Earnings call transcript: Nomad Foods Q4 2024 surpasses EPS expectations

Nomad Foods (NYSE:NOMD) Ltd reported its fourth-quarter earnings for 2024, showcasing stronger-than-expected financial results. The company reported an adjusted earnings per share (EPS) of €0.42, surpassing the forecast of €0.38. Revenue reached €793 million, slightly above the anticipated €792.81 million. Following these results, Nomad Foods’ stock price increased by 4.34% in pre-market trading, reflecting positive investor sentiment. With a market capitalization of $3.18 billion, InvestingPro analysis suggests the company is currently undervalued, with 8 additional key insights available to subscribers.

Key Takeaways

• Nomad Foods exceeded EPS expectations with a reported €0.42 against a forecast of €0.38.
• Revenue for Q4 2024 was €793 million, marking a 4.3% increase from the previous year.
• The company experienced a significant 4.34% rise in stock price following the earnings announcement.
• Organic growth was reported at 3.1%, marking the tenth consecutive quarter of organic expansion.
• The company anticipates continued growth, with a raised full-year EPS guidance for 2025.

Company Performance

Nomad Foods exhibited robust performance in Q4 2024, with net revenues increasing by 4.3% compared to the same period last year. The company has maintained its growth trajectory with ten consecutive quarters of organic growth, driven by a 4.7% increase in volume. The full-year revenue rose by 1.8%, supported by a 1% rise in organic sales.

Financial Highlights

• Revenue: €793 million, up 4.3% year-over-year.
• Earnings per share: €0.42, a 31% increase from the previous year.
• Adjusted EBITDA: Grew by 5.6% for the year.
• Free cash flow conversion: 101%.

Earnings vs. Forecast

Nomad Foods reported an EPS of €0.42, exceeding the forecast of €0.38 by approximately 10.5%. The revenue also slightly surpassed expectations, coming in at €793 million against a forecast of €792.81 million. This positive surprise aligns with the company’s historical trend of consistent growth and reflects effective execution of strategic initiatives.

Market Reaction

The company’s stock price rose by 4.34% following the earnings announcement, trading at €19.72 in pre-market sessions. This increase positions the stock closer to its 52-week high of €20.38, indicating strong investor confidence in the company’s performance and future prospects. According to InvestingPro, management has been aggressively buying back shares, demonstrating confidence in the company’s value proposition. The stock’s current valuation metrics and momentum suggest potential for further upside, as detailed in the exclusive Pro Research Report.

Outlook & Guidance

Looking ahead, Nomad Foods has raised its full-year adjusted EPS guidance to a range of €1.85-€1.89. The company projects an organic sales growth of 1-3% in 2025 and adjusted EBITDA growth of 2-4%. Despite an anticipated modest decline in Q1 organic sales due to investment phasing, the company remains confident in its strategic focus on growth platforms such as poultry and potatoes.

Executive Commentary

CEO Stefan Geschmaker expressed optimism about the company’s future, stating, "We are well positioned to continue to deliver sustainable growth." He further emphasized the success of the company’s strategy, highlighting, "Our strategy is working and our teams are executing our plans well." Geschmaker also noted, "The best is yet to come," reflecting a positive outlook on the company’s long-term prospects.

Risks and Challenges

• Supply chain disruptions could impact production and delivery timelines.
• Market saturation in certain segments may limit growth opportunities.
• Macroeconomic pressures, such as inflation, could affect consumer spending.
• Currency fluctuations may impact financial results.
• Competitive pressures in the frozen food sector could challenge market position.

Q&A

During the earnings call, analysts inquired about Nomad Foods’ pricing strategy and volume growth, with management highlighting their focus on revenue growth management. Potential mergers and acquisitions were also discussed, as the company explores opportunities to expand its market presence. Analysts were keen to understand the progress of the company’s enterprise transformation and its impact on operational efficiency.

Full transcript - Nomad Foods Ltd (NOMD) Q4 2024:

Conference Operator: Good day, ladies and gentlemen, and welcome to Nomad Foods Fourth Quarter twenty twenty four Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note that this conference is being recorded. I would now like to turn the conference over to Jason English, Head of Investor Relations.

Please go ahead.

Jason English, Head of Investor Relations, Nomad Foods: Hello, and welcome to Nomad Foods’ fourth quarter twenty twenty four earnings call. I am Jason English, Head of Investor Relations. And I’m joined on the call today by Stefan Geschmaker, our CEO and Ruben Valdoux, our CFO. By now, everyone should have access to the earnings release for the period ended 12/31/2024, that was published at approximately 06:45 a. M.

Eastern Time. The press release and investor presentation are available on Nomad Foods’ website at nomadfoods.com. This call is being webcast and a replay will be available on the company’s website. This conference call will include forward looking statements that are based on our view of the company’s prospects, expectations and intentions at this time. Actual results may differ due to the risks and uncertainties, which are discussed in our press release, our filings with the SEC and in our investor presentation, which includes cautionary language.

We will also discuss non IFRS financial measures during the call today. These non IFRS financial measures should not be considered a replacement for and should be read together with IFRS results. Users can find the IFRS and non IFRS reconciliations within our earnings release and in the appendices at the end of the slide presentation available on our website. Please note that certain financial information within this presentation represents adjusted figures for 2023 and 2024. All these adjusted figures have been adjusted primarily for share based payment expenses and related employer payroll taxes, non operating M and A related costs, acquisition purchase price adjustments, exceptional items and foreign currency translation charges or gains.

Unless otherwise noted, comments from here will refer to those adjusted numbers. With that, I’ll

Stefan Geschmaker, CEO, Nomad Foods: hand it

Jason English, Head of Investor Relations, Nomad Foods: over to Staphon.

Stefan Geschmaker, CEO, Nomad Foods: Thank you, Jason. I’m happy to report that normalized foods had a strong finish to 2024 with impressive volume driven organic sales growth and robust margin expansion. But before I go too deep into results, I want to step back and reflect on where we are in our journey. As you can see on Slide three, we have now delivered nine consecutive years of sales and adjusted EBITDA growth. While this growth has been aided by M and A, organic growth has also been a strong and consistent contribution to this growth over time.

In fact, in 2016, we have grown our organic sales at a nearly 3% target with growth in every year other than 2021 and we’ll have the COVID demand spike. We are now entering our tenth year as a public company and are well positioned to continue to deliver sustainable growth, including another year of organic growth in 2025, while generating considerable shareholder value. We have created an enviable company since embarking on this journey in 2015. We have assembled a portfolio for iconic brands, the superior equity and strong market share positions. And we have accomplished this by remaining focused building a pure play frozen food business that now expands both developed and developing markets across Europe.

And we have acted with purpose, creating a portfolio of high quality, great tasting convenient food that is good value and good for you. Roughly two thirds of our portfolio is comprised of vegetables, fish and poultry. And 93% of our UK and Western European revenue is generated from products deemed a healthy meal choice by the UK government. And we’ve done this in a responsible way. I’m happy to share that Nomad Foods has been included in the annual Dow Jones Sustainability Europe Index for the fourth consecutive year, while receiving an maximum score of 100 in the Health and Nutrition for the sixth consecutive year.

We are well positioned for the trends that are reshaping this industry. We have a clear portfolio advantage and we also have a people advantage. In recent years, we have reshaped the organization. We have rewired how we work to improve efficiency, agility and ID sharing. And we have upgraded our talent pool by promoting high performers from within, by selectively hiring externally to fill knowledge and capability gaps where necessary.

This has helped us own our strategy energized organization and improve our execution. And lastly, we’ve enabled to lean in and arm our team with the tools they need to further strategy and initiatives. Our supply chain organization has delivered meaningful productivity over the past two years, while our strategic focus on driving growth in our profitable investment models and growth platforms is delivering margin mix benefits that have allowed us to increase investing in our products or advertising in our in store merchandising, while building capabilities in areas such as revenue growth management and cybersecurity among others. Even more of this, I feel great about how we positioned as we enter our tenth year as a public company. And I’m confident we will deliver our tenth consecutive year of top and bottom line growth in 2025.

Recent results only emboldened my confidence in this. It became clear to us in 2023 that the period of outside inflation in U. S. Revenue growth was nearing an end. We knew that growth would become more dependent on volume gains, market share expansion and effective revenue growth management initiatives.

It was then that we introduced our new commercial flywheeling innovation framework, while beginning to increase our investment in our products, advertising and the synergies. Our A and P spend increased by 14% in 2023 and then again by high single digits last year to 4% of net sales. This places us in the top tier of our E group and we expect A and P growth to once again all pay sales growth in 2025. And I’m excited to share some of our new creative with you later this year. It is some of the best I have ever seen from Nobel Foods.

Our innovation, meanwhile, jumped from 4.2% in 2023 to 4.8% in 2024. We expect it to easily exceed 5% in 2025. And when we combine innovation with renovation, we expect a renewal rate or percentage of sales where products are new or refreshed to double from high single digits in 2024 to mid to high teens in 2025. We are upgrading our food and packaging to achieve superiority across an increasingly large percentage of our business. All of this is helping our commercial Flywheel to spin faster and faster, while delivering solid returns.

As you can see on Slide five, we have now delivered three consecutive quarters of volume growth. Growth had moved around towards the quarter, so the trend line is leaning in the right direction. And why it helps that our European frozen food category is healthy and are controlling much of our own destiny, although investments are supporting category growth while driving share growth. As you can see on Slide six, we have now achieved market share growth in mid to the last two quarters. And impressively, we accomplished this while expanding our gross margin.

In fact, our gross margin in the last nine months of 2024 modestly exceeded the pre booking level we achieved in 2019. Focus has been a key contributor to our success and focus will continue to define how we go to market in the future. We continue to concentrate on the disproportionate amount of our time, energy and investment in our Merchant Battles. These are the core category country combinations that are critically important to our success, our margin accretive and the way we have clear right to win. The top 25 merchant backlogs accounted for more than half of our sales last year and an even larger share of gross profit and grew net sales by 2.7% for the year and 3.5% in the quarter.

While our focus remains on our operational backlogs. Recently we have been strategically investing behind select growth platforms. These are primarily areas where we see opportunities to leverage a capability in one market to expand our presence in another market with a lift and launch of growth. Our organic sales for growth platforms grew by 16% in 2024 and 40% in the fourth quarter. Over the past year, we have been highlighting poultry as an example.

We have more than doubled our culture sales in The UK over the past five years, and it has gone from a growth platform to a mushroom battle for us given the success. Our goal is to make all of our growth platforms into mushroom battles over time. Italy and Germany are two more recent markets where we have made poultry into a growth platform, seeking to replicate our success in The UK. The further prepared poultry segment is underdeveloped in Italy and we began to invest in developing the segment there in early twenty twenty four. I’m happy to say that it is working.

In the fourth quarter, our retail sales for prepaid poultry in Italy rose 98% year on year with our market share growing from 8% in Q4 twenty twenty three to 15% in Q4 twenty twenty four. The category meanwhile is now growing 6% in Italy with no map, accounting for more than 100% of the category growth. This is a great story for both us and the retail partners. In the back half of 2024, we turn our attention to Germany where the frozen prepared poultry market is large and well developed, but terminated by private label. Here our strategy is to create a premium fee in the segment.

I’m happy to say that we’re finding success here too. It is early, but in the fourth quarter, our retail sales for prepared poultry rose 35% year on year in Germany. We reached 2.7% market share in the fourth quarter, that is 70 basis points higher than the prior year and illustrates how long the runway could be for us in this market. The other growth platform we highlighted last year was the Datos. As a leading frozen fish company, it’s only Crawford that will be a leading frozen chip company as well.

In Belgium, we already have a strong market share position in potatoes, but we are leaning in to make it even stronger and grew our market share by four twenty basis points year on year in 2024. And we’re happy to report that we became the technical reliever in Belgium last year, climbing from number two to number one in value share. In France, our share grew five fifty basis points to 16.1% in the quarter. And in The UK, where the market is very large, our share grew 70 basis points year on year to 8.9%, a great accomplishment, even if it’s not keeping pace with the fantastic results in France and Belgium. Turning to 2025, our playbook will not look meaningfully different.

Our strategy is working and we will stay the course by championing Product Food. We will continue to focus on our investments beyond our mushroom bottles and targeted growth platforms. But we will do it with more advertising, more innovation, more innovation and more revenue growth management initiatives. Ongoing productivity realization from across our organization is fueling investment growth, allowing us to deliver balanced stock and bottom line growth. And as has always been the case with Nomai Foods, we will deploy capital in ways that create value for our shareholders and goes above and beyond organic growth.

I’m excited to celebrate our NCA as a public company with you in 2025. With that, let me turn it over to Ruben to tell you more about what we expect and provide some more details on what we achieved last quarter. Ruben?

Ruben Valdoux, CFO, Nomad Foods: Thank you, Stefan, and good morning, everyone. I have been with the company now for roughly eight months, and and I’m increasingly confident in the opportunities that lie ahead of us. We have an amazing portfolio in a great category with top tier talent and nutritional tailwinds at our back. Our playbook is working, and the innovation, renovation and marketing plans we have to drive sustainable growth in 2025 and beyond are compelling. Turning to results.

As you can see on Slide seven and nine, for the fourth quarter, reported net revenues increased by 4.3% to EUR $793,000,000. Organic growth was 3.1%, which marked our tenth consecutive quarter of organic growth. Volume growth remained positive for the third consecutive quarter, rising by an impressive 4.7%, while pricemix was a negative 1.6% offset to volume growth as we reinvested some of our margin upside to drive impactful merchandising at retail. The net price investment was an 80 basis point headwind to gross margin and was more than overcome by 40 basis points of favorable mix and 160 basis points of productivity, thanks to efficiency gains. This quarter, robust gross margin and healthy revenue growth delivered a 9% increase in gross profit, which was amplified by a 2.6% year on year decrease in SG and A expenses to result in a 17.6% increase in adjusted EBITDA.

The lower SG and A expense was driven by lower A and D expenses as we led the sharp increase in prior year investments and benefited from a more even investment cadence throughout the year. A and P investment rose high single digit for the year on top of double digit increase in 2023. Interact investment growth slowed to low single digits in the quarter as we began to cycle the capability investment that we gained in late twenty twenty three and carried through to 2024. Adjusted profit rose 28% year on year, while adjusted EPS rose 31% to EUR 0.42 as our diluted share count shrunk 3% year on year. For the full year, we delivered our ninth consecutive year of sales and adjusted EBITDA growth.

As you can see on Slide eight and ten, full year revenue grew 1.8% with organic sales rising 1% as volume returned to growth gaining 1.3% year over year. Gross margin rose from 40 basis points for the year to 29.6% nearly reaching the 30% pre COVID gross margin we achieved in 2019. The investment in price and promotion was a 70 basis point year on year headwind to our full year gross margin, which was more than offset by 110 basis points of favorable margin mix and 100 basis points of net productivity realized by our supply chain teams. Our teams have a robust pipeline of productivity initiatives and I expect these benefits to continue funding our growth investments going forward. Our SG and A expenses grew 7.4% for the full year as we increased our A and P and indirect investments eased by high single digits.

Our higher A and P was a continuation of the reinvestment plans that we started in 02/2003 and continued in 2024. We expect even more reinvestments in 2025. The higher indirect expense was due to a combination of underlying inflation and capability investments in areas such as cybersecurity and revenue growth management. With these investments now behind us, we expect much more moderate growth in indirect expenses going forward. Despite these investments made in 2024, we were still able to grow our adjusted EBITDA by 5.6% for the year, delivering near the high end of our initial 4% to 6% EBITDA growth guidance range that we gave this time last year.

Our full year EPS of was also near the high end of our initial to range. Turning to cash flow now. Strong fourth quarter results helped us over deliver on our full year cash flow guidance with free cash flow conversion of 101% coming in well above our initial to conversion guidance. We saw nice working capital inflows in the fourth quarter due to the normal seasonal timing of inventory balances and an unwind of the higher receivable balances that were ahead in the third quarter due to timing dynamics. The strong free cash flow allows us to return EUR208 million to shareholders in 2024 versus EUR171 million we returned to shareholders in 2023, therefore more than a 20% increase.

Last year, we returned the cash in the form of a $0.6 per share annual dividend and share repurchases. We finished the year with 156,100,000.0 basic shares outstanding, a 4% reduction from where we finished 2023. Over the past two years, we’ve now repurchased EUR $290,000,000 of our shares. Turning to our guidance for ’25 on Slide 12. We are pleased with the progress our commercial team has made improving the market results and restoring our market share to growth.

And we are happy to see our supply chain team delivering healthy productivity savings. This gives us strong momentum in 2025, which will be our tenth year as public company and is also expected to be our tenth year of positive revenue and adjusted EBITDA growth. We continue to expect organic sales growth of 1% to 3% for the year and adjusted EBITDA growth of 2% to 4%. We had a stronger than expected finish to 2024, which means we now expect a higher absolute level of adjusted EBITDA. And as a result, we have raised our full year adjusted EPS range to €1.85 to €1.89 from the initial €1.81 to €1.85 At recent exchange rates, this translates into U.

S. Dollar denominated EPS of $1.94 to $1.98 And lastly, we continue to expect full year adjusted free cash flow conversion of at least 90%. We expect to use this cash flow to create incremental value for shareholders that goes above and beyond organic growth. A still relatively new dividend is a great example of this. As you may have seen at our announcement last month, our Board of Directors has approved 13% increase in the first quarter of ’20 ’5 percent cash dividend to $70 per share from the $0.16 quarterly payout in 2024.

As we think about the shape of the year, we expect growth to be somewhat choppy quarter to quarter, even the phasing of investments, prior year comparisons and some seasonal movement. Nonetheless, we expect the underlying trend line of improvement to hold throughout the year in totality. While our advertising investment growth will be meaningful in late quarter one, our new innovation fuel distribution gains and associated merchandising activity is expected to be more phased into quarter two and quarter three this year. This, in combination with Easter falling into quarter two this year versus quarter one last year, will lead to revenue headwinds in the first quarter. At this moment, we therefore expect organic sales to modestly decline in quarter one.

These are just timing dynamics and not a reflection of the underlying health of the business. In fact, while shipments are moving around, we are happy to see our retail sales growing in 1% to 2% range over the past two months despite the later phasing of our activity. Overall, I’m pleased with the progress we are making. We returned the business to profitable volume and market share driven growth last year and are confident that we can keep the momentum growing in 2025. And with that, I will now turn the call back to the operator to open the line for questions.

Conference Operator: We will now begin the question and answer session. Our first question comes from Andrew Lazar with Barclays (LON:BARC). Please go ahead.

Andrew Lazar, Analyst, Barclays: Great. Thanks so much. And good morning, good afternoon, everybody.

Stefan Geschmaker, CEO, Nomad Foods: Good morning, Andrew.

Ruben Valdoux, CFO, Nomad Foods: Yes. Good morning.

Andrew Lazar, Analyst, Barclays: Stefan, maybe to start off, what is your 1% to 3% organic sales growth forecast for full year 2025 predicated on with respect to your expectations for category growth and market share performance?

Stefan Geschmaker, CEO, Nomad Foods: Well, as you may have seen, we began the low inflation environment and we’ve come up with the 1% category growth as the first piece. And the second piece is ourselves obviously. It’s overall, as we said, it’s growing. But also very interestingly, we our portfolio is really two thirds is poultry fish vegetables, which are growing very nicely. The commercial flywheel is working nicely.

Innovation, as we said, is around 5%. So the rest of the 1% to 3% is coming from this market share and mix. And a bit of some net ERP, I would put it that way, Andrew. Remember that in Q3, we suffered of an ERP disruption in The UK, which is the biggest business for us. So obviously, we keep going with ERP, which is the right thing to do.

But this year, as we said, we decided to slow down the process, come up with the lower the smaller part of the business and also all the lessons. So that’s why I’m using the word net ERP. So will there be some disruption maybe much, much, much more limited than in Q3 last year. So that’s where the 1% to 3% is coming from.

Andrew Lazar, Analyst, Barclays: Great. No, that’s helpful. And then you mentioned in the fourth quarter, you reinvested some of the upside in some of the sort of promotional activity getting sort of distribution and some retail work and whatnot. And that obviously benefited volume pretty nicely. As you move through the first quarter, I realize there’s some impact on volume as you talked about to a later Easter and such.

How would you expect sort of the price mix piece to come in now that you’re two months through the first quarter? Would it be consistent on a year over year basis as an impact with what you saw in 4Q or more modest do you think, again, on the pricemix side? Thanks so much.

Ruben Valdoux, CFO, Nomad Foods: Yes. Let me answer that, Andrew. And hopefully, you appreciate that we cannot and will not give clear kind of guidance outlook between separate line items of the P and L and price volume. But let me do try to give you some context. So you’re absolutely right.

If you look at the last three quarters, you’ve seen positive volume, especially in quarter four, where we almost had 5% positive volume growth. And volume will remain important to us. It’s important from a consumer perspective, retailer perspective, but also how it drives leverage in our factory. So we’re not all overnight going to change that strategy where we drive efficiencies and reinvest that in volume. So that’s one thing.

To the point of Stefan, so we’ve seen in the last two, three months lower inflation, and maybe that’s also a separate question. If we look at kind of the full year and we’re not fully hedged yet, but we might see a bit more inflation into this year. How that exactly plays out is still to be seen, But then we would need to take some pricing back. And again, if we see inflation on cost price, let’s be absolutely clear. First of all, it’s really to be cost competitive.

So we’ll continue all our efforts we’ve done in terms of saving programs on procurement, continue to drive efficiencies in our factories, but also to drive efficiencies in indirects. But there might be that a ladder is a remainder which we need to do with price. Now how and when that price comes through is still to be seen. So at this moment, and we’ve only had one month of actuals, we still see volume and a bit of pressure on price. Throughout the year, it could be that price comes back.

So I think that is the context we can give you at this point.

Andrew Lazar, Analyst, Barclays: Thank you very much.

Conference Operator: And the next question comes from Steve Powers with Deutsche Bank (ETR:DBKGn). Please go ahead.

Steve Powers, Analyst, Deutsche Bank: Great. Thank you. Good morning. Good afternoon, everybody. Stefan, the stepped up innovation and renovation activity that you mentioned in your prepared remarks, I’m curious as to how much of that you expect to be focused on existing must win battles as opposed to some of the new and emerging growth platforms that you talked about in 2025?

And just how you think about striking that balance?

Stefan Geschmaker, CEO, Nomad Foods: Well, the thing is, to your point, it’s going to be mostly, let’s say, must win battles and growth platforms. But let’s say let’s put it that way, the Muslim bottles are still very much the biggest piece of our business. So it’s around 50% of our business and that’s where the bulk of the innovation is going to go. This being said, at the same time, growth platform, which is, let’s say, north of EUR 100,000,000 at this stage is growing very nicely, very fast. There’s going to be a lot of list and launch, which is great.

So it’s going to be probably to take proportionally a bigger part, but obviously applied on the smaller part of the business. But that’s where the innovation is going to go. First and foremost, mostly battles, then obviously growth platforms.

Steve Powers, Analyst, Deutsche Bank: Okay, very good. And then you had also you talked about the organizational changes and the rewiring efforts that you’ve done to improve overall execution and agility, etcetera. To what extent do you feel that mission is sort of accomplished versus there being more work to do? And what would be the priorities in 2025 on that front?

Stefan Geschmaker, CEO, Nomad Foods: Well, let me start with the well, my statement, it is never finished as the first piece, never finished because well, you may know me as I’m never fully satisfied anyway. So that’s you’ll never hear me something like fantastic and all these things because these words do not exist in my one one

Conference Operator: Hi, this is the operator. We have now brought in the speaker line. Sam, you can proceed.

Stefan Geschmaker, CEO, Nomad Foods: Thank you very much. So Steve, sorry for the interruption.

Steve Powers, Analyst, Deutsche Bank: So I could feel your passion. Your passion was so great. Yes.

Stefan Geschmaker, CEO, Nomad Foods: I’m not pleased with what happened right now, I can tell you. It’s not very, but fine. So my point is no, it’s never finished. But this being said, we have I mean, we have really simplified the organization big time last year. So you remember that we had at some stage 22 countries and their reporting between it was a bit I wouldn’t say it was optimal.

Now we have all these guys reporting to one person, six clusters, and I think it’s a big, big change. And then in the meantime, we have obviously invested heavily in things like growth like revenue growth management, innovation as well in service of obviously these clusters. Supply Chain is really it’s a never ending process anyway, restructuring, improvements, making sure that these savings are going to come back and then be in a position to invest behind A and P and gross margin ultimately. So my point is, it’s never finished, but let’s say what we have accomplished, Lizzie, last year was really meaningful. And obviously, we also have to remain very, very cost conscious because basically what I want to do to achieve is to put most of our, let’s say, savings behind A and P and innovation and then obviously in service of short term and long term EBITDA.

But that’s how we want to be. So lean in terms of indirect after having restructured and clarified the whole structure and then making sure that obviously our top line will be served the right way.

Steve Powers, Analyst, Deutsche Bank: Very good. I appreciate all that. I’ll pass it on. Thank you.

Stefan Geschmaker, CEO, Nomad Foods: Thank you.

Conference Operator: And the next question comes from Rob Dickerson with Jefferies. Please go ahead.

Rob Dickerson, Analyst, Jefferies: Great. Thanks so much. I guess maybe just first question on around gross margin. I think about a year or so ago, kind of the idea was you can gradually get back right to the 30% gross margin range or somewhere around there, really based on volume recovery also combined with just all the productivity initiatives and the mix benefits. As you think through kind of 2025 relative to 2024, your first question is like seems like you’re kind of already there, right?

I guess you finished the full year 2024, you’re pretty close already. Is there any kind of change to the thinking in terms of like what the real gross margin benefit from here could be on the business just given really the focus on must win battles, given the volumes starting to recover, given the productivity initiatives? That’s just the first question. Thanks.

Ruben Valdoux, CFO, Nomad Foods: Yes, let me answer that. Thanks for the question. Again, our strategy will continue in the same way and no change to that. We will continue and that’s our commitment to drive efficiencies in supply chain. You’ve seen that in quarter four in both the full year, we had full year around 110 basis points of supply chain efficiencies.

Quarter four, we had supply chain efficiencies. We will continue to drive that, right? And what we then said, we will reinvest those efficiencies together with our efficiencies together with our continued effort of driving mix into our brands and products. Now most of that will be an investment in A and P and into the product, but it could also be that we do some investments in price, as you have seen over the last three quarters. So that is our commitment.

We’re not at this moment we’re going to say this is our guidance for gross margin in 2025 whether that will be 30. We’re very happy that you see the recovery in 2024. We will continue to drive the drivers. But But as I said also, there will be a bit of inflation. Again, we need to be cost competitive.

We have to take some prices and that will lead and we’ll see how we then end with the gross margin. On the long term, I think we will continue to drive a further gross margin recovery. How that plays out in 2025 is still to be seen.

Rob Dickerson, Analyst, Jefferies: Okay, great. Perfect. And then maybe just a bigger question for you, Stefan, just around kind of strategic opportunities, inorganic strategic opportunities and kind of where you sit now, kind of for a long time, Nomad was clearly acquiring a lot more actively, lots occurred over the past three, four years that made that maybe a little bit more complicated, maybe valuations even a little lower. I’m just curious like kind of where you sit today, like are you kind of more actively thinking about acquisition potential like if there were something that were to come up that were attractive, would you still consider that or are you maybe in a period right now such that the focus on the core portfolio really is primary number one initiative? And you really kind of think at some point we’ll get back there.

But right now, we’re really not thinking about acquisition potential at this point. That’s all. Thanks so much.

Stefan Geschmaker, CEO, Nomad Foods: Thanks Rob. Well, the point is with or without acquisitions Rob, the focus has always been the portfolio, the existing portfolio. That’s the first piece. We never deviated even when we did the Switzerland or Goodfellas or on Besseys or the Adriatic, we never deviated. That’s the key piece.

And that’s the key piece because I don’t think you can be a good acquirer if you’re not doing the right job with your core business because the business model behind the acquisitions are always predicated on a very solid model, organic model. And That’s why we never did any acquisitions between 2015, ’20 ’16, ’20 ’17, because we had nothing to offer. We had first to clean up the whole thing and then we started. So now obviously since basically the 2022, we stopped to your point because basically first we really need to focus on the business assets even more, that’s one thing. And second, because there was a big difference between sellers and buyers.

I think this is reducing. The GAAP is decreasing a bit. In the meantime, no regrets, we keep buying back shares, which is the best acquisitions we can do. But also at the same time, I think what we also see is there are some maybe under the radar screen things, not shiny objects that we could consider in our category. You know, new subcategories in some countries where we have a lot of synergies and that’s the kind of things more and more we are considering.

Nothing done yet, but obviously I’m not in the business of disclosing any names. That would be that would be not the smart thing to do. No guarantee to do anything, Rob, because if you guarantee it is something that’s the best way to make mistakes by the way. But definitely, we believe that we have something to offer, which is not necessarily the big names in Europe, but all those add ons, deals and I think by doing so, we could create a nice pipeline of M and A as we’re also creating a pipeline of innovation.

Ruben Valdoux, CFO, Nomad Foods: And maybe just to build on that and I can give credit to Stefan, I wasn’t there, but since 2016, end of ’20 ’16, this business has deployed roughly SEK 1,200,000,000.0 for M and A, while shrinking the share count by 30% to 13.13%. And this combined then with our organic growth has allowed us to increase our EBITDA per share by 97%, almost 100 nearly doubling it from twenty sixteen to 2024%. And we were doing this while you’ve seen the dividends and lowering our net debt to EBITDA leverage. So I think that also tells you something in my humble opinion.

Rob Dickerson, Analyst, Jefferies: Yes, of course. Thank you so much. Very impressive.

Stefan Geschmaker, CEO, Nomad Foods: Thank you, Rob.

Conference Operator: And the next question comes from John Baumgartner with Mizuho (NYSE:MFG). Please go ahead.

John Baumgartner, Analyst, Mizuho: Good morning. Thanks for the question.

Stefan Geschmaker, CEO, Nomad Foods: Hi, John.

John Baumgartner, Analyst, Mizuho: Hey, Stefan. Good morning or good afternoon. Maybe first question, I wanted to come back to the enterprise wide transformation. The charges taken for that program in the quarter were fairly sizable. How far along are you in terms of taking these charges at this point implementing the program?

And then on the other side of that, how should we think about the ramp and the related efficiency benefits? I know it’s not something you normally discuss in detail, but should that ramp in efficiencies begin in 2025? Is it more 2026? Just any thoughts there?

Ruben Valdoux, CFO, Nomad Foods: Yes. No, let me answer that. It’s a good question, John. So a couple of points. We’ve seen that on the line.

Yes, maybe you can go to Jon a bit of on the line. So the ramp in terms of cost was around $5,000,000 over the quarter as well as if you look at the last year. What we said before some interaction is, we will bring that down, but clearly we’re not all of a sudden going to halt that. But can we bring down these loan rates with 20%, twenty five %? That is clearly the aim and we are working towards that.

That’s one point. I think the other point is what Stefan said is the contrary question on efficiencies. The other point is what Stefan just said. In terms of not having disruptions again, we will go slower, smaller and simpler. And slower means one of the lessons is you need proper time to test it, to onboard our teams and our people and our suppliers.

That’s one point. We will go smaller. So what we’re going to put live at the end of this year, the current plan is that what we went live last year was around a third of our business. What we’re going to put live this year is not even 15% of our business. So we will go smaller.

And the third bit is where we can we’re going to simplify. So that’s the second point I want to bring in. The third point is the efficiency ramp up. There are elements related to the fact that you need a whole new enterprise system and that will help us. But the big efficiency gains in terms of what Stefan spoke about simplifying the organization, in terms of factory optimization both at a factory as well as on a macro level in terms of supplier rationalization.

Nothing is stopping us to do that already in the next quarter and the next one or two years.

John Baumgartner, Analyst, Mizuho: Okay, great. Thanks for that. And then a follow-up on the commentary on pricing. I’m curious as you sort of see the waves of material inflation having passed and you look back and it says how the volumes are evolving you’re actively basing to these higher price levels for the category. How do you think about everyday value for your frozen categories at this point?

And do you sense that anything has changed in terms of maybe frothy elasticity is relative to fresh or shelf stable options for consumers of the categories?

Stefan Geschmaker, CEO, Nomad Foods: Well, I think vis a vis, let’s say, the center store and obviously fresh, it’s a bit more difficult to see. The only thing we see we’ve seen is during this crisis, as expected, we as category leader, we led the price increases and the other guys have been a bit slower to react, including the private label. So it’s been a great time for private label in terms of market share as expected, by the way, but we have no regrets because that was the right thing to do. I by far prefer back to Rob’s question, where do we start with gross margin, I can tell you, we wouldn’t have this we would not talk about whether you’re going to go back to 30%, we would have been very far from that. Now what we see is, at least in the category, John, I would put in the category, I think what we see is we are obviously it’s we’re regaining market share.

It’s a bit choppy still, but we’re gaining market share, which is private label, which is good because the market, let’s say, the price has stabilized, which is a good news as well. Now back to your question, correct me if I’m wrong, how are we doing versus other categories like fresh or center store? Well, I think overall, I think it’s more than ever, frozen has proven to be a very resilient and good category. And I would say with all the things we have ahead of us in terms of long term trends, in terms of good food and obviously also waste and all these things, I think it’s going to only amplify the future.

John Baumgartner, Analyst, Mizuho: Thank you.

Stefan Geschmaker, CEO, Nomad Foods: You’re welcome, John.

Conference Operator: And the next question comes from John Tanwaning with CJS Securities. Please go ahead.

Steve Powers, Analyst, Deutsche Bank: Hi, good morning. Thank you for taking my questions and congrats on a nice quarter. First, just a small one for Ruben. Are there any repurchases assumed in the EPS guidance for the year or are

Ruben Valdoux, CFO, Nomad Foods: the capital allocation at all? No. We have not assumed that only to the what we have assumed is that our share count will stay flat. So there’s always a bit of shares issued for share program we have internally and for that we assume some buyback. For the rest, it is assumed flat.

So additional share buyback could be a tailwind. On the other hand, you also know that in EPS there might be of headwind depending what the floating interest rate will do and all of that. So that’s the assumption.

Steve Powers, Analyst, Deutsche Bank: Got it. And then second, have you thought about the potential for tariffs from The U. S. And how that might impact European markets and the ability to procure seafood that’s denominated in U. S.

Dollars? And what the knock on impacts might be to you and how you might change your strategy to mitigate anything that might flow through there to you?

Ruben Valdoux, CFO, Nomad Foods: Yes. So just because I heard you saying denominated in U. S. Dollars, also to be clear, potential U. S.

Dollar moves, our hedging strategy is such that we don’t see a big impact into this year of the strengthening of the dollar, which we’ve seen over the last one or two months. So just to make that point clear. Secondly, and just to be clear, we don’t export into The U. S. And if you look at our buy side outside fish, which I will come to, we don’t import ingredients from The U.

S. So we don’t see overall big impact on tariffs. Now if you do look at fish, maybe The U. S. Russian fish, there is an executive order that Russian fish is not allowed into The U.

S. We think if you look at also a bit the population base from a U. S. Perspective where a lot of that is in Alaska, we don’t think that will change, but again, no one knows in these times. What we then see there is a tariff in Europe, in UK on fish.

On that one, for UK, we’re an important U. S. Fish, so not an impact for us. And it could be that there is additional tariffs also in Europe, but at this moment, we’re not foreseeing that also because you have to look at the overall fish supply, where we would run out of fish if tariff would go up too much or sanction would go up too much. So actually, we don’t see that as a major risk.

That doesn’t mean we’re complacent about it. So I think there’s a more strategic work, which we’ve done on looking at diversification of our fish sourcing that we are sure that in five to ten years we have the right fish sourcing. So I think that’s one element. The impact which the element which could have an impact, but again, this is also a bit hypothetical or no one knows what will happen is an impact on the gas prices. But again, that’s not the biggest spend of the item in our P and L, where we freeze stuff instead of heating stuff, but that could have an impact you’ve seen what will happen today with the gas prices.

But again, a lot of sentences, the main point is we don’t see a major impact of litigation in terms of tariffs.

Steve Powers, Analyst, Deutsche Bank: Great. Thank you.

Conference Operator: And the next question comes from Peter Saleh with BTIG. Please go ahead.

Peter Saleh, Analyst, BTIG: Great. Thanks for taking the question and congrats on a nice quarter. I just wanted to ask if you guys could provide a little bit more color on the overall consumer environment in Western Europe. Just given the inflation that you’re seeing, the incremental, have you seen any change in behavior at all in some of your core markets given that you’re starting to see a little bit more inflation? Has that flowed through to the consumer already or are we still a little early on that front?

Thank you.

Stefan Geschmaker, CEO, Nomad Foods: Well, I would put it that way. I think it’s easing little by little it’s improving, but it remains it’s not where it was before the crisis. But what’s little by little I think I would, but because when Ruben is talking about increased inflation, it’s nothing comparable to what we had in 2022. So it’s a bit of a price increase, but nothing major. So yes, I think overall it remains, as I said, slightly improving, but takes a bit of time.

What we see also see, which is good is private label is losing a bit of market share, which says something about obviously people coming back to brands and what they perceive rightly so, by the way, in terms of quality. So that’s good. So but yes, I think that’s where we see it, which is fully reflected in our guidance, by the way.

Peter Saleh, Analyst, BTIG: Thank you very much.

Stefan Geschmaker, CEO, Nomad Foods: You’re welcome.

Conference Operator: This concludes our question and answer session. I would like to turn the conference back over to Stefan Deshmeker for any closing remarks.

Stefan Geschmaker, CEO, Nomad Foods: Thank you very much. So I’m proud of the progress our company has made over the past year and confident in our growth outlook going forward. Our strategy is working and our teams are executing our plans well. We have compelling innovation, renovation, advertising and merchandising plans slated for 2025, which when combined with our ongoing productivity through programs, give us good visibility to another year of top and bottom line growth. We expect to keep our top and bottom line growth streak going again in 2025, extending the streak to ten years as we mark our ten year anniversary as a complete company.

Thank you to all our employees and investors who have joined us on this journey. The best is yet to come.

Conference Operator: The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.

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