Lamb Weston(US:LW)2025-09-30 15:02Financial 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]