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Nomad Foods Reports Fourth Quarter and Full Year 2018 Financial Results

Reports Fourth Quarter Organic Revenue Growth of 4.2%
Full Year 2018 Adjusted EBITDA of €376 million and Adjusted EPS of €1.19 Exceed Prior Guidance
Initiates 2019 Guidance of Adjusted EBITDA Growth of 8-10% before the Impact of IFRS 16

FELTHAM, England - February 28, 2019 - Nomad Foods Limited (NYSE: NOMD), today reported financial results for the three and twelve-month periods ended December 31, 2018.

Key operating highlights and financial performance for the fourth quarter 2018, when compared to the fourth quarter 2017, include:

  • Organic revenue growth of 4.2%
  • Reported revenue increased 21% to €615 million
  • Adjusted EBITDA increased 23% to €101 million
  • Reported profit for the period of €41 million
  • Reported EPS of €0.23; Adjusted EPS increased 7% to €0.29

Key operating highlights and financial performance for the full year 2018, when compared to the full year 2017, include:

  • Reported revenue increased 11% to €2,173 million
  • Organic revenue growth of 2.6%
  • Reported profit for the period of €171 million
  • Adjusted EBITDA increased 15% to €376 million
  • Reported EPS of €0.97; Adjusted EPS increased 19% to €1.19

Management Comments

Stéfan Descheemaeker, Nomad Foods’ Chief Executive Officer, stated, “We delivered a solid end to 2018, with fourth quarter and full year results exceeding our prior guidance. Performance during both periods reflected broad based geographic growth, continued leadership within our core categories and strong customer acceptance of our new product offerings. We are pleased with our progress integrating Aunt Bessie’s and Goodfella’s which have outperformed their plans since being acquired in the middle of 2018. Finally, we generated significant cash flow during the fourth quarter and the year which will further enable our growth ambitions for 2019 and beyond.”

Noam Gottesman, Nomad Foods’ Co-Chairman and Founder, commented, “Our 2018 financial results mark another year of organic growth for Nomad Foods which demonstrates the sustainability of our growth model, the power of our brands, and the quality and determination of our people. We have an exciting set of plans for 2019, and we look forward to building shareholder value through sustainable growth, cash flow generation and accretive capital deployment.”

Fourth Quarter of 2018 results compared to the Fourth Quarter of 2017

  • Revenue increased 21% to €615 million. Organic revenue growth of 4.2% was comprised of 1.7% growth in volume/mix and 2.5% growth in price. Revenue growth benefited 17.3 percentage points from the acquisitions of Goodfella's and Aunt Bessie's and was partially offset by 0.5 percentage points from foreign exchange translation.
  • Adjusted gross profit increased 15% to €184 million. Adjusted gross margin declined 160 basis points to 29.9% as positive mix and pricing and promotional efficiencies were offset by cost of goods inflation and the inclusion of the recently acquired acquisitions.
  • Adjusted operating expense increased 8% to €96 million as financial discipline in the base business was offset by the inclusion of expenses related to the aforementioned acquisitions. Advertising and promotion expense increased 10% to €38 million and Indirect expense increased 7% to €58 million.
  • Adjusted EBITDA increased 23% to €101 million.
  • Adjusted profit after tax increased 13% to €52 million and Adjusted EPS increased 7% to €0.29.

Year ended 2018 results compared to the Year ended 2017

  • Revenue increased 11% to €2,173 million. Organic revenue growth of 2.6% was comprised of 1.2% growth in volume/mix and 1.4% growth in price. Revenue growth benefited 9.4 percentage points from the acquisitions of Goodfella's and Aunt Bessie's and was partially offset by 1.0 percentage points from foreign exchange translation.
  • Adjusted gross profit increased 9% to €659 million. Adjusted gross margin declined 30 basis points to 30.3% with positive mix and pricing and promotional efficiencies more than offsetting cost of goods inflation and acquisition mix.
  • Adjusted operating expense increased 5% to €329 million as financial discipline in the base business was offset by the inclusion of expenses related to the aforementioned acquisitions. Advertising and promotion expense increased 7% to €121million and Indirect expense increased 3% to €208 million.
  • Adjusted EBITDA increased 15% to €376 million.
  • Adjusted profit after tax increased 19% to €209 million and Adjusted EPS increased 19% to €1.19.

IFRS 16 - Leases

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 will not be restated to reflect the new standard. IFRS 16 is expected to have the following impact on 2019 results:

  • EBITDA is expected to be approximately €15 million higher due to lower lease expense, which will be replaced by higher depreciation and interest expense charges.
  • Profit before tax is expected to be approximately €5 million lower and EPS is expected to be approximately €0.02 lower.
  • Assets are expected to be €84 million higher and liabilities are expected to be €120 million higher.
  • While IFRS 16 will not affect company cash flow, the standard will reclassify lease payments from operating activities to financing activities within the Statements of Cash Flows.

2019 Guidance

The Company is initiating 2019 guidance, which includes the anticipated impact of IFRS 16. Full year 2019 Adjusted EBITDA is expected to be approximately €420 to €430 million, inclusive of approximately €15 million of anticipated benefit related to IFRS 16. This equates to expected 2019 Adjusted EBITDA growth of approximately 8-10% before the effect of IFRS 16.

Adjusted EPS is expected to be in the range of approximately €1.28 to €1.32, inclusive of approximately €0.02 of anticipated dilution related to IFRS 16. Full year guidance assumes organic revenue growth at a low-single digits percentage rate.