Nomad Foods(US:NOMD)2022-05-11 16:47Financial Data and Key Metrics Changes - Reported revenues for Q1 2022 were $733 million, an increase of 3.6% year-on-year, primarily driven by the inclusion of the newly acquired Adriatic business [11][33] - Organic revenue declined by 4.5%, reflecting difficult volume comparisons against the previous year's COVID lockdowns [12][14] - Adjusted gross margin was 27.9%, down 250 basis points year-on-year due to higher raw material costs and lower organic sales [12][35] - Adjusted EBITDA was $132 million, representing a 4% decline compared to the previous year [13][36] - Adjusted EPS was $0.43 per share, a 9% decline year-on-year, but still on track to meet the 2022 adjusted EPS guidance of $1.71 to $1.75 [13][45] Business Line Data and Key Metrics Changes - Positive revenue growth was attributed to the first-time inclusion of the Adriatic business and a small boost from currency, while organic sales faced a decline due to various challenges [14][35] - Sales losses in the U.K. were due to a poultry shortage and a pricing dispute with a major retail customer, but these issues have since been resolved [15][16] Market Data and Key Metrics Changes - Market share trends showed a 10 basis point increase across all markets, with a 60 basis point increase in the top four markets, which account for over 60% of sales [19] - The company is well hedged on input costs, with approximately 85% of raw materials hedged for 2022 [20] Company Strategy and Development Direction - The company is focusing on performance and delivery, driving retail execution, and refining the supply chain through targeted investments [10][30] - Plans to implement at least one more round of price increases in the second half of the year to offset inflationary pressures [17][39] - The integration of the Adriatic business is progressing well, with confidence in achieving synergy targets by 2024 [23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the unprecedented geopolitical challenges posed by the war in Ukraine and rising input costs, but expressed confidence in the resilience of the business model [8][9] - The company expects sequentially improving financial performance throughout 2022, driven by pricing actions and a favorable mix from the Adriatic business [42][45] - Management remains optimistic about the long-term growth potential, despite current challenges [30][128] Other Important Information - The company repurchased nearly $27 million in shares during Q1 as part of a $500 million buyback program [24] - The company is committed to social responsibility and sustainability goals, including net carbon neutrality [30] Q&A Session Summary Question: Guidance on pricing waves - Management indicated that a third wave of pricing may be necessary if inflation continues to rise [48][49] Question: Competitive positioning in fish - Competitors are facing similar challenges regarding supply and pricing, and the company is moving quickly to address these issues [50][52] Question: Organic growth guidance confusion - Management clarified that there will be modest organic growth for the year, correcting previous statements [58] Question: Raw materials availability and risks - The company is actively working to diversify sourcing and reduce dependency on Russian fish, while also managing other raw material costs [68][70] Question: Capital allocation priorities - The company maintains an opportunistic approach to capital allocation, assessing all options including share repurchases and M&A [91][92] Question: Integration of Fortenova - The integration of Fortenova is progressing well, with strong performance expected in the summer selling season [101][106]