Nomad Foods Reports Third Quarter 2018 Financial Results

Company Raises 2018 Guidance to the Upper End of the Prior Range

Nomad Foods Limited (NYSE: NOMD), today reported financial results for the three and nine month periods ended September 30, 2018.  Key operating highlights and financial performance for the third quarter 2018, when compared to the third quarter 2017, include:

• Reported revenue increased 15.6% to €531 million
• Organic revenue growth of 1.9%
• Reported Profit for the period of €36 million
• Adjusted EBITDA increased 7% to €84 million
• Reported EPS decreased 13% to €0.21; Adjusted EPS increased 8% to €0.26
• Company raises 2018 guidance to the upper end of the prior range of €365 to €370 million Adjusted EBITDA and €1.14 to €1.17 Adjusted EPS

Management Comments

Stéfan Descheemaeker, Nomad Foods’ Chief Executive Officer, stated, “We are pleased with our third quarter performance and are now on track to deliver the upper end of our prior 2018 guidance range. Organic revenue growth of 1.9% marks our seventh consecutive quarter of organic growth and is a testament to our focused strategy and relentless commitment to execution. As anticipated, underlying gross margin improvement was offset by acquisition mix and an unfavorable pea harvest. We continue to expect accelerated EBITDA growth in the fourth quarter and look forward to a strong finish to 2018."

Noam Gottesman, Nomad Foods’ Co-Chairman and Founder, commented, “Our brands continue to respond well to the investments we are making in our core portfolio. Third quarter results demonstrate our ability to anniversary strong year-ago performance while successfully navigating one of the hottest and driest summers on record in Europe. The prospects for frozen food remain bright with Nomad Foods well positioned as the market leader."

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

• Revenue increased 15.6% to €531 million. Organic revenue growth of 1.9% was comprised of 0.1% growth in price and 1.8% growth in volume/mix. Revenue growth benefited 14.7 percentage points from the acquisitions of Goodfella's and Aunt Bessie's and was offset by 1.0 percentage point from foreign exchange translation.
• Adjusted gross profit increased 8% to €151 million. Adjusted gross margin declined 190 basis points to 28.4% as positive mix was offset by an unfavorable harvest and the inclusion of the recently acquired acquisitions.
• Adjusted operating expense increased 12% to €79 million, primarily due to acquisitions. Advertising and promotion expense increased 18% to €27 million due to acquisitions and phasing. Indirect expense increased 8% to €53 million due to acquisitions.
• Adjusted EBITDA increased 7% to €84 million.
• Adjusted profit after tax increased 7% to €45 million. Adjusted EPS increased 8% to €0.26, reflecting Adjusted profit growth.

First Nine Months of 2018 results compared to the First Nine Months of 2017

• Revenue increased 7.6% to €1,558 million. Organic revenue growth of 2.1% was comprised of 1.0% growth in price and 1.1% growth in volume/mix. Revenue growth benefited 6.7 percentage points from the acquisitions of Goodfella's and Aunt Bessie's and was offset by 1.2 percentage points from foreign exchange translation.
• Adjusted gross profit increased 8% to €476 million. Adjusted gross margin expanded 20 basis points to 30.5% as positive mix and improved pricing and promotional efficiency were offset by an unfavorable harvest and the inclusion of the recently acquired acquisitions.
• Adjusted operating expense increased 4% to €233 million, primarily due to acquisitions. Advertising and promotion expense increased 5% to €83 million and Indirect expense increased 3% to €151 million.
• Adjusted EBITDA increased 12% to €276 million.
• Adjusted profit after tax increased 21% to €156 million reflecting prior year interest rate savings. Adjusted EPS increased 24% to €0.89, reflecting Adjusted profit growth and a lower share count resulting from prior year share repurchases.

2018 Guidance

The Company is raising 2018 guidance to the upper end of the prior range and now expects Adjusted EBITDA at the upper end of approximately €365 to €370 million and Adjusted EPS at the upper end of approximately €1.14 to €1.17 per share. Full year guidance continues to assume organic revenue growth at a low-single digit percentage range.