Lamb Weston Reports Fiscal Second Quarter 2024 Results; Updates Fiscal Year 2024 Outlook
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Insights
The reported financial results of Lamb Weston Holdings, Inc. indicate a significant 36% increase in net sales to $1,732 million, which is substantially bolstered by the LW EMEA Acquisition. This suggests a robust expansion strategy that has effectively scaled the company's operations. The 12% increase in income from operations and a 109% increase in net income reflect efficient operational management and the successful integration of the acquisition, despite the $71 million pre-tax charge for excess raw potatoes.
The company's decision to strategically manage customer and product mix, as evidenced by their exit from certain lower-margin businesses, appears to be paying dividends. The 22% increase in Adjusted Income from Operations and 17% increase in Adjusted Net Income indicate that the company's pricing strategy and mix improvements have more than offset the volume declines and cost inflation in raw materials and labor. The 15% increase in Adjusted EBITDA further underscores the company's ability to maintain profitability despite these challenges.
From a shareholder perspective, the 29% increase in quarterly dividend and share repurchases totaling $50 million signal a strong confidence in the company's financial health and a commitment to delivering shareholder value. The updated fiscal outlook, with raised GAAP net income and EPS targets, suggests that management anticipates continued strong performance and stability in the consumer and operating environment.
The food processing industry, particularly within the context of Lamb Weston Holdings, Inc., is experiencing dynamic shifts. The company's significant sales growth is indicative of resilient global demand for its products, despite the challenges posed by inflation and supply chain disruptions. The successful consolidation of LW EMEA and the subsequent sales growth demonstrates the company's strategic foresight in expanding its international footprint.
The volume decline of 6% suggests a strategic shift towards higher-margin products and the shedding of less profitable lines, a move that can be seen as a positive long-term strategy for maintaining profitability and market position. The company's pricing power, as reflected by the 12% increase in price/mix, is a testament to the strong brand equity and value proposition Lamb Weston offers to its customers, enabling it to pass on inflationary costs without significant pushback from consumers.
Investors should note the company's proactive approach to capital allocation, with significant investments in capacity expansion projects and technology infrastructure. This indicates a forward-looking approach to growth and efficiency, which could position Lamb Weston favorably within the competitive landscape.
The write-off of excess raw potatoes represents a supply chain challenge that Lamb Weston had to navigate. The $71 million pre-tax charge reflects a mismatch between supply and demand, likely exacerbated by the solid potato crop yields. The company's ability to still increase gross profit despite this charge demonstrates robust supply chain risk management and the successful implementation of cost savings initiatives.
Looking at the supply chain productivity savings that partially offset higher costs per pound, Lamb Weston seems to have implemented effective cost control measures. These measures, coupled with the favorable mix and inflation-driven pricing actions, have contributed to the overall increase in profitability.
The company's capital expenditures, particularly the increase to support capacity expansion projects, indicate a strategic investment in the supply chain to meet future demand. This is critical for long-term growth, especially in light of the global demand resilience and the need to maintain a competitive edge through efficient operations.
Second Quarter Fiscal 2024 Highlights
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GAAP and Non-GAAP results include a
$71 million -
GAAP Results as Compared to Second Quarter Fiscal 2023:
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Net sales increased
36% to$1,732 million $376 million -
Income from operations increased
12% to$306 million -
Net income increased
109% to$215 million -
Diluted EPS increased
108% to$1.48
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Net sales increased
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Non-GAAP Results as Compared to Second Quarter Fiscal 2023:
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Adjusted Income from Operations(2) increased
22% to$301 million -
Adjusted Net Income(2)increased
17% to$212 million -
Adjusted Diluted EPS(2) increased
15% to$1.45 -
Adjusted EBITDA(2) increased
15% to$377 million
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Adjusted Income from Operations(2) increased
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Repurchased
$50 million $41 million -
Announced
29% increase of quarterly dividend to$0.36
Updated Fiscal 2024 Outlook
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Reaffirming net sales target of
$6.8 billion $7.0 billion -
Raising GAAP net income target to
$830 million $900 million $5.70 $6.15 -
Reaffirming Adjusted EBITDA(2) target range of
$1,540 million $1,620 million $71 million -
Raising Adjusted Net Income(2) target to
$830 million $900 million $5.70 $6.15
“We delivered solid financial results in the quarter by executing well across our customer channels in
“Against this backdrop, we are reaffirming our fiscal 2024 sales estimate as well as our previously-raised Adjusted EBITDA target despite incurring significant costs associated with writing off excess raw potatoes in
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Summary of Second Quarter FY 2024 Results |
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Year-Over-Year |
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Year-Over-Year |
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Q2 2024 |
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Growth Rates |
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FY 2024 |
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Growth Rates |
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Net sales |
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$ |
1,732.1 |
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$ |
3,397.4 |
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Income from operations |
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$ |
305.6 |
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$ |
628.9 |
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Net income |
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$ |
215.0 |
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$ |
449.8 |
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Diluted EPS |
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$ |
1.48 |
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$ |
3.08 |
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Adjusted Income from Operations (2) |
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$ |
301.0 |
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$ |
630.9 |
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Adjusted Net Income (2) |
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$ |
211.7 |
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$ |
451.2 |
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Adjusted Diluted EPS (2) |
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$ |
1.45 |
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$ |
3.09 |
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Adjusted EBITDA (2) |
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$ |
376.9 |
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$ |
789.7 |
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40% |
Q2 2024 Commentary
Net sales increased
Net sales, excluding the incremental sales attributable to the LW EMEA Acquisition, grew 6 percent versus the prior year quarter. Price/mix increased 12 percent, reflecting the benefit of inflation-driven pricing actions across both of the Company’s business segments, and favorable mix, partially offset by lower customer transportation charges. Volume declined 6 percent, primarily reflecting the carryover effect of the Company’s decisions to exit certain lower-priced and lower-margin business in the prior year to strategically manage customer and product mix. Volume elasticities in response to inflation-based pricing actions across the Company’s portfolio have continued to remain low.
Gross profit increased
Excluding unrealized mark-to-market gains and losses related to commodity derivatives and items impacting comparability, gross profit increased
The increase in gross profit was also partially offset by higher costs per pound, which largely reflected mid-single-digit cost inflation, in aggregate, for key inputs, including: raw potatoes; ingredients such as grains and starches used in product coatings; and labor. The increase in per pound costs was partially offset by supply chain productivity savings as well as lower costs for edible oils.
Selling, general and administrative expenses (“SG&A”) increased
Excluding these items, SG&A increased
Income from operations increased
Net income was
Adjusted EBITDA(2) increased
The Company’s effective tax rate(3) in the second quarter was 23.5 percent, versus 26.3 percent in the prior year quarter. The Company’s effective tax rate varies from the
Q2 2024 Segment Highlights
North America Summary
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Year-Over-Year |
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Q2 2024 |
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Growth Rates |
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Price/Mix |
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Volume |
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(dollars in millions) |
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Net sales |
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$ |
1,167.1 |
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( |
Segment Adjusted EBITDA |
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$ |
321.3 |
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Net sales for the
North America Segment Adjusted EBITDA increased
International Summary
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Year-Over-Year |
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Q2 2024 |
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Growth Rates |
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Price/Mix |
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Volume |
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(dollars in millions) |
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Net sales |
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$ |
565.0 |
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Segment Adjusted EBITDA |
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$ |
100.2 |
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Net sales for the International segment, which includes all sales to customers outside of
International Segment Adjusted EBITDA increased
Equity Method Investment Earnings (Loss)
Equity method investment earnings (loss) from unconsolidated joint ventures were earnings of
Excluding these items, equity method investment earnings declined
Liquidity and Cash Flows
As of November 26, 2023, the Company had
Net cash provided by operating activities for the first half of fiscal 2024 was
Capital Returned to Shareholders
In the second quarter of fiscal 2024, the Company returned
On October 11, 2023, as previously announced, the Company increased the authorized amount under its existing share repurchase program to
Fiscal 2024 Outlook
The Company updated its financial targets for fiscal 2024, as follows:
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The Company reaffirmed its net sales target of
$6.8 billion $7.0 billion $1.1 billion $1.2 billion
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The Company increased its targets for GAAP net income to
$830 million $900 million $5.70 $6.15 $2.0 million $1.4 million $0.01 $800 million $870 million $5.47 $5.92
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The Company reaffirmed its target range for Adjusted EBITDA(2) to
$1,540 million $1,620 million $70.9 million $745 million $755 million $765 $775 million
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The Company raised its Adjusted Net Income(2) target to
$830 million $900 million $5.70 $6.15 $140 million $805 million $875 million $5.50 $5.95 $155 million
The Company updated other financial targets, as follows:
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Depreciation and amortization expense of approximately
$305 million $325 million
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Cash used for capital expenditures of
$900 million $950 million $800 million $900 million China ,Idaho ,the Netherlands andArgentina .
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The Company continues to target an effective tax rate(3) (full year) of 23 percent to 24 percent.
End Notes
(1) |
Non-GAAP results include a |
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(2) |
Adjusted Income from Operations, Adjusted Net Income, Adjusted Diluted EPS, and Adjusted EBITDA are non-GAAP financial measures. Please see the discussion of non-GAAP financial measures, including a discussion of guidance provided on a non-GAAP basis, and the associated reconciliations at the end of this press release for more information. |
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(3) |
The effective tax rate is calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings. |
Webcast and Conference Call Information
Lamb Weston will host a conference call to review its second quarter fiscal 2024 results at 10:00 a.m. EST today, January 4, 2024. Participants in the
https://event.webcasts.com/starthere.jsp?ei=1646667&tp_key=49f7aa2ece
A rebroadcast of the conference call will be available beginning on Friday, January 5, 2024, after 2:00 p.m. EST at https://investors.lambweston.com/events-and-presentations.
About Lamb Weston
Lamb Weston is a leading supplier of frozen potato products to restaurants and retailers around the world. For more than 70 years, Lamb Weston has led the industry in innovation, introducing inventive products that simplify back-of-house management for its customers and make things more delicious for their customers. From the fields where Lamb Weston potatoes are grown to proactive customer partnerships, Lamb Weston always strives for more and never settles. Because, when we look at a potato, we see possibilities. Learn more about us at lambweston.com.
Non-GAAP Financial Measures
To supplement the financial information included in this press release, the Company has presented Adjusted EBITDA, Adjusted Income from Operations, Adjusted Net Income, Adjusted Diluted EPS, Adjusted Income Tax Expense, and Adjusted Equity Method Investment Earnings (Loss), each of which is considered a non-GAAP financial measure. The non-GAAP financial measures presented in this press release should be viewed in addition to, and not as an alternative for, financial measures prepared in accordance with accounting principles generally accepted in
Management uses these non-GAAP financial measures to assist in analyzing what management views as the Company's core operating performance for purposes of business decision making. Management believes that presenting these non-GAAP financial measures provides investors with useful supplemental information because they (i) provide meaningful supplemental information regarding financial performance by excluding foreign currency exchange and unrealized derivative activities and items affecting comparability between periods, (ii) permit investors to view performance using the same tools that management uses to budget, make operating and strategic decisions, and evaluate the Company’s core operating performance across periods, and (iii) otherwise provide supplemental information that may be useful to investors in evaluating the Company's financial results. In addition, the Company believes that the presentation of these non-GAAP financial measures, when considered together with the most directly comparable GAAP financial measures and the reconciliations to those GAAP financial measures, provides investors with additional tools to understand the factors and trends affecting the Company's underlying business than could be obtained absent these disclosures.
The Company has also provided guidance in this press release with respect to certain non-GAAP financial measures, including non-GAAP Adjusted Net Income, Adjusted Diluted EPS, and Adjusted EBITDA. The Company cannot predict certain items that are included in reported GAAP results, including items such as strategic developments, integration and acquisition costs and related fair value adjustments, impacts of unrealized mark-to-market derivative gains and losses, foreign currency exchange, and items impacting comparability. This list is not inclusive of all potential items, and the Company intends to update the list as appropriate as these items are evaluated on an ongoing basis. In addition, the items that cannot be predicted can be highly variable and could potentially have significant impacts on the Company’s GAAP measures. As such, prospective quantification of these items is not feasible without unreasonable efforts, and a reconciliation of forward-looking non-GAAP Adjusted Net Income, Adjusted Diluted EPS, and Adjusted EBITDA to GAAP net income or diluted earnings per share has not been provided.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws. Words such as “expect,” “believe,” “will,” “continue,” “deliver,” “drive,” “grow,” “remain,” “invest,” “improve,” “anticipate,” “raise,” “reaffirm,” “mitigate,” “increase,” “estimate,” “outlook,” “target,” and variations of such words and similar expressions are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements regarding: the Company’s business and financial outlook and prospects; the Company’s plans, execution, capital expenditures and investments; potato crop; pricing actions; integration of LW EMEA; and conditions in the Company’s industry and the global economy. These forward-looking statements are based on management’s current expectations and are subject to uncertainties and changes in circumstances. Readers of this press release should understand that these statements are not guarantees of performance or results. Many factors could affect these forward-looking statements and the Company’s actual financial results and cause them to vary materially from the expectations contained in the forward-looking statements, including those set forth in this press release. These risks and uncertainties include, among other things: the availability and prices of raw materials and other commodities; labor shortages and other operational challenges; an uncertain general economic environment, including inflationary pressures and recessionary concerns, any of which could adversely impact the Company’s business, financial condition or results of operations, including the demand and prices for the Company’s products; risks associated with integrating acquired businesses, including LW EMEA; levels of labor and people-related expenses; the Company’s ability to successfully execute its long-term value creation strategies; the Company’s ability to execute on large capital projects, including construction of new production lines or facilities; difficulties, disruptions or delays in implementing new technology, including the Company’s new ERP system; the competitive environment and related conditions in the markets in which the Company operates; political and economic conditions of the countries in which the Company conducts business and other factors related to its international operations; disruptions in the global economy caused by conflicts such as the war in
Lamb Weston Holdings, Inc.
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Thirteen Weeks Ended |
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Twenty-Six Weeks Ended |
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November 26, |
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November 27, |
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November 26, |
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November 27, |
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2023 (1) |
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2022 |
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2023 (1) |
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2022 |
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Net sales |
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$ |
1,732.1 |
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$ |
1,276.5 |
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$ |
3,397.4 |
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$ |
2,402.1 |
Cost of sales (2) (3) |
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1,256.5 |
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894.9 |
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2,422.3 |
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1,747.2 |
Gross profit |
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475.6 |
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381.6 |
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975.1 |
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654.9 |
Selling, general and administrative expenses (4) |
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170.0 |
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109.8 |
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346.2 |
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226.1 |
Income from operations |
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305.6 |
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271.8 |
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628.9 |
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428.8 |
Interest expense, net |
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29.1 |
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24.6 |
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59.8 |
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50.6 |
Income before income taxes and equity method earnings |
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276.5 |
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247.2 |
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569.1 |
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378.2 |
Income tax expense |
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66.2 |
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36.8 |
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136.1 |
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110.5 |
Equity method investment earnings (loss) (2) (5) |
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4.7 |
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(107.3 |
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16.8 |
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67.3 |
Net income (2) |
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$ |
215.0 |
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$ |
103.1 |
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$ |
449.8 |
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$ |
335.0 |
Earnings per share: |
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Basic |
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$ |
1.48 |
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$ |
0.72 |
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$ |
3.10 |
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$ |
2.33 |
Diluted |
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$ |
1.48 |
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$ |
0.71 |
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$ |
3.08 |
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$ |
2.32 |
Dividends declared per common share |
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$ |
0.280 |
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$ |
0.245 |
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$ |
0.560 |
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$ |
0.490 |
Weighted average common shares outstanding: |
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Basic |
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144.9 |
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144.0 |
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145.3 |
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144.0 |
Diluted |
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145.5 |
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144.6 |
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146.0 |
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144.6 |
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(1) |
The thirteen and twenty-six weeks ended November 26, 2023 included the consolidated financial statements of LW EMEA whereas in the same period in the prior year, LW EMEA’s financial results were recorded in “Equity method investment earnings.” For more information about the LW EMEA Acquisition, see Note 3, Acquisitions, of the Notes to Consolidated Financial Statements in the Company’s fiscal 2023 Annual Report on Form 10-K filed with the SEC on July 25, 2023 (the “Form 10-K”). |
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(2) |
Net income included a |
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(3) |
Cost of sales included activity related to the step-up and sale of inventory acquired in the LW EMEA Acquisition, which resulted in a
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(4) |
Selling, general and administrative expenses included the following: |
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a) |
Foreign currency exchange gains of |
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b) |
Unrealized gains related to mark-to-market adjustments associated with currency hedging contracts of |
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c) |
Net integration and acquisition-related expenses of |
(5) |
Equity method investment earnings (loss) included a
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Lamb Weston Holdings, Inc.
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November 26, |
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May 28, |
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2023 |
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2023 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
78.3 |
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$ |
304.8 |
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Receivables, less allowance for doubtful accounts of |
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766.2 |
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724.2 |
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Inventories |
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1,153.6 |
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932.0 |
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Prepaid expenses and other current assets |
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82.8 |
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166.2 |
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Total current assets |
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2,080.9 |
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2,127.2 |
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Property, plant and equipment, net |
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3,173.6 |
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2,808.0 |
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Operating lease assets |
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140.0 |
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146.1 |
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Goodwill |
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1,065.1 |
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1,040.7 |
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Intangible assets, net |
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109.1 |
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110.2 |
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Other assets |
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476.6 |
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287.6 |
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Total assets |
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$ |
7,045.3 |
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$ |
6,519.8 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Short-term borrowings |
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$ |
294.3 |
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$ |
158.5 |
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Current portion of long-term debt and financing obligations |
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55.0 |
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55.3 |
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Accounts payable |
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834.5 |
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636.6 |
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Accrued liabilities |
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434.0 |
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509.8 |
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Total current liabilities |
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1,617.8 |
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1,360.2 |
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Long-term liabilities: |
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Long-term debt and financing obligations, excluding current portion |
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3,252.5 |
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3,248.4 |
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Deferred income taxes |
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260.3 |
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252.1 |
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Other noncurrent liabilities |
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247.0 |
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247.8 |
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Total long-term liabilities |
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3,759.8 |
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3,748.3 |
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Commitments and contingencies |
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Stockholders’ equity: |
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Common stock of |
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150.7 |
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150.3 |
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Treasury stock, at cost, 6,326,519 and 4,627,828 common shares |
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(479.4 |
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(314.3 |
) |
Additional distributed capital |
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(535.9 |
) |
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(558.6 |
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Retained earnings |
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2,528.6 |
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2,160.7 |
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Accumulated other comprehensive income (loss) |
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3.7 |
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(26.8 |
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Total stockholders’ equity |
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1,667.7 |
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1,411.3 |
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Total liabilities and stockholders’ equity |
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$ |
7,045.3 |
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$ |
6,519.8 |
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Lamb Weston Holdings, Inc.
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Twenty-Six Weeks Ended |
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November 26, |
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November 27, |
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2023 |
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2022 |
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Cash flows from operating activities |
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Net income |
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$ |
449.8 |
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$ |
335.0 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization of intangibles and debt issuance costs |
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140.7 |
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102.0 |
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Stock-settled, stock-based compensation expense |
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22.2 |
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17.6 |
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Equity method investment earnings in excess of distributions |
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(11.3 |
) |
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(67.6 |
) |
Deferred income taxes |
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5.8 |
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(6.8 |
) |
Foreign currency remeasurement gain |
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(0.1 |
) |
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(16.8 |
) |
Other |
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(1.3 |
) |
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(13.2 |
) |
Changes in operating assets and liabilities, net of acquisitions: |
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Receivables |
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(35.2 |
) |
|
|
(54.8 |
) |
Inventories |
|
|
(216.0 |
) |
|
|
(240.1 |
) |
Income taxes payable/receivable, net |
|
|
27.6 |
|
|
|
24.8 |
|
Prepaid expenses and other current assets |
|
|
68.8 |
|
|
|
52.7 |
|
Accounts payable |
|
|
96.1 |
|
|
|
140.6 |
|
Accrued liabilities |
|
|
(91.9 |
) |
|
|
14.6 |
|
Net cash provided by operating activities |
|
$ |
455.2 |
|
|
$ |
288.0 |
|
Cash flows from investing activities |
|
|
|
|
|
|
||
Additions to property, plant and equipment |
|
|
(507.6 |
) |
|
|
(232.9 |
) |
Additions to other long-term assets |
|
|
(58.9 |
) |
|
|
(37.4 |
) |
Acquisition of interests in joint venture, net |
|
|
— |
|
|
|
(42.3 |
) |
Acquisition of business, net of cash acquired |
|
|
(11.2 |
) |
|
|
— |
|
Other |
|
|
6.9 |
|
|
|
1.6 |
|
Net cash used for investing activities |
|
$ |
(570.8 |
) |
|
$ |
(311.0 |
) |
Cash flows from financing activities |
|
|
|
|
|
|
||
Proceeds from short-term borrowings, net |
|
|
133.7 |
|
|
|
23.3 |
|
Proceeds from issuance of debt |
|
|
28.4 |
|
|
|
— |
|
Repayments of debt and financing obligations |
|
|
(27.7 |
) |
|
|
(16.7 |
) |
Dividends paid |
|
|
(81.6 |
) |
|
|
(70.6 |
) |
Repurchase of common stock and common stock withheld to cover taxes |
|
|
(164.3 |
) |
|
|
(34.9 |
) |
Other |
|
|
(0.5 |
) |
|
|
2.3 |
|
Net cash used for financing activities |
|
$ |
(112.0 |
) |
|
$ |
(96.6 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
1.1 |
|
|
|
14.0 |
|
Net decrease in cash and cash equivalents |
|
|
(226.5 |
) |
|
|
(105.6 |
) |
Cash and cash equivalents, beginning of period |
|
|
304.8 |
|
|
|
525.0 |
|
Cash and cash equivalents, end of period |
|
$ |
78.3 |
|
|
$ |
419.4 |
|
Lamb Weston Holdings, Inc.
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended |
||||||||||
|
|
|
|
|
|
Year-Over- |
|
|
|
|
||
|
|
November 26, |
|
November 27, |
|
Year Growth |
|
|
|
|
||
|
|
2023 |
|
2022 |
|
Rates |
|
Price/Mix |
|
Volume |
||
Segment net sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,167.1 |
|
$ |
1,062.5 |
|
|
|
|
|
( |
International (1) |
|
|
565.0 |
|
|
214.0 |
|
|
|
|
|
|
|
|
$ |
1,732.1 |
|
$ |
1,276.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
321.3 |
|
$ |
299.6 |
|
|
|
|
|
|
International (1) |
|
|
100.2 |
|
|
60.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twenty-Six Weeks Ended |
||||||||||
|
|
|
|
|
|
|
|
Year-Over- |
|
|
|
|
|
|
November 26, |
|
November 27, |
|
Year Growth |
|
|
|
|||
|
|
2023 |
|
2022 |
|
Rates |
|
Price/Mix |
|
Volume |
||
Segment net sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,302.5 |
|
$ |
2,018.1 |
|
|
|
|
|
( |
International (1) |
|
|
1,094.9 |
|
|
384.0 |
|
|
|
|
|
|
|
|
$ |
3,397.4 |
|
$ |
2,402.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
700.7 |
|
$ |
531.4 |
|
|
|
|
|
|
International (1) |
|
|
189.8 |
|
|
93.3 |
|
|
|
|
|
|
|
|
_________________________________ |
|
(1) |
The Company acquired the remaining equity interest in LW EMEA in the fourth quarter of fiscal 2023. Accordingly, LW EMEA’s net sales and adjusted EBITDA are reported in the International segment for the thirteen and twenty-six weeks ended November 26, 2023, whereas in the same periods in the prior year, the Company’s 50 percent equity interest in LW EMEA was recorded using equity method accounting. As a result, LW EMEA’s net sales are not included in the International segment’s net sales for the thirteen and twenty-six weeks ended November 27, 2022, and only 50 percent of LW EMEA’s adjusted EBITDA is reported in the International segment for those periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lamb Weston Holdings, Inc. |
||||||||||||||||||||
Reconciliation of Non-GAAP Financial Measures |
||||||||||||||||||||
(unaudited, in millions, except per share amounts) |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
||||||
|
|
Income |
|
|
|
Income |
|
Method |
|
|
|
|
|
||||||
|
|
From |
|
Interest |
|
Tax Expense |
|
Investment |
|
|
|
|
Diluted |
||||||
Thirteen Weeks Ended November 26, 2023 |
|
Operations |
|
Expense |
|
(Benefit) (1) |
|
Earnings (Loss) |
|
Net Income |
|
|
EPS |
||||||
As reported |
|
$ |
305.6 |
|
$ |
29.1 |
|
$ |
66.2 |
|
$ |
4.7 |
|
$ |
215.0 |
|
|
$ |
1.48 |
Unrealized derivative losses (2) |
|
|
1.6 |
|
|
— |
|
|
0.3 |
|
|
— |
|
|
1.3 |
|
|
|
0.01 |
Foreign currency exchange gains (2) |
|
|
(9.2) |
|
|
— |
|
|
(2.3) |
|
|
— |
|
|
(6.9) |
|
|
|
(0.05) |
Items impacting comparability (2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory step-up from acquisition |
|
|
(1.8) |
|
|
— |
|
|
(0.5) |
|
|
— |
|
|
(1.3) |
|
|
|
(0.01) |
Integration and acquisition-related items, net |
|
|
4.8 |
|
|
— |
|
|
1.2 |
|
|
— |
|
|
3.6 |
|
|
|
0.02 |
Total adjustments |
|
|
(4.6) |
|
|
— |
|
|
(1.3) |
|
|
— |
|
|
(3.3) |
|
|
|
(0.03) |
Adjusted (3) |
|
$ |
301.0 |
|
$ |
29.1 |
|
$ |
64.9 |
|
$ |
4.7 |
|
$ |
211.7 |
|
|
$ |
1.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended November 27, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
As reported |
|
$ |
271.8 |
|
$ |
24.6 |
|
$ |
36.8 |
|
$ |
(107.3) |
|
$ |
103.1 |
|
|
$ |
0.71 |
Unrealized derivative losses (gains) (2) |
|
|
(0.4) |
|
|
— |
|
|
33.5 |
|
|
130.1 |
|
|
96.2 |
|
|
|
0.67 |
Foreign currency exchange losses (2) |
|
|
1.4 |
|
|
— |
|
|
0.4 |
|
|
— |
|
|
1.0 |
|
|
|
0.01 |
Item impacting comparability (2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Integration and acquisition-related items, net |
|
|
(26.5) |
|
|
— |
|
|
(7.3) |
|
|
— |
|
|
(19.2) |
|
|
|
(0.13) |
Total adjustments |
|
|
(25.5) |
|
|
— |
|
|
26.6 |
|
|
130.1 |
|
|
78.0 |
|
|
|
0.55 |
Adjusted (3) |
|
$ |
246.3 |
|
$ |
24.6 |
|
$ |
63.4 |
|
$ |
22.8 |
|
$ |
181.1 |
|
|
$ |
1.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twenty-Six Weeks Ended November 26, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
As reported |
|
$ |
628.9 |
|
$ |
59.8 |
|
$ |
136.1 |
|
$ |
16.8 |
|
$ |
449.8 |
|
|
$ |
3.08 |
Unrealized derivative gains (2) |
|
|
(25.7) |
|
|
— |
|
|
(6.5) |
|
|
— |
|
|
(19.2) |
|
|
|
(0.13) |
Foreign currency exchange gains (2) |
|
|
(1.8) |
|
|
— |
|
|
(0.4) |
|
|
— |
|
|
(1.4) |
|
|
|
(0.01) |
Items impacting comparability (2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory step-up from acquisition |
|
|
20.7 |
|
|
— |
|
|
5.3 |
|
|
— |
|
|
15.4 |
|
|
|
0.11 |
Integration and acquisition-related items, net |
|
|
8.8 |
|
|
— |
|
|
2.2 |
|
|
— |
|
|
6.6 |
|
|
|
0.04 |
Total adjustments |
|
|
2.0 |
|
|
— |
|
|
0.6 |
|
|
— |
|
|
1.4 |
|
|
|
0.01 |
Adjusted (3) |
|
$ |
630.9 |
|
$ |
59.8 |
|
$ |
136.7 |
|
$ |
16.8 |
|
$ |
451.2 |
|
|
$ |
3.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twenty-Six Weeks Ended November 27, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
As reported |
|
$ |
428.8 |
|
$ |
50.6 |
|
$ |
110.5 |
|
$ |
67.3 |
|
$ |
335.0 |
|
|
$ |
2.32 |
Unrealized derivative losses (gains) (2) |
|
|
3.6 |
|
|
— |
|
|
(2.8) |
|
|
(14.4) |
|
|
(8.0) |
|
|
|
(0.06) |
Foreign currency exchange losses (2) |
|
|
2.4 |
|
|
— |
|
|
0.6 |
|
|
— |
|
|
1.8 |
|
|
|
0.01 |
Item impacting comparability (2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Integration and acquisition-related items, net |
|
|
(26.5) |
|
|
— |
|
|
(7.3) |
|
|
— |
|
|
(19.2) |
|
|
|
(0.13) |
Gain on acquisition of interest in joint venture |
|
|
— |
|
|
— |
|
|
— |
|
|
(15.1) |
|
|
(15.1) |
|
|
|
(0.10) |
Total adjustments |
|
|
(20.5) |
|
|
— |
|
|
(9.5) |
|
|
(29.5) |
|
|
(40.5) |
|
|
|
(0.28) |
Adjusted (3) |
|
$ |
408.3 |
|
$ |
50.6 |
|
$ |
101.0 |
|
$ |
37.8 |
|
$ |
294.5 |
|
|
$ |
2.04 |
|
|
_________________________________ |
|
(1) |
Items are tax effected at the marginal rate based on the applicable tax jurisdiction. |
|
|
(2) |
See footnotes (1)-(4) to the Consolidated Statements of Earnings for a discussion of the adjustment items. |
|
|
(3) |
See“Non-GAAP Financial Measures” in this press release for additional information. |
Lamb Weston Holdings, Inc.
|
||||||||||||||||
To supplement the financial information included in this press release, the Company has presented Adjusted EBITDA, which the Company defines as earnings, less interest expense, income tax expense, depreciation and amortization, foreign currency exchange and unrealized mark-to-market derivative gains and losses, and items impacting comparability. Adjusted EBITDA is a non-GAAP financial measure. The following table reconciles net income to Adjusted EBITDA. |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Thirteen Weeks Ended |
|
Twenty-Six Weeks Ended |
||||||||||||
|
|
November 26, |
|
November 27, |
|
November 26, |
|
November 27, |
||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Net income |
|
$ |
215.0 |
|
|
$ |
103.1 |
|
|
$ |
449.8 |
|
|
$ |
335.0 |
|
Interest expense, net |
|
|
29.1 |
|
|
|
24.6 |
|
|
|
59.8 |
|
|
|
50.6 |
|
Income tax expense |
|
|
66.2 |
|
|
|
36.8 |
|
|
|
136.1 |
|
|
|
110.5 |
|
Income from operations including equity method investment earnings (1) |
|
|
310.3 |
|
|
|
164.5 |
|
|
|
645.7 |
|
|
|
496.1 |
|
Depreciation and amortization (2) |
|
|
71.2 |
|
|
|
59.8 |
|
|
|
142.0 |
|
|
|
117.4 |
|
Unrealized derivative losses (gains) |
|
|
1.6 |
|
|
|
(0.4 |
) |
|
|
(25.7 |
) |
|
|
3.6 |
|
Unconsolidated joint venture unrealized derivative losses (gains) |
|
|
— |
|
|
|
130.1 |
|
|
|
— |
|
|
|
(14.4 |
) |
Foreign currency exchange losses (gains) |
|
|
(9.2 |
) |
|
|
1.4 |
|
|
|
(1.8 |
) |
|
|
2.4 |
|
Items impacting comparability (3): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Inventory step-up from acquisition |
|
|
(1.8 |
) |
|
|
— |
|
|
|
20.7 |
|
|
|
— |
|
Integration and acquisition-related items, net |
|
|
4.8 |
|
|
|
(26.5 |
) |
|
|
8.8 |
|
|
|
(26.5 |
) |
Gain on acquisition of interest in joint venture |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(15.1 |
) |
Adjusted EBITDA (4) |
|
$ |
376.9 |
|
|
$ |
328.9 |
|
|
$ |
789.7 |
|
|
$ |
563.5 |
|
|
|
_________________________________ |
|
(1) |
Lamb Weston holds a 50 percent equity interest in a |
|
|
(2) |
Depreciation and amortization included interest expense, income tax expense, and depreciation and amortization from equity method investments of |
|
|
(3) |
See footnotes (1)-(4) to the Consolidated Statements of Earnings for more information. |
|
|
(4) |
See “Non-GAAP Financial Measures” in this press release for additional information. |
Lamb Weston Holdings, Inc.
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Thirteen Weeks Ended November 26, 2023 |
|
|
|
|
|
International |
|
Unallocated
|
|
|
Total Company |
||||
Income from operations |
|
$ |
273.3 |
|
$ |
75.2 |
|
|
$ |
(42.9 |
) |
|
$ |
305.6 |
|
Equity method investment earnings |
|
|
4.7 |
|
|
— |
|
|
|
— |
|
|
|
4.7 |
|
Income from operations including equity method investment earnings |
|
|
278.0 |
|
|
75.2 |
|
|
|
(42.9 |
) |
|
|
310.3 |
|
Depreciation and amortization (2) |
|
|
43.3 |
|
|
26.8 |
|
|
|
1.1 |
|
|
|
71.2 |
|
Unrealized derivative losses (3) |
|
|
— |
|
|
— |
|
|
|
1.6 |
|
|
|
1.6 |
|
Foreign currency exchange gains |
|
|
— |
|
|
— |
|
|
|
(9.2 |
) |
|
|
(9.2 |
) |
Items impacting comparability (3): |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Inventory step-up from acquisition |
|
|
— |
|
|
(1.8 |
) |
|
|
— |
|
|
|
(1.8 |
) |
Integration and acquisition-related items, net |
|
|
— |
|
|
— |
|
|
|
4.8 |
|
|
|
4.8 |
|
Adjusted EBITDA |
|
$ |
321.3 |
|
$ |
100.2 |
|
|
$ |
(44.6 |
) |
|
$ |
376.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Thirteen Weeks Ended November 27, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
||
Income from operations |
|
$ |
252.1 |
|
$ |
25.5 |
|
$ |
(5.8 |
) |
|
$ |
271.8 |
|
Equity method investment earnings (loss) |
|
|
4.8 |
|
|
18.0 |
|
|
(130.1 |
) |
|
|
(107.3 |
) |
Income from operations including equity method investment earnings |
|
|
256.9 |
|
|
43.5 |
|
|
(135.9 |
) |
|
|
164.5 |
|
Depreciation and amortization (2) |
|
|
42.7 |
|
|
16.7 |
|
|
0.4 |
|
|
|
59.8 |
|
Unrealized derivative gains (3) |
|
|
— |
|
|
— |
|
|
(0.4 |
) |
|
|
(0.4 |
) |
Foreign currency exchange losses |
|
|
— |
|
|
— |
|
|
1.4 |
|
|
|
1.4 |
|
Unconsolidated joint venture unrealized derivative losses (3) |
|
|
— |
|
|
— |
|
|
130.1 |
|
|
|
130.1 |
|
Item impacting comparability (3): |
|
|
|
|
|
|
|
|
|
|
|
|
||
Integration and acquisition-related items, net |
|
|
— |
|
|
— |
|
|
(26.5 |
) |
|
|
(26.5 |
) |
Adjusted EBITDA |
|
$ |
299.6 |
|
$ |
60.2 |
|
$ |
(30.9 |
) |
|
$ |
328.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Twenty-Six Weeks Ended November 26, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||
Income from operations |
|
$ |
596.9 |
|
$ |
116.1 |
|
$ |
(84.1 |
) |
|
$ |
628.9 |
|
Equity method investment earnings |
|
|
16.8 |
|
|
— |
|
|
— |
|
|
|
16.8 |
|
Income from operations including equity method investment earnings |
|
|
613.7 |
|
|
116.1 |
|
|
(84.1 |
) |
|
|
645.7 |
|
Depreciation and amortization (2) |
|
|
87.0 |
|
|
53.0 |
|
|
2.0 |
|
|
|
142.0 |
|
Unrealized derivative gains (3) |
|
|
— |
|
|
— |
|
|
(25.7 |
) |
|
|
(25.7 |
) |
Foreign currency exchange gains |
|
|
— |
|
|
— |
|
|
(1.8 |
) |
|
|
(1.8 |
) |
Items impacting comparability (3): |
|
|
|
|
|
|
|
|
|
|
|
|
||
Inventory step-up from acquisition |
|
|
— |
|
|
20.7 |
|
|
— |
|
|
|
20.7 |
|
Integration and acquisition-related items, net |
|
|
— |
|
|
— |
|
|
8.8 |
|
|
|
8.8 |
|
Adjusted EBITDA |
|
$ |
700.7 |
|
$ |
189.8 |
|
$ |
(100.8 |
) |
|
$ |
789.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Twenty-Six Weeks Ended November 27, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Income from operations |
|
$ |
438.1 |
|
$ |
32.3 |
|
|
$ |
(41.6 |
) |
|
$ |
428.8 |
|
Equity method investment earnings |
|
|
9.3 |
|
|
43.6 |
|
|
|
14.4 |
|
|
|
67.3 |
|
Income from operations including equity method investment earnings |
|
|
447.4 |
|
|
75.9 |
|
|
|
(27.2 |
) |
|
|
496.1 |
|
Depreciation and amortization (2) |
|
|
84.0 |
|
|
32.5 |
|
|
|
0.9 |
|
|
|
117.4 |
|
Unrealized derivative losses (3) |
|
|
— |
|
|
— |
|
|
|
3.6 |
|
|
|
3.6 |
|
Foreign currency exchange losses |
|
|
— |
|
|
— |
|
|
|
2.4 |
|
|
|
2.4 |
|
Unconsolidated joint venture unrealized derivative gains (3) |
|
|
— |
|
|
— |
|
|
|
(14.4 |
) |
|
|
(14.4 |
) |
Items impacting comparability (3): |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Integration and acquisition-related items, net |
|
|
— |
|
|
— |
|
|
|
(26.5 |
) |
|
|
(26.5 |
) |
Gain on acquisition of interest in joint ventures |
|
|
— |
|
|
(15.1 |
) |
|
|
— |
|
|
|
(15.1 |
) |
Adjusted EBITDA |
|
$ |
531.4 |
|
$ |
93.3 |
|
|
$ |
(61.2 |
) |
|
$ |
563.5 |
|
|
|
_________________________________ |
|
(1) |
The Company’s two segments include corporate support staff and services that are directly allocable to those segments. Unallocated corporate costs include costs related to corporate support staff and services, foreign exchange gains and losses, and unrealized mark-to-market derivative gains and losses. Support services include, but are not limited to, the Company’s administrative, information technology, human resources, finance, and accounting functions that are not specifically allocated to the segments.
|
|
|
(2) |
Depreciation and amortization included interest expense, income tax expense, and depreciation and amortization from equity method investments of
|
|
|
(3) |
See footnotes (1)-(4) to the Consolidated Statements of Earnings for more information. See “Non-GAAP Financial Measures” in this press release for additional information. |
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240104524622/en/
For more information, please contact:
Investors:
Dexter Congbalay
224-306-1535
dexter.congbalay@lambweston.com
Media:
Shelby Stoolman
208-424-5461
shelby.stoolman@lambweston.com
Source: Lamb Weston Holdings, Inc.
FAQ
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