Taposh Bari - IR Stefan Descheemaeker - CEO Paul Kenyon - CFO.

Rob Dickerson - Deutsche Bank Steve Strycula - UBS William Chappell - SunTrust Brian Holland - Consumer Edge Research Jon Tanwanteng - CJS Securities.

Good day everyone and welcome to the Nomad Foods First Quarter 2017 Earnings Conference Call. Today’s conference is being recorded. At this time I’d like to turn the call over to Taposh Bari, Head of Investor Relations at Nomad Foods. Please go ahead..

Thank you for joining us to review our first quarter 2017 earnings results. With me on the call today are Stefan Descheemaeker our CEO and Paul Kenyon our CFO. Before we begin, I would draw your attention to the disclaimer on slide two of our presentation.

This conference call may make forward-looking statements that are based on our view of the company’s prospects 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-GAAP financial measures during the call today. These non-IFRS financial measures should not be considered a replacement for, and should be read together with, IFRS results.

Users can find the IFRS to non-IFRS reconciliations within our earnings release and in the appendices at the end of the slide presentation available on our website.

Finally please note that the financial information within this presentation does represent adjusted figures for 2016 and 2017, as a result all figures have been adjusted for exceptional items, restructuring and transaction related items and all comments from here will refer to those adjusted numbers. And with that, I will hand it over to Stefan. .

Number one, marketing leadership position in the niche category; number two, businesses with sustainable competitive advantages; number three, strong management; and number four, attractive free cash flow characteristics.

In summary, we are pleased with our strong start to the year and now have increased confidence in our full year performance, which is leading us to raise our guidance.

I look forward to updating you on our progress throughout the year as our Must Win Battles activation, which are driving the improved results we are reporting today become even more impactful to the overall portfolio. With that I will hand it to Paul. .

Thank you, Stefan. I'll begin with an overview of the first quarter results, which were in line with the expectations that we provided to you on our last earnings call in late March. First quarter reported revenue decreased 2.9%, while organic revenue increased by 1.1%.

Organic growth was driven by 3% volume and mix growth, which was offset by 1.9% of negative pricing, primarily reflecting our preplanned decision to offer trade support alongside UK price increases. It is worth noting that these actions were successful isolated to the first quarter and have since moderated.

Reported revenue growth was offset by approximately 400 basis points of both FX translation and the anniversary of an extra trading day in last year's first quarter. Slide four illustrates the sequential progression of organic revenue growth since 2015 along with an overlay of Must Win Battle growth since we begin to implement the strategy in 2016.

The success of our Must Win Battle activations are driving organic revenue growth, which entered into positive territory overall in Q1 2017. On slide five, we breakout the trend across our three largest markets UK, Italy and Germany as well as the remaining countries in our portfolio.

We are encouraged by the positive momentum across the across the big three, particularly in Germany and Italy and look forward to their success stories translating across our other markets in due time. Turning to slide six, gross margins contracted 120 basis points to 29.4% with volume and mix showing good progression.

This was offset by pricing and promotions. There are three distinct factors impacting the pricing and promotions line that are worth highlight. First, we implemented price increases in the UK to offset currency driven product cost inflation. Second, we executed planned promotions and trade support in the UK to help smooth higher prices to the consumer.

And third, we encountered a more normalized rates promotional activity in Q1 2017 versus Q1 2016 were promotions were unusually surprised due to the hake fish shortage in Italy and product supply issues in Sweden.

Overall these results are in line with our prior expectations and we continue to expect gross margin to expand this year, the trend that we expect to become evidenced when we report second quarter results. On slide seven, I’ll review our operating performance during the quarter.

I’ll skip revenue and gross profit commentary, which I just discussed in detail. We continue to tightly manage our operating expenses, which were flat to last year despite more normalized A&P spend and the reinstatement of bonuses. A&P increased 3% as we return to a more normalized quarterly phasing versus 2016.

This was offset by indirect expenses, which declined 2%. Resulting adjusted EBITDA EUR89 million, representing 16.7% revenue. Adjusted EBITDA declined 11% year-over-year with 7 percentage points of the decline attributable to FX translation and the anniversary of an extra trading day versus a year ago period.

Excluding these factors, the 4% underlying decline was primarily driven by the aforementioned UK promotional investment to smoothen higher prices and the annualization of unusually low promotional activity in Q1 of 2016. Depreciation and amortization of EUR12 million was flat versus last year.

Financing cost were EUR18 million, as you know we refinanced our entire dead stack in early May and we now expect financing cost to be approximately EUR60 million to EUR65 million in 2017. The effective tax rate was 23% in line with previous quarters and Q1 2016 leading to adjusted EPS up EUR0.25 for the quarter.

Turning to cash flow on slide eight, the key drivers in the operating cash flow performance aside from the EBITDA movement are working capital, which showed a modest inflow of EUR2.6 million in the period due to careful management of debtors in the season where normally we would use cash for working capital.

Adjusted CapEx, which excludes non-recurring Findus integration cost of EUR1.2 million increased by EUR1 million year-over-year. Cash tax which was EUR1.9 million lower than the prior year was driven by tax refund.

Restructuring and non-recurring cash flows of EUR23.4 million were largely driven by severance cost associated with the closure of production facilities in Sweden and further integration of the Findus Group. Operating cash flow conversion for Q1 2017 was 95.2% significantly ahead of the prior year.

Adjusted free cash flow delivery of EUR69 million is in line with our 2017 target, which we now expect to be at least EUR200 million for the year. Turning to slide nine, we are raising our full year 2017 guidance. We now expect 2017 organic revenue growth in the low single-digits percentage range.

EBITDA to be in a range of EUR315 million to EUR325 million and free cash flow to be at least EUR200 million for the year. Our updated outlook reflects greater confidence in our Must Win Battles strategy was just over third of the year now having been completed.

Our updated guidance is based on the following underlying assumptions for the full year 2017 and assume as foreign exchange rates as of May 23, 2017, positive organic revenue growth in the low single-digits percentage range.

Reported revenue is expected to include around 170 basis points offset related to currency translations and the anniversary of a leap year comparison with the impacts to Q2 being approximately 225 basis points. Gross profit and gross margin are both expected to be ahead of 2016. A&P investments are expected to be comparable to last year in euros.

We expect underline indirect expenses to decline versus 2016, but will be more than offset by an incremental EUR15 million to EUR20 million from the reinstatement of bonuses. Underline EBITDA is now expected to grow mid to high single-digit before the effects of currency the extra trading day and bonus reinstatement.

In terms of quarterly considerations, as already mentioned, the second quarter will benefit from the later timing of Easter, which created an approximately 100 basis points or EUR6 million headwind to Q1 revenue. We expect that to reverse this quarter creating a tailwind to similar magnitude to Q2's underlying revenue growth.

We expect positive top-line momentum to continue throughout the year, as such, we expect the low single-digit organic revenue growth in the back half of the year, and given the benefits of the Easter shift the Q2 growth to be above that trend.

We continue to expect 2017 adjusted EBITDA to be more second half weighted than in 2017 with the fourth quarter showing the greatest year-over-year improvement when we anniversary last year's sizable A&P increase get pass the FX translation headwinds from the first half of this year and later EUR7 million reversal of our bonus accrual in the third quarter.

To that end, third quarter operating costs are expected to show the greatest deleverage due to a combination of this year's bonus reinstatement and the anniversary of the aforementioned EUR7 million bonus accrual reversal. Finally, on cash flow, we now expect to generate adjusted free cash flow of at least EUR200 million.

We expect this figure to be offset by EUR105 million of restructuring and non-recurring cash charges, which now includes costs related to our recent debt refinancing. Also included will be the settlement of legacy tax issues, which we continue to anticipate will be in the EUR30 million to EUR40 million range on top of the EUR105 million.

That concludes our prepared remarks. I will now turn the session over to the Q&A. Operator, back to you..

Thank you. [Operator Instructions] We'll take our first question from Rob Dickerson with Deutsche Bank. Please go ahead sir. .

Thank you very much. Good job guys. First question I have is I guess if you look at the Must Win Battles of 5.5% in the quarter, I think you said previously that Must Win Battles are approximately 70% of sales. And you combine that with UK, Germany and Italy, which I think is about half of revenues, and Germany and Italy up high single-digit.

I'm just curious what is -- I guess outside of the UK are there other regions that are essentially holding you back from putting up let's call it mid-single-digit like-for-like number relative to the low single-digit.

And just kind of how do you think about those other regions outside of those I guess outside of the Must Win Battles and then also outside of your core three markets..

Thanks for the complement by the way Rob, we appreciate it. Overall when you see the difference between the 5.5% and the 1.1% which is your point. I think it's a geographically speaking and structurally speaking it's really about -- it's more about the Nordics.

So we have some challenges all the interesting challenges but it's more to do -- has more to do with either private label for example in Norway or industrial products in Sweden, that by their very nature are going down and sometimes are just cancelled. So that's one thing.

And at the same time as we said we’re making a lot of progress in most of the countries. We either have one or two countries that are a bit behind, which is normal..

Okay great. And then just in terms of Germany and Italy more specifically. The organic growth performance is obviously impressive, but that also includes I'm assuming some Easter shift.

So can you just remind us what were the core drivers of that performance despite I'm assuming some pressure coming out of Easter?.

Again it has to do with Must Win Battles. To your point, Easter shift obviously is going to even help obviously Q2 as opposed to Q1. So that's going to even help further Germany. But it has to do with -- Germany is probably was the country that started the Must Win Battles before the others.

They were ready with things like fish fingers, which was obviously very, very helpful. So that's that, and that's continued in the meantime with the rest of the fish range, and we’re also making progress with vegetable. So good combination and good execution..

Okay, thanks. And then just last one for Paul. Paul, I think you said for the year your net financing cost I think around EUR60 million to EUR70 million, you did EUR18 million in Q1. So I guess there is a bit of improvement in the rest of the year. So I just want to clarify that.

And then secondly just in terms of free cash flow, I know EBITDA is going up a bit, free cash flow is still around that EUR200 million range. Last year you did EUR225 million, it seems like this year there is a little incremental refi cost are coming into that free cash flow number.

So I guess; one, just kind of clarify why you wouldn’t expect a little bit better than the EUR200 million free cash flow this year considering little bit better EBITDA forecast. And then also considering kind of how you did last year in terms of free cash flow. That’s it, thanks. .

Okay. So financing cost obviously we will see a benefit from the refinancing but we only did the refinancing in May. So you will see just under eight months benefit from that. So that’s why you didn’t see an impact in Q1 obviously as you know. In terms of the cash flow, I think the cash flow is pretty much aligned to where we expected it to be.

We generated EUR68 million last year, we have generated EUR69 million this year. Working capital actually has -- management has improved.

I guess in terms of cash in the bank we have seen higher outflows this year on restructuring and non-recurring and that is driven by the closure of the Bjuv factory at the end of the quarter, which resulted in a significant severance cost payments. So that is what’s driving the step up in the restructuring and non-recurring.

In terms of expectations for the year, I mean we did do EUR224 million last year, but we did call out that EUR16 million of that was a one-time refund of consideration on the Findus deal following the completion of the closing accounts. And we also felt we had a EUR8 million tailwind on tax due to credits from prior years.

So we really felt and I think communicated at the time the proper number was EUR200 million, we reiterated that guidance for this year, we have shifted it up to above EUR200 million because obviously we will see lower cash interest payments going out of the business, it’s possible that some of the EBITDA will feed through as well, although it depends on the working capital cycle of where we deliver the results.

But certainly we have shifted to above EUR200 million rather than a solid EUR200 million. .

Okay great, makes sense. Thank you. .

And we will take our next question from Steve Strycula from UBS. Please go ahead, sir. .

Hi, good afternoon, congratulations on the good quarter. I have a top-line question first and then a margin question for Paul. For the top-line, just want to understand we saw a better than expected rate of improvement in the first quarter.

How should we think about the volume and pricing contribution mix as we move through the balance of the year, as you get better visibility into your Must Win Battles? I imagine price gets a little bit better because of the UK pricing dynamic, but can you help us understand what’s happening with the volumes as we move through the balance of the year, and ultimately what the means for market share across some of your key regions?.

Let me start with the market share, because at the end between [sell out] [ph] and market share that’s the reality. We can see that month after month after month we are starting to gain market share, which is really encouraging and it’s not limited to the large countries, but obviously starting with the countries like Germany and Italy.

But overall on the weighted average we over the last four weeks and you can check this obviously we are gaining market share, so that’s one thing. Second, the question is obviously is between selling and sellout, I would make it very simple, it’s a very healthy trend at this stage, so there is nothing like sell in ahead of sell out on the contrary.

So that’s where we are and we have no reason to believe that it’s going to be different in the rest of the year. And what we have seen in Q2 so far is we’re pleased..

Great. And then on the margin front, Paul can you talk about the price increases that you put through particularly in the UK as it relates to some of the inflation that you are experiencing there. What has been the retailer response, have competitors followed, has private label followed in the category, just trying to monitor the price gaps.

And then now that we are into the second quarter, how has -- have you been able to peel off the trade spend a little bit, and push through some of that pricing so we can get confidence at the rate of gross margin improvement rebalance as we move through the balance of the year. Thank you. .

Sure. So, the price roses went in from the 1st of January where we took headline pricing progressively through the first quarter where we took pack content down. And as we've previously communicated at the end of March with our full year results we chose to step up the level of promotions in Q1.

So you see that impact coming through in Q1 as expected that is moderating in Q2 and will be done by Q3 and obviously we now have a full set of pack content reduction in the market as well. So I think the program is proceeding exactly in line with plan and expectations. And that gives us confidence that the margin will improve from Q2 onwards.

I guess the other two things to think about when you're thinking about margin development through the year, we do move out of the anniversary of some of the supply issues as we move through the year, we called out that in this call.

So we have some product supply issues up in Sweden and as a result of the warehouse implementation, which we will be out of shortly. So you won’t see extra promotions year-on-year. And obviously last year the harvests were particularly poor.

So depends on how those turn out, but if we have a more normal harvest we will have a benefit to margin through that period as well. So I think there are plenty of tailwinds that support our margin position going forward. .

Got you.

And just a clarification on Rob's question that free cash flow should improve in the third and fourth quarter relative to the first half as some of these cash restructuring charges kind of dissipate after the factory closure timing, is that correct?.

Yes. So in terms of cash left in the bank as it were, yes, you will see the restructuring costs are broadly front end weighted. The integration costs obviously roll through the whole year. So the way to think about it is we spent EUR10 million of Bjuv costs last year we have EUR40 million this year.

We’ve seen a chunk of those materialized in Q1, you will see most of the rest, but not all materialize in Q2. So probably of the 40 remaining you'll see up to 30 in the first half. And then there will be the run down costs on the site for the rest of the year..

Great. Congrats on a great quarter. .

And we'll take our next question from Bill Chappell from SunTrust. Please go ahead sir. .

Thanks, good morning, afternoon. Just, I want to follow-up on the just kind of the overall category growth. Have you seen much in terms of change, I mean, I appreciate it was -- you had good growth and certainly favorable comparison with last year.

But kind of what you're seeing and if that's really much different from the Southern versus Northern or different parts of Europe.

Or is it pretty even across the whole region?.

Let's put it that way it's -- I think it's been the business as usual, it's not even slow start for the category as such overall. And it's difficult to see a material difference between the regions, but some regions for example like Italy are doing extremely well, but probably we are part of the category, which obviously is very helpful.

But overall, as I said we are gaining market share so which more than offset any difficulties. So for the last 12 weeks, where the industry was a bit negative, but we increasing our market share, so that makes a difference. Volume wise, we are -- it’s stable I would read that way, but nothing else. .

Okay. And then on the kind of the restage repackaging where are we now, I think there was another kind of sale in over the past couple of months.

Is there still another tranche to go in the fall or are you largely done with kind of restaging everything?.

No, nothing has changed as Paul mentioned, we are on track with the re-launch. So 50% at the end of last year it's going to be 70% at the end of H1 and the rest of the re-launch will take place obviously in the fall, and by the end of the year.

And so everything goes according to plan, nothing fast and nothing slower, which is right thing to do just want to make sure that we have all the components ready..

Okay. Well then just my last question, maybe help me understand, you have said several times in the call and in the release that everything is on plan, everything was in line with guidance, but raised the EBITDA guidance for the full year.

So what -- I understand we have had two more months of good momentum, but kind of is it pricing is holding up better, trade promotions are holding up better, what’s kind of the biggest driver of that offset to the EBITDA guidance?.

We have increased EBITDA for a range EUR315 million to EUR325 million. What gives us confidence to do that, I think the sales performance is giving us confidence, we are seeing the Must Win Battles respond very well to the new strategy, clearly they tend to be modestly accretive in margin terms.

And obviously the three largest markets, which are just under half of our sales tend to be accretive as well. So, we get quite a nice mix effect as the three largest markets grow their Must Win Battles. So I think that help, we continue to work hard as Stefan said in his comments on lean, on zero based budgeting, on net revenue management.

So I think as we are just over a third of the way through the year now as suppose, we have greater visibility and I think a bit more confidence as well..

And I guess I am just trying to understand like did things meaningfully accelerate excluding the Easter shift in April and May?.

Yes, I mean we clarified it’s about a EUR6 million shift, out of Q1 into Q2 this year. .

Excluding Easter, if something obviously you said momentums continued did it actually accelerate in the past two months?.

At least, as we said we are pleased with the result so far and mathematically moving from positive to low single-digit mean something in terms of sales robustness I would view that way.

So from there as Paul mentioned, the margins are not disappointing, we also have some positive mix three countries versus the rest, and then mathematically it makes a difference. That’s how we -- but it starting indeed from slightly more optimistic view on our sales. Hence you know obviously the revised guidance in terms of sales..

Okay, thanks so much. .

Welcome. .

[Operator instructions] We will take our next question from Brian Holland from Consumer Edge Research. Please go ahead sir. .

Thanks, hello gentlemen. I wanted to ask -- I apologize, I jumped on a little bit late here, so forgive me if I am being repetitive. But wanted to ask about UK and France, which I guess on a relative basis are still little bit of a laggard behind Germany and Italy as far as rate of improvement.

And I understand that why entering in the transition in France and the promotion in UK as we work through the projects.

Just curious as we look over the balance of the year, thinking about an inflection point as you have got into Q2, when should we expect that rate of improvement, the kind of accelerate in line with what we are seeing in Germany and Italy, or do you not anticipate that kind of progression and similar performance….

Let’s view that way for both indeed we are going according to plan, so just to make it simple, in UK and France the situations are different, technically different. France, we have to recycle obviously the Iglo products and SKUs and which is now happening, we are at the end of this process.

So what we should expect is obviously a probably an acceleration because basically it’s about having recycled the whole thing.

In the UK, it’s going to be more progressive, which is something we always said from the start, because we knew that we had to digest this and smoothen the price increase, which is something we have been doing in the course of Q1. And now little by little obviously we should see our gross margin improving the right way.

So that’s a -- so two very different situations, but however very much according to plan..

Okay, understood. So, we are close on France the kind of that inflection, I guess I understood the dynamics, I was just curious about timing. France, we are very close to that inflection point and probably a little more back half.

And then UK does that improve considerably here in Q2 or do we still kind of wait for that all to flow through before we see the acceleration?.

As I said it’s a big difference. In France you could define this as an inflection point, for very technical reason because we had to recycle the products. And so to your point if the answer is yes, we have reached this inflection points.

In UK, it’s not so much a question of inflection point, it’s much more progressively improving, which is something we’re doing..

Okay. I appreciate that. Looking a little bit longer term, obviously the play books working beautifully here and really strong progress across the board and maybe just a different way of asking a question that you’ve been asked for the past few quarters. I guess in the U.S.

as we look at frozen food where there has been packets of -- there has been packets of improvement but those packets of improvement have been led by those players who are really driving constant consistent new product news innovation, et cetera.

Obviously your first wave has gone really well and according maybe even better to plan, but as we think about kind of keeping that momentum, how do you think about that what’s going to drive that and maybe where are your focus points as far as kind of keeping the product fresh staying in front of the consumer and staying relevant, and how that works in your market? As we think about when we start to lap some of the….

It’s a very good question, Brian, it’s absolutely fair, that for the first two years we really have to refocus organization behind renovation and you’re absolutely right. So, we really stopped all these innovation that were not in line with our strategy and so it’s been quite a shift. No, we are not going to change this.

So, renovation is an ongoing effort and you always need with your existing SKUs, you always need to make sure that you ask -- this you have a gap, positive gap for you vis-à-vis the private level. So, that's not going to change.

At the same time, and always in line with the Must Win Battles strategy, yes indeed obviously you need to now to resume this process of innovation with new trends in all the things. It’s really something we’re preparing right now.

More to come, obviously more to come first with the board in all these things, but it’s going to be part of our plan, yes indeed. So, we are going to move from innovation only three years ago to renovation mostly renovation to a probably now a better combination of renovation and innovation..

Thanks, I appreciate the color. Last one if I could, and again forgive me if addressed this topic earlier, but just asking about M&A I know there was a little bit of when you talked about sort of your view on M&A last quarter and you mentioned North America, I think that got a little bit of buzz.

Can you help sort of -- can you just sort of claim for us the way that you think about M&A on a global basis? I mean, do you go step-by-step and look sort of at tuck-in in closure to your core market today and categories. Are you welling at this point and make a jump into the U.S.

or in North America? Or is that sort of just kind of reiterating that few ultimately aspire to have a global platform that maybe you would progress to that as oppose to maybe leaping to that next. I’m just curious if you could confirm how do you think about….

Let me give you a bit of background. The first two years are those things year have must have spent more than a second in terms of M&A for very simple reason you just can’t build M&A strategy if your foundations are not strong enough.

And so that's what we’re doing and little by little I think we know we’re seeing the progress, which is fine, because it’s not only reinforce or business as such.

But in the mean time we have created, we are building new capabilities within the organization in terms of lean manufacturing, in terms of natural view management, in terms of zero base budgeting and it’s going to be helpful for the future for any acquisitions we will consider.

So that's a bit of backgrounds of what we’ve been doing for the last two years.

In the main time in terms of M&A wherever the geography is, we not going to change our criteria, our criteria remains the same, it’s market leadership position in the niche category business with sustainable competitive advantages, strong management, attractive free cash flow characteristic.

In the meantime, we are going to combine this with the new capabilities we have created, and that’s how we are going to go. Though in terms of perfect play book, there we still have a lot to do in all categories in Europe and by the way this is where we have the more synergistic, but these obviously when you can combine and best practice and scale.

Best example was obviously Findus. Nothing is comparable, you don’t have another Findus in this industry, but you have some other very interesting things to do.

So that’s the perfect play book, with what I have learned also in my life in M&A, you should obviously, you have the perfect play book, you have to prepare yourself for this, you have to do all these things and at some stage something totally out of the blue might come. So that’s why and we’ve always said that U.S. might be an option.

But let’s say if we respect the play book the way we have created over the last two years. Europe is a more natural obviously, let’s say priority, but you may never say never..

Thanks gentlemen. Appreciate the inside. .

We have one more question from Jon Tanwanteng from CJS Securities. Please go ahead sir. .

Good morning and congratulations on a nice quarter and achieving the organic growth.

In the same vein a product question, just for ‘18 and beyond once you have activated all your Must Win Battles, do you focus on the lagging countries of the non-core product categories and can those get back to organic growth or even flat at all?.

To your point, I think we still have a lot to do with our Must Win Battles and we believe that there is still a lot of potential with this. In the meantime it’s not that we have states that haven’t done anything with all secondary battles.

And in some countries, like the UK for example if you remember, the secondary battles as will still represent being important piece of the equation. And so the teams on the local basis are working on this and quite frankly with some success.

The resources are different, the A&P coverage is obviously lower, but it doesn’t mean that we shouldn’t change the packaging, you shouldn’t improve the quality and all these thing. So Must Win Battles and the secondary battles definitely in the large countries do represent an important improvement potential for beyond ‘17.

So that’s the way I would label it. In the meantime and back to the previous question, we also little by little we are going to move from renovation only to innovation, but always and obviously first with the Must Win Battle in mind. So that’s organic play book for ‘17 and the years to come..

Got you.

And beyond the secondary battles, are there product categories or businesses that you would like to exit or divest potentially at all?.

No, nothing that’s why we have carefully selected our Must Win Battles, we had different criteria, criteria number one was the attractiveness of the sub-category, second was the market share we had and the third one is on top of growth is also pricing potential. So -- and we haven’t change our mind.

So this still represent very interesting avenue for growth, no reason to change at this stage. And while you can always consider at some stage to add a category, but the real question will be then build or buy and building a new category from scratch we have learned it the hard way in the past is very difficult.

So more than ever this focus on Must Win Battles is the right thing to do..

Great.

And I noticed you called out in the press release, expenses incurrent for investigation and strategic opportunities, does that specifically include M&A and if so you know how should we think about the environment and how it’s changed maybe since the last time your reported earnings?.

As and when we do M&A that category would be where the costs landed, but I mean as Stefan said, we have been very focused on the turnaround thus far. I think having stabilized the base, we do feel ready and we certainly have the balance sheet to support M&A, but no rush. .

And we have the people. .

We have the people. So very interesting shape. .

Okay, great. And then just one last one, if you could just a quick update on various supply situations in your businesses. For example you had the hake issue last year salmon pricing has been a headwind that you harvest and et cetera.

Have those all been resolved to your satisfaction is there anything new going on? And how do those collectively impact margins heading forward. Thanks..

Hale supply we reinstated from Q4 last year. So no issues there, well in fact we set up in the supply chain to increase robustness on that specie. Salmon pricing is what it is, so it's a market wide issue and we price accordingly.

Agricultural harvests if you have an insight into whether patterns over the growing areas, we saw strong Jon I'd be very happy to your advice it is literally in the lap of the God in terms of nature. I think last year was a particularly poor harvest and it is unusual to see both peas and spinach be negative.

So that was unusual to have both of those important vegetables have a bad harvest. So we would anticipate a better harvest this year that you can do itself. .

Okay, great. Thank you very much. .

And that concludes today's question-and-answer session. I'd like to turn the conference back over to Stefan Descheemaeker for any additional or closing remarks..

Thank you operator and let me come back to the prepared message. So thank you for joining us on the call today. In summary, I'm pleased with the progress we've made to-date and believe there is still significant amount of opportunity in front of us.

Our strategy is gaining traction and exceeding our expectations giving us the confidence to raise guidance at this stage in the year. And I would like to express my thanks to the entire Nomad team for their hard work, dedication and continued focus and look forward to providing you with another update when we report Q2 earnings in August. Thank you..

This concludes today's presentation. Thank you for your participation. You may now disconnect..