Nomad Foods (NYSE:NOMD) Q4 2025 Earnings call February 26, 2026 08:30 AM ET Company ParticipantsDominic Brisby - CEOJason English - Head of Investor Relations and Corporate StrategyJohn Baumgartner - Managing DirectorJon Tanwanteng - Managing DirectorRuben Baldew - CFOOperatorGreetings, everyone, welcome to the Nomad Foods fourth quarter of 2025 Q&A conference call. Please be aware that today's event is being recorded. I'd now like to turn the floor over to your host, English, Head of Investor Relations. Pl ...

Third Quarter 2025 Performance - Organic growth contracted by 1.6% due to a 0.5% volume decline, but trends improved sequentially throughout the quarter[8] - Category sales growth accelerated to 2%+ value growth[8] - Adjusted gross margin decreased by 420 bps year-over-year due to higher COGS inflation[8] - Adjusted EBITDA declined 14% year-over-year, and Adjusted EPS fell 11%[8] - Total revenue was €752 million, a 2.2% decrease from €770 million in 3Q 2024[23] - Adjusted gross profit decreased by 15% from €248 million to €212 million[23] - Adjusted EBITDA was €143 million, a 14% decrease from €166 million[23] - Adjusted EPS was €0.49, an 11% decrease from €0.55[23] Cash Flow and Capital Allocation - The company returned cash to shareholders through share repurchases (€151 million YTD) and dividend payments (€70 million YTD), collectively up 100% year-over-year[8] - Adjusted free cash flow was €66 million for the nine months ended September 30, 2025, compared to €105 million for the same period in 2024[24] Outlook - Management expects to deliver full-year 2025 results near the low-end of its organic revenue, Adjusted EBITDA, and Adjusted EPS ranges[8] - The company is guiding to the low end of its existing 2025 ranges, with organic revenue between 0% to -2%, and Adjusted EBITDA between -3% to -7% year-over-year[27]

Financial Data and Key Metrics Changes - The company has experienced nine consecutive years of growth in sales, EBITDA, and EPS, but this year marks a disappointing performance [4][5][13] - The company is targeting a 1% to 3% CAGR in EBITDA over the next three years, with a focus on improving the quality of earnings and reducing exceptional items [37][39] Business Line Data and Key Metrics Changes - The company has seen stabilization in volume market share and growth in volume share in the frozen food category, despite a decline in the overall category growth due to unusual weather conditions [8][34] - The ice cream business has faced challenges, particularly in July and August, due to unrest in Serbia affecting out-of-home sales [36][64] Market Data and Key Metrics Changes - The frozen food category has shown resilience, with growth over the last ten years, although recent months have seen a decline linked to weather conditions [34][35] - The company has reaffirmed its guidance for 2025, indicating confidence in future performance despite recent challenges [65] Company Strategy and Development Direction - The company is focusing on a "Must Win Battles" strategy to concentrate on key markets where it holds significant market share [7] - A new master brand advertising campaign is being rolled out to enhance brand visibility and efficiency in media spending [18][47] - The company plans to increase its productivity program by 25%, targeting €200 million in savings over the next three years, primarily in supply chain and overheads [39][40] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges faced this year, including inflation and supply chain issues, but emphasizes the importance of learning from these experiences to strengthen future performance [6][10][13] - The company believes there are significant growth opportunities in the frozen food category, particularly in markets with lower penetration compared to the U.S. [15][16] Other Important Information - The company is committed to innovation, with plans to increase the percentage of renovated products and introduce new offerings in the ready meals category [21][23] - The foodservice segment, which accounts for around 8% of the business, is expected to grow, particularly in the Nordics and Southern Europe [29][32] Q&A Session Summary Question: Why has the company lowered its long-term growth targets? - Management indicated that the previous targets were too ambitious given the volatile environment and emphasized the need for a larger savings program to create space for reinvestment [53][55] Question: Are the targeted cost savings realistic? - Management clarified that the $200 million savings target is an increase from previous savings and is essential for maintaining competitiveness and reinvesting in product quality [60][62] Question: How does the company plan to manage pricing and market share? - Management explained that they have developed a revenue growth management tool to make more informed pricing decisions by category and country, allowing for better management of market share [71] Question: What is the outlook for capital allocation moving forward? - Management highlighted that the company has been active in share buybacks and dividends, and will continue to evaluate capital allocation based on current valuations [72]

Financial Data and Key Metrics Changes - The company has experienced a decline in performance this year, breaking a nine-year streak of increasing sales, EBITDA, and EPS [4][5][13] - The company is targeting a 1% to 3% CAGR for EBITDA over the next three years, with a focus on improving the quality of earnings and reducing exceptional items [39][50] Business Line Data and Key Metrics Changes - The frozen food category remains strong, with the company maintaining a leading position in Europe, but has faced challenges due to weather conditions impacting sales [2][36] - The company is focusing on innovation and renovation, with plans to accelerate product launches in key categories like fish fingers and pizza [11][21] Market Data and Key Metrics Changes - The frozen food category has shown growth over the last decade, but recent unusual weather patterns have led to a decline in growth numbers [36][37] - The company has seen a stabilization of value share and growth in volume share in the second quarter of 2025, despite earlier declines [36] Company Strategy and Development Direction - The company is implementing a €200 million productivity program over the next three years, focusing on supply chain efficiencies and overhead reductions [41][46] - The strategy includes a significant emphasis on brand investment, product quality, and innovation to maintain competitive positioning in the healthy food category [41][49] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges faced this year, including inflation and supply chain issues, but remains optimistic about future growth opportunities in the frozen food category [6][13] - The company is committed to learning from past experiences and adapting its strategies to better respond to market conditions [10][12] Other Important Information - The company is launching a new master brand advertising campaign aimed at maximizing media efficiency across various markets [17][20] - The company has a strong focus on health and nutrition, with a significant portion of its revenue coming from fish, protein, and vegetables [16] Q&A Session Summary Question: What has changed regarding long-term targets for revenue and EBITDA growth? - Management indicated that the previous targets were too tight given the volatile environment and emphasized the need for a larger savings program alongside lower EBITDA guidance [55][56] Question: Are the targeted cost savings real, and where will they be allocated? - Management clarified that the $200 million savings target is a cumulative increase and will be reinvested into product quality and innovation [60][62] Question: How does the company plan to manage pricing actions while minimizing market share loss? - Management explained that they have developed a revenue growth management tool to make more informed pricing decisions by category and country [67][70] Question: What is the outlook for capital allocation given strong free cash flow? - Management stated that they will continue to evaluate capital allocation strategies, including share buybacks and dividends, in light of current valuations [71]

Financial Data and Key Metrics Changes - Reported net revenues decreased by 3% to €760 million, with organic sales declining by 3.6% and volume declining by 3.7% [23][24] - Gross margin increased by 90 basis points year on year to 27.8% [24] - Adjusted EBITDA decreased by 1.8% year on year to €120 million, while adjusted EPS fell by 5.4% to €0.35 due to net sales contraction [26][30] Business Line Data and Key Metrics Changes - Net sales for growth platforms rose by 36% year over year in the first quarter, with chicken performing particularly well [15] - Retail sell-through was slightly positive at +0.2%, indicating that sell-in led sell-through by nearly four percentage points [23] Market Data and Key Metrics Changes - The frozen category in Europe remains healthy, with growth recently accelerating, driven by improved volume and value gains [12][13] - The category has outgrown the overall food industry by nearly one percentage point over the past decade [12] Company Strategy and Development Direction - The company is focused on long-term health by continuing to invest in brands and products despite current headwinds [11] - A new master brand advertising campaign is set to launch, emphasizing the taste appeal and nutritional profile of frozen food brands, particularly in the fish category [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged headwinds from retailer inventory destocking and increased consumer value-seeking behavior, leading to a revised outlook for organic revenue growth [10][29] - The company expects organic sales to return to growth beginning in the second quarter, with profitable growth anticipated for the remainder of the year [23][31] Other Important Information - The company repurchased €49 million of shares and paid €25 million in dividends in the first quarter, marking a 152% increase in total cash returned to shareholders compared to the previous year [9][28] - Adjusted free cash flow conversion ratio fell to 24% due to higher working capital pressures [26] Q&A Session Summary Question: Impact of retailer destocking - Management noted that destocking was broad-based across 12 to 13 countries, with greater than expected impacts [36][37] Question: Outlook for category growth - Management confirmed that the category remains healthy, with expectations for market share growth despite some softness in the UK [40][41] Question: New product innovation and consumer shifts - Management indicated that new consumers are shifting from both smaller brands and private labels, with a focus on snacking occasions [48][51] Question: Input cost increases - Input costs are primarily rising in proteins, particularly chicken and red meat, due to demand and external factors like avian flu [58] Question: Pricing strategy amidst consumer trading down - Management acknowledged that consumers are seeking value, and pricing strategies will be a combination of various factors, including advertising and product innovation [64][66]

Financial Data and Key Metrics Changes - Reported net revenues decreased by 3% to €760 million, with organic sales declining by 3.6% and volume declining by 3.7% [23][24] - Gross margin increased by 90 basis points year on year to 27.8% [24] - Adjusted EBITDA decreased by 1.8% year on year to €120 million, while adjusted EPS fell by 5.4% to €0.35 due to net sales contraction [26][29] Business Line Data and Key Metrics Changes - Net sales for growth platforms rose by 36% year over year in the first quarter, with chicken performing particularly well [14] - Retail sell-through was slightly positive at +0.2%, indicating that sell-in led sell-through by nearly four percentage points [23] Market Data and Key Metrics Changes - The frozen category in Europe remains healthy, with growth recently accelerating driven by improved volume and value gains [11][12] - The UK market is experiencing some softness, particularly in the ice cream segment, which is expected to impact margins [41][68] Company Strategy and Development Direction - The company is focused on long-term health by continuing to invest in brands and products despite current headwinds [10][30] - A new master brand advertising campaign is set to launch, emphasizing the taste appeal and nutritional profile of frozen food brands, particularly in the fish category [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by retailer inventory destocking and increased consumer value-seeking behavior [9][10] - The full-year organic revenue, adjusted EBITDA, and adjusted EPS growth ranges have been lowered due to these challenges [10][29] Other Important Information - The company repurchased €49 million of shares and paid €25 million in dividends in the first quarter, marking a 152% increase in total cash returned to shareholders compared to the previous year [8][28] - The company expects to achieve profitable growth for the remainder of the year despite the current headwinds [23][31] Q&A Session Summary Question: Impact of retailer destocking - Management noted that destocking was broad-based across 12 to 13 countries and various segments, with greater than expected impacts [35][37] Question: Expectations for category growth and market share - Management indicated that the category remains healthy, with expectations for growth in the next quarters and a slight recovery in market share [39][40] Question: Insights on new product innovation and consumer shifts - Management highlighted that innovations are increasingly catering to snacking occasions, attracting new consumers from both frozen and fresh categories [47][50] Question: Input cost increases - Management clarified that input cost increases are primarily related to proteins, with no significant tariff impacts currently observed [58] Question: Pricing strategy amidst consumer trading down - Management acknowledged the volatility in consumer behavior and emphasized a balanced approach to pricing, innovation, and advertising [64][66] Question: Outlook for organic growth - Management expects a combination of volume and price growth, with volume growth anticipated in the second quarter and pricing strategies to kick in later [67][69]