Third Quarter Fiscal 2022
Highlights
- Compared to Third Quarter Fiscal 2021:
- Net sales increased 7% to $955 million
- Income from operations increased 33% to $134 million
- Net income increased 61% to $107 million
- Diluted EPS increased 62% to $0.73 from $0.45
- Adjusted EBITDA including unconsolidated joint ventures(1)
increased 31% to $220 million
- Capital Returned to Shareholders:
- Paid $34 million in cash dividends
- Repurchased $50 million of common stock
Updated Fiscal 2022 Outlook
- Net sales growth above long-term target range of low-to-mid
single digits
- Net income and Adjusted EBITDA including unconsolidated joint
ventures(1) expected to be pressured through the remainder of
fiscal 2022 due to higher potato, input and transportation
costs
- Gross margin of 19% to 20%; previous gross margin estimate was
18% to 20%
Lamb Weston Holdings, Inc. (NYSE: LW) announced today its fiscal
third quarter 2022 results and updated its fiscal 2022 outlook.
“We continued to make financial and operating progress in the
quarter through strong execution of pricing actions to manage
significant input, manufacturing and supply chain cost inflation,”
said Tom Werner, President and CEO. “Our pricing actions, along
with manufacturing productivity and cost mitigation efforts, drove
sequential and year-over-year improvement in our gross margin
despite the Omicron variant affecting demand across our restaurant
and foodservice channels, and disrupting production and
distribution operations more than we anticipated. In addition,
constraints in global logistics networks continued to significantly
limit our international sales volumes.”
“We are managing through this challenging macro environment well
and remain on track to deliver our financial targets for fiscal
2022. The increase in our potato costs resulting from the
exceptionally poor crop harvested in fall 2021 in the Pacific
Northwest is in line with expectations, and we have secured enough
raw potatoes to meet our near-term production forecast. We plan to
continue to execute on our pricing, productivity and cost
management actions to mitigate the effect of inflation, and drive
run-rate and throughput improvements in our factories. Our capacity
expansions in Idaho and China are on schedule, and we remain
confident that continuing to invest in our business and executing
on our strategies will have us well positioned to support the needs
of customers and drive long-term growth.”
Summary of Third Quarter
Fiscal 2022 Results
($ in millions, except per
share)
Year-Over-Year
YTD
Year-Over-Year
Q3 2022
Growth Rates
FY 2022
Growth Rates
Net sales
$
955.0
7%
$
2,945.8
11%
Income from operations
$
133.8
33%
$
308.4
(18%)
Net income
$
106.6
61%
$
168.9
(33%)
Diluted EPS
$
0.73
62%
$
1.16
(33%)
Adjusted Diluted EPS(1)
$
0.73
62%
$
1.43
(17%)
Adjusted EBITDA including unconsolidated
joint ventures(1)
$
219.6
31%
$
523.9
(10%)
Q3 2022 Commentary
Net sales increased $59.2 million to $955.0 million, up 7
percent versus the prior year quarter. Price/mix increased 12
percent, primarily reflecting the benefit of pricing actions across
each of the Company’s business segments to offset input,
manufacturing, and transportation cost inflation. Volume declined 5
percent, reflecting lower export volume and lower shipments to
retail channels. The Company increased shipments to restaurant and
foodservice channels in North America, although growth was tempered
by softer restaurant traffic as a result of the effects of the
Omicron variant of the COVID-19 virus and an inability to fully
serve customer demand due to widespread industry supply chain
constraints, including labor and commodities shortages, that
resulted in lower production run-rates and throughput in the
factories.
Income from operations increased $33.2 million to $133.8
million, up 33 percent versus the prior year quarter, reflecting
higher gross profit and lower selling, general and administrative
expenses (“SG&A”). Gross profit increased $24.3 million, as the
benefits from higher price/mix more than offset the impact of
higher manufacturing and distribution costs on a per pound basis,
as well as lower sales volumes. The higher costs per pound
primarily reflected double-digit cost inflation from key inputs,
particularly raw materials such as edible oils, ingredients such as
grains and starches used in product coatings, and raw potatoes, as
well as higher transportation, packaging, and labor costs. The
increase in costs per pound also reflected the effects of labor and
commodities shortages on production run-rates, as well as lower raw
potato utilization rates. The increase in per pound costs was
partially offset by supply chain productivity savings. The increase
in gross profit also included a $1.7 million increase in unrealized
mark-to-market adjustments associated with commodity hedging
contracts, which includes a $3.6 million gain in the current
quarter, compared with a $1.9 million gain related to these items
in the prior year quarter.
SG&A declined $8.9 million compared to the prior year
quarter, primarily due to lower consulting expenses associated with
improving the Company’s commercial and supply chain operations,
lower compensation and benefits expense, and a $1.9 million
decrease in advertising and promotion expenses (“A&P”). The
decrease in SG&A was partially offset by higher information
technology infrastructure costs, including expenses related to the
planning and design of the Company’s new enterprise resource
planning (“ERP”) system, as well as unfavorable foreign exchange
expense. Approximately $2 million of the ERP-related expenses
recognized in the quarter consisted primarily of consulting
expenses that will not continue after the Company implements its
new ERP system, compared to approximately $1 million of ERP-related
expenses in the prior year quarter.
Net income was $106.6 million, up $40.5 million versus the prior
year quarter, and Diluted EPS was $0.73, up $0.28 versus the prior
year quarter. The increases were driven by higher income from
operations and equity method investment earnings.
Adjusted EBITDA including unconsolidated joint ventures(1)
increased $52.5 million to $219.6 million, up 31 percent versus the
prior year quarter, driven by higher income from operations and
equity method investment earnings.
The Company’s effective tax rate(2) in the third fiscal quarter
was 22.6 percent, versus 19.8 percent in the prior year quarter.
The Company’s effective tax rate varies from the U.S. statutory tax
rate of 21 percent principally due to the impact of U.S. state
taxes, foreign taxes, permanent differences, and discrete
items.
Q3 2022 Segment
Highlights
Global
Global Segment Summary
Year-Over-Year
Q3 2022
Growth Rates
Price/Mix
Volume
(dollars in millions)
Net sales
$
487.9
2%
8%
(6%)
Segment product contribution margin(3)
$
73.0
(8%)
Net sales for the Global segment, which is generally comprised
of the top 100 North American based quick service (“QSR”) and
full-service restaurant chain customers as well as all of the
Company’s international sales, increased $9.4 million to $487.9
million, up 2 percent versus the prior year quarter, with price/mix
up 8 percent and volume down 6 percent. The benefit of domestic and
international product and freight pricing actions to offset
inflation, as well as favorable mix, drove the increase in
price/mix. Lower export shipments due to limited shipping container
availability and disruptions to ocean freight networks drove the
decline in sales volumes. Sales volumes to North American large QSR
and casual dining restaurant chain customers increased, although
this increase was tempered by softer consumer traffic as a result
of the effects of the Omicron variant.
Global segment product contribution margin declined $6.3 million
to $73.0 million, down 8 percent versus the prior year quarter.
Higher manufacturing and distribution costs per pound as well as
lower sales volumes more than offset the benefit of favorable
price/mix.
Foodservice
Foodservice Segment
Summary
Year-Over-Year
Q3 2022
Growth Rates
Price/Mix
Volume
(dollars in millions)
Net sales
$
294.5
34%
22%
12%
Segment product contribution margin(3)
$
106.7
52%
Net sales for the Foodservice segment, which services North
American foodservice distributors and restaurant chains generally
outside the top 100 North American based restaurant chain
customers, increased $75.0 million to $294.5 million, up 34 percent
versus the prior year quarter, with price/mix up 22 percent and
volume up 12 percent. The benefits of product and freight pricing
actions taken earlier in the year to offset inflation, as well as
favorable mix, drove the increase in price/mix. The ongoing
recovery in demand at full-service restaurants and in
non-commercial channels (such as lodging and hospitality,
healthcare, schools and universities, sports and entertainment, and
workplace environments) drove the increase in sales volumes. While
shipments to restaurants have essentially returned to pre-pandemic
levels, demand in non-commercial channels remain below pre-pandemic
levels. The segment’s overall volume growth was tempered by softer
restaurant and non-commercial traffic as a result of the effects of
the Omicron variant, as well as an inability to fully serve
customer demand due to widespread industry supply chain
constraints, including labor shortages, that resulted in lower
production run-rates and throughput in the factories.
Foodservice segment product contribution margin increased $36.5
million to $106.7 million, up 52 percent compared to the prior year
quarter. Favorable price, volume and mix drove the increase, and
were partially offset by higher manufacturing and distribution
costs per pound.
Retail
Retail Segment Summary
Year-Over-Year
Q3 2022
Growth Rates
Price/Mix
Volume
(dollars in millions)
Net sales
$
143.6
(12%)
12%
(24%)
Segment product contribution margin(3)
$
31.6
(5%)
Net sales for the Retail segment, which includes sales of
branded and private label products to grocery, mass merchant, and
club customers in North America, declined $18.9 million to $143.6
million, down 12 percent versus the prior year quarter, with volume
down 24 percent and price/mix up 12 percent. Lower shipments of
private label products, resulting from incremental losses of
certain low-margin business, as well as lower shipments of branded
products, drove the sales volume decline. The decline in branded
product shipments reflected an inability to fully serve customer
demand due to lower production run-rates and throughput in the
factories. Product and freight pricing actions across the branded
and private label portfolios to offset inflation, as well as
improved mix, drove the increase in price/mix.
Retail segment product contribution margin declined $1.5 million
to $31.6 million, down 5 percent versus the prior year quarter.
Lower sales volumes and higher manufacturing and distribution costs
per pound drove the decline, partially offset by favorable
price/mix and a $1.6 million decrease in A&P expenses.
Equity Method Investment Earnings
Equity method investment earnings from unconsolidated joint
ventures in Europe, the U.S., and South America were $29.7 million
and $11.1 million for the third quarter of fiscal 2022 and 2021,
respectively. Equity method investment earnings included a $19.6
million unrealized gain related to mark-to-market adjustments
associated with currency and commodity hedging contracts in the
current quarter, compared to a $2.2 million unrealized gain related
to these items in the prior year quarter. The increase in
mark-to-market adjustments in the third quarter of fiscal 2022,
primarily relates to changes in the value of natural gas
derivatives at Lamb-Weston/Meijer as commodity markets in Europe
have experienced significant volatility.
Excluding the mark-to-market adjustments, earnings from equity
method investments increased $1.2 million compared to the prior
year quarter. The increase reflects the benefit of favorable
price/mix and higher sales volumes, largely offset by input cost
inflation and higher manufacturing and distribution costs in both
Europe and the U.S.
Cash Flow and Liquidity
In the first three quarters of fiscal 2022, net cash from
operating activities was $174.0 million, down $200.8 million versus
the prior year period, primarily due to unfavorable changes in
working capital and lower earnings. Capital expenditures, including
information technology expenditures, were $227.0 million, up $120.3
million versus the prior year period, reflecting increased
investments to support capacity expansion projects.
At the end of the third quarter of fiscal 2022, the Company had
$428.6 million of cash and cash equivalents and no borrowings
outstanding under its $1.0 billion revolving credit facility.
Capital Returned to Shareholders
In the third quarter of fiscal 2022, the Company returned a
total of $84.3 million to shareholders, including $34.3 million in
cash dividends and $50.0 million through share repurchases. The
Company repurchased 763,777 shares during the quarter at an average
price per share of $65.46.
Fiscal 2022 Outlook
The Company continues to expect fiscal 2022 net sales growth
will be above its long-term target of low-to-mid single digits. The
Company anticipates net sales growth in the fourth quarter of
fiscal 2022 will be driven largely by price/mix, reflecting the
Company’s pricing actions to offset input and transportation cost
inflation. The Company expects sales volumes in the fourth quarter
will continue to be tempered by disruptions to the Company’s
production and logistics networks, as well as the effects of
inflation and COVID-19 variants on restaurant traffic and consumer
demand.
The Company expects net income and Adjusted EBITDA including
unconsolidated joint ventures(1) in the fourth quarter of fiscal
2022 will continue to be pressured, as it manages through
significant inflation for key production inputs, transportation and
packaging, as well as industrywide operational challenges,
including labor and commodities shortages, resulting from
volatility in the broader supply chain. In addition, the Company
expects higher raw potato costs on a per pound basis due to the
impact of extreme summer heat that negatively affected the yield
and quality of potato crops in the Pacific Northwest.
Taking these headwinds into account, the Company expects its
full year fiscal 2022 gross margin to be 19 percent to 20 percent.
The Company previously expected its full year fiscal 2022 gross
margin to be 18 percent to 20 percent.
For the fourth quarter of fiscal 2022, the Company is targeting
a gross margin of 19 percent to 21 percent. In addition, the
Company expects that ongoing investments in information technology,
including the second phase of its ERP project, will increase
SG&A expenses as compared to the fourth quarter of fiscal 2021.
The Company expects that these investments will improve its ability
to support growth and margin improvement over the long-term.
In addition, for fiscal 2022, the Company continues to
expect:
- Depreciation and amortization of approximately $190
million,
- Interest expense of approximately $163 million, which includes
a $53.3 million loss (an aggregate call premium of $39.6 million of
cash and a write-off of $13.7 million of previously unamortized
debt issuance costs associated with the redeemed senior notes) on
the extinguishment of debt that the Company recognized during the
second quarter of fiscal 2022, and
- Effective tax rate of approximately 22 percent.
The Company reduced its estimate for cash used for capital
expenditures, excluding acquisitions, to approximately $325 million
from its previous estimate of $450 million, due to the projected
timing of expenditures related to certain capacity expansion
projects.
End Notes
(1)
Adjusted Diluted EPS and Adjusted EBITDA
including unconsolidated joint ventures are non-GAAP financial
measures. Please see the discussion of non-GAAP financial measures
and the associated reconciliations at the end of this press release
for more information.
(2)
The effective tax rate is calculated as
the ratio of income tax expense to pre-tax income, inclusive of
equity method investment earnings.
(3)
For more information about product
contribution margin, please see “Non-GAAP Financial Measures” and
the table titled “Segment Information” included in this press
release.
Webcast and Conference Call
Information
Lamb Weston will host a conference call to review its third
quarter fiscal 2022 results at 10:30 a.m. EDT today, April 7, 2022.
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 +1-323-994-2093. The confirmation code is
1882707. The conference call also may be accessed live on the
internet. Participants can register for the event at:
https://globalmeet.webcasts.com/starthere.jsp?ei=1531544&tp_key=6212cb795b.
A rebroadcast of the conference call will be available beginning
on Friday, April 8, 2022 after 2:00 p.m. EDT at
https://investors.lambweston.com/events-and-presentations.
About Lamb Weston
Lamb Weston, along with its joint venture partners, is a leading
supplier of frozen potato, sweet potato, appetizer and vegetable
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.
Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of the federal securities laws. Words such as “expect,”
“improve,” “will,” “continue,” “remain,” “support,” “anticipate,”
“deliver,” “mitigate,” “increase,” “outlook,” 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
plans, execution, capital expenditures and investments, operational
costs, pricing actions, and business outlook and prospects, as well
as supply chain constraints, inflation, and the impact of the
COVID-19 pandemic on 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 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; labor
shortages and other operational challenges; disruptions in the
global economy caused by Russia’s invasion of Ukraine and the
possible related heightening of the Company’s other known risks;
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; levels of pension, 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 and its joint ventures operate; political and economic
conditions of the countries in which the Company and its joint
ventures conduct business and other factors related to its
international operations; disruption of the Company’s access to
export mechanisms; risks associated with possible acquisitions,
including the Company’s ability to complete acquisitions or
integrate acquired businesses; its debt levels; changes in the
Company’s relationships with its growers or significant customers;
the success of the Company’s joint ventures; actions of governments
and regulatory factors affecting the Company’s businesses or joint
ventures; the ultimate outcome of litigation or any product
recalls; 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. 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.
Non-GAAP Financial
Measures
To supplement the financial information included in this press
release, the Company has presented product contribution margin on a
consolidated basis, Adjusted EBITDA, Adjusted EBITDA including
unconsolidated joint ventures, Adjusted Diluted EPS, and adjusted
interest expense, income tax expense, and net income, each of which
is considered a non-GAAP financial measure. The non-GAAP financial
measures provided 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 presented in this press release. These
measures are not substitutes for their comparable GAAP financial
measures, such as gross profit, net income, diluted earnings per
share, or other measures prescribed by GAAP, and there are
limitations to using non-GAAP financial measures. The non-GAAP
financial measures presented 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.
Management uses these non-GAAP financial measures to assist in
comparing the Company's performance on a consistent basis for
purposes of business decision making. Management believes that
presenting these non-GAAP financial measures provides investors
with useful information because they (i) provide meaningful
supplemental information regarding financial performance by
excluding certain 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 historical performance, and (iii) otherwise provide
supplemental information that may be useful to investors in
evaluating the Company's results. The Company believes that the
presentation of these non-GAAP financial measures, when considered
together with the corresponding GAAP financial measures and the
reconciliations to those measures, provides investors with
additional understanding of the factors and trends affecting the
Company's business than could be obtained absent these
disclosures.
Lamb Weston Holdings,
Inc.
Consolidated Statements of
Earnings
(unaudited, in millions, except
per share amounts)
Thirteen Weeks Ended
Thirty-Nine Weeks
Ended
February 27,
February 28,
February 27,
February 28,
2022
2021
2022
2021
Net sales
$
955.0
$
895.8
$
2,945.8
$
2,663.4
Cost of sales
734.0
699.1
2,368.0
2,029.4
Gross profit
221.0
196.7
577.8
634.0
Selling, general and administrative
expenses
87.2
96.1
269.4
258.1
Income from operations
133.8
100.6
308.4
375.9
Interest expense, net (1)
25.8
29.3
136.1
89.6
Income before income taxes and equity
method earnings
108.0
71.3
172.3
286.3
Income tax expense
31.1
16.3
49.4
76.2
Equity method investment earnings
29.7
11.1
46.0
42.2
Net income
$
106.6
$
66.1
$
168.9
$
252.3
Earnings per share
Basic
$
0.73
$
0.45
$
1.16
$
1.72
Diluted
$
0.73
$
0.45
$
1.16
$
1.72
Dividends declared per common share
$
0.245
$
0.235
$
0.715
$
0.695
Weighted average common shares
outstanding:
Basic
145.1
146.5
145.8
146.4
Diluted
145.5
147.2
146.2
147.1
Computation of diluted earnings per
share:
Net income
$
106.6
$
66.1
$
168.9
$
252.3
Diluted weighted average common shares
outstanding
145.5
147.2
146.2
147.1
Diluted earnings per share
$
0.73
$
0.45
$
1.16
$
1.72
__________________________
(1)
Interest expense, net, for the thirty-nine
weeks ended February 27, 2022, includes a loss on the
extinguishment of debt of $53.3 million, which includes an
aggregate call premium of $39.6 million related to the redemption
of the Company’s 4.625% senior notes due 2024 and 4.875% senior
notes due 2026, and the write-off of $13.7 million of previously
unamortized debt issuance costs associated with those notes.
Lamb Weston Holdings,
Inc.
Consolidated Balance
Sheets
(unaudited, dollars in millions,
except share data)
February 27,
May 30,
2022
2021
ASSETS
Current assets:
Cash and cash equivalents
$
428.6
$
783.5
Receivables, less allowance for doubtful
accounts of $1.1 and $0.9
430.6
366.9
Inventories
634.5
513.5
Prepaid expenses and other current
assets
117.0
117.8
Total current assets
1,610.7
1,781.7
Property, plant and equipment, net
1,556.1
1,524.0
Operating lease assets
128.2
141.7
Equity method investments
312.8
310.2
Goodwill
321.8
334.5
Intangible assets, net
34.5
36.9
Other assets
136.7
80.4
Total assets
$
4,100.8
$
4,209.4
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term debt and
financing obligations
$
32.2
$
32.0
Accounts payable
349.3
359.3
Accrued liabilities
231.4
226.9
Total current liabilities
612.9
618.2
Long-term liabilities:
Long-term debt and financing obligations,
excluding current portion
2,697.0
2,705.4
Deferred income taxes
171.9
159.7
Other noncurrent liabilities
226.7
245.5
Total long-term liabilities
3,095.6
3,110.6
Commitments and contingencies
Stockholders' equity:
Common stock of $1.00 par value,
600,000,000 shares authorized; 148,038,020 and 147,640,632 shares
issued
148.0
147.6
Additional distributed capital
(819.4
)
(836.8
)
Retained earnings
1,309.1
1,244.6
Accumulated other comprehensive income
(loss)
(7.4
)
29.5
Treasury stock, at cost, 3,593,439 and
1,448,768 common shares
(238.0
)
(104.3
)
Total stockholders’ equity
392.3
480.6
Total liabilities and stockholders’
equity
$
4,100.8
$
4,209.4
Lamb Weston Holdings,
Inc.
Consolidated Statements of
Cash Flows
(unaudited, dollars in
millions)
Thirty-Nine Weeks
Ended
February 27,
February 28,
2022
2021
Cash flows from operating
activities
Net income
$
168.9
$
252.3
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of
intangibles and debt issuance costs
142.4
142.3
Loss on extinguishment of debt
53.3
1.0
Stock-settled, stock-based compensation
expense
15.5
17.6
Earnings of joint ventures in excess of
distributions
(26.8
)
(29.9
)
Deferred income taxes
14.2
1.0
Other
(3.3
)
9.4
Changes in operating assets and
liabilities:
Receivables
(64.1
)
(30.4
)
Inventories
(121.2
)
(80.6
)
Income taxes payable/receivable, net
16.4
28.2
Prepaid expenses and other current
assets
(15.6
)
(6.5
)
Accounts payable
(3.8
)
60.9
Accrued liabilities
(1.9
)
9.5
Net cash provided by operating
activities
$
174.0
$
374.8
Cash flows from investing
activities
Additions to property, plant and
equipment
(217.8
)
(92.1
)
Additions to other long-term assets
(9.2
)
(14.6
)
Other
0.8
0.5
Net cash used for investing
activities
$
(226.2
)
$
(106.2
)
Cash flows from financing
activities
Proceeds from issuance of debt
1,669.2
—
Repayments of debt and financing
obligations
(1,690.1
)
(297.6
)
Repurchase of common stock and common
stock withheld to cover taxes
(133.7
)
(22.9
)
Dividends paid
(103.0
)
(100.9
)
Payments of senior notes call premium
(39.6
)
—
Repayments of short-term borrowings,
net
—
(498.8
)
Other
(5.0
)
0.3
Net cash used for financing
activities
$
(302.2
)
$
(919.9
)
Effect of exchange rate changes on cash
and cash equivalents
(0.5
)
1.6
Net decrease in cash and cash
equivalents
(354.9
)
(649.7
)
Cash and cash equivalents, beginning of
period
783.5
1,364.0
Cash and cash equivalents, end of
period
$
428.6
$
714.3
Lamb Weston Holdings,
Inc.
Segment Information
(unaudited, dollars in
millions)
Thirteen Weeks Ended
Year-Over-
February 27,
February 28,
Year Growth
2022
2021
Rates
Price/Mix
Volume
Segment net sales
Global
$
487.9
$
478.5
2%
8%
(6%)
Foodservice
294.5
219.5
34%
22%
12%
Retail
143.6
162.5
(12%)
12%
(24%)
Other
29.0
35.3
(18%)
2%
(20%)
$
955.0
$
895.8
7%
12%
(5%)
Segment product contribution margin
(1)
Global
$
73.0
$
79.3
(8%)
Foodservice
106.7
70.2
52%
Retail
31.6
33.1
(5%)
Other (2)
6.2
8.7
(29%)
217.5
191.3
14%
Add: Advertising and promotion
expenses
3.5
5.4
(35%)
Gross profit
$
221.0
$
196.7
12%
Thirty-Nine Weeks
Ended
Year-Over-
February 27,
February 28,
Year Growth
2022
2021
Rates
Price/Mix
Volume
Segment net sales
Global
$
1,505.8
$
1,401.9
7%
5%
2%
Foodservice
929.8
697.3
33%
10%
23%
Retail
418.7
457.1
(8%)
6%
(14%)
Other
91.5
107.1
(15%)
8%
(23%)
$
2,945.8
$
2,663.4
11%
7%
4%
Segment product contribution margin
(1)
Global
$
196.5
$
249.8
(21%)
Foodservice
307.5
243.7
26%
Retail
67.8
99.0
(32%)
Other (2)
(6.6
)
32.4
(120%)
565.2
624.9
(10%)
Add: Advertising and promotion
expenses
12.6
9.1
38%
Gross profit
$
577.8
$
634.0
(9%)
__________________________
(1)
Product contribution margin is one of the
primary measures reported to the Company’s chief operating decision
maker for purposes of allocating resources to the Company’s
segments and assessing their performance. Product contribution
margin represents net sales less cost of sales and advertising and
promotion expenses. Product contribution margin includes
advertising and promotion expenses because those expenses are
directly associated with the performance of the Company’s segments.
Product contribution margin, when presented on a consolidated
basis, is a non-GAAP financial measure. See “Non-GAAP Financial
Measures” in this press release for a description of non-GAAP
financial measures and the table above for a reconciliation of
product contribution margin on a consolidated basis to gross
profit.
(2)
The Other segment primarily includes the
Company’s vegetable and dairy businesses and unrealized
mark-to-market adjustments associated with commodity hedging
contracts. Unrealized mark-to-market adjustments and realized
settlements associated with commodity hedging contracts reported in
the Other segment included a gain of $2.8 million and a gain of
$4.3 million for the thirteen weeks ended February 27, 2022 and
February 28, 2021, respectively; and a loss of $14.1 million and a
gain of $16.3 million for the thirty-nine weeks ended February 27,
2022 and February 28, 2021, respectively.
Lamb Weston Holdings, Inc.
Reconciliation of Non-GAAP Financial Measures (unaudited,
dollars in millions)
There were no items impacting
comparability during the thirteen weeks ended February 27, 2022, or
during the thirteen and thirty-nine weeks ended February 28,
2021.
Thirty-Nine Weeks Ended
February 27, 2022
Equity
Income
Income
Method
From
Interest
Tax
Investment
Diluted
Operations
Expense
Expense (1)
Earnings
Net Income
EPS
As reported
$
308.4
$
136.1
$
49.4
$
46.0
$
168.9
$
1.16
Items impacting comparability:
Loss on extinguishment of debt (2)
—
(53.3
)
12.8
—
40.5
0.27
Adjusted (3)
$
308.4
$
82.8
$
62.2
$
46.0
$
209.4
$
1.43
__________________________
(1)
Items impacting comparability are tax
effected at the marginal rate based on the applicable tax
jurisdiction.
(2)
See footnote (1) to the Consolidated
Statements of Earnings above for a discussion of the item impacting
comparability.
(3)
Adjusted interest expense, income tax
expense, net income, and diluted earnings per share are non-GAAP
financial measures. Management excludes items impacting
comparability between periods as it believes these items are not
necessarily reflective of the ongoing operations of Lamb Weston.
These non-GAAP financial measures provide a means to evaluate the
performance of Lamb Weston on an ongoing basis using the same
measures that are frequently used by the Company’s management and
assist in providing a meaningful comparison between periods. See
also “Non-GAAP Financial Measures” in this press release.
Lamb Weston Holdings,
Inc.
Reconciliation of Non-GAAP
Financial Measures
(unaudited, dollars in
millions)
To supplement the financial information
included in this press release, the Company has presented Adjusted
EBITDA and Adjusted EBITDA including unconsolidated joint ventures,
which are non-GAAP financial measures. The following table
reconciles net income to Adjusted EBITDA and Adjusted EBITDA
including unconsolidated joint ventures.
Thirteen Weeks Ended
Thirty-Nine Weeks
Ended
February 27,
February 28,
February 27,
February 28,
2022
2021
2022
2021
Net income
$
106.6
$
66.1
$
168.9
$
252.3
Equity method investment earnings (1)
(29.7
)
(11.1
)
(46.0
)
(42.2
)
Interest expense, net (2)
25.8
29.3
136.1
89.6
Income tax expense
31.1
16.3
49.4
76.2
Income from operations
133.8
100.6
308.4
375.9
Depreciation and amortization
46.6
46.3
138.8
138.5
Adjusted EBITDA (3)
180.4
146.9
447.2
514.4
Unconsolidated Joint Ventures (4)
Equity method investment earnings
29.7
11.1
46.0
42.2
Interest expense, income tax expense, and
depreciation and
amortization included in equity method
investment earnings
9.5
9.1
30.7
25.5
Add: Adjusted EBITDA from unconsolidated
joint ventures
39.2
20.2
76.7
67.7
Adjusted EBITDA including unconsolidated
joint ventures (3)
$
219.6
$
167.1
$
523.9
$
582.1
__________________________
(1)
Unrealized mark-to-market adjustments
associated with currency and commodity hedging contracts within
equity method investment earnings include a gain of $3.6 million
and a gain of $1.9 million for the thirteen weeks ended February
27, 2022 and February 28, 2021, respectively; and a loss of $9.2
million and a gain of $11.9 million for the thirty-nine weeks ended
February 27, 2022 and February 28, 2021, respectively.
(2)
See footnote (1) to the Consolidated
Statement of Earnings above for a discussion of the item impacting
comparability.
(3)
Adjusted EBITDA and Adjusted EBITDA
including unconsolidated joint ventures are non-GAAP financial
measures. Lamb Weston presents these measures because the Company
believes they provide a means to evaluate the performance of the
Company on an ongoing basis using the same measure frequently used
by the Company’s management and assist in providing a meaningful
comparison between periods. Any analysis of non-GAAP financial
measures should be done only in conjunction with results presented
in accordance with GAAP. These non-GAAP financial measures are not
intended to be a substitute for GAAP financial measures and should
not be used as such. See also “Non-GAAP Financial Measures” in this
press release.
(4)
Lamb Weston holds equity interests in
three potato processing joint ventures, including 50% of
Lamb-Weston/Meijer v.o.f., Lamb-Weston/RDO Frozen, and Lamb Weston
Alimentos Modernos S.A., and accounts for these investments under
the equity method of accounting. See Note 4, Investments in Joint
Ventures, of the Notes to Consolidated Financial Statements in
“Part II, Item 8. Financial Statements and Supplementary Data” in
the Company’s fiscal 2021 Form 10-K, for more information.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220407005031/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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