Good day, and welcome to the Nomad Foods Second Quarter 2019 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Taposh Bari, Head of Investor Relations. Please go ahead, sir..

Great. Thanks, Shannon, and thank you all for joining us to review our second quarter 2019 earnings results. With me on the call today our Chief Executive Officer, Stéfan Descheemaeker; and Chief Financial Officer, Samy Zekhout. Before beginning, I would like to draw your attention to the disclaimer on Slide 2 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-IFRS 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, which is available on our website. Please note that certain financial information within this presentation represents adjusted figures for 2018 and 2019.

All adjusted figures have been adjusted for exceptional, acquisition-related and share-based payment and related expenses as well as non-cash FX gains or losses. And all comments from hereon will refer to those adjusted figures.

Finally, users should be aware that 2019 figures have been presented in accordance with IFRS 16, the new standard for lease accounting. As such, certain financial metrics may not be directly comparable to 2018 figures. However, we have disclosed the impact of this change in the press release where the impact on comparability has been deemed material.

And with that, I will hand the call over to Stéfan..

organic revenue growth of 3.5%, driven by 4% growth from price, offset by a 0.5% decline in volume and mix; adjusted gross margin of 29.8%, reflecting a 70 basis point decline in the base business and 90 basis point decline due to the inclusion of acquisitions; adjusted EBITDA of €98 million, representing a growth of 10%; and adjusted EPS of €0.27 per share.

We’re pleased with our performance during the second quarter, which represents the 10th consecutive quarter of organic revenue growth for our company.

This trajectory of sustained growth has been fueled by the investments we’ve been making in our brands, our people and our capabilities, while also strengthening the long-term potential of our portfolio.

Growth during the second quarter was again led by our branded business, which grew 4.5%; within our brands, portfolio or core, also known as Must Win Battles, grew 7%. We achieved growth in nearly every major core categories including fish fingers, coated fish, recipe fish, famous in local Must Win Battles.

We experienced particularly strong growth within our vegetable portfolio, which grew 6% during the quarter. This growth was driven by strong execution of spinach products, combined with a favorably responsive prepared vegetable products, such as our recently launched Veggie Power innovation.

Geographic performance during the second quarter was once again relatively broad based with most of the countries achieving growth. Growth was particularly strong in Germany, Austria and The Netherlands with each achieving organic revenue growth above 10%.

In UK, our largest country, delivered organic growth net 5% with strength in fish fingers, poultry, vegetables and private-label pizza. UK also benefited from the launch of Green Cuisine, our new plant-protein range, which began shipping in late March.

Within the UK, we rebooted the Goodfella’s Pizza brand during the second quarter, by launching a new advertising campaign alongside enhanced product packaging features.

As you may have seen in the interim report, we experienced some temporary generative declines in branded pizza business early in Q2, based on our decision to under-promote and to build capacity ahead of the brand reviews. We’re happy to see the strategy play out as expected, with the branded pizza business returning to growth for the month of June.

Staying on the topic of pizza, we recently began to test the Goodfella’s model outside of the UK and Ireland. We are currently piloting the concept in Portugal under the Iglo brand, which actually sold pizza many years ago. We look forward to seeing the results of these tests later this year. Now, for the summary of our second quarter highlights.

So let’s now turn our attention to our outlook, both near- and long-term. Through the product quality of our core, we’re developing a strong foundation from which we can build on for years to come. Notwithstanding our performance to date, we continue to see significant headroom for growth within our core fish and vegetable category.

Our core categories are margin-accretive, have market-leading positioning and opportunity for even greater [product] [ph] penetration. The food industry is undergoing a significant product shift, as consumers seek out brands with value [Technical Difficulty] taste, but also on nutrition and on sustainability.

We foresee to have a portfolio which plays directly into these themes. Our Power brands, Findus, Iglo and Birds Eye are known for providing families with high-quality and great-tasting meal solutions, which are convenient, nutritious and accessible.

These brands have incredible awareness built over decades, with the potential to be even larger in size. As we prepare ourselves for the future, we are increasingly focused on evolving our core, which includes fish fingers, coated fish, peas and spinach as well as developing new platforms which play into the growing flexitarian movement.

To do this, we will look to leverage the credibility of our brands and the pan-European scale of our operations. Turning to Slide 5, plant protein is one of many exciting innovations in our pipeline.

We’re developing a differentiated range of meat-free products through our Green Cuisine sub-brand, using pea protein and leveraging our brands’ heritage in this protein rich crop. Green Cuisine was launched in the UK earlier this year, and is offering burgers, sausages and meatballs.

Early feedback has been positive with excitement building further since our new Whoops, I’m a Bit Veggie campaign, which began in late July and will run through early October. Another innovation success story is Veggie Power, a modern blend of vegetables boosted with healthy grains.

This range launched in Portugal last year and has since been expanded to a total of five countries across our portfolio with each market having its own local variation. Results have been very encouraging thus far, reinforcing the potential that we have in vegetable side-dishes beyond Peas and Spinach.

Green Cuisine and Veggie Power are two great examples of our innovation pipeline as well and how we will look to build around our core. They illustrate the number of dimensions that our portfolio has in helping consumers maintain a more sustainable and nutritious diet while still offering superior quality and taste.

Green Cuisine provides families with a meat-free product, which is healthier than most of our competitors, while Veggie Power provides an innovative way of increasing vegetable consumption. In summary, we are pleased with our second quarter results, which have us on track to deliver a third year of growth in line with our long-term algorithm.

Our portfolio is well aligned with the future of food and we look forward to playing a pivotal role in driving growth in both our business and our category. This will be through a combination of organic growth, we are demonstrating a sustainable model as well, M&A will also play an important role in due time.

We have a strong pan-European infrastructure, integration capabilities and capital to pursue acquisitions which will be accretive to both earnings and shareholder value. With that, I will hand the call over to Samy to discuss the financials and guidance in more detail.

Samy?.

adjusted EBITDA of €220 million, a 15% year-on-year increase; a working capital outflow of €68 million; CapEx and cash taxes were both €17 million; and cash and interest – cash interest and other of €31 million due primarily to the reallocation of the lease payments from operating cash flow to financing cash flow as a result of IFRS 16.

We achieved free cash flow conversion of 71% through the first six months of the year, below our long-term annual target of 100%. This performance is partly a function of seasonality given the time of the year.

With that said, we know we can do better on cash generation and have a series of actions in place to drive stronger cash performance in the back half. However, given the seasonal nature of our cash flows, we do expect working capital to again represent a cash outflow in Q3 as is typically the case due to the timing of the harvest.

We ended the second quarter with leverage in the high 2s, which provides us with adequate capacity to pursue our M&A agenda. As Stéfan mentioned, we remain active on the M&A front and look forward to updating you in due course. With that, let’s turn to Slide 8 to review our 2019 guidance, which is based on foreign exchange rates as of August 6, 2019.

For the full year 2019, we are reiterating adjusted EBITDA guidance of approximately €420 million to €430 million, and adjusted EPS guidance of €1.18 to €1.22. Full year guidance continues to assume organic revenue growth as the low single-digit percentage rate.

Based on current exchange rates, we expect FX translation to represent approximately 70 basis points of drag on reported revenue in the third quarter and 60 basis points for the full year. We expect adjusted EBITDA growth in both Q3 and Q4 with relatively comparable year-on-year growth rate in each quarter. That concludes our remarks.

I will now turn the session over to Q&A. Thank you. Operator, back to you..

Thank you. [Operator Instructions] And we’ll take our first question from Steve Strycula of UBS..

Hi, good morning..

Good morning….

So, a quick question on revenue and I have a quick margin follow-up question. So, Stéfan, you mentioned that the core is doing quite strong, up 7% in organic sales.

Just was curious as to what are some happening in some other pockets of the portfolio right now that have further room for improvement, whether it’s pizza or some of what you would call that are not Must Win Battles..

Good point, Steve. I think, let me again reiterate in over – in the starting point for us. Obviously, Must Win Battle is critically for us. And you may remember that all in together, even including the decline of peas, because we did not have enough peas due to the bad harvest last year. We delivered plus 7% with Must Win Battles.

So a total of 3.5, 3 or 4 it means that, obviously, some other things are doing less well. But again, part of that is a deliberate choice, which is let’s focus on, obviously, our key categories where we have leading positions, where obviously our gross margin is the highest. And that’s exactly what Must Win Battles are.

So, [others, obviously, no] [ph], on the non-branded side is one thing. Obviously, food service is another. But even within the brand side, Steve, we also have made some deliberate choices. For example, in Norway, we have a very low gross margin product like [wet] [ph] fish.

And we just have decided that it was time to delist it, because it was just not good. So it had an impact in terms of sales, but quite frankly, it’s really something that we are – it’s a deliberate choice that we are making. Does it mean that we are perfect and that there are other things that we could do better? Absolutely, you’re right.

So in terms of secondary battles, there are some areas of growth and pockets of improvement in food service, where we think we can do a better job. And that, specifically, is going to be a focus for the coming quarters without losing a – I will only repeat this 10 times, without we losing our focus behind the Must Win Battles..

Okay. Perfect. And then a question on the margin leverage.

As we think about the longer-term goal of getting to a 20% EBITDA margin rate, can you help us understand where we are in the journey of, call it, raising the profitability of like a legacy Findus business, particularly in the Nordic region which I think has lagged? And then, some of the opportunities of where are we in the process of kind of improving the profitability run rate of Goodfella’s and Aunt Bessie’s knowing that 2019 was more of a reinvestment year for both of those brands.

That would be helpful. Thank you..

Got it. Let me start, and obviously, Samy, please complement what – if I’m missing something. I’m sure that I will miss something. But conceptually first, I mean, you know that [those are] [ph] really based on a series of, let’s say, specific tools. The Must Win Battle is one. It’s really part of our DNA.

And obviously, the more you’re tweaking the size and the proportion of Must Win Battles, by definition of your mix, you tend to increase naturally your gross margin. That’s one thing. The second piece, and it’s been vital for us for the last – the first few years, and it’s still very important, is network management plays a significant role.

And you remember that this year, we are digesting so far, an unprecedented level of price increase. So I think we’ve been quite bold that, obviously, we were not afraid of moving some volumes here and there. Obviously, it has to do with pricing activity on road, but it’s – we’re pleased with that. The third piece is productivity.

We still believe that we have more to do in terms of our supply chain, improving relationship the between insourcing and outsourcing, that’s one thing; really working hard and we’re initiating a program this year of how to overall raise our standards.

But first, the first in plans we have right now, raising the standards, making sure that little by little every plant has reached a standard base on the best-in-class KPIs we have. So a lot of this and, obviously, we also have the synergies coming from Aunt Bessie’s and Goodfella’s.

I’ll go back to your question, more specific question, for example, about Goodfella’s. I think it’s been a very interesting journey, Steve. It’s an interesting journey, because it’s – let’s say, let’s do it that way, 50% of brand and 50% of private label. So you know the journey with brands.

And we’ve just applied our toolkit, which is we’re taking the time, just making sure that we have the right packaging, the right quality, we’re increasing quality, we have the right copy, the right advertising, and then the right price. By the way, we increase price as well. So that’s one thing, and that’s brand.

And we are quite pleased with the early – it’s early results, obviously. So it’s only one month, so it’s too early to say. But at least it feels good and we report later obviously in the coming quarters.

The second piece, which is private label, that’s also interesting, because what we discovered is we have a whole lot of things, very low margin and then very decent margins.

And I think it’s an interesting situation, because then you can afford to stop some very, very low margin, because you know that your brand, if everything goes right, is going to take in all the capacity. So that’s what we’re doing with Goodfella’s. And then little by little we’re going to increase the overall gross margin.

So back to your question about when are we going to reach [30%,] [ph] as you know, we haven’t come up with one – we haven’t committed to a deadline. We know that, obviously, with everything being equal, like-for-like, we’re increasing it. Obviously, we never had the mercy of the big spike in terms of inflation. It’s something we did this year.

We would not have noticed, if we would not have come up with the price increase this year, I can tell you, I mean we would have done very much lower. So we’re making progress. So that’s a journey more than anything else. Sorry, I was very long..

No, no, no, that’s very helpful. Thank you..

Steve, I think the only point – Steve, I think the only point I would add is on top of what Stéfan said, is that as you recall, we had made the statement that we will increase as well our innovation phase and the share of innovation in our total sales. And as you know, we clearly pride ourselves to bring to the market some higher-margin innovations.

That is as well part of the health amongst all of the things Stéfan has mentioned as well..

Great. Thank you..

And our next question will come from John Baumgartner of Wells Fargo..

Good morning. Thanks for the question..

Good morning..

Hi, John..

Stéfan, obviously, some moving parts with the Easter shift, but even looking at numbers on a first-half basis, the volume elasticity was really fairly resilient given the price increases. So I just like to get a sense as to your confidence in that elasticity.

What you’re learning about the pricing power of the portfolio? And then maybe thinking about any cross-elasticities, what are you seeing from competing categories? Is pricing fairly rational there as well?.

So let me start with a global statement. I think, overall, I think the pricing elasticity is in line with what we had expected. Obviously, by definition, with some variations country-by-country, because to your point, at the end of the day, most of the time, the competition is becoming rational. It is always taking a bit of time to adjust.

So we’ve seen and sometimes these are doing better than expected. Some others, a bit – it takes a bit more time. But overall, we’re pleased with the pricing elasticity, and we’re pleased with the quality of the pricing power of our brand..

Okay. And then just for Samy, anything worth noting in terms of expectations for pea cost inflation for next year, any comments on the harvest outcome this year? And then on fish, are there any views at this point in terms of the catch rates? And any prospects for moderation of the inflation in the fish? Thank you..

Yeah. On the harvest, John, clearly, the situation is definitely better than last year. Clearly, what – the summer has started this year as we’ve seen summer heat waves, but not in the proportion of last year. And the early reads that we are seeing on the harvest is quite encouraging so far.

We’re going to know by the end of August, as you know, because probably on peas, that’s really where we have the highest sensitivity given the fact that it’s a one shop. But I would say so far, so good. We should have yields that are better than last year, definitely.

On the fish, what we are seeing is still some increase on inflation coming up, but definitely not in the same magnitude of what we have seen this year. As I say, it’s going to be probably more modest. That’s our expectation at this stage..

Okay. Thank you, Samy..

And our next question will come from Robert Moskow of Credit Suisse..

Hi, thank you. This is Jake Nivasch for Rob. Just a couple of quick questions. So for EBITDA guidance for the back half, is that – it looks like there’s going to be some like modest growth in the back half, if at all.

So we’re just wondering, is this largely because of the phasing of your ad spending or just lower growth altogether? Just any color there would be helpful. And then I have a follow-up..

Yeah. We – as you know, we’re maintaining the guidance between €420 million and €430 million. And what we can tell you at this stage, when you’re taking factor in the actual that we have at the end of June and the prospect on the basis of our total year outlook, we’re expecting in each quarter roughly between 8% and 14% per quarter of growth.

So the spending shift is creating that – in this effect..

Got it. Thank you. And then, so the [Garden] [ph] Cuisine brand, I think you guys might have mentioned this, but I missed it.

What is – I guess, what’s the strategy for scaling this up? Is it country by country? Or is it more of a narrow expansion focusing on just like a couple of countries?.

Let’s say, we’ve just started with UK. The objective is obviously not to limit ourselves to three SKUs, so it’s definitely a starting point. I think, it’s going to be much bigger, because it’s really – I mean, it’s very much in line with the flexitarian trend that we can see.

We also believe that we have an amazing, let’s say, number of SKUs or products that can work in that category today, so even without further expanding. So more should come in the next months, let’s say, country by country. It’s not necessarily going to be called the Green Cuisine in each country, because that we also have this concept of global-local.

The product might be a bit different. Sometimes we’ll have just to – we’ll have the same chassis that you have to adapt to the local tastes, like, local tastes are different, definitely. And that’s something that we believe will be part of our success is to be able to deal with this global-local thing.

And I think very, very, very important, and that’s a factor of difference compared to many other, let’s say, plant protein products, we are very much focused on healthy foods. So it has to be tasty, definitely. It is obviously very much in line with the CSR concept.

But probably, I mean, the differentiating factor with our products is how healthy that is in terms of saturated fat and in terms of calories, by the way, calories is also important..

Perfect. Thank you very much for the help..

You’re welcome..

And our next question will come from Donald McLee of Berenberg..

Good afternoon. Two questions. The first is on acquisitions. They continue to be a significant driver of top-line growth, but could you provide any more color on what’s happening with your organic EBITDA, excluding Aunt Bessie’s and Goodfella’s? It seems like that number might be flat year-over-year.

Is that correct?.

Can you repeat the question? I’m not sure that I could understand it. I don’t know if, Samy, you have it..

Sure, you just give us….

[indiscernible].

Yeah, if you can give us any color on organic EBITDA, excluding Aunt Bessie’s and Goodfella’s, and how that number has grown or moved year-over-year, it’d be helpful..

Sorry. Okay. I heard something else. Okay. Good. So the point is we don’t disclose EBITDA between base and the acquisition, actually..

Okay. Then another question just on....

But the point – just a point, I mean, maybe just to give some additional point there, the fundamental – I mean, the message we want to give you is that the fundamentals on the base are strong, and we are clearly riding our acquisition in line with our expectation as well.

That’s the thing that for your own modeling, I think that can be helpful, but we don’t really break down the two..

Okay. That’s fine. I can also follow up after the call..

Likewise we are on track, and we are on track in terms of synergies..

All right. And then the second question is on cash conversion. Could you provide more color on – there’s a line item in your cash flow statement, cash paid related to the factored receivables.

It would be great if you could provide any color on the amount of that actual facility and how it might impact your cash conversion?.

You’re talking about what’s exactly within the cash conversion? I’m sorry..

Yeah. There’s a €3.1 million payment for cash paid related to factor receivables. I think, that’s the first time that line has shown up in your statements. If you can give an idea of what’s actually happening to drive that cash outflow and then how that impacts your cash conversion..

Yeah. We have used factoring based on, frankly, our needs and the market situation. And actually, it’s not the first time that we’re using it. We’ve been using it historically as well. And in December, we had about roughly €50 million of factoring. And at this stage, the number, exact number is about €33 million.

So gradually phasing in or phasing out depending on the market condition and our needs as well..

Okay. Perfect. That’s helpful. Thank you for taking my questions..

[Operator Instructions] And we’ll take our next question from Cornell Burnette of Citi Research..

Okay. Thank you, guys, and congratulations on the quarter. Just wanted to make myself clear about some lines with advertising and promotion. I know that the original 2Q guidance called for flattish EBITDA, but yet EBITDA improved by about 10%.

So just wondering, how much of that was due to maybe a shift in advertising and promotion? I know there was about €5 million that was supposed to shift out of 1Q primarily into 2Q, but it seems a lot of that’s moved back later in the year.

So wondering, if that’s really the main driver of the upside in EBITDA in the quarter, and if not, kind of what prevents you from taking up the EBITDA range for the full year if it’s really kind of beating numbers as we speak..

Yeah. As we have mentioned in the communication, in the announcement, [we’ve given] [ph] any guidance. I mean, we continue to maintain the guidance. And what we have seen on the shift is fully driven by the business.

We are trying to build our plans on a quarterly basis, and sometimes we do see shift and, for instance, on the Green Cuisine launch, the point at which advertising makes sense that we have to achieve a certain set of distribution before we start our advertising.

And that point of distribution is effectively going to be achieved more in Q3 than it was in Q2. So it made no sense to frankly advertise Green Cuisine in Q2, and so we decided to shift there. So this is not a cut. I want to be very clear; this is just a shift on the A&P side.

And we manage our plan over the year as well on the indirect side, so there are moments where technical projects are shifting, some resource allocation are shifting as well. So at that stage, we are fully maintaining our guidance, and we are planning effective to deliver between €420 million and €430 million for the year..

Okay. Very good. And then adjusting, I guess, for the Easter shift, it looks like volumes are running at about a 2% decline, which is really good in light of the 4 points of pricing that you’ve been getting.

But just wondering, digging deeper into those declines, kind of are they broadly spread maybe across your categories? Or are they more pronounced in a category like peas where you’re dealing with kind of some pea supply issues? And then kind of once these supply issues are out of the way, perhaps in Q4, how do you see that category progressing for you?.

On the volume, as you have noted, we’ve seen effective return, which is effectively planned. I mean, what you see on the volume, which is important, is the sensitivity is not just if you want a straight outcome of the pricing, but the PPA has an effect that went to the price architecture in the short term.

I mean, instead of a pack of 12 versus the pack of 14, you are – because people buy usual things in packs, then it does have an impact. And over time, people readjust their consumption based on what they consume, if you want. So there’s a bit of time always on that one. So that element of volume has an impact, I mean, out there.

What we have seen is effectively that as Stéfan was saying, the elasticity has responded in line with expectation, proving the fact that our brands are strong and frankly can handle pricing.

And the other piece is the market condition were clearly, let’s say, set to confirm the fact that all of the pricing was justified by inflation, to be fair, very well differentiated because not only have, but our competitor in the market had moved there because of the raw material inflation that we had seen overall.

And last but not least on the Easter impact, I just want to remind, I mean, we were talking about very roughly a 1.5% shift from one quarter to the other. That was the prime impact that we have seen between both quarters..

Okay. And then the last one for me is just if you can provide us with an update on how you’re planning to position the business heading into October 31 Brexit deadline draws nearer.

Just wondering what contingencies you have in place in case that there’s a hard Brexit scenario?.

Okay. But to your point, I think we are preparing ourselves for a hard Brexit or a no-deal Brexit, whatever the name you want to use. So all in, we’re ready for this. We have all the administrative infrastructure in place, which is absolutely fundamental to limit the disruption in that event, which we believe, is likely to happen.

By definition, that our guidance assumes business as usual until we notified otherwise. But I think, what’s important is in the event of a no deal, we have built in three mitigation strategies that we will use to offset the P&L impact.

One is it comes naturally, which is the UK, obviously elected a government is offering some import subsidies, which is not insignificant to say the least. That’s one thing. For how long, one year, maybe more, nobody knows, obviously.

So, what I’ve learned in this situation that the reality of today is not the reality of tomorrow, maybe the day after tomorrow, we will see. So that’s one thing. Second, and it covers a lot of different things, is the supply chain reorganization. So it really covers many different things.

It can be, for example, moving from a UK co-packer to a – or maybe even the own capacity to a co-packet in another country. By doing so, you’ve got obviously the tariffs moving from UK to export.

All you can imagine, which is going to take a more long term, is some CapEx reorganization that obviously will modify in the UK and the rest of Europe or supply chain.

One other thing, which is also short-term is we definitely have some communication with some of our suppliers in terms of who’s going to take the remaining, the net impact of the subsidies. And last but not least, after all these things is pricing. There will be definitely in UK. Maybe it’s less expensive in Europe.

But in the UK, depending on the category, we have some pricing power. And obviously, it is something that even, let’s say, is acknowledged by the trade when they say that there will be price increases. That’s a public statement that has been made, and that is going to come from people like us. So that’s the whole thing.

So it’s something obviously we’re taking, as you can imagine very seriously.

And I think what is also important to understand is, and it’s not a personal consideration, but beyond October 31, assuming there is no deal, both parties, Europe and UK, will have to come back to the negotiation table at some stage, definitely they cannot live long, long, long, long-term with the highest tariff possible that are WTO.

So that’s not part of our plan. So we’re obviously planning for the worst and we need to present how resilient we’re going to be today. And definitely, we have all the variables that are ready for this..

Okay. It’s very helpful. Thank you..

You’re welcome..

And we’ll take our next question from Bill Chappell of SunTrust..

Thanks. Good morning..

Good morning, Bill.

How are you doing?.

Good morning..

Good. Could you just go back a little bit to Goodfella’s and even Aunt Bessie’s and just maybe kind of an update on how those are progressing since you bought them and maybe some things you’ve done to them? I mean you talked a little bit about the reboot on Goodfella’s.

And so, I’m just kind of understanding, was that always in the plan? Or was there a thought that, really, to get it where you needed to, you needed a full reboot? And same, just Aunt Bessie’s, I know it’s more of a product-specific category, but just trying to understand what you can and what you have done with that business?.

Yeah. Well, let me start with the synergy plan. I think it’s – synergies are really very much in line, sometimes even slightly better. Overall, on a standalone basis, some are better, some are probably – at least temporarily a bit less than expected.

So in other words, I would say Goodfella’s is really doing well, qualitatively doing better, both are doing well. But I would say Goodfella’s is doing even better. I think what we’re doing is increasing the quality of the private-label portfolio. And we’re increasing the quality and the price, by the way, of our brand ramp-up.

And we’re really rebuilding the brand, which is a great brand. So that’s doing well on top of, obviously, the synergies. And I’d say Aunt Bessie’s is a bit upright now, but it’s highly seasonal. And I think we are very – we overall, we’re pleased with what we have.

We know that we can, obviously, we have still some distribution, let’s say, possibilities that we need to further expand. And let’s not forget, obviously, that it’s a highly seasonal product and an important part of for Aunt Bessie’s at the end of the year. But overall, very pleased..

And in terms of the reboot for Goodfella’s, just kind of the understanding behind that..

As I said, let us move to – I mean, let’s just move back to what we said is we took our time, as we did for all of Must Win Battles, by the way, which is, one, let’s make sure that we have a product that is superior and obviously is superior to competition. That’s one thing.

Second is, let’s make sure that we have a packaging that is really encompasses that compete as a same kind of message. That’s the second piece. The third piece is, let’s make sure that price-wise and promotion-wise, we have built the right model and in line with what the trade is expecting from us.

And all this obviously helped by a very good advertising campaign that I’ve started, as I said. So far – so very good. Obviously, it’s a bit too early to say because it’s a few weeks. But I think the first few weeks are very, very encouraging.

So I think it’s very much in line with our playbook, which is reassuring, by the way, because it means that this playbook can really travel not only to the existing portfolio, but can travel to other M&A targets in the future.

So that’s – so obviously, we’re always trying to improve the playbook, but at least the basis right now is working very well..

Got it. And last one for me. Maybe too early....

Without pizzas – I forgot to mentioned, by the way, and I mentioned it during the prepared remarks, that Portugal was not part of the business plan. So we bought the business based only on Ireland and the UK. And we see that – again, too early to say, but at least the early signals from Portugal, I’d say, are encouraging.

But again, it’s a small pilot, but these guys, they like to do these kind of things. And Iglo as a brand has the right to place pizza and we have the distribution investment..

Great. Thanks for the color..

Welcome..

And our next question will come from John Tanwanteng of CJS Securities..

Good morning, gentlemen, and nice quarter again. I’m not sure if you addressed this yet. I jumped on a little bit late.

But can you talk about the impact of a hot summer on your sales and potential supply and the harvest?.

Yeah. Actually, this summer, as I had mentioned, has been better than last year. So far, frankly, we can’t comment on the sales per se, because, I mean, we’re in the middle of the summer. And we look at our plan on a 3-month basis. What I can comment more is on the – probably on the supply side and on the harvest.

And what we are seeing today is that, so far so good. It is definitely better than last year. And the harvest itself has given some encouraging signs. So we’ll definitely end up with better yields than last year, provided the weather will continue to remain on that basis..

Great. Thanks for that color. And then, Stéfan, just an update on – what you’re seeing in the M&A pipeline and maybe a little bit more on the, I guess, the attractiveness of these very healthy options that consumers are gravitating towards.

Are you planning on shifting your focus towards those types of entrée? I know you’re doing it organically with the Green Cuisine, but from an acquisition standpoint, are you looking more at those? Or are you still trying to go down the [frago] [ph] with the frozen food and then your core types of businesses?.

It’s a very good question. To your point, first, we want to accelerate. Organically, we want to accelerate that part of the business. So plant protein is, as we said, is a very important point for us. We’re even going to reorganize ourselves towards being even more dedicated to plant protein. So that it’s coming, which I think is fundamental.

We’re facing competitors that are fully dedicated to plant protein and so should we. So that’s one thing. Then back to acquisitions or external growth in terms of supporting good, healthy options.

Definitely, when we see the – our portfolio, 80% of our portfolio is in the – from this nutritious standpoint, is label defined as – 80% is considered as good food, and that’s quite unique. And definitely, we – and, by the way, that’s something that probably we understand. We’re not very good at that.

So we need to do a better job at that, internally, externally, everything. So back to the healthy options, definitely.

In frozen and potentially non-frozen, if we see some assets that are in line with our criteria in terms of, obviously, a strong brand, capacity to be integrated in our distribution, strong moat and, obviously, a good growth potential, definitely something we’re going to consider, no doubt about it.

And so back to your M&A questions, we are active definitely. At the same time we are very disciplined. And let me repeat it again, I will never commit to a timeline and to a deadline in M&A. That’s the best way to [describe to you] [ph]..

Great. Thanks again..

And we’ll take a follow-up question from Donald McLee of Berenberg..

Hey, guys. Quick follow-up on Ocean Beauty, it’s been about 6 months since you announced the distribution agreement in the U.S.

Could you talk a bit about the progress you’re seeing there with your product over in the U.S.?.

Yeah. Thanks. It’s an interesting question. And you remember last time when we talked about Ocean Beauty, I just mentioned it’s an interesting first step, but let’s say, it’s a very first step and it’s tiny. I think what I’ve seen so far is they are in preparing mode. But let’s say, don’t expect something like a big advertising campaign in the U.S.

with a lot of money to be invested. So I think we’re going to be more granular with Ocean Beauty. We’re going to build maybe one stronghold and then go to the other, and all these things. So it’s going to be a long thing and it’s – don’t expect something spectacular out of this at least in the short-term. Long-term, that’s something else.

At least, we shall see. It’s an interesting development. And the – but the good news to your point is we have a really, we believe, a world-class fish business in Europe. And, yes, we will test how it’s going to work in the U.S. We believe the product is superior to what is currently existing in U.S.

And we will see whether the consumers would agree with us..

Okay. Thank you. That’s helpful..

And it does appear we have no further questions at this time. I will turn the conference back over to Stéfan Descheemaeker for any additional or closing remarks..

Thank you, Shannon, and thank you for joining us on the call today to review our second quarter results. We’re pleased by the progress that we have made through the first half of the year and continue to see further opportunity for growth in both the near- and long-term.

Our core portfolio remains a strong driver of growth with contributions from new innovations like Green Cuisine and acquisitions. With that, thank you for your participation. And I look forward to updating you on our progress, when we next report third quarter results in November..

That does conclude today’s teleconference. Thank you all for your participation..