Nomad Foods(US:NOMD)2021-05-09 20:31Financial Data and Key Metrics Changes - The company reported a revenue growth of 3.6% to EUR 707 million, driven by 1.8% organic revenue growth and a 3% contribution from the acquisition of Findus Switzerland [33][34] - Adjusted EBITDA increased by 15% to EUR 138 million, while adjusted EPS grew by 42% to EUR 0.47 per share [37] - Gross margin expanded by 130 basis points, reflecting strong procurement execution and lower promotional activity [35][11] Business Line Data and Key Metrics Changes - The branded retail business led growth with mid single-digit increases, while foodservice and private label experienced double-digit declines [34] - The company achieved 1.8% organic revenue growth in Q1, building on a 7.7% increase during the same period last year [14][34] Market Data and Key Metrics Changes - The company noted that many corporate offices remain closed and restaurants still have capacity restrictions, contributing to sustained elevated demand [15] - The company is experiencing more rational shopping behavior, with consumers developing new routines that include larger family meal sizes and online food purchases [16] Company Strategy and Development Direction - The company announced a planned acquisition of Fortenova's Frozen Food Group, which is expected to enhance its portfolio and result in combined annualized EPS above $2 per share [12][26] - The company is investing in new permanent capacity to support growth in 2022 and beyond, including a new production line in the UK [19][82] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year guidance, citing strong Q1 performance and plans to improve service levels [9][40] - The company expects low single-digit inflation in 2021 and believes it has the levers to manage gross margin effectively [11][41] Other Important Information - The company generated EUR 98 million of adjusted free cash flow in Q1, equating to 117% cash conversion [38] - The integration of Findus Switzerland is progressing well, with strong performance during Q1 [24][25] Q&A Session Summary Question: Difference between shipments and consumption due to supply constraints - Management indicated that branded sell-out was mid single-digit percentage, with supply constraints impacting sales growth [48][49] Question: Market share trends and capacity constraints - Management acknowledged that market share loss was primarily due to capacity utilization differences compared to competitors, with plans to recoup share later in the year [51][56] Question: Pricing power and inflation management - Management confirmed that pricing plans were in place to manage inflation, with strong brands supporting pricing power [62][66] Question: Inflation guidance and cost pressures - Management stated that inflation remains manageable, aided by effective procurement strategies [72][73] Question: Promotional spending to regain market share - Management indicated that regaining market share would involve shifting promotional plans rather than incurring additional spending [74] Question: Trends heading into April and May - Management expressed confidence in achieving full-year plans, with strong trends continuing [80] Question: Capacity expansion and its impact on gross margin - Management noted that new capacity would improve efficiency and gross margin by reducing reliance on co-packing [84]