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Nomad Foods Reports First Quarter 2019 Financial Results

Company Reiterates 2019 Adjusted EBITDA Guidance

Nomad Foods Limited (NYSE: NOMD), today reported financial results for the three month period ended March 31, 2019. Key operating highlights and financial performance for the first quarter 2019, when compared to the first quarter 2018, include:

  • Reported revenue increased 15% to €618 million
  • Organic revenue growth of 0.9%
  • Reported Profit for the period of €22 million
  • Adjusted EBITDA increased 18% to €122 million
  • Adjusted EPS increased 14% to €0.40

Management Comments

Stéfan Descheemaeker, Nomad Foods’ Chief Executive Officer, stated, “We achieved strong performance during the first quarter and are on pace to deliver another year of revenue and Adjusted EBITDA growth in line with our long-term growth algorithm. Organic revenue growth of 0.9% was achieved despite a later Easter this year, reflecting our ability to consistently execute against our growth model. Strategic focus on our core categories continues to drive market share gains and favorable mix. Overall, we are pleased with our start to the year and are well positioned to continue the solid momentum throughout 2019 and beyond.”

Noam Gottesman, Nomad Foods’ Co-Chairman and Founder, commented, “First quarter results reinforce the sustainability of the Nomad Foods business model, now in its third consecutive year of organic revenue growth and market share gains. The team continues to execute at a high level while successfully navigating a dynamic packaged food backdrop. We ended the quarter with a sizable cash position due to strong free cash generation and a successful equity offering completed in late March. The combination of solid operating momentum and a well-capitalized balance sheet puts us in a position of strength as we pursue our organic and acquisitive growth ambitions."

First Quarter of 2019 results compared to the First Quarter of 2018

  • Revenue increased 14.6% to €618 million. Organic revenue growth of 0.9% was comprised of 4.1% growth in price and a 3.2% decline in volume/mix. Revenue growth benefited 13.8% from acquisitions.
  • Gross profit increased 11% to €191 million. Gross margin declined 90 basis points to 30.9% as positive mix and pricing and promotional efficiencies were offset by cost of goods inflation and acquisition mix.
  • Adjusted operating expenses increased 9% to €85 million primarily due to inclusion of acquisitions. As a percentage of revenues, Adjusted operating expenses improved from 14.5% to 13.8% reflecting acquisition synergies, expense discipline and phasing. Advertising and promotion expense increased 6% to €32 million while Indirect expense increased 11% to €54 million.
  • Adjusted EBITDA increased 18% to €122 million, which included a benefit of €4.3 million related to IFRS 16.
  • Adjusted Profit after tax increased 14% to €71 million, reflecting Adjusted EBITDA growth, higher finance costs and a lower effective tax rate. The impact of IFRS 16 reduced Adjusted Profit after tax by €0.7 million.
  • Adjusted EPS increased 14% to €0.40, reflecting Adjusted Profit growth. The impact of IFRS 16 was immaterial to this metric. Reported EPS declined 64% to €0.13.

IFRS 16 - Leases

As previously disclosed, Nomad Foods has adopted IFRS 16, a new standard on lease accounting which requires certain operating leases to be capitalized on the balance sheet effective January 1, 2019. Based on the adoption method selected by the Company, prior year results have not been restated to reflect the new standard.

2019 Guidance

The Company is reiterating 2019 guidance of approximately €420 to €430 million Adjusted EBITDA. Adjusted EPS is now expected to be in the range of €1.18 to €1.22 per share, reflecting a higher share count as a result of the March 2019 equity offering. Full year guidance continues to assume organic revenue growth at a low-single digit percentage range.