Lamb Weston(US:LW)2025-12-19 17:35Financial Performance - Net sales for Q2 fiscal 2026 increased by $17.2 million to $1,618.1 million, with an 8% volume increase offset by an 8% decline in price/mix [88]. - North America segment net sales were essentially flat at $1,069.5 million, with an 8% volume increase driven by customer contract wins, but an 8% decline in price/mix [89]. - International segment net sales increased by $19.8 million, or 4%, to $548.6 million, with a 7% volume increase but an 8% decline in price/mix at constant currency [90]. - Net sales for the first half of fiscal 2026 increased by $22.3 million to $3,277.3 million, with a 7% volume increase offset by an 8% decline in price/mix [101]. - North America segment net sales for the first half declined by $21.8 million, or 1%, to $2,154.0 million, with a 7% volume increase but an 8% decline in price/mix [102]. - Net sales for the same period were $1,618.1 million, down from $1,642.5 million, reflecting a decrease of 1.5% due to currency impacts [130]. - North America net sales for the twenty-six weeks ended November 23, 2025, were $2,154.0 million, a slight decrease of 0.9% from the previous year [133]. Profitability - Gross profit increased by $46.5 million to $324.3 million, while Adjusted Gross Profit declined by $15.6 million to $327.9 million due to unfavorable price/mix [91]. - Gross profit increased by $32.9 million to $666.7 million compared to the first half of fiscal 2025, while adjusted gross profit declined by $29.8 million to $666.8 million due to unfavorable price/mix and increased costs [104]. - Net income rose by $98.2 million to $62.1 million, while Adjusted EBITDA declined by $8.5 million to $285.7 million [93]. - Net income rose by $35.1 million to $126.4 million, while adjusted EBITDA fell by $5.8 million to $285.7 million, impacted by lower adjusted gross profit and equity method investment earnings [107]. - The adjusted income tax expense for the thirteen weeks ended November 23, 2025, was $45.0 million, compared to $53.5 million in the prior year, a decrease of 16.0% [129]. Expenses - SG&A expenses decreased by $13.7 million to $171.0 million, with Adjusted SG&A down by $7.8 million to $145.1 million, driven by cost savings initiatives [92]. - Selling, General and Administrative (SG&A) expenses decreased by $4.0 million to $324.6 million, with adjusted SG&A down by $31.8 million to $277.5 million, reflecting ongoing cost savings initiatives [106]. Segment Performance - North America Segment Adjusted EBITDA increased by $18.6 million to $287.8 million, driven by higher volume and lower manufacturing costs [94]. - International Segment Adjusted EBITDA decreased by $21.4 million to $27.2 million, primarily due to higher manufacturing costs per pound [95]. - North America Segment Adjusted EBITDA remained flat at $547.8 million, with higher sales volumes offset by price and trade support costs [108]. - International Segment Adjusted EBITDA decreased by $15.6 million to $84.4 million, primarily due to unfavorable price/mix and higher manufacturing costs [109]. Cash Flow and Investments - Cash provided by operating activities increased by $101.1 million to $530.4 million, driven by favorable changes in working capital and increased net income [118]. - Investing activities used $137.3 million in cash, significantly lower than $484.9 million in the prior year, primarily for expanding production capacity in Argentina [119]. - Financing activities included net payments of $187.6 million under revolving credit facilities and $103.3 million in cash dividends paid to common stockholders [120]. Tax and Accounting - The effective income tax rate for the first half of fiscal 2026 was 39.9%, down from 41.3% in the prior year, with a higher adjusted effective tax rate of 31.1% compared to 26.3% in the previous year [111]. - The company reported total adjustments of $3.6 million for the thirteen weeks ended November 23, 2025, impacting comparability due to various expenses [129]. - The company has not reported any material changes to off-balance sheet arrangements during the reporting period [134]. - There were no material changes to critical accounting policies and estimates during the second quarter of fiscal 2026 [135]. Risk Management - The company continues to monitor and manage market risks related to currency exchange rates, commodity prices, and interest rates as part of its risk management program [137].