Company Performance - Shares of Lamb Weston Holdings, Inc. (NYSE: LW) have declined approximately 8% over the past year due to weak pricing and lower traffic at restaurants [1] - Cost-cutting efforts are being implemented to stabilize results [1] Market Context - The company is facing challenges in the current market environment, particularly in the food service sector [1]

Group 1: Company Overview - Hormel Foods Corporation (NYSE:HRL) is a leading American multinational manufacturer and marketer of processed food, operating in three segments: Grocery Products, Foodservice, and International [2] - The Grocery Products segment is the largest producer of manufactured meat and food products for retail sales in the U.S., featuring well-known brands such as Planters, SPAM, Skippy, Herdez, Jennie-O, and Hormel [2] Group 2: Financial Performance - Hormel Foods recently reported quarterly earnings, with analysts forecasting earnings of $0.41 per share on revenue of $2.98 billion [3] - Organic product sales increased by 6% year-on-year, while overall revenue grew by 4.5% [3] - Despite revenue growth, earnings per share declined by 5.4% year-on-year, and the company provided soft forward guidance, disappointing investors [3] Group 3: Dividend Policy - Hormel Foods has a strong dividend policy, having increased its dividends for 59 consecutive years [4] - The company declared a quarterly dividend of $0.29 per share, resulting in a dividend yield of 4.69% as of September 27 [4]

Market Overview - The U.S. is facing a potential government shutdown, which could have economic implications, including a drag on GDP of about 0.1% per week if resolved quickly, but potentially more significant if extended [1][2] - Job openings reported at 7.227 million, slightly above estimates, indicating a tight labor market [1][2] - Consumer confidence index for September came in at 94.2, lower than the expected 96, marking the lowest level since April [1][3] Economic Implications - A prolonged government shutdown could lead to furloughs of 600,000 to 700,000 workers, potentially raising the unemployment rate from 4.3% to between 4.5% and 4.7% [1][2] - Consumer confidence is being affected by rising prices in food, fuel, and utilities, which dampens spending and corporate investment [2][3] - The market has shown resilience despite political uncertainties, with stocks generally not reacting strongly to government shutdowns historically [1][2] Company Focus: Nike - Nike is set to report fiscal first-quarter earnings, with expectations of a year-over-year sales decline of 5% to 6% [5][6] - Analysts are looking for guidance indicating a smaller decline in the second quarter, ideally down only 3% to 4% [5][6] - Innovation is highlighted as a key factor for Nike's growth, particularly in the running footwear category, which is crucial for the brand's recovery [5][6] Consumer Behavior - There is a contradiction between consumer sentiment and spending, with strong spending indicators despite declining confidence [3][4] - Concerns about job availability and rising prices are prevalent among consumers, impacting their financial outlook [3][4] - The upcoming holiday season is expected to test consumer tolerance for price increases due to tariffs [3][4] Industry Trends - The athleisure market has faced challenges, with many stocks down significantly this year despite strong sales growth [5][6] - Companies like Under Armour are noted for potential growth due to upcoming innovations, despite negative sentiment [5][6] - The overall market sentiment is cautious, with investors closely monitoring earnings and consumer behavior as key indicators for future performance [5][6]

Core Insights - Lamb Weston Holdings, Inc. reported first-quarter fiscal 2026 net sales of $1.66 billion, slightly up from $1.65 billion year-over-year and exceeding the $1.62 billion estimate [1] - Adjusted net income was $103 million, with adjusted earnings per share of 74 cents, surpassing the 55-cent estimate [1] - Adjusted EBITDA increased to $302.2 million from $299.4 million [1] Financial Performance - Overall volume rose by 6%, while price/mix declined by 7% due to prior-year pricing investments and channel mix [3] - Gross profit decreased to $342.4 million from $356.0 million, with adjusted gross profit down to $338.9 million from $353.1 million [3] - SG&A expenses increased to $153.6 million from $143.9 million, while adjusted SG&A fell to $132.4 million from $156.4 million [4] Segment Performance - North America sales declined by 2% to $1.08 billion, with 5% volume growth offset by a 7% price/mix drop [5] - International sales rose by 4% to $574.7 million, including a $24.5 million currency benefit, while constant-currency sales were flat [5] - International adjusted EBITDA improved to $57.2 million from $51.4 million, aided by higher volumes and lower potato costs [5] Cash Flow and Capital Management - Operating cash flow rose to $352.0 million from $330.2 million, driven by lower inventories [6] - Capital spending dropped to $79.2 million from $335.6 million after major projects were completed [6] - The company returned $62.1 million to shareholders, including $51.7 million in dividends and $10.4 million in repurchases [6] Outlook - The company reaffirmed its fiscal 2026 guidance for constant-currency sales of $6.35 billion to $6.55 billion, compared to a $6.49 billion estimate, and adjusted EBITDA of $1.0 billion to $1.2 billion [7]

Financial Data and Key Metrics Changes - First quarter net sales increased by $5 million, including a $24 million favorable impact from foreign currency translation, but declined 1% on a constant currency basis [15] - Volume increased by 6%, driven by customer wins and retention, primarily in North America and Asia [15] - Adjusted EBITDA was essentially flat at $302 million, with the favorable impact from currency translation offset by higher local currency expenses [21] Business Line Data and Key Metrics Changes - North America net sales declined 2% compared to the prior year, primarily due to lower net selling prices, with price/mix declining 7% and volume increasing 5% [17] - International segment net sales increased 4%, including a favorable $24 million impact from foreign currency translation, with volume growing 6% and price/mix declining 6% [17] - Adjusted EBITDA in North America declined 6% to $260 million, while international segment adjusted EBITDA increased by $6 million to $57 million [22] Market Data and Key Metrics Changes - Restaurant traffic in the U.S. was flat, with QSR hamburger traffic down low single digits, while QSR chicken traffic was up [16][78] - Internationally, traffic was mixed, with the U.K. down 4% but other markets like France and Germany showing slight increases [78] Company Strategy and Development Direction - The company is executing its new strategic plan, "Focus to Win," aiming for profitable growth through category-leading innovation and customer-centric actions [4][5] - The company is prioritizing specific markets and products where it has a sustainable competitive advantage [7] - New innovative products are set to launch in the fall, including flavor-forward offerings and artisanal fries [11] Management's Comments on Operating Environment and Future Outlook - Management noted positive customer momentum and strong volume growth, with expectations for continued growth in both segments [4][26] - The company anticipates challenges in price/mix due to strong crop yields and competitive actions, particularly in Latin America [18][26] - Management reaffirmed its fiscal 2026 outlook, expecting revenue in the range of $6.35 billion to $6.55 billion [25][26] Other Important Information - The company ended the quarter with approximately $1.4 billion of liquidity and generated $352 million of cash from operations [23] - Capital expenditures for the quarter declined to $79 million, with expectations of approximately $500 million for fiscal 2026 [24] Q&A Session Summary Question: Restarting a curtailed production line and industry capacity - Management indicated the restart was necessary to meet demand signals and maintain customer fill rates, noting that some announced industry capacity may be delayed or canceled [36][37] Question: Price/mix expectations for the first half of the fiscal year - Management expects a mid to high single-digit decrease in price/mix for the first half, moderating in the back half of the year [39] Question: Gross margin commentary and seasonal increases - Management confirmed that the North America segment will see a seasonal increase, but input cost inflation will also impact margins [45] Question: Tariff exposure and guidance - Most tariff exposure relates to imports of palm oil, with an expected annualized impact of about $25 million [47] Question: Customer wins and profitability - Management refrained from discussing specific profitability on new customers but emphasized that pricing aligns with expectations [100] Question: Capital expenditures outlook - Management indicated that the $500 million capital expenditure plan is in line with expectations for maintenance and environmental projects [101]

Financial Data and Key Metrics Changes - First quarter net sales increased by $5 million, including a $24 million favorable impact from foreign currency translation, but declined 1% on a constant currency basis [15] - Volume increased by 6%, driven by customer wins and retention, primarily in North America and Asia [15] - Adjusted EBITDA was essentially flat at $302 million, with the favorable impact from currency translation offset by higher local currency expenses [21] Business Line Data and Key Metrics Changes - North America net sales declined 2% compared to the prior year, primarily due to lower net selling prices, with price/mix declining 7% and volume increasing 5% [17] - International segment net sales increased 4%, including a favorable $24 million impact from foreign currency translation, with volume growing 6% and price/mix declining 6% [17] Market Data and Key Metrics Changes - Restaurant traffic in the U.S. was flat, with QSR hamburger traffic down low single digits, while QSR chicken traffic was up [16][78] - Internationally, traffic was mixed, with the U.K. down 4% but other markets like France and Germany showing slight increases [78] Company Strategy and Development Direction - The company is executing its new strategic plan, "Focus to Win," aiming for profitable growth through category-leading innovation and customer-centric actions [4][5] - The company is prioritizing specific markets and products where it has a sustainable competitive advantage [7] Management's Comments on Operating Environment and Future Outlook - Management noted that the industry is rational regarding capacity, with some announced capacity not moving forward as planned [36] - The company expects continued pressure on price/mix due to a strong crop and competitive actions, particularly in Latin America [18] Other Important Information - The company is on track to achieve at least $250 million of annual run-rate savings by fiscal year-end 2028 [5] - Capital expenditures for the quarter declined to $79 million, with expectations of approximately $500 million for fiscal 2026 [24] Q&A Session Summary Question: Restarting a curtailed production line and supply-demand imbalance - Management indicated the restart was necessary to meet demand signals and maintain customer fill rates, noting that not all new capacity announcements will proceed as planned [36][37] Question: Price/mix expectations for the first fiscal half - Management expects a mid to high single-digit decrease in price/mix for the first half, moderating to low to mid in the back half of the year [39] Question: Gross margin commentary for North America - Management confirmed a seasonal increase in North America, with input cost inflation expected to rise in Q2 but benefits from lower potato prices also anticipated [45] Question: Tariff exposure - Most tariff exposure relates to imports of palm oil and other ingredients, with an annualized expectation of about $25 million [47] Question: New customer wins and profitability - Management refrained from discussing specific profitability on new customers but emphasized that pricing aligns with the P&L moving forward [100] Question: Capital expenditures outlook - Management indicated that the $500 million capital expenditure for the year is in line with expectations for maintenance and environmental projects [101]

Financial Data and Key Metrics Changes - First quarter net sales increased by $5 million, including a $24 million favorable impact from foreign currency translation, but declined 1% on a constant currency basis [13] - Volume increased by 6%, driven by customer wins and retention, primarily in North America and Asia [13] - Adjusted EBITDA was essentially flat at $302 million, with the favorable impact from currency translation offset by higher local currency expenses [19] Business Line Data and Key Metrics Changes - North America net sales declined 2% compared to the prior year, primarily due to lower net selling prices, with price/mix declining 7% and volume increasing 5% [16] - International segment net sales increased 4%, including a favorable $24 million impact from foreign currency translation, with volume growing 6% and price/mix declining 6% [16][20] - Adjusted EBITDA in North America declined 6% to $260 million, while the international segment's adjusted EBITDA increased by $6 million to $57 million [20] Market Data and Key Metrics Changes - Restaurant traffic in the U.S. was flat, with QSR hamburger traffic down low single digits, while QSR chicken traffic was up [14][72] - Internationally, traffic was mixed, with the U.K. down 4% but other markets like France and Germany showing slight increases [15][72] Company Strategy and Development Direction - The company is executing its new strategic plan, "Focus to Win," aimed at driving profitable growth and enhancing customer partnerships [4][7] - The company is prioritizing specific markets and products where it believes it has a sustainable competitive advantage [5] - New innovative products are set to launch in the fall, aligning with customer trends [10] Management's Comments on Operating Environment and Future Outlook - Management noted that while the first quarter results exceeded expectations, the outlook remains cautious due to potential pressures from soft restaurant market demand and increased competition [25][29] - The company expects unfavorable price/mix to continue in the first half of the year, moderating in the second half [25][27] - Management reaffirmed the fiscal 2026 revenue outlook, expecting a range of $6.35 billion to $6.55 billion [24] Other Important Information - The company ended the quarter with approximately $1.4 billion of liquidity and generated $352 million of cash from operations [22] - Capital expenditures for the quarter declined to $79 million, with expectations of approximately $500 million for fiscal 2026 [23] Q&A Session Summary Question: Restarting a curtailed production line and industry capacity - Management indicated the restart was necessary to meet demand signals and maintain customer fill rates, noting that some announced industry capacity may be delayed or canceled [34] Question: Price/mix expectations for the first half of the year - Management expects a mid to high single-digit decrease in price/mix for the first half, moderating in the back half of the year [36] Question: Gross margin commentary for North America - Management confirmed that the increase in gross margin is expected to be seasonal, with input cost inflation anticipated in the second quarter [42] Question: Tariff exposure and guidance - Most tariff exposure relates to imports of palm oil and is expected to be about $25 million annually, with full amounts included in guidance [44] Question: Customer win growth in North America - Management noted that new customer wins have materialized quicker than anticipated, contributing to volume growth [55] Question: Impact of restarting the curtailed line - Management stated that restarting the line would not incur significant costs and is expected to maintain production based on demand signals [63] Question: Phasing of cost savings in fiscal 2026 - Management confirmed that they are on track to deliver the $100 million target for fiscal 2026, with two-thirds of the benefits expected in the back half of the year [67] Question: Drivers of business wins with QSR customers - Management emphasized a renewed focus on service quality and consistency, alongside joint business planning with customers [70]

Group 1: Hormel Foods Corporation Overview - Hormel Foods Corporation is focusing on the multi-year Transform and Modernize (T&M) initiative to enhance long-term profitability, with approximately 90 projects contributing to measurable bottom-line results in the fiscal third quarter [1][8] - The T&M initiative includes modernizing the supply chain and brand renovations, such as the update of Hormel pepperoni to align with consumer tastes [2][8] - Financially, T&M is projected to deliver $100-$150 million in incremental benefits in fiscal 2025, helping to mitigate the impact of rising pork and beef costs [3][8] Group 2: Industry Comparisons - Pilgrim's Pride Corporation reported a 4.3% increase in net sales to $4.76 billion in Q2 2025, driven by strong consumer demand and operational efficiencies [5] - Tyson Foods, Inc. achieved a 4% revenue increase to $13.9 billion in Q3 2025, with notable performance in the Chicken segment, which generated $4.22 billion in sales [6] - Smithfield Foods, Inc. recorded a 20% year-over-year increase in adjusted operating profit to $298 million in Q2 2025, supported by strong demand in Packaged Meats and improved profitability in Fresh Pork and Hog Production [7]

Lamb Weston Holdings Inc. jumped after reporting sales and profit that beat expectations, in part due to improved restaurant foot traffic https://t.co/kFMW8rpiog ...

Financial Performance - Net sales were $1659 million, flat compared to Q1 F25, but down 1% at constant currency[14, 26] - Adjusted diluted EPS was $074, a decrease of 5% compared to Q1 F25[14] - Adjusted EBITDA increased by 1% to $302 million[14, 15] - Free cash flow was $273 million[14] Volume and Pricing - Overall volume increased by 6%[15] - Price/mix decreased by 7% in constant currency[15] - North America volume increased by 5%, while price/mix decreased by 7%[28] - International volume increased by 6%, while price/mix decreased by 6% in constant currency[28] Strategic Initiatives and Outlook - The company is implementing "Focus to Win" program, including a Cost Savings Program[11] - Capital expenditures for FY26 are forecasted to be approximately $500 million[40] - The company reaffirms its fiscal 2026 outlook, with net sales projected between $635 billion and $655 billion, and adjusted EBITDA between $10 billion and $12 billion[11, 47] Cash Flow and Capital Allocation - The company has approximately $99 million in cash and equivalents and $13 billion available under its revolving credit facility[39] - Net debt is approximately $39 billion, with a net debt to adjusted EBITDA leverage ratio of 31x[39] - The company returned $62 million to shareholders, including $52 million in dividends and $10 million in share repurchases[40]