Fourth Quarter Fiscal 2024
Highlights
- GAAP Results as Compared to Fourth Quarter Fiscal 2023:
- Net sales declined 5% to $1,612 million
- Income from operations increased 14% to $213 million
- Net income declined 74% to $130 million
- Diluted EPS declined 74% to $0.89
- Non-GAAP Results as Compared to Fourth Quarter Fiscal 2023:
- Adjusted Income from Operations(1) declined 26% to $191
million
- Adjusted Net Income(1) declined 40% to $114 million
- Adjusted Diluted EPS(1) declined 40% to $0.78
- Adjusted EBITDA(1) declined 15% to $283 million
- Paid $52 million in cash dividends to common shareholders and
repurchased $60 million of common stock
Full Year Fiscal 2024
Highlights
- GAAP Results as Compared to Full Year Fiscal 2023:
- Net sales increased 21% to $6,468 million, including $1,107
million of incremental sales attributable to acquisitions
- Income from operations increased 21% to $1,065 million
- Net income declined 28% to $726 million
- Diluted EPS declined 28% to $4.98
- Non-GAAP Results as Compared to Full Year Fiscal 2023:
- Adjusted Income from Operations(1) increased 16% to $1,085
million
- Adjusted Net Income(1) increased 6% to $740 million
- Adjusted Diluted EPS(1) increased 6% to $5.08
- Adjusted EBITDA(1) increased 13% to $1,417
- Paid $174 million in cash dividends to common shareholders and
repurchased $210 million of common stock
Fiscal 2025 Outlook
- Net sales of $6.6 billion to $6.8 billion
- Net income of $630 million to $705 million, and Diluted EPS of
$4.35 to $4.85
- Adjusted EBITDA(1) of $1,380 million to $1,480 million
Lamb Weston Holdings, Inc. (NYSE: LW) announced today its fiscal
fourth quarter and full year 2024 results and provided its outlook
for fiscal 2025.
“We are disappointed by our fourth quarter performance,” said
Tom Werner, President and CEO. “Our price/mix results were below
our expectations, while market share losses and a slowdown in
restaurant traffic in the U.S. and many of our key international
markets were greater than we expected. We also incurred losses
related to a voluntary product withdrawal.”
“We expect fiscal 2025 to be another challenging year. The
operating environment has changed rapidly over the past twelve
months as global restaurant traffic and frozen potato demand
softened due to menu price inflation continuing to negatively
affect global restaurant traffic. This has resulted in an increase
in available capacity in North America and Europe. We believe this
supply-demand imbalance will persist through much, if not all, of
fiscal 2025. Accordingly, we are making some operating adjustments
in the near term to fit the macroeconomic reality and business
environment, including reinvigorating volume growth, targeted
investments in price and trade support, decisive measures on cost,
supply chain productivity initiatives, and a rephasing of
investments to modernize production capabilities to better match
the demand environment.”
“Despite these near-term headwinds, we remain focused on
executing on our long-term strategies, and improving customer
service. We believe the actions we are taking to continue to
strengthen our portfolio and capabilities, position us well to
continue to support our customers and create value for our
stakeholders over the long term.”
Summary of Fourth Quarter and
FY 2024 Results
($ in millions, except per
share)
Q4 2024
Year-Over-Year Growth
Rates
FY 2024
Year-Over-Year Growth
Rates
Net sales
$
1,611.9
(5)%
$
6,467.6
21%
Income from operations
$
212.5
14%
$
1,065.3
21%
Net income
$
129.6
(74)%
$
725.5
(28)%
Diluted EPS
$
0.89
(74)%
$
4.98
(28)%
Adjusted Income from Operations (1)
$
191.0
(26)%
$
1,084.5
16%
Adjusted Net Income (1)
$
113.7
(40)%
$
739.9
6%
Adjusted Diluted EPS (1)
$
0.78
(40)%
$
5.08
6%
Adjusted EBITDA (1)
$
283.4
(15)%
$
1,416.7
13%
Q4 2024 Commentary
Net sales declined $83.0 million to $1,611.9 million, down 5
percent versus the prior year quarter. Volume declined 8 percent,
with more than one-half of the decline reflecting the impact of
market share losses, as well as the Company's decision to exit
certain lower-priced and lower-margin business in Europe earlier in
the year. The Company estimates that approximately one-quarter of
the volume decline was due to soft restaurant traffic trends in
North America and other key international markets, with most of the
remainder of the decline due to the voluntary product
withdrawal.
Price/mix increased 3 percent, reflecting the carryover benefit
of inflation-driven pricing actions taken in late fiscal 2023, as
well as pricing actions taken in fiscal 2024, across both of the
Company's business segments.
Gross profit increased $8.5 million versus the prior year
quarter to $387.9 million, and included a $24.9 million ($18.5
million after-tax, or $0.13 per share) unrealized gain related to
mark-to-market adjustments associated with commodity hedging
contracts. The prior year quarter included a $28.8 million ($21.5
million after-tax, or $0.13 per share impact) unrealized loss
related to mark-to-market adjustments associated with commodity
hedging contracts; and $27.0 million of costs ($20.0 million
after-tax, or $0.14 per share) associated with the sale of
inventory stepped-up following completion of the Company’s
acquisition of the remaining interest in Lamb-Weston/Meijer v.o.f.,
the Company’s former joint venture in Europe (“LW EMEA”), in
February 2023 (the “LW EMEA Acquisition”).
Adjusted Gross Profit(1) declined $72.2 million versus the prior
year quarter to $363.0 million, due to an approximately $40 million
impact associated with the voluntary product withdrawal, as well as
lower sales volumes. The benefit of inflation-driven pricing
actions largely offset higher manufacturing costs per pound, as
well as higher transportation and warehouse costs. The higher
manufacturing costs per pound reflected mid-single-digit input cost
inflation, in aggregate, for key inputs, including: raw potatoes,
labor, and ingredients such as grains and starches used in product
coatings. The increase in per pound costs was partially offset by
lower costs of edible oils and energy.
Selling, general and administrative expenses (“SG&A”)
declined $17.0 million versus the prior year quarter to $175.4
million, and included: $1.6 million ($1.2 million after-tax, or
$0.01 per share) of LW EMEA integration and acquisition-related
expenses; $1.6 million ($1.2 million after-tax, or $0.01 per share)
unrealized gain related to mark-to-market adjustments associated
with currency hedging contracts; and $3.4 million ($2.6 million
after-tax, or $0.02 per share) of foreign currency exchange losses.
The prior year quarter included $9.0 million of LW EMEA
Acquisition-related expenses ($9.8 million after-tax, or $0.07 per
share), net of a foreign currency gain from actions taken to
mitigate the effect of changes in currency rates on the purchase
price for the acquisition; a $4.2 million ($3.1 million after-tax,
or $0.02 per share) unrealized loss related to mark-to-market
adjustments associated with currency hedging contracts; and $1.3
million ($1.0 million after-tax, or $0.01 per share) of foreign
currency exchange losses.
Adjusted SG&A(1) declined $5.9 million to $172.0 million, as
a reduction in performance-based compensation and benefits accruals
more than offset higher expenses associated with information
technology investments, including $5.8 million of incremental
non-cash amortization related to the Company's new enterprise
resource planning (“ERP”) system, as well as higher advertising and
promotion (“A&P”) investments to support the launch of retail
products in Europe.
Income from operations increased $25.5 million to $212.5
million, up 14 percent versus the prior year quarter. Adjusted
Income from Operations(1) declined $66.3 million to $191.0 million,
down 26 percent versus the prior year quarter. The decline
primarily reflects lower net sales and Adjusted Gross Profit(1),
which was partially offset by lower Adjusted SG&A(1).
Net income was $129.6 million, down $369.2 million versus the
prior year quarter, and Diluted EPS was $0.89, down $2.51 from the
prior year quarter. Net income in the current quarter included a
total net gain of $15.9 million ($21.5 million before tax, or $0.11
per share) for foreign currency exchange and unrealized
mark-to-market derivative gains and losses, and items impacting
comparability. Net income in the prior year quarter included a
total net gain of $309.0 million ($340.4 million before tax, or
$2.11 per share), which primarily reflects a non-cash net benefit
related to the LW EMEA Acquisition with the remaining net gain from
foreign currency exchange and unrealized mark-to-market derivative
gains and losses, and other items impacting comparability.
Adjusted Net Income(1) was $113.7 million, down $76.1 million
versus the prior year quarter, and Adjusted Diluted EPS(1) was
$0.78, down $0.51 versus the prior year quarter. The declines in
Adjusted Net Income(1) and Adjusted Diluted EPS(1) largely reflect
lower Adjusted Income from Operations(1) due to the factors
described above; a higher effective tax rate, reflecting discrete
items in the current and prior year quarters; and higher interest
expense, reflecting increased total debt and higher borrowing rates
on variable rate debt.
Adjusted EBITDA(1) declined $50.3 million from the prior year
quarter to $283.4 million. The decline primarily reflects lower net
sales and Adjusted Gross Profit(1), which was partially offset by
lower Adjusted SG&A(1).
The Company’s effective tax rate(3) in the fourth quarter was
28.2 percent, versus 12.6 percent in the prior year quarter.
Excluding $5.6 million and $31.4 million of net tax benefits from
items impacting comparability in fiscal 2024 and 2023,
respectively, the Company's effective tax rate in the fourth
quarter was 28.4 percent, versus 17.6 percent in the prior year
quarter. The Company’s effective tax rate varies from the U.S.
statutory tax rate of 21 percent primarily due to the impact of
U.S. state taxes, foreign taxes and currency, permanent
differences, and discrete items.
Q4 2024 Segment
Highlights
North America
Net sales for the North America segment, which includes all
sales to customers in the U.S., Canada and Mexico, declined $47.3
million to $1,113.2 million, down 4 percent versus the prior year
quarter. Volume declined 7 percent, with approximately 5 percentage
points of the decline due to share losses, and approximately 2
percentage points largely attributable to soft restaurant traffic
trends in the U.S.
Price/mix increased 3 percent as the carryover benefit of
inflation-driven pricing actions taken in late fiscal 2023, as well
as pricing actions for contracts with large and regional chain
restaurant customers in fiscal 2024.
North America Segment Adjusted EBITDA declined $21.4 million, or
7 percent to $276.5 million. Lower sales volumes, and an
approximately $19 million charge for the voluntary product
withdrawal related to products manufactured in North America, drove
the decline, while the benefit of inflation-driven pricing actions
more than offset higher costs per pound.
International
Net sales for the International segment, which includes all
sales to customers outside of North America, declined $35.7
million, or 7 percent to $498.7 million. Volume declined 9 percent,
with nearly 5 percentage points of the decline from share losses,
which are due in part to the Company’s decisions to exit certain
lower-priced and lower-margin business in LW EMEA earlier in the
year. More than 2 percentage points of the volume decline reflects
the voluntary product withdrawal, with the remaining approximately
2 percentage points of the decline largely attributable to soft
restaurant traffic trends in key international markets. Price/mix
increased 2 percent due to inflation-driven pricing actions taken
in fiscal 2024, as well as the carryover benefit of pricing actions
taken in fiscal 2023.
International Segment Adjusted EBITDA declined $43.2 million or
52 percent, to $40.4 million. An approximately $21 million charge
associated with the voluntary product withdrawal, lower sales
volumes, higher costs per pound, and higher A&P investments to
support the launch of retail products in Europe drove the decline,
partially offset by the benefit of inflation-driven pricing.
Equity Method Investment Earnings
Equity method investment earnings from unconsolidated joint
ventures were $8.2 million and $416.6 million for the fourth
quarter of fiscal 2024 and 2023, respectively. The results in the
current quarter include earnings associated with the Company’s 50
percent interest in Lamb Weston/RDO Frozen, an unconsolidated joint
venture in Minnesota (“Lamb Weston RDO”), while results in the
prior year quarter also included a non-cash gain of $410.7 million
($364.4 million after-tax, or $2.48 per share) related to
remeasuring the Company’s initial 50 percent ownership interest in
LW EMEA to fair value.
Adjusted Equity Method Investment Earnings(1) increased $2.3
million compared to the prior year quarter.
Fiscal Year 2024
Commentary
Net sales increased $1,117.0 million to $6,467.6 million, up 21
percent versus fiscal 2023, with the current fiscal year including
$1,107.4 million of incremental sales attributable to the
consolidation of the financial results of (1) LW EMEA, and (2) Lamb
Weston Alimentos Modernos S.A. (“LWAMSA”), the Company’s joint
venture in Argentina, following the Company’s acquisition of an
additional 40 percent interest in LWAMSA (the “LWAMSA Acquisition”
and, together with the LW EMEA Acquisition, the
“Acquisitions”).
Net sales, excluding the incremental sales attributable to the
Acquisitions, increased $9.6 million, or less than 1 percent versus
fiscal 2023, with sales growth reduced by an estimated $135 million
due to impacts associated with the Company's ERP transition.
Price/mix increased 10 percent, reflecting the carryover benefit of
inflation-driven pricing actions taken in fiscal 2023, as well as
pricing actions taken in fiscal 2024, across both business
segments, partially offset by lower customer transportation charges
that were driven by lower volume and the pass-through of lower
freight rates.
Volume, excluding the incremental sales attributable to the
Acquisitions, declined 10 percent. Approximately 3.5 percentage
points of the volume decline reflects the carryover effect of the
Company’s decision to exit certain lower-priced and lower-margin
business in the prior year to strategically manage customer and
product mix. Another approximately 3.5 percentage points of the
volume decline was largely driven by soft restaurant traffic trends
in North America and other key international markets, and to a much
smaller extent, lost sales related to the voluntary product
withdrawal. The remaining approximately 3 percentage points of the
volume decline reflects share losses and the impact of unfilled
customer orders related to the ERP transition in the fiscal third
quarter.
Gross profit increased $334.6 million versus the prior fiscal
year to $1,766.7 million, and included $20.7 million of costs
($15.4 million after-tax, or $0.11 per share) associated with the
sale of inventory stepped-up to fair value following completion of
the LW EMEA Acquisition, and a $28.7 million ($21.4 million
after-tax, or $0.15 per share) unrealized gain related to
mark-to-market adjustments associated with commodity hedging
contracts. The prior fiscal year included $27.0 million of costs
($20.0 million after-tax, or $0.14 per share) associated with the
sale of inventory stepped-up to fair value following completion of
the LW EMEA Acquisition and a $37.5 million ($28.0 million
after-tax, or $0.19 per share impact) unrealized loss related to
mark-to-market adjustments associated with commodity hedging
contracts.
Adjusted Gross Profit(1) increased $262.1 million versus the
prior fiscal year to $1,758.7 million, driven primarily by
incremental earnings from the consolidation of the financial
results of LW EMEA and benefits from inflation-driven pricing
actions. Gross profit and Adjusted Gross Profit(1) in the current
fiscal year included:
- An estimated $88 million of pre-tax losses related to lower
customer order fulfillment rates and other pre-tax costs associated
with the ERP transition in the fiscal third quarter;
- An $85.1 million pre-tax charge(2) for the write-off of excess
raw potatoes ($64.6 million in the fiscal second quarter and $20.5
million in the fiscal third quarter), largely attributable to soft
restaurant traffic trends in North America and other key
international markets; and
- An estimated $40 million pre-tax loss related to the voluntary
product withdrawal, of which approximately $21 million was
allocated to the International segment and approximately $19
million was allocated to the North America segment in the fiscal
fourth quarter.
Higher manufacturing costs per pound in fiscal 2024, largely
reflected mid-single-digit cost inflation, in aggregate, for key
inputs, including: raw potatoes, ingredients such as grains and
starches used in product coatings, and labor. The increase in per
pound costs was partially offset by lower cost of edible oils.
SG&A increased $151.4 million versus the prior fiscal year
to $701.4 million, and included: $12.8 million ($9.6 million, or
$0.07 per share) of LW EMEA integration and acquisition-related
expenses; a $3.8 million ($2.8 million after-tax, or $0.02 per
share) unrealized loss related to mark-to-market adjustments
associated with currency hedging contracts; and $10.6 million ($8.0
million after-tax, or $0.05 per share) of foreign currency exchange
losses. The prior fiscal year included a net $21.8 million ($12.2
million after-tax, or $0.08 per share) gain related to actions
taken to mitigate the effect of changes in currency rates on the
purchase price of LW EMEA, net of other acquisition-related costs;
a $4.2 million ($3.1 million after-tax, or $0.02 per share)
unrealized loss related to mark-to-market adjustments associated
with currency hedging contracts; and $5.5 million ($4.1 million
after-tax, or $0.03 per share) of foreign currency exchange
losses.
Adjusted SG&A(1) increased $112.1 million to $674.2 million,
primarily due to incremental expenses attributable to the
consolidation of the financial results of LW EMEA, and higher
expenses associated with information technology investments,
including $11.5 million of incremental non-cash amortization
related to the new ERP system. The increase in Adjusted SG&A(1)
was partially offset by a reduction in performance-based
compensation and benefits accruals.
Income from operations increased $183.2 million versus the prior
year to $1,065.3 million. Adjusted Income from Operations(1)
increased $150.0 million to $1,084.5 million, driven by higher net
sales and Adjusted Gross Profit(1), and was partially offset by
higher Adjusted SG&A(1).
Net income was $725.5 million, down $283.4 million versus the
prior fiscal year, and Diluted EPS was $4.98, down $1.97 from the
prior fiscal year. Net income in the current fiscal year included a
total net loss of $14.4 million ($19.2 million before tax, or $0.10
per share) for foreign currency exchange and unrealized
mark-to-market derivative gains and losses, and items impacting
comparability. Net income in the prior fiscal year included a total
net gain of $312.2 million ($340.7 million before tax, or $2.15 per
share) most of which is a non-cash net benefit related to the LW
EMEA Acquisition with the remaining net gain from foreign currency
exchange and unrealized mark-to-market derivative gains and losses,
and items impacting comparability.
Adjusted Net Income(1) was $739.9 million, up $43.2 million
versus the prior fiscal year, and Adjusted Diluted EPS(1) was
$5.08, up $0.28 versus the prior fiscal year. The increases in
Adjusted Net Income(1) and Adjusted Diluted EPS(1) largely reflect
higher Adjusted Income from Operations(1) due to the factors
discussed above, partially offset by a higher effective tax rate,
reflecting discrete items in the current and prior fiscal years,
and higher interest expense, reflecting increased total debt and
higher borrowing rates on variable rate debt.
Adjusted EBITDA(1) increased $167.3 million from the prior
fiscal year to $1,416.7 million, reflecting the benefit of
inflation-driven pricing actions and incremental earnings from the
consolidation of the financial results of LW EMEA, which more than
offset higher manufacturing costs per pound, a $95.9 million
pre-tax charge(2) for the write-off of excess raw potatoes (of
which $10.8 million was recorded in Equity Method Investment
Earnings), an approximately $95 million negative impact related to
the ERP transition, lower sales volumes, and an estimated $40
million pre-tax loss related to the voluntary product
withdrawal.
The Company’s effective tax rate(3) for fiscal 2024 was 24.1
percent, versus 18.2 percent in fiscal 2023. Excluding $4.8 million
of tax benefit and $28.5 million of net tax expense from items
impacting comparability in fiscal 2024 and 2023, respectively, the
Company's effective tax rate was 24.1 percent for fiscal 2024 and
22.0 percent in fiscal 2023. The Company’s effective tax rate
varies from the U.S. statutory tax rate of 21 percent primarily due
to the impact of U.S. state taxes, foreign taxes and currency,
permanent differences, and discrete items.
Fiscal Year 2024 Segment
Highlights
North America
Net sales for the North America segment increased $113.8 million
to $4,363.2 million, up 3 percent versus the prior fiscal year,
with sales growth reduced by an estimated $123 million due to
impacts associated with the Company's ERP transition in the fiscal
third quarter. Price/mix increased 11 percent, reflecting the
carryover benefit of inflation-driven pricing actions taken in
fiscal 2023, as well as pricing actions for contracts with large
and regional chain restaurant customers in fiscal 2024. The
increase in price/mix was partially offset by lower customer
transportation charges that were driven by lower volume and
pass-through freight rates, and unfavorable mix.
Volume declined 8 percent, with approximately 3 percentage
points of the volume decline reflecting the carryover effect of the
Company's decision to exit certain lower-priced and lower-margin
business in the prior year to strategically manage customer and
product mix. Approximately 2.5 percentage points of the decline
reflects share losses and approximately 2.5 percentage points was
largely driven by soft restaurant traffic trends in the U.S.
North America Segment Adjusted EBITDA increased $100.8 million
to $1,263.1 million, reflecting the benefits of inflation-driven
pricing actions more than offsetting higher manufacturing costs per
pound, an $86.0 million charge(2) for the write-off of excess raw
potatoes, an approximately $83 million negative impact related to
the ERP transition, lower sales volumes, unfavorable mix, and an
approximately $19 million loss related to the voluntary product
withdrawal related to products manufactured in North America.
International
Net sales for the International segment, which includes all
sales to customers outside of North America, increased $1,003.2
million to $2,104.4 million, with the current year including
$1,107.4 million of incremental sales attributable to the
consolidation of the financial results of LW EMEA and LWAMSA.
International segment net sales, excluding the incremental sales
attributable to the Acquisitions, declined $104.2 million, or 9
percent, compared to the prior year. Volume, excluding the benefit
from the Acquisitions, declined 15 percent. Approximately 10
percentage points of the volume decline reflects share losses,
which are due in part to the Company's decisions to exit certain
lower-priced and lower-margin business in LW EMEA earlier in the
year, the carryover effect of the Company's decision to exit
certain lower-priced and lower-margin business in the prior year to
strategically manage customer and product mix, and an estimated $12
million impact of unfilled customer orders related to the
transition to a new ERP system in the fiscal third quarter. The
remaining approximately 5 percentage points of the volume decline
was largely driven by soft restaurant traffic trends in the
Company's key international markets, and to a smaller extent, the
voluntary product withdrawal.
Price/mix increased 6 percent as the carryover benefit of
inflation-driven pricing actions taken in fiscal 2023 and pricing
actions taken in fiscal 2024 was partially offset by lower customer
transportation charges.
International Segment Adjusted EBITDA increased $100.9 million
to $331.9 million. Incremental earnings from the consolidation of
the financial results of LW EMEA drove the increase. Excluding the
benefit from the Acquisitions, the impact of higher costs per
pound, lower sales volumes, and approximately $21 million of
allocated losses related to the voluntary product withdrawal, $9.9
million charge(2) for the write-off of excess raw potatoes, and an
approximately $5 million negative impact related to the ERP
transition, more than offset the benefit of inflation-driven
pricing actions.
Equity Method Investment Earnings
Equity method investment earnings from unconsolidated joint
ventures were earnings of $26.0 million and $460.6 million for
fiscal 2024 and 2023, respectively. The results in the current year
include earnings associated with the Company’s 50 percent interest
in Lamb Weston RDO, while results in the prior year also included
earnings associated with the Company’s then 50 percent interests in
LW EMEA and LWAMSA. The results in the prior year include non-cash
gains relating to the Acquisitions of $425.8 million ($379.5
million after-tax or $2.62 per share), as well as a $32.7 million
($24.3 million after-tax, or $0.17 per share) unrealized loss
related to mark-to-market adjustments associated with currency and
commodity hedging contracts at LW EMEA.
Adjusted Equity Method Investment Earnings(1) declined $41.5
million compared to the prior year, largely due to LW EMEA earnings
being reflected as equity method investment earnings in the first
three quarters of fiscal 2023. The results in the current year also
include a $10.8 million charge(2) for the write-off of excess raw
potatoes at Lamb Weston RDO.
Liquidity and Cash Flows
As of May 26, 2024, the Company had $71.4 million of cash and
cash equivalents, with $1.2 billion of available liquidity under
the Company's committed global revolving credit facility.
Net cash provided by operating activities for fiscal 2024 was
$798.2 million, up $36.5 million versus the prior year, primarily
due to higher net income, adjusted for non-cash income and
expenses, partially offset by increased working capital needs.
Capital expenditures during fiscal 2024 were $991.8 million, up
$255.8 million versus the prior year, primarily due to increased
investments to support capacity expansion projects and to upgrade
the Company’s ERP and information systems infrastructure.
Capital Returned to Shareholders
The Company paid $174.0 million in cash dividends during fiscal
2024. In addition, for the fiscal year, the Company repurchased
$210.0 million of its common stock, with an aggregate of 2,294,654
shares repurchased at an average price per share of $91.51, which
included $60.0 million of common stock repurchased in the fiscal
fourth quarter at an average price of $82.15. The Company has
$390.0 million of remaining capacity under its existing share
repurchase program.
Fiscal 2025 Outlook
Fiscal 2025 Outlook
Summary
Net Sales
$6.6 billion to $6.8 billion
Net Income
$630 million to $705 million
Diluted Earnings Per Share
$4.35 to $4.85
Adjusted EBITDA(1)
$1,380 million to $1,480
million
Interest expense
Approximately $180 million
Depreciation and amortization expense
Approximately $375 million
Effective tax rate(3) (full year)
Approximately 24 percent
Cash used for capital expenditures
Approximately $850 million
For fiscal 2025, the Company expects:
- Net sales of $6.6 billion to $6.8 billion, reflecting growth of
approximately 2 percent to 5 percent on a constant currency basis.
The Company expects net sales growth to be largely driven by an
increase in volume as the Company increases targeted investments in
price. In the first half of fiscal 2025, the Company expects volume
may decline low-to-mid single digits as compared to the prior year
period, reflecting the carryover impact of market share losses
incurred in the prior year as well as soft restaurant traffic in
the U.S. and key international markets. In the second half of
fiscal 2025, the Company expects volume growth will be favorable as
it laps the prior-year impacts of the ERP transition and the
voluntary product withdrawal, and as the sales and volume benefit
from recent customer contract wins continues to build.
- Net income of $630 million to $705 million and Diluted EPS of
$4.35 to $4.85 and Adjusted EBITDA(1) of $1,380 million to $1,480
million. As compared to the prior year, the Company expects higher
sales and gross profit will largely drive Adjusted EBITDA(1)
growth, but will be partially offset by higher Adjusted
SG&A(1), which is expected to be $740 million to $750 million.
As compared to the prior year, the Company expects net income and
Diluted EPS to decline, in part by an increase in depreciation and
amortization expense of approximately $75 million associated with
the depreciation of the capacity expansions in China and Idaho, and
the amortization of the new ERP system. The Company also expects an
increase in interest expense as compared to the prior year to
reflect higher debt levels and reduced capitalized interest.
- Cash used for capital expenditures, excluding acquisitions, if
any, of approximately $850 million as the Company continues
construction of previously-announced capacity expansion efforts in
the Netherlands and Argentina, as well as capital investments to
upgrade its information systems and ERP infrastructure.
End Notes
(1)
Adjusted Gross Profit, Adjusted SG&A,
Adjusted Income from Operations, Adjusted Equity Method Investment
Earnings, Adjusted Net Income, Adjusted Diluted EPS, and Adjusted
EBITDA, are non-GAAP financial measures. Please see the discussion
of non-GAAP financial measures, including a discussion of guidance
provided on a non-GAAP basis, and the associated reconciliations at
the end of this press release for more information.
(2)
Both GAAP and Non-GAAP results for the
fifty-two weeks ended May 26, 2024 include a $95.9 million charge
($72.9 million after-tax, or $0.50 per share) related to a
write-off of excess raw potatoes. This includes a $85.1 million
charge ($64.7 million after-tax, or $0.44 per share) in cost of
sales, and a $10.8 million charge ($8.2 million after-tax, or $0.06
per share) recorded in equity method investment earnings. The total
charge to the reporting segments relating to excess raw potatoes
was as follows: $86.0 million to the North America segment and $9.9
million to the International segment.
(3)
The effective tax rate is calculated as
the ratio of income tax expense to pre-tax income, inclusive of
equity method investment earnings.
Webcast and Conference Call
Information
Lamb Weston will host a conference call to review its fourth
quarter and fiscal 2024 results at 10:00 a.m. EDT today, July 24,
2024. Participants in the U.S. and Canada may access the conference
call by dialing 888-204-4368 and participants outside the U.S. and
Canada should dial +1-323-794-2551. The conference ID is 4529601.
The conference call also may be accessed live on the internet.
Participants can register for the event at:
https://event.webcasts.com/starthere.jsp?ei=1676014&tp_key=20839addab.
A rebroadcast of the conference call will be available beginning
on Thursday, July 25, 2024, after 2:00 p.m. EDT at
https://investors.lambweston.com/events-and-presentations.
About Lamb Weston
Lamb Weston is a leading supplier of frozen potato products to
restaurants and retailers around the world. For more than 70 years,
Lamb Weston has led the industry in innovation, introducing
inventive products that simplify back-of-house management for its
customers and make things more delicious for their customers. From
the fields where Lamb Weston potatoes are grown to proactive
customer partnerships, Lamb Weston always strives for more and
never settles. Because, when we look at a potato, we see
possibilities. Learn more about us at lambweston.com.
Non-GAAP Financial
Measures
To supplement the financial information included in this press
release, the Company has presented Adjusted Gross Profit, Adjusted
SG&A, Adjusted Income from Operations, Adjusted Income Tax
Expense (Benefit), Adjusted Equity Method Investment Earnings,
Adjusted Net Income, Adjusted Diluted EPS, and Adjusted EBITDA,
each of which is considered a non-GAAP financial measure. The
non-GAAP financial measures presented in this press release should
be viewed in addition to, and not as an alternative for, financial
measures prepared in accordance with accounting principles
generally accepted in the United States of America (“GAAP”) that
are also presented in this press release. These measures are not
substitutes for their comparable GAAP financial measures, such as
gross profit, SG&A, income from operations, income tax expense,
equity method investment earnings (loss), net income, diluted
earnings per share, or other measures prescribed by GAAP, and there
are limitations to using non-GAAP financial measures. For example,
the non-GAAP financial measures presented in this press release may
differ from similarly titled non-GAAP financial measures presented
by other companies, and other companies may not define these
non-GAAP financial measures the same way as the Company does.
Management uses these non-GAAP financial measures to assist in
analyzing what management views as the Company's core operating
performance for purposes of business decision-making. Management
believes that presenting these non-GAAP financial measures provides
investors with useful supplemental information because they (i)
provide meaningful supplemental information regarding financial
performance by excluding impacts of foreign currency exchange rates
and unrealized derivative activities and other items affecting
comparability between periods, (ii) permit investors to view
performance using the same tools that management uses to budget,
make operating and strategic decisions, and evaluate the Company’s
core operating performance across periods, and (iii) otherwise
provide supplemental information that may be useful to investors in
evaluating the Company's financial results. In addition, the
Company believes that the presentation of these non-GAAP financial
measures, when considered together with the most directly
comparable GAAP financial measures and the reconciliations to those
GAAP financial measures, provides investors with additional tools
to understand the factors and trends affecting the Company's
underlying business than could be obtained absent these
disclosures.
The Company has also provided guidance in this press release
with respect to certain non-GAAP financial measures, including
non-GAAP Adjusted EBITDA and Adjusted SG&A. The Company cannot
predict certain items that are included in reported GAAP results,
including items such as strategic developments, integration and
acquisition costs and related fair value adjustments, impacts of
unrealized mark-to-market derivative gains and losses, foreign
currency exchange, and items impacting comparability. This list is
not inclusive of all potential items, and the Company intends to
update the list as appropriate as these items are evaluated on an
ongoing basis. In addition, the items that cannot be predicted can
be highly variable and could potentially have significant impacts
on the Company’s GAAP measures. As such, prospective quantification
of these items is not feasible without unreasonable efforts, and a
reconciliation of forward-looking non-GAAP Adjusted EBITDA and
Adjusted SG&A to GAAP net income or SG&A has not been
provided.
Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of the federal securities laws. Words such as “expect,”
“believe,” “will,” “continue,” “grow,” “reduced,” “benefit,”
“strengthen,” “support,” “create,” “outlook,” “target,” and
variations of such words and similar expressions are intended to
identify forward-looking statements. Examples of forward-looking
statements include, but are not limited to, statements regarding:
the Company’s business and financial outlook and prospects; the
Company’s plans, execution, capital expenditures and investments;
impacts of the ERP system transition; demand for the Company's
products; the Company's cost structure; and other conditions in the
Company’s industry and the global economy. These forward-looking
statements are based on management’s current expectations and are
subject to uncertainties and changes in circumstances. Readers of
this press release should understand that these statements are not
guarantees of performance or results. Many factors could affect
these forward-looking statements and the Company’s actual financial
results and cause them to vary materially from the expectations
contained in the forward-looking statements, including those set
forth in this press release. These risks and uncertainties include,
among other things: the availability and prices of raw materials
and other commodities; operational challenges; consumer
preferences, including restaurant traffic in North America and the
Company's international markets, and an uncertain general economic
environment, including inflationary pressures and recessionary
concerns, any of which could adversely impact the Company’s
business, financial condition or results of operations, including
the demand and prices for the Company’s products; difficulties,
disruptions or delays in implementing new technology, such as the
Company's new ERP system; levels of labor and people-related
expenses; the Company’s ability to successfully execute its
long-term value creation strategies; the Company’s ability to
execute on large capital projects, including construction of new
production lines or facilities; the competitive environment and
related conditions in the markets in which the Company operates;
political and economic conditions of the countries in which the
Company conducts business and other factors related to its
international operations; disruptions in the global economy caused
by conflicts such as the war in Ukraine and conflicts in the Middle
East and the possible related heightening of the Company’s other
known risks; the ultimate outcome of litigation or any product
recalls or withdrawals; changes in the Company's relationships with
its growers or significant customers; impacts on the Company’s
business due to health pandemics or other contagious outbreaks,
such as the COVID-19 pandemic, including impacts on demand for its
products, increased costs, disruption of supply, other constraints
in the availability of key commodities and other necessary services
or restrictions imposed by public health authorities or
governments; disruption of the Company’s access to export
mechanisms; risks associated with integrating acquired businesses,
including LW EMEA; risks associated with other possible
acquisitions; the Company’s debt levels; actions of governments and
regulatory factors affecting the Company’s businesses; the
Company’s ability to pay regular quarterly cash dividends and the
amounts and timing of any future dividends; and other risks
described in the Company’s reports filed from time to time with the
Securities and Exchange Commission (“SEC”). The Company cautions
readers not to place undue reliance on any forward-looking
statements included in this press release, which speak only as of
the date of this press release. The Company undertakes no
responsibility for updating these statements, except as required by
law.
Lamb Weston Holdings,
Inc.
Consolidated Statements of
Earnings
(unaudited, in millions, except
per share amounts)
Thirteen Weeks Ended
Fifty-Two Weeks Ended
May 26, 2024 (1)
May 28, 2023
May 26, 2024 (1)
May 28, 2023
Net sales (2)
$
1,611.9
$
1,694.9
$
6,467.6
$
5,350.6
Cost of sales (2) (3)
1,224.0
1,315.5
4,700.9
3,918.5
Gross profit
387.9
379.4
1,766.7
1,432.1
Selling, general and administrative
expenses (2) (4)
175.4
192.4
701.4
550.0
Income from operations
212.5
187.0
1,065.3
882.1
Interest expense, net
40.3
32.8
135.8
109.2
Income before income taxes and equity
method earnings
172.2
154.2
929.5
772.9
Income tax expense
50.8
72.0
230.0
224.6
Equity method investment earnings (2)
(5)
8.2
416.6
26.0
460.6
Net income (2)
$
129.6
$
498.8
$
725.5
$
1,008.9
Earnings per share:
Basic
$
0.90
$
3.42
$
5.01
$
6.98
Diluted
$
0.89
$
3.40
$
4.98
$
6.95
Dividends declared per common share
$
0.36
$
0.28
$
1.28
$
1.05
Weighted average common shares
outstanding:
Basic
144.3
145.9
144.9
144.5
Diluted
145.0
146.8
145.6
145.2
_______________________________________________
(1) The thirteen and fifty-two weeks ended May 26, 2024 included
the consolidated financial results of LW EMEA whereas in the first
three quarters of fiscal 2023, LW EMEA’s financial results were
recorded in “Equity method investment earnings.” For more
information about the LW EMEA Acquisition, see Note 11,
Acquisitions, of the Notes to Consolidated Financial Statements in
the Company’s Annual Report on Form 10-K for the fiscal year ended
May 26, 2024 filed with the SEC on July 24, 2024 (the “Form 10-K”).
(2) Net income included the following:
a.
For the fifty-two weeks ended May 26,
2024, a $95.9 million charge ($72.9 million after-tax, or $0.50 per
share) for the write-off of excess raw potatoes in North America.
The Company recorded an $85.1 million ($64.7 million after-tax, or
$0.44 per share) charge in cost of sales, and a $10.8 million
charge ($8.2 million after-tax, or $0.06 per share) in equity
method investment earnings. The total charge to the reporting
segments relating to excess raw potatoes was as follows: $86.0
million to the North America segment and $9.9 million to the
International segment.
b.
The Company implemented a new ERP system
in the third quarter of fiscal 2024, and estimates it reduced net
sales by approximately $135 million, with $123 million and $12
million of impacts in the North America and International segments,
respectively, for the fifty-two weeks ended May 26, 2024 . The
Company estimates net income was negatively impacted by
approximately $95 million ($72 million after-tax), including
approximately $55 million ($42 million after-tax) related to lower
order fulfillment rates and approximately $40 million ($30 million
after-tax) of incremental costs and expenses, of which,
approximately $7 million ($5 million after-tax) was recorded as a
reduction in gross sales, and included accrued fees and charges for
delayed or unfilled customer orders; approximately $26 million ($20
million after-tax) was recorded in cost of sales, and included
reduced fixed cost coverage and inefficiencies resulting from
planned downtime at the Company's processing facilities, as well as
additional freight charges; and approximately $7 million ($5
million after-tax) was recorded in selling, general and
administrative expenses, and largely included consulting expenses
incurred to assist in restoring order fulfillment rates. The
Company estimates that approximately $83 million impacted the North
America segment, approximately $5 million impacted the
International segment, and approximately $7 million impacted
unallocated corporate costs.
c.
An estimated $40 million loss ($30 million
after-tax, or $0.20 per share) related to the voluntary product
withdrawal, for the thirteen and fifty-two weeks ended May 26,
2024. The total charge to the reporting segments was $19 million to
the North America segment and $21 million to the International
segment.
(3) Cost of sales included a $24.9 million unrealized gain ($18.5
million after-tax, $0.13 per share) and a $28.8 million unrealized
loss ($21.5 million after-tax, or $0.13 per share) related to
mark-to-market adjustments associated with commodity hedging
contracts for the thirteen weeks ended May 26, 2024 and May 28,
2023, respectively. For the fifty-two weeks ended May 26, 2024 and
May 28, 2023, cost of sales included a $28.7 million unrealized
gain ($21.4 million after-tax, or $0.15 per share) and a $37.5
million unrealized loss ($28.0 million after-tax, or $0.19 per
share), respectively, related to mark-to-market adjustments
associated with commodity hedging contracts.
For the fifty-two weeks ended May 26, 2024, cost of sales included
activity related to the step-up and sale of inventory following
completion of the LW EMEA Acquisition, which resulted in a $20.7
million ($15.4 million after-tax, or $0.11 per share) and for the
thirteen and fifty-two weeks ended May 28, 2023, cost of sales
included a $27.0 million ($20.0 million after-tax, or $0.14 per
share) charge related to the step-up of inventory following
completion of the LW EMEA Acquisition.
(4) Selling, general and administrative expenses included the
following:
a.
Net integration and acquisition-related
expenses of $1.6 million ($1.2 million after-tax, or $0.01 per
share) and $9.0 million ($9.8 million after-tax, or $0.07 per
share) for the thirteen weeks ended May 26, 2024 and May 28, 2023,
respectively; and expenses of $12.8 million ($9.6 million
after-tax, or $0.07 per share) and gains of $21.8 million ($12.2
million after-tax, or $0.08 per share) for the fifty-two weeks
ended May 26, 2024 and May 28, 2023, respectively;
b.
Unrealized gain related to mark-to-market
adjustments associated with currency hedging contracts of $1.6
million ($1.2 million after-tax, or $0.01 per share) and an
unrealized loss of $4.2 million ($3.1 million after-tax, or $0.02
per share) for the thirteen weeks ended May 26, 2024 and May 28,
2023, respectively, and an unrealized loss of $3.8 million ($2.8
million after-tax, or $0.02 per share) and $4.2 million ($3.1
million after-tax, or $0.02 per share) for the fifty-two weeks
ended May 26, 2024 and May 28, 2023, respectively; and
c.
Foreign currency exchange losses of $3.4
million ($2.6 million after-tax, or $0.02 per share) and $1.3
million ($1.0 million after-tax, or $0.01 per share) for the
thirteen weeks ended May 26, 2024 and May 28, 2023, respectively;
and losses of $10.6 million ($8.0 million after-tax, or $0.05 per
share) and $5.5 million ($4.1 million after-tax, or $0.03 per
share) for the fifty-two weeks ended May 26, 2024 and May 28, 2023,
respectively.
(5) Equity method investment earnings for the thirteen weeks ended
May 28, 2023, included a $410.7 million gain ($364.4 million
after-tax, or $2.48 per share) related to the remeasurement of the
Company's initial equity interest to fair value for the LW EMEA
Acquisition discussed in (1) above.
Equity method investment earnings for the fifty-two weeks ended May
28, 2023, included a $425.8 million gain ($379.5 million after-tax,
or $2.62 per share) related to the LW EMEA Acquisition discussed in
(1) above and a $15.1 million gain (before and after-tax, or $0.10
per share) in connection with the LWAMSA Acquisition. These gains
were partially offset by a $32.7 million unrealized loss ($24.3
million after-tax, or $0.17 per share) related to mark-to-market
adjustments associated with commodity and currency hedging
contracts.
Lamb Weston Holdings,
Inc.
Consolidated Balance
Sheets
(unaudited, in millions, except
share data)
May 26, 2024
May 28, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
71.4
$
304.8
Receivables, less allowance for doubtful
accounts of $0.9 million and $2.6 million
743.6
724.2
Inventories
1,138.6
932.0
Prepaid expenses and other current
assets
136.4
166.2
Total current assets
2,090.0
2,127.2
Property, plant and equipment, net
3,582.8
2,808.0
Operating lease assets
133.0
146.1
Goodwill
1,059.9
1,040.7
Intangible assets, net
104.9
110.2
Other assets
396.4
287.6
Total assets
$
7,367.0
$
6,519.8
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Short-term borrowings
$
326.3
$
158.5
Current portion of long-term debt and
financing obligations
56.4
55.3
Accounts payable
833.8
636.6
Accrued liabilities
407.6
509.8
Total current liabilities
1,624.1
1,360.2
Long-term liabilities:
Long-term debt and financing obligations,
excluding current portion
3,440.7
3,248.4
Deferred income taxes
256.2
252.1
Other noncurrent liabilities
258.2
247.8
Total long-term liabilities
3,955.1
3,748.3
Commitments and contingencies
Stockholders’ equity:
Common stock of $1.00 par value,
600,000,000 shares authorized; 150,735,397 and 150,293,511 shares
issued
150.7
150.3
Treasury stock, at cost, 7,068,741 and
4,627,828 common shares
(540.9
)
(314.3
)
Additional distributed capital
(508.9
)
(558.6
)
Retained earnings
2,699.8
2,160.7
Accumulated other comprehensive loss
(12.9
)
(26.8
)
Total stockholders’ equity
1,787.8
1,411.3
Total liabilities and stockholders’
equity
$
7,367.0
$
6,519.8
Lamb Weston Holdings,
Inc.
Consolidated Statements of
Cash Flows
(unaudited, in millions)
Fifty-Two Weeks Ended
May 26, 2024
May 28, 2023
Cash flows from operating
activities
Net income
$
725.5
$
1,008.9
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of
intangibles and debt issuance costs
306.8
222.8
Stock-settled, stock-based compensation
expense
46.8
38.5
Gain on acquisition of interests in joint
ventures
—
(425.8
)
Equity method investment earnings in
excess of distributions
(15.5
)
(35.7
)
Deferred income taxes
(1.3
)
0.4
Foreign currency remeasurement gain
(0.1
)
(21.7
)
Other
7.0
23.9
Changes in operating assets and
liabilities, net of acquisitions:
Receivables
(15.1
)
(53.6
)
Inventories
(203.3
)
(125.1
)
Income taxes payable/receivable, net
20.1
(12.3
)
Prepaid expenses and other current
assets
9.7
1.8
Accounts payable
36.5
83.1
Accrued liabilities
(118.9
)
56.5
Net cash provided by operating
activities
$
798.2
$
761.7
Cash flows from investing
activities
Additions to property, plant and
equipment
(929.5
)
(654.0
)
Additions to other long-term assets
(62.3
)
(82.0
)
Acquisition of interests in joint
ventures, net
—
(610.4
)
Acquisition of business, net of cash
acquired
(10.5
)
—
Other
18.2
5.5
Net cash used for investing
activities
$
(984.1
)
$
(1,340.9
)
Cash flows from financing
activities
Proceeds from issuance of debt
592.0
529.5
Repayments of debt and financing
obligations
(401.1
)
(32.6
)
Dividends paid
(174.0
)
(146.1
)
Repurchase of common stock and common
stock withheld to cover taxes
(225.3
)
(51.6
)
Proceeds of short-term borrowings, net
164.9
41.4
Other
(4.5
)
0.2
Net cash (used for) provided by
financing activities
$
(48.0
)
$
340.8
Effect of exchange rate changes on cash
and cash equivalents
0.5
18.2
Net decrease in cash and cash
equivalents
(233.4
)
(220.2
)
Cash and cash equivalents, beginning of
period
304.8
525.0
Cash and cash equivalents, end of
period
$
71.4
$
304.8
Lamb Weston Holdings,
Inc.
Segment Information
(unaudited, in millions, except
percentages)
Thirteen Weeks Ended
May 26, 2024
May 28, 2023
Year-Over- Year
Growth Rates
Price/Mix
Volume
Segment net sales
North America
$
1,113.2
$
1,160.5
(4%)
3%
(7%)
International
498.7
534.4
(7%)
2%
(9%)
$
1,611.9
$
1,694.9
(5%)
3%
(8%)
Segment Adjusted EBITDA
North America
$
276.5
$
297.9
(7%)
International
40.4
83.6
(52%)
Fifty-Two Weeks Ended
May 26, 2024
May 28, 2023
Year-Over- Year
Growth Rates
Price/Mix
Volume
Segment net sales
North America
$
4,363.2
$
4,249.4
3%
11%
(8%)
International (1)
2,104.4
1,101.2
91%
6%
85%
$
6,467.6
$
5,350.6
21%
10%
11%
Segment Adjusted EBITDA
North America
$
1,263.1
$
1,162.3
9%
International (1)
331.9
231.0
44%
_______________________________________________
(1)
The Company acquired the remaining equity
interest in LW EMEA in the fourth quarter of fiscal 2023.
Accordingly, LW EMEA’s net sales and adjusted EBITDA for the
thirteen weeks ended May 28, 2023 are reported in the International
segment, whereas in the first three quarters of fiscal 2023, the
Company’s initial 50 percent equity interest in LW EMEA was
recorded using equity method accounting. As a result, LW EMEA’s net
sales are not included in the International segment’s net sales for
the first three quarters of the fifty-two weeks ended May 28, 2023,
and only 50 percent of LW EMEA’s adjusted EBITDA is reported in the
International segment for those periods.
Segment Adjusted EBITDA includes equity
method investment earnings and losses and excludes unallocated
corporate costs, foreign currency exchange gains and losses,
unrealized mark-to-market derivative gains and losses, and items
discussed in footnotes (3)-(5) to the Consolidated Statements of
Earnings.
Lamb Weston Holdings,
Inc.
Reconciliation of Non-GAAP
Financial Measures
(unaudited, in millions, except
per share amounts)
Thirteen Weeks Ended May 26,
2024
Gross Profit
SG&A
Income From
Operations
Interest
Expense
Income Tax Expense
(Benefit) (1)
Equity Method
Investment Earnings (Loss)
Net Income
Diluted EPS
As reported
$
387.9
$
175.4
$
212.5
$
40.3
$
50.8
$
8.2
$
129.6
$
0.89
Unrealized derivative gains (2)
(24.9
)
1.6
(26.5
)
—
(6.8
)
—
(19.7
)
(0.14
)
Foreign currency exchange losses (2)
—
(3.4
)
3.4
—
0.8
—
2.6
0.02
Item impacting comparability (2):
Integration and acquisition-related items,
net
—
(1.6
)
1.6
—
0.4
—
1.2
0.01
Total adjustments
(24.9
)
(3.4
)
(21.5
)
—
(5.6
)
—
(15.9
)
(0.11
)
Adjusted (3)
$
363.0
$
172.0
$
191.0
$
40.3
$
45.2
$
8.2
$
113.7
$
0.78
Thirteen Weeks Ended May 28,
2023
As reported
$
379.4
$
192.4
$
187.0
$
32.8
$
72.0
$
416.6
$
498.8
$
3.40
Unrealized derivative losses (2)
28.8
(4.2
)
33.0
—
8.4
—
24.6
0.15
Foreign currency exchange losses (2)
—
(1.3
)
1.3
—
0.3
—
1.0
0.01
Item impacting comparability (2):
Gain on acquisition of interest in joint
venture
—
—
—
—
(46.3
)
(410.7
)
(364.4
)
(2.48
)
Inventory step-up from acquisition
27.0
—
27.0
—
7.0
—
20.0
0.14
Integration and acquisition-related items,
net
—
(9.0
)
9.0
—
(0.8
)
—
9.8
0.07
Total adjustments
55.8
(14.5
)
70.3
—
(31.4
)
(410.7
)
(309.0
)
(2.11
)
Adjusted (3)
$
435.2
$
177.9
$
257.3
$
32.8
$
40.6
$
5.9
$
189.8
$
1.29
Lamb Weston Holdings,
Inc.
Reconciliation of Non-GAAP
Financial Measures
(unaudited, in millions, except
per share amounts)
Fifty-Two Weeks Ended May 26,
2024
Gross Profit
SG&A
Income From
Operations
Interest
Expense
Income Tax Expense
(Benefit) (1)
Equity Method
Investment Earnings (Loss)
Net Income
Diluted EPS
As reported
$
1,766.7
$
701.4
$
1,065.3
$
135.8
$
230.0
$
26.0
$
725.5
$
4.98
Unrealized derivative gains and losses
(2)
(28.7
)
(3.8
)
(24.9
)
—
(6.3
)
—
(18.6
)
(0.13
)
Foreign currency exchange losses (2)
—
(10.6
)
10.6
—
2.6
—
8.0
0.05
Items impacting comparability (2):
Inventory step-up from acquisition
20.7
—
20.7
—
5.3
—
15.4
0.11
Integration and acquisition-related items,
net
—
(12.8
)
12.8
—
3.2
—
9.6
0.07
Total adjustments
(8.0
)
(27.2
)
19.2
—
4.8
—
14.4
0.10
Adjusted (3)
$
1,758.7
$
674.2
$
1,084.5
$
135.8
$
234.8
$
26.0
$
739.9
$
5.08
Fifty-Two Weeks Ended May 28,
2023
As reported
$
1,432.1
$
550.0
$
882.1
$
109.2
$
224.6
$
460.6
$
1,008.9
$
6.95
Unrealized derivative losses (2)
37.5
(4.2
)
41.7
—
19.0
32.7
55.4
0.38
Foreign currency exchange losses (2)
—
(5.5
)
5.5
—
1.4
—
4.1
0.03
Items impacting comparability (2):
Gain on acquisition of interest in joint
venture
—
—
—
—
(46.3
)
(425.8
)
(379.5
)
(2.62
)
Inventory step-up from acquisition
27.0
—
27.0
—
7.0
—
20.0
0.14
Integration and acquisition-related items,
net
—
21.8
(21.8
)
—
(9.6
)
—
(12.2
)
(0.08
)
Total adjustments
64.5
12.1
52.4
—
(28.5
)
(393.1
)
(312.2
)
(2.15
)
Adjusted (3)
$
1,496.6
$
562.1
$
934.5
$
109.2
$
196.1
$
67.5
$
696.7
$
4.80
_______________________________________________
(1)
Items are tax effected at the marginal
rate based on the applicable tax jurisdiction.
(2)
See footnotes (3)-(5) to the Consolidated
Statements of Earnings for a discussion of the adjustment
items.
(3)
See “Non-GAAP Financial Measures” in this
press release for additional information..
Lamb Weston Holdings,
Inc.
Reconciliation of Non-GAAP
Financial Measures
(unaudited, in millions)
To supplement the financial information
included in this press release, the Company has presented Adjusted
EBITDA, which the Company defines as earnings, less interest
expense, income tax expense, depreciation and amortization, foreign
currency exchange and unrealized mark-to-market derivative gains
and losses, and certain items impacting comparability identified in
the table below. Adjusted EBITDA is a non-GAAP financial measure.
The following table reconciles net income to Adjusted EBITDA for
the identified periods.
Thirteen Weeks Ended
Fifty-Two Weeks Ended
May 26, 2024
May 28, 2023
May 26, 2024
May 28, 2023
Net income (3)
$
129.6
$
498.8
$
725.5
$
1,008.9
Interest expense, net
40.3
32.8
135.8
109.2
Income tax expense
50.8
72.0
230.0
224.6
Income from operations including equity
method investment earnings (1)
220.7
603.6
1,091.3
1,342.7
Depreciation and amortization (2)
84.2
70.5
306.2
247.4
Unrealized derivative (gains) and losses
(3)
(26.5
)
33.0
(24.9
)
41.7
Unconsolidated joint venture unrealized
derivative losses (3)
—
—
—
32.7
Foreign currency exchange losses (3)
3.4
1.3
10.6
5.5
Items impacting comparability (3):
Inventory step-up from acquisition
—
27.0
20.7
27.0
Integration and acquisition-related items,
net
1.6
9.0
12.8
(21.8
)
Gain on acquisition of interest in joint
venture
—
(410.7
)
—
(425.8
)
Adjusted EBITDA (4)
$
283.4
$
333.7
$
1,416.7
$
1,249.4
Segment Adjusted EBITDA
North America
$
276.5
$
297.9
$
1,263.1
$
1,162.3
International
40.4
83.6
331.9
231.0
Unallocated corporate costs (5)
(33.5
)
(47.8
)
(178.3
)
(143.9
)
Adjusted EBITDA
$
283.4
$
333.7
$
1,416.7
$
1,249.4
_______________________________________________
(1)
Lamb Weston holds a 50 percent equity
interest Lamb Weston RDO. Lamb Weston accounts for its investment
in Lamb Weston RDO under the equity method of accounting. Lamb
Weston accounted for its investments in LWAMSA and LW EMEA under
the equity method of accounting until July 2022 and February 2023,
respectively, when Lamb Weston acquired majority ownership and
began to account for those investments by consolidating their
respective financial results in Lamb Weston’s consolidated
financial statements. See Note 12, Joint Venture Investments, of
the Notes to Consolidated Financial Statements in the Company’s
Form 10-K, for more information.
(2)
Depreciation and amortization included
interest expense, income tax expense, and depreciation and
amortization from equity method investments of $1.9 million and
$2.3 million for the thirteen weeks ended May 26, 2024 and May 28,
2023, respectively, and $8.3 million and $29.1 million for the
fifty-two weeks ended May 26, 2024 and May 28, 2023,
respectively.
(3)
See footnotes (3)-(5) to the Consolidated
Statements of Earnings for more information.
(4)
See “Non-GAAP Financial Measures” in this
press release for additional information.
(5)
The Company’s two segments include
corporate support staff and services that are directly allocable to
those segments. Unallocated corporate costs include costs related
to corporate support staff and services, foreign exchange gains and
losses, and unrealized mark-to-market derivative gains and losses.
Support services include, but are not limited to, the Company’s
administrative, information technology, human resources, finance,
and accounting functions that are not specifically allocated to the
segments.
Unallocated corporate costs for the
fifty-two weeks ended May 26, 2024 included unallocated corporate
costs of LW EMEA for all periods whereas the fifty-two weeks ended
May 28, 2023 included thirteen weeks with unallocated corporate
costs of LW EMEA following the completion of the LW EMEA
Acquisition. For the first three quarters of fiscal 2023, the
Company’s portion of LW EMEA’s unallocated corporate costs were
recorded in “Equity method investment earnings” in the
International segment
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240724981569/en/
Investors: Dexter Congbalay 224-306-1535
dexter.congbalay@lambweston.com
Media: Shelby Stoolman 208-424-5461
shelby.stoolman@lambweston.com
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