LW Q1 Earnings Meet Estimates, Profit View Cut Amid Demand Slowdown

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]