Nomad Foods : Q1 2024 Financial Results Press Release

Nomad Foods Reports First Quarter 2024 Financial Results

Volume recovery on-track; Revenue growth of +1.1% with Adjusted EPS of €0.37

Reiterates full year 2024 financial guidance

WOKING, England - May 9, 2024 - Nomad Foods Limited (NYSE: NOMD), today reported financial results for the three month period ended March 31, 2024. Key operating highlights and financial performance for the first quarter 2024, when compared to the first quarter 2023, include:

• Reported revenue increased 1.1% to €784 million
• Organic revenue growth of 0.3%
• Adjusted EBITDA decreased 16.4% to €122 million
• Adjusted EPS of €0.37

Management Comments

Stéfan Descheemaeker, Nomad Foods' Chief Executive Officer, stated, "I am pleased with the solid start to the year as our first quarter's results demonstrated tangible progress on our key growth initiatives. Our volume and market share trends improved sequentially as targeted investments and exceptional execution at retail is driving accelerated growth in our core must-win-battles. Looking ahead, I am excited about our building momentum as our growth flywheel starts to spin faster, fueled by our outstanding progress on productivity initiatives and a more favorable costs environment."

He continued, "As a result, we are maintaining our full year guidance to deliver revenue growth of 3%-4%, Adjusted EBITDA growth of 4%-6%, and Adjusted EPS of €1.75-€1.80."

Noam Gottesman, Nomad Foods' Co-Chairman and Founder, commented, "We are delighted with the trajectory of the business as our strategies to return to volume growth in 2024 are working. Frozen food categories remain healthy and we are well-positioned to leverage our strong brands, impactful innovation, and excellent supply-chain into delivering sustained, top-tier sales and profit growth in 2024 and beyond. Our attractive organic growth outlook coupled with strong cash generation, and disciplined capital allocation gives us the confidence that we will continue to generate superior returns for our shareholders."

First Quarter of 2024 results compared to the First Quarter of 2023

• Revenue increased 1.1% to €784 million. Organic revenue growth of 0.3% was driven by favorable price/mix of 2.5%. Quarterly volume declines moderated to -2.2%, a marked improvement from -8.0% in 4Q23.
• Gross profit decreased 5.9% to €211 million. Gross margin decreased 200 basis points to 26.9% as anticipated impact from balance sheet inventory revaluation due to lower inflation more than offset positive contribution from favorable mix and higher productivity.
• Adjusted operating expenses increased 11.5% to €112 million due to the planned increase in A&P investments, ongoing investments in building capabilities, and inflationary headwinds.
• Adjusted EBITDA decreased 16.4% to €122 million due to the aforementioned factors.
• Adjusted Profit for the period decreased 25% to €61 million, and as a result, Adjusted EPS decreased by €0.09 to €0.37. Reported EPS decreased €0.03 to €0.21.

2024 Guidance

For the full year 2024, the Company continues to expect organic revenue growth of 3%-4%, driven by positive volume/mix, Adjusted EBITDA growth of 4%-6%, and Adjusted EPS of €1.75-€1.80, implying growth of 9-12%. Based on USD/EUR exchange rate as of May 1st, this translates into 2024 Adjusted EPS of $1.87-$1.93. The Company expects full year cash flow conversion in the range of 90% to 95%.

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Conference Call and Webcast

The Company will host a conference call with members of the executive management team to discuss these results today, Thursday, May 9, 2024 at 1:30 p.m. BST (8:30 a.m. Eastern Daylight Time). To participate on the live call, listeners in North America

may dial [phone] and international listeners may dial [phone]. Additionally, there will be a presentation to accompany the conference call and the call is being webcast. Both can be accessed at the Nomad Foods website at www.nomadfoods.com under Investor Relations. A replay of the conference call will be available on the Company website for two weeks following the event and can be accessed by listeners in North America by dialing [phone] and by international listeners by dialing [phone]; the replay pin number is 13745160.

Enquiries

Investor Relations Contact

Amit Sharma, Head of Investor Relations [e-mail]

About Nomad Foods

Nomad Foods (NYSE: NOMD) is Europe's leading frozen food company. The Company's portfolio of iconic brands, which includes Birds Eye, Findus, iglo, Ledo and Frikom, have been a part of consumers' meals for generations, standing for great tasting food that is convenient, high quality and nutritious. Nomad Foods is headquartered in the United Kingdom. Additional information may be found at www.nomadfoods.com.

Non-IFRS Financial Information

Nomad Foods is presenting Adjusted and Organic financial information, which is considered non-IFRS financial information, for the three months ended March 31, 2024 and for comparative purposes, the three months ended March 31, 2023.

Adjusted financial information for the three months ended March 31, 2024 and 2023 presented in this press release reflects the historical reported financial statements of Nomad Foods, adjusted primarily for share based payment expenses and related employer payroll taxes, non-operating M&A related costs, acquisition purchase price adjustments, exceptional items and foreign currency translation charges/gains.

Adjusted EBITDA is profit or loss for the period before taxation, net financing costs, depreciation and amortization, adjusted to exclude, when they occur, the impacts of exited markets, acquisition purchase price adjustments and exceptional items such as restructuring charges, goodwill and intangible asset impairment charges and other unusual or non-recurring items. In addition, we exclude other adjustments such as the impact of share based payment expenses and related employer payroll taxes, and non-operating M&A related costs, because we do not believe they are indicative of our normal operating costs, can vary significantly in amount and frequency, and are unrelated to our underlying operating performance. The Company believes Adjusted EBITDA provides important comparability of underlying operating results, allowing investors and management to assess operating performance on a consistent basis.

Adjusted EBITDA should not be considered as an alternative to profit/(loss) for the period, determined in accordance with IFRS, as an indicator of the Company's operating performance.

Adjusted Profit for the period is defined as profit for the period excluding, when they occur, the impacts of exited markets, acquisition purchase price adjustments and exceptional items such as restructuring charges, goodwill and intangible asset impairment charges, unissued preferred share dividends, as well as certain other items considered unusual or non-recurring in nature. In addition, we exclude other adjustments such as the impact of share based payment expenses and related employer payroll taxes, and non-operating M&A related costs, because we do not believe they are indicative of our normal operating costs, can vary significantly in amount and frequency, and are unrelated to our underlying operating performance. The Company believes Adjusted Profit after tax provides important comparability of underlying operating results, allowing investors and management to assess operating performance on a consistent basis.

Adjusted EPS is defined as basic earnings per share excluding, when they occur, the impacts of exited markets, acquisition purchase price adjustments and exceptional items such as restructuring charges, goodwill and intangible asset impairment charges, as well as certain other items considered unusual or non-recurring in nature. In addition, we exclude other adjustments such as the impact of share based payment expenses and related employer payroll taxes, and non-operating M&A related costs, because we do not believe they are indicative of our normal operating costs, can vary significantly in amount and frequency, and are unrelated to our underlying operating performance. The Company believes Adjusted EPS provides important comparability of underlying operating results, allowing investors and management to assess operating performance on a consistent basis.

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Organic revenue growth/(decline) is an adjusted measurement of our operating results. The comparison for the three months ended March 31, 2024 and 2023 presented in this press release takes into consideration only those activities that were in effect during both time periods. Organic revenue growth/(decline) reflects reported revenue adjusted for currency translation and non-comparable trading items such as expansion, acquisitions, disposals, closures, trading day impacts or any other event that artificially impacts the comparability of our results period over period.

Adjustments for currency translation are calculated by translating data of the current and comparative periods using a budget foreign exchange rate that is set once a year as part of the Company's internal annual forecast process.

Adjusted Free Cash Flow - Adjusted free cash flow is the amount of cash generated from operating activities before cash flows related to exceptional items (as described above), non-operating M&A related costs and working capital movements on employer taxes associated with share based payment awards, but after capital expenditure (on property, plant and equipment and intangible assets), net interest paid, proceeds/(payments) on settlement of derivatives where hedge accounting is not applied and payments of lease liabilities. Adjusted free cash flow reflects cash flows that could be used for payment of dividends, repayment of debt or to fund acquisitions or other strategic objectives. Cash flow conversion is Adjusted Free Cash Flow as percentage of Adjusted Profit for the period.

Adjusted and Organic non-IFRS financial information should be read in conjunction with the unaudited financial statements of Nomad Foods included in this press release as well as the historical financial statements of the Company previously filed with the SEC.

Nomad Foods believe its non-IFRS financial measures provide an important additional measure with which to monitor and evaluate the Company's ongoing financial results, as well as to reflect its acquisitions. Nomad Foods' calculation of these financial measures may be different from the calculations used by other companies and comparability may therefore be limited. The Adjusted and Organic financial information presented herein is based upon certain assumptions that Nomad Foods believes to be reasonable and is presented for informational purposes only and is not necessarily indicative of any anticipated financial position or future results of operations that the Company will experience. You should not consider the Company's non-IFRS financial measures an alternative or substitute for the Company's reported results and are cautioned not to place undue reliance on these results and information as they may not be representative of our actual or future results as a Company.

Please see on pages 7 to 11, the non-IFRS reconciliation tables attached hereto and the schedules accompanying this release for an explanation and reconciliation of the Adjusted and Organic financial information to the most directly comparable IFRS measure. The Company is unable to reconcile, without unreasonable efforts, Organic Growth, Adjusted EBITDA and Adjusted EPS guidance to the most directly comparable IFRS measure.

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Nomad Foods Limited As Reported

Condensed Consolidated Interim Statements of Profit or Loss (unaudited)

Three months ended March 31, 2024 and March 31, 2023

		Three months ended		Three months ended
		March 31, 2024		March 31, 2023
		€m		€m
Revenue		783.7			775.1
Cost of sales	(572.8)	(550.9)
Gross profit		210.9			224.2
Other operating expenses	(115.4)	(114.5)
Exceptional items		(23.5)			(30.1)
Operating profit		72.0			79.6
Finance income		5.9			1.1
Finance costs	(36.0)	(30.1)
Net financing costs		(30.1)			(29.0)
Profit before tax	41.9		50.6
Taxation		(7.4)			(9.4)
Profit for the period		34.5			41.2
Basic & diluted earnings per share in €	0.21		0.24

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Nomad Foods Limited As Reported

Condensed Consolidated Interim Statements of Financial Position

As at March 31, 2024 (unaudited) and December 31, 2023 (audited)

			As at March 31, 2024		As at December 31, 2023
			€m		€m
	Non-current assets
	Goodwill	2,103.2	2,105.0
	Intangibles		2,467.0		2,468.2
	Property, plant and equipment	563.4	563.7
	Other non-current assets		7.3		7.1
	Derivative financial instruments	1.4	0.7
	Deferred tax assets		106.1		106.9
	Total non-current assets	5,248.4	5,251.6
	Current assets
	Cash and cash equivalents	390.7	412.9
	Inventories		432.6		446.4
	Trade and other receivables	343.8	263.4
	Current tax receivable		39.7		40.7
	Indemnification assets	0.5	0.5
	Derivative financial instruments		6.0		1.2
	Total current assets	1,213.3	1,165.1
	Total assets		6,461.7		6,416.7
	Current liabilities
	Trade and other payables		810.3		769.8
	Current tax payable	189.3	189.5
	Provisions		31.5		35.1
	Loans and borrowings	26.2	21.4
	Derivative financial instruments		8.9		12.2
	Total current liabilities	1,066.2	1,028.0
	Non-current liabilities

Loans and borrowings

Employee benefits

Other non-current liabilities

Provisions

Derivative financial instruments

Deferred tax liabilities

Total non-current liabilities

Total liabilities

Net assets

Equity attributable to equity holders Share capital and capital reserve

Share-based compensation reserve

Translation reserve

Other reserves

Retained earnings

Total equity

2,126.9	2,113.7
152.1			158.3
0.5	0.5
1.4			1.4
69.8	97.8
425.6			425.1
2,776.3	2,796.8
3,842.5			3,824.8
2,619.2	2,591.9
1,419.0	1,426.1
34.5			31.4
104.6	101.0
(11.8)			(24.6)
1,072.9	1,058.0
2,619.2			2,591.9

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Nomad Foods Limited As Reported

Condensed Consolidated Interim Statements of Cash Flows (unaudited)

For the three months ended March 31, 2024 and the three months ended March 31, 2023

			For the three months		For the three months
			ended March 31, 2024		ended March 31, 2023
			€m		€m
	Cash flows from operating activities
	Profit for the period	34.5	41.2
	Adjustments for:
	Exceptional items	23.5	30.1
	Share based payment expense		3.1		12.3
	Depreciation and amortization	23.1	22.3
	Loss on disposal of property, plant and equipment		0.4		0.5
	Net finance costs	30.1	29.0
	Taxation		7.4		9.4
	Operating cash flow before changes in working capital, provisions and	122.1	144.8
	exceptional items
	Decrease/(increase) in inventories		14.2		(34.3)
	Increase in trade and other receivables	(81.3)	(53.7)
	Increase in trade and other payables		77.1		20.6
	(Decrease)/increase in employee benefits and other provisions	(0.2)	1.9
	Cash generated from operations before tax and exceptional items		131.9		79.3
	Cash flows relating to exceptional items	(24.0)	(14.0)
	Tax paid		(8.9)		(10.0)
	Net cash generated from operating activities	99.0	55.3
	Cash flows from investing activities
	Purchase of property, plant and equipment and intangibles	(18.8)	(20.6)
	Interest received		2.0		1.1
	Cash used in investing activities		(16.8)		(19.5)
	Cash flows from financing activities
	Repurchase of ordinary shares	(7.1)		-
	Payment of lease liabilities		(7.2)		(7.0)
	Dividends paid	(22.3)		-
	Payment of financing fees		(0.5)		(0.5)
	Interest paid	(50.4)	(19.3)
	Net cash used in financing activities		(87.5)		(26.8)
	Net (decrease)/increase in cash and cash equivalents	(5.3)	9.0
	Cash and cash equivalents at beginning of period		399.7		366.8
	Effect of exchange rate fluctuations	(3.7)	(4.9)
	Cash and cash equivalents at end of period		390.7		370.9

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Nomad Foods Limited Adjusted Financial Information (In € millions, except per share data)

Reconciliation of Non-IFRS Financial Measures

The following table reconciles adjusted financial information for the three months ended March 31, 2024 to the reported results of Nomad Foods for such period.

Adjusted Statement of Profit or Loss (unaudited)

Three Months Ended March 31, 2024

		As reported for the					As adjusted for the
		three months ended					three months ended
€ in millions, except per share data		March 31, 2024		Adjustments			March 31, 2024
Revenue		783.7		-			783.7
Cost of sales	(572.8)		-		(572.8)
Gross profit		210.9		-			210.9
Other operating expenses	(115.4)	3.7	(a)	(111.7)
Exceptional items		(23.5)		23.5	(b)		-
Operating profit		72.0		27.2			99.2
Finance income		5.9		(4.1)			1.8
Finance costs	(36.0)	10.4		(25.6)
Net financing costs		(30.1)		6.3	(c)		(23.8)
Profit before tax		41.9		33.5			75.4
Taxation		(7.4)		(7.4)	(d)		(14.8)
Profit for the period		34.5		26.1			60.6
Weighted average shares outstanding in millions - basic	163.2				163.2
Basic earnings per share		0.21					0.37
Weighted average shares outstanding in millions - diluted	163.3				163.3
Diluted earnings per share		0.21					0.37

1. Represents share based payment charge including employer payroll taxes of €3.4 million and non-operating M&A transaction costs of €0.3 million.
2. Represents exceptional items which management believes are non-recurring and do not have a continuing impact. See Note 6,
   Exceptional items, within 'Exhibit 99.2 - Condensed Consolidated Interim Financial Statements' for a detailed list of exceptional items.
3. Elimination of €4.1 million net gains on repricing of debt, €10.2 million of foreign exchange translation losses and €0.2 million of foreign exchange losses on derivatives.
4. Represents tax impact of the above at the applicable tax rate for each adjustment, determined by the nature of the item and the jurisdiction in which it arises.

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Reconciliation of Non-IFRS Financial Measures (continued)

The following table reconciles adjusted financial information for the three months ended March 31, 2023 to the reported results of Nomad Foods for such period.

Adjusted Statement of Profit or Loss (unaudited)

Three Months Ended March 31, 2023

			As reported for the					As adjusted for the
	€ in millions, except per share data		three months ended		Adjustments			three months ended
		March 31, 2023				March 31, 2023
	Revenue		775.1		-			775.1
	Cost of sales	(550.9)		-		(550.9)
	Gross profit		224.2		-			224.2
	Other operating expenses	(114.5)	14.3	(a)	(100.2)
	Exceptional items		(30.1)		30.1	(b)		-
	Operating profit	79.6	44.4		124.0
	Finance income		1.1		-			1.1
	Finance costs	(30.1)	5.9		(24.2)
	Net financing costs		(29.0)		5.9	(c)		(23.1)
	Profit before tax	50.6	50.3		100.9
	Taxation		(9.4)		(10.9)	(d)		(20.3)
	Profit for the period	41.2	39.4		80.6
	Weighted average shares outstanding in millions - basic	174.5				174.5
	Basic earnings per share		0.24					0.46
	Weighted average shares outstanding in millions - diluted	174.5				174.5
	Diluted earnings per share		0.24					0.46

1. Represents share based payment charge including employer payroll taxes of €13.9 million and non-operating M&A transaction costs of €0.4 million.
2. Represents exceptional items which management believes are non-recurring and do not have a continuing impact. See Note 6,
   Exceptional items, within 'Exhibit 99.2 - Condensed Consolidated Interim Financial Statements' for a detailed list of exceptional items.
3. Elimination of €5.8 million of foreign exchange translation losses and €0.1 million of foreign exchange losses on derivatives.
4. Represents tax impact of the above at the applicable tax rate for each adjustment, determined by the nature of the item and the jurisdiction in which it arises.

Reconciliation of Non-IFRS Financial Measures (continued)

Reconciliation of Profit for the period to Adjusted EBITDA (unaudited)

	Three months ended
€ in millions	March 31, 2024		March 31, 2023
Profit for the period	34.5		41.2
Taxation	7.4	9.4
Net financing costs	30.1		29.0
Depreciation & amortization	23.1	22.3
Exceptional items (a)	23.5		30.1
Other add-backs(b)	3.7	14.3
Adjusted EBITDA	122.3		146.3
Revenue	783.7		775.1
Adjusted EBITDA margin (c)	15.6 %		18.9 %

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1. Adjustment to add back exceptional items. See Note 6, Exceptional items, within 'Exhibit 99.2 - Condensed Consolidated Interim
   Financial Statements' for a detailed list of exceptional items.
2. Represents the elimination of share-based payment charges including employer payroll taxes for the three month period to March 31, 2024 of €3.4 million (2023: €13.9 million) as well as the elimination of non-operating M&A transaction costs for the three month period to March 31, 2024 of €0.3 million (2023: €0.4 million). We exclude these costs because we do not believe they are indicative of our normal operating costs, can vary significantly in amount and frequency, and are unrelated to our underlying operating performance.
3. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by Revenue.

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Nomad Foods Limited

Adjusted Financial Information (continued)

Appendix 1: Reconciliation from reported to organic revenue growth/(decline)

Year on Year Growth - March 31, 2024 compared with March 31, 2023:

Three Months Ended

March 31, 2024

YoY change

Reported Revenue Growth		1.1 %
Of which:
Organic Revenue Growth/(Decline)	0.3	%
Translational FX (a)		0.8	%
Total	1.1 %

1. Translational FX is calculated by translating data of the current and comparative periods using a budget foreign exchange rate that is set once a year as part of the Company's internal annual forecast process.

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