Nomad Foods(US:NOMD)2021-11-06 21:20Financial Data and Key Metrics Changes - The company achieved revenue growth of 4%, with adjusted EBITDA growing to EUR 113 million, representing 4% growth versus last year and a 9% CAGR versus 2019 [5][6][16] - Adjusted EPS was EUR 0.35 per share, representing 17% growth versus the third quarter of 2020 and a 2-year CAGR of 18% [6][19] - Adjusted gross margins declined 240 basis points, with initial gross margins from the acquisition of Findus Switzerland being below the company average [5][17] Business Line Data and Key Metrics Changes - Organic revenues declined 1.4% versus the prior year but were up mid-single digits relative to the third quarter of 2019 [5][16] - The non-branded business increased by 15% as food service continued to recover [16] - Green Cuisine, the plant protein business, is on pace to nearly double in 2021 and has accumulated double-digit market share in only 2 years [10] Market Data and Key Metrics Changes - The frozen food category experienced a low single-digit percentage decline during the third quarter versus the prior year, reflecting increased consumer mobility and a return to out-of-home consumption [8][16] - Market share expanded in the branded retail business, with strong year-on-year revenue growth from Green Cuisine [16] Company Strategy and Development Direction - Sustainability is a key strategic priority, with the company committing to reduce greenhouse gas emissions and collaborating with BlueNalu to introduce cell-cultured seafood to Europe [9][11] - The acquisition of Fortenova is expected to enhance the company's geographic footprint and is projected to be high single-digit accretive to adjusted EPS in 2022 [12][14] Management's Comments on Operating Environment and Future Outlook - The management acknowledged a challenging macro backdrop with inflation and supply chain disruptions but expressed confidence in achieving another year of record results in 2021 [4][8] - The company expects macro factors to intensify in 2022 but is prepared to leverage revenue growth management capabilities to mitigate exposure [8][19] Other Important Information - The company generated nearly EUR 100 million of adjusted free cash flow through the first nine months of the year, equating to 45% cash conversion [18] - The company reiterated its guidance for 2021 adjusted EPS of EUR 1.50 to EUR 1.55 per share, translating to growth in the 11% to 15% range [19] Q&A Session Summary Question: Thoughts on organic growth expectations and new household habits - Management noted that while mobility is increasing and restaurants are reopening, the sales level remains robust against tough comparisons, with inflation expected to impact sales in 2022 [23][24] Question: Pricing opportunities in light of expected inflation - Management indicated that pricing discussions are ongoing and that they have strong revenue management capabilities to navigate the situation [25][26] Question: Expected cost inflation in 2022 - Management expects higher inflation in 2022 but not as high as seen by U.S. companies, with a gradual step-up anticipated [28][29] Question: Insights on Fortenova's performance post-acquisition - Management reported positive dynamics within Fortenova, with no significant issues regarding inventory loading before the transition [30][31]