Lamb Weston Holdings Inc.

10/06/2026 | Press release | Distributed by Public on 10/06/2026 08:12

Quarterly Report for Quarter Ending August 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations, which we refer to as "MD&A," should be read in conjunction with our condensed consolidated financial statements and related notes included in "Financial Information" of this Quarterly Report on Form 10-Q (this "Form 10-Q") and in "Financial Statements and Supplementary Data" of the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2026 (the "Form 10-K"), which we filed with the United States ("U.S.") Securities and Exchange Commission (the "SEC") on July 24, 2026.
Forward-Looking Statements
This report, including the MD&A, contains forward-looking statements within the meaning of the federal securities laws. Words such as "expect," "intend," "continue," "advance," "deliver," "enable," "optimize," "remain," "support," "grow," "reduce," "focus," "manage," "believe," "anticipate," "will," "may," "estimate," "outlook," 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 our business and financial outlook and prospects, our plans and strategies and anticipated benefits therefrom, including with respect to the Cost Savings Program and other cost savings or efficiency initiatives, anticipated capital expenditures and investments, input and other costs, cash flows, liquidity, dividends, anticipated conditions in our 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 report should understand that these statements are not guarantees of performance or results. Many factors could affect these forward-looking statements and our actual financial results and cause them to vary materially from the expectations contained in the forward-looking statements, including those set forth in this report. These risks and uncertainties include, among other things: consumer preferences, including restaurant traffic in North America and our international markets, and an uncertain general economic environment, including as a result of tariffs and other trade policies, inflationary pressures and recessionary concerns, any of which could adversely impact our business, financial condition or results of operations, including as a result of impacts on the demand and prices for our products; the competitive environment and related conditions in the markets in which we operate; the availability and prices of raw materials and other commodities; operational challenges; our ability to successfully implement the Cost Savings Program or other cost savings or efficiency initiatives, including achieving the expected benefits of those activities and possible changes in the size and timing of related charges; our dependence on information technology and systems, including service interruptions, misappropriation of data, or breaches of security, as well as difficulties, disruptions or delays in implementing new technology; levels of labor and people-related expenses; our ability to successfully execute our long-term value creation strategies, including our Focus to Win strategy; our ability to execute on large capital projects; political and economic conditions in the countries in which we conduct business and other factors related to our international operations; disruptions in the global economy caused by conflicts such as the wars in Ukraine and the Middle East and the possible related heightening of our other known risks; the ultimate outcome of litigation or any product recalls or withdrawals; changes in our relationships with our growers or significant customers; impacts on our business due to health pandemics or other contagious outbreaks, such as the COVID-19 pandemic, including impacts on demand for our products, increased costs, disruption of supply, other constraints in the availability of key commodities and other necessary services or restrictions imposed by public health authorities or governments; disruption of our access to export mechanisms; risks associated with integrating acquired businesses; risks associated with other possible acquisitions; our debt levels; actions of governments and regulatory factors affecting our businesses; our ability to pay regular quarterly cash dividends or otherwise return capital to shareholders and the amounts and timing of any future dividends or other shareholder returns; and other risks described in our reports filed from time to time with the SEC. We caution readers not to place undue reliance on any forward-looking statements included in this report, which speak only as of the date of this report. We undertake no responsibility for updating these statements, except as required by law.
Overview
Lamb Weston Holdings, Inc. ("we," "us," "our," the "Company," or "Lamb Weston") is a leading global producer, distributor, and marketer of value-added frozen potato products. We are the number one supplier of value-added frozen potato products in North America and a leading supplier of value-added frozen potato products internationally, with a strong and growing presence in high-growth emerging markets. We offer a broad product portfolio to a diverse channel and customer base in over 100 countries. French fries represent most of our value-added frozen potato product portfolio.
This MD&A is provided as a supplement to the consolidated financial statements and related condensed notes included elsewhere herein to help provide an understanding of our financial condition, changes in financial condition and results of our operations. Our MD&A is based on financial data derived from the financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). We have also presented Adjusted EBITDA, Adjusted Gross Profit, Adjusted Selling, General and Administrative expenses ("SG&A"), and Adjusted Income Tax Expense, each of which is considered a non-GAAP financial measure, to supplement the financial information included in this report. We also present net sales excluding FX. Refer to "Non-GAAP Financial Measures" below for the definitions of Adjusted EBITDA, Adjusted Gross Profit, Adjusted SG&A, and Adjusted Income Tax Expense and a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, net income, gross profit, SG&A, income tax expense, or net sales, as applicable. For more information, refer to the "Results of Operations" and "Non-GAAP Financial Measures" sections below.
Executive Summary
Our first quarter results reflect continued momentum in North America and our ongoing progress advancing our Focus to Win strategy.
In our North America segment, we delivered a 7% increase in sales volume resulting in a 5% increase in net sales and an 11% increase in Segment Adjusted EBITDA.
In our International segment, EMEA continues to face challenging market conditions. Segment Adjusted EBITDA improved sequentially versus the fiscal fourth quarter 2026 as we worked through prior year crop carry in costs. We have taken action to balance our network utilization as demonstrated by ending production at our Broekhuizenvorst, the Netherlands facility and successfully transitioning customer fulfillment within our network. These actions have enabled further cost optimization.
We believe that our cash generation remains strong as we generated $235 million in cash provided by operating activities during the quarter.
During the quarter, we returned $52 million to shareholders through our quarterly dividend.
Outlook
Our updated full-year 2027 fiscal outlook, on a 52-week comparable basis, includes net sales growth of low single-digits and earnings growth of mid single-digits. We expect low single-digit sales volume growth and price/mix to be flat to up slightly for the year. Fiscal year 2027 is a 52-week period versus a 53-week period in fiscal year 2026.
We are experiencing inflationary pressure across key cost inputs and freight. Our teams are managing this cost inflation through disciplined actions, including proactive cost savings and review of contract price escalation terms. We are on track to deliver additional cost savings in fiscal 2027 under our Cost Savings Program.
Results of Operations
Thirteen Weeks Ended August 30, 2026 compared to Thirteen Weeks Ended August 24, 2025
Net Sales and Segment Adjusted EBITDA
Thirteen Weeks Ended
(in millions, except percentages) August 30,
2026 		August 24,
2025 		%
Increase (Decrease) 		% Increase (Decrease) excl. FX
Segment net sales
North America $ 1,141.4 $ 1,084.6 5% 5%
International 528.9 574.7 (8)% (8)%
$ 1,670.3 $ 1,659.3 1% -%
Segment Adjusted EBITDA
North America $ 287.3 $ 260.0 11%
International 26.5 57.2 (54)%
Net Sales
Net sales for the first quarter of fiscal 2027 increased $11.0 million to $1,670.3 million compared to the prior year quarter, including an immaterial favorable foreign currency ("FX") impact. Net sales excluding FX was essentially flat over the prior year quarter, as a 2% increase in sales volume was offset by a 2% decline in price/mix.
North America segment net sales, which includes all sales to customers in the U.S., Canada, and Mexico, increased $56.8 million, or 5%, to $1,141.4 million. Sales volume increased 7% compared to the prior year quarter driven by customer wins and higher demand from existing customers. Price/mix declined 2%, resulting from price and trade support for customers and continued mix shift toward faster-growing chain customers and private-label products, which generally carry lower margins than other channels.
International segment net sales, which includes all sales to customers outside of North America, declined $45.8 million, or 8%, to $528.9 million over the prior year quarter. Sales volume declined 6% and price/mix declined 2%.
Gross Profit
Gross profit declined $75.9 million versus the prior year quarter to $266.5 million. Adjusted Gross Profit declined $22.1 million versus the prior year quarter to $316.8 million, primarily reflecting unfavorable global price/mix and increased manufacturing costs per pound, mostly in the International segment. Total manufacturing cost per pound increased due to the carry in of prior year costs, underutilized international production facilities and inflationary pressures across key input categories globally, including fuel and freight costs. These higher costs were partially offset by benefits from cost savings initiatives, lapping of Argentina start-up costs, and approximately $5 million in tariff refunds.
Selling, General and Administrative Expenses
SG&A increased $16.6 million versus the prior year quarter to $170.2 million. Adjusted SG&A increased $6.8 million versus the prior year quarter to $139.2 million, primarily the result of lapping $7.3 million of non-recurring miscellaneous income in the first quarter fiscal 2026. Cost savings mostly offset increases in outside services and fixed expense.
Net Income, Adjusted EBITDA and Segment Adjusted EBITDA
Net income declined $35.2 million from the prior year quarter to $29.1 million.
Adjusted EBITDA declined $16.6 million versus the prior year quarter to $285.6 million, reflecting lower Adjusted Gross Profit and higher Adjusted SG&A.
North America Segment Adjusted EBITDA increased $27.3 million to $287.3 million compared to the prior year quarter. Higher sales volumes, cost savings initiatives, and approximately $5 million in tariff refunds, as well as an increase in equity method investment earnings, more than offset price and trade support for customers, customer and product mix and inflation in key input cost categories.
International Segment Adjusted EBITDA declined $30.7 million to $26.5 million compared to the prior year quarter. The decrease was primarily attributable to lower sales volume and lower net sales mostly in Europe and higher manufacturing costs per pound including the impact of the carry in of prior year higher costs, factory underutilization and inflation, including higher fuel costs.
Interest Expense, Net
Interest expense, net declined $1.3 million, versus the prior year quarter, to $42.4 million, driven by lower outstanding debt balances.
Income Tax Expense
Income tax expense for the first quarter of fiscal 2027 and 2026 was $16.9 million and $47.9 million, respectively. The effective income tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was 36.7% and 42.7% in the first quarter of fiscal 2027 and 2026, respectively. The effective tax rate for our current quarter reflects the impacts of comparability items, most notably the expenses related to our Cost Savings Program and Restructuring Plan, as discussed in more detail in the Reconciliations of Non-GAAP Financial Measures. In addition, we recorded $10.2 million of discrete tax expense in the first quarter of fiscal 2026, primarily related to the establishment of a full valuation allowance against certain international deferred tax assets. Excluding the impact of these items, the Company's effective tax rate was 27.2% for the first quarter of fiscal 2027, versus 30.2% for the prior year quarter. Compared to the first quarter of fiscal 2026, the effective tax rate excluding the impact of these items is lower primarily due to having a smaller proportion of losses with no expected tax benefits in certain jurisdictions.
Equity Method Investment Earnings (Loss)
Equity method investment earnings (loss) from unconsolidated joint ventures were earnings of $6.2 million and losses of $0.6 million for the first quarter of fiscal 2027 and 2026, respectively. The increase of $6.8 million in earnings was primarily the result of higher sales volumes and gross margin, including a more favorable mix of sales. The results for the current and prior year quarters reflect earnings associated with our 50% interest in Lamb Weston/RDO Frozen, an unconsolidated potato processing joint venture in Minnesota.
Liquidity and Capital Resources
Sources and Uses of Cash
As of August 30, 2026, we had $166.3 million of cash and cash equivalents, with $1,239.3 million additional amounts available for borrowing under our revolving credit facility. We believe we have sufficient liquidity to meet our business requirements for the next 12 months and the foreseeable future thereafter. Cash generated by operations, supplemented by our cash and cash equivalents and availability under our revolving credit facility, are our primary sources of liquidity for funding our business requirements. Our funding requirements include capital expenditures, changes in working capital, and returning cash to shareholders in the form of cash dividends and share repurchases. These expenditures could increase or decrease as a result of our financial results, future economic conditions, supply chain constraints for equipment, our regulatory compliance requirements, and other factors.
Cash Flows
Below is a summary table of our cash flows, followed by a discussion of the sources and uses of cash through operating, investing, and financing activities:
Thirteen Weeks Ended
(in millions) August 30,
2026 		August 24,
2025
Net cash flows provided by (used for):
Operating activities $ 234.8 $ 352.0
Investing activities (90.9) (76.3)
Financing activities (46.3) (248.5)
97.6 27.2
Effect of exchange rate changes on cash and cash equivalents 0.5 0.7
Net increase in cash and cash equivalents 98.1 27.9
Cash and cash equivalents, beginning of period 68.2 70.7
Cash and cash equivalents, end of period $ 166.3 $ 98.6
Operating Activities
Compared with the first quarter of fiscal 2026, cash provided by operating activities decreased $117.2 million to $234.8 million in the first quarter of fiscal 2027. Cash provided by operating activities in the prior-year quarter benefited from a $136.3 million improvement in inventories as we were beginning our Cost Savings Program. Current cash provided by operating activities benefited by $59.2 million from an increase in accounts payable as we work with supplier partners to improve terms. Other changes to working capital items were attributed to normal course of business. Furthermore, reported net income declined by $35.2 million.
Investing Activities
Investing activities used $90.9 million of cash in the first quarter of fiscal 2027, compared with $76.3 million in the first quarter of fiscal 2026. Expenditures in the first quarter of fiscal 2027 primarily related to production facility modernization efforts. Expenditures in the first quarter of fiscal 2026 primarily related to our investments to expand our french fry capacity in Argentina.
Financing Activities
During the first quarter of fiscal 2027, we had net proceeds of $30.1 million, reflecting amounts outstanding under our revolving credit facilities. We paid $52.2 million in cash dividends to common stockholders and repaid $16.5 million of debt and financing obligations.
During the first quarter of fiscal 2026, we made net payments of $161.9 million under our revolving credit facilities. We used $18.7 million of cash to repurchase 187,259 shares of our common stock at an average price of $55.34 per share and withheld 157,665 shares from employees to cover income and payroll taxes on equity awards that vested during the period. In addition, we paid $51.7 million in cash dividends to common stockholders during the first quarter of fiscal 2026 and repaid $16.2 million of debt and financing obligations.
For more information about our debt, see Note 10, Debt and Financing Obligations, of the Condensed Notes to Consolidated Financial Statements in "Part I, Item 1. Financial Statements" of this report and Note 8, Debt and Financing Obligations, of the Notes to Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" of the Form 10-K. At August 30, 2026, we were in compliance with the covenants contained in our debt agreements.
Obligations and Commitments
There have been no material changes to the contractual obligations disclosed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Form 10-K.
See Note 10, Debt and Financing Obligations, of the Condensed Notes to Consolidated Financial Statements in "Part I, Item 1. Financial Statements" of this report for more information.
Non-GAAP Financial Measures
To supplement the financial information included in this report, we have presented Adjusted EBITDA, Adjusted Gross Profit, Adjusted SG&A, and Adjusted Income Tax Expense, each of which is considered a non-GAAP financial measure. We also present net sales excluding FX, which provides information on net sales as if foreign currency exchange rates had remained constant between the current and prior-year periods. Management uses these non-GAAP financial measures to assist in analyzing what management views as our 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 impacts of foreign currency exchange translation and unrealized mark-to-market derivative gains and losses and other items affecting comparability between periods; (ii) permit investors to view our operating and financial performance using the same tools that management uses to evaluate performance across periods and to make budgeting, operating, and strategic decisions; and (iii) otherwise provide supplemental information that may be useful to investors in evaluating our operating and financial performance. In addition, we believe that the presentation of these non-GAAP financial measures, when considered together with their most directly comparable GAAP financial measure and corresponding reconciliations to those GAAP financial measures, provides investors with additional tools to understand the factors and trends affecting our underlying business than could be obtained absent these disclosures.
The non-GAAP financial measures presented in this report should be viewed in addition to, and not as alternatives for, financial measures prepared in accordance with GAAP that are also presented in this report. These measures are not substitutes for their comparable GAAP financial measures, such as net income, gross profit, SG&A, income tax expense, net sales, or other measures prescribed by GAAP, and there are limitations to using non-GAAP financial measures. For example, the non-GAAP financial measures presented in this report may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define these non-GAAP financial measures the same way we do.
The following table reconciles net income to Adjusted EBITDA:
Thirteen Weeks Ended
(in millions) August 30,
2026 		August 24,
2025
Net income $ 29.1 $ 64.3
Interest expense, net 42.4 43.7
Income tax expense 16.9 47.9
Income from operations including equity method investment earnings 88.4 155.9
Depreciation and amortization 101.8 96.3
Unrealized derivative (gains) losses 0.7 (4.9)
Foreign currency exchange (gains) losses 12.4 (4.7)
Stock-based compensation 15.1 10.6
Items impacting comparability:
Cost Savings Program, Restructuring Plan, and other expenses (a) 34.2 31.9
Legal proceedings and other claims (b) 33.0 -
Shareholder activism expense (c) - 4.0
Pension settlement (d) - 13.1
Adjusted EBITDA $ 285.6 $ 302.2
___________________________________________
(a)For more information about the Cost Savings Program and Restructuring Plan, see Note 4, Cost Savings Program and Restructuring, in the Condensed Notes to Consolidated Financial Statements (unaudited), within "Part I, Item I. Financial Statements" of this Form 10-Q.
(b)Represents accruals for legal proceedings and other claims. See Note 14, Commitments, Contingencies, Guarantees and Legal Proceedings, in the Condensed Notes to Consolidated Financial Statements (unaudited), within "Part I, Item I. Financial Statements" of this Form 10-Q.
(c)Represents advisory fees related to shareholder activism matters.
(d)Represents costs associated with fully funding the Company's defined benefit pension plan, enabling lump sum payments to participants and transferring the remaining obligations and related plan assets to an insurer through a group annuity contract.
The following tables reconcile gross profit to Adjusted Gross Profit, SG&A to Adjusted SG&A, and Income Tax Expense (Benefit) to Adjusted Income Tax Expense for the thirteen weeks ended August 30, 2026 and August 24, 2025.
Thirteen Weeks Ended
August 30, 2026 August 24, 2025 August 30, 2026 August 24, 2025 August 30, 2026 August 24, 2025
(in millions) Gross Profit Selling, General and Administrative Income Tax Expense (Benefit)
As reported $ 266.5 $ 342.4 $ 170.2 $ 153.6 $ 16.9 $ 47.9
Unrealized derivative gains and losses (0.6) (3.1) (1.3) 1.8 0.1 (1.1)
Foreign currency exchange gains and losses - - (12.4) 4.7 2.2 (0.8)
Stock-based compensation - - (15.1) (10.6) 2.5 1.6
Items impacting comparability:
Cost Savings Program, Restructuring Plan, and other expenses 20.1 (0.4) - - 8.9 7.7
Legal proceedings and other claims 30.8 - (2.2) - 7.9 -
Shareholder activism expense - - - (4.0) - 0.9
Pension settlement - - - (13.1) - 3.0
Total adjustments 50.3 (3.5) (31.0) (21.2) 21.6 11.3
Adjusted $ 316.8 $ 338.9 $ 139.2 $ 132.4 $ 38.5 $ 59.2
The following table reconciles net sales to net sales excluding FX for the thirteen weeks ended August 30, 2026.
(in millions) Net Sales FX Net Sales excl. FX
Thirteen Weeks Ended August 30, 2026
North America $ 1,141.4 $ (2.4) $ 1,139.0
International 528.9 (1.7) 527.2
$ 1,670.3 $ (4.1) $ 1,666.2
Off-Balance Sheet Arrangements
There have been no material changes to the off-balance sheet arrangements disclosed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Form 10-K.
Critical Accounting Policies and Estimates
A discussion of our critical accounting policies and estimates can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Form 10-K. There were no material changes to these critical accounting policies and estimates during the first quarter of fiscal 2027.
New and Recently Adopted Accounting Pronouncements
For a list of our new and recently adopted accounting pronouncements, see Note 1, Nature of Operations and Summary of Significant Accounting Policies, of the Condensed Notes to Consolidated Financial Statements in "Part I, Item I. Financial Statements" of this report.
Lamb Weston Holdings Inc. published this content on October 06, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 06, 2026 at 14:12 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]