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Financial

Nomad Foods Reports Fourth Quarter and Full Year 2017 Financial Results

Mar 22, 2018
Q4 2017 Earnings Press Release
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Q4 2017 Earnings Presentation
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Reports Full Year 2017 Organic Revenue Growth of 3.9%, Adjusted EBITDA of €328 million and Adjusted EPS of €1.00

Initiates 2018 Guidance of Adjusted EBITDA of €350 to €360 million and Adjusted EPS of €1.08 to €1.13

Nomad Foods Limited (NYSE: NOMD), today reported financial results for the three and twelve month periods ended December 31, 2017.

Key operating highlights and financial performance for the fourth quarter 2017, when compared to the fourth quarter 2016, include:

  • Reported revenue increased 4.7% to €508 million
  • Organic revenue growth of 5.6%
  • Reported profit for the period of €27 million
  • Adjusted EBITDA increased 31% to €82 million
  • Reported EPS of €0.16; Adjusted EPS increased 108% to €0.27

Key operating highlights and financial performance for the full year 2017, when compared to the full year 2016, include:

  • Reported revenue increased 1.5% to €1,957 million
  • Organic revenue growth of 9%
  • Reported profit for the period of €137 million
  • Adjusted EBITDA increased 1% to €328 million
  • Reported EPS of €0.78; Adjusted EPS increased 19% to €1.00

Management Comments

Stéfan Descheemaeker, Nomad Foods’ Chief Executive Officer, stated, “2017 was an outstanding year for our Company. We reported full year organic revenue growth of 3.9% and expanded gross margins by 100 basis points. These results, which exceeded the expectations we set at the start of the year, are a testament to the power of our iconic brands, a proven strategy and relentless execution. We enter 2018 in a position of strength. Goodfella's Pizza, once closed, will provide a complementary source of growth to our base business and illustrate the power of our value creation model.”

Noam Gottesman, Nomad Foods’ Co-Chairman and Founder, commented, “These results further validate  the strategy that we have been executing against for the past two years. The combination of base business momentum, strong cash flow generation and accretive capital deployment positions us to drive continued shareholder value in 2018.”

Fourth Quarter of 2017 results compared to the Fourth Quarter of 2016

  • Revenue increased 4.7% to €508 million. Organic revenue growth of 5.6% was driven by 3.0% growth in volume/mix and 2.6% growth in price.
  • Gross profit increased 18% to €160 million. Gross margin expanded 350 basis points to 31.5% due to positive mix, improved pricing and promotional efficiency and manufacturing improvements. Foreign exchange currency translation positively impacted gross margin by 10 basis points.
  • Adjusted operating expense increased 2% to €89 million. Advertising and promotion expense decreased 7% to €35 million due to more normalized seasonality versus the prior year. Indirect expense increased 8% to €54 million, primarily due to the reinstatement of bonuses in 2017.
  • Adjusted EBITDA increased 31% to €82 million.
  • Adjusted profit after tax increased 93% to €46 million reflecting interest rate savings from debt repricing amendments and lower depreciation and amortization. Adjusted EPS increased 108% to €0.27, reflecting Adjusted EBITDA growth and a lower share count resulting from share repurchases.

Year ended 2017 results compared to the Year ended 2016

  • Revenue increased 1.5% to €1,957 million. Organic revenue growth of 3.9% was driven by 2.7% growth in volume/mix and 1.2% growth in price.
  • Gross profit increased 5% to €599 million. Gross margin expanded 100 basis points to 30.6% due to positive mix and improved pricing and promotional efficiencies which more than offset currency driven inflation. Foreign exchange currency translation adversely impacted gross margin by 10 basis points.
  • Adjusted operating expense increased 6% to €314 million. Advertising and promotion expense decreased 1% to €113 million with a favorable foreign exchange impact of 2% offsetting increased media spend on core brands of 1%. Indirect expense increased 9% to €201 million primarily due to the reinstatement of bonuses in 2017.
  • Adjusted EBITDA increased 1% to €328 million. Foreign exchange currency translation adversely affected adjusted EBITDA by €9 million.
  • Adjusted profit after tax increased 13% to €175 million reflecting interest rate savings from debt repricing amendments and lower depreciation and amortization. Adjusted EPS increased to €1.00, reflecting Adjusted EBITDA growth and a lower share count resulting from share repurchases.

2018 Guidance

The Company initiates 2018 guidance, inclusive of expected partial year contribution from Goodfella's Pizza which is expected to close during the second quarter of 2018.

Full year 2018 Adjusted EBITDA is expected to be approximately €350 to €360 million, which equates to adjusted EPS of approximately €1.08 to €1.13 based on the current share count of 176 million. Full year guidance assumes organic revenue growth at a low-single digits percentage rate.