Nomad (NOMD, Financial) reported Q3 results in late November.
Third quarter like-for-like sales declined 3.3%, which marked the fourth straight quarter of sequential improvement in like-for-like sales trends. This sequential improvement in trends is consistent with management’s guidance and driven by the company’s shift in its strategy to refocus its resources on its core product offerings.
Third quarter EBITDA was €85 million and the EBITDA margin was 19.4% or 200 basis points better than prior year, although much of this improvement in margins was driven by a reduction in bonus accruals. Net of this impact, margins grew modestly, driven by a reduction in indirect expenses. The Company realized of €2.5 million of synergies during the quarter or €10 million annually and reaffirmed its target of €43 to €48 million of total synergies by 2018. Nomad remains focused on stabilizing its base business, integrating Findus and delivering the significant synergies it has identified.
Nomad reiterated its expectation that sales trends will improve sequentially as the new strategy rolls out. It also reiterated full year guidance that estimates that EBITDA will be broadly flat with last year at €330 million and levered free cash flow will be €200 million before restructuring and other one-time items. The stock trades at about 8 times free cash flow guidance, a valuation we find attractive.
From Bill Ackman (Trades, Portfolio)'s Pershing Square third-quarter shareholder letter.
