Loading...
01/10 15:44
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary presents a mixed outlook. While liquidity is strong and North America shows positive trends, global challenges persist, including price/mix headwinds and flat margins. The Q&A session reveals cautious optimism but also highlights competitive pressures and macroeconomic uncertainties. The company's prudent stance on guidance and the lack of significant positive catalysts suggest a neutral sentiment, with potential for modest stock movement.
Net Sales Second quarter net sales increased 1%, including a $24 million benefit from foreign currency translation. On a constant currency basis, net sales were essentially flat versus last year. Volume rose 8%, driven by customer wins, share gains, and strong retention, especially in North America and Asia. Price/mix declined 8% at a constant currency, primarily due to the carryover and current year impact of price and trade to support customers as well as mix shifts towards lower-margin sales.
North America Net Sales Net sales were essentially flat compared with the prior year. Volume increased 8%, supported by recent customer contract wins and share gains. Price/mix declined 8%, reflecting the carryover and current year impact of price and trade to support our customers and unfavorable mix.
International Net Sales Net sales increased 4%, including a favorable foreign currency impact of $23 million. At constant currency rates, net sales declined 1%. Volume grew 7%, while price/mix at constant currency declined 8%, primarily due to pricing actions in key international markets to support customers and unfavorable mix.
Adjusted EBITDA Adjusted EBITDA declined $9 million compared to last year to $286 million. Adjusted gross profit was down $16 million year-over-year, primarily due to unfavorable price mix. This was partially offset by higher sales volume, benefits from cost savings initiatives, and lower total manufacturing cost per pound.
North America Adjusted EBITDA Adjusted EBITDA in the North America segment increased 7% or $19 million versus the prior year quarter to $288 million. This growth reflects strong execution, including higher sales volume and lower manufacturing cost per pound, driven by raw potato deflation and benefits from cost savings initiatives. These improvements were partially offset by price and trade to support customers.
International Adjusted EBITDA Adjusted EBITDA declined $21 million to $27 million. This reflects price and trade to support customers as well as higher manufacturing cost per pound. These costs include start-up expenses associated with ramping up the new Latin America production facility in Argentina and increased factory burden and other costs in Latin America and Europe as supply and demand are rebalanced.
Free Cash Flow Free cash flow was strong at $375 million. Capital expenditures were $156 million in the first half, down $331 million from last year as major growth investments and facility expansions were completed.
Liquidity Liquidity and cash position remain strong with approximately $1.43 billion of liquidity, including $1.35 billion available under the revolving credit facility and $83 million of cash and cash equivalents. Net debt was $3.6 billion, and the adjusted EBITDA to net debt leverage ratio was 3.1x on a trailing 12-month basis.
New Product Launches: Several new item launches in North America, leveraging Lamb Weston's history of quality, innovation, and value. Internationally, launched Snap Fries, a crispy fast fry innovation for oven preparation, with early success in airline customer expansion.
Market Expansion: Reopened previously curtailed capacity in North America to meet customer demand. Expanded production in Argentina to capture growth in Latin America, with the facility already producing and qualifying products for key customers. Leveraging global manufacturing and supply chain to capture volume in fast-growing markets like Asia and Latin America.
Cost Savings Initiatives: On track to deliver annual cost savings target. Building a global supply chain with improvements in run rates, safety, and alignment with customer metrics. Investing in tools to improve demand and supply planning.
Capital Efficiency: Capital spending reduced, with fiscal 2026 expenditures expected below $500 million. Generated $375 million in free cash flow in the first half of fiscal 2026. Repurchased $40 million of shares in Q2 and increased quarterly dividend by 3%.
Focus to Win Strategy: Strengthening customer partnerships through service, joint business planning, and menu innovation. Gained share with new and growing customers, with 90% of open contracted volume negotiations concluded. Addressing supply-demand balance globally to optimize asset utilization.
Dynamic macroeconomic and competitive environment: The company faces challenges in navigating a dynamic macroeconomic and competitive environment, particularly in international markets.
European market pressures: In Europe, a strong potato crop, softer restaurant traffic, and lower export demand due to localized production in other regions are creating pricing pressures. The European business is also less contracted, contributing to volatility.
Latin America production ramp-up: The new facility in Argentina is facing higher costs per pound due to lower production volumes during the ramp-up phase, which will persist for the remainder of the year.
International pricing and demand challenges: Internationally, restaurant traffic has declined in key markets like the U.K., and pricing actions to support customers are impacting margins.
Input cost inflation: Input costs outside of raw potato prices, such as tariffs, labor, fuel, power, water, and transportation rates, have increased, adding pressure to profitability.
Palm oil tariff uncertainty: Agreements for palm oil tariff exemptions from Indonesia and Malaysia have not been finalized, leading to continued forecasted expenses.
Underutilization in Europe: Efforts to rebalance supply and demand in Europe are leading to underutilization of assets, increasing costs.
Shift to lower-margin sales: There is a mix shift towards lower-margin sales, including restaurant customers and private label retail customers, which is impacting profitability.
Higher manufacturing costs in international markets: Manufacturing costs in international markets, including start-up expenses in Latin America and underutilization in Europe, are higher, affecting margins.
Volume Growth: The company expects continued volume growth and strong sales momentum for the balance of fiscal 2026, with North America volumes expected to grow at or above first-half rates.
Revenue Guidance: The company is on track to deliver at the high end of its sales guidance range for fiscal 2026, supported by strong demand and completed contract negotiations.
International Market Trends: International volumes in the second half are expected to be flat year-over-year, with headwinds from softer restaurant traffic, added capacity, and a strong prior-year comparison.
Price/Mix Dynamics: Price/mix is expected to remain unfavorable at constant currency in the second half, but to a lesser extent than the first half. North America price declines are expected to ease, while international markets will face continued pricing pressure.
Adjusted Gross Margin: Adjusted gross margin in the second half is expected to be flat to down compared to the first half's 20.4%, reflecting price/mix dynamics and higher manufacturing costs internationally.
Capital Expenditures: Fiscal 2026 capital expenditures are expected to come in below the $500 million target, reflecting disciplined investment and a focus on sustaining performance.
Adjusted EBITDA Guidance: The company reaffirmed its fiscal 2026 adjusted EBITDA guidance range of $1 billion to $1.2 billion, expecting to finish closer to the midpoint.
International Expansion: The company is ramping up production at its new facility in Argentina, which is expected to drive volume growth and margin expansion over the coming years.
Global Market Opportunities: The company is well-positioned to capture volume in fast-growing markets such as Asia and Latin America, with international markets projected to represent 75% of global industry volume growth through 2030.
Quarterly Dividend Increase: The Board approved a 3% increase to the quarterly dividend, continuing the company's annual dividend increase tradition since becoming a public company.
Dividend Payout: In the first half of the year, the company returned $103 million in cash dividends to shareholders.
Share Repurchase Program: The company repurchased $40 million of shares during the second quarter and $50 million year-to-date. There is $308 million remaining under the current repurchase authorization.
Capital Allocation: The company remains committed to returning cash to shareholders through dividends and share repurchases, while maintaining a strong balance sheet.
The earnings call summary presents a mixed outlook. While liquidity is strong and North America shows positive trends, global challenges persist, including price/mix headwinds and flat margins. The Q&A session reveals cautious optimism but also highlights competitive pressures and macroeconomic uncertainties. The company's prudent stance on guidance and the lack of significant positive catalysts suggest a neutral sentiment, with potential for modest stock movement.
The earnings call summary provides mixed signals. While there are positive elements such as strategic investments, cost savings, and new customer wins, there are also concerns like flat revenue guidance and inflationary pressures. The Q&A reveals uncertainties about tariff exposures and unclear management responses, which offset the positives. Without a clear market cap, the overall sentiment leans neutral, as positive elements are balanced by risks and uncertainties.
The earnings call summary presents mixed signals: positive aspects include international sales growth, cost savings initiatives, and shareholder returns. However, challenges like lower North American sales, competitive pricing pressures, and geopolitical uncertainties offset these positives. The Q&A section did not provide additional clarity. The strategic plan indicates stable revenue expectations but faces potential risks. Considering these factors, the overall sentiment is neutral, with no strong catalysts to drive significant stock price movement in the short term.
The earnings call presents a mixed outlook. While there are positive signs like strong customer engagement and cost-saving initiatives, there are concerns about declining gross margins and uncertainties around international capacity. The Q&A reveals management's reluctance to confirm certain financial targets, and the avoidance of specific guidance adds to the uncertainty. Overall, the mixed signals and lack of clear guidance suggest a neutral impact on the stock price.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
