Nomad Foods(US:NOMD)2021-02-28 16:15Financial Data and Key Metrics Changes - Organic revenue growth of 9.5% driven by an 8.6% increase in volume and mix, and a 0.9% increase in price [9][11] - Adjusted EBITDA of €119 million, with adjusted EPS growth of 19% to €0.38 per share [10][25] - Gross margin expanded by 160 basis points to 31.5%, marking the strongest quarterly gross margin rate in over two years [9][24] Business Line Data and Key Metrics Changes - Branded retail portfolio grew by 12% during Q4, with strong performance in fish fingers, coated fish, poultry, and plant protein [22][11] - Non-branded channels represented approximately 10% of sales, experiencing mid-single-digit growth in private label sales and nearly 30% declines in food service due to COVID-19 restrictions [23] Market Data and Key Metrics Changes - Demand for frozen foods accelerated in late October 2020, continuing into 2021 [11] - The company reported a significant increase in advertising and promotional spending, with a 30% year-on-year increase in A&P spend [12][24] Company Strategy and Development Direction - Focus on core portfolio anchored in frozen fish and vegetables, with plans for breakthrough innovation in Green Cuisine, aiming to grow revenues to over €100 million by the end of next year [18][20] - Active M&A strategy, including the acquisition of Findus Switzerland and exclusive discussions to acquire the frozen food portfolio of the Fortenova Group [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving another year of double-digit adjusted EPS growth in 2021, with total revenue and adjusted EBITDA growth expected to be approximately 3% to 5% [29][32] - The company believes it is still in the early stages of value creation, with strong plans to continue momentum into 2021 [63][64] Other Important Information - Generated €345 million of adjusted free cash flow in 2020, setting a new record for the company [13][26] - Initiated a $300 million share buyback program in March 2020, repurchasing over €600 million of stock [14] Q&A Session Summary Question: Drivers of organic sales guidance and COVID gains - Management highlighted the importance of brand investment and the strong performance of core categories, indicating confidence in achieving 1% to 2% growth in 2021 despite the challenges [40][41] Question: Marketing spend and support for Findus Switzerland - Management indicated that SG&A will be flat year-on-year in 2021, with continued investment in brand support and a focus on driving ROI [42] Question: Industry and trade negotiations post-Brexit - Management noted that Brexit has been navigated successfully, with some logistical issues but overall positive outcomes for trade negotiations [45][46] Question: Synergy and accretion potential from Findus Switzerland - Management stated that the plan is on track for synergy realization, with a focus on competitive advantages and cost management [47][49] Question: Surging demand for frozen foods and potential for new categories - Management reaffirmed commitment to core categories and indicated that the focus will remain on must-win battles rather than diversifying into less profitable areas [56] Question: Marketing strategy for Green Cuisine amidst competition - Management emphasized the importance of brand differentiation and strong distribution networks, with a focus on growing the category rather than engaging in a land grab [58][59]