Nomad Foods Limited

Good day and welcome to the Nomad Foods third quarter 2020 earnings conference call. Today's conference is being recorded. At this time, I'd like to turn the call over to Tepoche Berry, Head of Investor Relations. Please go ahead.

Thank you for joining us to review our third quarter 2020 earnings results. With me on the call today are Chief Executive Officer Stefan Descheemaeker and Chief Financial Officer Sammy Zickaut. Before we begin, I would like to draw your attention to the disclaimer on slide two of our presentation. This conference call may make forward-looking statements that are based on our view of the company's prospects, expectations, and intentions at this time, including consideration related to the impacts from COVID-19. Actual results may differ due to risks and uncertainties, which are discussed in our press release, our followings with the SEC, and this slide 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 may find the IFRS to 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 does represent adjusted figures for 2019 and 2020. And all adjusted figures have been adjusted for exceptional items, acquisition-related, share-based payment, and related expenses, as well as non-cash FX gains or losses. And all comments from here on will refer to those adjusted numbers. With that, I will hand the call over to Stefan.

Thank you, Taposha, and thank you all for joining us on the call today. I hope you and your loved ones remain well as we all continue to manage through these unprecedented times. As has been the case since the initial onset of the COVID-19 pandemic, we continue to prioritize the health and safety of our employees while ensuring the continued operation of our factories and meeting the needs of our consumers. With the number of confirmed cases rising across Europe, we will need to remain vigilant more than ever by sustaining the discipline and agility that has enabled us to navigate thus far. Moving on to our results, we reported third quarter earnings earlier today, which demonstrated continued momentum in the business with robust growth in our branded retail portfolio, offset by declines in food service and private label. Third quarter financial highlights were as follows. Organic revenue growth of 5.4%, driven by a 4.2% increase in volume and mix, and a 1.2% increase in price. This performance was in line with the guidance of mid-single-digit organic growth for the back half of this year. Growth margin of 30.4%, reflecting 90 basis points of expansion. adjusted EBITDA growth of 13% to 109 million euro and adjusted EPS growth of 20% to 30 euro cents per share. We sustained strong performance in the third quarter even as countries began to relax their restrictions and consumers learned to coexist with the virus. Offices, schools and restaurants gradually reopened across Europe this summer while other factors like unceasingly warm weather and the UK's Eat Out to Help Out campaign reignited auto-farm consumption during the month of August. As a result, there was a clean moderation of growth in packaged food, frozen savory, and our business relative to the extraordinary growth that we experienced in Q2. Nevertheless, we were pleased to see no mad outgrowth both total frozen savory and packaged foods during the third quarter. A testament to the value that our portfolio of family favorites is providing consumers during these unprecedented times. While COVID-19 continues to create a tailwind for companies like ours, we estimate that its uplift to our Q3 results was relatively small and a fraction of what it was in Q2 due to some of the aforementioned factors. What that implies, however, is that the underlying momentum in our business has accelerated every quarter this year. With that said, as a number of cases surges across Europe, governments are resuming restrictions, and we are beginning to see early signs of re-accelerated rates of consumption growth. This is something that we will continue to monitor closely, and we have prepared our supply chain with high levels of safety stock across the board. Let's turn to some additional highlights of the quarter on slide five. As the COVID-19 pandemic extends into its eighth month, it's increasingly clear that many of the new consumers who entered our portfolio during the March, April, and May months are repurchasing our brands and are recognizing the value that frozen food has to offer. Our aim is to directly engage these new consumers through increased A&P investment in the coming months and to ultimately retain many of them in 2021 and beyond. Between the significant amount of new trials that we are experiencing and the enhancements that we have made to our portfolio under Nomad ownership, we believe we are uniquely positioned in a post-COVID world. Our gross margin expanded 90 basis points during the quarter, driven by a combination of pricing, favorable mix, and fixed cost leverage. I'm also happy to share that our pea and spinach harvest met our expectation this season, providing the necessary supply to help achieve our goals for the coming year. We're pleased to see an upward trajectory in our gross margin as the inflationary headwinds for the past two years abate. Moving on, we continue the expansion of green cuisine during the quarter. In the UK, our largest and most advanced market, we demonstrated growth on growth by reaching a new record market share of 7% within the frozen plant protein category. We're building on our position as the number three brand in the space and establishing strong strategic partnership with many of our top retailers. From a distribution perspective, we enter three new markets during the quarter, Portugal, Sweden, and Finland, and are now happy to announce that green cuisine is currently available across 12 of our European markets. We activated a new multi-channel advertising campaign across several European markets during the quarter to drive trailer and awareness. And finally, we launched a new range of chicken-free poultry products which are demonstrating strong initial sales velocity early on. As you know, Green Cuisine is a multi-country, multi-dimensional brand whose goal is to make meat-free mealtime easy and affordable for consumers. By the end of this year, we will have 28 Green Cuisine SKUs across Europe that we have either developed or rebranded. It's quite an achievement and we look forward to elevating this part of our business even further in the coming year. Finally, we returned $467 million of capital to shareholders during the third quarter, the majority of which was executed through a successful tender offer in mid-September. Year to date, we have purchased approximately $600 million of equity, which represents a 14% reduction in our share count versus the start of the year. Our capital structure is now realigned to a strategy of consistent organic growth coupled with complementary acquisitions within European frozen. We remain active on the M&A front and look forward to updating you in due course. We have the financial flexibility to pursue this objective and in the meantime continue to generate strong free cash flow. I'd like to provide an update on our sustainability commitments where we're making great progress. I'm proud to share the news that we recently joined the 10-20-30 initiative, a collaboration of more than 10 of the world's biggest food retailers and manufacturers, each committing to engage in a whole supply chain approach to halving food loss and waste by 2030. We believe that our influence within the food industry makes us perfectly positioned to raise awareness of the issue and lead the way in achieving the UN Sustainable Development Goals for 50% reduction in food loss and waste worldwide by 2030. And we're looking forward to sharing future updates on our progress. We have also achieved the SAI platform Farm Sustainability Assessment Goal level for PFARM Management Group. I'm incredibly proud to confirm that we are the first UK farm management group and the first global in frozen food to be awarded the gold level. This is a major milestone for agriculture team in the UK underpinning our commitment to sourcing 100% of our vegetables and potatoes through sustainable farming practices by the end of 2025. We're pleased with the progress that we're making along the sustainability goals, which we expect will help drive our societal objectives and support longer-term financial performance. Staying on the theme of sustainable financial performance, I would like to share with you some preliminary thoughts on 2021, which I'm sure is an area of interest for many of you. There are a number of moving pieces including how the pandemic may affect the balance of this year. And the guidance that Sami will outline in his remarks does not yet include the potential impact from the recent COVID-related restrictions across Europe. Having said that, we have strong underlying momentum supported with investments behind our core portfolio, green cuisine and consumer retention. and we expect these actions to yield strong return next year. Taking all this into consideration, I am pleased to share today that our current 2021 plans show organic revenue, adjusted EBITDA and adjusted EPS growth when compared to the current 2020 consensus. This outcome would build on the extraordinary performance achieved this year while making a considerable acceleration on a two-year basis. Importantly, it would make Nomad one of the few companies delivering growth before, during, and after the COVID-19 pandemic. As we always do, we will share more detailed guidance when we report Q4 results in early 2021. We plan to articulate our long-term strategy and growth drivers when we host our first ever Investor Day to be held virtually next Tuesday, November 10th. This will be a unique opportunity for the investment community to hear from members of our management team, beyond myself and Sami, and to learn about the breadth and depth of our business model. We're excited to bring the Nomad story to life and hope you can join us for this engaging and unique session. Now over to Sami to review our financial performance and guidance in more detail.

Thank you, Stefan, and thank you all for your participation on the call today. Turning to slide six, I will provide more detail on our key third quarter operating metrics, beginning with revenues, which increased 6.7% to 576 million euros, driven by 5.4% organic revenue growth, and a 1.7% benefit from calendar timing offset by 40 basis points from foreign exchange translation. Organic revenue growth was in line with our expectations, led by our branded retail business, which represents 90% of our sales and grew just over 7% during the third quarter. This was offset by a two percentage point drag from food service and private label, which declined 23% and 5% respectively during the quarter. Second quarter gross margins expanded 90 basis points to 30.4% due to a combination of pricing, favorable mix, and fixed cost leverage. This marks a second consecutive quarter of gross margin expansion as realized the benefits of supply chain productivity and opportunistic raw material purchases. Moving down to the rest of the P&L. Adjusted operating expenses increased 4% year-over-year, reflecting growth in indirect and a modest decline in ANP. Adjusted EBITDA increased 13% to 109 million euros, and adjusted EPS increased 20% to 30 euro cents for the quarter. Turning to cash flow on slide seven, we generated 237 million euros of adjusted free cash flow during the first nine months of the year equating to 122% cash conversion. This is an exceptional outcome when taking into consideration the rebuilding of our inventory stock this summer and the fact that the third quarter is seasonally depressed due to the harvest and other factors. We continue to make significant progress on our cash breakthrough intervention focused on all parts of working capital a true testament to our entire organization's commitment to creating value across both the P&L and the balance sheet. We continue to expect to end the year with robust cash generation and cash conversion above 100%. With that, let's turn to slide eight to review our 2020 guidance, which is based on foreign exchange rates as of November the 3rd, 2020. For the full year 2020, We continue to expect organic revenue guidance in the high single digits range, which implies mid-single digit organic revenue growth in the fourth quarter. Consistent with our original expectations, we expect organic revenue growth to be offset by a 3% headwind, resulting from an unfavorable calendar shift in Q4. In addition, based on current foreign exchange rates, we expect FX translation to create another 2% headwind to the fourth quarter reported revenue given the relative strength of the euro versus the pound sterling and the Norvegia corona versus the prior year. In summary, we are reiterating our guidance for adjusted EBITDA in excess of 460 million, which will be subject to how the impact from COVID-19 transpires over the coming weeks. This now equates to adjusted EPS guidance in excess of €1.31 for the year, which is higher than our prior EPS guidance due to the successful completion of the tender offer in September and share repurchases to date. Our guidance assumes a weighted average share count of approximately €180 million for Q4 and €194 million for the year. When translated into U.S. dollars, the currency in which our shares trade, full year 2020 adjusted EBITDA guidance equates to at least $538 million, and adjusted EPS guidance equates to at least $1.53. Finally, gross margin are expected to increase year-on-year in Q4, and operating expenses are expected to grow significantly ahead of revenue growth due to the phasing of A&P into Q4. That concludes our remarks. I will now turn the session over to Q&A. Thank you. Operator, back to you.

Thank you, sir. We will now begin the question and answer session. To join the question queue, you may press star, then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then 2. We'll pause for a moment as callers join the queue. The first question comes from Rob Dickerson from Jefferies. Please go ahead.

All right, great. Thank you so much. Good morning. I guess, Stefan, just a clarification question up front. I know you had mentioned or you had some commentary around 2021. I thought I heard you say, you know, organic revenue growth, EBITDA, EPS, and it kind of went out. The timing wasn't great, but I didn't hear what kind of what you said about 21. It's kind of like we could be kind of in line with consensus or maybe there's there's still growth in 21. And that was, you know, in line with the follow up commentary around, you know, growth and nomad kind of, you know, pre, during and post 2020 in the heart of the pandemic. So just want to clarify the comments on 21. Thanks.

Okay, good morning, Rob. Yeah, let me clarify, and maybe, you know, thereafter, you know, I will leave it to Sammy to further, you know, define the comments. What we said is growth across the board. So what we want to achieve, objective in 2021, is to achieve organic revenue growth. adjusted EBITDA growth, adjusted EBITDA, adjusted the EPS. So all growing versus, obviously needed to come with a guideline, a baseline, growing versus 2020 consensus. So what's also important to comment is we're doing this based on what we've seen so far. It doesn't take into consideration how the second wave is going to play out. which is obviously it's so volatile it's very difficult to say but at least that's what we see that's ambitious and it's obviously you have to do if you want to do this you have to lap a significant COVID impact in 2020.

Okay and so I guess then obviously the expectation is and you know and maybe You said you would point to this or discuss this in more detail at the Investor Day next week. You must have some visibility on new innovation and distribution, and maybe it's around green cuisine, because obviously the laugh is really significant, right? So if you still expect organic sales growth, there are at least some clear drivers of that growth that you see that can get you to growth on top of growth.

Rob, I'll take that one. Actually, you're absolutely right. I mean, we do have a perspective on retention for new consumers, I mean, coming in. Green cuisine, definitely, I mean, which will continue to be a growth driver for us. Recovery input service and, frankly, continued, let's say, investments, the return of the investment that we have made, I mean, this year carrying over into the next year.

Okay, super. I'll pass it on. Thank you.

Thank you, Rob.

Thank you. The next question comes from John Bumgartner from Wells Fargo. Please go ahead, sir. Good morning. Thanks for the question.

Sandy, could you comment from a supply chain perspective, sort of the setup as it pertains to contingency plans relating to hard Brexit at this point, which I guess is still out there in addition to the COVID volatility? Anything different year on year relative to the plans last year? How do you feel about inventory situation going forward? Just any thoughts there will be appreciated.

Yeah, I'll probably give you a general overview on the supply situation, and maybe Stefan will add some further perspective on the Brexit-specific element of the question. So we definitely took the learning of the wave one into account into the way we are managing, if you want, the rest of the year relating to actually rebuilding our safety stock. Can we continue to carry challenge because I mean the demand is fluctuating a fair deal but definitely the situation we've taken the time I mean over summer to rebuild our inventory in order for us to start if you want Q4 with a much better visibility on our safety stock. Okay all of that is taken into consideration as well with the preparation of the of the Brexit I mean timing that's going to come off if you want a plan for at the end of December early January. So that's that's where we I mean Stefan do you want to add maybe any further perspective on Brexit?

Yeah, good morning, John. Yeah, as you can imagine, this combination of Brexit and COVID makes it, you know, quite, I would say, interesting and volatile. So, and you have to plan for this. So, we prepared, you know, we prepared very well for Brexit and Brexit in terms of how to do business and obviously in terms of if the worst comes and happens. So, obviously, we're going to plan in terms of inventory. and obviously it's a very dynamic situation to change again hour by hour maybe in the few coming days. But at this stage, that's how we're planning our inventory. But obviously 2021 is based on a deal basis as opposed to a no deal basis. Thanks, Stefan. Maybe just a follow-up.

Your emphasis on sustainability really seems to be ramping up at this point. and I'm curious as to what you've seen or heard or maybe your expectations as to how the sustainability efforts may lead to any sort of direct cost improvements tied to the waste initiatives and maybe on the revenue side, the extent to which you think the program can provide a competitive advantage, incremental appeal for your brands relative to competitors or even other frozen food categories. Any thoughts there would be helpful.

Yeah, definitely, I can imagine, you know, on November 10th, we'll spend quite some time on sustainability because it's really fundamental for business. The good news for us is sustainability does very well with frozen food in terms of waste. But also, if you're taking, you know, a more proactive approach, commercially, it's critical for us because at the end of the day, it's great for the retailers, as we can imagine, again, back to waste. But also it's good for the consumers in terms of nutrition, in terms of how you can keep obviously the vitamin and how you can obviously keep, you know, that kind of label in terms of good for the planet and good for you. So all these things, you know, and it's again, it's go back to label. So it's everything. It covers the whole organization and the whole P&L from cost. Sometimes you're adding cost. Sometimes, indeed, you can reduce cost. And then it goes, which is even more important, is the receipt goes up to your top line. And we see that little by little, our consumers start to appreciate, especially during these times, how great, you know, our category is doing in terms of sustainability. But again, more to come, as you can imagine, during your investor day. Great. Thanks for your time. You're welcome.

The next question comes from John Sanwanting from BJS Securities. Please go ahead.

Hi. Good morning. It's Pete Lucas for John from CJS. Just wanted to touch base. You touched on M&A, talked about it a little bit. I just wonder if you could talk about the number of opportunities that you're seeing and also the willingness of people to sell in this environment.

Yeah, it's a very good question. And I think let me start by providing a bit of background where we stand. So as you know, together with the buyback, we also redefined and even focused even further you know our strategy in terms of M&A so it's really focused on frozen food consolidation in Europe so that's the real backdrop and we believe you know with the cash flow generating including obviously you know the right allocation of a capital we can do this and so that's one thing second you know M&A wise it's quite simple you have to be ready because you have to be flexible you have to be prepared and then from a moment you know an owner decides to sell you have to be there as simple as that and that's what we're doing sometimes you can be more proactive sometimes a bit less but things are coming so back to your question about let's say you know how is it possible to do M&A time will tell it's a volatile world and it has an impact on M&A as well but you can see in the rest of the world M&A is still going on.

Very helpful, thanks. My other questions have been covered. Thank you. You're welcome.

The next question comes from Rob Mosco from Credit Suisse. Please go ahead.

Hi, this is Ariel Alter. I was on for Rob. Thanks for taking my question. Just on the reacceleration Your consumption growth as consumers are set to spend more time at home now because of new lockdowns. Are you seeing any meaningful distinctions across geographies and also how has consumer behavior changed in the second lockdown period in terms of what they're buying and how much they're buying compared to what you saw earlier in the year?

So to your first question, the answer is Across the board in Europe, not really. I think consumers are consumers. And when you're at home, you start to appreciate even further frozen foods, whether you are in Finland or in Portugal or in Spain or Italy or in Germany. Obviously, the measures that the governments have been taking have impacted, let's say, not the behavior, but at least the intensity. depending on whether the schools are closed, the restaurants and all these things. But that's normal. Now, to your second question, which is, you know, how do we see the second wave? It's obviously early game, so it's early moment, but what we can see so far, and not limited to frozen food, by the way, is that there is less panic buying. People have We understand, I've learned to cope with COVID. They know what's working, what's not working. And so it's a bit easier to handle the demand and the offer from that standpoint.

All right, great. Thanks.

The next question comes from Bill Chappell from Truist Securities. Please go ahead.

Hi, this is actually Grant on for Bill. Thanks for taking the question. Have one on the step up in investment in AMP going forward. And really a question on has plans or have plans changed for where you guys are going to allocate that spend based on the current consumer economic environment? I would assume less promotional dollars, more to the advertising side, but just want to get your thoughts on that and how you think about that going forward.

Hi, Bill. I mean, it's a very dynamic environment, as you can imagine, and we have to remain super agile in the way we manage our own spending there. Clearly, at this very stage, if you're on the current plan to spend the proceeds, and for us, it's all focused in maximizing the mix across the product lines. and the different vectors of spending, if you want, in order to clearly end the year with a very strong momentum and get into the next year with a strong momentum as well. So, I mean, at this very stage, it's all about managing allocation and spending.

Got it. And then just one on the cash flow. Oh, sorry.

No, no, please keep going. I was just about to say that it's really this very delicate balance between Navigating through Q4 and obviously how to make sure that we offer a fast start with the right level of A&P in Q1 because, again, as we said, growing organically, sales have been done, and EPS is what we want to achieve in 2021. Got it.

Thanks for that. That's helpful. And then one on the cash flow. Very strong so far, especially the free cash flow conversion. Just a question on your comments on more safety stock inventory investment going forward just to have a little bit of a cushion. Should we expect to be more of a cash investment going forward with that dynamic or should we expect it based on some of the other initiatives that you have in place on payables, et cetera, to continue to be a cash generation? Thank you.

We continue to be committed to clearly converting more than 100% of our profit into cash I mean at this stage so the factor you're describing have already been taken into consideration to end the year with a strong momentum and I think we've been clearly stating that we want to continue to return I mean a significant let's say cash level I mean overall and 100% is what we are after so we're trying to balance all of the items from the cash part and that's frankly what the Thank you. I'll pass it on.

Once again, if you have a question, please press star then 1 on your telephone keypad. The next question comes from Jason English from Goldman Sachs. Please go ahead.

Hey, good morning, folks. Congratulations on another strong quarter. A couple of questions. You're welcome. A couple of questions. I think you guys have been signaling, aside from the second quarter where you pulled back, you've been signaling this rampant investment into the third quarter, into the fourth quarter, yet we haven't actually seen it show up in the P&L yet. Is the spend just being deferred, or is it just not as substantial as perhaps I thought it was going to be?

Well, at this stage, to be fair, Jason, I mean, we are managing really our P&L, if you want, on a full year basis at this stage. We were planning, effectively, to start in Q3. I mean, some of it has started in Q3, and the majority will be effectively Q4 focused as we have laid out. But we intend to continue to spend, if you want, the amount of investment that we had planned for, as we said, because it's delivering good return and is the right thing to do to exit the year with the right momentum going into the next year.

Okay. And on the cost side, we had seen some spot market weakness in fish, and I haven't checked recently, but on the back of food service weakness. Can you update us on whether or not you're seeing cost relief or where your input cost pressure or relief stands, both on an absolute basis and relative or post the currency transaction impacts as well?

Yeah, I would say on the cost side, I mean, to the example that you used, but I would frankly broaden the point on the input cost on virtually all of the critical material we have in our cost of goods. We've been very, I mean, focused and opportunistic at the same time. Definitely there has been some pockets of opportunity, as you know, I mean, from a spot standpoint on some ingredients. And we've taken advantage, I mean, from that perspective into this year. But what we are seeing, if you want, when you project that in a broader sense from a projection moving forward is that our current expectation is that we have a low single-digit inflation moving into the next year, I mean, which is pretty much in line with, frankly, our longer-term history. So on that front, I mean, there's no change.

So we'll be back to more normal years to some extent, Jason.

And then on your question on effects, effectively, I mean, we do see some effectively slight help, but it's not going to be I mean that's significant given the fact that we have a rolling hedging program there and most of it is being reflected in the economics as we look at this year and the next year as well.

Very helpful. Thank you. I'll pass it on.

The next question comes from Faiza Ali from Deutsche Bank. Please go ahead.

Yes, hi. I wanted to talk about you know private label shares just some of the data that we see in frozen fish and I know the data that we're getting from Nielsen is not you know doesn't encompass everything but that's showing sort of some increase in private label shares just in the latest you know few weeks here so just wanted to get your perspective on what you're seeing on you know private label versus branded side in the fish category.

So let me start, Sami, and please complement it. I think I understand your point. I think, quite frankly, a few weeks can be and more of the time is also promo related. So sometimes, you know, you have a week or so, two weeks, which were last week. Last year, we had some promo. This year, we don't. So, quite frankly, fish remains more than ever, you know, a very strong category for us. Back to the previous question, we're going to invest a lot, and we're investing a lot in Q4 and onwards, and it doesn't change anything to our game plan vis-a-vis private label. I think we are a branded company. We want to come up with the product superiority, and we obviously need to manage the price gaps, so that's an important consideration. But definitely, you know, we're a fish company and we intend to continue to be the leader. So I wouldn't be concerned.

Okay, that's helpful. And then just back on the, you know, the strategic investments that you had talked about and A&P, just going back to Jason's question. Is that how you intended it? Did you intend that most of these investments will come through in the fourth quarter? Or did you make that decision as you got into third quarter and decided that you were going to defer this to the end of the year so you get more of a return on it into next year? I'm just curious why you chose not to spend in the third quarter.

Well, as Sami said, you know, it's something really that we're leaving to operators. And, you know, what I've seen is we believe that, you know, having it, you know, in Q4 and where they believe that having it in Q4 is going to be the most impactful solution for their respective market in every country where we are. Back to the other question, which was, you know, you remember that we said we're going to invest Another 10 million, how to keep these new consumers. So far, so good. It's too early to say. We will inform you. But apparently, we're trying different solutions, not limited, by the way, to television, but more. It's broader than that. and we will inform you. We will monitor the situation and we'll let you know. But again, I wouldn't really read too much about Q3, Q4 because that's not how we're managing the business. It's really up to the countries and the respective markets to see exactly when they want to invest.

Got it. Perfect. Thank you so much.

You're welcome.

The next question comes from Ryan Bell from Consumer Edge Research. Please go ahead.

Hi, everyone. For understandable reasons, we continue to see manufacturers across a number of countries focusing a bit more on meat alternatives and plant-based protein products in the pursuit of incremental growth. Would you be able to offer a bit of perspective about How the competitive landscape in Europe is now and has been evolving and then maybe a little bit more about the positioning of green cuisine products within that spectrum.

Okay, so it's a very good question and you can imagine for us it's a crucial question because green cuisine slash plant protein is really a big bet for Nomad and we're investing Accordingly, in terms of resource, cash, and time, and talent, obviously. So let me dissect a bit further. We started last year with the UK and Ireland. Especially the UK is probably the most advanced market in Europe. And so we started almost from scratch. And we're very pleased with the progress we have achieved. So in something like a year or so, we already have achieved a 7% market share, the number three brand, and still making a lot of progress and very close to the retailers. We know that some of our retailers have big ambitions in that category, and we want to be part of that together with them. So that's one thing. Then you can go to other countries, especially in continental Europe, which are less advanced, and there you see some flurry of new initiatives in countries like Germany, which is fine, because it means that the category needs to grow. You need to think a bit differently compared to a mature category. The category first has to grow. So we're pleased with these additional offers, and obviously it's our job with the quality of our products and with OAP and obviously our install activation to make the difference. And then in some countries, It's really, we are becoming as de facto the market leader because we're starting really from scratch. And again, it's our job to make sure that people are going to start to understand the beauty of plant protein. So a lot of things to do from different angles. And and obviously, at the same time, we also need to make sure that it's also a big impact in terms of R&D. We just started a new range of, let's say, of nuggets, so poultry-free, fantastic product, I can tell you. I don't know if you, obviously, if you happen to be in the UK, which is difficult now, I know, But you should try the new nuggets. They're just fantastic. And we know it's going to make a difference. The numbers are very, very, very interesting. And I could speak for hours about cuisine. As you can imagine, it's big for us.

Thank you. That was very helpful. And then could you speak in a little bit more detail about how the COVID retail landscape is impacting your SKU assortments? essentially what learnings have provided about your brand and the package architecture and then maybe how innovations are being able to get to market recently in the context of increasing cases and how retailers are positioned to handle that going forward.

Well, it's common knowledge that normally in crisis times you know, the retailers tend to stick to the standard SKUs. In all fairness, we haven't seen that much with green cuisine, or at least it's difficult to compare because we're doing well. So we don't think that innovation, the NPD that came from green cuisines from some of the places, you know, have been, let's say, We moved or slowed down by our retailers at this stage. Could happen, but at this stage we haven't seen it. So now looking forward, expecting at some stage of recession where we know that frozen food is doing well, yes, we're going to work at some stage together with the retailers and see how we can optimize the SKUs. But again, it's a very dynamic process. that can happen country by country and retailer by retailer. Okay, thanks.

And so it's sounding a little bit like green cuisine is an innovation that may be uniquely successful, and is it fair to say that maybe some of your competitors aren't having the same level of success plotting innovation, or am I interpreting that wrong?

Well, you know, it's difficult to speak on behalf of our competitors. and let's not forget that competition goes both ways. It's frozen food but it's also in obviously in chilled and fresh. So we have to think both ways. How to lead and obviously how to make sure that frozen is going to be well represented. So for the rest, you know, difficult to comment on behalf of the others. But overall, what I would say, which is very important, is It's a long-term trend structurally, and we believe at this stage that, you know, we first need collectively to make sure that this category is going to grow and is going to be big enough.

Great. Thanks a lot. That's it for me.

The next question comes from Peter Sally from BTIG. Please go ahead.

Great. Thank you, and thanks for taking my question. I think this was touched on a little bit, but I was hoping you could comment a little bit. I think you had mentioned that consumers are creating new purchasing habits, purchasing more frequently. Any sort of detail or insight into how much of that you think is More permanent versus transitory. I know that may be a little bit difficult at this point, but any sort of insight you could provide that gives us confidence that some of the changing consumer habits are a little bit more here to stay.

So let me start with just a global comment. We're tracking, as you can imagine, we're tracking these repeat rates on a monthly basis, and we've given ourselves some targets. and what I can see is it takes a bit of time because obviously in frozen, I mean the frequency is a bit lower than in chilled and or in obviously in ambient. This being said, we're pleased with what we're seeing right now and my invitation is to come to the investor day because we will have more to say about our ambitions and how we're doing. So I wouldn't like to empty the content of our conversation on November 10th.

Fair enough. Okay. So can I just ask about the plant-based meat category? When you look at the category as a whole, where do you – I'm assuming consumers just aren't eating more food, so there's some share loss coming. Is it really coming from actual meat products? Is it coming from fish? Do you see any sort of evidence in terms of where the growth is taking share from?

To your point, compared to all the innovations we have in our industry, Mestrine Battles, where by definition you have a level of cannibalization, which is inherent from, you know, it's the name of the game. Here the beauty for us is, the only thing I can say is, it's not coming from our own products. So that's great. So where is it coming from? I think it's too early to say, but we can imagine, you can see on the macro basis that let's say meat is a bit more stable than it used to be. And I think we will see. But I think I would give ourselves a bit of time to really see where it's coming from. It should come from there. I think it's going to be also interesting to see from the retailers what their view is, but at least they already have voted. I'm talking about the retailers. because even inside of, let's say, the frozen products, they're adding more space to plant protein at the expense mostly of lower value frozen produce where we're not anyway. So it's probably a combination of lower value frozen products and also some meat content which makes a lot of sense. So for us, it's a perfect innovation It's a perfect new category because it's highly incremental with the margins that are obviously in line with our expectations. So far, so good. But definitely, as you can imagine, it's also a category, and rightly so, where we need to invest ahead of time. And that's what we've been doing in 2020, and that's what we're going to do in 2021.

Thank you very much.

You're welcome.

The next question comes from Andrew Olson from UBS. Please go ahead.

Hey, good morning everybody. I just wanted to touch a little bit on the Nordic region. I believe you started to lap the challenges there in TQ, so just wondering what you're seeing now and how you're seeing that region turn around.

Yes, as you know, and I wouldn't speak so much about the Nordics. I would just limit myself to Sweden because the rest of the business is doing well and in line with our expectations. So in Sweden, as you know, we had to rebuild everything. I wouldn't say from scratch, but quite frankly, quite deeply in something we've been doing with... with Wayne Hudson, who is now in charge of the UK and Nordics and Ireland. So we have a new team in place. I think we've changed a bit, you know, the mindset as well. The mindset is much more customer driven. And we see that, you know, we're starting to really make progress. So starting to make progress means, you know, a better relationship with these people and starting to see, you know, obviously, The space allocated to us is starting to increase again. So we see that little by little, it's going to take place in the course of the next quarters. So you don't expect anything spectacular in one quarter. It's something that's going to take place. But we're starting to see some interesting results, also some interesting results pretty soon in terms of cost optimization, especially at the logistics level. So, starting to see some green shoots, but again, don't expect, you know, a quick, quick, quick turnaround. But I think it's really starting first from how to rebuild the top line, and that's exactly what we are doing at this stage.

Okay, very helpful. Thank you. I'll pass it on.

There are no more questions at this time. I would like to turn the conference back over to Nomad CEO Stefan Descheemaeker for any closing remarks.

So thank you, operator, and thank you for joining our third quarter earnings call. Our business continues to perform well amidst the COVID-19 pandemic. I'd like to reiterate the comments that I made in my prepared remarks. We're having an exceptional 2020 and are planning to build on that momentum in 2021. with organic revenue, adjusted EBITDA and adjusted EPS growth. We're generating a significant amount of cash and remain active and well-equipped to pursue M&A strategy. And we look forward to hosting you on Investor Day next week to be held virtually, as you know, on Tuesday, November 10th.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.