Nomad Foods Limited (NOMD) Q1 2026 Earnings Call Prepared Remarks Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals several negative aspects: underperformance in key markets, declining organic sales, and gross margin compression. Despite some positive elements like leadership changes and a strong dividend yield, the overall financial outlook is weak, with declining revenue and EBITDA. The Q&A section did not provide clarity on management's responses, further adding to uncertainties. Given the market cap, the stock price is likely to react negatively, falling within the -2% to -8% range over the next two weeks.
Key Financial Performance
Organic Sales Declined 5.3% year-over-year due to inventory destocking by retailers in January and realignment of order patterns at the end of the quarter.
Retail Sellout Flat year-over-year, indicating stable underlying demand despite the decline in organic sales.
Gross Margin Declined by 210 basis points year-over-year due to partial benefit of price increases and ongoing cost pressures.
Adjusted EBITDA Declined 23% year-over-year due to organic sales decline, gross margin compression, and a modest A&P timing benefit.
Adjusted EPS EUR 0.23, EUR 0.12 lower than the prior year, impacted by the decline in adjusted EBITDA.
Adjusted Free Cash Flow Conversion Ratio Increased to 36% from 24% year-over-year, driven by different phasing of interest payments and underlying improvements in working capital.
Cash on Balance Sheet EUR 283 million at the end of the quarter, supported by improved cash flow conversion and disciplined cash management.
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Operating Highlights
Market Performance: Underperformed in Germany and France due to price negotiation disruptions. The UK market showed improvement compared to last year. Italy, Austria, Portugal, Sweden, and Switzerland experienced low single-digit growth. Serbia saw mid-single-digit growth, Norway had high single-digit growth, and Croatia achieved mid-teens growth.
Operational Model Changes: Ended historical practice of shipping ahead of consumption to better align sell-in with sell-out, resulting in a healthier and more efficient operating model.
Cost Efficiency Goal: Progressing towards a EUR 200 million three-year cost efficiency goal announced last September.
Marketing Restructuring: Restructuring marketing organization to reduce complexity and inefficiency, cutting its size by half and reallocating resources towards growth.
Leadership Changes: Significant changes to the leadership team, including new Regional Presidents and a Chief Marketing Officer, with plans for further appointments.
Growth Opportunities: Identified opportunities across channels, countries, and segments by removing constraints in product portfolio and nutrition standards, unlocking new growth avenues.
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Risk or Challenges
Inventory and Order Realignment: Retailers built inventory ahead of price increases, creating a headwind in early Q1. Additionally, the company ended its historical practice of shipping ahead of consumption, leading to a sharp year-on-year decline in shipments at quarter-end.
Cost Inflation: Ongoing cost inflation has led to lower gross margins and a 23% decline in adjusted EBITDA compared to the prior year.
Price Negotiation Disruptions: Select retailers paused orders and promotions to pressure price negotiations, resulting in temporary market share setbacks and underperformance in key markets like Germany and France.
Market Performance Variability: Underperformance in Germany, France, and a soft UK market, despite growth in other regions, indicates uneven market performance.
Gross Margin Compression: Gross margin declined by 210 basis points due to partial benefits from price increases and continued cost pressures.
Organic Sales Decline: Organic sales declined by 5.3% in Q1, driven by inventory destocking and price negotiation disruptions.
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Guidance & Outlook
Full Year Organic Revenue: Expected to decline by 2% to 5%.
Constant Currency Adjusted EBITDA: Expected to decline by 5% to 10%.
Adjusted EPS Guidance: Increased to EUR 1.47 to EUR 1.62 from EUR 1.45 to EUR 1.60 due to incremental share repurchase activity. Translates to $1.72 to $1.90 at recent exchange rates.
Adjusted Free Cash Flow Conversion Ratio: Expected to be 90% or greater for the full year.
Second Quarter Organic Sales and Adjusted EBITDA Growth: Expected to be below full year target due to rephasing of A&P activities and residual impact from price negotiation disruptions.
Gross Margin: Expected to see more positive contributions from price and productivity for the remainder of the year.
Second Half of the Year: More robust results expected.
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Shareholder Return Plan
Dividend Yield: Currently yielding approximately 7% on an annualized basis.
Dividend Payment: EUR 20 million of dividend payments funded in the quarter.
Upcoming Dividend: Board of Directors declared another cash dividend of $0.70 per share payable on May 28, 2026, to shareholders.
Share Repurchase Activity: Repurchased EUR 24 million worth of shares in the quarter, equating to 2.7 million shares.
Impact on EPS Guidance: Incremental share repurchase activity enabled an increase in EPS guidance for the year.
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Key Q&A
Q:Review of Unclear Management Responses
A:
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
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Analyst Day
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CEO
Director
EUR
Investor Relations
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NOMD Transcript
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Nomad Foods Limited (NOMD) Q1 2026 Earnings Call Prepared Remarks Transcript
Unknown5-13
The earnings call reveals several negative aspects: underperformance in key markets, declining organic sales, and gross margin compression. Despite some positive elements like leadership changes and a strong dividend yield, the overall financial outlook is weak, with declining revenue and EBITDA. The Q&A section did not provide clarity on management's responses, further adding to uncertainties. Given the market cap, the stock price is likely to react negatively, falling within the -2% to -8% range over the next two weeks.
Nomad Foods Limited (NOMD) Q1 2026 Earnings Call Transcript
Unknown5-7
The company's financial performance is strong with increased revenue, margins, and net income, which is positive. However, the lack of strategic and operational updates, along with management's vague responses to key questions, introduces uncertainty. Additionally, while there are no immediate risks from the Middle East conflict, potential cost impacts in 2027 and the absence of clear guidance temper positive sentiment. The market cap suggests moderate sensitivity, leading to a neutral prediction.
DRI Healthcare Trust (DHT.UN:CA) Q3 2025 Earnings Call Transcript
Unknown11-6
The earnings call reveals a mixed financial performance with declining royalty receipts and concerns around competition and reimbursement changes impacting revenue. Despite some positive indicators like high EBITDA margins and strategic deals, uncertainties in guidance updates and lack of clarity on tax impacts post-internalization add to investor concerns. The market cap suggests moderate volatility, leading to a negative outlook for the stock price over the next two weeks.
NOMD Report
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