Lamb Weston Reports Fiscal Third Quarter 2024 Results; Updates Fiscal Year 2024 Outlook
- Net sales increased by 16% to $1.46 billion in the third quarter of fiscal 2024.
- Income from operations declined by 16% to $224 million compared to the same period last year.
- Net income and diluted EPS both dropped by 17% to $146 million and $1.01, respectively.
- Adjusted Net Income fell by 18% to $175 million, and Adjusted Diluted EPS declined by 18% to $1.20.
- The company paid $40 million in cash dividends to common shareholders.
- Updated fiscal 2024 outlook includes net sales of $6.54 billion to $6.60 billion and adjusted EBITDA of $1,480 million to $1,510 million.
- The transition to a new ERP system negatively impacted financial results.
- Lower order fulfillment rates affected sales volume and margin performance.
- Reductions in sales volume growth and net sales were attributed to the ERP transition.
- The ERP transition had a negative impact on net income and Adjusted EBITDA.
- Higher costs per pound offset benefits from inflation-driven pricing actions.
Insights
The financial results of Lamb Weston Holdings, Inc. reflect a mixed performance with a significant 16% increase in net sales, largely attributed to the LW EMEA Acquisition. However, this top-line growth is shadowed by a decrease in income from operations and net income by 16% and 17%, respectively. The transition to a new ERP system has evidently disrupted operations, leading to a shortfall in order fulfillment and a consequential impact on sales volume and margins.
Investors should note the $25 million pre-tax charge for excess raw potatoes, signaling potential inefficiencies in supply chain management, which could be a red flag for operational oversight. The updated Fiscal 2024 Outlook suggests cautious optimism, with net sales projections remaining robust, but net income forecasts have been adjusted downward. This indicates management's expectation of continued challenges or conservative estimates in the face of operational disruptions.
The report highlights significant industry-specific challenges, such as soft restaurant traffic trends and the strategic decision to exit lower-margin business, affecting volume. The 8 percentage points decline related to unfilled orders due to the ERP transition is substantial, reflecting the critical nature of efficient IT infrastructure in modern supply chain management. The impact on the International segment, although less pronounced, emphasizes the interconnectedness of global operations.
The ERP system's teething problems are a cautionary tale for businesses undergoing digital transformations, underscoring the importance of contingency planning. The long-term outlook remains positive, with confidence in the global frozen potato category suggesting resilience and potential for growth in this sector.
The ERP transition's operational impact, resulting in a $95 million negative adjustment to EBITDA, is a significant supply chain issue. The reduced visibility into finished goods inventories and the subsequent effect on order fulfillment rates underline the critical role of ERP systems in inventory management and customer service. The reported inefficiencies, including unplanned downtime and additional freight charges, suggest areas where process improvements could yield substantial cost savings and efficiency gains post-transition.
The write-off of excess raw potatoes also points to potential overestimation in demand forecasting or a lack of agility in the supply chain to adapt to changing market conditions. The restoration of order fulfillment rates to pre-transition levels is a positive sign, but stakeholders will likely monitor future reports for evidence of sustained operational improvements.
Third Quarter Fiscal 2024 Highlights
-
GAAP and Non-GAAP results include a temporary, higher-than-expected impact from the transition to a new enterprise resource planning system in
North America and a$25 million -
GAAP Results as Compared to Third Quarter Fiscal 2023:
-
Net sales increased
16% to$1,458 million $357 million -
Income from operations declined
16% to$224 million -
Net income declined
17% to$146 million -
Diluted EPS declined
17% to$1.01
-
Net sales increased
-
Non-GAAP Results as Compared to Third Quarter Fiscal 2023:
-
Adjusted Income from Operations(2) declined from
$269 million $263 million -
Adjusted Net Income(2) declined
18% to$175 million -
Adjusted Diluted EPS(2)declined
18% to$1.20 -
Adjusted EBITDA(2) declined from
$352 million $344 million
-
Adjusted Income from Operations(2) declined from
-
Paid
$40 million
Updated Fiscal 2024 Outlook
-
Net sales of
$6.54 billion $6.60 billion -
GAAP net income of
$770 million $790 million $5.30 $5.45 -
Adjusted EBITDA(2) of
$1,480 million $1,510 million North America and a$96 million -
Adjusted Net Income(2) of
$800 million $820 million $5.50 $5.65
“The transition to a new enterprise resource planning (ERP) system in
“As a result of the ERP transition’s impact and soft near-term restaurant traffic trends, we have reduced our annual sales and earnings guidance for the year. We remain confident in the underlying performance of the business, the health of the global frozen potato category and our ability to deliver sustainable, profitable growth over the long term.”
Summary of Third Quarter FY 2024 Results ($ in millions, except per share) |
|||||||||
|
Q3 2024 |
|
Year-Over-Year Growth Rates |
|
YTD FY 2024 |
|
Year-Over-Year Growth Rates |
||
Net sales |
$ |
1,458.3 |
|
|
|
$ |
4,855.7 |
|
|
Income from operations |
$ |
223.9 |
|
(16)% |
|
$ |
852.8 |
|
|
Net income |
$ |
146.1 |
|
(17)% |
|
$ |
595.8 |
|
|
Diluted EPS |
$ |
1.01 |
|
(17)% |
|
$ |
4.09 |
|
|
|
|
|
|
|
|
|
|
||
Adjusted Income from Operations(2) |
$ |
262.6 |
|
(2)% |
|
$ |
893.6 |
|
|
Adjusted Net Income (2) |
$ |
175.0 |
|
(18)% |
|
$ |
626.2 |
|
|
Adjusted Diluted EPS (2) |
$ |
1.20 |
|
(18)% |
|
$ |
4.29 |
|
|
Adjusted EBITDA (2) |
$ |
343.6 |
|
(2)% |
|
$ |
1,133.4 |
|
|
Q3 2024 Commentary
ERP Transition
At the beginning of the fiscal third quarter, the Company transitioned certain central systems and functions, including order to cash, produce to deliver, source to pay, and inventory management, among others in
In total, the Company estimates the ERP transition negatively impacted fiscal third quarter net income by approximately
-
Approximately
$7 million
-
Approximately
$26 million
-
Approximately
$7 million
Of the approximately
The Company believes the impact of the order fulfillment issues were contained to the fiscal third quarter as customer order fulfillment rates have been restored to pre-transition levels.
Q3 Results of Operations
Net sales increased
Net sales, excluding the incremental sales attributable to the LW EMEA Acquisition, were down
Gross profit increased
Adjusted Gross Profit(2) increased
The increase in Adjusted Gross Profit(2) 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, labor, energy, and ingredients such as grains and starches used in product coatings. The increase in per pound costs was partially offset by lower transportation rates and lower cost of edible oils.
Selling, general and administrative expenses (“SG&A”) increased
Adjusted SG&A(2) increased
Income from operations declined
Net income was
Adjusted Net Income(2) was
Adjusted EBITDA(2) declined
The Company’s effective tax rate(3) in the third quarter was 22.8 percent, versus 19.4 percent in the prior year quarter. The Company’s effective tax rate varies from the
Q3 2024 Segment Highlights
North America Summary |
||||||||
|
Q3 2024 |
|
Year-Over-Year Growth Rates |
|
Price/Mix |
|
Volume |
|
|
(dollars in millions) |
|
|
|
|
|
|
|
Net sales |
$ |
947.5 |
|
( |
|
|
|
( |
Segment Adjusted EBITDA |
$ |
285.9 |
|
( |
|
|
|
|
Net sales for the
Price/mix increased 5 percent, reflecting the carryover benefit of inflation-driven pricing actions taken in fiscal 2023, as well as pricing actions for contracts with large and regional chain restaurant customers in fiscal 2024. The increase in price/mix was partially offset by lower customer transportation charges and unfavorable mix associated with the transition to a new ERP system.
North America Segment Adjusted EBITDA declined
International Summary |
||||||||
|
Q3 2024 |
|
Year-Over-Year Growth Rates |
|
Price/Mix |
|
Volume |
|
|
(dollars in millions) |
|
|
|
|
|
|
|
Net sales |
$ |
510.8 |
|
|
|
|
|
|
Segment Adjusted EBITDA |
$ |
101.7 |
|
|
|
|
|
|
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
Adjusted Equity Method Investment Earnings(2) declined
Liquidity and Cash Flows
As of February 25, 2024, the Company had
Net cash provided by operating activities for the first three quarters of fiscal 2024 was
Capital Returned to Shareholders
In the third quarter of fiscal 2024, the Company returned
Fiscal 2024 Outlook
The Company updated its financial targets for fiscal 2024, as follows:
-
The Company updated its annual net sales target range to
$6.54 billion $6.60 billion $1.1 billion $6.8 billion $7.0 billion North America and other key international markets. The Company is targeting net sales of$1.69 billion $1.75 billion
-
The Company updated its target ranges for net income to
$770 million $790 million $5.30 $5.45 $40.8 million $30.4 million $0.20 $830 million $900 million $5.70 $6.15
-
The Company updated its target range for Adjusted EBITDA(2) to
$1,480 million $1,510 million $95.9 million $1,540 million $1,620 million $350 million $375 million $190 million $195 million
-
The Company updated its target ranges for Adjusted Net Income(2) to
$800 million $820 million $5.50 $5.65 $830 million $900 million $5.70 $6.15
The Company updated other financial targets, as follows:
-
Cash used for capital expenditures of
$950 million $900 million $950 million
- An effective tax rate(3) (full year) at the lower end of its targeted range of 23 percent to 24 percent.
The Company maintained its targets for depreciation and amortization expense of approximately
End Notes |
|
(1) |
Both GAAP and Non-GAAP results for the thirteen weeks ended February 25, 2024 include a |
(2) |
Adjusted Gross Profit, Adjusted SG&A, Adjusted Income from Operations, Adjusted Equity Method Investment Earnings, 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. |
(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 third quarter fiscal 2024 results at 10:00 a.m. EDT today, April 4, 2024. Participants in the
https://event.webcasts.com/starthere.jsp?ei=1659128&tp_key=9deeb425d4
A rebroadcast of the conference call will be available beginning on Friday, April 5, 2024, after 2:00 p.m. EDT 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 Gross Profit, Adjusted SG&A, Adjusted Income from Operations, Adjusted Income Tax Expense (Benefit), Adjusted Equity Method Investment Earnings, Adjusted Net Income, Adjusted Diluted EPS, and Adjusted EBITDA, 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,” “believes,” “will,” “deliver,” “drive,” “grow,” “remain,” “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; ERP system transition; 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; difficulties, disruptions or delays in implementing new technology, including the Company's new ERP system; 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; 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. Consolidated Statements of Earnings (unaudited, in millions, except per share amounts) |
||||||||||||
|
Thirteen Weeks Ended |
|
Thirty-Nine Weeks Ended |
|||||||||
|
February 25,
|
|
February 26,
|
|
February 25,
|
|
February 26,
|
|||||
Net sales |
$ |
1,458.3 |
|
$ |
1,253.6 |
|
|
$ |
4,855.7 |
|
$ |
3,655.7 |
Cost of sales (2) (3) |
|
1,054.6 |
|
|
855.8 |
|
|
|
3,476.9 |
|
|
2,603.0 |
Gross profit |
|
403.7 |
|
|
397.8 |
|
|
|
1,378.8 |
|
|
1,052.7 |
Selling, general and administrative expenses (4) |
|
179.8 |
|
|
131.5 |
|
|
|
526.0 |
|
|
357.6 |
Income from operations |
|
223.9 |
|
|
266.3 |
|
|
|
852.8 |
|
|
695.1 |
Interest expense, net |
|
35.7 |
|
|
25.8 |
|
|
|
95.5 |
|
|
76.4 |
Income before income taxes and equity method earnings |
|
188.2 |
|
|
240.5 |
|
|
|
757.3 |
|
|
618.7 |
Income tax expense |
|
43.1 |
|
|
42.1 |
|
|
|
179.3 |
|
|
152.6 |
Equity method investment earnings (loss) (2) (5) |
|
1.0 |
|
|
(23.3 |
) |
|
|
17.8 |
|
|
44.0 |
Net income (2) |
$ |
146.1 |
|
$ |
175.1 |
|
|
$ |
595.8 |
|
$ |
510.1 |
Earnings per share: |
|
|
|
|
|
|
|
|||||
Basic |
$ |
1.01 |
|
$ |
1.22 |
|
|
$ |
4.11 |
|
$ |
3.54 |
Diluted |
$ |
1.01 |
|
$ |
1.21 |
|
|
$ |
4.09 |
|
$ |
3.53 |
Dividends declared per common share |
$ |
0.360 |
|
$ |
0.280 |
|
|
$ |
0.920 |
|
$ |
0.770 |
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|||||
Basic |
|
144.5 |
|
|
144.0 |
|
|
|
145.0 |
|
|
144.0 |
Diluted |
|
145.3 |
|
|
144.8 |
|
|
|
145.8 |
|
|
144.7 |
_______________________________________________ |
||
(1) |
The thirteen and thirty-nine weeks ended February 25, 2024 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”). | |
(2) |
Net income included the following: | |
|
a. |
A |
|
b. |
For both the thirteen and thirty-nine weeks ended February 25, 2024, the Company results were negatively impacted by the ERP transition, and estimate it impacted net sales by approximately |
(3) |
Cost of sales included activity related to the step-up and sale of inventory acquired in the LW EMEA Acquisition, which resulted in |
|
(4) |
Selling, general and administrative (SG&A) expenses included the following: | |
|
a. |
Net integration and acquisition-related expenses of |
|
b. |
Unrealized losses related to mark-to-market adjustments associated with currency hedging contracts of |
|
c. |
Foreign currency exchange losses of |
(5) |
Equity method investment earnings (loss) included a |
|
|
Equity method investment earnings (loss) for the thirty-nine weeks ended February 26, 2023 also included a |
|
Lamb Weston Holdings, Inc. Consolidated Balance Sheets (unaudited, in millions, except share data) |
|||||||
|
February 25,
|
|
May 28,
|
||||
ASSETS |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
62.3 |
|
|
$ |
304.8 |
|
Receivables, less allowance for doubtful accounts of |
|
736.2 |
|
|
|
724.2 |
|
Inventories |
|
1,210.0 |
|
|
|
932.0 |
|
Prepaid expenses and other current assets |
|
150.6 |
|
|
|
166.2 |
|
Total current assets |
|
2,159.1 |
|
|
|
2,127.2 |
|
Property, plant and equipment, net |
|
3,406.4 |
|
|
|
2,808.0 |
|
Operating lease assets |
|
135.9 |
|
|
|
146.1 |
|
Goodwill |
|
1,056.6 |
|
|
|
1,040.7 |
|
Intangible assets, net |
|
106.4 |
|
|
|
110.2 |
|
Other assets |
|
381.3 |
|
|
|
287.6 |
|
Total assets |
$ |
7,245.7 |
|
|
$ |
6,519.8 |
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Short-term borrowings |
$ |
538.4 |
|
|
$ |
158.5 |
|
Current portion of long-term debt and financing obligations |
|
139.1 |
|
|
|
55.3 |
|
Accounts payable |
|
684.1 |
|
|
|
636.6 |
|
Accrued liabilities |
|
454.4 |
|
|
|
509.8 |
|
Total current liabilities |
|
1,816.0 |
|
|
|
1,360.2 |
|
Long-term liabilities: |
|
|
|
||||
Long-term debt and financing obligations, excluding current portion |
|
3,175.1 |
|
|
|
3,248.4 |
|
Deferred income taxes |
|
254.6 |
|
|
|
252.1 |
|
Other noncurrent liabilities |
|
241.8 |
|
|
|
247.8 |
|
Total long-term liabilities |
|
3,671.5 |
|
|
|
3,748.3 |
|
Commitments and contingencies |
|
|
|
||||
Stockholders’ equity: |
|
|
|
||||
Common stock of |
|
150.7 |
|
|
|
150.3 |
|
Treasury stock, at cost, 6,336,439 and 4,627,828 common shares |
|
(480.1 |
) |
|
|
(314.3 |
) |
Additional distributed capital |
|
(521.0 |
) |
|
|
(558.6 |
) |
Retained earnings |
|
2,622.1 |
|
|
|
2,160.7 |
|
Accumulated other comprehensive loss |
|
(13.5 |
) |
|
|
(26.8 |
) |
Total stockholders’ equity |
|
1,758.2 |
|
|
|
1,411.3 |
|
Total liabilities and stockholders’ equity |
$ |
7,245.7 |
|
|
$ |
6,519.8 |
|
Lamb Weston Holdings, Inc. Consolidated Statements of Cash Flows (unaudited, in millions) |
|||||||
|
Thirty-Nine Weeks Ended |
||||||
|
February 25,
|
|
February 26,
|
||||
Cash flows from operating activities |
|
|
|
||||
Net income |
$ |
595.8 |
|
|
$ |
510.1 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization of intangibles and debt issuance costs |
|
220.0 |
|
|
|
153.3 |
|
Stock-settled, stock-based compensation expense |
|
34.4 |
|
|
|
28.0 |
|
Equity method investment earnings in excess of distributions |
|
(4.8 |
) |
|
|
(44.3 |
) |
Deferred income taxes |
|
1.3 |
|
|
|
(25.5 |
) |
Foreign currency remeasurement gain |
|
(0.1 |
) |
|
|
(21.2 |
) |
Other |
|
(2.9 |
) |
|
|
(22.3 |
) |
Changes in operating assets and liabilities, net of acquisitions: |
|
|
|
||||
Receivables |
|
(8.6 |
) |
|
|
(47.2 |
) |
Inventories |
|
(275.0 |
) |
|
|
(254.3 |
) |
Income taxes payable/receivable, net |
|
36.3 |
|
|
|
13.1 |
|
Prepaid expenses and other current assets |
|
(5.9 |
) |
|
|
5.9 |
|
Accounts payable |
|
(25.6 |
) |
|
|
16.7 |
|
Accrued liabilities |
|
(83.4 |
) |
|
|
22.8 |
|
Net cash provided by operating activities |
$ |
481.5 |
|
|
$ |
335.1 |
|
Cash flows from investing activities |
|
|
|
||||
Additions to property, plant and equipment |
|
(763.4 |
) |
|
|
(429.4 |
) |
Additions to other long-term assets |
|
(64.9 |
) |
|
|
(67.6 |
) |
Acquisition of interests in joint venture, net |
|
— |
|
|
|
(42.3 |
) |
Acquisition of business, net of cash acquired |
|
(11.2 |
) |
|
|
— |
|
Other |
|
14.7 |
|
|
|
3.6 |
|
Net cash used for investing activities |
$ |
(824.8 |
) |
|
$ |
(535.7 |
) |
Cash flows from financing activities |
|
|
|
||||
Proceeds from short-term borrowings, net |
|
379.1 |
|
|
|
— |
|
Proceeds from issuance of debt |
|
50.1 |
|
|
|
510.8 |
|
Repayments of debt and financing obligations |
|
(42.0 |
) |
|
|
(24.6 |
) |
Dividends paid |
|
(122.0 |
) |
|
|
(105.8 |
) |
Repurchase of common stock and common stock withheld to cover taxes |
|
(165.1 |
) |
|
|
(47.2 |
) |
Other |
|
— |
|
|
|
(1.9 |
) |
Net cash provided by financing activities |
$ |
100.1 |
|
|
$ |
331.3 |
|
Effect of exchange rate changes on cash and cash equivalents |
|
0.7 |
|
|
|
19.3 |
|
Net (decrease) increase in cash and cash equivalents |
|
(242.5 |
) |
|
|
150.0 |
|
Cash and cash equivalents, beginning of period |
|
304.8 |
|
|
|
525.0 |
|
Cash and cash equivalents, end of period |
$ |
62.3 |
|
|
$ |
675.0 |
|
Lamb Weston Holdings, Inc. Segment Information (unaudited, in millions, except percentages) |
|||||||||||
|
Thirteen Weeks Ended |
||||||||||
|
February 25,
|
|
February 26,
|
|
Year-Over- Year Growth Rates |
|
Price/Mix |
|
Volume |
||
Segment net sales |
|
|
|
|
|
|
|
|
|
||
|
$ |
947.5 |
|
$ |
1,070.8 |
|
( |
|
|
|
( |
International (1) |
|
510.8 |
|
|
182.8 |
|
|
|
|
|
|
|
$ |
1,458.3 |
|
$ |
1,253.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Segment Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
||
|
$ |
285.9 |
|
$ |
333.0 |
|
( |
|
|
|
|
International (1) |
|
101.7 |
|
|
54.1 |
|
|
|
|
|
|
|
Thirty-Nine Weeks Ended |
||||||||||
|
February 25,
|
|
February 26,
|
|
Year-Over- Year Growth Rates |
|
Price/Mix |
|
Volume |
||
Segment net sales |
|
|
|
|
|
|
|
|
|
||
|
$ |
3,250.0 |
|
$ |
3,088.9 |
|
|
|
|
|
( |
International (1) |
|
1,605.7 |
|
|
566.8 |
|
|
|
|
|
|
|
$ |
4,855.7 |
|
$ |
3,655.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Segment Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
||
|
$ |
986.6 |
|
$ |
864.4 |
|
|
|
|
|
|
International (1) |
|
291.5 |
|
|
147.4 |
|
|
|
|
|
|
_______________________________________________ |
|
(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 thirty-nine weeks ended February 25, 2024, 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 thirty-nine weeks ended February 26, 2023, and only 50 percent of LW EMEA’s adjusted EBITDA is reported in the International segment for those periods. |
Segment Adjusted EBITDA includes equity method investment earnings and losses and excludes unallocated corporate costs, foreign currency exchange gains and losses, unrealized mark-to-market derivative gains and losses, and items discussed in footnotes (1)-(5) to the Consolidated Statements of Earnings. |
|
Lamb Weston Holdings, Inc. Reconciliation of Non-GAAP Financial Measures (unaudited, in millions, except per share amounts) |
|||||||||||||||||||||||||
Thirteen Weeks Ended February 25, 2024 |
|
Gross Profit |
|
SG&A |
|
Income From Operations |
|
Interest Expense |
|
Income Tax Expense (Benefit) (1) |
|
Equity Method Investment Earnings (Loss) |
|
Net Income |
|
Diluted EPS |
|||||||||
As reported |
|
$ |
403.7 |
|
$ |
179.8 |
|
|
$ |
223.9 |
|
$ |
35.7 |
|
$ |
43.1 |
|
$ |
1.0 |
|
$ |
146.1 |
|
$ |
1.01 |
Unrealized derivative losses (2) |
|
|
23.3 |
|
|
(4.0 |
) |
|
|
27.3 |
|
|
— |
|
|
7.0 |
|
|
— |
|
|
20.3 |
|
|
0.14 |
Foreign currency exchange losses (2) |
|
|
— |
|
|
(9.0 |
) |
|
|
9.0 |
|
|
— |
|
|
2.2 |
|
|
— |
|
|
6.8 |
|
|
0.04 |
Item impacting comparability (2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Integration and acquisition-related items, net |
|
|
— |
|
|
(2.4 |
) |
|
|
2.4 |
|
|
— |
|
|
0.6 |
|
|
— |
|
|
1.8 |
|
|
0.01 |
Total adjustments |
|
|
23.3 |
|
|
(15.4 |
) |
|
|
38.7 |
|
|
— |
|
|
9.8 |
|
|
— |
|
|
28.9 |
|
|
0.19 |
Adjusted (3) |
|
$ |
427.0 |
|
$ |
164.4 |
|
|
$ |
262.6 |
|
$ |
35.7 |
|
$ |
52.9 |
|
$ |
1.0 |
|
$ |
175.0 |
|
$ |
1.20 |
Thirteen Weeks Ended February 26, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
As reported |
|
$ |
397.8 |
|
$ |
131.5 |
|
|
$ |
266.3 |
|
|
$ |
25.8 |
|
$ |
42.1 |
|
|
$ |
(23.3 |
) |
|
$ |
175.1 |
|
|
$ |
1.21 |
|
Unrealized derivative losses (2) |
|
|
5.1 |
|
|
— |
|
|
|
5.1 |
|
|
|
— |
|
|
13.5 |
|
|
|
47.1 |
|
|
|
38.7 |
|
|
|
0.27 |
|
Foreign currency exchange losses (2) |
|
|
— |
|
|
(1.8 |
) |
|
|
1.8 |
|
|
|
— |
|
|
0.4 |
|
|
|
— |
|
|
|
1.4 |
|
|
|
0.01 |
|
Item impacting comparability (2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Integration and acquisition-related items, net |
|
|
— |
|
|
4.3 |
|
|
|
(4.3 |
) |
|
|
— |
|
|
(1.5 |
) |
|
|
— |
|
|
|
(2.8 |
) |
|
|
(0.02 |
) |
Total adjustments |
|
|
5.1 |
|
|
2.5 |
|
|
|
2.6 |
|
|
|
— |
|
|
12.4 |
|
|
|
47.1 |
|
|
|
37.3 |
|
|
|
0.26 |
|
Adjusted (3) |
|
$ |
402.9 |
|
$ |
134.0 |
|
|
$ |
268.9 |
|
|
$ |
25.8 |
|
$ |
54.5 |
|
|
$ |
23.8 |
|
|
$ |
212.4 |
|
|
$ |
1.47 |
|
Thirty-Nine Weeks Ended February 25, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
As reported |
|
$ |
1,378.8 |
|
|
$ |
526.0 |
|
|
$ |
852.8 |
|
$ |
95.5 |
|
$ |
179.3 |
|
$ |
17.8 |
|
$ |
595.8 |
|
$ |
4.09 |
Unrealized derivative gains and losses (2) |
|
|
(3.8 |
) |
|
|
(5.4 |
) |
|
|
1.6 |
|
|
— |
|
|
0.5 |
|
|
— |
|
|
1.1 |
|
|
0.01 |
Foreign currency exchange losses (2) |
|
|
— |
|
|
|
(7.3 |
) |
|
|
7.3 |
|
|
— |
|
|
1.8 |
|
|
— |
|
|
5.5 |
|
|
0.03 |
Items impacting comparability (2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Inventory step-up from acquisition |
|
|
20.7 |
|
|
|
— |
|
|
|
20.7 |
|
|
— |
|
|
5.3 |
|
|
— |
|
|
15.4 |
|
|
0.11 |
Integration and acquisition-related items, net |
|
|
— |
|
|
|
(11.2 |
) |
|
|
11.2 |
|
|
— |
|
|
2.8 |
|
|
— |
|
|
8.4 |
|
|
0.05 |
Total adjustments |
|
|
16.9 |
|
|
|
(23.9 |
) |
|
|
40.8 |
|
|
— |
|
|
10.4 |
|
|
— |
|
|
30.4 |
|
|
0.20 |
Adjusted (3) |
|
$ |
1,395.7 |
|
|
$ |
502.1 |
|
|
$ |
893.6 |
|
$ |
95.5 |
|
$ |
189.7 |
|
$ |
17.8 |
|
$ |
626.2 |
|
$ |
4.29 |
Thirty-Nine Weeks Ended February 26, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
As reported |
|
$ |
1,052.7 |
|
$ |
357.6 |
|
|
$ |
695.1 |
|
|
$ |
76.4 |
|
$ |
152.6 |
|
|
$ |
44.0 |
|
|
$ |
510.1 |
|
|
$ |
3.53 |
|
Unrealized derivative losses (2) |
|
|
8.7 |
|
|
— |
|
|
|
8.7 |
|
|
|
— |
|
|
10.6 |
|
|
|
32.7 |
|
|
|
30.8 |
|
|
|
0.20 |
|
Foreign currency exchange losses (2) |
|
|
— |
|
|
(4.2 |
) |
|
|
4.2 |
|
|
|
— |
|
|
1.0 |
|
|
|
— |
|
|
|
3.2 |
|
|
|
0.02 |
|
Items impacting comparability (2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Integration and acquisition-related items, net |
|
|
— |
|
|
30.8 |
|
|
|
(30.8 |
) |
|
|
— |
|
|
(8.8 |
) |
|
|
— |
|
|
|
(22.0 |
) |
|
|
(0.15 |
) |
Gain on acquisition of interest in joint venture |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
(15.1 |
) |
|
|
(15.1 |
) |
|
|
(0.10 |
) |
Total adjustments |
|
|
8.7 |
|
|
26.6 |
|
|
|
(17.9 |
) |
|
|
— |
|
|
2.8 |
|
|
|
17.6 |
|
|
|
(3.1 |
) |
|
|
(0.03 |
) |
Adjusted (3) |
|
$ |
1,061.4 |
|
$ |
384.2 |
|
|
$ |
677.2 |
|
|
$ |
76.4 |
|
$ |
155.4 |
|
|
$ |
61.6 |
|
|
$ |
507.0 |
|
|
$ |
3.50 |
|
_______________________________________________ |
|
(1) |
Items are tax effected at the marginal rate based on the applicable tax jurisdiction. |
(2) |
See footnotes (2)-(5) 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. Reconciliation of Non-GAAP Financial Measures (unaudited, in millions) |
||||||||||||||||
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 |
|
Thirty-Nine Weeks Ended |
||||||||||||
|
|
February 25,
|
|
February 26,
|
|
February 25,
|
|
February 26,
|
||||||||
Net income (3) |
|
$ |
146.1 |
|
|
$ |
175.1 |
|
|
$ |
595.8 |
|
|
$ |
510.1 |
|
Interest expense, net |
|
|
35.7 |
|
|
|
25.8 |
|
|
|
95.5 |
|
|
|
76.4 |
|
Income tax expense |
|
|
43.1 |
|
|
|
42.1 |
|
|
|
179.3 |
|
|
|
152.6 |
|
Income from operations including equity method investment earnings (1) |
|
|
224.9 |
|
|
|
243.0 |
|
|
|
870.6 |
|
|
|
739.1 |
|
Depreciation and amortization (2) |
|
|
80.0 |
|
|
|
59.5 |
|
|
|
222.0 |
|
|
|
176.9 |
|
Unrealized derivative losses (3) |
|
|
27.3 |
|
|
|
5.1 |
|
|
|
1.6 |
|
|
|
8.7 |
|
Unconsolidated joint venture unrealized derivative losses (3) |
|
|
— |
|
|
|
47.1 |
|
|
|
— |
|
|
|
32.7 |
|
Foreign currency exchange losses (3) |
|
|
9.0 |
|
|
|
1.8 |
|
|
|
7.3 |
|
|
|
4.2 |
|
Items impacting comparability (3): |
|
|
|
|
|
|
|
|
||||||||
Inventory step-up from acquisition |
|
|
— |
|
|
|
— |
|
|
|
20.7 |
|
|
|
— |
|
Integration and acquisition-related items, net |
|
|
2.4 |
|
|
|
(4.3 |
) |
|
|
11.2 |
|
|
|
(30.8 |
) |
Gain on acquisition of interest in joint venture |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(15.1 |
) |
Adjusted EBITDA (4) |
|
$ |
343.6 |
|
|
$ |
352.2 |
|
|
$ |
1,133.4 |
|
|
$ |
915.7 |
|
|
|
|
|
|
|
|
|
|
||||||||
Segment Adjusted EBITDA |
|
|
|
|
|
|
|
|
||||||||
|
|
$ |
285.9 |
|
|
$ |
333.0 |
|
|
$ |
986.6 |
|
|
$ |
864.4 |
|
International |
|
|
101.7 |
|
|
|
54.1 |
|
|
|
291.5 |
|
|
|
147.4 |
|
Unallocated corporate costs (5) |
|
|
(44.0 |
) |
|
|
(34.9 |
) |
|
|
(144.7 |
) |
|
|
(96.1 |
) |
Adjusted EBITDA |
|
$ |
343.6 |
|
|
$ |
352.2 |
|
|
$ |
1,133.4 |
|
|
$ |
915.7 |
|
_______________________________________________ |
|
(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 (2)-(5) to the Consolidated Statements of Earnings for more information. |
(4) |
See “Non-GAAP Financial Measures” in this press release for additional information. |
(5) |
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. |
|
Unallocated corporate costs for the thirteen and thirty-nine weeks ended February 25, 2024 included unallocated corporate costs of LW EMEA whereas in the same period in the prior year, the Company’s portion of LW EMEA’s unallocated corporate costs were recorded in “Equity method investment earnings” in the International segment. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240404698637/en/
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
How did the new ERP system transition impact Lamb Weston's financial results?
What were the changes in net sales and income from operations in the third quarter of fiscal 2024?
What were the adjustments made to net income and diluted EPS in the third quarter of fiscal 2024?
How much did Lamb Weston pay in cash dividends to common shareholders in the third quarter of fiscal 2024?
What are Lamb Weston's updated financial outlook figures for fiscal 2024?
