Nomad Foods(US:NOMD)2023-11-10 02:33Financial Data and Key Metrics Changes - Company reported sales grew by 1% and 1.6% on an organic basis, exceeding original expectations [10][28] - Adjusted EBITDA was €140 million with an adjusted EBITDA margin of 18.3% [36] - Adjusted EPS came in at €0.43 per share, translating to USD 0.45 per share at current spot rates [28][36] - For the first nine months, organic sales grew by 6%, maintaining guidance for mid-single-digit growth for the full year [11][38] - Gross margin was reported at 28.4%, supported by pricing initiatives and cost control [10][63] Business Line Data and Key Metrics Changes - The company has seen a strong performance in its fish products, which account for nearly 40% of sales, with new advertising initiatives launched [31][60] - Ice cream sales in the Adriatic region reached record levels, driven by good weather and effective marketing [15] - The company has increased its advertising and promotion (A&P) spending to 5% of sales from 3.5% last year to drive growth [8][9] Market Data and Key Metrics Changes - The frozen food category is showing signs of recovery, with volume growth in 12 out of 16 markets tracked [60] - In the U.K., the company launched a back-to-school campaign that reached over 90% of households [32] - The company noted that private label price gaps have stabilized, allowing for competitive positioning [44] Company Strategy and Development Direction - The primary strategic objective is to return to volume growth, with expectations for improvement in Q4 and into 2024 [25][27] - The company is focusing on enhancing in-store execution and promotional activities to drive demand [26][59] - A new $500 million share repurchase program has been approved, alongside plans for a regular quarterly dividend starting in early 2024 [13][58] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in Q3 due to retail disputes but expressed optimism for recovery in Q4 and beyond [41][45] - The company is closely monitoring the impact of weight loss drugs on food industry volumes but believes it is well-positioned due to its product portfolio [6][7] - Management expects to see a balanced mix of price and volume as A&P investments take hold in the market [66] Other Important Information - The company generated €125 million of adjusted free cash flow in the first nine months, with a conversion ratio of 56% [37] - Working capital decreased by €151 million, contributing to improved cash flow performance [37][64] - The company is maintaining its adjusted free cash flow guidance of approximately €250 million for the year [66] Q&A Session Summary Question: What is the impact of retail disputes on Q3 revenues? - Management indicated that around 2% of revenues were "lost" due to negotiations, but they expect positive impacts in Q4 and Q1 [42][41] Question: How is the company addressing private label competition? - Management noted that private label price gaps have stabilized, allowing the company to operate competitively while focusing on promotions [44] Question: What is the expected timeline for volume recovery? - Management expressed confidence in regaining market share and volume growth by Q1 of the following year [45][91] Question: How does the company view the frozen food category's performance? - Management highlighted that the frozen food category is showing recovery, with volume growth in most key markets [60][52] Question: What are the expectations for gross margin in Q4? - Management projected that gross margins would remain stable, supported by pricing and cost discipline [18][54]