Starboard Value Delivers Strategic Recommendations to Lamb Weston

Starboard Value, a stockholder of Lamb Weston, announced that it has delivered a letter to Michael Smith, the company's CEO, with a copy to the company's board of directors. The letter said, "We appreciate the time that you and the Lamb Weston team have spent with us over the past year. As we have discussed, we believe that Lamb Weston Holdings, Inc. is a high-quality business operating in a structurally attractive industry. We are encouraged by the meaningful progress made since the leadership transition, including improved pricing discipline, a clear volume inflection, and deliberate capacity curtailments that have begun to restore utilization toward normalized levels. We believe the opportunity extends beyond the initial recovery. The return of volume growth and more rational capacity behavior are important milestones, but stabilization alone will not be sufficient to unlock Lamb Weston's full earnings potential. In our view, the Company is well positioned to enter a new phase of value creation, one defined not only by normalization of industry conditions, but by a structural improvement in margins, capital allocation, and earnings power. Specifically, we believe you should expand the already announced cost reduction program and conduct a strategic review of certain international operations, particularly within Asia Pacific. The Company has announced a cost reduction program targeting at least $250 million in annualized run-rate savings by the end of FY2028. While this is a welcome first step, it is important to recognize that the vast majority of the announced savings are expected to come from cost of sales, with comparatively limited impact on selling, general, and administrative expenses and overhead. We believe the larger opportunity moving forward lies within SG&A. As you see in the chart below, since IPO, Lamb Weston's sales have roughly doubled, yet the Company has generated little to no operating leverage. Most of the Company's revenue growth since IPO has been price-driven, as opposed to volume-driven. Therefore, we would expect Lamb Weston to have realized significant operating leverage. You have not. It is time to catch up... Mike, we greatly appreciate the hard work so far and are thrilled to be able to buy a substantial position at this valuation. We believe a valuation of 6.7x EV/ NTM EBITDA5, proforma for a 25% EBITDA margin, is extremely attractive, especially for a high-quality business in a stable and capacity-constrained industry. While we are pleased with the progress to date, we believe there is much more to be accomplished and are excited to be able to get involved at this valuation. We look forward to working with you and the Board as you focus on accomplishing and surpassing this margin target. Lamb Weston remains a strong business with durable competitive advantages in a concentrated industry. We look forward to engaging constructively as the Company moves into this next phase of value creation and stand ready to support actions that strengthen Lamb Weston's performance and long-term shareholder value."