Key Takeaways Lamb Weston leverages 'Focus to Win' to boost profitability via cost savings and core market focus.Innovation drives growth with fridge-friendly fries and premium potato bites meeting shifting demands.Opportunities arise from food delivery growth, QSR evolution and rising air fryer popularity.Lamb Weston Holdings, Inc. ((LW), a specialist in frozen potatoes, holds a leading position in the global frozen foods industry. The company has built a powerhouse around frozen potato products, fries and ...

Core Insights - Lamb Weston reported fiscal 2025 fourth-quarter earnings with adjusted EPS of $0.87, exceeding analyst estimates of $0.78, and revenue of $1.68 billion, surpassing forecasts of $1.65 billion [1][2] - Despite positive earnings, the company faces profitability pressures due to competitive pricing, higher fixed costs, and subdued restaurant demand, prompting a significant cost reduction plan [1][11] Financial Performance - Adjusted EPS increased by 12% year-over-year, while revenue grew by 4% compared to the previous year [2][6] - Income from operations decreased by 12.6% year-over-year, and net income fell by 7.5% [2] - Adjusted EBITDA rose slightly by 0.5% year-over-year, indicating stable core profitability despite margin compression [2][6] Business Overview - Lamb Weston is a leading supplier of frozen potato products, serving a diverse customer base including quick service restaurants and grocery retailers [3][4] - The company focuses on maintaining market leadership in North America and expanding its product offerings through innovation [4] Segment Dynamics - North American segment revenue declined by 1%, despite a 4% increase in sales volume, due to lower prices and a shift away from higher-margin customers [7] - International segment revenue grew by 15%, with a 16% increase in volume, driven by new customer contracts [7] Cost Management and Initiatives - The company launched a "Focus to Win" initiative targeting $250 million in annualized cost savings by FY2028, including a 4% headcount reduction [11] - Inventory days on hand decreased by eight days, reflecting improved product movement, although warehousing and logistics costs rose [11] Capital Returns - In FY2025, the company returned $488.9 million to shareholders, including $282.0 million in share repurchases and $206.9 million in dividends [13] Future Outlook - For fiscal 2026, Lamb Weston projects net sales between $6.35 billion and $6.55 billion, indicating modest growth, with adjusted EBITDA forecasted at $1.0 billion to $1.2 billion [14] - Management anticipates continued challenges from pricing and cost pressures, particularly in the first half of FY2026 [14][15]

Group 1 - Lamb Weston Holdings, Inc. reported its Fourth Quarter and Full Year Fiscal 2025 earnings, indicating a focus on financial performance and future expectations [3][4]. - The earnings call was led by key company executives, including the Chief Financial Officer and the President & CEO, highlighting the importance of leadership in communicating financial results [1][3]. - The company provided a press release and presentation slides for stakeholders, emphasizing transparency and accessibility of information [3]. Group 2 - The earnings call included discussions on forward-looking statements, which are based on current expectations but may differ due to various risks and uncertainties [4]. - Non-GAAP financial measures were mentioned, indicating that these metrics should be considered alongside GAAP results for a comprehensive understanding of the company's financial health [5].

Core Insights - Lamb Weston Holdings, Inc. (LW) reported strong fourth-quarter fiscal 2025 results, with both revenue and earnings exceeding Zacks Consensus Estimates and showing year-over-year growth [1][3][11] Financial Performance - Adjusted earnings were 87 cents per share, surpassing the Zacks Consensus Estimate of 64 cents, marking a 12% increase primarily due to lower income tax expenses [3] - Net sales reached $1,675.8 million, exceeding the Zacks Consensus Estimate of $1,593 million, reflecting a 4% year-over-year increase [3] - Adjusted gross profit decreased by $19.5 million to $343.5 million, mainly due to a negative price/mix, although this was partially offset by lower manufacturing costs [6] Volume and Sales Dynamics - Fiscal fourth-quarter volume rose 8% compared to the same quarter last year, driven by contract wins across all channels and regions, despite soft global restaurant traffic [4] - The price/mix declined by 4% as the company engaged in strategic pricing and trade promotions to remain competitive [5] Segment Performance - North America segment net sales decreased by 1% to $1,103.1 million, with a volume increase of 4% offset by declines in restaurant traffic [12] - International segment net sales grew by 15% to $572.7 million, with a volume increase of 16%, despite declines in restaurant traffic in key markets [14] Cost Management and Profitability - Adjusted selling, general and administrative (SG&A) expenses fell by $16.4 million year over year to $155.6 million, attributed to lower advertising costs and restructuring savings [8] - Adjusted EBITDA rose by $1.5 million year over year to $284.9 million, driven by reduced SG&A expenses [9] Future Outlook - The company forecasts fiscal year 2026 sales between $6.35 billion and $6.55 billion, with adjusted EBITDA expected to be between $1 billion and $1.2 billion [11][19] - Capital expenditures are projected to total approximately $500 million [19] Shareholder Returns - In fiscal 2025, the company returned $488.9 million to shareholders through dividends and share repurchases, including $206.9 million in cash dividends and $282 million in share repurchases [17]

Core Insights - Shares of Lamb Weston Holdings, Inc. (NYSE: LW) have declined approximately 25% over the past year, indicating poor performance in the market [1] Company Performance - Recent news provided some positive developments for investors, suggesting potential recovery or improvement in the company's outlook [1]

Part I [Business](index=4&type=section&id=Item%201.%20Business) Lamb Weston is a leading global producer of value-added frozen potato products, operating through North America and International segments - Lamb Weston is the leading supplier of value-added frozen potato products in North America and a major international supplier, with french fries being the primary product[7](index=7&type=chunk) - The company operates through two reportable segments: North America (U.S., Canada, Mexico) and International (all other regions)[9](index=9&type=chunk)[10](index=10&type=chunk)[11](index=11&type=chunk) - Significant customer concentration exists, with the ten largest customers making up about **50% of net sales**. McDonald's Corporation is the largest customer, accounting for approximately **15% of consolidated net sales in fiscal 2025**[16](index=16&type=chunk) - The company operates **26 production facilities** globally and also utilizes co-packing agreements to source some products[23](index=23&type=chunk) - As of July 17, 2025, the company had approximately **10,100 employees**, with about **30% covered by collective bargaining agreements**[28](index=28&type=chunk) - The company expects to spend approximately **$100 million in fiscal 2026** and about **$500 million over the next six years** to comply with environmental regulations, primarily for wastewater treatment[50](index=50&type=chunk) [Risk Factors](index=13&type=section&id=Item%201A.%20Risk%20Factors) The company faces diverse risks including rising input costs, supply chain disruptions, and international operational challenges - The company may not be able to offset cost increases for key inputs like raw potatoes, edible oil, labor, and energy, which could adversely affect financial results. Elevated commodity and supply chain costs continued in fiscal 2025[55](index=55&type=chunk)[56](index=56&type=chunk) - Disruptions to the supply chain from factors like natural disasters, labor shortages, or geopolitical conflicts (e.g., war in Ukraine) could impair manufacturing and distribution capabilities[58](index=58&type=chunk)[59](index=59&type=chunk) - International operations, which accounted for approximately **35% of net sales in fiscal 2025**, are exposed to risks including foreign exchange rate fluctuations, trade barriers, and political instability[63](index=63&type=chunk) - Poor potato crop performance due to weather, pests, or disease can lead to insufficient supply, higher costs, and manufacturing inefficiencies. An oversupply, as seen in fiscal 2025, can lead to write-offs of excess raw potatoes[78](index=78&type=chunk) - The transition to a new ERP system in North America has caused and could further cause business disruptions. In fiscal 2024, the transition led to reduced visibility of finished goods inventories, affecting customer order fulfillment and resulting in declines in sales volume and margins[94](index=94&type=chunk) - Climate change presents risks such as decreased agricultural productivity, water scarcity impacting production, and increased compliance costs from new environmental regulations[106](index=106&type=chunk)[107](index=107&type=chunk) [Unresolved Staff Comments](index=34&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the Securities and Exchange Commission - None[112](index=112&type=chunk) [Cybersecurity](index=34&type=section&id=Item%201C.%20Cybersecurity) The company manages cybersecurity risks through a comprehensive program overseen by the Board's Audit Committee - The company's cybersecurity risk management program includes policies, an incident response plan, regular risk assessments, vulnerability testing, and employee training[113](index=113&type=chunk) - The Board of Directors has ultimate oversight of cybersecurity risk, with the Audit Committee regularly reviewing the program and reporting to the full Board[118](index=118&type=chunk) - The cybersecurity program is managed by an interim CISO with over **20 years of experience**, who reports to the CIO. The CISO and CIO provide regular updates to the Audit Committee[119](index=119&type=chunk)[120](index=120&type=chunk) - To date, the company is not aware of any cybersecurity incident that has had, or is reasonably likely to have, a material impact on its business or operations[117](index=117&type=chunk) [Properties](index=37&type=section&id=Item%202.%20Properties) Lamb Weston operates **26 global production facilities**, headquartered in Idaho, and recently closed a facility Principal Production and Processing Facilities (as of May 25, 2025) | Location | Type of Facility | Owned/Leased | | :--- | :--- | :--- | | **Domestic (U.S.)** | | | | American Falls, ID | Production & Cold Storage | Owned (1) | | Boardman, OR | Production & Cold Storage | Owned (3) | | Delhi, LA | Production, Cold Storage, Farm | Owned (1), Leased (2) | | Hermiston, OR | Production | Owned (1) | | Park Rapids, MN | Production & Cold Storage | Owned (1) (a) | | Pasco, WA | Production | Owned (2) | | Paterson, WA | Production, Farm | Owned (2), Leased (3) | | Quincy, WA | Production | Owned (1) | | Richland, WA | Production, Innovation Center | Owned (2) | | Twin Falls, ID | Production | Owned (1) | | Warden, WA | Production | Owned (1) | | **International** | | | | Bergen-op-Zoom, Netherlands | Production | Owned (1) | | Broekhuizenvorst, Netherlands | Production | Owned (1) | | Buenos Aires, Argentina | Production | Owned (1) | | Hallam, Australia | Production & Cold Storage | Leased (2) | | Hollabrunn, Austria | Production | Owned (1) (b) | | Kruiningen, Netherlands | Production | Owned (1) | | Oosterbierum, Netherlands | Production | Owned (1) | | Shangdu, China | Production | Owned (1) | | Taber, Canada | Production & Cold Storage | Owned (1) | | Ulanqab, China | Production & Cold Storage | Owned (1) | | Wisbech, United Kingdom | Production | Owned (1) | (a) 50% interest through Lamb Weston RDO joint venture. (b) 75% interest through a joint venture owned by LW EMEA. - As part of the FY25 Restructuring Plan announced on October 1, 2024, the company closed one of its manufacturing facilities in Connell, Washington[124](index=124&type=chunk) [Legal Proceedings](index=38&type=section&id=Item%203.%20Legal%20Proceedings) The company faces legal proceedings, including class actions related to ERP system and antitrust allegations - The company is defending against consolidated class actions and a stockholder derivative complaint alleging misrepresentations regarding its ERP system implementation and pricing practices[389](index=389&type=chunk) - Multiple class action complaints have been filed alleging antitrust violations, claiming the company and other producers conspired to fix prices of frozen potato products beginning around January 1, 2021[390](index=390&type=chunk) - Management believes the pending legal actions will not have a material adverse effect on the company's financial condition, results of operations, or cash flows[391](index=391&type=chunk) [Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[128](index=128&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=38&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Lamb Weston's common stock trades on the NYSE, with the Board increasing share repurchase authorization to **$750 million** - The company's common stock is listed on the NYSE under the ticker symbol "LW"[130](index=130&type=chunk) - The Board increased the total share repurchase authorization to **$750 million** in December 2024. As of May 25, 2025, approximately **$358 million** remained available for repurchase under the program, which has no expiration date[132](index=132&type=chunk) Issuer Purchases of Equity Securities (Q4 FY2025) | Period | Total Shares Purchased | Average Price Paid Per Share | Shares Purchased as Part of Publicly Announced Programs | Approx. Dollar Value Remaining Under Programs (in millions) | | :--- | :--- | :--- | :--- | :--- | | Feb 24 - Mar 23, 2025 | 957 | $52.73 | 0 | $458 | | Mar 24 - Apr 20, 2025 | 595,178 | $54.61 | 584,451 | $426 | | Apr 21 - May 25, 2025 | 1,313,220 | $51.88 | 1,310,777 | $358 | [Reserved](index=39&type=section&id=Item%206.%20Reserved) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) FY25 net sales were flat, net income declined, prompting a new strategic plan and cost savings program - The company announced a new strategic plan, "Focus to Win," and a Cost Savings Program aiming for at least **$250 million in annualized savings by the end of fiscal 2028**[142](index=142&type=chunk) Fiscal Year 2025 vs. 2024 Performance Summary | Metric (in millions) | FY 2025 | FY 2024 | % Change | | :--- | :--- | :--- | :--- | | **Net Sales** | | | | | North America | $4,265.2 | $4,363.2 | (2)% | | International | $2,186.1 | $2,104.4 | 4% | | **Total Net Sales** | **$6,451.3** | **$6,467.6** | **—%** | | **Segment Adjusted EBITDA** | | | | | North America | $1,101.4 | $1,263.1 | (13)% | | International | $253.7 | $331.9 | (24)% | | **Total Adjusted EBITDA** | **$1,220.5** | **$1,416.7** | **(13.9)%** | | **Net Income** | **$357.2** | **$725.5** | **(50.8)%** | | **Diluted EPS** | **$2.50** | **$4.98** | **(49.8)%** | - Gross profit declined to **$1,398.6 million**, primarily due to increased manufacturing costs per pound, higher input costs (potato, labor, packaging), and **$57.6 million** in incremental depreciation from capacity expansions[150](index=150&type=chunk) - The company recorded a **$100.0 million restructuring expense** related to the FY25 Restructuring Plan[152](index=152&type=chunk) - Cash from operations increased to **$868.3 million in fiscal 2025** from **$798.2 million in fiscal 2024**, mainly due to favorable changes in working capital, particularly reduced inventories[161](index=161&type=chunk)[164](index=164&type=chunk) - For fiscal 2026, the company expects earnings to decline due to price investments, input cost increases, and higher depreciation, partially offset by benefits from restructuring and cost savings programs[144](index=144&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=51&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from commodity prices, foreign currency exchange rates, and interest rates - The company is exposed to commodity price risk for inputs like oil and energy. A hypothetical **10% decline in market prices** would result in a pre-tax charge of **$6.8 million to cost of sales** based on open hedge positions at May 25, 2025[193](index=193&type=chunk) - The company faces foreign currency exchange rate risk, primarily from the Euro. A hypothetical **10% adverse change in exchange rates** would result in pre-tax losses of **$68.5 million** as of May 25, 2025[194](index=194&type=chunk) - The company has interest rate risk related to its **$1,166.4 million of variable-rate debt**. A **one percent increase in interest rates** would increase annual pre-tax interest expense by **$11.8 million** as of May 25, 2025[195](index=195&type=chunk) [Financial Statements and Supplementary Data](index=52&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited consolidated financial statements for FY23-25 with an unqualified audit opinion Consolidated Statement of Earnings Highlights (Fiscal Year Ended May 25, 2025) | Metric (in millions) | Amount | | :--- | :--- | | Net sales | $6,451.3 | | Gross profit | $1,398.6 | | Income from operations | $665.1 | | Net income | $357.2 | | Diluted EPS | $2.50 | Consolidated Balance Sheet Highlights (As of May 25, 2025) | Metric (in millions) | Amount | | :--- | :--- | | Total Current Assets | $2,032.7 | | Total Assets | $7,392.6 | | Total Current Liabilities | $1,476.0 | | Long-Term Debt (excl. current) | $3,682.8 | | Total Liabilities | $5,654.9 | | Total Stockholders' Equity | $1,737.7 | Consolidated Statement of Cash Flows Highlights (Fiscal Year Ended May 25, 2025) | Metric (in millions) | Amount | | :--- | :--- | | Net cash provided by operating activities | $868.3 | | Net cash used for investing activities | $(648.0) | | Net cash used in financing activities | $(225.0) | - The independent auditor, KPMG LLP, issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting[199](index=199&type=chunk)[210](index=210&type=chunk) - A critical audit matter was identified concerning the sufficiency of audit evidence over finished goods inventory held at third-party warehouse locations, due to reliance on manual and automated processes[204](index=204&type=chunk)[205](index=205&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=100&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting or financial disclosure - None[393](index=393&type=chunk) [Controls and Procedures](index=100&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls and internal control over financial reporting were effective - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of May 25, 2025[394](index=394&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of May 25, 2025, based on the COSO framework[396](index=396&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended May 25, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[400](index=400&type=chunk) [Other Information](index=101&type=section&id=Item%209B.%20Other%20Information) The company announced a new Cost Savings Program targeting **$250 million** in annualized savings by FY28 - A new Cost Savings Program announced on July 23, 2025, is expected to deliver at least **$250 million in annualized savings by the end of fiscal 2028**[401](index=401&type=chunk) - The program will incur total pre-tax cash charges of **$70 million to $100 million** and involves a headcount reduction of approximately **4% of the global workforce**[402](index=402&type=chunk) - No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the quarter ended May 25, 2025[403](index=403&type=chunk) [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=101&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20That%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[404](index=404&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=102&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated from the Proxy Statement - This section incorporates information by reference from the company's 2025 Proxy Statement[406](index=406&type=chunk) [Executive Compensation](index=102&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the company's 2025 Proxy Statement - This section incorporates information by reference from the company's 2025 Proxy Statement[407](index=407&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=102&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section provides equity compensation plan information and incorporates security ownership details Equity Compensation Plan Information as of May 25, 2025 | Plan Category | Number of Securities to be Issued Upon Exercise (a) | Weighted-Average Exercise Price of Outstanding Options (b) | Number of Securities Remaining Available for Future Issuance (c) | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by securityholders | 2,081,450 | $69.72 | 5,532,480 | - Information on security ownership of certain beneficial owners and management is incorporated by reference from the 2025 Proxy Statement[409](index=409&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=103&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated from Proxy Statement - This section incorporates information by reference from the company's 2025 Proxy Statement[411](index=411&type=chunk) [Principal Accountant Fees and Services](index=103&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on fees paid to the principal accountant and services rendered is incorporated from Proxy Statement - This section incorporates information by reference from the company's 2025 Proxy Statement[412](index=412&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=103&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists financial statements, schedules, and exhibits, including Schedule II detailing deferred tax asset valuation Schedule II – Valuation and Qualifying Accounts (Deferred tax asset valuation allowance) | Fiscal Year Ended | Beginning Balance (in millions) | Additions Charged to Costs, Expenses and Equity (in millions) | Deductions from Reserves (in millions) | Ending Balance (in millions) | | :--- | :--- | :--- | :--- | :--- | | May 25, 2025 | $53.1 | $12.6 | $— | $65.7 | | May 26, 2024 | $49.5 | $3.6 | $— | $53.1 | | May 28, 2023 | $50.1 | $— | $0.6 | $49.5 | - A list of all exhibits filed with the Form 10-K is provided, including governance documents, credit agreements, stock plans, and officer certifications[416](index=416&type=chunk)[417](index=417&type=chunk)[418](index=418&type=chunk) [Form 10-K Summary](index=110&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has not provided a summary for its Form 10-K - None[421](index=421&type=chunk)

Financial Data and Key Metrics Changes - For the fourth quarter, net sales increased by 4% year-over-year, with volume up by 8% driven by contract wins across channels and regions [25][26] - Adjusted EBITDA for the quarter was $285 million, essentially flat compared to the prior year, with lower adjusted SG&A offsetting lower adjusted gross profit [30][31] - The company ended the year with approximately $1.24 billion in liquidity and a net debt of $4.1 billion, resulting in an adjusted EBITDA to net debt leverage ratio of 3.3 times [31][32] Business Line Data and Key Metrics Changes - North America segment net sales declined by 1% year-over-year, primarily due to lower net selling prices, while volume increased by 4% [26][27] - International segment sales grew by 15% year-over-year, with volume up by 16%, driven by recent customer contract wins [28] - Adjusted EBITDA in the North America segment declined by 7% to $258 million, while the International segment's adjusted EBITDA increased by $22 million to $63 million [30][31] Market Data and Key Metrics Changes - Global restaurant traffic trends were down low single digits in the US and UK, impacting overall sales despite positive consumption trends in the French fry category [25][26] - French fry attachment rates in the US remained approximately two points higher than pre-pandemic levels, indicating strong demand [26] - The international segment faced a 3% decline in restaurant traffic in the UK, yet still achieved significant volume growth [28] Company Strategy and Development Direction - The company is focused on a "Focus to Win" strategy, which includes zero-based budgeting and assessing non-core assets to drive targeted decision-making [11][21] - The strategic framework aims to prioritize investments in attractive growth opportunities across markets, channels, and product segments [15][17] - The company plans to strengthen customer partnerships and enhance execution excellence to differentiate itself in a competitive marketplace [19][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by macroeconomic and geopolitical factors but expressed confidence in the company's ability to capitalize on customer momentum [22][38] - The outlook for fiscal 2026 anticipates revenue in the range of $6.35 billion to $6.55 billion, reflecting a 2% decline to 2% growth on a constant currency basis [39] - Management emphasized the importance of controlling operational aspects to ensure readiness for when restaurant traffic returns to growth [22][45] Other Important Information - The company announced a cost savings program targeting $250 million in annualized savings by the end of fiscal 2028 [21][42] - Capital expenditures for fiscal 2026 are expected to be approximately $500 million, focusing on maintenance and modernization [34][64] - The company plans to return cash to shareholders, having repurchased $282 million in shares and paid $207 million in dividends during the year [35][36] Q&A Session Summary Question: EBITDA margin target for the year - Management indicated that the EBITDA margin is expected to be below normalized levels in fiscal 2026 due to competitive pressures and pricing actions to support customers [49][50] Question: Working capital improvement specifics - Management highlighted efforts to improve inventory management and planning capabilities to enhance working capital efficiency [53][54] Question: International capacity and project delays - Management confirmed that while some international capacity projects have been announced, many are expected to be delayed or canceled, indicating a rational approach within the industry [60][61] Question: Capital expenditures guidance - Management explained the reduction in capital expenditure intensity as the focus shifts from growth investments to maintenance and modernization [62][64] Question: Sales outlook and pricing impacts - Management noted that the first half of fiscal 2026 will face pressure from carryover pricing actions, with stronger sales expected in the second half due to an additional week of sales [88][89]

Financial Data and Key Metrics Changes - For the fourth quarter, net sales increased by 4% year-over-year, while volume increased by 8%, driven by contract wins across channels and geographies [26][27] - Adjusted EBITDA for the quarter was $285 million, essentially flat compared to the prior year, with lower adjusted SG&A offsetting lower adjusted gross profit [32][34] - The company ended the year with approximately $1.24 billion in liquidity and a net debt of $4.1 billion, resulting in an adjusted EBITDA to net debt leverage ratio of 3.3 times [33][34] Business Line Data and Key Metrics Changes - North America net sales declined by 1% year-over-year, primarily due to lower net selling prices, with a price mix decline of 5% [27][28] - International segment sales grew by 15% year-over-year, with volume increasing by 16%, driven by recent customer contract wins [30][32] - Adjusted EBITDA in the North America segment declined by 7% to $258 million, while the International segment's adjusted EBITDA increased by $22 million to $63 million [32][33] Market Data and Key Metrics Changes - Global restaurant traffic trends were down low single digits in the US and UK, impacting overall sales [26][30] - In the US, French fry attachment rates remained approximately two points higher than pre-pandemic levels, with the French fry category growing by 1% in the quarter [27][30] - The international segment experienced a 3% decline in restaurant traffic in the UK, but still achieved significant volume growth [30] Company Strategy and Development Direction - The company is focused on a "Focus to Win" strategy, which includes zero-based budgeting and assessing non-core assets to drive targeted decision-making [11][22] - The strategic focus is on strengthening customer partnerships, achieving executional excellence, and setting the pace for innovation [15][16] - The company plans to invest in priority global markets and segments, targeting premium market segments where innovation is a differentiator [17][21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the macroeconomic and geopolitical pressures affecting consumer behavior and restaurant traffic, but expressed confidence in the company's ability to capitalize on future demand [23][40] - The outlook for fiscal 2026 anticipates revenue in the range of $6.35 billion to $6.55 billion, reflecting a potential decline or modest growth due to carryover pricing actions [40][41] - Management emphasized the importance of controlling operational costs and improving efficiency to enhance competitiveness [45] Other Important Information - The company announced a cost savings program targeting $250 million in annualized savings by the end of fiscal 2028 [22][43] - Capital expenditures for fiscal 2025 were $651 million, down from initial targets, with expectations for approximately $500 million in fiscal 2026 [35][66] - The company plans to continue returning cash to shareholders, having returned $489 million in fiscal 2025 [36] Q&A Session Summary Question: What is the EBITDA margin target for the year? - Management indicated that the EBITDA margin would be below normalized levels in fiscal 2026 due to headwinds faced by key customers and ongoing pricing support [51][52] Question: Can you elaborate on working capital improvements? - Management highlighted improvements in inventory management and planning capabilities as key components of their strategy to enhance working capital [56][57] Question: What is the outlook for international capacity? - Management noted that while there have been announcements of new capacity, many projects are being delayed or canceled, indicating a rational approach within the industry [62][63] Question: How is the company assessing risks related to tariffs? - Management stated that the potential impact of tariffs on financial results is estimated at $25 million, with ongoing efforts to mitigate exposure [85] Question: What is the company's leverage target? - The company continues to target a leverage ratio of about 3.5 times and is open to M&A opportunities that align with its strategic focus [103][106]

Company Performance - Lamb Weston reported quarterly earnings of $0.87 per share, exceeding the Zacks Consensus Estimate of $0.64 per share, and up from $0.78 per share a year ago, representing an earnings surprise of +35.94% [1] - The company posted revenues of $1.68 billion for the quarter ended May 2025, surpassing the Zacks Consensus Estimate by 5.21%, compared to $1.61 billion in the same quarter last year [2] - Over the last four quarters, Lamb Weston has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [2] Stock Performance - Lamb Weston shares have declined approximately 26.4% since the beginning of the year, while the S&P 500 has gained 7.3% [3] - The current Zacks Rank for Lamb Weston is 4 (Sell), indicating expectations of underperformance in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.79 on revenues of $1.62 billion, and for the current fiscal year, it is $3.40 on revenues of $6.42 billion [7] - The outlook for the industry, specifically the Food - Miscellaneous sector, is currently in the bottom 30% of Zacks industries, which may impact Lamb Weston’s stock performance [8]

Financial Performance - Lamb Weston's Q4 F25 net sales increased by 4% to $1,676 million compared to Q4 F24 [16, 43] - Full Year 2025 net sales reached $6,451 million [19] - Q4 F25 adjusted EBITDA increased by 1% to $285 million compared to Q4 F24 [16] - Full Year 2025 adjusted EBITDA decreased by 14% to $1,221 million compared to FY24 [19] - Lamb Weston forecasts capital expenditures of approximately $500 million for FY26 [53, 66] Volume and Pricing - Q4 F25 volume increased by 8%, while price/mix decreased by 4% [17] - Full Year 2025 volume increased by 2%, while price/mix decreased by 2% [19] - North America volume increased by 4% in Q4 F25, while price/mix decreased by 5% [44] - International volume increased by 16% in Q4 F25, while price/mix decreased by 1% [44] Cost Savings and Restructuring - Lamb Weston delivered approximately $60 million of pre-tax cost savings in FY25 and is on track for $85 million in FY26 [19, 36] - The company is targeting at least $250 million in annualized run rate savings by the end of fiscal year 2028 [35] Liquidity and Capital Allocation - Lamb Weston returned $489 million to shareholders in FY25, including $207 million in dividends and $282 million in share repurchases [53, 56] - The company had approximately $71 million in cash and equivalents and $12 billion availability under its revolving credit facility [53] Fiscal 2026 Outlook - Lamb Weston projects net sales between $635 billion and $655 billion for fiscal year 2026 [66] - The company anticipates adjusted EBITDA between $10 billion and $12 billion for fiscal year 2026 [66, 71]