Nomad Foods Limited (NOMD) 7 Aug 242024 Q2 Earnings call transcript

Good day, ladies and gentlemen, and welcome to Nomad Foods' Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

I would now like to turn the conference over to Jason English. Please go ahead.

Hello folks, and welcome to Nomad Foods' Second Quarter 2024 Earnings Call. Head by Relations, and Stefan our Interim on I'm Ruben English, CFO. call the Descheemaeker, Jason of and Investor joined Baldew, I'm our CEO; the to everyone published was X:XX earnings have now, approximately June access By release XXXX, should at for period a.m. that ending XX, the Time. Eastern Nomad The press on release nomadfoods.com. at presentation investor website and available are Foods' This the company's on call be will available is being replay webcast, and a website.

statements and This the that at will conference forward-looking are of results expectations presentation, include our which are Actual to company's on time. press discussed prospects, due in the with which our risks intentions SEC filings uncertainties, based this investor view cautionary differ includes our call may our and release, and language.

measures financial in release These call IFRS a find of website. the financial during to together slide be be considered can reconciliations We the measures earnings at for not IFRS within will available non-IFRS and our and should the on with the presentation end the non-IFRS replacement appendices read discuss today. should Users also results. non-IFRS our

those certain related financial nonoperating costs, that adjusted otherwise All and items acquisition charges gains. numbers. for comments represents price translation been or adjusted our to expenses figures within XXXX taxes, Unless and noted, note Please XXXX. adjusted figures here adjusted payment share-based exceptional adjustments, primarily employer have presentation payroll and for information purchase M&A-related refer foreign currency from

that, With over hand Stefan. let me to

volume certainly this is has period come volume I'm quarter Thank we forecasted volume to fruition growth the of last. but first top not with report inflection XXXX, you, solid and bottom Jason. Nomad pleased the growth line quarter. performance. delivered X Foods of quarter X.X% the another previously since This of to that

quarter marked surgical able of benefit line to consecutive This X.X% to the amplify our profitable drive Net throughout growth. sales And top mitigated the growth. volume positive pleased by only ForEx we that a as increased the by X.X% been our investments positive P&L. have price we growth are including was from Xth partially sales organic growth made we

points margin a Gross by X XXX primary on robust drivers. expanded basis

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on what confidence. more gives bit a us elaborate me Let this

premium are lessening the remains up inching that products. confidence of price from the while were we appears First, they and shift cost to headwinds sensitivity have beginning Consumer is see to European the pressured, to the consumer ease. evidenced begun living under be by modest crisis as towards

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in And the has food while on Slide X% last growth volume a can volume relative posting frozen for vary period, illustrate X, the XX outperformance plate grown increase robust food generally with period growth that most months. our total outpaced recent period. to we frozen only has for As food

has momentum the the lens. that show suggest July through story same in outperformance on the while a slide continued. we And operating sake, in is possibility not do read value the early The

drive are We growth our to in leaning with this retail partners.

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this Battles of rose this supported Eye and will have Our campaign our as XX% An quarter, and where our U.K., example Win been behind platforms. Must a year-on-year growth we is portfolio, the ticket executing in full A&P XXX-degree spend we is in strong burgers, we Must bring in Win accelerating new -- X Battles. chicken innovation growth and mid the in the Chicken wings with This compelling under bringing and launch loaded resulting be brand in quarter of Birds bottom this Shop tenders.

growth for of where Chicken is have under profitable integrated and we innovations early fully the chicken supported have quarter in and chicken We launch branded Italy, upcoming advertising, of mixed X have we win. been to brand merchandising large, subcategory. And the an quarter stuffed Germany. promotion the launch this Burgers in and iglo Findus clear It that love nuggets is right a by platform such in Italy, us X and as development Germany plan

Our branded branded brands, legacy have have competitive X and the can in they which extend in proven dynamics. fish that relying heritage chicken

manufacturer we modernize of the premiumize category and partners. are taking and advertising and driving are us and our investing retail with growth innovation this both and to the level only for revenue and We the margin actions

and in share volume and quarter half. about the beginning. secured this improving distribution the is This because bearing premium is profit digits margins excited are volume plans innovation investments this in for is review as second gross have overall double expansion our just or one outpacing It have many platform growth fruit, we're that we Volume our innovation of performance for chicken positive we and the platform the market year-to-date, that examples of is we that higher. mixes of is and the up inflection and confident

especially deliver We our year due and this will rate exit further expect initiatives. acceleration timing to of our to strong be

We are on excited that guidance into our in deliver the to momentum build confident we reiterated and about the ability will XXXX.

to during I to in walk our this through do Zekhout for results I Ruben our answer I achieved our Samy With as helped point CFO, all the so, I'm Ruben thank for getting thank in smooth also outlook time and running a want Baldew, see want to committing his And tenure before Ruben? energy the Ruben pleased that, me detail. it generously turn has new to a company This CFO. making accomplishments we ground already his month. positive and But and to let to quarterly business. our at [indiscernible] and more on him impact

reasons. to the Thank be as everyone. CFO. the here and today joined various for I'm good I first you, pleased Stefan, for presenting the organization time company's morning,

to fast impact future because on this the trends. nutritional benefits I And waste, of aligned well positive the as benefit First, drive macro as believe I category. category lower from a growth. The will environment in food the believe strong delivers category perspective consumer the continue both

healthy believe festivals, portfolio has been and in fish, role poultry will that I leader the playing continue a and diverse as spends Secondly, to Nomad play with meals. category

I the people Lastly, its the of love level quality company. strength the talent supply among Nomad of the brand, the chain at of and

I've the made seat even X been at that I'm for I months, more nearly Now decision. the confident right that

ahead outside to second I'm generating inflection I of company be the to contribution quarters accelerate beginning quarter make growth profitable about and excited shareholder the at I've results As value. while will in joined the point, an able important the illustrate,

net the favorable while majority year-on-year see growth Organic as EUR revenues quarterly last decline while growth plus of the a growth. X.X Volume XXX increased X.X% retain year, small minus quarter, to can of prior X.X% last and price/mix to X.X% partially Slide reinvesting X, and we the surgically contributed was a million. we increase portion to quarter XX.X% you accelerated quarter by the vast to increase As achieved X.X% for sales. X on of in ForEx offset by price/mix X.X%, support same to improved further the reported the second from

to In this the XX.X%, despite with by from context basis gross XX% second increase profit point margin surgical the investment, a year quarter quarter. XXX nearly year-on-year and ago gross rose climbing

me a the minutes margin Let quarter. during our few on spend gross performance

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our coming supply our from productivity or remainder chain margin of effort. primarily gross expansion is The

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X%. and a in of we year-on-year income were increase reinvestment, organizational XX% to growth adjusted the in we And organization the as Stefan flywheel. XX% as giving mentioned, operating to the strong in investing growth capabilities. a gross fuel Adjusted A&P robust it Despite quarter net EBITDA margin of in year-on-year rose adjusted expenses our funded reinvest healthy is able the the X.X% needs deliver increase while

provide lower XX% A EUR EPS continue shareholders to the at X.XX. count of that cash to figure as share to yielding growth line, return adjusted we an EPS and

Turning to X. Slide

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to guidance on X. our Turning for slide 'XX

pleased We our guidance. our are first us momentum, with to enabling reiterate full are performance year and building half

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quarter euro our per XX% of momentum evident EUR year we full growth leaning momentum 'XX. And exchange delivering quarter applies dollar X $X.XX into of as X to be into this as share. to most adjusted expect and our translates that X% in to to returns investment built adjusted X% in confident to guidance the earnings guidance strengthen in rate EBITDA August to of will $X.XX strong EPS this adjusted U.S. year adjusted on exit X% be year-over-year we and We and growth. remain during investment, the X, per EUR share EPS X.XX X.XX and Despite

as we year-on-year EUR track shareholders. to shareholders. to Year-to-date, to capital and returned conversion to we to full and year up have free our per returning returned consistently EUR XX We to investors, on quarterly cash adjusted week, our cash million return XX committed are the commitment XX% deliver have our cash million for to flow highlighting declared established XX% We our EUR year-to-date through of XX dividend. cash third last now dividend strong million $X.XX newly flow share consistent remain

testament momentum a dedication work our I'm It's the pleased to half. with the in hard workforce. our first talented and of

strategies top are are and growth confident growth bottom line even top-tier we and delivering working, Our meals. in more 'XX in

the for to now call your questions. turn will I operator the over

[Operator from of Andrew Instructions] question first Our comes Barclays. Lazar

for back Nice half. from growth you, Ruben, guess, wanted come expectations organic back and hear sort great you, of to to, Jason. to to meet I I the

little And a and have nice obviously, range margin comps surgical in year in some to to that's sequential X% saw extent be. flexibility To X.X% guide modest I a you would full easy the X% a given mean, call certainly low sales year, better the lot you volume volume XQ. organic whole it improvement lot momentum, the from be target. that And in XQ acceleration would to realize obviously, requires But a reinvestment, will continues focus even than gives more. it, But organic some think drag you for I could of from, a XH, price you that why to and where need to maybe the what of sort X% the back reinvest. hit accelerate that there. hoping around growth of greater to more get to sort of range end come half you to depth bit the obviously level hit sales held of first more that visibility maybe was in to the of the I full an to and

some is we Thanks, volume. Well, that inflection in terms guess Andrew. point I will QX agree sort of of

volume QX, to X% X.X% we X.X%. had ahead business in were year, to about talked territory, that and of at may QX minus to last you But You XX%. minus minus a X% We what we we remember positive then moved announced time. last bit

first piece. the that's So

is is gross Second the that margin see you doing fine. piece

our programs. space a And it terms top and lot to us, of in top behind ammunition in invest see terms programs, So innovation. gives obviously, we line line of

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very to then us So is start us help obviously, a leading we next on very, obviously healthy. and leading all to year, the obviously, the QX things strong should indeed a

key get a of competitive to work, just obviously, seems what's you where to with A sense sort little frozen last, your happening of then shifting it range of to in of those a terms competitive of is environment are of terms you've mentioned geographies I'd on the marketplace price that like done normal and seeing environment of behavior, I what in And label, in bring gaps the consumer private are, love there's some But better a consumer maybe in sense respect sort to, in you're category closer better premium, think, kind to to what of -- is. which the terms encouraging. back more of just bit behavior. lot

to Well, well, the I see think I past good Europe. remember some was it's Europe so the it that at stage where to think your by to point, not in way. doing nice be I in

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So we see. that's what

also that as food. we the from as you nutrition have frozen think is food affordable great ahead the food, nutrition We great. see the moving from of seen such presentation, -- is it We definitely, as It's food, because well. standpoint is it's good it's global love category that

But things. I at think it the Let's still we're premiumizing not time, remains affordable. forget, same

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well see starting after stand. And to we some we're green where interesting interesting years, X shoots. That's Okay.

in of a See weeks. you couple

Yes, absolutely.

Looking forward, very Andrew. soon,

comes question next Our Dickinson from Rob of Jefferies.

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be you that on just would If touch great. could that,

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what to So we that's do. exactly want

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consumers For an price. the us, at for for affordable the retailers and

a is this So great example.

is in early Germany very Italy and in we see proven good. also stage in already what So

from of The next comes Baumgartner Mizuho question John Securities.

the June back transition the there started moving in transition maybe to to started nuances occurred ROI soft, really Can summer winter data. you a off data and and takeaway data fairly of testable, any was close there to where from Was the distribution supporting temporary new into wanted go these the that strong. points timing anything in retail speak promo was The dip be to realized where you something there to I quarter QX, that shipment activity, there? then as in was your the in from terms quarter. fish you

of by Well, all as it's inflection, the the a see because can definition, one points, by way, when this these to opposed never others. bit it you be

we to So done it. have promo in be QX QX, to space from -- saw have something further in much, much we built countries. that yes, space. the past all much was during can that done margin surgical terms And compared expertise some in we that terms to we promo we quarter with also the the RGM in some of invest we've can X faster another. there of our And and be It's more

So can kind it's thing definitely impact. the and that's of had an that do, you that

late we're the to to what at a same starting stage, are promo QX, A&P see already than that And rest time, things investing definition takes A&P the up. QX you've started -- I do, right say, year, we you'll however. some would ramp At the And is invest expected, than QX. to last time as thing more seen

come the And programs, we're starting in one also Italy. innovation again, to then the up like Rob, mentioned also, I with, poultry to

ramp and seen. up, obviously, So stage, what starting to at are we've all that's some these things,

to Win our a of couple build just Must that. Stefan Maybe on Yes. spoke times mean I Battles. on

then drive your can evolution X. in quarter in surgical over that we've By our is said, to that it's way, a the as and see, gross Battles. seen used XXX RGM. X/X the basis to part for And question to Must Being margin shop Stefan a drive also reinvestment, the points. strategy and A&P, also reinvest. on mainly not but of can consequence bit Win You've you And also only the profitable but up ourselves be of it to as our retailers

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And then just a follow-up.

your that a in Just bulk portfolio comprised of prior there, fourth revitalization market existing think was the you that your decline, quarter. sticking and the Italy, volume the I with instituted to

the You've now, you where the invested in And go point? where pricing, much how are, as you'd at half how this Italy like programming. in-store price to with Is retail get Italy curious, investment activity? a back I'm you to you trying -- the see do you into incremental Are at still it this gaps needs that comfortable point? just the sense more think

is, been comfortable we a a answer what in It's yes, Italy. do. of we with The do bit reset feel

category. I overall as you the the among of Italy are margin large know, margins the from think the independently in the is big one best on countries

price, fish, that's surgical we've came responded extremely let's we've what conclusion, well, that so to because price inflation we what fact-based see despite gave seen. RGM in this points and of But the to price you be the in then has especially we that, fish, again in nice very high. And see in fish conclusion, of terms and and -- we during some it's never And well. And it's us in were interesting promo, terms it have also been very our need categories, elasticity, to to conclusion. too just do especially it's war, we to say, prices, inflation helped come to yes, in that

don't And obviously, to quite further this at remain, at So But obviously, it's this price a I necessity in margins in Italy. very very, the dynamic stage, invest stage, very see good. our environment.

So that's we're now well we're And encouraging. Italy in gaining on which and is yes, market volume as PX, extremely we've market share seen share what is and that. gaining market,

Steve Powers of Deutsche comes The Bank. next question from

Great.

a half So more I on pick bit wanted the inflection. to up little second

year mix originally, goal and nice least volume other. on talked from at the a the hand of Over one perspective, being we've quarters, the the about on couple -- your the balance past price being between

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Yes.

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trade So and what optimize there. with can overall you term do

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improve. There perfection is to exist. Steve, a news, good is way The always doesn't

Jon from comes question Securities. Tanwanteng next of The CJS

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you can the favor, in part me of repeat question. the give first Can

your Yes. What percentage today revenue is Must products? of Win

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Yes.

benefit mix. doing X inflation, a of in supply what chain well big to quarter they're of you've drive. been worthwhile what were revaluation. in also it's already what seen But we'll that notice kind team of logistics inventory And is evident. our And seasoned So benefits to that is more with the more factories for evident as the would that have becoming actually X continue in as not quarter

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our and driven by build that's linked gains. And distribution Yes. ability invest to to to

question Peter of BTIG. Saleh next Our comes from

seems seeing elaborate to bit want the maybe what little premium your did ago to on consumer I pressured, those could eased. the of European for or the modest the little ask just consumer more in couple bit elaborate maybe you're from you a there's Can And have a X still changed a if shift on over comments pressures quarter shift a like sounded that on general. heard months? It just you like but and and of you just European what's what items. past tone

think, let's well, I impact macro the thing, going That's overall, think of and confident again, a to a it especially easing, interest obviously being the too like have I with rate bit. because example. is items situations. terms what an see down important lot -- Europe without of food, is, the most you let's U.S. Well, inflation, in compared well, But one especially different And in say, has for say, the consumer immediately we

this. we've So seen

XX% digest way, improvement say, which I But we're in not let's the we've because inflation. a than is challenging of because worst it's wood fully have what people the using calibrated again, less our But word but think like something out the we're to right yet.

-- ahead salaries nothing that's yes, increasing at Obviously, the are always what So the coming people salaries inflation. after But us sorry. are ahead in of meantime, see. first the time, of same the nothing,

improving with Europe. that they the of the see in income that and seeing are again, times. well disposable we is these people overall during And way. uncertain So situation this category a doing in see that as That's

can just at XXXX year. the balance on then this this for point? Any point update for of this early I you this And of Understood. contracted give at what the you're believe year, mostly probably rest for for thoughts us you're expecting an on inflation .

Yes.

So as I said, we're covered now around XX%, XX%, XX%.

line So flywheel. way And and a driving of best continue this with will chain the of look in also drive will happen to again, what investing sight efficiencies and good our the at on then of pretty mix supply year. of context we

increases still XXXX. said, heavy for there of the too bit see inflation, early but to sight a Stefan it's we give overall line inflation. are the think as where us, big I behind still are I first mean, some buckets

too on at in it's think time. point early this I comment to that

and we remarks. closing over hand session. Descheemaeker Ladies for end question-and-answer will the I now to reached the of gentlemen, Stefan have

today's for much, your Thank on you and you call. very participation thank

momentum return commitment to organic set flywheels start the through growth spin As we to the the bottom -- volume the at second the XXXX sustain positive committed sales of shareholders. by you quarter turn top the inflection cash faster year, and our and to up while accelerating deliver and beginning this in evidenced as half line year. us This of growth top-tier to continuing growth in to to seen

you time, Thank with you I engaging and for and look to forward in ahead. your days many of weeks the

you Thank disconnect gentlemen, lines. now your and may concludes event. today's Ladies attending, for and you, that sir. Thank you