Lamb Weston(US:LW)2024-12-19 11:03Financial Performance - Net sales declined 8% to $1,601 million in Q2 FY2025 compared to Q2 FY2024[2] - Net income declined $251 million to a loss of $36 million in Q2 FY2025[2] - Adjusted EBITDA declined 25% to $282 million in Q2 FY2025[2] - Net sales for the thirteen weeks ended November 24, 2024 decreased to $1,600.9 million from $1,732.1 million in the prior year period[44] - Gross profit for the thirteen weeks ended November 24, 2024 declined to $277.8 million from $475.6 million in the prior year period[44] - Net income for the thirteen weeks ended November 24, 2024 was a loss of $36.1 million compared to a profit of $215.0 million in the prior year period[44] - Net income for the period ended November 24, 2024, was $91.3 million, compared to $449.8 million in the same period last year[53] - Net income for the twenty-six weeks ended November 24, 2024, was $91.3 million[65] - Adjusted diluted EPS for the thirteen weeks ended November 24, 2024, was $0.66, compared to $1.48 in the same period last year[61] - Diluted EPS for the twenty-six weeks ended November 24, 2024, was $0.64[65] Segment Performance - North America segment net sales declined 8% to $1,072.1 million in Q2 FY2025[16] - International segment net sales declined 6% to $528.8 million in Q2 FY2025[19] - North America segment net sales decreased by 8% to $1,072.1 million, with a 3% decline in price/mix and a 5% decline in volume[56] - International segment net sales decreased by 6% to $528.8 million, driven entirely by a 6% decline in volume[56] - North America segment Adjusted EBITDA decreased by 17% to $266.7 million[56] - International segment Adjusted EBITDA decreased by 53% to $47.4 million[56] - North America segment Adjusted EBITDA for the twenty-six weeks ended November 24, 2024, was $542.8 million[70] - International segment Adjusted EBITDA for the twenty-six weeks ended November 24, 2024, was $97.9 million[70] Cost and Expenses - Adjusted Gross Profit declined $134.9 million to $343.5 million in Q2 FY2025[12] - Restructuring expenses for the thirteen weeks ended November 24, 2024 totaled $74.6 million, primarily related to facility closures and employee severance[44] - Cost of sales for the thirteen weeks ended November 24, 2024 included $75.5 million in charges for unused raw potatoes and inventory write-offs[44] - The twenty-six weeks ended November 24, 2024 included a $39 million charge related to a voluntary product withdrawal[46] - Restructuring Plan expenses for the twenty-six weeks ended November 24, 2024, were $159.1 million[70] - Unallocated corporate costs for the twenty-six weeks ended November 24, 2024, were $(68.9) million[70] - Income tax expense for the twenty-six weeks ended November 24, 2024, was $64.2 million[65] - Interest expense for the twenty-six weeks ended November 24, 2024, was $88.5 million[65] Cash Flow and Liquidity - Net cash provided by operating activities for the first half of fiscal 2025 was $429.3 million, down $25.9 million versus the prior year period[22] - Capital expenditures during the first half of fiscal 2025 were $486.4 million, down $73.0 million versus the prior year period[23] - The Company had $79.0 million of cash and cash equivalents and $1,211.9 million of available liquidity under its revolving credit facility as of November 24, 2024[25] - Cash and cash equivalents increased to $79.0 million as of November 24, 2024 from $71.4 million as of May 26, 2024[50] - Net cash provided by operating activities was $429.3 million, slightly down from $455.2 million in the previous year[53] - Additions to property, plant, and equipment were $474.6 million, down from $507.6 million in the previous year[53] - Proceeds from short-term borrowings increased significantly to $811.6 million, compared to $194.3 million in the prior year[53] Shareholder Returns - The Company returned $103.3 million to shareholders through cash dividends and repurchased $82.0 million of its common stock in the first half of fiscal 2025[26] - The Board of Directors approved an increase of $250 million in the Company's share repurchase authorization, bringing the total to $750 million[27] - Repurchase of common stock and common stock withheld to cover taxes amounted to $92.8 million, down from $164.3 million in the previous year[53] Outlook and Targets - Updated fiscal 2025 outlook projects net sales of $6.35 billion to $6.45 billion[2] - The Company reduced its annual net sales target range to $6.35 billion to $6.45 billion, down from $6.6 billion to $6.8 billion[29] - The Company reduced its GAAP net income target range to $330 million to $350 million and Diluted EPS to $2.30 to $2.45[30] - The Company reduced its Adjusted EBITDA target range to $1,170 million to $1,210 million from approximately $1,380 million[31] - The Company reduced its Adjusted Net Income target range to $440 million to $460 million and Adjusted Diluted EPS to $3.05 to $3.20[32] - The Company expects cash used for capital expenditures, excluding acquisitions, to be approximately $750 million[33] Restructuring Plan - Restructuring Plan expected to generate $55 million in pre-tax cost savings in FY2025[7] - Restructuring expenses for the thirteen weeks ended November 24, 2024 totaled $74.6 million, primarily related to facility closures and employee severance[44] - Restructuring Plan expenses for the twenty-six weeks ended November 24, 2024, were $159.1 million[70] Volume and Traffic Trends - Volume declined 6% in Q2 FY2025, reflecting soft global restaurant traffic trends[9] - North America segment net sales decreased by 8% to $1,072.1 million, with a 3% decline in price/mix and a 5% decline in volume[56] - International segment net sales decreased by 6% to $528.8 million, driven entirely by a 6% decline in volume[56] Equity and Investments - Equity method investment earnings were $2.1 million in Q2 FY2025[21] Balance Sheet - Inventories increased to $1,327.2 million as of November 24, 2024 from $1,138.6 million as of May 26, 2024[50] - Long-term debt increased to $3,693.6 million as of November 24, 2024 from $3,440.7 million as of May 26, 2024[50] - Total assets increased to $7,452.1 million as of November 24, 2024 from $7,367.0 million as of May 26, 2024[50] Adjusted Metrics - Adjusted EBITDA for the twenty-six weeks ended November 24, 2024, was $571.8 million[70] - Gross profit for the twenty-six weeks ended November 24, 2024, was $633.8 million[65]