NOMD - Earnings call transcript Q3 2021

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Taposh Bari

Hello, and welcome to the Nomad Foods Third Quarter, 2021 Earnings Call. I'm Taposh Bari, Head of Investor Relations, and I'm joined on the call by Stefan Descheemaeker, our CEO; and Samy Zekhout, our CFO. On our call today, we will review our financial results for the quarter and conclude with a question-and-answer session [Operator Instructions].

Before we begin, I would like to draw your attention to the disclaimer on Slide 2 of our presentation. This conference call may make forward-looking statements that are based on our view of the company's prospects, expectations and intentions at this time, including consideration related to the impacts of COVID-19. investor due press and the release, this in differ discussed which SEC may cautionary slide our includes in our our results to uncertainties, risks are and language. Actual which presentation, filings with

payment and IFRS We certain our with And call from call These foreign the will the here adjusted may losses. IFRS in be those a figures and figures as results. comments financial non-IFRS well the All exchange should earnings represents adjusted to and And the numbers. not today. for adjusted all I replacement over presentation should hand have to Users Please also for XXXX. on the financial within to that, measures note information for be at been during gains within XXXX end share-based non-IFRS presentation exceptional considered slide or related discuss on as release the our the non-IFRS measures expenses reconciliations financial site. noncash refer read Web will appendices and find that adjusted together with Stefan. of will acquisition-related, available items,

Stefan Descheemaeker

Earlier are for year few third our Taposh, built last that we the you you, the thank in These call a we growth deliver achieved XXXX. double-digit us provided to with exceptional weeks ago. we and quarter results plans on morning, all business and the on today. financial Thank results reiterated performance this reported joining consistent and update adjusted EPS

the tough inflation food macro backdrop is between and As challenging comps, disruptions. quite many the you in for know, supply chain industry

of EUR points relative With or like-for-like of on growth versus our the we of versus environment, X%, fact representing last excluding third EBITDA Organic category driven quarter gross I'm Switzerland, to would those XXXX. acquisition another record that, a normalizing with gross we and to grew EUR were Adjusted the basis up more basis are growth revenue prefer EPS of X.X% achieve basis dilution has XXX let's The digits and anniversary elevated And begin margins translation. declined margins the responded, XXXX. adjusted in ForEx by trends. to are points on XXXX mid-single the from third XXX per business. While growth X-year when of declined representing quarter revenues to of Switzerland our demand with in X.XX how of versus XX%. and Findus Adjusted XXX initial XXXX. year base X% CAGR CAGR highlights. financial of year team X% favorable quarter results We a finally, that the proud year the achieved a XX% pace a of commodity prior Findus share, million, versus was below the third

Our have capital and highest driven This model navigate we performance to accretive attributes third the quarter the namely quarter of improving strong on we year. adjusted EPS were the by company's performance history revenues, factors, adjusted built EBITDA third last several was results and achieved in any challenging are allocation. management creation These of backdrop. a trends, share market and macro our the as been and disciplined success value that fuel to cost defining continue our key

share know, share our situation growth. capacity on since consistent in you that QX May. return has shown market happy levels hard to As been and say we've improvement service our expanded to improving working and I'm market to

Europe, food are category service supply and vaccination during look percentage pockets challenges, returning in we consumption. improved still single-digit decline year. at in out-of-home frozen where quarter recovery most our third While the material a of relatively packaged environment corresponding This a the back results raw the high. our food of work versus low have We're consumers to seeing across closer rates in prior in the selected business. Taking levels have in a broader

of we well under been normalization are market with are a most The material share, many period category a The compounded outcome. labor over through the As over navigate encouraged chains to which months. of This areas series industry-wide are have costs we is control issues, and growth we where market the of transition, supply X this the to and improving we supply directing on starts attention stress. see past has significantly have of by trajectory rise. chain are Raw been the tight our documented.

margin this challenge year, chain well gross organization first navigated supply X the year. stable resulting the in has through Our this of months

We management capabilities macro leverage growth intensify to revenue in factors expect and to to XXXX our prepared these exposure. mitigate are

deliver objectives, necessary are near-term key we we an the we growth. been against our third also area As support to long-term active quarter. during Sustainability financial strategic the quite and where investments making a priority were has

in anchored advantaged have we a better inherently nutrition and portfolio helping make fish is that As comes consumers when choices it sustainability. in a food vegetables, company to frozen and

You've repeating. are they heard statistics, the worth but

accounts goes impact climate by change, of assessment, starting cycle we life helping gas waste. waste. of reduction emissions know that to awareness and with scale the on industry in greenhouse consumers brands food make X/X the credibility, frozen of Supported First, for food have our and X/X an that food food

strong base strategies carry to portfolio choice, meal with ship and our retailers alignment are is and our considered of of creating looking a products. trends healthy consumer who XX% the Second,

only market Cuisine, fast-growing Green has fastest brand last developing on and achievement strategy during Green month, chicken-less quarter. advance proud products. And finally, very to further our a factories includes XXX% established an share and be of are took a on now a and as which is to fish-less important we portfolio, that X Cuisine are in pace We third of. nearly frozen business steps electricity, diversified X years. meat-free growing our are We of existing to the accumulated Europe's renewable XXXX business sustainability that double in continues in protein plant has double-digit

to chain. include per which announcing reduce the approved and consistent X.X a to targets X global warming are X, ton gas XX% plans scope across reduction to with our targets, joined XXXX our operations keep X to our X, degrees. science-based the with These operations in significantly our by emissions reductions and emissions race we required First, greenhouse supply

Second, food we and the a development growth a of announced the underpins collaboration have with the This leader of of sustainable see in kind agreement introduce route insights, better excited in coming to the first in BlueNalu technology food. our developed Europe aligns with to to We're BlueNalu cell-cultured seafood serving scaling brands, and cell-cultured lead is consumer Europe. and years. and emerging technologies. to the of its market purpose seafood our can commitment and breakthrough the world combination to scale technology that the with cell-cultured to what

Finally, result expected in the of annualized in the on frozen business ForEx we completed XXXX $X on basis acquisition to of EPS adjusted combined transaction, which based Fortenova's food over is and and rates. current

a with Nomad business multiple value creation. with Fortenova and strategic value levers to Foods for significant is

and many food XX% similar growth bring operational and these existing We to capabilities the marketing significant believe in is strategy, market-leading incredible with vegetables, many in in in Fortenova awareness our in and and Findus high-quality Croatia, resembles frozen of These our portfolio markets, similar Ledo such business the represents respective Iglo categories, has expertise their consumer in Birds we business others and countries like Frikom. regions. Eye, Serbia to in savory commercial and frozen as sales, a and [Indiscernible] ways. revenue brands have portfolio. fish insights, brands across It high concentration in management.

with savory Fortenova category to leading a [Indiscernible] ice also which business. side and highly the is of our profitable the synergistic has a cream and highly portfolio. introduces portfolio, interesting

Fortenova earlier the is to and early that is for XX to the approximately join the this the year, we into the EBITDA. many European mid-single with XXXX announced a number days, to their tell in digits. grow our overdeliver leading business to expands footprint of adjusted business Central The geographic acquisition forward challenge share latest slightly organization we objectives. revenue business positions. markets, While this markets of expected is expected is looking generate plan excited and with family Nomad can the of it acquisition million EUR spend new When very The Eastern delivering to you I Foods of

and base with level of a the several exceeding are underway business. expected full EPS ensure Consistent high have XX%. streams work revenue increase a we our growth organic the suite that to spend to the profile mid-single-digit is providing margin Fortenova to path timely single-digit integration. with successful XXXX and our a fueled We advising to in M&A to From accretive be plan EBITDA capabilities in financial of adjusted perspective, playbook,

progress on held been event provide since Foods X,XXX Investor with our more our new the It We first into detailed look are updating months. thrilled last employees hosted this the business to forward a investors and to you We Nomad a leadership our November. to and perspective Day has coming our year we team. ever to welcome in

more a am of With also later, We closed, financial goal the review nearly guidance we Samy not laid now if we over pace call of say, XXXX that which hand our pleased I to XXXX that at by our will Samy? over adjusted our that detail. X objective EUR Fortenova and event, year to of out on X.XX the goals notably acquisition CAGR EPS, introduced complete financial now remain I XXXX, in represents achieve sooner. XX%. to to results and

Samy Zekhout

today. you on Thank your participation all call and you, the Stefan, for thank

X.X% during Against with steady third Revenue Organic continued Turning consumer which up a FX by Frozen X growth of were increased and demand anniversaried strong XXXX, key provide included our decline mobility a to share points category and operating from digits business, Slide Switzerland, to acquisition expansion metrics, consumption. the our Green beginning percentage XXX Findus XXXX. increased slight the retail which this points normalize was organic eating. reflecting versus to backdrop, as out-of-home EUR branded a revenues market from favorable growth in we elevated on detail from year-on-year percentage will quarter, food return to third X% declined more driven million. versus mid-single revenues X. translation X.X achieved but in I we revenue quarter the Cuisine. revenues,

below dilution decline of whose are initial quarter margins execution the Findus basis through flat X comprised versus inclusion XX% months the point year margins year. material raw Gross from higher [Indiscernible] recover levels. from the as costs Switzerland gross points from were a year, procurement raw X the months food of points nonbranded XX XXX basis reflecting to strong increased year. margins continued Our service during first material the of ago the the company business and first average. deflation the of effectively of were This XX% prior XXX and basis during reflecting Gross

the process in currently middle expect a inflation of higher of are planning year. our like We level XXXX next others, and

Our to goal will be available. mitigate through levers all inflation

in is health. business good Our

that revenue Our market-leading we have to capabilities environment. brands current have the strong growth positions, us navigate enable will and management

Moving of for a the and of decline down indirect P&L. to These quarter. the EUR operating metrics the to growth. once versus on EPS increased adjusted again performance year-over-year, rest declined expenses reflecting year XX% record EBITDA represent XXX increased growth A&P a X% and Adjusted spend XX% comparable prior to level in X.XX costs. and Adjusted million, the EUR

flow X cash adjusted the free flow to conversion. XXX the equating year, cash nearly of XX% generated Slide to Turning We first through million on X. of EUR months cash

cash represents conversion seasonal our As and capital third know, quarter you low a cycles. in working

across improvement end We the metrics significant year. continue to by expect both of the

With are expecting the rate committed QX which to based over review number a a Slide year and that target will with With as catch-up long-term factors, our a let's of to remain we in our November last X on flow higher of X, that said, result our As limit term. turn this improvement of achieve this XXXX. a to is XXX% as we guidance of you that, our inventory in we foreign COVID CapEx and have adjusted quarter, cash free of exchange shared to XXXX this target conversion ability notably notable long year. rates

path XXXX per adjusted X.XX EPS our in range to translates which share financial We and achieving our XX% to on us guidance are of has growth percentage longer-term reiterating X.XX the XX% glide to EUR objectives. a for EUR to

the Our guidance Fortenova quarter. seasonal during now from operating includes a loss fourth

have this acquisition reminder, high for Had year, accretive start $X the we on this XXXX. annual adjusted been we owned and combined a be our at expect basis. of would Fortenova EPS over to As in single-digit a

will expansion. XXXX now market for to turn remarks. share Our assumes Thank we modest organic That you. guidance the a achieve to expectation over with the in will to continue revenues our decline Operator, the concludes I Q&A. that year back you. session

Operator

yourself. from free Andrew will [Operator to first feel Barclays. Andrew, please question Our unmute Lazar from Instructions] come

Andrew Lazar

I ago Europe mentioned on your reopening. growth weeks guess, in first expectations the that investors for in updated year, you markets off, organic when a few you key category growth rates we're normalizing

new to bit gained these packaged households the longer then thought that got talked You all about sort years just And of that like of a thoughts be of could and your stage, get squares X other most I've food really during the process some again things follow-up. hybrid of new with nature? companies past that sticky and term with arrangements this habits well and I'd your work I on a that this guess how at belief today.

Stefan Descheemaeker

Well, thought hasn't Andrew, really our process changed.

people we open. but mobility returning back you them can think it's I X I to very work. days environment, are see People see, not increasing, week. that think a your volatile But are as definitely is a restaurants to point,

to But And that level pre-COVID So that can this -- at you in And to of compare tough the also going the shape. when the inflation, which time, a is the obviously highlight piece with is impact robust very coming fruition. on really against important before good comps. that's we remains come this in are to same XXXX. we very see and sales

So The somehow level definitely hasn't only really have the inflation. well sales of has the as changed, as that that changed. should higher thing but

Andrew Lazar

of obviously, in it inflation, peers this U.S. the the in talked next in about, be pricing question, lean And did bigger not many inflation therefore, and than 'XX. is, year you you seem as that as could leads less your into to have And a far heavily had my headwind on which it you would lever.

in I limited we about not of the might Europe, can kick to for more time the So windows, the -- on key the of terms customers there how timing are in in sort such be successful, think pricing, would guess, of after shelf? when pricing take think Or impact XQ Europe and pricing getting agreement time in of in it. on maybe then to I'm trying what's which effective opportunity until of more how if the work until frames fully it that year? realize I And next frame typically terms with does be

Stefan Descheemaeker

of know, interesting Well, -- it's Andrew, is many it's Europe countries. question, different an because you as a constellation

But it's we're definitely, starting. much already very So staggered process. a

middle So mean, for have that, I experience think more visibility, we're we in But in this QX. I release conversations. these the during our really of next

are use management advanced, think I the let's terms I revenue we've we're pricing have past overall, very well are we've Some think -- a well advanced. well actually. I some now, But revenue, -- muscle in less right of going say, in we think always strong muscles, that's executed and to developed -- with this

-- are that's So we determined. very

Operator

yourself. free Suisse. unmute to Our question Robert come feel Moskow next Crédit from will from Robert,

Robert Moskow

follow-ups. it And single significant. I you it to a little do you've XXXX? mean you've like on level give within it is far It digit? X of seen digit? so guess gotten bit also, double more expect like your can X within be business like sounds walls. the Fortenova, experience What could high in then I inflation Is quite you as cost what

before Can expectations. the due you in some environment inventory you inventory sure are did that businesses that might are ahead and you make sometimes consumer happen? Did maybe there even the acquired said that, talk sales a bit transition. trade, that of tracking on little You about didn't load diligence

Samy Zekhout

on is Robert, going go to and Fortenova. I'm one Stefan the to to take going first

inflation I would side, the say. On

up, expense other time, we've And level. detail high give say XXXX, in [indiscernible] through we're actually the been you And we I towards as a year, in it frankly on been but inflation and at about we expect you But You've single-digit year. U.S. more communicating would low the as really companies. not the you step that, to what what seen that XXXX. seen of mean, gradual more higher with have give we we've will that's that navigating the I end be higher. in from XXXX color going to [indiscernible] And

Energy is profile board, across different. portfolio our a that's logistics bit or have versus We similar the but businesses. are supply quite quite or other a brand issues different

of -- net high higher, to the as would what not So others. specifically, say you from your have question I but certainly as seen

Stefan Descheemaeker

the [indiscernible], And X double I are we to would month question, question your about in Fortenova your company. say

a So of spend we lot time.

out a have well with We team very team together integration structural working the there.

doing far, well. really So it's

a the to level really conglomerate energy They're of a pure-play. the opposed concept. think is be very to is high. Frozen pleased very as part food thing I

So that's trading yes, And, they're well. very important.

your matter that's What way So loading, they did -- or [indiscernible] now have actually, of let's the what. second, one -- another. in right good anyway was way. dynamics that captured we where remain adjustment, anyway, question, remains too basically, good, would -- capital which is that And the the put no question been news. working what the That they're behavior is well, see it doesn't kind much it matter which is

think of. been care taken I So that's

Robert Moskow

capital you working What do mean by adjustments?

Stefan Descheemaeker

you're definitely the your you're before inventory are you level say, other before or example, let's way a hiccup capital stage, deal, the normal are no across level the if increasing There is of working you are -- going some Well, at of you to making you for sure board. have closing. that around, just

you're haven't And seen kind one another. that significant we of think fine. formula you that's way anything so or using, the that then And which is

Robert Moskow

meant. I what That's

Okay.

So nothing significant…

Stefan Descheemaeker

a obviously learning we're way. our What fine, category, ice seen at cream, I doing are think, consumers stage. the is which by is great we've Robert, this

So doing fine.

summer tourists year a terms coming improvement I more very, a is great. season, the robust of business. of And But think frozen, with in an overall, that back, very I be this next beginning think during QX, they should which seen during to year. already we've it's savory

You share region, that overall within say, XX% know with Europe. we're our Western plus in XX%, of market very the let's Nomad being pleased more in

XX%. about talking you're Here,

countries, so these in Findus, brands [Iconic], are tell are Iglo, we fantastic So -- that brands I if Frikom it's like believe Birds these Eye, you, can -- old brands. the Ledo,

it's dynamic. So a overall, good

Robert Moskow

in there is the you're category seeing category? frozen the not impact mobility, [Indiscernible] but back you consumer to So the normal U.K. negative a on are getting like

Stefan Descheemaeker

Again, don't pronounced which off-trade, rest than our more and of have much on-trade a the forget of so combination is -- that you business.

say, So a which terms lot out-of-home, suffered definitely, in off-trade, much business And there rest is in bit let's the on-trade, suffered is a back. of very -- of which coming a decline of the retail. a line with lot but in of in

us, overall, very tough compared it's So business. but which With different on-trade, basically, there it now significantly line, difference more the the now coming good to nothing up. significant for of one is rest it's much and back though, is in during COVID was

Operator

[Operator Instructions]

Stefan Descheemaeker

Taposh, apparently no other questions?

Taposh Bari

more any there in the are questions queue? Shannon,

Operator

It looks like not this time. at

Stefan Descheemaeker

lot but a questions, to the answers of had fine. all we So

Operator

our CEO, back Foods call right. concludes Stefan Descheemaeker, to turn I Nomad All remarks. now session. the Well, that question-and-answer will for concluding

Stefan Descheemaeker

Thank quarter you, participation earnings for Shannon, third call. our thank XXXX and your you on

our We volatile backdrop the investing and navigating near-term delivering objectives in health are our of macro by financial through a business. long-term

fourth financial to report the set exceeding, in high not another double-digit the adjusted next which if year. achieving, we progress on be expect forward We year goals next to are to recently we and excited Fortenova when at acquired on summary, to we XXXX. on we single-digit look transaction path you accretive our our Day results integrate remain in that EPS quarter year's right growth pace In And Investor updating last XXXX. I'm of to XXXX achieve the

Nomad Foods Limited (NOMD) 6 Nov 212021 Q3 Earnings call transcript