Nomad Foods Reports Third Quarter 2018 Financial Results

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

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

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

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

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

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

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

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

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

Conference Call and Webcast
The Company will host a conference call with members of the executive management team to discuss these results today, Thursday, November 8, 2018 at 1:30 p.m. GMT time (8:30 a.m. Eastern time). Investors interested in participating in the live call can dial +1-800-239-9838 from the U.S. International callers can dial +1-323-794-2551.

In addition, the call will be broadcast live over the Internet hosted at the “Investor Relations” section of the Company’s website at http://www.nomadfoods.com. The webcast will be archived for 30 days. 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 +1-844-512-2921 and by international listeners by dialing +1-412-317-6671; the replay pin number is 3706556.

About Nomad Foods
Nomad Foods (NYSE: NOMD) is a leading frozen foods company building a global portfolio of best-in-class food companies and brands within the frozen category and across the broader food sector. The company's portfolio of iconic brands, which includes Birds Eye, Findus, Iglo, Aunt Bessie's and Goodfella's, 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 and nine months ended September 30, 2018 and for comparative purposes, the three and nine months ended September 30, 2017.

Adjusted financial information for the three and nine months ended September 30, 2018 and 2017 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 exchange charges/gains.

EBITDA is profit or loss for the period before taxation, net financing costs, depreciation and amortization. Adjusted EBITDA is EBITDA adjusted to exclude, when they occur, the impacts of exited markets, acquisition purchase price adjustments, trading day impacts, chart of account (“CoA”) alignments and exceptional items such as restructuring charges, goodwill and intangible asset impairment charges, charges relating to the Founders Preferred Shares Annual Dividend Amount, charges relating to the redemption of warrants 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 EPS is defined as basic earnings per share excluding, when they occur, the impacts of exited markets, acquisition purchase price adjustments, trading day impacts, chart of account (“CoA”) alignments 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 EPS provides important comparability of underlying operating results, allowing investors and management to assess operating performance on a consistent basis.

Organic revenue for the three and nine months ended September 30, 2018 and 2017 presented in this press release reflects reported revenue adjusted for currency translation and non-comparable trading items such as expansion, acquisitions, disposals, closures, chart of account (“CoA”) alignments, trading day impacts or any other event that artificially impact the comparability of our results.

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 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 8 to 16, 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.

Forward-Looking Statements

Forward-Looking Statements and Disclaimers

Certain statements in this announcement are forward-looking statements which are based on the Company’s expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts, including expectations regarding (i) the Company’s focused strategy and relentless commitment to execution; (ii) prospects for the frozen food industry and expectations regarding the Company’s performance in such industry; and (iii) the operating and financial performance of the Company for the remainder of 2018, including accelerated EBITDA growth, organic revenue growth rate and the Company’s guidance with respect to Adjusted EBITDA and Adjusted EPS. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including (i) economic conditions, competition and other risks that may affect the Company’s future performance, including increases in operating costs and the Company’s ability to manage its cost structure; (ii) the loss of any of the Company’s executive officers or members of its senior management team or other key employees; (iii) the loss of any of the Company’s major customers or a decrease in demand for its products; (iv) changes in consumer preferences and the Company’s failure to anticipate and respond to such changes or to successfully develop and renovate products; (v) the Company’s ability to successfully interpret and respond to key industry trends and to realize the expected benefits of its responsive actions; (vi) the ability to recognize the anticipated benefits to the Company of strategic initiatives and its recent strategic acquisitions; (vii) changes in applicable laws or regulations; and (viii) the other risks and uncertainties disclosed in the Company’s public filings and any other public disclosures by the Company. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of such statements and, except as required by applicable law, the Company does not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

No Offer or Solicitation

This release and referenced conference call is provided for informational purposes only and does not constitute an offer to sell, or an invitation to subscribe for, purchase or exchange, any securities or the solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance, exchange or transfer of the securities referred to in this press release in any jurisdiction in contravention of applicable law.

The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this announcement is released, published or distributed should inform themselves about and observe such restrictions.

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