Lamb Weston Holdings, Inc.
CEO : Mr. Thomas P. Werner
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q4 | 47.0% YoY | 116.7% | 1468.2% | 2023-07-25 |
Bernadette Madarieta says,
Q4 2023 Earnings Summary
- Sales increased by $540 million or 47% to a quarterly record of just under $1.7 billion
- About $380 million of the increase was due to the consolidation of EMEA and Argentina operations
- Net sales grew 14% excluding incremental sales from acquisitions
- Price/mix increased by 24% due to pricing actions taken in fiscal 2023
- Overall sales volumes declined by 10%
- Gross profit increased by $170 million to nearly $425 million
- Gross margin increased by over 300 basis points to 25.1%
- SG&A expenses increased by $65 million to $183 million
- Adjusted EBITDA increased by $117 million or 59% to $318 million
- Sales in the Global segment were up 85%, driven by the EMEA and Argentina acquisitions
- Sales in the Foodservice segment grew 4%, a deceleration from previous quarters
- Sales in the Retail segment increased by 25%
- Liquidity position remained solid with $305 million of cash and no borrowings under the revolving credit facility
- Net debt was nearly $3.2 billion, resulting in a leverage ratio of 2.6 times
Fiscal 2024 Outlook
- Operating environment expected to remain challenging with inflation and macro factors impacting costs, restaurant traffic, and consumer demand
- Capacity constraints in producing coated fries, specialty cuts, and chopped in form varieties until new facilities become available
- Targeting sales of $6.7 billion to $6.9 billion, including incremental sales from the EMEA transaction
- Net sales growth, excluding acquisitions, expected to be 6.5% to 8.5%
- Volume to be pressured by strategic product mix management and cautious consumer demand
- Pricing actions to counter input cost inflation expected, but at a more modest rate than in fiscal 2023
- Transportation rates charged to customers may serve as a price headwind
Tom Werner says,
Fiscal 2023 Financial Results
- Record sales of nearly $5.4 billion
- Strong profit growth in each core business segment
- Achieved through pricing actions, mix improvement, and supply chain productivity
Strategic Transactions and Business Expansion
- Acquired remaining interest in European joint venture, adding processing facilities and capacity
- Acquired controlling interest in joint venture in Argentina, with capacity expansion underway
- Progress on major capital expansion projects in China, Idaho, and The Netherlands
- Opened innovation center in The Netherlands to develop and test new products
Product Innovation and Market Expansion
- Launched new products addressing non-traditional frozen potato channels
- Expanded total addressable market, particularly in pizza outlets
Operational Infrastructure and Capabilities
- Stabilized supply chain through staffing and productivity initiatives
- Upgrading capabilities at processing facilities
- Completing design work for new enterprise resource planning system
Financial Highlights and Shareholder Returns
- Returned over $190 million to shareholders
- Increased dividend for the sixth straight year
- Continued execution against share repurchase plan
Operating Environment and Demand Outlook
- Frozen potato category remains healthy globally
- Fry attachment rate in the US remains steady and above pre-pandemic levels
- Restaurant traffic growth decelerated but picked up in June
- Near-term demand may be choppy due to variability in restaurant traffic trends and macro pressures on consumers
Costs, Pricing, and Inflation
- Expect input cost inflation to moderate but still have a meaningful impact
- Higher contract prices for potatoes in North America (20% increase) and Europe (35-40% increase)
- Price actions to offset inflation expected to be more modest than fiscal 2023
Potato Crop Outlook
- Early potato varieties consistent with historical averages
- Main crop in North America and Europe appear to be in line with historical averages
- Wet and cold spring in Europe may delay harvest timing in some regions
Q & A sessions,
Potato crop management
- The company closely monitors and manages the yields on the potato crop annually.
- Current progress of the crop looks promising.
- The company tracks contracted amounts versus forecast and market conditions globally.
- Adjustments can be made in the next 90 to 120 days to six months to balance overall potato supply.
- The agricultural team is skilled at managing these adjustments.
Capacity expansion
- The company plans to bring on additional capacity in the next 18 months.
- This investment demonstrates confidence in the market category’s future.
- Although there is some near-term softness in certain areas, the company believes the category will remain resilient in the long-term.
- Competition is also increasing capacity, but the overall category is expected to handle the additional supply well.
- The company is well-positioned in terms of both near-term and long-term supply and demand balance.
No bad stock 