Good day, everyone, and welcome to the Nomad Foods First Quarter 2016 Earnings Conference Call. Today's conference is being recorded. On the call today, we have Paul Kenyon and Stéfan Descheemaeker. At this time, I'd like to turn the conference over to Mr. Paul Kenyon. Please go ahead.

Thank you, operator, and good morning, good afternoon, everybody. Before we start, I would as usual like to draw your attention to the disclaimer on Slide 1 of the presentation. I don't propose to read it out, but do draw your attention to it. With that, I will turn it over to Stéfan. Stéfan? Stéfan Descheemaeker: Thank you, Paul. Good morning, good afternoon, everyone, and thank you for joining us on our first quarter 2016 results call. So I will start by giving you a brief update on progress versus our strategy so far in 2016. So turning to Slide 3. I will take a global view of each segment of our strategy in turn. We're executing our strategy, i.e., to refocus on cost cutting and recent integration of Findus in a very disciplined way, and we're starting to see positive results. First of all, we remain confident in our ability to deliver the projected synergies from combining the Iglo and Findus businesses and our integration process remains on track. I will provide additional detail later in our presentation, but can tell you that we have delivered just under EUR 3 million in synergies so far on an annual run-rate basis, which equates to around 3 quarters of EUR 1 million in the first quarter. We continue to make steady progress with the consultation process in Sweden, and subject to a successful completion of the process, we remain on track to seize operations on the Bjuv side by the end of 2016. As is only to be expected from an acquisition of the skills and complexity, we have innovated some operational issues from the former owners of Findus, most notably regarding project supply from the Bjuv factory, which impacted sales in the first quarter due to drop in service levels.…

Thank you, Stéfan, and good morning, good afternoon, everyone. Before turning back to the presentation, please note that the financial information represents pro forma, as adjusted figures. As communicated at last results presentation, we have now moved on to a consistent calendar basis for the entire group for the first quarter 2016 results and have done the same for the comparative period in 2015. So those sets of quarterly information are for January to March of their respective years for the entire group. Furthermore, to invade -- to aid the investment community in their modeling, and to ensure that everyone is working from a consistent basis, we have also provided, as an appendix to this presentation, the updated pro forma as adjusted financial information for 2015 for the Nomad business as a whole on a consistent calendar basis, as well as providing the breakdown by quarter. As a reminder, in our last earnings presentation, we presented financial information for 2015, which cover the 12 months to September 2015 for the Findus business from the 12 months to December 2015 for the Iglo business, those periods being the last audited set of financial statement available for the respective parts of the group. As a result of adjusting the Findus business from a September 2015 year-end to a December 2015 year-end, EBITDA for the group has moved from EUR 345 million to EUR 331 million, which is due to 3 factors. Each were just over EUR 4 million. Firstly, acquisition accounting adjustments; secondly, double running costs associated with the commissioning process for new automated production and warehousing facility is Sweden, required to complete the closure of the Helsingborg plant inherited from the previous owners, and thirdly, transactional FX impacts due to the weakening of the euro Swedish krona and Norwegian krone against…

[Operator Instructions] We'll have our first question from Jon Tanwanteng from CJS Securities.

Can you provide the pro forma Q2 revenues from last year? Stéfan Descheemaeker: So we provided that in our presentation, so slide 14 shows the Q2 2015 pro forma as adjusted financial information for the whole P&L, and the pro forma revenue for Q2 2015 was EUR 488 million.

Got you. Okay. That's helpful. And then seasonally, Q2 should be weaker, right? Is that what's the -- do you have the percentage usually of the year to that usually is?

So it is normally something like 26%, 27% in Q1; 23%, 24% in Q2; 23%, 24% in Q3; 26%, 27%, Q4. So there's not a huge amount of seasonality, but we do see a slight drop off in the summer, partly because in Southern Europe, in particular, people eat outdoors, and therefore, our ovenable products are less relevant to them partly because a little more of the [indiscernible] goes to ice cream.

Okay, that's helpful. And then any color on the macro environment currency and input pricing trends heading to the June quarter? What have you seen so far? Stéfan Descheemaeker: So as I said in the script, John, I think input prices, so far, have been reasonably benign. As we communicated with the fourth quarter results last year, we are seeing the weakness of the euro, krona, Norwegian krone and Swedish krona impact cost of goods to varying degrees across those markets. And we guided that we would see that impact from Q4 last year through to the end of Q3 this year. As you can see, from Q1, we've largely managed to offset that by pricing so far.

Okay, great. And then any update on the environment for M&A? What are you seeing out there, either valuations or opportunity? Can you just provide an update there? Stéfan Descheemaeker: The -- To be fair frankly, Jon, we've been -- we've remained very focused on the -- obviously [indiscernible] operations. So that was really the priority for us. This being said, when you see the price, price remain quite competitive. The good thing is -- and that's what we're trying to do with the acquisition of Findus, trying to do 2 things. One is, obviously, to generate the right level of synergies, which will help us, obviously, to stabilize the EBITDA, to improve the EBITDA, and also to further invest in the business, but beyond this, it would serve as a model for further integration. And so even if prices remained high, if you're coming with the right level of synergies 6%, 7%, 8%, 9% offset, then you -- obviously, you're becoming obviously a -- you're creating a competitive advantage, whatever the kind of price and the M&A pricing environment you have at that time -- so that's operated today.

Got you. And then if it were to occur, would a Brexit actually impact your operations in anyway? Stéfan Descheemaeker: So we obviously have planning in place for Brexit, Jon. I think the relevant things to bear in mind if you're thinking about modeling the impact of Brexit on the business, obviously, there would be some currency volatility for sterling as the exiting country, possibly for the euro as well, who knows. So we would see currency volatility. Clearly, we hedge out between 9 and 12 months, so we hedged for the rest of the year against any transactional currency volatility. So it would largely be confined to 2 translational effects, which we always call out. From an operational perspective, there is a 2-year period of grace to renegotiate trade contracts between the EU and any departing country. So we would have time to plan for any tariff barriers that might result. The key exposure, I suppose, is the U.K. to Europe, where we import about EUR 120 million a year of fish, and we export about EUR 40 million a year of poultry. Correcting that EUR 80 million net imbalance would require us just to put a fishing processing line into our U.K. factory. So we would be able to complete that well within the 2-year period, should it look like tariff barriers were being erected. So I think we are well able to cope with any potential impact on our business.

Okay. Great. And then, finally, any update to your free cash flow outlook and the cost associated with the integration and the closing of the facility in Sweden? Stéfan Descheemaeker: No center change. So as I've said in the presentation, the EUR 68 million delivery in Q1 is consistent with delivering the EUR 200 million for the full year, and our expectation is still to spend around -- or invest around 60% of that or EUR 120 million into restructuring and integration costs associated with the Findus acquisition and other restructuring through the business.

We'll have our next question from Rob Dickerson, Consumer Edge Research.

I just have a few easy questions hopefully. Just I guess, follow up on the last one with respect to the EUR 200 million free cash flow for the year, the EUR 120 million in restructuring and kind of other costs. Could you just provide potentially just a bit more color as to where that actual cash goes and is it for -- are we talking more severance or is it larger supply chain initiatives, you're investing in the entire supply chain, not just the cost coming off of the Swedish plant?

Sure. Happy to do that. So we have forecast EUR 120 million, of that EUR 50 million is directly associated with the proposed closure of the Bjuv factory, where we are currently working through the consultation process with the unions and workforce at that plant. That comprises both severance pay, but also our necessary investments associated with the transfer of production. We then have probably about EUR 25 million of integration costs related to our IT platform. So Nomad benefits in its old Iglo business from a single instance SAP platform, and that is a critical part of our operating model. The Findus businesses and we knew this from the diligence prior to acquisition have a very old IT estate, in some cases, out of support and rather fragmented. So we have to rollout our SAP platform across the acquired businesses. And we are currently blueprinting that, ready to go later this year, and that will flow into next year. So the cost this year is probably going to go around EUR 25 million. There will be a cost next year, but it will be smaller than that, depending on how far we get through the integration program on IT this year. You've got another EUR 20 million regarding restructuring in the old Iglo business, so clearly, so we saw volumes fall away quite sharply last year, and we have as a result, got restructuring programs running in 3 of the 4 legacy Iglo plants. We also have the lean program that Stéfan kicked off when he arrived, growing through the sales and marketing businesses as well. So there's about EUR 20 million going in there. The rest -- so the remaining, I suppose, EUR 25 million, about EUR 15 million of that is integration costs associated with synergy delivery at Findus, so clearly that would be severance costs associated with the indirect synergies projected in our forecast and procurement as well. So there are some contract procurement and contract legal resources to assist us in renegotiating and papering the contracts, as we roll through the combined. And lastly, you have costs associated with unusual listing, getting to SOX compliance in year one, so we have a project running for that because we have a very limited time to deliver Sarbanes-Oxley compliance, and other corporate development stuff. So that's the breakdown of the EUR 120 million.

Okay, great. That's actually very helpful. So then would it be fair to say, I mean, this is very rough math. But just out of the pocket, if you just went through -- should we expect, as we get into '17, obviously, it's a fair amount of time away, but I have questions on this all the time from investor days. Is maybe half of that kind of come -- rolls off as we get into next year? Is that fair?

So we would expect -- not well -- so absence of the acquisitions of factory closures, we would expect a much lower level of spend next year, so we would be looking probably more at low tens of millions than anything like EUR 120 million. So we would expect to see material cost in '17.

Okay. Great. That's great. Okay, and then next, it sounded like around your Q4 call, and I guess, some when you presented at CAGNY event, some of the -- or part of the short-term plan, the attempt to stabilize volumes was to maybe increase promotional spend in certain areas, right? So just trying to block and tackle where you came with the retailers. In Q1, you're pointing to increased pricing and kind of a reduction in that promotional spend. Is that -- was there anything that changed during the quarter that caused promotional spend to kind of go down versus up outside of that mixed component you're talking, some of the inventory issues or not?

Yes. So I think I'll give you my view, and then Stéfan could probably provide a broader, perhaps, more retailer-centric view. So in Q1, you had a couple of one-offs that reduced promotion levels, but first, there was the Swedish supply issues. So as a result of the Swedish supply issues, we agreed with a number of retailers that it made sense to cancel promotional slots, because product availability didn't support that level of demand. In Italy, we have had the shortage on hake fillet, which is an industry-wide issue, but has impacted our business. So again, we pulled promotions on hake to maximize the return from the available supply. There's a couple of one-offs going through. We have got pricing in Q1, which is a result of our negotiations with the trade around the change in dollar/euro coming through as well. We have selectively in some markets, maintained or increased level of promotion, where we think it's sensible to keep people with us, pending the launch of the new strategy, but I think a slightly better result than we have, perhaps, expected back at the Q4 results, but Stéfan, you should chip in. Stéfan Descheemaeker: Yes, again, it's early days, so it's a bit difficult to be more specific than this, but it's very clearly a focus point for us in the future. So some of the countries -- in some of the countries, the promotion level is still way too high. But again, things will happen, will not happen overnight, and again, it has to be considered together with all the other elements with quality, with pricing, with official baseline, with advertising. So we're doing -- we're going to do this everything in sync. But what we see, at least, even some of the results are one-offs, we see some encouraging results, but again, more to come in Q2, Q3.

Okay, great. That's fair. And then just lastly, with respect to the kind of the rate sales decline year-over-year cadence throughout the year, you're saying about 6% down like-for-like in Q1, and supposed to get better in Q2, Q3, et cetera. Is that like -- should we be thinking you're down kind of about 6% in Q1, maybe you're down 4% in Q2, hopefully, with innovation coming in back half of the year Q4, maybe even Q4, the frozen department, per se, and your end markets doesn't really decline, the goal is to have finally get to the flat organic sales year-over-year in Q4. So should the market be thinking that, for the year, we're down 3%, but say, like-for-like or what? Stéfan Descheemaeker: It's a good guess. It's a good guess. I appreciate, and I guess, you will appreciate my answer, which isn't changed. We said then we're going to do what we're going to do, which is we said Q1 should be in line with Q4. Actually, it's a bit better, which is fine. Q2 should be better than Q1. Q3, same for -- a bit of the Q2 and Q4. So at this stage, it would be quite presumptuous to exactly guess what the consumer is going to do. The only thing we can see is, number one, the rate of decline is moving the way we thought it would. That's good news. And second, we can also see that the must-win battles, really, and good example, is Italy that Paul mentioned, where the rate of decline has moved from 15% to 10%, but within the 10% -- must-win battles are in the region of minus 5%. So again, not stable yet, but at least, still a long way to go, but it's moving in line. So point is we're very focused on the consumer, the consumer -- at the end of the day, the consumer is the one that's going to decide how fast the must-win battles will move -- will make progress and also how fast the other categories will decline because when you decide that you're going to focus on 70% of your business, you need to be consistent. It means that the 30% or the rest of the business will be less well served, obviously, or differently. So that's also major decision. So long story short, long answer to your question, and to your best guess, but we're not changing our forecast, and we're going to focus more than ever on our strategy because we think what we're seeing is early signal that it's paying off. We're not going [indiscernible]. We're not going to cut corners. We're going to do this systematically.

And we have no further questions in the queue. I'll turn the conference back over to Mr. Stéfan Descheemaeker for any additional or closing remarks. Stéfan Descheemaeker: Thank you, operator. So yes, let me finish by thanking you, all, for attending the call today. So while I'm taking encouragement for the slowing of the rate of decline, the progress made on implementing our strategy so far, there is still, as I just said, there is still so much to do, remain focused on the key objectives for the year. First is to stabilize the top line. Secondly, to deliver the predicted synergies, and thirdly, if available, to the highly synergistic deal in European frozen. With that, I wish you a good day, and hand back to the operator. Operator?

That does conclude today's conference. Thank you for your participation. You may now disconnect.