Nomad Foods Limited

Greetings and welcome to Nomad Foods' fourth quarter and full year 2021 earnings call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Seamus Murphy, Group Finance Director. Thank you. You may begin.

Hello. and welcome to the Nomad Foods fourth quarter 2021 earnings call. I'm Seamus Murphy, Group Finance Director, and I'm joined on the call by our CEO, Stefan Deschmaker, and our CFO, Sam Ezekiel. Before we begin, I would like to draw your attention to the disclaimer on slide two of our presentation. This conference call may 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 risks and uncertainties which are disclosed in our press release, our filings 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 reconsidered a replacement for and should be read together with our IFRS results. Users can 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 represent adjusted figures for 2020 and 2021. All adjusted figures have been adjusted for exceptional items, acquisition-related, share-based payments, and related expenses, as well as non-cash FX gains or losses. Unless otherwise noted, all comments from here on will refer to those adjusted numbers. With that, I will hand over to Stéphane.

Thank you, Seamus, and thank you all for joining us on the call today. We're pleased to report our results for the fourth quarter and full year 2021 in line with the high end of our prior guidance range and marking a fifth consecutive year of growth on revenue, adjusted EBITDA, and adjusted EPS. This was a great achievement for the team, overcoming a series of macro challenges throughout the year and reinforcing the resilience of our business model and the strength of our brands. In the face of a volatile market backdrop, we prioritized our attention to areas of the business where we could have the most control. Specifically, we sharpened our consumer proposition while strengthening our supply chain through process improvement and targeted investments. We also took the opportunity to materially lower our cost of capital through a successful debt refinancing. This was concurrent with the acquisition and integration of two significant acquisitions, which continued the development of our brand portfolio and expanded the European footprint to the high-growth and Adriatic region. With that, I'd like to recap our 2021 key financial metrics, beginning with reported revenues of €2.6 billion, which increased by 3.6% compared to 2020, and 6% on a two-year casual basis. Full-year organic revenues were in line with our guidance and declined 2.1%, as we compare against strong 2020 results and navigated the volatile market through 2021. Importantly, it's worth noting on the two-year CAGR basis, organic revenues increased 3.2% as we consolidated our consumer wins from 2020. We delivered a robust adjusted gross margin of 28.9%, which was 140 basis pounds lower year-on-year, reflecting the impact of acquisitions as well as raw material and utilities inflation through the second half of the year and the normalizing of promotional activity adjusted EBITDA of 487 million euro represents four percent growth compared to last year in a six percent CAGR compared to 2019 on the two-year basis and finally adjusted EPS was 1.55 euro cents per share representing 15% growth versus last year and a two-year CAGR of 12%. This performance, which included a fourth-quarter seasonal loss from Forte Nova's frozen food business of approximately 4 cents, is in line with the top end of our full-year guidance. After an exceptionally strong year for frozen food demand in 2020, we saw greater volatility in 2021 as Europe reopened and consumer demand began to normalize. In some cases, faster than in other parts of the world. However, while the European frozen food category did decline modestly during 2021, we believe our continuing solid performance is evidence of the longer-term shift of consumers eating occasions to their homes and the greater share of frozen food within that consumption. At the same time, We continue to invest in our brands as we optimize our NP strategy to maximize impact with our consumers and develop a growth engine in green cuisine. Specifically on green cuisine, we are pleased with our continued growth in the meat and alternative segments, which has seen that business grow by 31% during 2021. This growth is driven by product and technology innovations with the launch of chicken-less burgers and grills, as well as fish alternative fishless fingers. We continue to expect this segment to be a driver of dynamic growth in the years ahead. I am proud of how our supply chain has adapted to a radically different environment since 2019, navigating exceptional growth in demand in 2020 and ratcheting inflation pressure since the first half of 2021. Focusing on continuity of supply, we have right-fitted process to optimize our manufacturing and logistic network while undertaking several capital projects to ensure excellent service levels despite the volatile micro background. Even in this environment, our strong business model delivered free cash flow of 232 million euros for the year after higher capital investments in capacity expansion, and cost reduction projects. This was driven by our solid EBITDA performance and disciplined work in capital management. Within this number, we increased our capital investment by €20 million to €79 million, or 3% of revenue, as we invest in capacity expansion and cost reduction projects. We expect our underlying free cash flow to grow as we continue to expand our business and our conversion returns to its long-term 90% to 100% average. Our strong operation performance in 2021 was augmented with a number of capital allocation actions. We successfully completed two acquisitions during the year with a total announced purchase price of €725 million. Finder Switzerland, which we acquired at the start of the year for €110 million, completed our consolidation of the Finder brand in Europe. Our integration program is largely complete, and the business is performing well. In late September, we completed the acquisition of 14 of our frozen food business, which expanded our geographic footprint into several new markets in Central and Eastern Europe through the leading brands Ledo and Fricom. We have now owned the business for nearly five months, and we are pleased with what we have seen. The brands have leading market share positioning, and our teams are working hard to enhance them even further by leveraging the commercial and scale capabilities of Nomad Foods. In 2022, we plan to invest significantly in the business with targeted A&P increases and growth-focused capital investments, and we are confident of delivering our stated synergy target of 15 million by the end of 2024. For the Novas frozen food business, represents our fifth acquisition since the creation of Nomad Foods in 2015, and it shares many of the same characteristics as the deals that preceded it. Iconic brands with number one market share, strong consumer awareness, and attractive free cash flow. While we're excited to integrate Fortinova in the coming quarters, we have the appetite and capacity to continue the consolidation of frozen foods across Europe. Our M&A pipeline is active, and we look forward to updating you with progress when we have news to share. In August 2021, we announced a $500 million buyback program expiring in August 2024. To date, we have repurchased 4.2 million shares for a total value of €94 million, and we continue to regard opportunistic repurchases as a highly creative option to drive shareholder value. Turning to slide five, we're pleased to share a number of the sustainability milestones that we achieved in 2021. As Europe's leading frozen food company and a major purchaser of fish and agricultural produce, we are committed to playing our part in transforming the food system to protect natural resources and tackle climate change. Despite significant challenges across our supply chain in 2021, We have continued to raise the bar and I would like to provide you with a few examples. In 2021, we joined the United Nations Race to Zero and announced plans to significantly reduce our greenhouse gas emissions. We are also partnering with the World Wildlife Fund to further enhance our work on sustainable agriculture. During 2021, we achieved 100% renewable electricity in all of the factories within our base business, which reflects the medium-term direction of our energy strategy. As recognition of our progress on sustainability over a number of years, we were also delighted to be included in Dow Jones Sustainability Europe Index for the first time. We were ranked as one of the top four companies in Europe within the food product industry, with a full 100 score in health and well-being. Turning to slide six, I believe it is important to look at our results in 2021 in context of what we have achieved since the creation of this business in 2015. Following the series of early acquisitions which consolidated much of the Bird's Eye, Iglo and Findus operations across Europe, we have continued to grow our sales from €1.9 billion to €2.6 billion with a run rate into 2022 of €2.9 billion. including the 14 of our business. Our adjusted EBITDA has increased by over 50% to 487 million euros, and our adjusted EPS has increased by 85% at an average annual rate of 13% to a 2021 reported 1.55 euro per share. We will discuss our 2022 guidance later, but I'm confident that our business is well positioned to repeat this pattern of growth in this current year and over the medium and longer term, supported by our excellent team across Europe, our strong brand portfolio and consumer proposition, and our proven track record to deploy capital in the optimal way to drive value for our shareholders. With that, I will now hand the call over to Samy to review our financial results and guidance in more detail. Samy?