Good day and thank you for standing by. Welcome to the Oatly Group third quarter 2026 earnings call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. I would now like to hand the conference over to your speaker today, John Baumgardner, Vice President of Investor Relations.

Good morning and thank you for joining us today. On today's call are our Chief Executive Officer, Jean-Christophe Flatin, our Global President and Chief Operating Officer, Daniel Ordonez, and our Chief Financial Officer, Marie-Jose David. Please review the cautionary statement regarding forward-looking statements and other disclaimers on slide three, which are integrated into this presentation and include the Q&A that follows. Please also refer to the documents we have filed with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Also on today's call, management will refer to certain non-IFRS financial measures including adjusted EBITDA, constant currency revenue, and free cash flow. Please refer to today's release for a reconciliation of non-IFRS financial measures to the most comparable measures prepared in accordance with IFRS. In addition, OLE has posted a supplemental presentation on its website for reference. I'd now like to turn the call over to Jean-Christophe.

Thank you, John, and good morning, everyone. Slide five features our key messages. First, our third quarter tells the story of business resilience. Not only did we deliver strong top-line growth, but we also delivered substantial growth in total adjusted EBITDA, both year-on-year and sequentially, despite another quarter of elevated and tightening cost inflation. Our results exceeded consensus expectations despite this pressure. Second, in Europe and international, volume momentum remains robust. On-trend innovation drives growth, and we believe that our new products are capturing incremental demand both for Oatly and the plant-based category, while attracting younger consumers. In North America, where the macro backdrop remains challenging, We are activating on the control levels as we accelerate retail distribution growth, now at a record high number of distribution points, and we continue to narrow the market share gap in pursuit of category leadership. Third, I'm excited to announce our entry into the wellness space through our new platform of fiber beverages. Our first platform launch planned across both Europe and North America. One of the reasons that our founders chose oats is for its nutritional power, including the fiber naturally present in oats. As many populations consume less fiber than recommended by dietary guidelines, creating what we refer to as being the fiber gap, our fiber platform is designed to offer consumers a convenient and delicious way to incorporate more fiber into their everyday diets. Our fiber line has launched in Europe and arrives in North America in January, 2027. Fourth, our cost structure maintains strong resilience through the third quarter, including absorption of higher costs related to the Middle East conflict, both in Europe and international and North America, which allowed us to deliver our strong quarter three performance. However, the latest wave of logistics and fuel inflation in North America has finally exceeded our capacity to offset. From perspective in the US, These all prices have increased approximately 70% since the beginning of the conflict in the Middle East in February and approximately 40% since early July. This unexpected and sharp acceleration during quarter three combined with broader logistics pressure drives the downward revision to our full year adjusted EBITDA outlook. In response, We continue to engage key mitigation levers, including continued cost efficiencies and product mix, and we will implement incremental pricing effective in the first quarter of 2027. Amid these volatile and challenging macro headwinds, we choose to protect our profit margins and resources to reinvest and fuel our growth. Despite these profit headwinds, We remain on a positive structural trajectory of profitable growth. Our reiteration of 2026 constant currency revenue, despite more difficulty on your comparisons and macro consumer pressure, reinforces our confidence and visibility into our demand generating growth strategy. Turning now to slide six. Here you can see our solid third quarter scorecard for important key performance indicators. Our revenue grew by 9.1% and 8.9% in constant currency. Our gross profit margin reached 34.1%, an improvement of 436 basis points compared to last year. Our adjusted EBITDA was positive 9.4 million and 3.9% of net sales, an improvement of 6.3 million versus last year despite reinvestment and cost inflation. Finally, our free cash flow in the quarter was a negative 18.4 million, a decline from last year outflow of 5.4 million, and attributable to timing elements that NJ will detail in the finance section. Our year-to-date cash flow is evolving consistent with our expectations and our business plan remains fully funded. We maintain focus on achieving positive free cash flow through continued improvement in the P&L, growth in adjusted EBITDA and working capital efficiency. Slide 7 reiterates our focus areas for the rest of 2026. As Daniel will soon outline, not only do we maintain high conviction in the traction of our growth playbook and existing portfolio, but our combined taste and fiber products strongly position us to participate in more consumption occasions across more consumer segments as a full beverage company. In addition, we remain fully mobilized across all parts of the company to mitigate the continued macro volatility and cost headwinds to protect our profit margin and our ability to further fuel our growth momentum. Finally, as it pertains to Greater China, we expect to complete our strategic review by the end of this year as we evaluate a range of options including a potential carve-out. Our goal is to accelerate growth, enhance operational focus and improve our consolidated cash returns whilst maximizing the value of this business. We view North America and other international expansion markets as our priorities for growth and we commend and our management team in Greater China for navigating challenging local headwinds in recent years. We will of course update the market on our progress as necessary. Slide eight summarizes our guidance. For full year 2026, continued execution of our growth playbook underpinned our unchanged outlook for constant revenue growth of 8% to 10%. As discussed, the reduction of our adjusted EBITDA outlook from the prior lower end of 25 million to 35 million to a new range of 16 million to 20 million reflects incremental pressure from fuel and logistics in North America since the end of July. With that, Daniel, over to you.

Thank you, JC, and good morning, everyone. I will start my discussion on slide 10. We're very pleased with our strong year-to-date performance from the deployment of our growth playbook, which demonstrates Oakley's relevance in shaping the beverages culture. As I discussed last quarter, over the past two years we have made substantial progress reducing the barriers to consumption and creating new occasions for consumers to enjoy the taste, functionality, and versatility of our old drinks. We're encouraged by the growth in household penetration, which we believe reflects growing consumer preference of Oatly as a full-on beverages company. As we close 2026, this approach is gaining momentum through new platforms and unique flavors, appealing to a much broader population and anchored on taste, health, and with sustainability at the core. It is important to reflect on Oakley's ability to shape global beverages trends, so we captured the most prominent in the upcoming slides. In quarter three, We strengthen our presence in the global matcha phenomenon with monochrome events in Berlin, Toronto, and London, as featured on slide 11. Our presence at the London Fashion Week reinforces ultimately its relevance at the intersection of beverages and culture, which led to a high-profile London Embassy event last week, as featured on slide 12 and 13. Following Up to Taste in New York back in June, our London Embassy event attracted media, influencers, and commercial partners to celebrate the collective momentum for beverages and the launch of our latest trend-setting recipe lookbook, the Volume 4, and our Future of Taste Report 2026. We hosted over 500 attendees on day one alone before it was open to the public. They experienced signature drinks, panel discussions exploring taste, trends, fiber, sustainability, and participated in hands-on drinks masterclasses. As demonstrated in our Future of Taste report on slide 14, our ambition is to shape what's next on menus. The insights that inform this work are collected from our very own beverage market developers based in each coffee capital of the world, as well as coffee houses, experts, and mixologists from more than 20 countries. And finally, validated by data, identifying what's trending online. As traditional nightlife culture declines, cafes have become the hub where new ideas are cultivated and subcultures are formed. Oatly is uniquely positioned to offer our commercial partners the expertise into the trends shaping coffee culture and how these trends can be realized via our lookbook. In this year's Future of Taste Report, we explore the pharmacification of drinks from fibers to ferments with the expectation that functionality cannot come at the expense of taste. Emerging health trends, including gut health, Fiber maxing, fiber layering, and skin care are increasingly delivered through drinks. Slide 15 shows how the coffee menu is transforming, fueled by customization and visual appeal, and moving away from the traditional offers of flat whites and cappuccinos. As an example, we expect the Mont Blancs and cold foam to enter the mainstream. Oatly versatility is highly relevant for inclusion among these trends. and we close 2026 more confident than ever before that Oatly provides the ultimate base for functionality, fun and experimentation as captured in our lookbook. Through flavors and formats, we believe Oatly is strongly positioned to lead this new taste world order. This leads me to our next big announcement on slide 16, the launch of our new Fivers platform. I emphasize that the fiber range is not simply innovation. It's a natural evolution of who we are. Oatly is built on over 30 years of old research and innovation, which provides unique legitimacy in the fiber space. Our fiber line complements our tastemakers platform as the breadth of our offering has significantly expanded over the last three years. The fiber range is available in two options. a low-calorie, no-sugar option, well-suited for use in shakes, and a low-sugar barista for coffee and similar drinks. An approximate 250 ml serving, roughly equivalent to one oat latte, provides 5 to 6 grams of fiber. So, we expect that platform to accelerate oatly's penetration in new consumer occasions. For example, Low-cal is highly relevant for the world of wellness, fitness, and sports. Oakley Fiber can also be combined with protein powder, bringing fiber and protein together in a creamy and convenient format, making for a versatile base for shakes and other functional beverages. Oakley Fiber has been designed to make it easier for consumers to incorporate more fiber into their everyday diet with particular focus on female consumers. Despite these benefits, the modern diet lacks fiber as seen on slide 17. Across Europe, the average daily fiber intake is approximately 10 grams below the 30 grams recommended by health authorities. Similar gaps exist across the world, including the US. We see consumers' demand for fiber on the verge of a multi-year acceleration, and internet search data indicate fiber is already closing the gap with protein. Fueled by the growing use of GLP-1 medications, consumers are increasingly scrutinizing the quality and the quantity of nutrients, and we expect these structural tailwinds to drive fiber demand, and notably for oats. Nutrient Dense, Naturally Reaching Fiber, and Containing Betaglutens, a type of natural soluble fiber shown to reduce blood cholesterol levels. We expect Oatly to be among the leaders in reducing the fiber gap through taste and our expertise in oat processing, which is an important part of our approach to developing fiber-focused products. Oatly Fiber will be available across 11 markets in Europe by year end and in the US beginning of January 2027 in the new 48 ounces pack and it will be supported with intention. Closing my discussion on innovation, slide 18 features our Oatly Barista Cold Foam which extends our presence into the refreshment occasion and is among the strongest strengths in the out-of-home channel and, again, particularly relevant to the young consumer. Specially designed for out-of-home professionals and suitable for hot and iced drinks, cold beverages and cocktails, our cold foam features a delicate vanilla note, is lighter than classic whipped cream and compatible with most professional equipment. As with fiber, we intend to develop it into a full global platform at speed. Turning to slide 19 and our quarter three performance, Europe and international delivered another very robust quarter. Constant currency revenue growth was at 20.4%, including volume growth of nearly 18%. This is particularly impressive as we lapped volume growth of nearly 9% in last year's third quarter. At the category level, Retail takeaway growth for total plant-based beverage has remained solid, up high single digits driven by volume, while oat milk outgrows plant-based, up 9%. Oatly is growing at nearly double the rate of oat milk category. As shown on slide 20, growth in household penetration continues to enhance our results, including increasing relevance among younger consumers. all demonstrate strong appeal across Gen Z and Alpha, which underpins our encouraging long-term growth potential. Expanding appeal is also evident in our volume acceleration across the out-of-home channel, as seen on slide 21, including year-on-year growth of 25% in Q3. Across our expansion markets, the sales dynamic is nearly identical. Oatly outperforms Oatmilk and Oatmilk is outperforming overall planned ice drinks. As shown on slide 22, we're accelerating our momentum and gaining critical mass with the identical playbook curated for local relevance. It seems as if France, Spain, Belgium, Mexico, UAE or Poland had been waiting for Oatly to arrive. Importantly though, in addition to the accreted revenue growth from expansion markets, were also adjusted EBITDA positive in these regions as we leverage our established capacity and we observe a rigorous go-to-market approach. Time to turn our attention to North America on slide 23. Retail macros remain challenged. Consistent with recent quarters, category takeaway declined mid-single digits, but we again outperformed with volume-driven growth of 8%. This sustained momentum means we are quickly closing the market share gap, nearing just 2 percentage points to take market leadership, following a gap of nearly 8 percentage points in the summer of 2025. Overall, our North America segment grew in Q3 with constant currency revenue of 2.9%, including positive price mix. This is net of the sales decline in the former largest customer, which is now significantly reduced but still meaningful in the year-on-year or quarter-on-quarter comparison. Our sales in out-of-home accelerated sequentially, and September was the second strongest month of the sales this year. Looking ahead, we plan to further accelerate this momentum. Turning to slide 24. Our expectation for continued outperformance is underpinned by two catalysts. First, we are growing retail distribution at an accelerating rate, including benefits from a category consolidation around a more limited number of leading brands. Our distribution growth has accelerated throughout the year, including contributions from numerous leading retailers, and importantly, without diluting velocities. This growth has been significantly driven by our barista edition as shown on slide 25. By and large, our leading item in Europe and that I'm glad to say is now gaining traction in North America led by our state strategy, connecting the out-of-home experience with the retail channel, both in chilled and ambient shelves and in multiple sizes for different shopper locations. Elevated visibility for Barista provides a foundational bridge to our second catalyst, the launch of Flavor Barista, including the likes of churros or popcorn, and the introduction of matcha, all of which are now underway. Collectively, expanded distribution is driving our sustained growth in market share, as featured on slide 26, and our larger market presence leads to the adoption of our increasingly diverse range of products, as seen on slide 27. These more expansive portfolio enables a reframing of the category to drive new consumer trial and ultimately repeat and velocity. Shifting to Greater China on slide 28, third quarter constant currency revenue declined 19.3% on lapping last year's difficult comparison of growth of 29%. Operating conditions remain consistent with recent quarters, including headwinds that persist in the food service channel and sustained strong performance of the new Riedel portfolio. As JC mentioned, we intend to complete the strategic review of our Greater China segment by the end of this year. To close my business update, I would like to focus on the trajectory of key business metrics on slide 29. We continue to deliver strong volume growth, which is converting into operating leverage and gross margin expansion that fuels reinvestment. In the third quarter, spending for branding and advertising again grew at a strong double-digit rate relative to last year and was among the main factors driving the year-on-year increase in SG&A. As JC mentioned, this latest wave of North America fuel and freight inflation since July has finally outpaced our ability to offset this incremental cross-pressure, similar with our peers in food and beverage. which reduces our outlook for 2026 adjusted EBITDA. With the necessary objective to protect margins, we have already communicated a price increase to our customers effective in the first quarter of 2027. We are confident that the significant ways of relevant innovations, taste, fiber, and importantly the reframing with the 48 ounces pack for the innovations, not on 64 ounces any longer, together with strong distribution and velocity traction will help buffer volume elasticity. In Europe, our pricing is also under review as the cost impact related to this year's Middle East conflict is proving stickier. We emphasize our decisiveness for the consolidation of profitability from which we will reinvest to sustain the current cycle of demand growth in 2027 and beyond. And with that, I will now turn the call over to MJ.

Thank you, Daniel, and good morning, everyone. Slide 31 summarizes our solid financial delivery for the third quarter. Constant currency revenue grew 8.9% against a more difficult prior year comparison, maintaining the solid rate seen in quarter two. Gross profit margin was 34.1% and increased 436 basis points year on year. Net pricing and product mix offset cost inflation with nearly all pressure driven by conflict in the Middle East and freight expenses in North America. This offset drove the flow through of solid operating leverage from facility optimization volume absorption and productivity improvements. Q3 adjusted EBITDA was a positive 9.4 million and improved 6.3 million relative to last year's Q3. Delivery was consistent with our expectations for a ramp in second half profit contribution driven by gross margin expansion, some favorable expense phasing and SG&A leverage. Our brand investments have demonstrated strong returns which have been sustained despite this year's material cost inflation and the underlying trajectory of structural profit improvement remains positive. I will now provide more details about our financial performance. Slide 32 shows the bridging items of our revenue growth. Volume grew 4.2%. price mix increased 4.7% and foreign exchange was a modest tailwind at 0.2%. Moving to slide 33, the year-over-year gross margin bridge shows the improvement of approximately 440 basis points. This improvement is explained by 450 basis points from fixed cost absorption and supply chain efficiencies and 120 basis points from net pricing and product channel mix. These benefits were only partially offset by a negative impact from inflation of 110 basis points, including 90 basis points from the Middle East conflict and North America freight costs and foreign currency headwinds of 20 basis points. Slide 34 shows the quarter-free year-over-year improvement in our adjusted EBITDA. Growth of 6.3 million was driven by a 16.6 million increase in gross profit, partially offset by a 10.3 million increase in SG&A and over. Nearly half of this SG&A increase is driven by customer distribution costs, which are linked to sold volumes and include increasing pressure from freight expense. Approximately one-third of the SG&A increase is from selling expenses and largely increased branding and advertising. The remaining increase in SG&A is driven by general and administrative functions. Excluding freight inflation related to macro factors, our underlying cost structure remains positioned to scale with volume growth. Slide 35 shows segment level details. Europe and international grew net sales by 20.4% in constant currency. Despite continued cost inflation related to the Middle East conflict, adjusted EBITDA grew nearly 10 million year on year from both gross margin expansion and operating leverage. Adjusted EBITDA margin was 21.4% and expanded approximately 370 basis points year on year. North America constant currency revenue grew 2.9%. The segments adjusted EBITDA increased by 1.6 million to 0.3 million and a more moderate growth rate relative to last quarter from rising cost pressure from fuel and logistics. Adjusted EBITDA margin was positive at 0.5% and improved approximately 260 basis points year on year. Greater China constant currency revenue decreased 19.3%. The contraction is explained by the lapping of a challenging comparison with the prior year quarter when constant currency revenue grew 29% and continued current year macro pressure in the out-of-home channel. This segment reported an adjusted EBITDA of negative 1.9 million and softening of 3.5 million year-on-year. As JC mentioned, our strategic review is ongoing and expected to conclude by year-end. In our reported results for Q3, Q3 results include a non-cash impairment charge of $1.6 million related to the exit of one office location which is excluded from adjusted debita. Q3 corporate expenses was higher by $1.4 million on higher personal costs. Turning to our cash flow on slide 36, I reaffirm that our business plan remains fully funded and we remain focused on bringing the company to positive free cash flow following the positive inflection in our adjusted EBITDA. In Q3, free cash flow was a net outflow of 18.4 million compared to an outflow of 5.4 million last year. The increased outflow results from three factors. First is unfavorable timing of capital expenditures which shift from Q2 into Q3. Second is increased inventory to support our innovation launches and expanded distribution. Third is the previously disclosed expected reversal of beneficial working capital phasing that enhance cash generation in Q2. Year-to-date cash from operating activities through Q3 is a negative $11.5 million and improved from last year outflow of $17.4 million. Year-to-date results are consistent with our expectations and at the end of Q3 total available liquidity was $95 million including undrawn bank facilities. Aside from the quarterly volatility in cash phasing this year, We see continued progress in our underlying cash drivers and opportunities for further improvements across all levels of cash flow. We continue to expect that free cash flow will not be positive for the full year 2026. Specifically for Q4, we anticipate improved cash flow relative to Q3 and last year from multiple factors. Timing considerations will result in capex not repeating at the same level as Q3. Second, as we have already largely built inventory to support our innovation, we do not anticipate a repeat of the headwind seen in Q3. Third, we also anticipate improvement in payables. Turning to our 2026 outlook on slide 37. As JC mentioned at the top of the call, we are maintaining our outlook for constant currency revenue growth at 8-10%. On a reported basis, considering recent FX rates and assuming no change for the rest of the year, we estimate FX to add approximately 200-250 basis points to net sales, consistent with our prior expectations. For adjusted EBITDA, We are reducing our outlook from the prior low end of 25 to 45 million to 16 to 20 million. Year to date, the flexibility and resilience of our model absorb the cost impact of the Middle East conflict. However, similar with many of our peers in food and beverage, the latest increase in fuel and freight costs for North America have been larger than anticipated. Although we have mitigation efforts underway, the time lag of these levers will be unable to offset this incremental cost push in Q4, which we estimate will be in the low double-digit percent in North America. The net impact of this cost pressure results in our reduced outlook for adjusted EBITDA. As a reminder, Our outlook is provided in the context of what we know today and set against elevated macrovolatility. Our fundamentals remain strong and we continue to execute against our growth playbook while maintaining agility to adapt to external factors. Lastly, our guidance for full-year CapEx remains unchanged in the range of 20 to 30 million and with a bias to the middle of this range. concludes our prepared remarks. We will now hand it over to the operator for the Q&A.

Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. One moment for questions. And our first question comes from Andrew Lazar with Barclays. You may proceed.

Great, thanks so much for the question. Good morning. I guess I wanted to drill down a little bit on some of the pricing commentary. Certainly a number of packaged food peers have already discussed the likely need to take some pricing actions exiting this year into 27. And those that have discussed it a bit more in a more detailed fashion have also talked about Embedding greater than, let's say, historical or typical volume elasticity this time around, just given the consumers under a bit more pressure than, let's say, the last time the industry had to enact quite a bit of pricing. So I'm trying to get a sense of what type of elasticity are you embedding in North America, and I guess in Europe as well. It sounds like there's probably some pricing coming there also. And is it greater than sort of what you've typically seen in these types of situations?

Thank you, Andrew. Daniel here will take your call. Thank you for the question. Listen, pricing, you got it right. We will do what we must do to protect margins since the cost inflation seems to be sticky. Before I dive into elasticity, I would like to see how we're looking at the two segments, right? We talked about you got it right as well. The North America price increases through. and we are contemplating but decisively as well in Europe as we speak. We need to look at things or the way we look at things is upon very strong velocities. We see at the moment strong velocities, market share momentum, significant market share momentum and building up and we show a consistent net gain from private labels, Andrew. So this is possibly significantly different to what other CPG peers could be seeing at the moment. So that demonstrates that our value equation is robust. How much are we going to increase price? The sufficient one to offset cost increase, so that gives you already the way we are directionally looking into 2027. Now, to frame this up, we don't see just a price increase as we're implementing this, but primarily an innovation-led price reframing. You see all the new items you see on taste, on fiber, the reframing of the 64 ounces in the US to 48 ounces, all the innovation will come in 48s that you see on slide 27 for reference. Half of those items will be new. So when you see what consumers and shoppers are going to be seeing, are not going to see a net price increase that sits, but a lot of momentum happening on shelves. Elasticity, there will always be. We're building some, not much. And we expect the contents to remain volatile. But on the whole, Andrew, we believe we are very well placed to minimize the elasticity.

Got it. All right. Thanks for that. And then just curious on sort of as you think forward the outlook on the oat milk category in North America, sort of once you lap the competitor leaving the space, which I'm assuming, but maybe I'm wrong, is what drove the oat milk category down some 12% in the quarter?

Yeah. Listen, good question, Andrew. You're right. If you look at what's happening with that alleged consolidation, We're clearly gaining more than our first share, as you see on slide 24. Imagine we are 800 bps up in TDPs. So that's a lot, and goes back to your previous question about strengths and velocities, right? So we're not diluting velocities, which gives us a lot of confidence that it correlates a lot with the household penetration gains we're seeing as well. It's not just about that consolidation. If you look at the other two shelves in which we are operating, creamers or ambient, the momentum keeps building. So it's not just a consolidation. Now, as you rightly said, our focus is in driving category penetration. We are obsessed by it, and with 70% of headspace of penetration in front of us, that's what we're doing. And then the rest is about executing The Playbook, and investing behind the innovation, Andrew. We are really, really decisive and optimistic about what fibers and functionality can do in the U.S. If your question was more towards the U.S., then I think it is. This could be the turning point that we're expecting for North America. Thanks very much. Thank you.

Thank you. Our next question comes from Kumail Gajewala with Jefferies. You may proceed.

I guess the big question is trying to understand the impact on logistics into 27 as best as we can. It sounds like a little bit from your commentary that maybe it was obviously prices moved up very quickly and they're hitting 4Q very substantially, but it also sounded like it's temporary in some way. So I'm just kind of curious. on is some of these fees a catch-up cost or something else going on or really any insights that we can get into the beginning of 27 related to what's happening with costs.

Thank you, Camille. Jean-Christophe, I'll take that. Allow me to start by unpacking your question on the why now, how much are we guiding, revising or guiding, and so what, including going into 2027. So first, why now? You're right. Up to Q3, we have demonstrated our resilience by our ability to absorb higher costs related to the Middle East conflict, mainly on logistics and packaging. And that resilience is what drove our robust delivery, both in Q2 and Q3. Now, however, in the course of Q3, like many of our TPG peers, we have seen an additional and quite sudden inflation acceleration specifically in U.S. freight and fuel. Let me just give one illustration. The U.S. diesel price increased by 23.8% just between last Monday, October 26, and the last time we spoke on July 22. If I step back and look at the full year 26, this latest diesel price point is 83% above what it was on January 5. and two-thirds of this growth nearly happened after July. So yes, it has been pretty sudden. So what this means is, first, our quarter three EBITDA would have been higher without this, and it also explains why this is this last wave of inflation that has now exceeded our capacity to offset, hence the timing of our revised bottom line guidance into and many more. So, what's up for quarter four? I think I already covered it, perhaps giving you two data points. When it comes to the Middle East conflict cost pressure in ENI, it now represents more than 100 basis points of our four-year total company net adjusted EBITDA margin. That's data point number one. Data point number two, to illustrate our freight and fuel challenge in North America, we now expect our freight to customer per liter sold in the U.S. to be in quarter four, 12.5% higher than the average of H-126. So that gives you a little bit of what we are seeing. If I now go to your question on the beginning of 27, specifically, honestly, We are informed and humbled by the 2026 journey. So we currently project 2027, both on key cost of goods sold and logistic light items, to be a little bit as the worst of 2026, reflecting both the latest energy rose impact price increases that we have got, as well as the highest points of fuel and freight in the US. So to your point, Are we planning or are we projecting an ease up of those cost inflation at the beginning of 27? Not at all. And that's why we are taking prices in the way Daniel just described, which is selectively and with innovation.

Great. Thank you very much.

Thank you. Our next question comes from Max Comfort with BNP Paribas. You may proceed.

Hey, thanks for the question. So you continue to show that your growth playbook is really having success both in Europe and international and in North America. I'm curious for your view on whether a lot of the growth you're getting from this playbook is one time in nature and presents tough comparisons versus how much of it is sustainable and how much of this growth rate that you're seeing both in Europe and North America could continue into 27 at this very attractive rate. Thanks very much.

Thank you, Max. Good to hear you this morning. Very good question. I tell you how we're looking at this. We're looking generalized momentum and we're looking at this as we're only getting started. Why am I saying that? A couple of other data points that are not in the deck. If you look at our volume growth year on year, for Q3 excluding China were growing at 15%. If you're looking at volume growth excluding China for the year today, we're growing at almost 10%. So there's something there that shows that we're gaining traction that perfectly correlates with household penetration. We're growing household penetration as you saw in the deck in all our markets and in both regions. That tells us that there are tailwinds that we are catching but also we're generating and as you know very well, household penetration is not something that goes in and out from a month-to-month basis. There are waves and there are trends. So when we look at 70% headspace penetration in front of us, we like to think that we are here, that this momentum will stick. On top of that, you add two incremental points, Max, before going into some color on the segments. Number one, I'm sure you see, like us, there is industry generalized momentum for out-of-home. And you see how much we're growing in out-of-home at the moment. So that tailwind favors our strategy. That's number one. And number two, the innovations that you see here are not one-hit wonders. Everything we have launched is sticking at the necessary velocities to stay and then continue to gain traction, whether it's the matcha range, the flavor baristas, and now the fibers. All of that combined makes us look with optimism at the category development in the future. You would have heard us talking about us not positioning ourselves anymore as an alternative. I think that what we hear from consumers today is that we are a choice and we're really moving away from these binary dairy versus plant-based debates and we're really, really moving into what's the right flavor, texture, performance and nutrition for what people drink, right? So that's the way in which we see it generally and we're not stopping until we'll become the world's culturally favored drink, Max. That's what we're seeing and building a beverage company which is the kind of lingo that JC and I love using. Both regions, same thing. Perhaps in the case of North America, in the US, I will need to double-click on distribution. There is a very, very significant distribution to be gained still, and a reconfiguration of the retail shelves. And we're only getting started there. So when you see 50% of the new items going to hit shelves in the coming weeks, It gives me hope that the shelves in the retail space in North America will look increasingly similar to the ones we can see when you go to London or Berlin.

Great. Thanks very much for all the color. And then just turning back to pricing, would it be possible to quantify specifically in North America just the magnitude of the price increase that you've communicated to your customers already that will become effective in one queue? I can imagine a wide range of outcomes depending on how much of this outside inflation you are looking to offset. Thanks very much.

Yeah, of course. Sorry, I will sound like a scratch record here. The sufficient one, Max, to cover for the cost inflation, of course, and it depends. As JC alluded as well, it is selective. It is quite surgical. It's not a wide canvas price increase. and a lot is skewed towards the innovation and the reframing on PAC. So I hate to disappoint you, but I'm not going to provide you a number, but it's material. It's not insignificant.

Okay, understood. I'll pass it on. Thanks very much. Thank you so much, Max.

Thank you. Our next question goes from Tom Palmer with J.P. Morgan. You may proceed.

Good morning and thanks for the question. I know inflation has been a big focus already, but I did have a follow up. When it comes to the 4Q COGS inflation, you've noted how much of that kind of reflects the full burden of elevated spot prices today for things like diesel and freight versus, say, contracts or hedges delaying some of the step up into 2027?

Thank you, Tom. Let me reiterate. The revised guidance is a combo of both the continued Middle East conflict impact on ENI as well as the very significant further logistic inflation in the U.S., both freight and fuel. So it's not accumulated. As we said, we proudly, strongly delivered in quarter two and quarter three, which shows the resilience of our business model at the time where we are creating growth momentum. So nothing accumulated. This is the tipping point has been what has happened in US logistics over the summer, specifically after the month of July. And we are now also projecting that to continue for the beginning of 2027, as I answered earlier.

Okay, understood. There was mention of pricing being under review in Europe. Maybe just a review of the conversation up to this point has been very U.S. centric in terms of inflationary pressure. Maybe just a review of kind of what you're seeing when it comes to Europe on the inflationary front and kind of how you think through pricing there, if this this kind of price back architecture bent would also be more of the focus.

Yeah, thank you so much, Tom. I think you should be reading the both regions in the same vein. Perhaps there is an internal lag in the process and they're very obvious thing that you all guys know. I mean, we have a much bigger, stronger and more resilient business in Europe and international, right? So in the mix of the way we see it internally, we are reviewing how to continue to strengthen the business We're not ready to communicate in this call, but we haven't communicated yet to customers, right? But we will make no mistake. We will protect margins. And you can see from the color of this call what we are prepared to do.

Understood. Thank you.

Cool.

Thank you. Our next question goes from Daryl Messinian with Morgan Stanley. You may proceed.

Hey, guys. Just a bit more detail around costs and pricing. I know we've had a bunch of questions on it, but just to confirm, the revision of full-year EBITDA this year sounds like that's more entirely driven by costs. So the $7 million revision at your midpoint, that's just cost-related, or are there any other puts and takes you would call out? And as we think about next year, Is that sort of a good run rate to think about for the first few quarters of next year until you cycle this? Just trying to get an understanding of it. The Q4 cost pressure is sort of similar on a quarterly basis as we move into 27. And just on pricing, I understand you won't quantify it for us exactly today, but is it designed to offset most of the cost increase? Is it designed to offset it on a dollar basis or a margin basis? just conceptually help us understand how you're managing pricing relative to that cost, understanding that the cost inflation is pretty volatile here. But how are you thinking about that conceptually? And then last, just we haven't heard a lot about incremental productivity, and you guys have made nice efforts on that front over the last couple of years here. So is there a renewed emphasis on productivity? or new programs on that front that can help offset some of this cost pressure. Thanks.

Thank you so much, Dara, for this sandwich of multiple questions. So I will unpack it. So first of all, is the guide down fully related to cost? The answer is yes. There is nothing else that we have factored in. As I explained, it's really the sudden and abrupt U.S. logistic inflation specifically post-August that is driving that, nothing else. Question number two is help us look at how are you thinking of 2027? So of course, A few preambles. Number one, as you know, we never guide on next year in our quarter three earnings goal, and I will not deviate from that. Number two, you're spot on. The current business context remains super volatile and unpredictable. So whatever I'm about to say is with what we know today and only that, and we will need to continue to have a great deal of agility to navigate that. If you allow me to reformulate your question into what are your key intents and assumptions as you start thinking about next year. Number one, growth momentum is one of the scarcest assets in CPG right now and Oatly has it currently. Our playbook is working and it will be further completed by the FIDO launch. So what we intend to do in the coming quarters is to continue to fuel meticulously these goals momentum. First, because it's precious. Number two, because our B&A investment is working. So, of course, we all need to keep in mind as your model that we will be lapping a much stronger 2026 CompBase. So, but that I don't need to tell you. Second, we will take pricing with innovation selectively. I'll come back to that. Third, when it comes to the COGS and logistic cost assumptions, at the moment, As I said, history has taught us and taught us in 2026 to be humble and conservative. So at the moment, what we are planning is the worst of 2026 going into 2027. So that's what we have. Your third question was, how do you calibrate your price increase specifically in the U.S.? Because here it's already out there. I will just repeat what Daniel very well said. It's designed to cover this cost inflation. No more, no less. So that's the way we look at that. And finally, I'm super happy that you bring the productivity question. Allow me to step back first. When we reflect with Daniel on MJ, we are at the moment in our company's story where we are creating growth momentum and we are delivering now structurally profitable growth. And therefore, we view our job as accelerating this value creation despite the external challenging environment. We passionately turned around this business and we are not prepared to slow down the value creation journey we have initiated. So what does it mean? First of all, it means that we will continue to deliver COGS and supply chain cost progress. I think the last three years journey you were kind enough to refer to has demonstrated our ability to do it and we'll continue it as a permanent. When it comes to G&A specifically, we are chasing productivity and overhead. And we do that on two fronts. First, we are currently decisively attacking all remaining inefficiencies in our organization, in the way we work, in anything that is not directly related to sales, consumer serving, customer serving, and being really at the forefront of delivering our mission. The second lever is continuing our duty to boost the impact of our investment. Every penny we invest is precious, and it is our job to maximize this investment. Beyond that, you will see us continue to very actively drive all mixed levers, channels, customer, portfolio, innovation, and as we said, we will implement pricing. So all of these combined, you see us continuing decisively to fuel the precious growth momentum we have created in order to accelerate our value creation.

Thank you, guys. Appreciate it.

Thank you. And as a reminder, to ask a question, please press star 1-1 on your telephone. Our next question comes from Sam Williamson with Nordea. You may proceed.

Hi, thank you. Thanks for taking my question. Kind of a tooth question regarding the cash flow part of the business. You, MJ, clarified wonderfully that you expect Q4 cash flow to improve a lower capex and no repeat of the inventory build and mirror payables. But are you able to quantify a bit more on the expected contribution from each of the three items? and maybe also that if the $80 million Q free cash outflow, how much would you consider timing related for that versus underlying cash consumption that will not reverse? So that's the first question. We can take that first.

Hi, Daniel. This is MJ, Marie-Jose. So let me take... Can you hear me well? Just checking.

Yeah, I can hear you.

Perfect. So... Let me start with Q3, right? So as you mentioned, negative 18.4 million in cash flow. But I'm sure you noticed the nice progress in the cash management since 2023. And you can see that, by the way, in the deck, right? Where Q3 2023 was 49 million of cash burn, and 2024 was 27 million of cash burn. Also, if you recall, when we discussed back in July, we mentioned those phasing. So clearly, What you should recall going into Q3 numbers is that most of it is a phasing impact. And it's a phasing impact, as we discussed, from capex timing shift, which we called in Q2 that we will see that going into Q3. Because don't forget, right? When we were in Q2, we told you that our free cash flow outflow was coming better than expected because of the timing. So one was driven by capex. The other one, as we called in our preferred remarks, was driven by larger inventory because we are building some innovations, so inventory, in order to shift that into Q4 and later. And the last thing is the calendar switch that we had from a payable standpoint. So most of the impact of the 18 are very much driven outside of the average that you should consider from the timing. Going into Q4, What to expect from an improvement standpoint? First, you should expect a year-over-year improvement as well as a sequential improvement. Where this will come from? Smaller capex, because again, Q3 was higher than what we expected, and we don't expect that to repeat into Q4. The inventory build, as I just called, which was more than $11 million, is not as well expected to be repeated in Q4. And that's the benefits of tables. We expect that to see in Q4. So again, what I want you to keep in mind is that cash management improvement, year-to-date cash flow in line with our expectations, fully funded, confidence towards our trajectory of free cash flow positives, total year impact, and supporting the trajectory of EBITDA growth as well as, we used to say, profitable growth in general. And I hope I answered your Q3 and Q4 questions.

Yes, indeed. Thank you. I understood. Maybe just a follow-up, Gus. You ended the Q3 with $23 million of cash and then obviously the unused RCF. but I guess the free cash flow by all means would also be negative for Q4 given your guidance. So do you have any, let's say, minimal liquidity level you would say comfortable operating with and how much liquidity buffer you would expect to have before achieving that positive free cash flow? Thanks.

So how much, Samuel, I'm not going to answer. The question is, are you comfortable in order to operate with the cash you have in the bank? The answer is 100% yes.

Okay. All right, wonderful. No other questions for me, thanks.

Thank you. Thank you. I would now like to turn the call back over to John Bobgardner for any closing remarks.

Thank you, operator, and thanks, everyone, for joining today. Any follow-up, feel free to reach out. Have a great day. Thank you.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.