Financial Data and Key Metrics Changes - In Q3 FY 2025, net sales increased by 4% year-over-year, with volume growth of 9% as the company rebuilt after transitioning to a new ERP system [12][26] - Adjusted EBITDA grew by 6%, reaching $364 million, primarily due to higher sales volumes and lower manufacturing costs [31][32] - Price mix declined by 5% compared to the prior year quarter due to planned investments in pricing to remain competitive [27][32] Business Line Data and Key Metrics Changes - North America net sales grew by 4%, with volume improving by 8%, driven by replacing lost volume from the previous year and new customer contracts [28][29] - International segment sales increased by 5%, with volume up by 12%, despite soft restaurant traffic in key markets [30] - Adjusted EBITDA for North America increased by $15 million to $301 million, while the international segment saw a decline of $8.5 million to $93 million [34] Market Data and Key Metrics Changes - QSR traffic in North America declined by 2% year-over-year, with hamburger chains experiencing a 6% drop in February [28][29] - The company anticipates a mid-single-digit percent decline in potato prices for the 2025 crop in North America, while prices in Europe are expected to remain flat [19][20] Company Strategy and Development Direction - The company is focusing on a value creation plan with the help of Alex Partners to optimize operations and drive growth [9][10] - Efforts include restructuring plans aimed at delivering at least $55 million in pre-tax savings for FY 2025 and $85 million for FY 2026 [12][51] - The company is committed to improving customer relations and expanding its product offerings to meet evolving customer needs [16][18] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer uncertainty has increased, impacting restaurant traffic and overall demand [13][18] - The company expects continued pressure on pricing and margins due to competitive dynamics and inflationary costs [44][45] - Despite challenges, management remains optimistic about achieving full-year guidance and is focused on cost reduction and operational efficiency [46][47] Other Important Information - The company ended Q3 with approximately $1.1 billion in liquidity and a net debt of $4.2 billion, maintaining a leverage ratio of 3.4 times [35][36] - Capital expenditures for FY 2025 are targeted at $750 million, down from the previous year, with a focus on modernization and environmental investments [38][39] - The company returned $151 million to shareholders in the quarter, including $100 million in share repurchases [40] Q&A Session Summary Question: Impact of crop prices on QSR contract negotiations - Management indicated that customer contract negotiations will begin in the summer, and while potato prices are expected to decline, other inflationary impacts will also be considered [57][58] Question: Opportunities from Alex Partners agreement - The focus is on cost savings, productivity, and a data-driven approach to identify growth opportunities across the entire P&L [61][63] Question: Q4 gross margin expectations - Management explained that higher fixed cost absorption and other input costs will impact gross margins, with a forecasted decline of around 700 basis points [69][72] Question: Connell plant future plans - The company has decided not to sell the Connell plant and is conducting a strategic review of other options [100][101] Question: Weakness in QSR traffic - Management attributed the decline in QSR traffic to consumer uncertainty and macroeconomic factors, while noting that French fry attachment rates remain strong [108][119] Question: Changes in capital expenditures - Maintenance capital expenditures are about 3% of sales, with additional spending for modernization and environmental initiatives [136] Question: Competitive landscape in QSR contracts - The company is adjusting its contract schedule and is open to new ideas and innovations to drive traffic for QSRs [138][139]

Financial Performance - Net sales for Q3 FY 2025 increased by 4% to $1,520.5 million compared to the prior year quarter[4] - Income from operations rose by 11% to $248.7 million, while net income remained flat at $146.0 million[4] - Adjusted EBITDA increased by 6% to $363.8 million, driven by higher net sales and lower adjusted SG&A[4] - Adjusted net income for Q3 FY 2025 declined by 11% to $156.6 million, with adjusted diluted EPS down 8% to $1.10[4] - For the thirteen weeks ended February 23, 2025, net sales were $1,520.5 million, compared to $1,458.3 million for the same period in 2024, reflecting a growth of 4.3%[32] - The company reported a net income of $146.0 million for the thirteen weeks ended February 23, 2025, compared to $146.1 million for the same period in 2024[32] - The company reported a net income of $237.3 million for the thirty-nine weeks ended February 23, 2025, compared to $595.8 million for the same period in 2024[39] - The company reported total revenue of $1,056.3 million for the thirty-nine weeks ended February 23, 2025, a decrease from $1,378.8 million in the same period of the previous year[47] Sales and Segments - The North America segment reported net sales of $986.3 million, up 4%, with volume increasing by 8%[11] - The International segment's net sales increased by 5% to $534.2 million, with volume up 12% despite soft restaurant traffic[12] - North America segment net sales for the thirty-nine weeks ended February 23, 2025, were $3,162.1 million, a 3% decrease from $3,250.0 million in the prior year[41] Future Projections - The company expects net sales for FY 2025 to be between $6.35 billion and $6.45 billion, with an adjusted EBITDA target of $1.17 billion to $1.21 billion[4] - Net sales target range for fiscal 2025 is projected between $6.35 billion and $6.45 billion[24] - Adjusted EBITDA target range is estimated to be between $1.17 billion and $1.21 billion[24] - Adjusted Net Income is expected to be in the range of $440 million to $460 million, with Adjusted Diluted EPS projected at $3.05 to $3.20[24] Capital Expenditures and Shareholder Returns - Capital expenditures for the first three quarters of FY 2025 were $563.1 million, down $250.7 million from the prior year period[14] - The company returned $151.4 million to shareholders in Q3 FY 2025, including $51.4 million in cash dividends and $100.0 million in share repurchases[16] - Cash used for capital expenditures is projected to be around $750 million, with potential adjustments based on the timing of cash payments for the Argentina expansion[24] - Dividends declared per common share increased to $0.37 for the thirteen weeks ended February 23, 2025, up from $0.36 in the prior year[32] Restructuring and Operational Efficiency - The company incurred a restructuring expense of $9.6 million for the thirteen weeks ended February 23, 2025, and $84.2 million for the thirty-nine weeks ended February 23, 2025[32] - The Company announced a Restructuring Plan on October 1, 2024, details of which are available in the Quarterly Report[4] - The Company’s restructuring efforts are aimed at improving operational efficiency and financial performance moving forward[4] Currency and Other Adjustments - The company experienced foreign currency exchange losses of $17.2 million for the thirteen weeks ended February 23, 2025, compared to $21.8 million for the same period in 2024[8] - Foreign currency exchange losses for the thirty-nine weeks ended February 23, 2025, were $17.2 million, compared to $21.8 million for the same period in 2024[52] - The Company’s financial measures include adjustments for unrealized derivative gains and losses, foreign currency exchange gains and losses, and other items impacting comparability[7] - The company incurred a pre-tax charge of approximately $31 million related to a voluntary product withdrawal during the thirty-nine weeks ended February 23, 2025[42] Depreciation and Amortization - Depreciation and amortization for the thirteen weeks ended February 23, 2025, was $2.0 million, compared to $2.1 million for the same period in 2024[3] - Depreciation expense for the thirty-nine weeks ended February 23, 2025, was $6.1 million, compared to $6.4 million for the same period in 2024[3] - Accelerated depreciation related to the closure of the manufacturing facility in Connell, Washington, amounted to $4.5 million for the thirteen weeks ended February 23, 2025[3] Other Financial Metrics - The effective tax rate for the full year is estimated to be approximately 28%, excluding the impact of comparability items[24] - The total assets increased to $7,422.8 million as of February 23, 2025, up from $7,367.0 million on May 26, 2024[37] - The company incurred integration and acquisition-related expenses amounting to $11.2 million for the thirty-nine weeks ended February 25, 2024[8] - The company estimates that the ERP transition negatively impacted net sales by approximately $135 million, affecting both North America and International segments[8]

Core Insights - Lamb Weston Holdings, Inc. is set to release its third-quarter earnings results on April 3, with analysts expecting earnings of 87 cents per share, a decrease from $1.2 per share in the same quarter last year [1] - The company projects quarterly revenue of $1.49 billion, slightly up from $1.46 billion a year earlier [1] - A quarterly dividend of 37 cents per share was declared on March 20 [1] Stock Performance - Lamb Weston shares increased by 1.6%, closing at $54.15 on Wednesday [2] Analyst Ratings - Barclays analyst Lauren Lieberman maintains an Overweight rating, reducing the price target from $87 to $60 [5] - Stifel analyst Matthew Smith holds a Hold rating, lowering the price target from $80 to $68 [5] - Jefferies analyst Rob Dickerson keeps a Buy rating, raising the price target from $80 to $95 [5] - JP Morgan analyst Ken Goldman maintains a Neutral rating, increasing the price target from $68 to $78 [5] - Deutsche Bank analyst Steve Powers initiates coverage with a Hold rating and a price target of $81 [5]

Core Viewpoint - Lamb Weston Holdings, Inc. is expected to report a decline in its earnings for the third quarter of fiscal 2025, with a consensus estimate of 87 cents per share, reflecting a 27.5% decrease from the previous year [1] Financial Performance - The Zacks Consensus Estimate for Lamb Weston's quarterly revenues is projected at $1.50 billion, indicating a year-over-year growth of 2.9% [2] - Adjusted EBITDA is anticipated to reach $305.7 million, representing an 11% decline for the upcoming quarter [4] Challenges and Market Conditions - The company is facing challenges such as sluggish restaurant traffic, customer share losses, and overcapacity in the global market, which are negatively impacting volume performance [3] - Increased manufacturing costs due to input cost inflation, particularly in raw potato prices, along with higher transportation and warehousing expenses, are exerting additional pressure on the company [4] Strategic Initiatives - Despite the challenges, Lamb Weston is seeing positive outcomes from its Restructuring Plan aimed at improving efficiency and profitability [5] - The company is modernizing its manufacturing capabilities to optimize operations further, which is expected to have a favorable impact on the upcoming quarter [5] Earnings Expectations - The current model does not predict an earnings beat for Lamb Weston, with a Zacks Rank of 4 (Sell) and an Earnings ESP of -3.60% [6]

The market expects Lamb Weston (LW) to deliver a year-over-year decline in earnings on higher revenues when it reports results for the quarter ended February 2025. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.The earnings report, which is expected to be released on April 3, 2025, might help the stock move higher if these key numbers are be ...

Core Insights - Lamb Weston is experiencing pressure as its profit margins are significantly lower despite an increase in revenue, indicating potential challenges in maintaining profitability [1]. Financial Performance - The company is achieving higher revenue but is facing significantly lower margins, suggesting inefficiencies or increased costs that are impacting overall profitability [1]. Market Position - There is uncertainty regarding the company's ability to recover from its current financial challenges, raising questions about its competitive position in the market [1].

Core Viewpoint - Lamb Weston Holdings, Inc. is facing significant challenges due to overcapacity in the global market, declining restaurant traffic, and rising manufacturing costs, leading to a decline in both revenue and profit margins [1][10]. Financial Performance - In the second quarter of fiscal 2025, Lamb Weston reported a year-over-year decline in both top and bottom lines, missing the Zacks Consensus Estimate [1]. - The company's stock has decreased by 33.5% over the past three months, underperforming the broader industry, which declined by 4.5% [2]. Volume and Market Challenges - The company experienced a 6% decrease in volume in the second quarter due to softened global restaurant traffic, with North America and international markets seeing declines of 5% and 6%, respectively [5][6]. - Lamb Weston is facing heightened competition, resulting in customer share losses and sluggish demand in the frozen potato market [5]. Cost Pressures - Rising manufacturing costs, particularly for raw potatoes, have negatively impacted profit margins, with transportation and warehousing costs also increasing significantly [7]. - The company reported a $134.9 million drop in quarterly adjusted gross profit and a $95 million decrease in adjusted EBITDA [7]. Revised Financial Targets - Lamb Weston has lowered its annual net sales target range for fiscal 2025 to $6.35-$6.45 billion, down from $6.6-$6.8 billion, reflecting increased competitive pressures and challenges in both North America and international markets [8][9]. - The adjusted earnings per share (EPS) forecast has been revised to $3.05-$3.20, down from the previous projection of $4.15-$4.35 [9].

Group 1 - The article warns investors about the high earnings multiples assigned to Lamb Weston (NYSE: LW) amidst declining margins, suggesting caution in investment decisions [1] - The investing group "Value In Corporate Events" focuses on identifying opportunities in major corporate events such as IPOs, mergers & acquisitions, and earnings reports, providing coverage of 10 significant events monthly [1] Group 2 - The article emphasizes that past performance does not guarantee future results, indicating a need for careful consideration before making investment decisions [2]

Company Performance - Lamb Weston Holdings, Inc. has seen an 18.5% decline in its share price over the past six months, which is significantly worse than the 2.3% decline in its industry and the 1.5% decline in the broader Zacks Consumer Staple sector [1] - The company's second-quarter fiscal 2025 results fell below expectations, with top and bottom lines declining year over year and missing the Zacks Consensus Estimate [4][10] - The quarterly volume decreased by 6%, attributed to weak global restaurant traffic trends and customer share losses, with North America segment volume falling by 5% and International segment volume dropping by 6% [5] Challenges Faced - Lamb Weston is facing challenges such as declining global restaurant traffic, increased competition, overcapacity in the global market, and rising manufacturing costs [2][3] - The company has experienced incremental customer share losses in both North American and International segments due to a competitive landscape, particularly in the Middle East and parts of Asia Pacific [3] - Increased manufacturing costs per pound have been driven by input cost inflation, particularly higher raw potato prices, inefficiencies, and increased transportation and warehousing costs [8] Financial Outlook - Management has revised its annual net sales target range to $6.35-$6.45 billion, down from the previous range of $6.6 billion to $6.8 billion [10] - Adjusted net income guidance has been lowered to $440-$460 million, with adjusted earnings per share (EPS) revised to $3.05 to $3.20 for fiscal 2025, compared to earlier estimates of $600 million to $615 million and adjusted EPS of $4.15 to $4.35 [10] - The company anticipates that challenging conditions will persist through the remainder of fiscal 2025 and into fiscal 2026, driven by continued softening in global frozen potato demand [9]

Core Insights - Jana Partners is advocating for significant changes at Lamb Weston, including a board overhaul or a potential sale of the company [1] - The activist investor has gained support from former executives, including Jeffery DeLapp, who holds 458 voting shares [1] - Lamb Weston has faced challenges, reporting an unexpected loss and cutting its guidance due to declining demand for frozen potatoes [1] Company Developments - Lamb Weston recently replaced its CEO, with COO Michael J. Smith set to take over on January 3 [1] - The company has seen its shares decline by more than a third this year, despite a recent 4% increase following Jana's actions [1] - Jana Partners holds over a 5% stake in Lamb Weston and has aligned with six food-industry executives to challenge the board [1] Financial Performance - Lamb Weston reported a loss in its second-quarter 2025 financial results, which prompted criticism from Jana Partners [1] - The company cited softening demand for frozen potatoes, which is expected to continue into 2026 [1] - Jana described the financial results as "disastrous" and criticized the board for failing to act in the best interests of shareholders [1]