Nomad Foods Limited · NYSE:NOMD
Nomad Foods — CAGNY Conference 2018
41 slides from Nomad Foods's conference presentation, Feb 22, 2018
Slide 1: CAGNY Conference February 22, 2018
CAGNY Conference February 22, 2018
Slide 2: Disclaimer
Disclaimer This presentation has been prepared and issued by Nomad Foods Limited (the "Company"). This Presentation has been provided solely for information and background. The information in this Presentation is provided as at the date of the Presentation (unless stated otherwise). This Presentatio
Slide 3: Nomad Foods Overview
In Western Europe’s €25B Savory Frozen Food Category Nomad Foods Overview €2B Net Revenues 3,800 Company Employees 90% Of Core Portfolio Ranked #1 Or #2 In Market Share 3 13 Primary Countries Across Western Europe Source: Company Information; Euromonitor
Slide 4: Expect To Deliver Strong 2017 Results
Expect To Deliver Strong 2017 Results 4 4% 110bps €225M Adjusted Free Cash FlowGross Margin ExpansionOrganic Revenue Growth Updated Full Year 2017 Financial Expectations Figures above are approximate and are consistent with updated 2017 financial expectations announced on January 17, 2018 3% price/m
Slide 5: Agenda
5 Agenda Company Overview Growth Strategy Shareholder Value Creation Q&A
Slide 6: Company Overview
Company Overview Nomad Foods
Slide 7: A Portfolio Anchored by Three Power Brands
A Portfolio Anchored by Three Power Brands 7 Austria Finland France NorwaySweden Spain Note: percent figures above represent 2017 net revenue mix by brand and excludes non-branded sales, which accounted for approximately 10% of sales in 2017. UK IrelandGermany Netherlands Belgium Portugal Italy 26%
Slide 8: Timeless Brands With A Rich Heritage
Timeless Brands With A Rich Heritage 8
Slide 9: Powerful Icons With Strong Brand Awareness
Powerful Icons With Strong Brand Awareness 9
Slide 10: Diversified Portfolio Anchored In Four Core Frozen Categories
FISH 40% OF REVENUES VEGETABLES 20% OF REVENUES MEALS 10% OF REVENUES POULTRY 10% OF REVENUES 1 2 3 4 Remaining 20% consists of other frozen branded categories and non-branded (private label and food service) sales Diversified Portfolio Anchored In Four Core Frozen Categories 10
Slide 11: Organized to Deliver Scale, Efficiency and Local Market Execution
Corporate Commercial, Finance, HR, IT, Legal Organized to Deliver Scale, Efficiency and Local Market Execution 11 UK & IRELAND WESTERN EUROPE SOUTHERN EUROPE NORDICS UK Ireland Belgium Austria Finland France NorwaySwedenSpain Germany Netherlands PortugalItaly Supply Chain & Procurement
Slide 12: The Undisputed Leader in Western Europe Savory Frozen Food
The Undisputed Leader in Western Europe Savory Frozen Food 12 14% market share Source: Euromonitor, 2017; branded only Total Retail Sales Value €25B Western Europe Savory Frozen Food
Slide 13: Strong Market Share at the Local Category Level
Seafood Vegetables Ready Meals Poultry #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #2 #2 #2 #2 #2 #2 #2 Strong Market Share at the Local Category Level 13 UK IrelandBelgiumAustria FinlandFrance NorwaySweden SpainGermany Netherlands P
Slide 14: 2017 Broad Based Share Gains in a Growing Category
14 2017 Nomad Takeaway Growth Broad Based Share Gains in a Growing Category UK IrelandBelgiumAustria FinlandFrance NorwaySweden SpainGermany Netherlands PortugalItaly 2017 Consumer Takeaway +4.8% 2017 Market Share +0.4pts 2017 Category Growth +2.3% 1.1% 7.4% 15.1% 1.9% (1.6)% 0.8% 2.4% 3.3% (1.0)% 5
Slide 15: Growth Strategy
- Growth-Strategy p Vie! ig Oe Nomad Foods
Slide 16: Frozen Food is Aligned With Consumer Trends
Frozen Food is Aligned With Consumer Trends 16 Shorter Meal Times Nutrition Reduced Waste Over-Indexed to Online Sustainable SourcingLower Carbon Footprint
Slide 17: Room to Grow Share in New and Existing Categories
Western Europe Savory Frozen Market Share by Category Room to Grow Share in New and Existing Categories 17 2% Meat Substitutes €.5B 33% Soup €.3B Potatoes €3.0B 6% Red Meat €1.6B 6% 22% Poultry €1.5B Fruit €.5B 3% 2% Baked Goods €1.3B 24% Vegetables €3.7B Seafood €4.5B 26% Pizza €4.3B 14% Ready Meal
Slide 18: A Clear Set of Priorities With A Proven Model
18 A Clear Set of Priorities With A Proven Model 18 Core Innovation Category Growth 1 2 3 Growth Model
Slide 19: Growth Strategy Rooted in Relentless Focus on the Core
Growth Strategy Rooted in Relentless Focus on the Core 19 Portfolio choices Media investments behind brands Improved product quality Packaging renovation In-store execution Invest disproportionately in the highest margin and most attractive growth areas Core 70% of sales
Slide 20: Core Growth is Driving Strong Underlying Performance
Core Growth is Driving Strong Underlying Performance 20 8% 4% 2% Nomad Foods Core Nomad Foods Total Category 2017 Organic Revenue Growth 1Aggregate for Nomad Foods’ top 5 markets (UK, Germany, Italy, France & Sweden) 2UK and Italy markets only, source: IPSOS Source: Penetration – Kantar World panel,
Slide 21: Core Focus Continues into 2018
Core Focus Continues into 2018 21
Slide 22: Deploying Digital Capabilities
Deploying Digital Capabilities Digital as a % of Nomad Foods Total Advertising Spend 11% 20% 27% 2016 2017 2018 22Source: Company Information
Slide 23: Building an Innovation Pipeline Behind Key Macro Trends
Building an Innovation Pipeline Behind Key Macro Trends 4.5% 5.0% 6.0% 2016 2017 2018 New Launches as a Percent of Nomad Foods Net Revenues Good For You SnackingVegetarian Convenience 23Source: Company Information
Slide 24: Discounter Expansion Evolving with Changing Consumer Shopping Habits
Discounter Expansion Evolving with Changing Consumer Shopping Habits 24 Small Shopping Trip Increasing Large Stores Re-Invigoration E- commerce Explosion
Slide 25: Leveraging Our Competitive Advantage in E-commerce
25 Leveraging Our Competitive Advantage in E-commerce 25 Online represents 4% of sales today and is growing double-digits Frozen overtrades online and Nomad Foods overtrades within frozen BirdsEye is the #2 online grocery brand in the UK after Coca-Cola UK and France account for the majority of onli
Slide 26: A White Space Opportunity As Hard Discounters Carry More A Brands
26 A White Space Opportunity As Hard Discounters Carry More “A Brands” 26 The Hard Discount channel (Aldi & Lidl) is growing mid-single digits across Western Europe In 2017, this channel accounted for 1% of Nomad Foods revenues but grew 44% The channel is growing double-digits in the UK and Southern
Slide 27: Mobilizing the Frozen Category
Mobilizing the Frozen Category Vision 27 Category captaincy Retailer collaborations On-trend innovation Corporate social responsibility Sizable Opportunity to Grow Frozen Occasions Occasions Where Frozen is Used 28% Occasions Where Frozen is Not Used But Considered 11% 29 Source: Usage and Occasion
Slide 28: Shareholder Value Creation
Shareholder Value Creation 28
Slide 29: EBITDA Margin Expansion A Key Driver of Shareholder Value
29 EBITDA Margin Expansion A Key Driver of Shareholder Value 29 17% 20% 2017 Long-Term Opportunity Net Revenue Management 1 Supply Chain Optimization 2 Expense Discipline 3 EBITDA Margin Drivers
Slide 30: Strengthening Net Revenue Management Capabilities
Teams & Capabilities Promotions Price Trade Terms Price Pack Architecture Strengthening Net Revenue Management Capabilities into 2018 and 2019 30 201820172016 2019 STAGE OF DEVELOPMENT basic intermediate advanced
Slide 31: Drivers of Supply Chain Productivity
Drivers of Supply Chain Lean Manufacturing 31 Procurement Productivity Factory Footprint Optimization
Slide 32: Expense Discipline
Non-Working Cost Reduction Funding Growth With Discipline 32 Invest In Our Brands Invest Behind Talent Expense Discipline
Slide 33: An Advantaged Balance Sheet with Strong Cash Flow Characteristics
33 An Advantaged Balance Sheet with Strong Cash Flow Characteristics Strong Cash Flow Conversion Actively Managed Capital Structure Value Creation through Capital Allocation under 3% Cost of Debt >60% Of Interest Rate Exposure is Fixed Earliest Debt Maturity 2024 Adjusted Free Cash Flow Yield 10%
Slide 34: Acquisition Criteria
Acquisition Criteria Market Leading Brands with Protective Moats Niche Categories with Opportunities for Growth Cash Flow Generation Strong Management Scale and Skill Synergies Valuation Discipline 34
Slide 35: Goodfella's Pizza Acquisition
Goodfella’s Pizza Acquisition Announced the acquisition of Goodfella’s Pizza in January 2018 for ~€225mn; expected to close by April 2018 Frozen pizza is the 2nd largest category within W. Europe frozen Goodfella’s is a market leading frozen pizza brand in the U.K. and Ireland Opportunity to realize
Slide 36: Goodfella's Acquisition Transforms UK and Ireland Businesses
Goodfella’s Acquisition Transforms UK and Ireland Businesses 36 Revenue Synergies • Portfolio opportunities • Brand management • Distribution channel Cost Synergies • Manufacturing • Procurement • Indirects Capabilities • Net revenue management • Expense discipline • Lean manufacturing
Slide 37: 2017 Performance Has Exceeded Initial Expectations
2017 Performance Has Exceeded Initial Expectations 37 INITIAL 2017 GUIDANCE LATEST 2017 EXPECTATIONS Organic Revenue Growth positive ~ 4% Adjusted EBITDA ~ €315 M ~ €328 M Adjusted Free Cash Flow ~ €200 M ~€225 M Source: Company Filings
Slide 38: Strengthening Euro vs. Dollar FX Rate is a Tailwind
Strengthening Euro vs. Dollar FX Rate is a Tailwind 38 1.00 1.10 1.20 1.30 January 1, 2017 May 1, 2017 September 1, 2017 January 1, 2018 2017 Expectations In euro € (reporting currency) In USD1 $ (equity currency) Net Revenues €1.9B $2.4B Adjusted EBITDA €328M $403M Adjusted Free Cash Flow €225M $27
Slide 39: Generate Shareholder Value by Leveraging Our Assets and Capabilities
Generate Shareholder Value by Leveraging Our Assets and Capabilities Create a Leading Global Consumer Food Company HIGH QUALITY ASSETS OPERATIONAL EXCELLENCE FINANCIAL DISCIPLINE Generate Sustainable Shareholder Value Distinctive Brands Pan-European Scale Talented People Growing from the Core Net Re
Slide 40: Financial Targets Summary
Financial Targets Summary 40 Low-Single Digit % Annual Revenue Growth 20% Long-Term Opportunity EBITDA Margin Mid-Single Digit % Annual EBITDA Growth At Least 90% Operating Cash Flow Conversion1 Below 4.5x Net Debt/EBITDA Impact from Acquisitions and Synergies Would Be Incremental 1 Operating Cash F
Slide 41: Nomad Foods
Nomad Foods