Nomad Foods Limited

Ladies and gentlemen, and welcome to Nomad Foods' third quarter 2024 earnings conference call. At this time, all participant lines are in the 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.

Hello, and welcome to Nomad Foods' third quarter 2024 earnings call. I'm Jason English, head of investor relations, and I'm joined on the call by Stefan Deschmaker, our CEO, and Ruben Baldu, our CFO. By now, everyone should have access to the earnings release for the period ended September 30, 2024, that was published at approximately 6.45 a.m. Eastern Time. The press release and investor presentation are available on Nomad Foods' website at www.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 risk and uncertainties that are discussed in our press release, our findings 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 or and should be read together with 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 the presentation represents adjusted figures for 2023 and 2024. All adjusted figures have been adjusted primarily for share-based payment expenses and related employer payroll taxes non-operating M&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 will hand it over to Stéphane.

Thank you, Jason. Nomad Food delivered another quarter of solid top and bottom line performance. I'm pleased with the progress our teams continue to make in accelerating profitable volume growth. The third quarter was our ninth consecutive quarter of organic sales growth and our second consecutive quarter of volume growth. The growth continues to be concentrated behind our profitable machine battles and growth platforms, which are yielding healthy margin mixed benefits. The mixed tailwinds, combined with productivity and price net of cost benefits due to promotion timings favorability, drove our gross margin up 390 basis points year-over-year to a new all-time quarterly high of 32.3%. Adjusted EBITDA rose 19% year-over-year, and adjusted EPS rose 28% year-over-year to €0.55 as a result. This solid margin performance gives us the fuel we need to reinvest back into the business to keep the commercial flywheel that we first introduced to you last year spinning. The investments associated with the flywheel are beginning to bear fruit, validated by our return to market share growth this quarter. The third quarter results are even more impressive when put in context of greater than expected temporary headwinds related to our ERP implementation that we faced in the quarter. Our service level suffered for a period of time, and caused us to reduce in-market support to dampen demand and limit out-of-stocks. I'm proud of our team's ability to overcome these obstacles and happy to report that our service levels are returning to near normal levels. We were able to nimbly adapt to the challenge and deliver strong bottom-line results this quarter as we pulled back promotions and changed the volume price mix at the top line. The impact of welfare has caused us to lower our full revenue outlook, We will not cut down on the investments on our brands and business and have therefore modestly lowered our full year EBITDA and EPS outlook as a result. We will continue to fuel our growth for both the short and the long term. Our recovery into positive market share in the third quarter is a result of our commitment to invest behind our categories, brand, products, and people. Our volume sales and share growth have accelerated further so far in the fourth quarter. We are seeing improved momentum in market now and are committed to spending behind that momentum to ensure that it translates into more robust organic sales growth in the fourth quarter and into 2025. As we detailed at the recent conference, our portfolio remains growth advantaged. First, we are in a relatively healthy market. Unlike the U.S., European consumers pulled back meaningfully during the cost-optiming crisis. which weighed on industry volume and boosted private label share. European consumers are now rebounding off that pullback. Volume for the FMCG industry is growing across all major European markets here to date, and private label gains have slowed as brands have accelerated. This backdrop becomes even more favorable when you zoom into our frozen category. As we illustrate on slide four, Volume growth for the product category continues to outpace the overall food industry. While we saw category volume growth slow in the quarter against tougher prior year comparisons, we are beginning to see re-acceleration in the fourth quarter. Category volume and value growth was up 2% and 2.6%, respectively, at retail in the most recent four-week periods. And our brands are driving much of this growth, while private label share is now contracting across our aggregate market footprint. As illustrated on slide 5, our actions have returned our market share to growth in the third quarter. We show a value share on this chart, and the story is the same through a volume lens. Our marketing, merchandising, and innovation efforts are driving these results, and the improvement is even more impressive. given that we curtail in-market activity in the UK and Ireland this quarter to limit other stocks as a result of the ERP disruption. We're achieving this success with concentrated marketing, merchandising, and innovation efforts behind our growth platforms, which grew net sales by 11% in the third quarter, and our mushroom battles where sales rose 2% this quarter despite the ERP disruption in the UK and Ireland. On slide 6, you can see a handful of innovations that have just recently been launched across our Western European markets. The team continues to build on our successful mushroom poultry battle in the UK with new chicken shop items while investing in our potato growth platform with the launch of Hugo's iChip. And while potatoes are a growth platform in the UK, they are a mushroom battle in France. And here you can see the seasonal items we are bringing to markets under the Finder's brand. In Italy, we're building on our early poultry success with the launch of new chicken crunchies in the third quarter, while also expanding our range of premium fish products, which is a growth platform for us in this market. And in Germany, where fish is a must-win battle, we are investing behind our recently launched regionally-inspired varieties, such as Militerana and Mexicana crusted fish. In Belgium, we're launching exciting vegetable-rich meal products in a bowl, and launching work-based vegetable meat solutions in Portugal. This twin engine of innovation, behind Russian battles and growth platforms, is speeding up in our South Eastern European markets as well. As a reminder, we entered South Eastern Europe with the acquisition of Fortinova's frozen food business in late 2021. Like our prior M&A, this has proven to be a great deal for us. Our full year 24 sales and adjusted EBITDA in Southeast and Europe are tracking high teens above our forecast at the time of the acquisition. Momentum are sustained with net sales up 8% year to date, purely in part by innovation. We highlight some of these new products on slide seven. We command leading share of the ice cream market in the region, and our focus earlier this year was on maintaining that strength into the peak summer season. Our team, has achieved just that. The King brand hit a record high share of the impulse ice cream category in Croatia, driven by innovation and a highly effective marketing campaign. And we've seen great growth behind the brand in Serbia, as well with a similar playbook. Innovation is driving this growth and getting recognized more broadly. At this year's International Ice Cream Consortium Conference, the King Supreme in layers won first place in the best ice cream category while the King Obsession Layers won second place for most innovative ice cream. We're winning awards, and more importantly, winning more sales. And our differential innovation behind our quarter brand is driving share in the multi-serve segment as well. We are successfully growing our businesses southeast in Europe with new premium offerings and gaining share from brands like Ben & Jerry's, Agondal, and Magnum. And our investment is not isolated to ice cream. Premium fish and prepared vegetables are two of our growth platforms in this market, where we are lifting our products concepts and capabilities from other markets to launch here. For context, the average household penetration for fish fingers in Serbia and Croatia is half of what it is in Germany, while being only a third for frozen fish. The frozen fish segment in this market has historically been dependent on lower margin natural fish, and we are changing that with innovation. Over the past year, we have invested in a full 360-degree campaign centered around premium innovation, and it has yielded results. Year-to-date, our fish sales in Croatia are plus 16% year-over-year and plus 30% in Serbia. In the fourth quarter, we will leverage our third Eastern European moat, our direct store delivery network, and over 120,000 owned freezers at retail to replicate the success in vegetables. Prepared vegetables account for more than one quarter of the frozen vegetable market in Western Europe, but are virtually non-existent in Southeastern Europe. Our research tells us that the demand is there, and we intend to unlock it with marketing innovation, including the new products you see on the slide. These products began to hit store shelves in October. This could become more than a 30 million euro new segment in the category if it evolved to look like Western Europe over time. We have a lot of actions on the way to keep our momentum in Southeast Eastern Europe going. These are just some of the examples that have made me excited about our future. We are in the great category with leading brands that are aligned with secular convenience, nutrition, value, and taste trends. We are investing to maximize our growth potential, and I'm pleased to see the commercial fly with delivering market share growth. Our marketing and merchandising is improving, and our innovation framework is only just beginning to deliver a multi-year pipeline of products to market. I'm pleased with the progress we're making and confident in our growth trajectory. With that, let me turn it to our CFO, Ruben Badiou, to work through our quarterly results and outlook in more detail.