Financial Data and Key Metrics Changes - Sales for Q1 2025 declined by 1% compared to the previous year, which was better than the expected high single-digit decline due to better volume and price mix [14] - Adjusted EBITDA for the quarter was $290 million, down $123 million from the prior year, primarily due to higher manufacturing costs and the impact of a voluntary product withdrawal [17][28] - Gross margin was nearly 21.5%, about 100 to 150 basis points below the target of 22% to 23% [16] Business Line Data and Key Metrics Changes - North America segment sales declined by 3%, with volume down 4% due to customer share losses and declining restaurant traffic [18] - International segment sales increased by 4%, with price mix up by 5%, but volume declined by 1% due to strategic exits from lower-margin businesses [19][20] Market Data and Key Metrics Changes - U.S. restaurant traffic was down 2% year-over-year, showing a slight improvement from a 3% decline in the previous quarter [5] - In key international markets, restaurant traffic trends were softer, with the U.K. and Germany both seeing a 3% decline [6] Company Strategy and Development Direction - The company announced a restructuring plan aimed at improving operational efficiency, which includes closing a high-cost facility and reducing global headcount by approximately 4% [10][23] - The company expects to generate approximately $55 million in savings from the restructuring plan in fiscal 2025, with further benefits anticipated in fiscal 2026 [24] Management's Comments on Operating Environment and Future Outlook - Management expressed a cautious view on frozen potato demand and global restaurant traffic for the remainder of fiscal 2025, despite some improvements in restaurant traffic trends [4][13] - The company anticipates that the supply-demand imbalance will persist through much of fiscal 2025 [7] Other Important Information - The company expects capital expenditures for fiscal 2025 to be approximately $750 million, down from previous estimates due to deferrals in ERP system implementation and modernization projects [25] - The company plans to spend approximately $150 million on environmental capital projects over the next five years to comply with regulations [27] Q&A Session All Questions and Answers Question: Pricing dynamics in North America - Management indicated that the pricing environment was in line with expectations, with a better mix and carryover from last year contributing positively [33] Question: Capacity reduction moves in the industry - Management noted that they have made tough decisions based on the current operating environment, but they do not have insights into competitors' actions [35] Question: Environmental capital expenditures - Management explained that the $500 million is primarily for wastewater capital investments needed at manufacturing plants [37] Question: Impact of ERP implementation delay - Management confirmed that delaying the ERP implementation will postpone the benefits but does not foresee a major impact on future guidance [40] Question: Gross margin expectations - Management acknowledged that higher manufacturing costs and fixed cost deleveraging would impact gross margins, but they expect improvements as volume increases [42] Question: Share regain progression - Management is confident in winning back customers, with significant business wins expected in the latter half of the fiscal year [62]

Core Insights - Lamb Weston Holdings, Inc. reported a decline in both net sales and earnings for the first quarter of fiscal 2025, with net sales exceeding estimates while earnings met expectations [1][2][3] Financial Performance - Quarterly net sales reached $1,654.1 million, surpassing the Zacks Consensus Estimate of $1,555.2 million, but fell 1% year over year [3] - Earnings per share (EPS) was 73 cents, aligning with estimates but down 55% year over year due to lower adjusted income from operations, higher effective tax rates, and increased interest expenses [2][3] - Adjusted gross profit decreased by $137.2 million to $353.1 million, impacted by increased manufacturing costs, a $39 million loss from a product withdrawal, and lower sales volumes [7] - Adjusted EBITDA fell by $122.9 million to $289.9 million, primarily due to lower sales and a decline in adjusted gross profit [8] Segment Performance - North America segment net sales dropped 3% to $1,103.7 million, with a 4% decline in volume attributed to customer share losses and reduced restaurant traffic [9][10] - International segment net sales increased 4% to $550.4 million, despite a 1% decline in volume, supported by growth in key international markets [10][11] Restructuring Plan - The company announced a restructuring plan aimed at enhancing operational efficiency and profitability, which includes the closure of a manufacturing facility and a 4% reduction in the global workforce [4][14] - The restructuring is expected to generate approximately $55 million in pretax cost savings and reduce capital expenditures for fiscal 2025 by $100 million [14] Future Outlook - The company reaffirmed its fiscal 2025 net sales target of $6.6 billion to $6.8 billion, projecting growth of approximately 2% to 5% on a constant currency basis [15] - Adjusted net income target range was lowered to $600-$615 million and adjusted EPS to $4.15-$4.35, reflecting reduced adjusted EBITDA guidance [18] - Anticipated interest expense is around $185 million, with an effective tax rate of about 25% [19]

Group 1: Earnings Performance - Lamb Weston reported quarterly earnings of $0.73 per share, matching the Zacks Consensus Estimate, but down from $1.63 per share a year ago [1] - The company had a revenue of $1.65 billion for the quarter ended August 2024, exceeding the Zacks Consensus Estimate by 6.36%, but down from $1.67 billion year-over-year [2] - Over the last four quarters, Lamb Weston has surpassed consensus EPS estimates only once [1] Group 2: Stock Performance and Outlook - Lamb Weston shares have declined approximately 40.1% since the beginning of the year, contrasting with the S&P 500's gain of 20.8% [3] - The current consensus EPS estimate for the upcoming quarter is $1.20 on revenues of $1.67 billion, and for the current fiscal year, it is $4.54 on revenues of $6.61 billion [7] - The estimate revisions trend for Lamb Weston is currently unfavorable, resulting in a Zacks Rank 5 (Strong Sell) for the stock, indicating expected underperformance in the near future [6] Group 3: Industry Context - The Food - Miscellaneous industry, to which Lamb Weston belongs, is currently in the top 41% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Lamb Weston Holdings, Inc. (LW) is likely to register a top-and-bottom-line decline when it reports firstquarter fiscal 2025 earnings on Oct. 1, 2024. The Zacks Consensus Estimate for revenues is pegged at $1.56 billion, suggesting a decrease of 6.6% from the prior-year quarter's reported figure. The Zacks Consensus Estimate for the bottom line has remained unchanged in the past 30 days at 73 cents per share. The projection indicates a decline of 55.2% from the figure reported in the year-ago period. LW has ...

Company Overview - Lamb Weston (NYSE: LW) is a consumer-staples company that specializes in the production of frozen potato products [1] - The company operates 27 factories and distributes its products in over 100 countries [1] - Lamb Weston holds the 1 market share in North America and 2 in other regions [1] Leadership and Background - The founder of Building Benjamins, Benjamin Halliburton, has a long history in investment management, starting his career at Merrill Lynch in 1986 [1] - Halliburton has been recognized for his investment performance, including being named "PSN Manager of the Decade" for both All-Cap and Dividend Value categories in different decades [1] - He earned an MBA with a focus on finance from Duke's Fuqua School of Business and holds the Chartered Financial Analyst designation [1]

Core Insights - Lamb Weston Holdings, Inc. is facing fundamental challenges impacting its performance, including difficulties in commercial execution, supply chain operations, and a global decline in demand for frozen fries [1] - The company anticipates another difficult year in fiscal 2025, with a projected year-over-year decline in sales of 6.6% and earnings of 55.2% [2] Performance Overview - Year-to-date, Lamb Weston has experienced disappointing stock market performance, with a stock price decline of 41.7%, underperforming the Zacks Food - Miscellaneous industry's growth of 4.4% and the broader Consumer Staples sector's increase of 10% [3] Volume-Related Concerns - In the fourth quarter of fiscal 2024, Lamb Weston saw an 8% decline in volume, attributed to market share losses and a strategic exit from lower-priced, lower-margin businesses in Europe [5] - Weak restaurant traffic trends in North America and other international markets contributed to approximately 25% of this volume decline [5] - For the first half of fiscal 2025, the company projects a low-to-mid single-digit volume decline compared to the previous year [6] Cost Pressures - The adjusted gross profit for Lamb Weston dropped by $72.2 million to $363 million in the fourth quarter of fiscal 2024, primarily due to losses from product withdrawals and lower sales volumes [7] - The company is facing high manufacturing costs due to inflation in raw potatoes, labor, and ingredients, along with increased transportation and warehouse expenses [7] - Input cost inflation is expected to persist, influenced by a potentially below-average potato crop in Europe [8] Future Outlook - Lamb Weston anticipates a challenging operating environment in fiscal 2025, characterized by softened global restaurant traffic and reduced demand for frozen potatoes [8] - The company projects a mid- to high single-digit decline in sales for the first quarter of fiscal 2025, reflecting ongoing market share losses and weak restaurant traffic [8] - Margin pressure is expected to be intensified by higher costs per pound, an unfavorable product mix, and increased investments in pricing and trade support [8] Investor Sentiment - Analysts' negative sentiment is reflected in the Zacks Rank 5 (Strong Sell) for Lamb Weston, indicating expectations of further deterioration in the company's financial performance [9]

Company Overview - Lamb Weston Holdings Inc. is a leading American food company specializing in frozen potato products, with a market cap of $9 billion [1] - The company operates in two segments: North America (67% of FY 2024 revenue) and International (33%) [1] - McDonald's Corp. is the largest customer, accounting for 14% of total net sales [1] Dividend Growth - The company has increased its dividend for eight consecutive years since becoming independent in 2017 [2] - The five-year dividend growth rate is 7.9%, with a recent increase of 28.6% [3] - The current stock yield is 2.3%, which is 110 basis points higher than its five-year average, and the payout ratio is 28.9% [3] Revenue and Earnings Growth - Revenue grew from $3.2 billion in FY 2017 to $6.5 billion in FY 2024, representing a compound annual growth rate (CAGR) of 10.7% [4] - Earnings per share (EPS) increased from $2.22 to $4.98 during the same period, with a CAGR of 12.2% [5] - Recent challenges include a botched ERP transition and excess supply in the market, leading to a significant drop in stock price [5] Financial Position - The long-term debt/equity ratio is 1.9, and the interest coverage ratio is nearly 8, indicating a decent financial position [6] - Return on equity (ROE) averaged 269% over the last five years, with a net margin of 10.8% [6] - The company benefits from economies of scale and strong customer relationships, providing durable competitive advantages [6] Valuation - The stock is currently trading at a P/E ratio of 12.4, significantly lower than its five-year average of 23.4 [7] - A dividend discount model analysis estimates a fair value of $61.92, indicating the stock may be undervalued [11] - Professional analysis firms rate the stock as a 4-star "buy," with target prices of $70.00 and $95.00 from CFRA and Morningstar, respectively [13][14] Investment Opportunity - The recent stock price drop of nearly 50% presents a potential buying opportunity for long-term investors [5][15] - The company has a low payout ratio and a history of dividend increases, making it an attractive option for dividend growth investors [15]

Core Viewpoint - Lamb Weston (LW) is currently facing significant challenges, reflected in its Zacks Rank of 5 (Strong Sell), indicating a bearish outlook from analysts on the company's earnings potential [1][7]. Financial Performance - The latest quarterly results showed that Lamb Weston fell short of the Zacks Consensus EPS estimate by 37% and reported sales that were 5% below expectations, marking the second consecutive quarter of disappointing earnings and revenue [4]. - The company's shares have declined by 40% in 2024, primarily due to the negative impact of back-to-back quarterly results [4]. Market Conditions - CEO Tom Werner indicated that fiscal 2025 is expected to be another challenging year, citing a rapid change in the operating environment over the past year, with softened global restaurant traffic and frozen potato demand due to menu price inflation [5]. - The increase in available capacity in North America and Europe is a direct consequence of the demand pullback, as consumers are experiencing financial strain [5][6]. Earnings Outlook - Negative earnings estimate revisions have emerged from the soft quarterly results, painting a challenging picture for the company's shares in the near term [7].

A month has gone by since the last earnings report for Lamb Weston (LW) . Shares have added about 17.7% in that time frame, outperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Lamb Weston due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. Lamb Weston Q4 Earnings & Sales Lag Estimates, Down ...

NEW YORK, Aug. 19, 2024 (GLOBE NEWSWIRE) -- Bragar Eagel & Squire, P.C., a nationally recognized shareholder rights law firm, is investigating potential claims against Lamb Weston Holdings, Inc. (NYSE: LW) on behalf of long-term stockholders following a class action complaint that was filed against Lamb Weston on June 13, 2024 with a Class Period from July 25, 2023 to April 3, 2024. Our investigation concerns whether the board of directors of Lamb Weston have breached their fiduciary duties to the company. ...