Lamb Weston Q3 Earnings Beat Estimates, Sales Grow on Strong Volume

Core Insights - Lamb Weston Holdings, Inc. reported third-quarter fiscal 2025 results with earnings per share (EPS) of $1.10, exceeding the Zacks Consensus Estimate of 87 cents, despite an 8% year-over-year decline in EPS due to increased tax rates and interest expenses [2][4] - Net sales reached $1,520.5 million, surpassing the Zacks Consensus Estimate of $1,500.1 million, marking a 4% increase year over year [3][4] Financial Performance - Adjusted gross profit decreased by $6.6 million to $420.4 million, influenced by a negative price/mix, increased transportation and warehousing costs, and higher depreciation expenses [7] - Adjusted selling, general and administrative (SG&A) expenses fell by $7.2 million to $157.2 million, benefiting from cost savings initiatives [8] - Adjusted EBITDA rose by $20.2 million year over year to $363.8 million, driven by increased net sales and reduced SG&A expenses [9] Volume and Sales Trends - Volume increased by 9% compared to the same quarter last year, successfully replacing lost volume from regional and retail customers [5] - North America segment net sales grew by 4% to $986.3 million, with an 8% rise in sales volume [10] - International segment net sales increased by 5% to $534.2 million, with a 12% rise in volume despite weak restaurant traffic [11] Strategic Initiatives - The company is implementing a Restructuring Plan to achieve cost savings while addressing challenges from soft restaurant traffic [4] - Lamb Weston is collaborating with AlixPartners to evaluate opportunities for value creation and cost savings [4] Shareholder Returns - The company returned $151.4 million to shareholders through cash dividends and share repurchases, including $51.4 million in cash dividends and $100 million in share repurchases [14] - A quarterly dividend of 37 cents per share was declared, payable on May 30, 2025 [15] Future Outlook - The company maintains its fiscal 2025 net sales target range of $6.35-$6.45 billion and adjusted EBITDA target range of $1.17 billion to $1.21 billion [17] - Adjusted SG&A expenses are now expected to be between $665 million and $675 million, down from previous estimates [18]