Nomad Foods anticipates stronger growth in 2024 By Investing.com

Nomad Meals (NYSE: NYSE:) has reported a strong efficiency for the fourth quarter and the total 12 months of 2023, with a constant rise in natural gross sales and improved gross margins. The corporate has additionally introduced the initiation of a quarterly money dividend and the adoption of a brand new $500 million share repurchase program.

Wanting forward, Nomad Meals expects natural gross sales to develop by 3% to 4% and adjusted EBITDA to extend by 4% to six% in 2024. The European frozen meals section stays robust, and the corporate is making ready to launch new merchandise and improve its advertising and marketing investments to reinforce market share.

Key Takeaways

• Natural gross sales grew by 1.9% in This fall 2023, marking the sixth consecutive quarter of progress.
• Gross revenue elevated by 7.9% to €208 million in This fall, with gross margins bettering to 27.3%.
• €300 million of free money movement was generated in 2023, with a brand new $500 million share repurchase program in place.
• Full-year web gross sales rose by 3.6% to €3.04 billion, with natural gross sales progress of 4.9%.
• Adjusted EBITDA for the total 12 months elevated to €535 million.
• The corporate plans to spice up promoting and promotion spending within the first half of 2024.
• Nomad Meals is open to M&A alternatives however prioritizes returning capital to shareholders.

Firm Outlook

• Projected web income progress of three% to 4% for 2024.
• Adjusted EBITDA progress anticipated to be between 4% to six%.
• Anticipated adjusted EPS of €1.75 to €1.80 per share.
• Sturdy money movement with a conversion vary of 90% to 95% is predicted.

Bearish Highlights

• Adjusted web revenue declined by 9.4% as a consequence of increased curiosity bills.

Bullish Highlights

• The initiation of a quarterly money dividend displays robust money movement.
• The frozen meals section in Europe is wholesome, indicating a good market atmosphere.
• Plans to launch a pipeline of latest merchandise in 2024.

Misses

• There have been no particular misses reported within the earnings name abstract supplied.

Q&A Highlights

• Executives mentioned rising promoting and promotion spending.
• Concentrate on innovation and the robust pipeline of latest merchandise.
• Openness to M&A alternatives whereas sustaining leverage inside the goal vary.
• Emphasis on closing the worth hole with non-public label merchandise and highlighting premium model qualities.
• Selective deal with Should Win Battles to focus on classes with one of the best margins.
• Potential for cross-selling alternatives in markets the place manufacturers usually are not current throughout all classes.

Nomad Meals’ CEO, Stefan Descheemaeker, expressed confidence within the firm’s technique and momentum, anticipating accelerated progress in 2024. The technique contains rising advertising and marketing investments, specializing in Should Win Battles, and leveraging the “pollination” method to increase profitable merchandise into new markets.

The corporate stays dedicated to delivering worth to shareholders by way of dividends and share repurchases whereas exploring progress alternatives.

Full transcript – Nomad Holdings Ltd (NOMD) This fall 2023:

Operator: Greetings, and welcome to the Nomad Meals Fourth Quarter 2023 Earnings Name. Presently, all contributors are in a listen-only mode. An issue-and-answer session will comply with the formal presentation. [Operator Instructions] As a reminder, this convention is being recorded. I’d now like to show the convention over to your host, Mr. Amit Sharma, Head of Investor Relations for Nomad Meals. Thanks. It’s possible you’ll start.

Amit Sharma: Howdy, and welcome to Nomad Meals’ fourth quarter 2023 earnings name. I am Amit Sharma, Head of Investor Relations. And I am joined on the decision immediately by Stefan Descheemaeker, our CEO, and Samy Zekhout, our CFO. By now, everybody ought to have entry to the earnings launch for the interval ending December 31, 2023 that was printed at roughly 6:45 a.m. Japanese Time. The press launch and investor presentation can be found on Nomad Meals’ web site at www.nomadfoods.com. This name is being webcast and a replay will probably be out there on the corporate’s web site. This convention name will embrace forward-looking statements which might be primarily based on our view of the corporate’s prospects, expectations and intentions right now. Precise outcomes might differ as a consequence of dangers and uncertainties, that are mentioned in our press launch, our filings with the SEC and in our Investor Relations presentation, which incorporates cautionary language. We may also focus on non-IFRS monetary measures throughout the name immediately. These non-IFRS monetary measures shouldn’t be thought-about a substitute and must be learn along with IFRS outcomes. Customers can discover the IFRS to non-IFRS reconciliation inside our earnings launch and within the appendices on the finish of the slide presentation out there on our web site. Please be aware that sure monetary info inside this presentation represents adjusted figures for 2022 and 2023. All adjusted figures have been adjusted for distinctive objects, acquisition-related prices, share-based compensation and associated bills, in addition to non-cash FX positive aspects or losses. Except in any other case famous, feedback from hereon will refer to those adjusted numbers. With that, I’ll hand you over to Stefan.

Stefan Descheemaeker: Thanks, Amit. I want to start by providing just a few highlights from our stable fourth quarter and full 12 months outcomes. I’d then supply just a few feedback on our accelerated progress outlook and the well being of the frozen classes, earlier than handing it over to Samy for detailed evaluate of our quarterly monetary outcomes and our preliminary 2024 steering. Nomad Meals delivered one other quarter of stable top- and bottom-line efficiency. Fourth quarter natural gross sales elevated by 1.9%, our sixth consecutive quarter of optimistic natural progress, as our quantity traits improved sequentially in every month of the quarter. Quarterly and full 12 months gross margins improved considerably, and we proceed to generate robust money flows, enabling us to provoke a quarterly money dividend. I am happy with our crew to allow us to proceed our uninterrupted monitor document of top-tier monetary efficiency and end 2023 with document excessive annual gross sales and EBITDA. I am much more enthusiastic about our constructing momentum as the important thing drivers of our long-term worthwhile progress start to speed up. Because the impression of difficult macros recedes and we return to our typical working cadence, we count on even stronger top- and bottom-line progress in 2024 and for a few years to return. Particularly, we count on 2024 natural gross sales to extend by 3% to 4%, together with optimistic quantity and share. Adjusted EBITDA is predicted to extend by 4% to six% to €556 million to €567 million, and adjusted EPS is predicted to be within the vary of €1.75 to €1.80, which suggests 9% to 12% progress. We count on one other 12 months of robust money movement era with money movement converging the 90% to 95% vary. With that, let me present just a few highlights on our fourth quarter efficiency. Fourth quarter web gross sales elevated by 1.4% as natural progress of 1.9% was modestly offset by unfavorable ForEx. Our quantity/combine declines improved sequentially from the final quarter and moderated to the bottom ranges because the third quarter of 2022. Fourth quarter gross margins improved by greater than 160 foundation factors as a consequence of disciplined pricing, optimized promotions and continued deal with productiveness. Our full 12 months gross margin additionally got here in higher than anticipated whilst we absorbed substantial COGS inflation, enabling us to proceed to extend A&P investments behind our manufacturers. Adjusted EBITDA of €117 million and adjusted EPS of €0.32 per share each got here in forward of expectations. We generated practically €174 million of free money movement throughout the quarter and €300 million for the total 12 months, one in all our highest, with money conversion ratio of 109%, properly above our focused vary. Our lengthy monitor document of persistently robust money movement is on the basis of our efficient capital allocation to reinforce shareholder worth. To that impact, we initiated a quarterly money dividend of €0.15 per share, a notable milestone for Nomad Meals and a testomony to the standard and resilience of our enterprise and our confidence in our means to generate important money flows and a sustainable long-term progress. On the retail gross sales degree, as reported by NielsenIQ, our price gross sales for the 12-weeks interval ending December thirty first elevated by practically 2%, together with sequentially bettering quantity and market share traits. Our current year-over-year quantity progress and share traits have already turned optimistic in lots of key markets, giving us larger confidence in delivering optimistic quantity progress in 2024. The frozen meals section in Europe stays wholesome. Underlying consumption in our core classes in key markets continued to develop with bettering quantity traits over the previous few durations. Even with the unprecedented degree of inflation-driven pricing within the final two years, frozen meals stays extremely related for many shoppers. Frozen meals get pleasure from excessive family penetration in our key markets within the mid- to high-80% vary. And much more importantly, family penetration has remained largely secure even with the extraordinary pricing within the final two years. And it isn’t that troublesome to see why. Frozen meals classes align completely with quite a lot of secular client traits, together with comfort, style, vitamin, sustainability, and stay extremely inexpensive. As an example, utilizing our price packs and promotion, a household of 5 can get pleasure from a meal of fish fingers, waffles, and peas for round $10 in lots of markets, highlighting the great worth proposition of our product providing, a key consideration for shoppers within the present atmosphere. We’re positioning ourselves to seize a larger share of this progress by rising our focus in investments behind our largest and most worthwhile alternatives. Our complete promoting and promotion spending elevated by practically 30% within the fourth quarter and a disproportionately massive share of those investments have been made in opposition to our prime 20 Should Win Battles. These high-priority alternatives account for practically half of our retail gross sales and even increased greater share of our gross revenue. Our current traits in lots of of those alternatives are very encouraging and provides me larger confidence in our revised progress plans as we glance to 2024. The numerous ramp up in our fourth quarter A&P funding will proceed with 2024. Particularly, we launched our grasp model marketing campaign to drive larger affinity to our manufacturers within the first quarter to construct an emotional connection to our manufacturers and to remind shoppers of probably the most related and beloved elements of their relationship with our iconic manufacturers. Our messaging may also deal with highlighting the stronger well being claims of our manufacturers to emphasise the naturalness and goodness of our merchandise, given the rising debate round weight problems and extremely processed meals. Together with driving the core, increased A&P may also assist reignite our innovation engine. Traditionally, new merchandise have accounted for practically 5% of our annual gross sales and it fell beneath that degree in 2023. We dedicated to regaining our innovation momentum and have an thrilling pipeline of latest merchandise to be launched by way of the remainder of the 12 months. I discussed two of those improvements final week, Iglo branded Mexican coated fish fillet in Germany, and King’s branded multi-layered premium ice cream for the house event [in Adriatic] (ph). We have now deliberate a full spectrum of selling help and retail activation behind each these improvements, together with our different new merchandise in our pipeline. As anticipated, nearly all of these, the troublesome however vital, pricing discussions with just a few of our retail companions, which I discussed in our final name, have been resolved efficiently. Retail atmosphere stays dynamic, however we’ve efficiently accomplished pricing conversations in majority of our markets and we stay on monitor to finish the remaining over the subsequent few months. On the identical time, we’re optimizing our promotion spending and reallocating sources the place we see the biggest potential impression. As I discussed in my feedback on the CAGNY convention final week, we’re investing in our progress capabilities, in our knowledge, in our analytics to place us for accelerated progress in 2024 and past. These investments are meaningfully upgrading our retail execution. We have now higher insights and a wider, extra complete income progress administration toolkit to maximise our worthwhile volumes. These methods are working, and I strongly consider that they place us to seize a larger share of the frozen meals progress in our markets. Our rising investments to drive accelerated progress is underpinned by our productiveness agenda, significantly throughout our provide chain. The resilience and nimbleness of our provide chain throughout a interval of unprecedented volatility is unmatched throughout the frozen meals aisle. However I am much more happy with the truth that we’re undertaking it whereas rising our deal with driving larger efficiencies throughout our community. We’re optimizing our manufacturing and logistic community, decreasing complexities and establishing strategic relationship with key suppliers to cut back provide threat and generate procurement financial savings. Our provide chain delivered robust price financial savings and better money flows in 2023, whilst our service ranges improved to over 98%. We count on comparable trajectory in 2024. Whereas on the subject of money movement, as I discussed earlier, we generated €300 million of free money in 2023, our second highest annual money movement ever. Sturdy money flows are a basis of our value-enhancing capital allocation methods. We purchased again greater than 6% of our shares excellent in 2023, initiated the quarterly money dividend, and adopted a brand new $500 million share repurchase program, highlighting the power and adaptability of our steadiness sheet as we proceed to execute a balanced capital deployment technique meant to maximise shareholder returns. In conclusion, we delivered document excessive gross sales and EBITDA in 2023, with bettering margins and powerful money flows. Our quarterly quantity traits improved sequentially, positioning us to ship optimistic quantity and share progress in 2024. We’re rising our progress investments to unlock the total potential of our enticing frozen classes and iconic manufacturers, positioning us to ship sustained enticing progress in 2024 and for a lot of extra years to return. I am extremely assured of delivering our revised long-term targets of three% to 4% natural income progress, 5% to 7% adjusted EBITDA progress, 7% to 9% adjusted EPS progress, and 90% to 95% money conversion, which I consider will ship superior returns for our shareholders. With that, let me hand the decision over to Samy to evaluate our fourth quarter outcomes and our 2024 steering in larger particulars. Samy?

Samy Zekhout: Thanks, Stefan, and good morning, everybody. I’m happy to current one other quarter of stable efficiency at Nomad Meals. For the fourth quarter, reported web revenues elevated by 1.4% to €761 million. Natural gross sales elevated by 1.9% whereas unfavorable FX impacted quarterly gross sales by 0.5%. Our natural gross sales progress was pushed primarily by pricing, as we proceed to learn from pricing to cowl inflation. Our quantity/combine was down 5.6% throughout the quarter, a marked enchancment from the third quarter and our lowest quantity/combine decline since quarter three 2022. Fourth quarter gross revenue elevated by 7.9% to €208 million, whereas gross margin elevated by over 160 foundation factors from the year-ago quarter to 27.3% as a consequence of higher procurement and value self-discipline, bettering quantity traits, and contribution from pricing and favorable RGM execution. Adjusted EBITDA elevated by 3.2% to €117 million within the quarter, as increased gross revenue was partially offset by increased working bills. Our adjusted working expense elevated by 14% from the year-ago quarter as a result of step-up A&P funding in addition to increased oblique bills. Adjusted web revenue declined by 9.4% as a consequence of increased curiosity expense from our final 12 months’s refinancing, whereas adjusted earnings per share of €0.32 declined by solely €0.01 from the year-ago quarter, as impression from increased curiosity prices was partially offset by share buybacks. At present euro/greenback spot charge, our quarter 4 adjusted EPS was $0.35 per share. For the total 12 months 2023, web gross sales elevated by 3.6% to €3.04 billion, together with 4.9% natural gross sales progress. Gross margin elevated by practically 50 foundation factors to twenty-eight.2%, whereas adjusted EBITDA elevated by 2% to €535 million. Full 12 months adjusted EPS of €1.61, or $1.74, declined as a consequence of increased curiosity expense from the refinancing of our debt. Throughout 2023, we repurchased greater than 11 million shares of our widespread inventory for practically $185 million underneath our earlier buyback authorization. As Stefan talked about, we now have a brand new $500 million share repurchase authorization. We delivered yet one more 12 months of robust money movement in 2023, with full 12 months adjusted free money movement of €300 million, pushed by robust working capital enchancment, increased EBITDA, and favorable timing on sure receivables. Full 12 months and fourth quarter money flows got here in properly forward of our expectation as we proceed to be extremely centered on efficient stock administration, money assortment to enhance our working capital efficiency. Particularly, full 12 months working capital decreased by practically €155 million, greater than offsetting a virtually €40 million improve in money curiosity. 2023 CapEx of €82 million elevated modestly from final 12 months as we stay extremely disciplined on supporting long-term strategic funding. Given the robust This fall money efficiency, full 12 months money conversion got here in at 109%, properly forward of our focused 90% to 95%. Sustaining a excessive degree of money conversion is paramount to making sure the power of our steadiness sheet and to proceed to execute our efficient capital allocation to ship enhanced shareholder returns. We paid our first quarterly money dividend of €0.15 per share earlier this week, reinforcing our means to generate robust, constant money flows and in our enticing long-term progress. Turning to our steering for 2024, we’re happy with our constructing top-line momentum as we enter 2024. We count on to ship web income progress of three% to 4%, adjusted EBITDA progress of 4% to six%, and adjusted EPS of €1.75 to €1.80 per share. We proceed to count on robust money movement, with money conversion in a spread of 90% to 95% vary. Our 3% to 4% natural progress in 2024 is predicted to be comparatively balanced between value and quantity/combine, together with optimistic quantity progress for the total 12 months. Quantity traits are already starting to inflect to optimistic progress in lots of our key markets. We count on continued sequential enhancements within the first half and consolidated quantity to show optimistic within the second half. We count on our gross margin traits to proceed to enhance in 2024 as we profit from bettering volumes, larger deal with productiveness initiative, and favorable prices. Digging into inflation extra particularly, we count on comparatively flat inflation for the total 12 months, with decrease fish and protein prices offset by headwinds in a few of different price buckets, together with greens. As Stefan talked about, we stay dedicated to investing behind our manufacturers. Total A&P spending elevated by practically 13% in 2023 and we’ve deliberate to a fair larger improve in 2024, significantly within the first half as we drive robust quantity and share efficiency in 2024. At US greenback/euro trade charges as of February 17, our adjusted EPS steering interprets into $1.89 to $1.95 earnings per share and implies 9% to 12% year-over-year progress as we lapped impression from increased curiosity prices in 2023 and proceed to learn from decrease share rely. When it comes to quarterly cadence, our top-line is prone to be largely according to historic sample. Nevertheless, the second half will account for a disproportionately increased share of our revenue and earnings given the timing of price flow-through as a result of steadiness sheet [re-measurement] (ph) and the timing of our A&P investments, significantly within the first quarter. Absent of any strategic acquisition and given our robust money movement, we stay dedicated to returning capital to shareholders by way of the not too long ago instituted dividend and opportunistic share repurchases. We have now a confirmed monitor document of top-tier monetary outcomes and are much more excited by the alternatives we’ve forward of us. We’re assured of delivering enticing progress at or close to the top-tier of our meals friends in 2024 and for a few years to return. I’ll now flip the decision over to the operator in your questions. Thanks.

Operator: Thanks. Presently, we’ll be conducting a question-and-answer session. [Operator Instructions] Thanks. Our first query comes from the road of John Baumgartner with Mizuho Securities. Please proceed along with your query.

John Baumgartner: Good morning. Thanks for the query.

Stefan Descheemaeker: Hello, John.

John Baumgartner: Samy, I wished to — good morning. I wished to dig into This fall gross margin, which I feel was a bit higher than anticipated. And I perceive you have acquired kind of pricing inflation kind of matching higher relative to final couple of quarters. Are you able to stroll by way of what drove that upside? And the way a lot of that was underlying price efficiencies coming by way of? How a lot of it was price inflation moderation relative to web pricing?

Samy Zekhout: Yeah. Thanks, John. Really, successfully, we had a superb efficiency in our gross margin of practically 160 foundation factors from 1 / 4 12 months in the past. I’d say, the principle driver have been frankly just about the identical. I imply, though the unfold was modified, if you take a look at efficient unfold starting of the 12 months, finish of the 12 months, as a result of successfully we noticed the pricing impression beginning to successfully fade down as we had prior pricing within the base. So, numerous it was coming from good self-discipline and higher procurement. So, we clearly continued to learn from the very fact that there have been some clearly stepped-up enchancment in that space. We had the next focus as properly general on productiveness and effectivity. And at that very same second, we had bettering quantity pattern. For those who recall, we had applied on the identical time a sharpened RGM technique to outline efficient some promotional intervention, but in addition successfully, there have been some particular stepped-up, if you would like, in promoting that basically boosted the amount, which successfully lowered the impression that we had versus 12 months in the past. So, the amount factor had a part, I imply, into that progress.

John Baumgartner: Okay. Thanks for that. And as a comply with up, trying on the vol/combine, I feel that got here in a bit bit lighter than we have been in search of within the quarter. I feel you talked about some one-time drags there. However greater image, are you able to stroll by way of the non-measured channels? What we won’t see in Nielsen, what you are seeing within the Nordics, what you are seeing within the Adriatic, and the way that kind of evolves in 2024? Thanks.

Stefan Descheemaeker: Properly, I feel to your level, John, really, [indiscernible] Nielsen is just capturing a part of our companies. So, it would not embrace, to your level, Nordics, Swiss, Adriatic, Eire. And it would not embrace some manufacturers, by the way in which, like Aunt Bessie’s. And it would not embrace both for instance meals service. And we’ve, as you already know, a bit of personal label. So, if you see, as an instance, quarter 4 in worth — however worth and quantity are getting very shut to one another now, really. What you see is, properly, Nordics hasn’t made any change to the entire image, so it is very a lot according to the remainder of our numbers. Adriatic was a climate assist, positively. So, we’re doing high quality. It’s possible you’ll keep in mind Adriatic in This fall is usually frozen meals versus ice cream. And it was a enterprise that was in all probability much less robust than ice cream, however we’re making numerous progress. And so, that is mainly the principle variations. So, the Adriatic is a plus, I’d put it that means. After which, in This fall, we even have numerous, as an instance, motion between sell-in and sell-out. So, more often than not, sell-in on the finish of the 12 months is decrease than sell-out. After which, on prime of that, you’ve gotten meals service, for instance, did contribute properly to us. So general, as an instance, curiously sufficient, after we see quarter 4, I feel between — or as an instance, Nielsen numbers and the ultimate numbers when it comes to promoting, they’re fairly comparable, however with the collection of delta being Adriatic, sell-in, and meals service. And if you wish to have this, as an instance, on a month-to-month foundation, identical factor in January, however the different means round to some extent.

Amit Sharma: And John, keep in mind, it is about two-thirds of our enterprise that is lined in Nielsen. So, there’s at all times a bit little bit of a dislocation, however I feel directionally it is the precise means to take a look at it.

John Baumgartner: Thanks, everybody.

Stefan Descheemaeker: Thanks, John.

Amit Sharma: Thanks, John.

Operator: Thanks. Our subsequent query comes from the road of Steve Powers with Deutsche Financial institution. Please proceed along with your query.

Steve Powers: Hey, good morning, all people. Thanks. There is a quote within the press launch and kind of the tone of your ready remarks talks about enjoying offense in 2024. And I suppose possibly just a bit bit extra element, in the event you may, on the cadence of spending as you try this. After which additionally how rapidly you count on to see returns on that spending, possibly when it comes to the pacing of quantity versus value as we undergo the 12 months? Any perspective on that may be nice.

Stefan Descheemaeker: Properly, to your level, I feel we already began, by the way in which. We began finish of Q3 the place we began to re-increase our A&P. This fall was actually a double digit in progress and we’ve all of the intent to maintain going that means in the middle of this 12 months, even sooner. So, general, by the way in which, we expect that A&P goes to go even sooner than our gross sales, which makes complete sense. And, properly, curiously sufficient, it was completely essential for us to have the ability to preserve our gross margin, in order that we might be capable to make investments to reinvest behind the manufacturers. So, that is beginning along with different issues, as a result of once more, A&P is one part, Steve. However we’ve increasingly more for all our Should Win Battles. We have now an built-in view, what we name our flywheel, which is basically mainly it is A&P. It is also, clearly — it is income progress administration. So, the place do we have to spend money on pricing or in promotion? How do we have to do that? Innovation, additionally, pipeline is beginning to be higher after two years, which have been extra, in all probability a bit extra subdued. So, we see actually to — we count on to see the gradual enchancment turning to optimistic quantity progress by second half of the 12 months. Nevertheless it’s not going to be linear, guys. It may be regular, however it’s not going to be linear. However general, what we see is we’re very assured that the expansion trajectory is there to remain. However once more, mixture of a superb class to excellent class, we’re additionally lapping clearly a really robust pricing, after which all our personal initiatives along with our manufacturers.

Steve Powers: Superb. Yeah, makes good sense. And Samy, you talked about openness to M&A, however on the identical time, the extent that M&A would not current itself, proceed leaning in direction of money return to shareholders. Is there a means take into consideration the parameters round that when it comes to how a lot dry powder, so to talk, you need to protect versus how a lot is an excessive amount of, and what is the set off to money return to shareholders? Is there a degree of money on the steadiness sheet that’s extreme? Is there a leverage ratio that is too low? How will we take into consideration the steadiness of form of ready for the M&A chance to current itself versus being proactive in capital return?

Samy Zekhout: Yeah. I feel we actually guided, Steve, I imply, by way of driving shareholder return from that perspective. And we have been utilizing, frankly, pretty actively, I imply, a superb arsenal of lesser variable. I imply, they’re from a capital allocation standpoint, I imply, we have centered traditionally on M&A. We have successfully moved ahead on buyback, as you’ve gotten seen us doing it final 12 months. We’re institutionalizing now a dividend, and we’re clearly taking a look at all of those variables collectively. And to be honest, now that we’ve, and to return again on to your first query, that we’re activating successfully quite a lot of the levers that we all know inside our algorithm are contributing to stronger progress steadiness between quantity and value, I imply, that is going to allow us to proceed to gasoline additional money. And pending, successfully, a correct steadiness between buyback, the dividend, we will probably be successfully taking a look at alternative when it comes to M&A, for positive. I imply, at this very stage, what we might need to do is to be sure that we keep our leverage inside the band — the working band, which we’ve talked about, I imply, throughout the CAGNY presentation, which is our goal vary, is between 2.5x and three.5x. And inside that, we are going to attempt to successfully use our money to make the utmost return from that perspective. So, M&A remains to be on the map. I need to be very clear, however we’ve clearly alternatives, I imply, within the space of buyback, and we as properly, I imply, have initiated the dividend there.

Stefan Descheemaeker: Properly, simply complimenting one or two factors to Samy, every thing, clearly — nothing could be attainable with out our free money movement, which is extraordinarily robust, as you already know. So that provides us the entire thing, offers us all of the alternatives out there. And fairly frankly, if you see the totally different alternatives between dividend, buyback, I feel we have been very disciplined at that. After which, M&A by way of integration, fairly frankly, it is also one thing the place all our acquisitions have been very profitable. So, we’ve all of the spectrum of what’s out there, however primarily based on a really, very robust money movement.

Steve Powers: Superb. Thanks a lot.

Amit Sharma: Thanks, Steve.

Operator: Thanks. Our subsequent query comes from the road of Rob Dickerson with Jefferies. Please proceed along with your query.

Samy Zekhout: Hello, Rob. Good morning.

Rob Dickerson: Good morning. Howdy. Look, we touched on this a bit bit final week at CAGNY, which is a superb presentation. I feel there’s quite a bit in there. It additionally looks as if there’s form of numerous form of ongoing and forthcoming adjustments occurring at Nomad form of relative to historical past, proper? It nearly looks as if it is time to step into the subsequent section with respect to productiveness after which the reinvestment cycle. However I simply wished to form of offer you one other alternative to form of discuss your general conviction on that top-line progress goal, as a result of the three% to 4%, frankly, just isn’t form of what we might think about like a normalized class progress goal relative to historical past. And I feel traditionally you have spoken form of extra to low-single digit or 2% to three%. So, clearly, appears as if there’s much more confidence and conviction for a bit bit sooner progress at Nomad as we expect ahead simply in all probability over the subsequent 5 years. That is all I’ve. Thanks a lot.

Stefan Descheemaeker: Thanks, Rob. And also you’re proper, by the way in which. I feel it is a barely totally different algo to begin with the top-line. I feel it is primarily based on a collection of components. First is, little by little we see that this class, which is a superb class, frozen meals, is basically beginning to develop. I feel individuals increasingly more can see that the class as such is wholesome, it is handy, it is also sustainable, it is nutritious, so it ticks all of the packing containers. And fairly frankly, persons are beginning to see this. In order that helps quite a bit. That is the primary piece. The second piece is, properly, after two years of, as an instance, numerous pricing and in addition with quantity impression, we are able to see clearly that we wish ready to recoup a part of the misplaced volumes, we have additionally been very selective. We do not need to regain all of the volumes, fairly frankly that is why we’ve this idea of Should Win Battle that you simply’re properly conscious of, which has one of the best classes with one of the best margin. So, we will be chosen from that standpoint on prime of accelerating the algorithm, to your level. And the third piece is, sure, we’re rising our A&P again to regular first. After which final however not least, our pipeline of innovation, the final two years have been a bit subdued, for lots of causes. Individuals have been centered on the price of dwelling. Clearly, we have been additionally attempting to actually deal with the entire. It was extra defensive. Now positively for the subsequent years and you already know that innovation takes extra time, however we’ve the ambition to actually create a best-in-class pipeline of latest merchandise as class leaders. And that is one thing in all probability we did not do sufficient prior to now and that we will do actually completely with an obsession within the coming years. So, that is a mixture of those components. By definition, there will probably be pluses and minuses, Rob. However that is the explanation why we expect we are able to improve our algo to your level from 2% to three% — by 1%, let’s make it clear.

Samy Zekhout: Rob, if I’ll, the one factor I would like to emphasise that we talked final week was the truth that the large distinction as properly is, and I feel Stefan used the phrase, it’s the built-in flywheel. We’re actually activating many of the a part of the flywheel collectively in a synchronized means with the mindset of driving higher return. A&P is one. Correct value degree is one other one with RGM and promo. On the identical time, we’re rising our presence and our technique in-store. The mixture of all of that’s clearly working, and it is labored in This fall. So, we’ve proof and it reveals within the enchancment that we’ve seen in This fall. And that is precisely what we’re going to proceed with the stepped-up investments we’re making. So, this factor of focus, integration, and ensuring that we activating the entire components of the flywheel collectively, which can allow us — along with productiveness that’s now, frankly, applied throughout the board, allow us to ship good top-line that is going to successfully movement by way of into bottom-line and a robust EPS progress shifting ahead.

Rob Dickerson: All proper, tremendous. Thanks, each. I actually recognize it.

Stefan Descheemaeker: Thanks, Rob.

Samy Zekhout: Thanks.

Operator: Thanks. [Operator Instructions] Our subsequent query comes from the road of Jon Tanwanteng with CJS Securities. Please proceed along with your query.

Jon Tanwanteng: Hello. Good morning. Thanks for taking my questions, and congrats on the good enhancements you are seeing there. I used to be questioning in the event you may first tackle the aggressive atmosphere and the way you see that developed within the final quarter and thru Q1. Are you seeing any response to your new technique in any respect, both from branded or non-public label competitors? And have you ever seen the worth hole proceed to shut with the non-public label facet?

Stefan Descheemaeker: I feel it is an incredible query, Jon. I feel the corporate has remained about the identical. I feel we first more than happy to have closed most of negotiations with the purchasers, which was, as you already know, a little bit of a drag in This fall. In order that’s serving to quite a bit and it is going to assist us step by step in a few of our nations. So, what we — non-public label value hole remains to be a bit wider than historic degree, which is regular. So, we’re not shocked by that. And that is why as an alternative of taking place, as an instance, drastically, we extra — when it comes to, we go into extra to surgical promotion intervention. We have discovered quite a bit with the income progress administration. We have invested quite a bit, and fairly frankly, the extent of science that we have put collectively is an actual plus. We talked about an instance final week in Italy in fish, and it is an incredible instance and we see the outcomes. So, it is an incredible funding. So, the worth gaps stay necessary. However I feel it goes simply past that managing this hole. So, we actually centered now on highlighting why our model is of a premium. So, we have not achieved that sufficient within the final couple of years. We all know that. And now we will be ramping up our A&P spend, which is a giant factor. Clearly, one thing that could be a nice reply to the non-public label, and extra long run, clearly the innovation, which is what anticipated from a class chief like us.

Jon Tanwanteng: Obtained it. Thanks. After which I do not know in the event you addressed this earlier, I apologize if I missed it. However did you point out how a lot capital allocation is constructed into your EPS steering for the 12 months? And what the steadiness is weighted extra in direction of it whether it is included?

Samy Zekhout: No, we’ve not talked about any of that. I feel we simply supplied the steering as talked about, I imply, within the steering.

Amit Sharma: Jon, we spent $82 million in 2023 round CapEx.

Operator: Thanks. Our subsequent query is a follow-up from the road of John Baumgartner with Mizuho Securities. Please proceed along with your query.

John Baumgartner: Hey, good morning. Thanks for the follow-up. Simply wished to ask a bigger-picture query. Stefan, at CAGNY, you talked about form of whittling down a few of your focus manufacturers or geographies within the Should Win Battles relative to a few years in the past. And I am curious what kind of went into that? How did you determine how you can whittle? Is it sure classes, sure manufacturers, or have returns modified during the last couple of years? So, I am curious to listen to extra about that. After which associated, you additionally talked about geographic expansions and cross-selling alternatives in markets the place the manufacturers are reside, however not simply in all of the classes. I am curious, as you pursue extra of that cross-selling going ahead, how will we take into consideration the incremental useful resource funding required? As a result of these aren’t new manufacturers and I think about you have already got leverage with native gross sales drive and distribution. Thanks.

Stefan Descheemaeker: Okay. Let’s attempt to be — properly, I am going to spend a bit extra time on that one as a result of it is form of matter I really like, which is the Should Win Battles. You keep in mind, John, we began in 2016 the place we got here to the conclusion that the corporate was not centered in any respect and it was completely time to focus behind the important thing classes per nation. And so as a result of we did not essentially have all the cash to go behind 100% of our gross sales. And by the way in which, technique is about deciding the place you are going to allocate your sources. It is precisely what we did with the Should Win Battles. And we determine to deal with A&P or innovation cash or in-store activation or flywheel really behind two-thirds of classes primarily based on mainly progress potential, gross margin, and market share, to make it easy. And because of this, I feel these two-thirds acquired, clearly, nearly every thing. And unsurprisingly, it grew a lot sooner than the remaining, one thing like round 5%, the remaining went to zero and typically even declined, which is completely acceptable. We like the concept that we have been very selective. Unsurprisingly, after just a few years, these two-thirds grew to become 90%. And so, then we again to sq. one, which is mainly the place are we going to reallocate our cash? And that is why we determined, okay, now we will be much more selective behind one of the best and brightest Should Win Battles. And so, we have determined to then deemphasize round 25% of our Should Win Battles to actually deal with one of the best and brightest, particularly when it comes to gross margin after which gross revenue potential. So, that is what we’re doing proper now. Simply as for info, 20 of our Should Win Battles signify round 50% of our gross sales and rather more — and extra when it comes to gross revenue, it’s 20 out of round 80. So that provides you a little bit of the concept what we’re doing proper now. So, it’s kind of — we stay very logical and consequent with what we did prior to now, however once more, with extra sources. On the identical time, as you already know, we’re investing extra in A&P. So, you’ll be able to think about these manufacturers are actually going to obtain more cash as a result of first we’re extra selective. And on prime of that, we’re rising A&P. In order that’s a giant enhance for these classes. The second piece about your idea of pollination, which is mainly we’ve one thing which is exclusive in frozen meals. We have now a novel assortment. When you consider all of the totally different vary of merchandise we’ve throughout all totally different nations, 22 nations in Europe. And on the identical time, we’re additionally distinctive to be current in all these nations. So, this mixture permits us to see, okay, high quality, we’ve implausible — for instance, we’ve a implausible product of, as an instance, fish and chips within the UK. And we expect — and clearly, shoppers show this, we expect it might work in France. So, with little or no cash, we began one thing like 5, six years in the past and it has moved from $5 million to $40 million in six years, fairly frankly, with little or no A&P, which reveals the power of the product, clearly offered the precise means. So, that is a finest instance of what the issues we are able to do, and there are a lot of extra. So, simply specializing in this instance of fish and chips, we will do it in Switzerland, we will do it in Adriatics. As a result of individuals demonstrated that the idea can work. And so, it is positively what I’d qualify some kind of, as an instance, very low-risk innovation when you consider it, as a result of we’re taking a product that exists within the nation, that could be very profitable. And we’re testing with the opposite nations adjoining or not and we are able to transfer. So, you take away of the innovation course of, which unavoidably comes with, as an instance, a sure degree of failure and unavoidable, it is regular. I feel we considerably decreasing this failure charge with this method. And as we mentioned, give it some thought, implausible assortment in an incredible variety of nations. After which, you’ll be able to see what the extent of this raise and shift can signify for us.

John Baumgartner: Nice. Thanks, Stefan.

Amit Sharma: Thanks, John.

Samy Zekhout: Thanks, John.

Operator: Thanks. Women and gents, that concludes our question-and-answer session. I am going to flip the ground again to Mr. Descheemaeker for any ultimate feedback.

Stefan Descheemaeker: Thanks very a lot, operator. So, thanks in your participation on immediately’s name. 2023 was a superb 12 months, and I am much more happy with our good momentum as we enter 2024. Nomad Meals crew has proven unbelievable nimbleness and agility within the final two, three years, and I consider that we are actually well-prepared to ship accelerated progress. Our revised long-term progress algo places us amongst the top-tier of our meals friends, which mixed with our very enticing valuation, positions us to ship superior returns for our shareholders. Thanks very a lot, operator.

Operator: Thanks. This concludes immediately’s convention name. It’s possible you’ll disconnect your traces right now. Thanks in your participation.

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