Feltham / UK. (nom) Nomad Foods Limited (Goodfella’s Pizza, Iglo, Findus and other brands) reported financial results for the three and nine month periods ended September 30, 2023. Key operating highlights and financial performance for the third quarter 2023, when compared to the third quarter 2022, include:
- Reported revenue increased 0.5 percent to EUR 764 million
- Organic revenue growth of 1.6 percent
- Reported Profit for the period of EUR 78 million
- Adjusted Ebitda of EUR 140 million
- Adjusted EPS of EUR 0.43
Chief Executive Officer Stéfan Descheemaeker: «In the third quarter, we maintained our organic sales momentum from the first half of the year. Additionally, during September we kicked off our stepped-up A+P investment plan with a new and dynamic media campaign augmented by a comprehensive in-store promotional program, positioning us for a return to sustainable, long-term volume and market share growth. As a result of our third quarter operational performance, share repurchase, and our positive expectations for the end of 2023, we are again raising our Adjusted EPS guidance range to EUR 1.57 to EUR 1.60 from our previous range of EUR 1.54 to EUR 1.57. We maintain our guidance for Adjusted Free Cash Flow conversion in the range of 90 percent to 95 percent, and we are on course to generate approximately EUR 250 million of Adjusted Free Cash Flow for the year.»
Co-Chairman and Founder Noam Gottesman: «We are pleased to report another set of strong results this quarter with a continuation of our organic revenue growth trend. Our financial, commercial, and supply chain strategies are all delivering results consistent with our expectations which contributes to this success. We repurchased EUR 65.8 million in shares this quarter and continue to believe our shares represent a significant value creation opportunity. Also, we have approved a new USD 500 million share repurchase authorization to replace our current program, which expires at the end of this year. Furthermore, to complement our capital allocation strategy, we also plan to institute a regular quarterly dividend in 2024, subject to board approval, with details to follow early next year. We believe the combination of a new share repurchase program and a dividend further underscores our commitment to maximizing shareholder returns.»
Third Quarter of 2023 results compared to the Third Quarter of 2022
- Revenue increased 0.5 percent to EUR 764 million. Organic revenue growth of 1.6 percent was comprised of a 11.2 percent decline in volume/mix offset by a 12.8 percent increase in price.
- Gross profit decreased 2.0 percent to EUR 217 million. Gross margin declined 70 basis points to 28.4 percent, due to an unfavorable comparison in the timing of pricing delivery in the prior year.
- Adjusted operating expenses increased 10.7 percent to EUR 100 million due to increased A+P investment in the business.
- Adjusted Ebitda decreased 8.8 percent to EUR 140 million due to the aforementioned factors. Adjusted Profit for the period decreased 18.7 percent to EUR 73 million due to the impact of the refinancing we performed in November 2022, resulting in higher cash interest payments on a portion of our debt.
- Adjusted EPS decreased 17.3 percent to EUR 0.43, reflecting the decrease in Adjusted Profit after tax due to higher interest charges. Reported EPS decreased 2.1 percent to EUR 0.46.
The first nine months 2023 compared to 9M-2022
- Revenue increased 4.3 percent to EUR 2,284 million. Organic revenue growth of 6.0 percent was comprised of a 10.6 percent decline in volume/mix offset by a 16.6 percent increase in price.
- Gross profit increased 4.6 percent to EUR 651 million. Gross margin increased 10 basis points to 28.5 percent, linked to the successful recovery of higher input costs through pricing, and a benefit in the cost of goods sold from the tail end of our cover positions from 2022.
- Adjusted operating expenses increased 8.8 percent to EUR 301 million.
- Adjusted Ebitda increased 1.7 percent to EUR 418 million. Adjusted Profit for the period decreased 5.6 percent to EUR 223 million due to the aforementioned factors.
- Adjusted EPS decreased 4.4 percent to EUR 1.29, reflecting the decrease in Adjusted Profit after tax. Reported EPS decreased 20.5 percent to 0.97.
For the full year 2023, driven by our operational performance and share repurchase program, we are raising our Adjusted EPS guidance to EUR 1.57 to EUR 1.60 from EUR 1.54 to EUR 1.57. We maintain our full-year guidance of mid-single-digit organic revenue growth and Adjusted Cash Flow conversion in the range of 90 percent to 95 percent, unchanged from our last update in September.
New Share Repurchase Authorization
The Company’s Board of Directors has approved a new share repurchase authorization of up to USD 500 million. This new program replaces the previous authorization which was established in August 2021 and finishes at the end of 2023. The new program will expire in 2026.
In addition to our share repurchase program, and subject to approval by our board of directors, we intend to initiate in 2024 a quarterly dividend with details to follow.