NYSE:NOMD Nomad Foods Q4 2023 Earnings Report $20.09 +0.38 (+1.93%) Closing price 05/2/2025 03:59 PM EasternExtended Trading$20.15 +0.06 (+0.29%) As of 05/2/2025 08:00 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Nomad Foods EPS ResultsActual EPS$0.32Consensus EPS $0.31Beat/MissBeat by +$0.01One Year Ago EPS$0.34Nomad Foods Revenue ResultsActual Revenue$761.00 millionExpected Revenue$766.56 millionBeat/MissMissed by -$5.56 millionYoY Revenue GrowthN/ANomad Foods Announcement DetailsQuarterQ4 2023Date2/29/2024TimeBefore Market OpensConference Call DateThursday, February 29, 2024Conference Call Time8:30AM ETUpcoming EarningsNomad Foods' Q1 2025 earnings is scheduled for Thursday, May 8, 2025, with a conference call scheduled at 8:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Annual Report (20-F)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Nomad Foods Q4 2023 Earnings Call TranscriptProvided by QuartrFebruary 29, 2024 ShareLink copied to clipboard.There are 8 speakers on the call. Operator00:00:00Greetings, and welcome to the NoMad Foods 4th Quarter 2023 Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Operator00:00:23Amit Sharma, Head of Investor Relations for Nomad Foods. Thank you. You may begin. Speaker 100:00:29Hello, and welcome to Nomad Foods' Q4 2023 earnings call. I'm Amit Sharma, Head of Investor Relations, and I'm joined on the call today by Stephan Dishmacher, our CEO and Sami Zukhut, our CFO. By now, everyone should have access to the earnings release for the period ending December 31, 2023, that was published at approximately 6:45 a. M. Eastern Time. Speaker 100:00:58The press release and investor presentation are available on Nomad Foods' website at www.nomadfoods.com. This call is being webcast and a replay will be available on the company's website. This conference call will include forward looking statements that are based on our view of the company's prospects, expectations and intentions at this time. Actual results may differ due to risks and uncertainties, which are discussed in our press release, our filings with the SEC and in our Investor Relations presentation, which includes cautionary language. We will also discuss non IFRS financial measures during the call today. Speaker 100:01:45These non IFRS financial measures should not be considered a replacement and should be read together with IFRS results. Users can find the IFRS to non IFRS reconciliation within our earnings release and in the appendices at the end of the slide presentation available on our website. Please note that certain financial information within this presentation represents adjusted figures for 2022 and 2023. All adjusted figures have been adjusted for exceptional items, acquisition related costs, share based compensation and related expenses, as well as non cash FX gains or losses. Unlike otherwise noted, comments from here on will refer to these adjusted numbers. Speaker 100:02:38With that, I will hand you over to Stephane. Speaker 200:02:42Thank you, Amit. I would like to begin by offering a few highlights from our solid Q4 and full year results. I would then offer a few comments on our accelerated growth outlook and the health of the frozen categories before handing it over to Sami for detailed review of our quarterly financial results and our initial 2024 guidance. Nomad Foods delivered another quarter of solid top and bottom line performance. 4th quarter organic sales increased by 1.9 percent, our 6th consecutive quarter of positive organic growth, as our volume trends improved sequentially in each month of the quarter. Speaker 200:03:25Quarterly and full year gross margins improved substantially, and we continue to generate strong cash flows, enabling us to initiate a quarterly cash dividend. I'm proud of our team to enable us to continue our uninterrupted track record of top tier financial performance and finished 2023 with record high annual sales and EBITDA. I'm even more excited about our building momentum as the key drivers of our long term profitable growth begin to accelerate. As the impact of challenging macros recedes and we return to our typical operating cadence, we expect even stronger top and bottom line growth in 2024 and for many years to come. Specifically, we expect 2024 organic sales to increase by 3% to 4%, including positive volume and share. Speaker 200:04:31Adjusted EBITDA is expected to increase by 4% to 6% to €556,000,000 to €567,000,000 And adjusted EPS is expected to be in the range of €1.75 to €1.80 which implies 9% to 12% growth. We expect another year of strong cash flow generation with cash flow conversion in the 90% to 95% range. With that, let me provide a few highlights on our 4th quarter performance. 4th quarter net sales increased by 1.4%, as organic growth of 1.9% was modestly offset by unfavorable ForEx. Our volume mix declines improved sequentially from the last quarter and moderated to the lowest levels since the Q3 of 2022. Speaker 200:05:334th quarter gross margins improved by more than 160 basis points due to disciplined pricing, optimized promotions and continued focus on productivity. Our full year gross margin also came in better than expected, even as we absorbed substantial COGS inflation, enabling us to continue to increase A and P investments behind our brands. Adjusted EBITDA of EUR 117,000,000 and adjusted EPS of EUR 0.32 per share both came in ahead of expectations. We generated nearly €174,000,000 of free cash flow during the quarter and EUR 300,000,000 for the full year, one of our highest, with cash conversion ratio of 109%, well above our targeted range. Our long track record consistently strong cash flows is at the foundation of our effective capital allocation to enhance shareholder value. Speaker 200:06:45To that effect, we initiated a quarterly cash dividend of €0.15 per share, a notable milestone for Nomaz Foods and a testament to the quality and resilience of our business and our confidence in our ability to generate significant cash flows and a sustainable long term growth. At the retail sales level, as reported by Nielsen IQ, our value sales for the 12 weeks period ending December 31, increased by nearly 2%, including sequentially improving volume and market share trends. Our recent year over year volume growth and share trends have already turned positive in many key markets, giving us greater confidence in delivering positive volume growth in 2024. The frozen food segment in Europe remains healthy. Underlying consumption in our core categories and key markets continue to grow with improving volume trends over the last few periods. Speaker 200:07:53Even with the unprecedented level of inflation driven pricing in the last 2 years, frozen food remains highly relevant for most consumers. Frozen food enjoy high household penetration in our key markets in the mid to high 80% range. And even more importantly, household penetration has remained largely stable even with the extraordinary pricing in the last 2 years. And it's not that difficult to see why. Frozen food categories align perfectly with a number of secular consumer trends, including convenience, taste, nutrition, sustainability and remain highly affordable. Speaker 200:08:39For instance, using our value packs and promotion, a family of 5 can enjoy a meal of fish fingers, waffles and peas for around $10 in many markets, highlighting the tremendous value proposition for products offering, a key consideration for consumers in the current environment. We are positioning ourselves to capture a greater share of this growth by increasing our focus in investments behind our biggest and most profitable opportunities. Our total advertising and promotion spending increased by nearly 30% in the 4th quarter and the disproportionately large share of these investments were made against our top 20 machine battles. These high priority opportunities account for nearly half for retail sales and even higher bigger share of our gross profits. Our recent trends in many of these opportunities are very encouraging and gives me greater confidence in our revised growth plans as we look to 2024. Speaker 200:09:51The significant ramp up in our 4th quarter A and P investment will continue with 2024. Specifically, we launched our master brand campaign to drive greater affinity to our brands in the Q1 to build an emotional connection to our brands and to remind consumers of the most relevant and loved aspects of their relationship with our iconic brands. Our messaging will also focus on highlighting the stronger health claims of our brands to emphasize the naturalness and goodness of our products, given the increasing debate around obesity and ultra processed foods. Along with driving the core, higher A and P will also help reignite our innovation engine. Historically, new products have accounted for nearly 5% of our annual sales and it fell below that level in 2023. Speaker 200:10:50We committed to regaining our innovation momentum and have an exciting pipeline of new projects to be launched through the rest of the year. I mentioned 2 of these innovations last week, Igloo branded Mexican decoated fish spiel in Germany and King's branded multilayered premium ice cream for the home occasion, the Adriatic. We have planned a full spectrum of marketing support and retail activation behind both these innovations along with our other new products in our pipeline. As expected, the majority of these, the difficult but necessary pricing discussions with a few of our retail partners, which I mentioned in our last call, were resolved successfully. Retail environment remains dynamic, but we have successfully completed pricing conversations in majority of our markets and we remain on track to complete the rest over the next few months. Speaker 200:11:54At the same time, we are optimizing our promotion spending and reallocating resources where we see the largest potential impact. As I mentioned in my comments at the CAGNY conference last week, we are investing in our growth capabilities, in our data, in our analytics to position us for accelerated growth in 2024 and beyond. These investments are meaningfully upgrading our retail execution. We have better insights in a wider, more comprehensive revenue growth management toolkit to maximize our profitable volumes. These strategies are working, and I strongly believe that they position us to capture a greater share of the frozen food growth in our markets. Speaker 200:12:41Our increasing investments to drive accelerated growth is underpinned by our productivity agenda, particularly across our supply chain. The resilience and nimbleness of our supply chain during a period of unprecedented volatility is unmatched across the frozen food aisle. But I'm even more proud of the fact that we are accomplishing it, while increasing our focus on driver grade efficiencies across our network. We are optimizing our manufacturing and logistic network, reducing complexities and establishing strategic relationship with key suppliers to reduce supply risk and generate procurement savings. Our supply chain delivered strong cost savings and higher cash flows in 2023, even as our service levels improved to over 98%. Speaker 200:13:38We expect similar trajectory in 2024. While on the topic of cash flow, as I mentioned earlier, we generated €300,000,000 of free cash in 2023, our 2nd highest annual cash flow ever. Strong cash flows are foundation of value enhancing capital allocation strategies. We bought back more than 6% of our shares outstanding in 2023, initiated the quarterly cash dividends and adopted a new $500,000,000 share repurchase program, highlighting the strength and flexibility of our balance sheet as we continue to execute a balanced capital deployment strategy intended to maximize shareholder returns. In conclusion, we delivered record high sales and EBITDA in 2023, with improving margins and strong cash flows. Speaker 200:14:35Our quarterly volume trends improved sequentially, positioning us to deliver positive volume and share growth in 2024. We are increasing our growth investments to unlock the full potential of our attractive frozen categories and iconic brands, positioning us to deliver sustained attractive growth in 2024 and for many more years to come. I'm highly confident of delivering of revised long term targets of 3% to 4% organic revenue growth, 5% to 7% adjusted EBITDA growth, 7% to 9% adjusted EPS growth and 90 percent to 95% cash conversion, which I believe will deliver superior returns for our shareholders. With that, let me hand the call over to Sami to review our Q4 results and our 2024 guidance in greater details. Sami? Speaker 300:15:33Thank you, Stephane, and good morning, everyone. I am pleased to present another quarter of solid performance at Nomad Foods. For the Q4, reported net revenues increased by 1.4% to €761,000,000 Organic sales increased by 1.9%, while unfavorable effects impacted quarterly sales by 0.5%. Our organic sales growth was driven primarily by pricing as we continue to benefit from pricing to cover inflation. Our volume mix was down 5.6% during the quarter, a marked improvement from the Q3 and our lowest volume mix decline since quarter 3 2022. Speaker 300:16:204th quarter gross profit increased by 7.9 percent to 208,000,000 while gross margin increased by over 160 basis points from the year ago quarter to 27.3 percent due to better procurement and cost discipline, improving volume trends and contribution from pricing and favorable RGM execution. Adjusted EBITDA increased by 3.2 percent to EUR 117,000,000 in the quarter as higher gross profit was partially offset by higher operating expenses. Our adjusted operating expense increased by 14% from the year ago quarter due to the step up A and P investment as well as higher indirect expenses. Adjusted net income declined by 9.4% due to higher interest expense from our last year's refinancing, while adjusted earnings per share of €0.32 declined by only €0.01 from the year ago quarter as impact from higher interest costs was partially offset by share buybacks. At current eurodollar spot rate, our quarter 4 adjusted EPS was US0.35 dollars per share. Speaker 300:17:35For the full year 2023, net sales increased by 3.6 percent to EUR 3,040,000,000 including 4.9 percent organic sales growth. Gross margin increased by nearly 50 basis points to 28.2%, while adjusted EBITDA increased by 2% to €535,000,000 Full year adjusted EPS of €1.61 or 1.74 declined due to higher interest expense from the refinancing of our debt. During 2023, we repurchased more than 11,000,000 shares of our common stock for nearly $185,000,000 under our previous buyback authorization. As Stephane mentioned, we now have a new $500,000,000 share repurchase authorization. We delivered yet another year of strong cash flow in 2023 with full year adjusted free cash flow of $300,000,000 driven by strong working capital improvement, higher EBITDA and favorable timing on certain receivables. Speaker 300:18:46Full year and 4 quarter cash flows came in well ahead of our expectation as we continue to be highly focused on effective inventory management, cash collection to improve our working capital performance. Specifically, full year working capital decreased by nearly 155 €1,000,000 more than offsetting a nearly €40,000,000 increase in cash interest. 2023 CapEx of €82,000,000 increased modestly from last year as we remain highly disciplined on supporting long term strategic investments. Given the strong Q4 cash performance, full year cash conversion came in at 109%, well ahead of our targeted 90% to 95%. Maintaining a high level of cash conversion is paramount to ensuring the strength of our balance sheet and to continue to execute our effective capital allocation to deliver enhanced shareholder returns. Speaker 300:19:43We paid our 1st quarterly cash dividend of $0.15 per share earlier this week, reinforcing our ability to generate strong, consistent cash flows and in our attractive long term growth. Turning to our guidance for 2024. We are pleased with our building top line momentum as we enter 2024. We expect to deliver net revenue growth of 3% to 4%, adjusted EBITDA growth of 4% to 6% and adjusted EPS of €1.75 to €1.80 per share. We continue to expect strong cash flow with cash conversion in the range of 90% to 95% range. Speaker 300:20:23Our 3% to 4% organic growth in 2024 is expected to be relatively balanced between price and volumemix, including positive volume growth for the full year. Volume trends are already beginning to inflect to positive growth in many of our key markets. We expect continued sequential improvement in the first half and consolidated volume to turn positive in the second half. We expect our gross margin trends to continue to improve in 2024 as we benefit from improving volumes, greater focus on productivity initiatives and favorable costs. Digging into inflation more specifically, we expect relatively flat inflation for the full year with lower fish and protein costs offset by headwinds in some of other cost buckets, including vegetables. Speaker 300:21:14As Stephane mentioned, we remain committed to investing behind our brands. Overall A and P spending increased by nearly 13% in 2023, we have planned to an even greater increase in 2024, particularly in the first half as we drive strong volume and share performance in 2024. At U. S. Dollar, euro exchange rates as of February 2017, our adjusted EPS guidance translate into 1 point $8.9 to $1.95 earnings per share and implies 9% to 12% year over year growth as we impact from higher interest costs in 2023 and continue to benefit from lower share count. Speaker 300:21:55In terms of quarterly cadence, our top line is likely to be largely in line with historical pattern. However, the second half will account for disproportionately higher share of our profit and earnings given the timing of cost flow through due to the balance sheet re measurement and the timing of our A and P investment, particularly in the Q1. Absent of any strategic acquisition and given our strong cash flow, we remain committed to returning capital to shareholders through the recently instituted dividend and opportunistic share repurchases. We have a proven track record of top tier financial results and are even more excited by the opportunities we have ahead of us. We are confident of delivering attractive growth at or near the top tier of our full peers in 2024 and for many years to come. Speaker 300:22:48I will now turn the call over to the operator for your questions. Thank you. Operator00:22:54Thank you. Thank you. Our first question comes from the line of John Baumgartner with Mizuho Securities. Please proceed with your question. Speaker 400:23:29Good morning. Thanks for the question. Sandy, I wanted to dig in Good morning. Into Q4 gross margin, which I think was a bit better than expected. And I understand you've got pricing inflation sort of matching better relative to last couple of quarters. Speaker 400:23:46Can you walk through what drove that upside? And how much of that was underlying cost efficiencies coming through? How much of it was cost inflation moderation relative to net pricing? Speaker 500:23:56Yes. Thank you, John. Actually, effectively, we had a good performance in our gross margin of nearly 160 basis points from a quarter a year ago. I would say the main driver were frankly pretty much the same. I mean even though the spread was changed when you look at effective the spread beginning of the year, end of the year because effective we saw the pricing impact starting to effectively fade down as we had prior pricing in the base. Speaker 500:24:23So a lot of it was coming from good discipline and better procurement. So we clearly continued to benefit from the fact that there were some clearly stepped up and improvement in that area. We had a higher focus as well overall on productivity and efficiency. And at that same moment, we had improving volume trend. If you recall, we had implemented at the same time a sharpenerg and strategy to define effective some promotional intervention, But also effectively, there were some specific stepped up, if you want, in advertising that really boosted the volume, which effectively reduced the impact that we had versus a year ago. Speaker 500:25:00So the volume element has a component, I mean, into that progress. Speaker 400:25:06Okay. Thanks for that. And as a follow-up, looking at the volume mix, I think that came in a little bit lighter than we were looking for in the quarter. I think you mentioned some one time drags there. But bigger picture, can you walk through the non measured channels, what we can't see in Nielsen, what you're seeing in the Nordics, what you're seeing in the AGI, and how that sort of evolves in 2024? Speaker 400:25:27Thank you. Speaker 200:25:29Well, I think to your point, John, actually, APOS is Nielsen is only capturing part of our businesses. So it doesn't include, to your point, Nordics, Swiss, Adriatic, Ireland and it doesn't include some brands, by the way, like on Besseys. And it doesn't include neither, for example, foodservice. And we have, as you know, a bit of private label. So when you see, let's say, quarter 4 in value, but value and volume are getting very close to each other now actually. Speaker 200:26:01What you see is when Nordics hasn't made any change to the whole picture, so it's very much in line with the rest of our numbers. Adriatic was a weather help, definitely. So we're doing fine. You may remember, Adriatic's in Q4 is mostly frozen food as opposed to ice cream. And it was a business that was probably less strong than ice cream, but we're making a lot of progress. Speaker 200:26:30And so that's basically the main differences. So the Adriatic is a plus, I would put it that way. And then in Q4, we also have a lot of, let's say, movement between sell in and sell out. So most of the time, sell in at the end of the year is lower than sell outs. And then on top of that, you have foodservice, for example, did contribute nicely to us. Speaker 200:26:56So overall, let's say, interestingly enough, when we see quarter 4, I think between or let's say Nielsen numbers and the final numbers in terms of sell in, they're quite similar. But with the series of Delta being Adriatic's sell in and foodservice. And if you want to have this, let's say, on a monthly basis, same thing in January, but the other way around to some extent. Speaker 100:27:24And John, remember, it's about 2 third of our business that's covered in Nielsen. So there is always a little bit of a dislocation, but I think directionally, it's the right way to look at it. Thanks everyone. Speaker 200:27:37Thank you John. Speaker 100:27:37Thank you John. Operator00:27:40Thank you. Our next question comes from the line of Steve Powers with Deutsche Bank. Please proceed with your question. Speaker 400:27:48Hey, good morning, everybody. Thank you. There's a quote in the press release and sort of the tone of your prepared remarks talks about playing offense in 2024. And I guess maybe just a little bit more detail if you could on the cadence of spending as you do that? And then also how quickly you expect to see returns on that spending maybe in terms of the pacing of volume versus price as we go through the year, any perspective on that would be great. Speaker 200:28:23Well, to your point, I think we already started, by the way. We started end of Q3 where we started to re increase our O and P. Q4 was really a double digit in growth, and we have all the intent to keep going that way in the course of this year even faster. So overall, by the way, think that A and P is going to go even faster than those sales, which makes the total sense. And well, interestingly enough, it was absolutely crucial for us to be able to keep our gross margin so that we would be able to invest to reinvest behind the brands. Speaker 200:29:04So that's starting together with other things because again, A and P is one component, Steve, but we have more and more for all our must win battles. We have an integrated view, what we call our flywheel, which is really basically it's A and P. It's also obviously it's revenue growth management. So where do we need to invest in pricing or in promotion? How do we need to do this? Speaker 200:29:33Innovation also pipeline is starting to be better after 2 years, which were more probably a bit more subdued. So we see really to we expect to see the gradual improvement turning to positive volume growth by second half of the year, but it's not going to be linear guys. It's going to be steady, but it's not going to be linear. So but overall, what we see is we are very confident that the growth trajectory is there to stay. But again, combination of a good category to very good category, We're also lapping, obviously, very strong pricing and then all our own initiatives together with our brands. Speaker 400:30:14Very good. Yes, makes perfect sense. And Sandy, you talked about openness to M and A, but at the same time, we've said that M and A doesn't present itself, continue leaning towards cash return to shareholders. Is there a way to think about the parameters around that in terms of how much dry powder, so to speak, you want to preserve versus how much is too much and what's the trigger to cash return to shareholders? Is there a level of cash on the balance sheet that is excessive? Speaker 400:30:53Is there a leverage ratio that's too low? How do we think about the balance of kind of waiting for the M and A opportunity? Because that itself versus being proactive in capital return. Speaker 500:31:05Yes. I think, I mean, we have really guided, Steve, I mean, through driving shareholder return, I mean, from that perspective. And we've been using, frankly, fairly actively, I mean, a good arsenal of a lesser variable, I mean, there from a capital allocation standpoint. I mean, we focused, I mean, historically on M and A. We've done we've effectively moved forward on buyback. Speaker 500:31:25As you have seen us doing it last year, we are institutionalizing our dividend. And we are clearly looking at all of these variables together. And to be fair, now that we have and to come back onto your first question that we are activating effectively a number of the levers that we know within our algorithm are contributing to stronger growth balance between volume and price. I mean, that's going to enable us to continue to fuel further cash and pending effectively a proper balance between buyback, the dividend, we will be effectively looking at opportunity in terms of M and A for sure. I mean, at this very stage, what we would want to do is to make sure that we maintain our leverage within the band, the operating band, which we have mentioned, I mean, during the CAGNY presentation, which is our target range between 2.5x and 3.5x. Speaker 500:32:15And within that, we will try to effectively use our cash to make the maximum return on from that perspective. So M and A is still on the map, I want to be very clear. But we have clearly opportunities, I mean, in the area of buyback, and we as well, I mean, have initiated the dividend there. Well, just complementing Speaker 200:32:341 or 2 points to Sami, everything, obviously, nothing would be possible without our free cash flow, which is extremely strong, as you know. So that gives us the whole thing, gives us all the opportunities available. And quite frankly, when you see the different opportunities between dividends, buyback, I think we've been very disciplined at that. And then M and A plus integration, quite frankly, it's also something where all of acquisitions have been very successful. So we have all the spectrum of what is available, but based on very, very strong cash flow. Speaker 400:33:09Very good. Thank you so much. Speaker 100:33:11Thank you, Seamus. Operator00:33:15Thank you. Our next question comes from the line of Rob Dickerson with Jefferies. Please proceed with your question. Speaker 100:33:20Good morning, Rob. Good morning. Speaker 600:33:24Good morning. Hello. Speaker 300:33:27Look, touched on this a Speaker 600:33:29little bit last week at CAGNY, which was a great presentation. I think there was a lot in there. And also seems like there's kind of a lot of kind of ongoing and forthcoming change, occurring at NoMad kind of relative to history, right? It almost seems like it's time to step into the next phase with respect to productivity and then the reinvestment cycle. But I just wanted to kind of give you another opportunity to kind of talk about that like your overall conviction on that top line growth target, because the 3% to 4% frankly is not kind of what we would consider like a normalized category growth target relative to history. Speaker 600:34:13And I think historically you've spoken kind of more to low single digit or 2 to 3. So it clearly seems as if there's a lot more confidence and conviction for a little bit faster growth and NoMad as we think forward just probably over the next 5 years? And that's all I have. Thanks so much. Speaker 200:34:31Thank you, Rob. And you're right, by the way. I think it's a slightly different angle to start with the top line. I think it's based on the series of elements. First is, little by little, we see that this category, which is a great category, frozen food is really starting to develop. Speaker 200:34:51I think people more and more can see that the category as such is healthy, it's convenient, it's also sustainable, it's nutritious. So you have it ticks all the boxes and quite frankly, people are starting to see this. So that helps a lot. That's the first piece. The second piece is, well, after have 2 years of, let's say, a lot of pricing and also with volume impact, we can see, obviously, that we want in a position to recoup part of the lost volumes. Speaker 200:35:26Will also be very selective. We don't want to regain all the volumes, but frankly, that's why we have this concept of Muslim battle that you're well aware of, which has the best categories with the best margin. So we're going to be selective from that standpoint on top of increasing the algorithm, to your point. And the third piece is, yes, we're increasing our A and P back to normal first. And then last but not least, our pipeline of innovation last 2 years was a bit subdued. Speaker 200:35:57A lot of reasons people were focused on cost of living. Obviously, we were also trying to really tackle the whole. It was more defensive. Now definitely for the next years, and you know that innovation takes more time, but we have the ambition to really create a best in class pipeline of new products as product as category leader. And that's something probably we didn't do enough in the past and that we're going to do really absolutely with an obsession the coming years. Speaker 200:36:26So that's a combination of these elements. By definition, there will be pluses and minuses, Rob, but that's the reason why we think we can increase or I'll go to your point from 2% to 3% to by 1%, let's make it clear. Speaker 500:36:40Rob, if I may, the one thing I'd like to emphasize that we took last week was the fact that the big difference as well is and I think Stephane is the word, it is the integrated flywheel. We are really activating most Speaker 300:36:55of the parts Speaker 500:36:56of the flywheel together in a synchronized way with the mindset of driving better return. A and P is 1. Proper price level is another one with our GM and promo. At the same time, we're increasing our presence and our strategy in store. The combination of all of that is clearly working and it's worked in Q4. Speaker 500:37:16So we have evidence and it shows the improvement that we have seen in Q4. And that's exactly what we're going to continue with the stepped up investments we're making. So this element of focus, integration and making sure that we're activating all of the parts of the flywheel together, which will enable us together with productivity that is now frankly implemented across the board, enable us to deliver the top line that's going to effectively flow through into bottom line and strong EPS growth moving forward. Speaker 600:37:46All right, super. Thank you, both. I really appreciate it. Speaker 200:37:49Thank you, Rob. Thank you. Operator00:37:52Thank you. Our next question comes from the line of Jon Tanwanteng with CJS Securities. Please proceed with your question. Speaker 700:38:04Hi, good morning. Thank you for taking my questions and congrats on the nice improvements you're seeing there. I was wondering if you could first address the competitive environment and how you see that evolve in the last quarter and then through Q1. Are you seeing any response to your new strategy at all either from branded or private label competition? And have you seen the price gap continue to close with the private label side? Speaker 200:38:29I think it's a great question, John. I think the company environment has remained above the same. I think we're first very pleased to have closed most of negotiations with the customers, which was, as you know, a bit of a drag in Q4. So that's helping a lot and it's going to help us gradually in some of our countries. So what we private label price gap is still a bit wider than historical level, which is normal. Speaker 200:38:56So we're not surprised by that. And that's why instead of going down, let's say, drastically, we're more in terms of we're going more to surgical promotion intervention. We've learned a lot with the revenue growth management. We've invested a lot. And quite frankly, the level of science that we've put together is a real plus. Speaker 200:39:19We mentioned an example last week in Italy in fish, and it's a great example and we see the results. So it's a great investment. So the price gaps remain important, but I think it goes just beyond that managing these gaps. So we really focus now on highlighting why our brand is of a premium. So we haven't done that enough in the last couple of years. Speaker 200:39:43We know that. And now we're going to be ramping up our ASP spend, which is a big thing, obviously, something that is a great answer to the private label and more long term, obviously, the innovation, which is what expected from a category leader like us. Speaker 700:40:01Got it. Thank you. And then I don't know if you addressed this earlier. I apologize if I missed it. But did you mention how much capital allocation is built into your EPS guidance for the year? Speaker 700:40:09And what was the balance weighted more towards if it is included? Speaker 500:40:14No, we haven't mentioned any of that. Speaker 700:40:16I think we just provided the guidance as mentioned, Speaker 500:40:18I mean, in the guidance. Speaker 100:40:22Yes, John, we spent $82,000,000 Speaker 400:40:24in $20,000,000 in our CapEx. Operator00:40:33Thank you. Our next question is a follow-up from the line of John Baumgartner with Mizuho Securities. Please proceed with your question. Speaker 400:40:41Hey, good morning. Thanks for the follow-up. Just wanted to ask a bigger picture question. Stephan, at Academy, you mentioned kind of whittling down some of your focus brands or geographies in the must win battles relative to a couple of years ago. And I'm curious what sort of went into that? Speaker 400:40:59How did you decide how to whittle? Is it certain categories, certain brands, or have returns changed over the last couple of years? So I'm curious to hear more about that. And then related, you also talked about geographic expansions and cross selling opportunities in markets where the brands are live, but not just in all the categories. I'm curious as you pursue more of that cross selling going forward, how do we think about the incremental resource investment required because these aren't new brands that I imagine you already have leverage with the local sales force and distribution. Speaker 400:41:32Thank you. Speaker 200:41:33Okay. Let's try to be well, I'll spend a bit more time on that one because it's kind of topic I love, which is the mushroom battles. You remember, John, it's we started 2016 where we came to conclusion that the company was not focused at all, It was absolutely time to focus behind the key categories per country. And so because we didn't necessarily have all the money to go to behind 100 percent of our sales. And by the way, strategy is about deciding where you're going to allocate your resources. Speaker 200:42:06It's exactly what we did with the merchant battles. And we decided to focus on A and P or innovation money or in store activation, all sideways actually behind 2 third of our categories based on basically growth potential, gross margin and market share to make it simple. And as a result, I think these 2 thirds received obviously almost everything. And unsurprisingly, it grew much faster than the rest, something like around 5%, the rest went to 0 and sometimes even declined, which is absolutely acceptable. We like the idea that we were very selective. Speaker 200:42:50Unsurprisingly, a few years, these 2 thirds became 90%. And so on and then we are back to the square one, which is basically where are we going to reallocate our money. And that's why we decided, okay, no, we're going to be even more selective behind the best and brightest mustard bottles. And so we've decided to then deemphasize around 25% of our mustard bottles to really focus on the best and brightest, especially in terms of gross margin and then gross profit potential. So that's what we're doing right now. Speaker 200:43:26Just as a for information, 20 percent of our merchant partners represent around 50% of our sales and much more in terms and more in terms of gross profit. And there's 20 out of around 80. So that gives you a bit of the idea what we're doing right now. So it's a bit very, very we remain very logical and the consequence with what we did in the past, but again, with more resource. At the same time, as you know, we're investing more in these. Speaker 200:43:58So you can imagine these brands are really going to receive more money because first we're more selective and on top of that we're increasing A and P. So that's a big boost for these categories. The second piece about your our concept of pollination, which is basically we have something which is unique in frozen foods. We have a unique assortment when you think about all the different range of products we have across all different countries, 22 countries in Europe. And at the same time, we are so unique to be present in all these countries. Speaker 200:44:34So this combination allows us to see, okay, fine, we have fantastic for example, we have a fantastic product of, let's say, let's say, efficient ships in the UK. And we think and obviously, consumers prove this. We think it can work in France. So with very little money, we started something like 5, 6 years ago, and it has moved from $5,000,000 to $40,000,000 in 6 years, quite frankly, with very little A and P, which shows you know, the strength of the product, obviously, is presented the right way. So that's a best example of what the things we can do, and there are many more. Speaker 200:45:09So just focusing on this example of efficiencies, we're going to do it in Switzerland, we're going to do it in AstraZeneca because people demonstrated that the concept can work. And so it's definitely what I would qualify some sort of, let's say, very low risk innovation when you think about it, because we're taking a product that exists in the country that is very, very successful and we're testing with the other countries adjacent or not and we can move. So you remove of the innovation process, which unavoidably comes with, let's say, a certain level of failure, unavoidable, it's normal. I think we're substantially reducing this failure rate with this approach. And as we said, think about it, fantastic assortment and an amazing number of countries. Speaker 200:46:02And then you can see what the extent of this lift and shift can represent for us. Speaker 400:46:11Thanks, Stefan. Speaker 500:46:13Thank you, John. Thank you, John. Operator00:46:16Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Dechmaker for any final comments. Speaker 200:46:26Thank you very much, operator. So thank you for your participation on today's call. 2023 was a good year and I'm even more pleased with our good momentum as we enter 2024. Nomad Foods' team has shown incredible nimbleness and agility in the last 2 to 3 years and that I believe that we are now well prepared to deliver accelerated growth. Our revised long term growth outlook puts us amongst the top tier of our full peers, which combined with our very attractive valuation positions us to deliver superior returns for our shareholders. Speaker 200:47:05Thank you very much, operator. Operator00:47:09Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallNomad Foods Q4 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Annual report(20-F) Nomad Foods Earnings HeadlinesZacks.com featured highlights Griffon, Nomad Foods, DXP Enterprises and LimbachMay 3 at 2:15 AM | theglobeandmail.comCan Mixed Fundamentals Have A Negative Impact on Nomad Foods Limited (NYSE:NOMD) Current Share Price Momentum?May 2 at 9:21 AM | finance.yahoo.comElon’s Terrifying Warning Forces Trump To Take ActionElon Musk has avoided two major financial crises before. He pulled Tesla and SpaceX back from the brink of collapse and built two of the most valuable companies in history. Now, he's sounding the alarm about America's $36 trillion debt time bomb that could destroy the fabric of our society.As head of the Department of Government Efficiency (DOGE) under President Trump, Musk is exposing just how bad things are...May 3, 2025 | American Hartford Gold (Ad)Nomad Foods (NYSE:NOMD) Hits New 12-Month High Following Dividend AnnouncementMay 2 at 1:53 AM | americanbankingnews.comNomad Foods Declares Quarterly DividendApril 30 at 8:38 AM | gurufocus.comNomad Foods Increases Quarterly Dividend by 13%April 30 at 7:41 AM | tipranks.comSee More Nomad Foods Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Nomad Foods? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Nomad Foods and other key companies, straight to your email. Email Address About Nomad FoodsNomad Foods (NYSE:NOMD), together with its subsidiaries, manufactures, markets, and distributes a range of frozen food products in the United Kingdom and internationally. The company offers frozen fish products, including fish fingers, coated fish, and natural fish; ready-to-cook vegetable products, such as peas and spinach; and frozen poultry and meat products comprising nuggets, grills, and burgers. It also provides meal products that include ready-to-cook noodles, pasta, lasagna, pancakes, and other ready-made meals; ice creams, such as in-home and out-of-home ice creams; and other products consisting of soups, pizzas, bakery goods, and meat substitutes. The company sells its products to supermarkets and food retail chains primarily under the Birds Eye, Green Cuisine, iglo, Findus, Aunt Bessie's, Goodfella's, Frikom, Ledo, La Cocinera, and Belviva brand names. Nomad Foods Limited was founded in 2014 and is headquartered in Feltham, the United Kingdom.View Nomad Foods ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Amazon Earnings: 2 Reasons to Love It, 1 Reason to Be CautiousMeta Takes A Bow With Q1 Earnings - Watch For Tariff Impact in Q2Palantir Earnings: 1 Bullish Signal and 1 Area of ConcernVisa Q2 Earnings Top Forecasts, Adds $30B Buyback PlanMicrosoft Crushes Earnings, What’s Next for MSFT Stock?Qualcomm's Earnings: 2 Reasons to Buy, 1 to Stay AwayAMD Stock Signals Strong Buy Ahead of Earnings Upcoming Earnings Palantir Technologies (5/5/2025)Vertex Pharmaceuticals (5/5/2025)Realty Income (5/5/2025)Williams Companies (5/5/2025)CRH (5/5/2025)Advanced Micro Devices (5/6/2025)American Electric Power (5/6/2025)Constellation Energy (5/6/2025)Marriott International (5/6/2025)Energy Transfer (5/6/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 8 speakers on the call. Operator00:00:00Greetings, and welcome to the NoMad Foods 4th Quarter 2023 Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Operator00:00:23Amit Sharma, Head of Investor Relations for Nomad Foods. Thank you. You may begin. Speaker 100:00:29Hello, and welcome to Nomad Foods' Q4 2023 earnings call. I'm Amit Sharma, Head of Investor Relations, and I'm joined on the call today by Stephan Dishmacher, our CEO and Sami Zukhut, our CFO. By now, everyone should have access to the earnings release for the period ending December 31, 2023, that was published at approximately 6:45 a. M. Eastern Time. Speaker 100:00:58The press release and investor presentation are available on Nomad Foods' website at www.nomadfoods.com. This call is being webcast and a replay will be available on the company's website. This conference call will include forward looking statements that are based on our view of the company's prospects, expectations and intentions at this time. Actual results may differ due to risks and uncertainties, which are discussed in our press release, our filings with the SEC and in our Investor Relations presentation, which includes cautionary language. We will also discuss non IFRS financial measures during the call today. Speaker 100:01:45These non IFRS financial measures should not be considered a replacement and should be read together with IFRS results. Users can find the IFRS to non IFRS reconciliation within our earnings release and in the appendices at the end of the slide presentation available on our website. Please note that certain financial information within this presentation represents adjusted figures for 2022 and 2023. All adjusted figures have been adjusted for exceptional items, acquisition related costs, share based compensation and related expenses, as well as non cash FX gains or losses. Unlike otherwise noted, comments from here on will refer to these adjusted numbers. Speaker 100:02:38With that, I will hand you over to Stephane. Speaker 200:02:42Thank you, Amit. I would like to begin by offering a few highlights from our solid Q4 and full year results. I would then offer a few comments on our accelerated growth outlook and the health of the frozen categories before handing it over to Sami for detailed review of our quarterly financial results and our initial 2024 guidance. Nomad Foods delivered another quarter of solid top and bottom line performance. 4th quarter organic sales increased by 1.9 percent, our 6th consecutive quarter of positive organic growth, as our volume trends improved sequentially in each month of the quarter. Speaker 200:03:25Quarterly and full year gross margins improved substantially, and we continue to generate strong cash flows, enabling us to initiate a quarterly cash dividend. I'm proud of our team to enable us to continue our uninterrupted track record of top tier financial performance and finished 2023 with record high annual sales and EBITDA. I'm even more excited about our building momentum as the key drivers of our long term profitable growth begin to accelerate. As the impact of challenging macros recedes and we return to our typical operating cadence, we expect even stronger top and bottom line growth in 2024 and for many years to come. Specifically, we expect 2024 organic sales to increase by 3% to 4%, including positive volume and share. Speaker 200:04:31Adjusted EBITDA is expected to increase by 4% to 6% to €556,000,000 to €567,000,000 And adjusted EPS is expected to be in the range of €1.75 to €1.80 which implies 9% to 12% growth. We expect another year of strong cash flow generation with cash flow conversion in the 90% to 95% range. With that, let me provide a few highlights on our 4th quarter performance. 4th quarter net sales increased by 1.4%, as organic growth of 1.9% was modestly offset by unfavorable ForEx. Our volume mix declines improved sequentially from the last quarter and moderated to the lowest levels since the Q3 of 2022. Speaker 200:05:334th quarter gross margins improved by more than 160 basis points due to disciplined pricing, optimized promotions and continued focus on productivity. Our full year gross margin also came in better than expected, even as we absorbed substantial COGS inflation, enabling us to continue to increase A and P investments behind our brands. Adjusted EBITDA of EUR 117,000,000 and adjusted EPS of EUR 0.32 per share both came in ahead of expectations. We generated nearly €174,000,000 of free cash flow during the quarter and EUR 300,000,000 for the full year, one of our highest, with cash conversion ratio of 109%, well above our targeted range. Our long track record consistently strong cash flows is at the foundation of our effective capital allocation to enhance shareholder value. Speaker 200:06:45To that effect, we initiated a quarterly cash dividend of €0.15 per share, a notable milestone for Nomaz Foods and a testament to the quality and resilience of our business and our confidence in our ability to generate significant cash flows and a sustainable long term growth. At the retail sales level, as reported by Nielsen IQ, our value sales for the 12 weeks period ending December 31, increased by nearly 2%, including sequentially improving volume and market share trends. Our recent year over year volume growth and share trends have already turned positive in many key markets, giving us greater confidence in delivering positive volume growth in 2024. The frozen food segment in Europe remains healthy. Underlying consumption in our core categories and key markets continue to grow with improving volume trends over the last few periods. Speaker 200:07:53Even with the unprecedented level of inflation driven pricing in the last 2 years, frozen food remains highly relevant for most consumers. Frozen food enjoy high household penetration in our key markets in the mid to high 80% range. And even more importantly, household penetration has remained largely stable even with the extraordinary pricing in the last 2 years. And it's not that difficult to see why. Frozen food categories align perfectly with a number of secular consumer trends, including convenience, taste, nutrition, sustainability and remain highly affordable. Speaker 200:08:39For instance, using our value packs and promotion, a family of 5 can enjoy a meal of fish fingers, waffles and peas for around $10 in many markets, highlighting the tremendous value proposition for products offering, a key consideration for consumers in the current environment. We are positioning ourselves to capture a greater share of this growth by increasing our focus in investments behind our biggest and most profitable opportunities. Our total advertising and promotion spending increased by nearly 30% in the 4th quarter and the disproportionately large share of these investments were made against our top 20 machine battles. These high priority opportunities account for nearly half for retail sales and even higher bigger share of our gross profits. Our recent trends in many of these opportunities are very encouraging and gives me greater confidence in our revised growth plans as we look to 2024. Speaker 200:09:51The significant ramp up in our 4th quarter A and P investment will continue with 2024. Specifically, we launched our master brand campaign to drive greater affinity to our brands in the Q1 to build an emotional connection to our brands and to remind consumers of the most relevant and loved aspects of their relationship with our iconic brands. Our messaging will also focus on highlighting the stronger health claims of our brands to emphasize the naturalness and goodness of our products, given the increasing debate around obesity and ultra processed foods. Along with driving the core, higher A and P will also help reignite our innovation engine. Historically, new products have accounted for nearly 5% of our annual sales and it fell below that level in 2023. Speaker 200:10:50We committed to regaining our innovation momentum and have an exciting pipeline of new projects to be launched through the rest of the year. I mentioned 2 of these innovations last week, Igloo branded Mexican decoated fish spiel in Germany and King's branded multilayered premium ice cream for the home occasion, the Adriatic. We have planned a full spectrum of marketing support and retail activation behind both these innovations along with our other new products in our pipeline. As expected, the majority of these, the difficult but necessary pricing discussions with a few of our retail partners, which I mentioned in our last call, were resolved successfully. Retail environment remains dynamic, but we have successfully completed pricing conversations in majority of our markets and we remain on track to complete the rest over the next few months. Speaker 200:11:54At the same time, we are optimizing our promotion spending and reallocating resources where we see the largest potential impact. As I mentioned in my comments at the CAGNY conference last week, we are investing in our growth capabilities, in our data, in our analytics to position us for accelerated growth in 2024 and beyond. These investments are meaningfully upgrading our retail execution. We have better insights in a wider, more comprehensive revenue growth management toolkit to maximize our profitable volumes. These strategies are working, and I strongly believe that they position us to capture a greater share of the frozen food growth in our markets. Speaker 200:12:41Our increasing investments to drive accelerated growth is underpinned by our productivity agenda, particularly across our supply chain. The resilience and nimbleness of our supply chain during a period of unprecedented volatility is unmatched across the frozen food aisle. But I'm even more proud of the fact that we are accomplishing it, while increasing our focus on driver grade efficiencies across our network. We are optimizing our manufacturing and logistic network, reducing complexities and establishing strategic relationship with key suppliers to reduce supply risk and generate procurement savings. Our supply chain delivered strong cost savings and higher cash flows in 2023, even as our service levels improved to over 98%. Speaker 200:13:38We expect similar trajectory in 2024. While on the topic of cash flow, as I mentioned earlier, we generated €300,000,000 of free cash in 2023, our 2nd highest annual cash flow ever. Strong cash flows are foundation of value enhancing capital allocation strategies. We bought back more than 6% of our shares outstanding in 2023, initiated the quarterly cash dividends and adopted a new $500,000,000 share repurchase program, highlighting the strength and flexibility of our balance sheet as we continue to execute a balanced capital deployment strategy intended to maximize shareholder returns. In conclusion, we delivered record high sales and EBITDA in 2023, with improving margins and strong cash flows. Speaker 200:14:35Our quarterly volume trends improved sequentially, positioning us to deliver positive volume and share growth in 2024. We are increasing our growth investments to unlock the full potential of our attractive frozen categories and iconic brands, positioning us to deliver sustained attractive growth in 2024 and for many more years to come. I'm highly confident of delivering of revised long term targets of 3% to 4% organic revenue growth, 5% to 7% adjusted EBITDA growth, 7% to 9% adjusted EPS growth and 90 percent to 95% cash conversion, which I believe will deliver superior returns for our shareholders. With that, let me hand the call over to Sami to review our Q4 results and our 2024 guidance in greater details. Sami? Speaker 300:15:33Thank you, Stephane, and good morning, everyone. I am pleased to present another quarter of solid performance at Nomad Foods. For the Q4, reported net revenues increased by 1.4% to €761,000,000 Organic sales increased by 1.9%, while unfavorable effects impacted quarterly sales by 0.5%. Our organic sales growth was driven primarily by pricing as we continue to benefit from pricing to cover inflation. Our volume mix was down 5.6% during the quarter, a marked improvement from the Q3 and our lowest volume mix decline since quarter 3 2022. Speaker 300:16:204th quarter gross profit increased by 7.9 percent to 208,000,000 while gross margin increased by over 160 basis points from the year ago quarter to 27.3 percent due to better procurement and cost discipline, improving volume trends and contribution from pricing and favorable RGM execution. Adjusted EBITDA increased by 3.2 percent to EUR 117,000,000 in the quarter as higher gross profit was partially offset by higher operating expenses. Our adjusted operating expense increased by 14% from the year ago quarter due to the step up A and P investment as well as higher indirect expenses. Adjusted net income declined by 9.4% due to higher interest expense from our last year's refinancing, while adjusted earnings per share of €0.32 declined by only €0.01 from the year ago quarter as impact from higher interest costs was partially offset by share buybacks. At current eurodollar spot rate, our quarter 4 adjusted EPS was US0.35 dollars per share. Speaker 300:17:35For the full year 2023, net sales increased by 3.6 percent to EUR 3,040,000,000 including 4.9 percent organic sales growth. Gross margin increased by nearly 50 basis points to 28.2%, while adjusted EBITDA increased by 2% to €535,000,000 Full year adjusted EPS of €1.61 or 1.74 declined due to higher interest expense from the refinancing of our debt. During 2023, we repurchased more than 11,000,000 shares of our common stock for nearly $185,000,000 under our previous buyback authorization. As Stephane mentioned, we now have a new $500,000,000 share repurchase authorization. We delivered yet another year of strong cash flow in 2023 with full year adjusted free cash flow of $300,000,000 driven by strong working capital improvement, higher EBITDA and favorable timing on certain receivables. Speaker 300:18:46Full year and 4 quarter cash flows came in well ahead of our expectation as we continue to be highly focused on effective inventory management, cash collection to improve our working capital performance. Specifically, full year working capital decreased by nearly 155 €1,000,000 more than offsetting a nearly €40,000,000 increase in cash interest. 2023 CapEx of €82,000,000 increased modestly from last year as we remain highly disciplined on supporting long term strategic investments. Given the strong Q4 cash performance, full year cash conversion came in at 109%, well ahead of our targeted 90% to 95%. Maintaining a high level of cash conversion is paramount to ensuring the strength of our balance sheet and to continue to execute our effective capital allocation to deliver enhanced shareholder returns. Speaker 300:19:43We paid our 1st quarterly cash dividend of $0.15 per share earlier this week, reinforcing our ability to generate strong, consistent cash flows and in our attractive long term growth. Turning to our guidance for 2024. We are pleased with our building top line momentum as we enter 2024. We expect to deliver net revenue growth of 3% to 4%, adjusted EBITDA growth of 4% to 6% and adjusted EPS of €1.75 to €1.80 per share. We continue to expect strong cash flow with cash conversion in the range of 90% to 95% range. Speaker 300:20:23Our 3% to 4% organic growth in 2024 is expected to be relatively balanced between price and volumemix, including positive volume growth for the full year. Volume trends are already beginning to inflect to positive growth in many of our key markets. We expect continued sequential improvement in the first half and consolidated volume to turn positive in the second half. We expect our gross margin trends to continue to improve in 2024 as we benefit from improving volumes, greater focus on productivity initiatives and favorable costs. Digging into inflation more specifically, we expect relatively flat inflation for the full year with lower fish and protein costs offset by headwinds in some of other cost buckets, including vegetables. Speaker 300:21:14As Stephane mentioned, we remain committed to investing behind our brands. Overall A and P spending increased by nearly 13% in 2023, we have planned to an even greater increase in 2024, particularly in the first half as we drive strong volume and share performance in 2024. At U. S. Dollar, euro exchange rates as of February 2017, our adjusted EPS guidance translate into 1 point $8.9 to $1.95 earnings per share and implies 9% to 12% year over year growth as we impact from higher interest costs in 2023 and continue to benefit from lower share count. Speaker 300:21:55In terms of quarterly cadence, our top line is likely to be largely in line with historical pattern. However, the second half will account for disproportionately higher share of our profit and earnings given the timing of cost flow through due to the balance sheet re measurement and the timing of our A and P investment, particularly in the Q1. Absent of any strategic acquisition and given our strong cash flow, we remain committed to returning capital to shareholders through the recently instituted dividend and opportunistic share repurchases. We have a proven track record of top tier financial results and are even more excited by the opportunities we have ahead of us. We are confident of delivering attractive growth at or near the top tier of our full peers in 2024 and for many years to come. Speaker 300:22:48I will now turn the call over to the operator for your questions. Thank you. Operator00:22:54Thank you. Thank you. Our first question comes from the line of John Baumgartner with Mizuho Securities. Please proceed with your question. Speaker 400:23:29Good morning. Thanks for the question. Sandy, I wanted to dig in Good morning. Into Q4 gross margin, which I think was a bit better than expected. And I understand you've got pricing inflation sort of matching better relative to last couple of quarters. Speaker 400:23:46Can you walk through what drove that upside? And how much of that was underlying cost efficiencies coming through? How much of it was cost inflation moderation relative to net pricing? Speaker 500:23:56Yes. Thank you, John. Actually, effectively, we had a good performance in our gross margin of nearly 160 basis points from a quarter a year ago. I would say the main driver were frankly pretty much the same. I mean even though the spread was changed when you look at effective the spread beginning of the year, end of the year because effective we saw the pricing impact starting to effectively fade down as we had prior pricing in the base. Speaker 500:24:23So a lot of it was coming from good discipline and better procurement. So we clearly continued to benefit from the fact that there were some clearly stepped up and improvement in that area. We had a higher focus as well overall on productivity and efficiency. And at that same moment, we had improving volume trend. If you recall, we had implemented at the same time a sharpenerg and strategy to define effective some promotional intervention, But also effectively, there were some specific stepped up, if you want, in advertising that really boosted the volume, which effectively reduced the impact that we had versus a year ago. Speaker 500:25:00So the volume element has a component, I mean, into that progress. Speaker 400:25:06Okay. Thanks for that. And as a follow-up, looking at the volume mix, I think that came in a little bit lighter than we were looking for in the quarter. I think you mentioned some one time drags there. But bigger picture, can you walk through the non measured channels, what we can't see in Nielsen, what you're seeing in the Nordics, what you're seeing in the AGI, and how that sort of evolves in 2024? Speaker 400:25:27Thank you. Speaker 200:25:29Well, I think to your point, John, actually, APOS is Nielsen is only capturing part of our businesses. So it doesn't include, to your point, Nordics, Swiss, Adriatic, Ireland and it doesn't include some brands, by the way, like on Besseys. And it doesn't include neither, for example, foodservice. And we have, as you know, a bit of private label. So when you see, let's say, quarter 4 in value, but value and volume are getting very close to each other now actually. Speaker 200:26:01What you see is when Nordics hasn't made any change to the whole picture, so it's very much in line with the rest of our numbers. Adriatic was a weather help, definitely. So we're doing fine. You may remember, Adriatic's in Q4 is mostly frozen food as opposed to ice cream. And it was a business that was probably less strong than ice cream, but we're making a lot of progress. Speaker 200:26:30And so that's basically the main differences. So the Adriatic is a plus, I would put it that way. And then in Q4, we also have a lot of, let's say, movement between sell in and sell out. So most of the time, sell in at the end of the year is lower than sell outs. And then on top of that, you have foodservice, for example, did contribute nicely to us. Speaker 200:26:56So overall, let's say, interestingly enough, when we see quarter 4, I think between or let's say Nielsen numbers and the final numbers in terms of sell in, they're quite similar. But with the series of Delta being Adriatic's sell in and foodservice. And if you want to have this, let's say, on a monthly basis, same thing in January, but the other way around to some extent. Speaker 100:27:24And John, remember, it's about 2 third of our business that's covered in Nielsen. So there is always a little bit of a dislocation, but I think directionally, it's the right way to look at it. Thanks everyone. Speaker 200:27:37Thank you John. Speaker 100:27:37Thank you John. Operator00:27:40Thank you. Our next question comes from the line of Steve Powers with Deutsche Bank. Please proceed with your question. Speaker 400:27:48Hey, good morning, everybody. Thank you. There's a quote in the press release and sort of the tone of your prepared remarks talks about playing offense in 2024. And I guess maybe just a little bit more detail if you could on the cadence of spending as you do that? And then also how quickly you expect to see returns on that spending maybe in terms of the pacing of volume versus price as we go through the year, any perspective on that would be great. Speaker 200:28:23Well, to your point, I think we already started, by the way. We started end of Q3 where we started to re increase our O and P. Q4 was really a double digit in growth, and we have all the intent to keep going that way in the course of this year even faster. So overall, by the way, think that A and P is going to go even faster than those sales, which makes the total sense. And well, interestingly enough, it was absolutely crucial for us to be able to keep our gross margin so that we would be able to invest to reinvest behind the brands. Speaker 200:29:04So that's starting together with other things because again, A and P is one component, Steve, but we have more and more for all our must win battles. We have an integrated view, what we call our flywheel, which is really basically it's A and P. It's also obviously it's revenue growth management. So where do we need to invest in pricing or in promotion? How do we need to do this? Speaker 200:29:33Innovation also pipeline is starting to be better after 2 years, which were more probably a bit more subdued. So we see really to we expect to see the gradual improvement turning to positive volume growth by second half of the year, but it's not going to be linear guys. It's going to be steady, but it's not going to be linear. So but overall, what we see is we are very confident that the growth trajectory is there to stay. But again, combination of a good category to very good category, We're also lapping, obviously, very strong pricing and then all our own initiatives together with our brands. Speaker 400:30:14Very good. Yes, makes perfect sense. And Sandy, you talked about openness to M and A, but at the same time, we've said that M and A doesn't present itself, continue leaning towards cash return to shareholders. Is there a way to think about the parameters around that in terms of how much dry powder, so to speak, you want to preserve versus how much is too much and what's the trigger to cash return to shareholders? Is there a level of cash on the balance sheet that is excessive? Speaker 400:30:53Is there a leverage ratio that's too low? How do we think about the balance of kind of waiting for the M and A opportunity? Because that itself versus being proactive in capital return. Speaker 500:31:05Yes. I think, I mean, we have really guided, Steve, I mean, through driving shareholder return, I mean, from that perspective. And we've been using, frankly, fairly actively, I mean, a good arsenal of a lesser variable, I mean, there from a capital allocation standpoint. I mean, we focused, I mean, historically on M and A. We've done we've effectively moved forward on buyback. Speaker 500:31:25As you have seen us doing it last year, we are institutionalizing our dividend. And we are clearly looking at all of these variables together. And to be fair, now that we have and to come back onto your first question that we are activating effectively a number of the levers that we know within our algorithm are contributing to stronger growth balance between volume and price. I mean, that's going to enable us to continue to fuel further cash and pending effectively a proper balance between buyback, the dividend, we will be effectively looking at opportunity in terms of M and A for sure. I mean, at this very stage, what we would want to do is to make sure that we maintain our leverage within the band, the operating band, which we have mentioned, I mean, during the CAGNY presentation, which is our target range between 2.5x and 3.5x. Speaker 500:32:15And within that, we will try to effectively use our cash to make the maximum return on from that perspective. So M and A is still on the map, I want to be very clear. But we have clearly opportunities, I mean, in the area of buyback, and we as well, I mean, have initiated the dividend there. Well, just complementing Speaker 200:32:341 or 2 points to Sami, everything, obviously, nothing would be possible without our free cash flow, which is extremely strong, as you know. So that gives us the whole thing, gives us all the opportunities available. And quite frankly, when you see the different opportunities between dividends, buyback, I think we've been very disciplined at that. And then M and A plus integration, quite frankly, it's also something where all of acquisitions have been very successful. So we have all the spectrum of what is available, but based on very, very strong cash flow. Speaker 400:33:09Very good. Thank you so much. Speaker 100:33:11Thank you, Seamus. Operator00:33:15Thank you. Our next question comes from the line of Rob Dickerson with Jefferies. Please proceed with your question. Speaker 100:33:20Good morning, Rob. Good morning. Speaker 600:33:24Good morning. Hello. Speaker 300:33:27Look, touched on this a Speaker 600:33:29little bit last week at CAGNY, which was a great presentation. I think there was a lot in there. And also seems like there's kind of a lot of kind of ongoing and forthcoming change, occurring at NoMad kind of relative to history, right? It almost seems like it's time to step into the next phase with respect to productivity and then the reinvestment cycle. But I just wanted to kind of give you another opportunity to kind of talk about that like your overall conviction on that top line growth target, because the 3% to 4% frankly is not kind of what we would consider like a normalized category growth target relative to history. Speaker 600:34:13And I think historically you've spoken kind of more to low single digit or 2 to 3. So it clearly seems as if there's a lot more confidence and conviction for a little bit faster growth and NoMad as we think forward just probably over the next 5 years? And that's all I have. Thanks so much. Speaker 200:34:31Thank you, Rob. And you're right, by the way. I think it's a slightly different angle to start with the top line. I think it's based on the series of elements. First is, little by little, we see that this category, which is a great category, frozen food is really starting to develop. Speaker 200:34:51I think people more and more can see that the category as such is healthy, it's convenient, it's also sustainable, it's nutritious. So you have it ticks all the boxes and quite frankly, people are starting to see this. So that helps a lot. That's the first piece. The second piece is, well, after have 2 years of, let's say, a lot of pricing and also with volume impact, we can see, obviously, that we want in a position to recoup part of the lost volumes. Speaker 200:35:26Will also be very selective. We don't want to regain all the volumes, but frankly, that's why we have this concept of Muslim battle that you're well aware of, which has the best categories with the best margin. So we're going to be selective from that standpoint on top of increasing the algorithm, to your point. And the third piece is, yes, we're increasing our A and P back to normal first. And then last but not least, our pipeline of innovation last 2 years was a bit subdued. Speaker 200:35:57A lot of reasons people were focused on cost of living. Obviously, we were also trying to really tackle the whole. It was more defensive. Now definitely for the next years, and you know that innovation takes more time, but we have the ambition to really create a best in class pipeline of new products as product as category leader. And that's something probably we didn't do enough in the past and that we're going to do really absolutely with an obsession the coming years. Speaker 200:36:26So that's a combination of these elements. By definition, there will be pluses and minuses, Rob, but that's the reason why we think we can increase or I'll go to your point from 2% to 3% to by 1%, let's make it clear. Speaker 500:36:40Rob, if I may, the one thing I'd like to emphasize that we took last week was the fact that the big difference as well is and I think Stephane is the word, it is the integrated flywheel. We are really activating most Speaker 300:36:55of the parts Speaker 500:36:56of the flywheel together in a synchronized way with the mindset of driving better return. A and P is 1. Proper price level is another one with our GM and promo. At the same time, we're increasing our presence and our strategy in store. The combination of all of that is clearly working and it's worked in Q4. Speaker 500:37:16So we have evidence and it shows the improvement that we have seen in Q4. And that's exactly what we're going to continue with the stepped up investments we're making. So this element of focus, integration and making sure that we're activating all of the parts of the flywheel together, which will enable us together with productivity that is now frankly implemented across the board, enable us to deliver the top line that's going to effectively flow through into bottom line and strong EPS growth moving forward. Speaker 600:37:46All right, super. Thank you, both. I really appreciate it. Speaker 200:37:49Thank you, Rob. Thank you. Operator00:37:52Thank you. Our next question comes from the line of Jon Tanwanteng with CJS Securities. Please proceed with your question. Speaker 700:38:04Hi, good morning. Thank you for taking my questions and congrats on the nice improvements you're seeing there. I was wondering if you could first address the competitive environment and how you see that evolve in the last quarter and then through Q1. Are you seeing any response to your new strategy at all either from branded or private label competition? And have you seen the price gap continue to close with the private label side? Speaker 200:38:29I think it's a great question, John. I think the company environment has remained above the same. I think we're first very pleased to have closed most of negotiations with the customers, which was, as you know, a bit of a drag in Q4. So that's helping a lot and it's going to help us gradually in some of our countries. So what we private label price gap is still a bit wider than historical level, which is normal. Speaker 200:38:56So we're not surprised by that. And that's why instead of going down, let's say, drastically, we're more in terms of we're going more to surgical promotion intervention. We've learned a lot with the revenue growth management. We've invested a lot. And quite frankly, the level of science that we've put together is a real plus. Speaker 200:39:19We mentioned an example last week in Italy in fish, and it's a great example and we see the results. So it's a great investment. So the price gaps remain important, but I think it goes just beyond that managing these gaps. So we really focus now on highlighting why our brand is of a premium. So we haven't done that enough in the last couple of years. Speaker 200:39:43We know that. And now we're going to be ramping up our ASP spend, which is a big thing, obviously, something that is a great answer to the private label and more long term, obviously, the innovation, which is what expected from a category leader like us. Speaker 700:40:01Got it. Thank you. And then I don't know if you addressed this earlier. I apologize if I missed it. But did you mention how much capital allocation is built into your EPS guidance for the year? Speaker 700:40:09And what was the balance weighted more towards if it is included? Speaker 500:40:14No, we haven't mentioned any of that. Speaker 700:40:16I think we just provided the guidance as mentioned, Speaker 500:40:18I mean, in the guidance. Speaker 100:40:22Yes, John, we spent $82,000,000 Speaker 400:40:24in $20,000,000 in our CapEx. Operator00:40:33Thank you. Our next question is a follow-up from the line of John Baumgartner with Mizuho Securities. Please proceed with your question. Speaker 400:40:41Hey, good morning. Thanks for the follow-up. Just wanted to ask a bigger picture question. Stephan, at Academy, you mentioned kind of whittling down some of your focus brands or geographies in the must win battles relative to a couple of years ago. And I'm curious what sort of went into that? Speaker 400:40:59How did you decide how to whittle? Is it certain categories, certain brands, or have returns changed over the last couple of years? So I'm curious to hear more about that. And then related, you also talked about geographic expansions and cross selling opportunities in markets where the brands are live, but not just in all the categories. I'm curious as you pursue more of that cross selling going forward, how do we think about the incremental resource investment required because these aren't new brands that I imagine you already have leverage with the local sales force and distribution. Speaker 400:41:32Thank you. Speaker 200:41:33Okay. Let's try to be well, I'll spend a bit more time on that one because it's kind of topic I love, which is the mushroom battles. You remember, John, it's we started 2016 where we came to conclusion that the company was not focused at all, It was absolutely time to focus behind the key categories per country. And so because we didn't necessarily have all the money to go to behind 100 percent of our sales. And by the way, strategy is about deciding where you're going to allocate your resources. Speaker 200:42:06It's exactly what we did with the merchant battles. And we decided to focus on A and P or innovation money or in store activation, all sideways actually behind 2 third of our categories based on basically growth potential, gross margin and market share to make it simple. And as a result, I think these 2 thirds received obviously almost everything. And unsurprisingly, it grew much faster than the rest, something like around 5%, the rest went to 0 and sometimes even declined, which is absolutely acceptable. We like the idea that we were very selective. Speaker 200:42:50Unsurprisingly, a few years, these 2 thirds became 90%. And so on and then we are back to the square one, which is basically where are we going to reallocate our money. And that's why we decided, okay, no, we're going to be even more selective behind the best and brightest mustard bottles. And so we've decided to then deemphasize around 25% of our mustard bottles to really focus on the best and brightest, especially in terms of gross margin and then gross profit potential. So that's what we're doing right now. Speaker 200:43:26Just as a for information, 20 percent of our merchant partners represent around 50% of our sales and much more in terms and more in terms of gross profit. And there's 20 out of around 80. So that gives you a bit of the idea what we're doing right now. So it's a bit very, very we remain very logical and the consequence with what we did in the past, but again, with more resource. At the same time, as you know, we're investing more in these. Speaker 200:43:58So you can imagine these brands are really going to receive more money because first we're more selective and on top of that we're increasing A and P. So that's a big boost for these categories. The second piece about your our concept of pollination, which is basically we have something which is unique in frozen foods. We have a unique assortment when you think about all the different range of products we have across all different countries, 22 countries in Europe. And at the same time, we are so unique to be present in all these countries. Speaker 200:44:34So this combination allows us to see, okay, fine, we have fantastic for example, we have a fantastic product of, let's say, let's say, efficient ships in the UK. And we think and obviously, consumers prove this. We think it can work in France. So with very little money, we started something like 5, 6 years ago, and it has moved from $5,000,000 to $40,000,000 in 6 years, quite frankly, with very little A and P, which shows you know, the strength of the product, obviously, is presented the right way. So that's a best example of what the things we can do, and there are many more. Speaker 200:45:09So just focusing on this example of efficiencies, we're going to do it in Switzerland, we're going to do it in AstraZeneca because people demonstrated that the concept can work. And so it's definitely what I would qualify some sort of, let's say, very low risk innovation when you think about it, because we're taking a product that exists in the country that is very, very successful and we're testing with the other countries adjacent or not and we can move. So you remove of the innovation process, which unavoidably comes with, let's say, a certain level of failure, unavoidable, it's normal. I think we're substantially reducing this failure rate with this approach. And as we said, think about it, fantastic assortment and an amazing number of countries. Speaker 200:46:02And then you can see what the extent of this lift and shift can represent for us. Speaker 400:46:11Thanks, Stefan. Speaker 500:46:13Thank you, John. Thank you, John. Operator00:46:16Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Dechmaker for any final comments. Speaker 200:46:26Thank you very much, operator. So thank you for your participation on today's call. 2023 was a good year and I'm even more pleased with our good momentum as we enter 2024. Nomad Foods' team has shown incredible nimbleness and agility in the last 2 to 3 years and that I believe that we are now well prepared to deliver accelerated growth. Our revised long term growth outlook puts us amongst the top tier of our full peers, which combined with our very attractive valuation positions us to deliver superior returns for our shareholders. Speaker 200:47:05Thank you very much, operator. Operator00:47:09Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.Read morePowered by