Nomad Foods Reports First Quarter 2018 Financial Results

Company Raises 2018 Guidance to the High End of the Prior Range

FELTHAM, England--()--Nomad Foods Limited (NYSE: NOMD), today reported financial results for the three month period ended March 31, 2018. Key operating highlights and financial performance for the first quarter 2018, when compared to the first quarter 2017, include:

  • Reported revenue increased 1.5% to €539 million
  • Organic revenue growth of 2.9%
  • Reported Profit for the period of €62 million
  • Adjusted EBITDA increased 16% to €103 million
  • Reported EPS of €0.36; Adjusted EPS increased 40% to €0.35
  • Company raises 2018 guidance to €355 to €360 million adjusted EBITDA and €1.10 to €1.13 adjusted EPS

Management Comments
Stéfan Descheemaeker, Nomad Foods’ Chief Executive Officer, stated, “2018 is off to a strong start highlighted by first quarter organic revenue growth of 2.9% and adjusted EPS growth of 40%. These results, which reinforce the sustainability of our growth model, are attributable to the team's focus and execution towards our goals of driving frozen food category growth and increasing our market share. Based on our year-to-date performance and visibility into the balance of the year, we now expect 2018 guidance at the high end of our prior expectations.”

Noam Gottesman, Nomad Foods’ Co-Chairman and Founder, commented, “It is a good time to be in the frozen food business. The category is growing across Western Europe and, in many cases, is out-pacing other packaged food categories. Our strong first quarter performance and plans for the remainder of 2018 put us on track to deliver another year of impressive financial results."

First Quarter of 2018 results compared to the First Quarter of 2017

  • Revenue increased 1.5% to €539 million. Organic revenue growth of 2.9% was driven by 1.5% growth in volume/mix and 1.4% growth in price.
  • Gross profit increased 10% to €171 million. Gross margin expanded 240 basis points to 31.8% due to positive mix and improved pricing and promotional efficiency.
  • Adjusted operating expense decreased 2% to €78 million. Advertising and promotion expense increased 1% to €30 million while Indirect expense decreased 4% to €48 million.
  • Adjusted EBITDA increased 16% to €103 million.
  • Adjusted Profit after tax increased 37% to €62 million reflecting interest rate savings and lower depreciation and amortization. Adjusted EPS increased 40% to €0.35, reflecting Adjusted Profit growth and a lower share count resulting from share repurchases.

2018 Guidance
The Company is raising 2018 guidance to the high end of the prior range and now expects adjusted EBITDA of approximately €355 to €360 million and adjusted EPS of approximately €1.10 to €1.13 per share. Full year guidance continues to assume organic revenue growth at a low-single digit percentage range.

Conference Call and Webcast
The Company will host a conference call with members of the executive management team to discuss these results today, Thursday, May 10, 2018 at 1:30 p.m. GMT time (8:30 a.m. Eastern time). Investors interested in participating in the live call can dial +1-888-394-8218 from the U.S. International callers can dial +1-323-701-0225.

In addition, the call will be broadcast live over the Internet hosted at the “Investor Relations” section of the Company’s website at http://www.nomadfoods.com. The webcast will be archived for 30 days. A replay of the conference call will be available on the Company website for two weeks following the event and can be accessed by listeners in North America by dialing +1-844-512-2921 and by international listeners by dialing +1-412-317-6671; the replay pin number is 2785198.

About Nomad Foods
Nomad Foods (NYSE: NOMD) is a leading frozen foods company building a global portfolio of best-in-class food companies and brands within the frozen category and across the broader food sector. Nomad Foods produces, markets and distributes brands in 17 countries and has the leading market share in Western Europe. The Company’s portfolio of leading frozen food brands includes Birds Eye, Iglo, Findus and Goodfella's. More information on Nomad Foods Limited is available at http://www.nomadfoods.com.

Non-IFRS Financial Information
Nomad Foods is presenting Adjusted and Organic financial information, which is considered non-IFRS financial information, for the three months ended March 31, 2018 and for comparative purposes, the three months ended March 31, 2017.

Adjusted financial information for the three months ended March 31, 2018 and 2017 presented in this press release reflects the historical reported financial statements of Nomad Foods, adjusted primarily for share based payment charges, M&A related costs, exceptional items and foreign currency exchange charges/gains.

EBITDA is profit or loss for the period before taxation, net financing costs, depreciation and amortization. Adjusted EBITDA is EBITDA adjusted to exclude, when they occur, the impacts of exited markets, trading day impacts, chart of account (“CoA”) alignments and exceptional items such as restructuring charges, goodwill and intangible asset impairment charges, charges relating to the Founders Preferred Shares Annual Dividend Amount, charges relating to the redemption of warrants and other unusual or non-recurring items. In addition, we exclude other adjustments such as the impact of share based payment charges and M&A related costs, because we do not believe they are indicative of our normal operating costs, can vary significantly in amount and frequency, and are unrelated to our underlying operating performance. The Company believes Adjusted EBITDA provides important comparability of underlying operating results, allowing investors and management to assess operating performance on a consistent basis.

Adjusted EBITDA should not be considered as an alternative to profit/(loss) for the period, determined in accordance with IFRS, as an indicator of the Company’s operating performance.

Adjusted EPS is defined as basic earnings per share excluding, when they occur, the impacts of exited markets, trading day impacts, chart of account (“CoA”) alignments and exceptional items such as restructuring charges, goodwill and intangible asset impairment charges, unissued preferred share dividends, as well as certain other items considered unusual or non-recurring in nature. In addition, we exclude other adjustments such as the impact of share based payment charges and M&A related costs, because we do not believe they are indicative of our normal operating costs, can vary significantly in amount and frequency, and are unrelated to our underlying operating performance. The Company believes Adjusted EPS provides important comparability of underlying operating results, allowing investors and management to assess operating performance on a consistent basis.

Organic revenue for the three months ended March 31, 2018 and 2017 presented in this press release reflects reported revenue adjusted for currency translation and non-comparable trading items such as expansion, acquisitions, disposals, closures, chart of account (“CoA”) alignments, trading day impacts or any other event that artificially impact the comparability of our results.

Adjustments for currency translation are calculated by translating data of the current and comparative periods using a budget foreign exchange rate that is set once a year as part of the Company's internal annual forecast process.

Adjusted and Organic non-IFRS financial information should be read in conjunction with the unaudited financial statements of Nomad Foods included in this press release as well as the historical financial statements of the Company previously filed with the SEC.

Nomad Foods believe its non-IFRS financial measures provide an important additional measure with which to monitor and evaluate the Company’s ongoing financial results, as well as to reflect its acquisitions. Nomad Foods’ calculation of these financial measures may be different from the calculations used by other companies and comparability may therefore be limited. The Adjusted and Organic financial information presented herein is based upon certain assumptions that Nomad Foods believes to be reasonable and is presented for informational purposes only and is not necessarily indicative of any anticipated financial position or future results of operations that the Company will experience. You should not consider the Company’s non-IFRS financial measures an alternative or substitute for the Company’s reported results and are cautioned not to place undue reliance on these results and information as they may not be representative of our actual or future results as a Company.

Please see on pages 7 to 11, the non-IFRS reconciliation tables attached hereto and the schedules accompanying this release for an explanation and reconciliation of the Adjusted and Organic financial information to the most directly comparable IFRS measure.

     

Nomad Foods Limited As Reported
Statements of Profit or Loss (unaudited)
Three months ended March 31, 2018 and March 31, 2017

 

Three months ended
March 31, 2018

Three months ended
March 31, 2017

€ millions € millions
Revenue 539.2 531.3
Cost of sales (367.9 ) (375.2 )
Gross profit 171.3 156.1
Other operating expenses (82.8 ) (80.9 )
Exceptional items (1.5 ) 0.1  
Operating profit 87.0 75.3
Finance income 6.2 1.6
Finance costs (12.3 ) (17.7 )
Net financing costs (6.1 ) (16.1 )
Profit before tax 80.9 59.2
Taxation (18.5 ) (11.2 )
Profit for the period 62.4   48.0  
Basic earnings per share
Profit for the period in € millions 62.4 48.0
Weighted average shares outstanding in millions 175.5 183.6
Basic earnings per share in € 0.36 0.26
Diluted earnings per share
Profit for the period in € millions 62.4 48.0
Weighted average shares outstanding in millions 175.5 183.7
Diluted earnings per share in € 0.36 0.26
 

Nomad Foods Limited As Reported
Statements of Financial Position
As at March 31, 2018 (unaudited) and December 31, 2017 (audited)

     
As at March 31, 2018 As at December 31, 2017
€ millions € millions
Non-current assets
Goodwill 1,745.6 1,745.6
Intangibles 1,723.9 1,724.4
Property, plant and equipment 287.4 295.4
Other receivables 3.5 4.3
Derivative financial instruments 17.6 18.6
Deferred tax assets 70.9   64.3  
Total non-current assets 3,848.9   3,852.6  
Current assets
Cash and cash equivalents 393.8 219.2
Inventories 286.9 306.9
Trade and other receivables 172.9 147.1
Indemnification assets 73.8 73.8
Derivative financial instruments 4.6   2.1  
Total current assets 932.0   749.1  
Total assets 4,780.9   4,601.7  
Current liabilities
Trade and other payables 474.9 477.5
Current tax payable 167.8 145.3
Provisions 61.4 68.0
Loans and borrowings 3.6 3.3
Derivative financial instruments 9.1   7.8  
Total current liabilities 716.8   701.9  
Non-current liabilities
Loans and borrowings 1,479.1 1,395.1
Employee benefits 194.0 188.4
Trade and other payables 1.8 1.8
Provisions 68.4 72.8
Derivative financial instruments 77.7 61.4
Deferred tax liabilities 326.6   327.7  
Total non-current liabilities 2,147.6   2,047.2  
Total liabilities 2,864.4   2,749.1  
Net assets 1,916.5   1,852.6  
Equity attributable to equity holders
Share capital
Capital reserve 1,744.5 1,623.7
Share based compensation reserve 5.1 2.9
Founder Preferred Share Dividend reserve 372.6 493.4
Translation reserve 87.8 83.2
Cash flow hedging reserve (3.5 ) (3.0 )
Accumulated deficit (290.0 ) (347.6 )
Total equity 1,916.5   1,852.6  
 

Nomad Foods Limited As Reported
Statements of Cash Flows (unaudited)
For the three months ended March 31, 2018 and the three months ended March 31, 2017

     

For the three months
ended March 31, 2018

For the three months
ended March 31, 2017

€ millions € millions
Cash flows from operating activities
Profit for the period 62.4 48.0
Adjustments for:
Exceptional items 1.5 (0.1 )
Share based payment expense 2.2 1.3
Depreciation and amortization 10.0 12.3
Loss on disposal of property, plant and equipment 0.1 0.2
Finance costs 12.3 17.7
Finance income (6.2 ) (1.6 )
Taxation 18.5   11.2  
Operating cash flow before changes in working capital, provisions and exceptional items 100.8 89.0
Increase in inventories 19.6 26.3
Increase in trade and other receivables (25.1 ) (9.0 )
Decrease in trade and other payables (5.3 ) (14.7 )
Increase/(decrease) in employee benefits and other provisions 0.1   (0.3 )
Cash generated from operations before tax and exceptional items 90.1 91.3
Cash flows relating to exceptional items (6.0 ) (23.4 )
Tax (paid)/refunded (2.6 ) 0.8  
Net cash generated from operating activities 81.5   68.7  
Cash flows from investing activities
Purchase of property, plant and equipment (3.7 ) (6.8 )
Purchase of intangibles (1.1 ) (1.2 )
Cash used in investing activities (4.8 ) (8.0 )
Cash flows from financing activities
Issuance of new loan principal 100.4
Payment of finance leases (1.6 )
Proceeds on settlement of derivatives 3.7 0.5
Interest paid (7.1 ) (15.2 )
Interest received   0.2  
Net cash provided by/(used in) financing activities 97.0   (16.1 )
Net increase in cash and cash equivalents 173.7   44.6  
Cash and cash equivalents at beginning of period 219.2 329.5
Effect of exchange rate fluctuations 0.9   (2.5 )
Cash and cash equivalents at end of period 393.8   371.6  
 

Nomad Foods Limited
Adjusted Financial Information
(In € millions, except per share data)

The following table reconciles adjusted financial information for the three months ended March 31, 2018 to the reported results of Nomad Foods for such period.

 

Adjusted Statements of Profit or Loss (unaudited)
Three Months Ended March 31, 2018

 

€ in millions, except per share data    

As reported for the
three months ended
March 31, 2018

    Adjustments      

As adjusted for the
three months ended
March 31, 2018

 
Revenue 539.2 539.2
Cost of sales (367.9 )   (367.9 )
Gross profit 171.3 171.3
Other operating expenses (82.8 ) 4.7 (a) (78.1 )
Exceptional items (1.5 ) 1.5   (b)  
Operating profit 87.0 6.2 93.2
Finance income 6.2 (6.1 ) 0.1
Finance costs (12.3 ) (0.9 ) (13.2 )
Net financing costs (6.1 ) (7.0 ) (c) (13.1 )
Profit before tax 80.9 (0.8 ) 80.1
Taxation (18.5 ) 0.5   (d) (18.0 )
Profit for the period 62.4   (0.3 ) 62.1  
Weighted average shares outstanding in millions - basic 175.5 175.5
Basic earnings per share 0.36 0.35
Weighted average shares outstanding in millions - diluted 175.5 175.5
Diluted earnings per share 0.36 0.35
 

(a) Adjustment to add back share based payment charge and non-operating M&A related costs.
(b) Adjustment to add back exceptional items. See Note 6, Exceptional items, within ‘Exhibit 99.2 - Condensed Consolidated Interim Financial Statements’ for a detailed list of exceptional items.
(c) Adjustment to eliminate €1.1 million of non-cash foreign exchange translation gains and €5.9 million of foreign exchange gains on derivatives.
(d) Adjustment to reflect the tax impact of the above at the applicable tax rate for each adjustment, determined by the nature of the item and the jurisdiction in which it arises.

Nomad Foods Limited
Adjusted Financial Information
(In € millions)

The following table reconciles EBITDA and Adjusted EBITDA for the three months ended March 31, 2018 to the reported results of Nomad Foods for such period.

     

EBITDA and Adjusted EBITDA (unaudited)
Three Months Ended March 31, 2018

 
€ in millions

Three months ended
March 31, 2018

Profit for the period 62.4
Taxation 18.5
Net financing costs 6.1
Depreciation 8.5
Amortization 1.5
EBITDA 97.0
Exceptional items: 1.5 (a)
Other Adjustments: 4.7 (b)
Adjusted EBITDA (c) 103.2
 

(a) Adjustment to add back exceptional items. See Note 6, Exceptional items, within ‘Exhibit 99.2 - Condensed Consolidated Interim Financial Statements’ for a detailed list of exceptional items.
(b) Other adjustments include the elimination of share-based payment charges of €2.2 million and elimination of non-operating M&A related costs of €2.5 million.
(c) Adjusted EBITDA margin of 19.1% for the three months ended March 31, 2018 is calculated by dividing Adjusted EBITDA by revenue of €539.2 million per page 7.

Nomad Foods Limited
Adjusted Financial Information
(In € millions, except per share data)

The following table reconciles adjusted financial information for the three months ended March 31, 2017 to the reported results of Nomad Foods for such period.

         

Adjusted Statements of Profit or Loss (unaudited)
Three Months Ended March 31, 2017

 
€ in millions, except per share data

As reported for the
three months ended
March 31, 2017

  Adjustments  

As adjusted for the
three months ended
March 31, 2017

 
Revenue 531.3 531.3
Cost of sales (375.2 )   (375.2 )
Gross profit 156.1 156.1
Other operating expenses (80.9 ) 1.3 (a) (79.6 )
Exceptional items 0.1   (0.1 ) (b)  
Operating profit 75.3 1.2 76.5
Finance income 1.6 (1.4 ) 0.2
Finance costs (17.7 )   (17.7 )
Net financing costs (16.1 ) (1.4 ) (c) (17.5 )
Profit before tax 59.2 (0.2 ) 59.0
Taxation (11.2 ) (2.4 ) (d) (13.6 )
Profit for the period 48.0   (2.6 ) 45.4  
Weighted average shares outstanding in millions - basic 183.6 183.6
Basic earnings per share 0.26 0.25
Weighted average shares outstanding in millions - diluted 183.7 183.7
Diluted earnings per share 0.26 0.25
 

(a) Adjustment to add back share based payment charge.
(b) Adjustment to add back exceptional items. See Note 6, Exceptional items, within ‘Exhibit 99.2 - Condensed Consolidated Interim Financial Statements’ for a detailed list of exceptional items.
(c) Adjustment to eliminate €0.9 million of non-cash foreign exchange translation gains and €0.5 million foreign exchange gains on derivatives.
(d) Adjustment to reflect the tax impact of the above at the applicable tax rate for each exceptional item, determined by the nature of the item and the jurisdiction in which it arises.

Nomad Foods Limited
Adjusted Financial Information
(In € millions)

The following table reconciles EBITDA and Adjusted EBITDA for the three months ended March 31, 2017 to the reported results of Nomad Foods for such period.

     

EBITDA and Adjusted EBITDA (unaudited)
Three Months Ended March 31, 2017

 
€ in millions

Three months ended
March 31, 2017

Profit for the period 48.0
Taxation 11.2
Net financing costs 16.1
Depreciation 9.9
Amortization 2.4  
EBITDA 87.6
Exceptional items: (0.1 ) (a)
Other Adjustments: 1.3 (b)
Adjusted EBITDA(c) 88.8  
 

(a) Adjustment to add back exceptional items. See Note 6, Exceptional items, within ‘Exhibit 99.2 - Condensed Consolidated Interim Financial Statements’ for a detailed list of exceptional items.
(b) Other adjustments include the elimination of share-based payment charges of €1.3 million.
(c) Adjusted EBITDA margin 16.7% for the three months ended March 31, 2017 is calculated by dividing Adjusted EBITDA by revenue of €531.3 million per page 9.

Nomad Foods Limited
Adjusted Financial Information (continued)

Appendix 1: Reconciliation from reported to organic revenue growth

Year on Year Growth - March 31, 2018 compared with March 31, 2017:

 

Three Months Ended
March 31, 2018

YoY Growth
Reported Revenue Growth 1.5 %
Translational FX (a) 1.4 %
Organic Revenue Growth 2.9 %
 

(a) Translational FX is calculated by translating data of the current and comparative periods using a budget foreign exchange rate that is set once a year as part of the Company's internal annual forecast process.

Forward-Looking Statements

Forward-Looking Statements and Disclaimers

Certain statements in this announcement are forward-looking statements which are based on the Company’s expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts, including expectations regarding (i) the Company’s ability to expand its presence and market share in the frozen foods market; (ii) the success of the Company’s strategic initiatives including focus on core products, product enhancements and media investments; (iii) the timing and success of new product launches such as Veggie Power, Good For You and PEASE; (iii) completion of successful acquisitions in the same and adjacent categories; (iv) the future operating and financial performance of the Company including organic growth rate and our guidance with respect to Adjusted EBITDA and adjusted EPS, gross margins and operating expenses; and (v) synergies and other benefits from the Goodfella's acquisition, including an increase in the size and scale of the Company’s U.K. business and the level of additional revenue and EBITDA generated by the Goodfella's business in 2018. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including (i) economic conditions, competition and other risks that may affect the Company’s future performance; (ii) the risk that securities markets will react negatively to actions by the Company; (iii) the ability to recognize the anticipated benefits to the Company of strategic initiatives; (iv) the successful completion of strategic acquisitions; (v) changes in applicable laws or regulations; and (vi) the other risks and uncertainties disclosed in the Company’s public filings and any other public disclosures by the Company. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of such statements and, except as required by applicable law, the Company does not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

No Offer or Solicitation

This release and referenced conference call is provided for informational purposes only and does not constitute an offer to sell, or an invitation to subscribe for, purchase or exchange, any securities or the solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance, exchange or transfer of the securities referred to in this press release in any jurisdiction in contravention of applicable law.

The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this announcement is released, published or distributed should inform themselves about and observe such restrictions.

Contacts

Nomad Foods Contacts
Investor Relations Contacts
Nomad Foods Limited
Taposh Bari, +1-718-290-7950
CFA
or
ICR
John Mills, +1-646-277-1254
Partner
or
Media Contact
Gladstone Place Partners
Felipe Ucros / Max Dutcher, +1-212-230-5930

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