Nomad Foods : Q2 2021 Earnings Presentation Transcript

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Taposh Bari: Hello, and welcome to the Nomads Foods Second Quarter 2021 Earnings Call. I am to Taposh Bari, Head of Investor Relations, and I am joined on the call by Stefan Descheemaeker, our CEO and Samy Zekhout, our CFO.

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Taposh Bari: On our call today, we will review our financial results for the quarter and conclude with a question and answer session. For those planning to ask a question, we ask that you do so using the Zoom raise hand feature.

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Taposh Bari: Before beginning, I would like to draw your attention to the disclaimer on slide two of our presentation.

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Taposh Bari: 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.

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Taposh Bari: Actual results may differ due to risks and uncertainties which are discussed in our press release, our filings with the SEC, and this slide in our investor presentation, which includes cautionary language.

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Taposh Bari: We will also discuss non-IFRS financial measures during the call today. These non- IFRS financial measures should not be considered a replacement for -

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Taposh Bari: and should be read together with - IFRS results. Users can find the IFRS to non-IFRS reconciliations within our earnings release and in the appendices at the end of the slide presentation available on our website.

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Taposh Bari: Please note that certain financial information within this presentation represents adjusted figures for 2020 and 2021.

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Taposh Bari: All adjusted figures have been adjusted for exceptional items, acquisition related, share based payment and related expenses, as well as non cash foreign exchange gains or losses.

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Taposh Bari: All comments from here on will refer to these adjusted numbers, and with that I will hand the call over to Stefan.

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Stefan Descheemaeker: Thank you Taposh, and thank you all for joining us on the call today.

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Stefan Descheemaeker: Earlier today we reported our second quarter 2021 results which mark the highest second quarter Adjusted EPS in our company's history.

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Stefan Descheemaeker: Despite the anniversary of our most difficult comparison of the year.

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Stefan Descheemaeker: The power and resilience of our value creation model was evident during the quarter as contributions from M&A, share repurchases and margin expansion more than offset an expected organic revenue decline.

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Stefan Descheemaeker: Based on our year to date performance and our plans for the second half,

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Stefan Descheemaeker: we remain confident in achieving our 2021 full year guidance, which calls for another year of organic revenue growth and double-digit Adjusted EPS growth.

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Stefan Descheemaeker: Further, with the pending acquisition of Fortenova's frozen business we expect a 2021 Adjusted EPS base of over $2 per share on a combined and annualized basis.

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Stefan Descheemaeker: This will create a higher, new baseline from which we expect to grow in the coming years.

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Stefan Descheemaeker: With that let's jump into the details of Q2, beginning with the highlights on slide three.

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Stefan Descheemaeker: Total revenues were down slightly as an expected decline in organic revenue was offset by contribution from the acquisition of Findus Switzerland.

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Stefan Descheemaeker: And favorable FX translation.

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Stefan Descheemaeker: On a two year basis, compared to 2019, total revenues grew at a CAGR of 5% and organic revenues grew at a CAGR of 4%.

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Stefan Descheemaeker: Adjusted gross margins expanded 50 basis points or 90 basis points on a like for like basis - when excluding the effect of Findus Switzerland, whose initial gross margins are below those of our base business.

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Stefan Descheemaeker: We are pleased with these results, as we continue to navigate a dynamic inflationary backdrop.

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Stefan Descheemaeker: Adjusted EBITDA grew to 123 million euro representing 4% growth versus last year and an 11% CAGR versus 2019.

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00:14:12.840 --> 00:14:13.650 Stefan Descheemaeker: And finally.

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Stefan Descheemaeker: Adjusted EPS was 40 euro cents per share, representing 18% growth versus the second quarter of 2020 and a two year CAGR of 22%.

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Stefan Descheemaeker: Shifting now to the details of the quarter, we achieved strong performance, despite the easing of restrictions across Europe and the anniversary of peak COVID-related demand a year ago.

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Stefan Descheemaeker: Growth in the frozen food category remained elevated on a two year basis, but did normalize versus the first quarter when most of Europe was under lockdown.

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Stefan Descheemaeker: Against this backdrop, we experienced sequentially improving market share trends during the second quarter with market share in May and June both increasing versus the prior year period.

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Stefan Descheemaeker: Our market share improvement has been enabled by better supply and service levels, which after dipping to the low 90% range earlier this year, have returned to the high 90%'s since May.

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Stefan Descheemaeker: We are encouraged to see a positive market share inflection and expect this momentum to build through the rest of the year.

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Stefan Descheemaeker: Confidence in our growth expectations for 2021 is supported by strong underlying fundamentals within our core portfolio.

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Stefan Descheemaeker: Improved capacity is leading to more normal promotional activity and, in turn, particularly strong market share performance in our core categories such as fish fingers, coated fish, peas, spinach and Green Cuisine.

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Stefan Descheemaeker: Green Cuisine continues to be a key driver of both absolute growth and share gains as we build distribution, grow penetration and drive trial across our European footprint.

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Stefan Descheemaeker: Our chickenless range as performed exceptionally well since being introduced late last year and early signals of a recent fishless launch in Germany are very encouraging.

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Stefan Descheemaeker: Further, with the Tokyo 2020 Olympic games under way, we are thrilled for Green Cuisine to be the official plant-based sponsor of Team GB in UK as we democratize the meat-free category.

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Stefan Desheemaeker: One of our incredible athletes - Max Whitlock- has already won the gold medal at the Tokyo games. Congratulations Max.

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Stefan Descheemaeker: We have several 360-degree activations underway and I'm excited to bring them to life, with the help of Max and our other sponsored athletes.

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Stefan Descheemaeker: In two short years, Green Cuisine has become one of the leading meat- free brands within Europe and now has nearly 14% share of the frozen meat-free cateogry across Western Europe.

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Stefan Descheemaeker: Consumers love our products and we continue to believe we have every right to win it is exciting white space growth opportunity.

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Stefan Descheemaeker: Our second quarter performance was also helped by strength in foodservice, which grew over 40% versus the prior year period.

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