Nomad Foods(US:NOMD)2022-02-26 01:36Financial Data and Key Metrics Changes - Reported revenues for 2021 were $2.6 billion, an increase of 3.6% compared to 2020, and a 6% CAGR over two years [11] - Adjusted EBITDA was $487 million, representing a 4% growth year-on-year and a 6% CAGR compared to 2019 [13] - Adjusted EPS was $1.55 per share, reflecting a 15% growth versus last year and a two-year CAGR of 12% [13] - Free cash flow for the year was $232 million, with a conversion rate of 84% [32] Business Line Data and Key Metrics Changes - Organic revenues declined by 2.1% for the full year, but increased by 3.2% on a two-year CAGR basis [11][12] - The Green Cuisine segment grew by 31% during 2021, driven by product innovations [15] - Gross margin for the fourth quarter was 26.5%, a decline of 500 basis points year-on-year, attributed to inflationary pressures and promotional activity [29] Market Data and Key Metrics Changes - Market share for the year was down 20 basis points, but there was positive momentum with solid market share growth since May 2021 [28] - The European frozen food category saw a modest decline in 2021, but the company believes in a long-term shift towards frozen food consumption [14] Company Strategy and Development Direction - The company plans to invest significantly in business growth, targeting A&P increases and capital investments [19] - The M&A pipeline remains active, with a focus on consolidating frozen food across Europe [21] - Sustainability initiatives were highlighted, including achieving 100% renewable electricity in factories and joining the UN Race to Zero [22][23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges of inflation and the need for phased price increases to recover costs [37] - The company expects a return to solid organic revenue growth in the low single-digit range for 2022 [36] - Management expressed confidence in achieving double-digit EPS growth for 2022, supported by the Fortenova acquisition [37] Other Important Information - The company completed two significant acquisitions in 2021, with a total purchase price of $725 million [17] - A $500 million buyback program was announced, with 4.2 million shares repurchased for a total value of $94 million [21] Q&A Session Summary Question: Pricing and Profitability in Q1 - Management indicated that Q1 profitability may be under pressure due to pricing not being fully phased in and tough comparisons with last year [42][43] Question: Changes in Frozen Food Category Performance - Management noted a positive trend in the frozen food category, with expectations for modest growth once past the lockdown comparisons [48][49] Question: Pricing Erosion and Inflation - Management explained that pricing erosion was due to last year's low COGS and emphasized the intent to align pricing with COGS moving forward [53][54] Question: Fortenova Contribution to Growth - Management confirmed that Fortenova will contribute to growth, but emphasized the importance of organic growth alongside M&A [60][62] Question: Supply Chain Risks from Eastern Europe - Management stated minimal direct exposure to Eastern European markets but acknowledged potential supply chain risks related to commodities [89]