Q1 2022 Nomad Foods Ltd Earnings Call
Thank you for standing by.
The conference operator.
Welcome to the Nomad Foods first quarter 2022 earnings conference call.
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I would now like to turn the conference over to Anthony the Colo head of Investor Relations. Please.
Please go ahead.
Hello, and welcome to the.
First quarter 2022 earnings call and Anthony <unk> head of Investor Relations and I'm joined on the call by Stefan to Shoemaker, our CEO and Sammy ZIP code our CFO .
Before we begin I would like to draw your attention to the disclaimer on slide two of our presentation. This conference call May include certain forward looking statements that are based on our view of the companys 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 this slide in our Investor presentation, which includes cautionary language. We will also discuss non <unk> financial measures during the call today. These non <unk> financial measures.
Should not be considered a replacement for and should be read together with our I FRS results users can find the I F Rs to non Ifr S. Reconciliations 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 pre.
<unk> represented adjusted figures for 2021 and 2022, all adjusted figures have been adjusted for exceptional items acquisition related share based payment and related expenses as well as noncash FX gains or losses, unless otherwise noted all comments from here on will work.
Where did those adjusted numbers with that I will hand, you over to Stephane.
Thank you Tony and welcome to the team for your first quarterly earnings.
Good afternoon, everyone and thank you all for joining us on the call today.
We're pleased to review our results for the first quarter and so we bought that we are executing well and.
We remain on track to deliver the 'twenty to 'twenty two guidance, we set back in February .
Our business has been significantly disrupted by the difficult macro backdrop and we see these results as a great achievement for the team.
Not entirely satisfied with our performance.
But we are encouraged by the resilience of our business model.
The strength of our brands.
And the ability to navigate difficult waters.
With the war in Ukraine, we faced an unprecedented geopolitical challenge.
In the first quarter of 2022.
Oil discussed.
Isn't sharply year on year, while consumers are coming under increasing pressure from high inflation across Europe .
It is with this backdrop that we are focusing on performance and delivery driving world class III did execution and strengthening our consumer proposition.
While stores are we finding those supply chain too.
Targeted investments in <unk>.
Process improvements.
Looking ahead to the rest of the year, we are aware that actually with costs and we expect at least one more round of price increases to help offset a significant portion of our cost inflation.
Supported by our strong free cash flows.
To maintain our investment in brand and supply chain improvements supporting us in 2022 and beyond.
We're also investing in our latest acquisition, yes, we antiques.
We are well positioned for the future.
With that I'd like to recap, our first quarter key financial metrics.
Beginning with reported revenue was up 733 million Euro.
Which increased by three 6%.
By the first inclusion of our newly acquired <unk> business.
Organic revenue declined by four 5%, reflecting difficult volume comparisons against the Covid Lockdown.
Our scheme in place this time last year.
We delivered an adjusted gross margin of 27, 9%.
250 basis points lower year on year, reflecting the impact of acquisition lower organic sales and the higher raw material costs.
Adjusted EBITDA of 132 million Euro represents a 4% decline compared to last year.
It was higher input costs before pricing waste on the results.
And finally.
Adjusted EPS was 43 euro cents per share.
Although this represented a 9% decline versus last year, we are still on track to deliver our 2022 adjusted EPS guidance of $1 71 to $1 75 euros.
Turning to slide four.
The first quarter positive revenue growth was driven by the law. The first time inclusion of course with explosives business.
And there's more and more from currency.
Organic sales declined four 5% as we lapped last year's strong volume results.
Given by Covid Lockdowns.
We lost sales in your kids, you threw a poultry shortage and law.
Losses in another large market due to a pricing dispute.
A major retail customer.
Stripping out these one off items organic revenues would have been down low single digits for the periods. We have since successfully resolve both issues.
We did not get the full benefit of our pricing actions during the quarter.
The pricing was stays across the periods with many of our increases with two months, we expect our second quarter stated trends to improve as we get the full benefit of the first quarter pricing and begin lapping post COVID-19 Lockdowns Gunther isn't.
Always room.
The next day or margin recovery to gain momentum.
The second half of the year. After we take our next round of pricing on top of our first one from Q1.
Traditionally we take pricing one centrally acting.
Early in the year. However, we are an appeal with the unprecedented cost inflation and we will be taking more pricing midyear to recover costs.
We are planning at least one more wave of pricing for the second half of the year.
Starting early in the U K.
You should boost our top line and help offset the record inflation we are experiencing.
Just to be clear.
There is always a time lag between Cogs increases which are linear.
Price increases to the retailer we charged standards what matters to US is a long term evolution of both margin and we believe it is imperative to recover gross profit dollars and margin this year to position us appropriately for next year.
We are on track to deliver that because means with this many discrete.
Our market share trends were highly encouraging in the quarter.
Overall, we grew value share 10 basis points across all of our markets.
However, we grew share 60 basis points on average in all four markets, which represents more than 60% of <unk>.
These are the must win battles, where we define a commercial success.
Higher input costs, where there's all the gross margins and profit in Q1. However.
However, we are well prepared for the rest of 2022 with roughly 85% of our raw material hedges.
In energy, we I think the big covered for 2022 and now have begun edging footwear, there's really three.
In edible oils, we are we have had no shortage today.
We've taken a position on all our requirements for 2022.
With these supply crises, we have accelerated the execution of our risk mitigation strategies.
We have taken steps to diversify our sourcing portfolio across key ingredients. We are also adjusting our product formulations wherever appropriate while still meeting our high quality standards.
We also quickly taking steps to reduce the volume of freshwater fish when using our products further de risking our business.
In the year to date.
I've been highly encouraged by the performance of our new business in the region.
Even by notwithstanding team across the eight markets.
Oh, he used to performance were strong, giving us confidence of a return to pre COVID-19 tourism levels through the summer selling season, when ice cream consumption peaks.
The integration program is progressing well and we are confident we will meet our 15 million euros synergy target by 20 it was before.
In August 'twenty, 'twenty, one, we announced a $500 million buyback program, which expires in August 2024.
In Q1, we repurchased nearly 27 million euro in shares and we continue to regard share repurchases as highly accretive option to drive shareholder value.
Turning to slide five.
He is the first time newmont has been tested during periods of uncertainty overall history, we've passed through multiple challenges enough to come out a better company on the other side.
After new amongst reissued in 2015, we turned the company around and create a growth culture and must embattled focus.
Which is no in the center of where we are today.
We managed through the unique challenge of bricks and in 2019, and then the COVID-19 pandemic in 2020 in 2021.
We will be challenged this year by high inflation and the war in Ukraine.
And believe we have robust plans in place and are well positioned to deliver to our commitments and come out a stronger organization.
In this difficult environment, we are continuing to provide security of supply for our retail partners.
I'm, especially pleased with the whole supply chain has evolved to meet these new challenges.
In 2020, and early 2021 will not be either the exceptional demand growth window facilities were running at higher than 90% capacity.
Through late 2021 and this year to date, we have step changed our capacity to source comverse and supply and the highest quality despite global shortage of raw materials and accept low inflationary pressures.
Our current service levels improved significantly from a year ago.
Finishing the first quarter of 2022 at the 96% fill rates.
The improvement of 300 basis points versus the same period last year.
Additionally, we've maintained a focus on innovation and we are.
Actively evolving our portfolio to reflect new market realities.
It is especially important in light of the rapidly climbing cost for all of our proteins.
Our flagship Green cuisine plant protein line is gaining share and we have more innovation planned for the second quarter with our brands.
We are also pleased that in the grocer Gold awards for 2022 green cuisine has been shortlisted for food brand of the year.
In addition approached <unk> to 'twenty 'twenty Tokyo Olympics campaign has also been Shortlisted for consumer initiative of the year.
Finally, it is worth noting that even with the difficult backdrop.
We are razor focused on the social responsibility commitments.
We've maintained our efforts on meeting Oes Seagull, especially in the area of net carbon neutrality.
When looking out through the balance of 2022.
We believe we are on track to deliver against our most important financial metrics.
Sami will discuss later in more detail.
You are guiding to grow business in line with what we have achieved in recent years.
I believe it is important to look at what we have accomplished in the creation of this business in 2015.
After consolidating birds, the igloo and fingers, we've grown revenues from $1 9 billion Euro to $2 6 billion euros in 2021.
With the run rate this year of $2 9 billion euros, including a full year of four new aesthetics business we.
We expect to have more than doubled adjusted EPS from 2016.
At the end of 2022.
We have successfully integrated more than 1 billion euros accretive acquisitions, including good fill us one day see you didn't seem to Switzerland, and we plan to add more value, creating strategic assets in the future.
There is volatility in the situation.
Including those supply chain.
And we expect to see some elasticity in wholesale this year.
But we are confident that our business is well positioned.
To produce good results under difficult conditions also I am confident that our growth will accelerate when these periods of uncertainty eases supported by excellent team across Europe .
<unk> brand portfolio and a proven track record of deploying capital in an optimal way.
Driving value for shareholders.
With that I will now hand, the call over to semi to review, our financial results and guidance in more detail semi.
Thank you Stephane and thank you all for your participation on the call today.
Turning to slide seven I will provide more detail on our key first quarter operating metrics.
We reported revenues of 733 million euro in the first quarter a growth of three 6% year on year, driven primarily by the acquisition of <unk> and we have fixed business.
The remainder of that transaction was finalized in September 2021.
Beyond M&A first quarter revenues also benefited one four percentage points from favorable FX sensation.
These growth drivers were offset by a four 5% decline in organic revenues due to difficult locked down comparisons so.
Supply chain constraints in the U K and the loss of some promotional volume in key markets.
Gross margins were 27, 9% during the first quarter, reflecting a 250 basis points decline compared to the prior year and in line with our expectations.
The first component of the 200 basis points decline in our base business as inflationary pressures impacted margins during the quarter.
The remaining 50 basis points contraction was driven by the inclusion of the advantage acquisition, whose gross margins are seasonally lower at this time of the year.
Mitigating pricing follow at the lagging with further price increase is expected to be implemented through 2022.
Moving to the rest of the P&L.
First quarter adjusted operating expenses of 94 million Euro was stable year over year.
This year on year stability reflects a more normalized level of A&P spend.
We remain committed to supporting our brands with the appropriate level of spend.
First quarter adjusted EBITDA of 132 million Euro was down 4% versus the prior year and our adjusted EPS of <unk> 43, Euro cents reflected a 9% decline versus the prior year, reflecting the factors previously discussed.
Turning to cash flow on slide eight we generated 46 million euros adjusted free cash flow in the first quarter.
Waiting to 62% free cash flow conversion.
This is below Q1 of last year as we are still benefiting from a COVID-19 related tailwind before we have rebuilt our inventory position during the remainder of 2021.
Change in working capital switched from a source of cash last year to 29 million use of cash in this quarter as we build raw material inventories in anticipation of possible strategies.
While capex was flat versus year ago in Q1, we do expect a higher capex for the year as we support strategic investment decisions.
Changes in both cash interest and cash tax in the quarter were broadly offsetting primarily due to phasing.
We expect to deliver strong free cash flows in this year. However, we also expect a combination of stepped up capital investment.
Inventory.
The implementation of the he was unfair trading practices Directv to leave us sort of a typical 90% to 100% medium term conversion targets.
With that let's turn to our final slide slide nine to review, our 2022 guidance, which we are reiterating from Cagny and our year end 2021 earnings report in February .
Our guidance on sales and EPS is based on our best projections of cost inflation and other factors in the second half of 2022.
As Stefan mentioned in his remarks, we plan to recover cost inflation through several waves of pricing throughout the year and thus we expect an improving gross margin profile over the course of 2022.
We expect a second wave of pricing to support margin recovery in the second half. So that we can start 2023 with an appropriate level of margin.
We remain reactive to market dynamics, hence, we may need to execute the third wave of pricing towards the end of the year should inflationary pressures persist.
Yes, we I think the business is weighted towards the second and third quarter, and we expect that favorable mix from the idea to provide a tailwind to margin during those quarters as well.
So to be clear, we expect sequentially, improving financial performance as well as 2022.
Improving margin evolution of our pricing takes hold.
We expect organic revenue growth in the low single digit range for 2022.
This will be driven by saying as the price increases through the first and second half of the year.
Low single digit growth is consistent with what we guided in February .
However, we expect a different mix of volume and price in our sales buildup that original guidance.
In our original guidance, we expected a relatively balanced mix of volume and price with a small spread between the two.
However, we now expect a wider spread between price and volume with significantly higher pricing, but much more negative volumes as we pushed for maximal cost recovery.
We expect yet.
In Houston to revenue to support our reported revenue guidance of high single digit for the full year.
All in we expect adjusted EPS in the range of $1 71 to $1 75 euro per share another year of double digit growth.
That concludes our remarks I will now turn the session over to Q&A. Thank you operator back to you.
Thank you.
Now begin the question answer session.
Joining the question queue, you May press Star one on your telephone keypad you were here at town acknowledging your request.
If you are using a speakerphone please pick up your handset before pressing any keys.
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Pause for a moment as callers join the queue.
The first question comes from Robert Moskow with Credit Suisse.
Please go ahead.
Hi, Thank you.
I wanted to ask one question about the guidance I think you said you might need a third wave of pricing if inflation persists and I wanted to know does that mean.
If inflation keeps climbing from here, you'll need a third wave or does that mean that if it's cost stay as high as they are today, you'll need a third wave and then I'd like a quick follow up.
Hi, Robert I mean actually what this means is that what we have seen is a steady increase.
<unk> inflation and they're now in the middle of execution of the current pricing, which is a second wave and if effectively inflation keeps them creeping up if you won't go wrong, then we will reconsider third wave at this stage.
Okay.
And then my next one.
I want to make sure I understood your competitive positioning and fish <unk> bin.
We're very transparent about 50% of your supply coming from Russia.
And that seemed like a logical thing to present to our retailer to to raise price, but I was wondering if you knew whether your competitors in private label and other brands are they facing the same challenges as Hugh and therefore, they have to raise as well.
Or do you think that you're the one who has to raise more than they do because of your sourcing.
Thanks.
Quick question. The question is very simple.
Actually you know we don't have a full intelligence that we have good intelligence and the understanding is that all competitors, mostly some brand players with mostly private label producers are exactly the same situation is sometimes you know for me even more dependent on Russian fish.
So it's for them you know it's.
It's good.
Facing the same situation I would put it that way I think we.
We are moving quite fast.
Judge for them then in terms of the cost increase I would put it that way.
Okay.
Well, it's it's it's broad based it's not limited to fish by the way it's about.
But in terms of fish.
I don't see why you know that would have a different.
Situation in terms of price the only question, they're facing but I'm looking at the issues.
One day, they're going to decide to oversee deposit price the cost increase.
From the private label supplier to the retailer.
From the retailer to the consumers that is obviously something which is not in my in my remarks, but it's going to come no no matter, what it's more a question of the Wendell if.
Okay I'll get back in the queue.
I would even argue if you don't mind.
Is it private label.
You're starting from a lower baseline in terms of price.
Facing exactly in absolute terms.
The same kind of.
Cox increase which means that you know in relative terms.
Your your issue.
When are you going to bus the Cogs increase in relative terms, it's going to be a steeper increase.
Got it thank you.
The next question comes from Coty Rice with UBS.
Please go ahead.
Hey, good morning folks. Thank you for taking our question first question I'm, a little confused about your organic growth guidance for 2022 in your press release, you noted a modest organic revenue decline for the year and then the five in your commentary you noted a low single digit organic growth.
Help us put those two together.
Yeah sure I think there are there hasn't.
Been corrected statement that maybe made in the press release of just being informed I mean, right now I think.
The correct version has been put there will be modest growth.
The remarks I have put in the speech and the commencement of the earnings all the correct one.
Modest organic growth for the year. That's what is intended at this stage.
Got it that's helpful. Thank you for that and then.
You held your full year EPS outlook. Many investors we speak with are concerned about the second half operating environment as it gets tougher.
Just help us understand some of the assumptions underpinning your expectations for the second half.
Organic sales growth sequentially build gross margin declines moderate and then operating expenses, we expect that to decline in the back half is that the right way to think about it. Thank you.
Yeah, I would say overall, it's just when you take the total amount, which we see effectively the beat.
Then E inflation impact across the quarter more or less if you got a bit of a ramp up gradually coming from let's say the end of the last year or getting into this year at the same time, we have implemented the first wave of pricing in Q1, which is executed as we as we speak and where we see the impact of <unk> full fledged impact is upfront.
End of Q1, as we had mentioned and then we are in the process of implementing the second pricing issue. So there is a productivity. When you look at point to point end of December to early January Cds gradual development of pricing with quite a significant step up in pricing you know therefore from an average standpoint to recover the totality of the.
The inflation or at least to end up with an exiting picture.
Picture, if you want that would have compensated for the for the inflation. So when you take those two elements into consideration there isn't a limit of no transition that's the objective.
To preserve the cost structure and set the right base for 2023 at the same time, we continue to maintain our cost discipline. We continue to maintain forget to tighten the school, we have made some discretionary intervention.
Clearly not impacting the business there and we still have some element of protection as we see at this stage in terms of in case of acute inflation moves up a bit further we have talked about the possibility of a third wave and we do have some discretionary intervention that could trigger should execute the suggestion request some rolling dimension. So it does vary.
Page under the hypothesis that we have I mean, clearly we feel comfortable with the guidance range that we have a 170 171 to 175 per.
Sure Yes.
Thank you I'll pass it on.
The next question comes from Steve powers with Deutsche Bank.
Please go ahead.
Yes, hi, good morning.
I was hoping you could give us a little bit more perspective on your raw materials expectations less from a cost perspective, but more from a availability perspective I'm most focused on on on fish whitefish from from Russia, but just more broadly if if if relevant I guess in the kidney.
Case, where EU or U K relations with Russia can you know continue to.
Deteriorate and that.
You know tail risk of of excessive tariffs or or or even you know importation bans on Russia Whitefish, you know how do you how do you size that risk and then what are your mitigation strategies in the event that tail risk might might actually play out.
Well, we've not been waiting for in order to materialize at this stage to be fair you know I think at this stage you know we just can be sourced.
By the way.
So thats one thing, but at the same time as we said repeatedly.
We are taking steps to reduce the use of volume purchased there.
Again, it's not like you switch off in switched on the lights.
You're talking about fish and you need to breathe to obviously grow efficiently to make sure that you have the right quality.
I used to be a messy.
So high quality standards, which is really.
Nobody's order boats.
But with that constraint, which is which is a great constraints. Yes, we have we need to find them. We are finding some ways to increase the purchase from outside of Russia. We are working with them. Some replacement in terms of species I take for example, which is very close in terms of fish.
And taste, we starting and it's something that is going to be significant in the coming years, we starting with them.
You know fanfish use today, we are not something like 98% is wildcard.
Anthony the future lies also with Fanfish provided again that were dealing with the same kind of quality criteria. So in other words instead of going to MSC, which is marine stewardship Council, we've gone through ASC, which is agricultural switch console and this is the kind of things we're going to develop together with the with the farms in.
So more.
More seats and so southeast Asia, So, we're taking appropriate steps to get there.
And in the meantime, yes subsidiary, we're still working with them with Green cuisine, which as you know we have a we have a fantastic product, which is called fish fingers.
And it's working very well side by the way from any threat.
Yes definitely.
That is today one of the best sellers in the U K income in countries like Germany, and so all the all the all the options we are taking but definitely as I can tell you. The let's say the procurement team is.
The teams are reasonably busy right now which is the right thing to do by the way because we don't think that there is way.
Way back to the previous situation. So we want to reduce our dependency and we're going to no matter what happens in the future. So we don't think it's going to be back to normal situation and there is a new normal in the we trying to define these new ones are move together with the with our suppliers that's for fish in terms of other materials.
Well, let's say aside from the fact that you know everything you know has been the price.
Prices have been.
<unk>, increasing its been a drone it's.
It's a broad base.
This situation.
Big things that I think coming from these countries for example, antibody ours and so it's it's impacted by the work that we are constructing for edible oils and we have taken a position on all our requirements for 2022. So we have no shortage is today.
So use rapeseed oil as you know what I mean, it's rapeseed oil has been an important.
I mean, there are a lot of people half of it for the first half sometimes routine Doyle.
Important that is in food.
And so we're working with all key suppliers and we've been working with our suppliers to ensure that both effects are approved and salt if required. So it's which is fine and I think again, we're doing this without.
The magic at all you know the quality standards that we have with no mud.
Energy is another thing obviously, we know and what we said at this stage, we have a multi year corporate strategy to 2025, we covered in the 2022 well hedged in 2023, starting 2024. So I think we've taken the right the right measures, but again, it's not going to stop here so more to come in the <unk>.
In the weeks months and quarters.
That is extremely helpful. Thank you for that perspective, if I could ask one follow up on a different topic on on the second and potentially third rounds of pricing that you're.
Anticipating you're contemplating.
How in your low single digit organic growth guidance.
How have you factored in potential retailer friction.
You know as you saw in the first quarter on future waves of pricing is that something you've you've baked into the outlook.
We carry I mean of course, I mean, I've already mentioned, let's say observing that and the competition. We had I mean, just to give you some prospective in the context of the strong and I'll give you some perspective.
At the same time insurance for every price increase we have done historically, we had a number of pension points. Because this is an exercise that usually starts in September October over the prior year and that ends up around the end of February depending on the market and there has always been a point of it.
Negotiation and so on.
This year, we only had one and which had ended up actually in a positive way, which is quite unusual but that tells you one thing which is effectively retailer and manufacturer in the same boat I mean at this stage I do think that the simple fact that there is a broad based inflation. That's the challenge that's hitting everybody.
There is a matter of frankly preservation of margins even at their end, which they do understand the question effectively is about talking about funding. If you want the old pricing and it was going to be sticky pricing by the most.
He's very stage, if you want we had gotten pretty successfully under work first wave and then the second wave we are managing the mix of different variable that we have I just want to highlight to you that pricing is pricing at the Q3 price, but there is a number of other element that you are looking at such as promotion is an example, or.
Or potentially if you aren't working a bit more on the mix of working at 60 via dwell on trade terms in order for us to boost the total mix. That's what we call our revenue growth management strategy and we are fully leveraging both sides or is it purely price and revenue growth management to circumvent some placebo risk at this stage between either those risks are there and it's our job to manage.
The totality of the portfolio of risks in order to deliver against the objective.
Very good thank you both.
From them.
The next question comes from Jon <unk> with CJS Securities.
Please go ahead.
Hi, Good morning, Thank you for taking my questions and nice quarter.
You mentioned that you were 85% hedged on your supply where are you open ended at this point either by feedstock or end market and kind of what are the risks there.
Yeah.
Boy that's to your point I think we have hedged 85% at the end of the year and I think we're making progress.
Moving forward in 2023.
The 15% is really I mean, the way that you know there are some categories, where it's really difficult.
Some of our ingredients.
It's impossible or quasi impossible to hedge.
So we're pushing the system to the limit but.
I'm going for an environment, where we like to hedge 100% of the 12 month basis, I think we're making progress from that standpoint, but when you also need to recognize there are some pieces of the business way way, it's almost impossible is it you know.
There is nothing that I would like to pinpoint I think it's more broad based.
I'd say, it's more ingredients you can let's say we mentioned for example.
So that's kind of things are just more difficult than some other categories of it that way.
Just I mean I'm sure that you're familiar with all of this would be that an institution like us with where you are.
Effectively.
Poultry in veg and so on.
Not necessarily in the best interest, even though the supplier to relocate an entire year I think the team has done an extraordinary job to get us to the 85% and really pushing even Furthermore, but it's really a question of realigning with suppliers on making sure that we can benefit from their production in whichever form it is.
For us to look completely for the year the pricing as Stefan said desert and antagonism on this one which is at the same time as we want to get the 85% higher we need to plant the seeds to frankly get to appropriate coverage for 2023.
Okay, great. Thank you and I don't know if you addressed this.
How should we think of your capital allocation priorities given valuations are down across the board in a number of sectors in assets.
Including your own share repurchases more of a priority now or is M&A still a focus for you guys.
The message I mean is it still the same I mean, clearly it's sort of our 2000 and seeking for the best opportunity to maximize return at this stage. We all have when we stated the efficacy that we have an opportunistic approach on that one and we are in constant assessment of all of the option available.
<unk> that you mentioned and of corporate it's forcing the business. So that's frankly, the view that <unk> yeah.
Okay.
So.
Yes, sometimes also it's got up to buy additional income which by the way.
Yes.
Okay, if I could ask one more as you scale, enabling you to take share and gain shelf space and even in a tough environment for some of what your competitors are doing at this point.
So again, I would say and repeat the question Im not sure that we get it.
Is your scale in those supply agreements, enabling you to drive.
Shelf space and market share gains in this environment.
Well I think overall you know I think the order supply chains have been obviously challenged with.
It's not the only ones that I would I would.
I'd say that in some categories, where we have a significant position. Yes scale is scale is a positive.
Especially long term agreements people remember.
Especially in more challenging times.
I think I would say.
<unk> scale.
Initial knowhow and category captaincy.
Retailers are really looking at a fully to help reshape the shelf if at some point our movements.
Fluid across the different sectors. So that it's not just scale I think in itself.
The organization has developed a very deep knowledge.
Install new legend shelving alleged whereby the retailers are really looking at this and frankly help them design the shelf, while maximizing the revenue out there and then we're clearly missed Rick.
Cause us to have that.
Understood. Thank you and good luck.
Thanks.
The next question comes from Ryan Bell with consumer edge research.
Go ahead.
Good morning would you be able to discuss how does fortinet.
<unk> is going and then also maybe you can give a little bit of an understanding that the recovery on the on premise broadly across your portfolio, but obviously specifically for fortunate than their agents that they operate.
But overall to make it simple I mean, the 14 of acquisition is doing the integration is going extremely well.
By the way, it's an interesting patterns because of all the acquisitions, we've been through so far.
With a clear focus behind frozen foods.
Rich.
We believe that that focus focus is paying off in terms of also obviously novo in terms of how to approach an acquisition or to generate the synergies and every time. We go into another another conditions, we I think all or let's say a model is improving and 14 O advise is really in the middle of this so first.
First thing is what we what we have seen after an extensive due diligence is no real surprise by definition, you always have surprises, but let's say at this stage until we have more good surprise in the bad surprises.
One thing.
The team is extremely supportive extremely excited to be part of of being a.
Core strategy of the organization, which is a big big change for them and I can tell you in terms of synergies.
It makes a huge difference people also want to load.
And you know I think we have let's say some some some interesting tools that they can they can they can take and on top of that you know to your point I think we also have some back to on premise.
We think it's a great asset.
Uh huh.
For ice cream, but also for frozen food, we have 120000.
Let's say freezers across the organization.
It's part of our Capex by the way, it's something that we knew from the start that we need to obviously.
Let's say improve.
Three of the assets is something we're doing with no signs of late the last of the last piece of it right now for this year and what we've seen at least so far as of Easter Ism has been extremely extremely good for us. So we're starting to come back to pre cum pre COVID-19.
Covid situations in terms of ice cream because this is what we see.
I'd say all of whom impulse was.
Was a beta in August .
Has been.
There was there were some issues during COVID-19 I think we can see is it simply improving big time. So we're quite quite confident that's what what's going to happen.
In the summer is going to be extremely helpful with a very good team.
Improved improves the infrastructure a new.
New tools.
And post Covid. So yeah I think it's it's it's we really like that position in them, but we also love the margins.
Impulse ice cream golf shoes.
Great margin, we love it.
If I could just ask one more on you took the <unk> pricing throughout Q.
A significant portion of that actually came in towards the back half the back ended the quarter.
Would you be able to talk about the that's the price increases kind of as we got towards the end of the quarter just to understand the magnitude of.
The full effect of those pricing.
Yeah, I think the comment was really get to talk more about the pricing impact from the sale execution.
The reality is that in the <unk> World when you pass at this price.
You have to support your business doing transition time, and you'd have to put in place the relevant level of promotions and together with the retailer in order to facilitate the transition from a given price point to another price point. So managing your promotion during your price increases are central So what happens is just to pick. An example, if you have a market technically.
Raising prices on January one you rarely if you want on the net net impact on your net sales pricing you start to see the effect after probably 45 days or so 45 50 days on average so it's not that we have deferred the execution I think what's really important to us.
We did execute the price actually even the UK started even earlier than that but the majority of the market I visited all of the pricing between January and February but that said the ramp up of the effect on the net basis. After promotion is really hitting most as of March.
And would you be able to just say kind of the size of that pricing on a percentage basis.
Yeah, I think it's quite quite well do you know what I think it's in the range of the mid single digit level I mean at this stage depending on the market.
Of them was a bit on the high end of the single digit the other one where we came closer to the mid single, but the average is probably around the mid single from the least price execution standpoint, not after promotions at these plants.
Thanks, so much.
Okay.
Once again, if you have a question. Please press Star then one.
Our next question comes from Robert Moskow with Credit Suisse.
Please go ahead.
Yes.
Hi, just a follow up.
You know the frozen category in Europe , the data looks pretty.
Pretty weak declines have continued I thought it was due to increased mobility among consumers.
How is the category doing compared to others in Europe and has that influenced at all the retailers willingness to allow higher pricing to go through.
Well I think to start with your second part I don't think it does it doesn't I don't think it impacts.
Your willingness to come up with prices because they also by the way.
No I mean, they are all private label, so they're going through the same kind of Cogs. So that's that would be in that.
The big mistake, and then making this mistake.
To your point I think at this stage yes.
Let's say frozen is a bit weaker than the others, but.
You need also to remember that during the same period last I mean during COVID-19.
It's significantly over performed the other categories ambient and perishable.
So overall and when you see on this on a two year basis, we're still doing very well, so I'm not concerned, but definitely we want to see obviously things moving on so that's one thing. So yeah. That's we very much you know you're taking a longer term approach of two years three years approach. It's it's it's you know.
The numbers are very very consistent.
I also believe by the way and I don't want to notice that we've come up with an announcement in terms of sustainability and the LTA, which has a lifecycle assessment.
We've come up with a very thorough study by the way end to end in terms of let's.
Let's say or 'twenty two biggest skus.
And we compare as you know the the carbon footprint and to and really from from let's say the field to the folk.
The equivalent in the in the fresh ore in ambiance and I think for most of them you know, what we're doing equal or better.
You know then these guys and the reason is most of the time is attributed to waste.
The waste level at the store level is obviously much better for US same thing for the consumers. So I think what one thing what we need to probably going to get better is it.
It's also waste is great in terms of sustainability or less waste, but it's even better for the disposable income.
So in other words, you know if you if it's you know youre going to save money on a full year basis. If you go into them all at the same price, whereas the wisdom with frozen foods, because the waste level is just much slower not only at the retail level, but also the consumer because that's the kind of things.
Do you believe that the fundamentals.
The fundamentals.
Of course, right and so at this stage as I said, you know what yes, it's a bit weaker but when you are taking them.
Long term space very much.
Yes.
Okay. Thank you.
The next question comes from Cody Ross with UBS.
Please go ahead.
Hi, there. Thank you for taking a follow up just a quick question you only repurchased 27 million shares stock is down 30%. This year and you have nearly 400 million left in dry powder at what point would you consider accelerating your share repurchase. Thank you.
Yeah, I'm going to repeat the answer.
This is I give you I mean, we have made those repurchases or pick three prior to the Ukraine War.
And we made it very clear communication that.
As a priority for us is to make sure that we clearly had access to supply.
In order to serve our consumers that is very important and that's why we spent probably more money mentoring building.
It was necessary to have.
Functioning a full a full regime I mean from that perspective, so from a general standpoint, if you want to as we generate cash if you want.
Quarter after quarter, we're looking at the best way to allocate this capital and frankly at this stage and frankly, there is no secret bullet there. We just after shareholder value maximization and we're in a constant let's say look of that taking into consideration of course, the external environment, which is all it's all about <unk>.
Supply of LPG. The question was raised earlier, so I think it's there's no magic formula there's not going to be a threshold per se, but it's all about really what's affecting the right mix, that's going to get us the maximization of shareholder value.
Yeah.
This concludes the question answer session.
I would like to turn the conference back over to Stan <unk> for any closing remarks.
Thanks, operator, and thank you for your participation on today's call.
2022 has gotten off to a challenging start but we are optimistic.
Yes, the trucking water in Ukraine has presented us with a difficult set of hurdles as it has for everyone around the globe.
But we are encouraged by the great people working at Nomad.
Good food partnership with our retail customers.
Oh loyal consumers.
We remain focused on delivering our business objectives, even in this tumultuous conditions.
Frozen food is as I said, they're healthy.
Fish's affordable option for all families, especially especially during difficult times like these.
Our business is built to survive in tough conditions, and we expect to come out of described is stronger than before.
We delivered our fifth consecutive year of record financial performance in 2021 and.
And we expect to do so again in 2022.
This concludes today's conference call you.
You may disconnect your lines.
Thank you for participating.
I think Paul.
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Okay.
Uh huh.
Yeah.
Okay.
[music].
Yeah.
Okay.