Lamb Weston(US:LW)2024-07-24 19:51Financial Data and Key Metrics Changes - Sales declined by $83 million or 5% to over $1.61 billion, with volume down 8% and price/mix up 3% [13][31] - Adjusted SG&A expenses decreased by $6 million to $172 million, reflecting lower performance-based compensation [15] - Adjusted EBITDA was $283 million, down $50 million year-over-year, primarily due to lower sales and gross profit [55] Business Line Data and Key Metrics Changes - North America segment sales declined by $47 million or 4%, with volume down 7% and price/mix up 3% [16] - International segment sales decreased by $36 million or 7%, with volume down 9% [33] - Adjusted EBITDA for the International segment fell by 52% to $40 million, impacted by lower sales volume and higher costs [34] Market Data and Key Metrics Changes - U.S. restaurant traffic, particularly in QSRs, was down about 3%, with hamburger chains seeing a decline of over 4% [8] - Internationally, restaurant traffic trends were mixed, with growth in China and Japan but declines in the UK and Germany [9] Company Strategy and Development Direction - The company is focusing on volume-driven sales growth rather than price-driven, with targeted investments in pricing and trade support [7][36] - Strategic actions include integrating acquisitions, modernizing production capabilities, and upgrading IT infrastructure [5][23] - The company anticipates a challenging operating environment in fiscal 2025, with a focus on regaining market share and improving profitability [44][60] Management's Comments on Operating Environment and Future Outlook - Management acknowledged execution challenges and soft global demand for fries, leading to disappointing financial results [4][29] - The company expects volume to decline in the first half of fiscal 2025 but anticipates recovery in the second half due to contract wins and market share recapture [26][62] - Management remains confident in the long-term growth outlook despite current market softness [44][60] Other Important Information - The company plans to target sales of $6.6 billion to $6.8 billion in fiscal 2025, implying growth of 2% to 5% [36] - Capital expenditures for the year are expected to be approximately $850 million, with a notable decrease anticipated in fiscal 2026 [39][65] Q&A Session Summary Question: What is the management's view on the current guidance and conservativeness? - Management indicated a cautious approach due to prolonged negative restaurant traffic trends, which have accelerated recently [97] Question: Can you provide more details on the voluntary product withdrawal? - The product withdrawal was a decision made to maintain product integrity, impacting both the fourth and first quarters financially [99][115] Question: How does the company view its capacity utilization and share losses? - Management refrained from providing specific capacity utilization rates but acknowledged that share losses were partly due to the ERP transition and current market conditions [88][90]