Swedish oat beverage maker Oatly announced that revenue increased 4.9% year-over-year to reach $195.1 million in Q4, while also informing investors that it had secured $425 million in financing commitments that will allow the business to grow as it looks to reach “self-sufficiency.”
Oatly CFO Christian Hanke reported that about $300 million of the new funding was received from private convertible bonds from shareholders including Verlinvest, China Resources and Blackstone. The other $125 million came from a term loan B. Oatly also announced a commitment letter for renewal of its revolving credit facility to approximately $200 million.
The company plans to use the capital infusion to expand into new geographic areas while also extending its reach in foodservice and growing its “product portfolio from coffee locations into all milk base moments” in an effort to drive to profitability, said Oatly CEO Toni Petersson on the call.
During the fourth quarter, gross profit was $31.1 million, a significant improvement from the $5 million in profits for Q3 2022 as the company streamlined its supply chain. Gross margin was 15.9% during the period; however, adjusted EBITDA was a loss of $60.5 million attributed to higher operating expenses.
For the full-year, revenue was $722 million, up 12% from 2022. Gross margins were up 11% year-over-year with adjusted EBITDA a loss at $267.9 million.
The company attributed the results to the streamlining of production in the Americas, the easing of COVID restrictions in Asia, deflationary costs and pricing actions taken during the final quarter of the year. Company leadership reiterated that it was confident in the decision to shift to co-manufacturing partnerships in the U.S. as a way to reduce its production assets and increase profitability.
“Our supply chain is back on firmer footing, we have a clear line of sight to reaching profitability, and we have the liquidity needed to fully fund our growth investments and reach financial self-sufficiency,” Petersson said in a prepared statement. “Therefore, we believe we are well-positioned to start playing offense in 2023.”
In developing an “asset-light model” as outlined in Oatly’s November Q3 earnings call, the company inked a deal in January with Toronto-based co-packer Ya Ya Foods Corp. to share production and packaging at Oatly’s Ogden, Utah facility. Ya Ya will also assume responsibility for the construction of the planned Dallas-Fort Worth plant that is set to begin commercial production in 2024-2025. Oatly will maintain ownership and operation of its oat base production.
The oat milk maker also noted during the earnings call that it had begun production at its Millville, New Jersey facility operated with co-manufacturer Innovation Foods. Once fully-operational, the production plant will increase capacity in the Americas by 33%.
Speaking to analysts on a conference call, COO Daniel Ordonez said Oatly is confident it has resolved its lingering supply issues and is seeing steady growth in dollar sales that will fuel the increased capacity being built out in the U.S.
Ordonez went on to say the brand was planning a “big comeback” in coming quarters as it feels more secure in its supply chain in the U.S.
“The reality is now we can unleash the power of the brand,” he said. “You will see the voice of the brand heard again in the U.S. That’s our priority more than the heavy, heavy hitting on promotions.”
Oatly’s 2023 guidance has revenue growth at 23% to 28% on a constant currency basis compared to full year 2022. Gross margins are expected to improve into the high 20% by Q4 2023, but the company is expecting foreign currency to be a headwind during the year.
Share price for Oatly was up to $2.22 at the time of publication, an 8% increase on the day.