Lamb Weston Holdings, Inc. · NYSE:LW
Lamb Weston — Investor Day (October 2023)
114 slides from Lamb Weston's investor day presentation, Oct 11, 2023
Slide 1: Investor Day
Investor Day October 11, 2023
Slide 2: Dexter Congbalay
Dexter Congbalay Vice President, Investor Relations and Strategy
Slide 3: Forward-looking statements
Forward-looking statements Important Notice This presentation contains forward-looking statements within the meaning of the federal securities laws. Words such as “expect,” “execute,” “enhance,” “enable,” “optimize,” “expand,” “deliver,” “drive,” “provide,” “leverage,” “capitalize,” “grow,” “invest,
Slide 4: Tom Werner
Tom Werner President and Chief Executive Officer
Slide 5: Agenda
Agenda Lamb Weston Strategy Tom Werner Category and Commercial Mike Smith Capital Allocation and Long-Term Algorithm Bernadette Madarieta Wrap-Up Tom Werner Q&A Fry Bar 5 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 6: Company Overview
COMPANY OVERVIEW
Slide 7: Key company facts
Key company facts FY 2017 FY 2024 Net Sales: $3.2 billion Net Sales: $6.8 billion to $7.0 billion3 Financials Adj. EBITDA: $707 million1 2 Adj. EBITDA: $1.54 – $1.62 billion3 Market #1 in NA frozen potato category #1 in NA frozen potato category Position (volume and dollars) #2 in global frozen pota
Slide 8: Lamb Weston investment opportunity
Lamb Weston investment opportunity Industry Attractive Strong Well-positioned Leader Category Financial Profile to drive peer- leading shareholder returns Global Disciplined Footprint Capital Allocation 8 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 9: Executing our strategies
EXECUTING OUR STRATEGIES Invest Accelerate Differentiate People for Growth Category & Global Supply Customer Chain to Drive Growth Growth 9 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 10: Track record of performance
Track record of performance Net Sales Adjusted Gross Margin1 Adjusted EBITDA1 2 ($ billions) ($ millions) $5.4 28.0% $1,249 24.6% $3.2 $707 FY2017 FY2023 FY2017 FY2023 FY2017 FY2023 (1) See GAAP to non-GAAP reconciliations at the end of this presentation. (2) Including Adjusted EBITDA from unconsoli
Slide 11: Delivering peer-leading shareholder returns
Delivering peer-leading shareholder returns Relative Stock Price Performance1 Total Shareholder Return Since Spinoff1 (November 9, 2016 = 100) (as of October 6, 2023) 221% LW $93 126% S&P 500 S&P Food & 62% Beverage LW $32 Nov. 2017 2020 2023 Lamb S&P S&P 2016 Weston 500 Food & Beverage (1) Source:
Slide 12: Segment Re-alignment
SEGMENT RE-ALIGNMENT
Slide 13: Optimized operating segments
Optimized operating segments Focused leadership North America Leverage global scale to All sales in U.S., Canada and Mexico serve differentiated international markets LTM Net Sales: $4.4B1 16 factories Drive North American channel and customer mix International Optimize cost to serve global manufact
Slide 14: Executive leadership
Executive leadership Tom Werner Bernadette Madarieta Mike Smith Chief Executive Officer Chief Financial Officer Chief Operating Officer Eryk Spytek Steven Younes Sukshma Rajagopalan General Counsel & Chief Chief Human Resources Officer Chief Information & Digital Officer Compliance Officer 14 | © 20
Slide 15: Operations leadership
Operations leadership Mike Smith Sharon Miller Marc Schroeder Gerardo Scheufler Chief Operating Officer President, North America President, International Chief Supply Chain Officer Kim Cupelli Steve Bannworth Trudy Slagle Senior Vice President, Senior Director, ESG Vice President, Agriculture Market
Slide 16: Strategic benefits of EMEA transaction
Strategic benefits of EMEA transaction Provides full control of global growth opportunities and operating strategies Strengthens global manufacturing footprint Enhances customer-centric operating model Enables growth in attractive European market 16 | © 2023 Lamb Weston, Inc. All Rights Reserved Lam
Slide 17: 17 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
17 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 18: Industry Supply and Demand
INDUSTRY SUPPLY AND DEMAND
Slide 19: Supply/demand dynamics in 2017-2022
Supply/demand dynamics in 2017-20221 Global Demand2 Global Supply3 +4.5B lbs +5.5B lbs 33.4 34.4 28.9 28.9 2017 2022 2017 2022 Implied Capacity 100% 97% Utilization (1) Pounds in billions. (2) Sources: GlobalData, NielsenIQ, Circana Potato Track and Lamb Weston estimates. (3) Sources: GlobalData and
Slide 20: Expect solid category growth through 2027
Expect solid category growth through 2027 Global Frozen Potato Category (lbs. in billions) +3.5B - 7.2B lbs 36.9B to 40.7B1 Projecting volume growth in line with Demand historical average 33.4B Growth 20221 2027E2 2022 2027E (1) Sources: GlobalData and Lamb Weston Estimates. 20 | © 2023 Lamb Weston,
Slide 21: Volume growth across all regions
Volume growth across all regions Frozen Potato Volume Growth: 2022-2027 CAGR1 Europe LSD% North America LSD% Asia MSD% MSD% Middle East Latin & Africa MSD% America Oceania LSD% (1) Sources: GlobalData and Lamb Weston estimates. 21 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Prop
Slide 22: Global supply 2022-2027E
Global supply 2022-2027E Global Processing Capacity (billions of pounds) 40.12 2.3 34.41 3.8 S. America 2.1 Capacity growth across Asia/Oceania 2.6 all regions 14.6 13.2 Lamb Weston adding N. America capacity in each region 19.3 EMEA 16.6 2022 2027E (1) Sources: Annual Insights, PotatoPro, MarketWat
Slide 23: Balanced global supply/demand
Balanced global supply/demand1 2 (lbs in billions; calendar years) 5.6B lbs of incremental capacity | 3.5B - 7.2B lbs of incremental demand 39.8 40.1 38.5 36.7 34.4 35.2 31.9 2019 2022 2023E 2024E 2025E 2026E 2027E Base year supply Incremental supply 99% 97% Implied Capacity Utilization 2% 97% 95% 9
Slide 24: Our global presence
Our global presence 10,300+ french fry experts around the globe 27 factories around the world Products sold in 100+ countries 24 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 25: North America export flows
North America export flows Asia and Middle East account for vast majority of North American exports 25 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 26: Europe export flows
Europe export flows Middle East, South America and Asia account for most of European exports 26 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 27: Expanded global footprint in FY2025
Expanded global footprint in FY2025 17 factories 7 factories 2 factories North America Europe China 2 factories Argentina 2 factories ~9B Australia Lbs1 (1) Potato processing factories only; excludes vegetable and blending factories. 27 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc
Slide 28: Optimizing cost to deliver with expansive global footprint
Optimizing cost to deliver with expansive global footprint (1) Potato processing factories only; excludes vegetable, repack and blending factories. 28 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 29: Continue to execute our strategies
Continue to execute our strategies Invest Accelerate Differentiate People for Growth Category & Global Supply Chain Customer Growth to Drive Growth Complete capacity Integrate LW EMEA to Build capabilities and Develop our people expansion projects in leverage one global flexibility to support throug
Slide 30: Mike Smith
Mike Smith Chief Operating Officer
Slide 31: Our Category
OUR CATEGORY
Slide 32: Fries are a leading menu item
Fries are a leading menu item U.S. French Fry Attachment Rate at Restaurants2 2016 2019 (Pre-Spin) (Pre-Pandemic) 21% 21% 42% 2022 (Post-Pandemic) 2023 (Year-to-Date) of global menus 23% 23% feature fries1 23% (1) Source: GlobalData 2023. (2) Source: Circana Group/CREST® 12ME July 2023; Menu Importa
Slide 33: Fries are #1 with consumers
Fries are #1 with consumers1 Silent Gen Z Millennials Generation X Boomers Generation French Fries French Fries French Fries French Fries French Fries Burgers Burgers Burgers Burgers Burgers Pizza Mexican Mexican Mexican Side salad Mexican Breakfast sandwich Breakfast sandwich Breakfast sandwich Egg
Slide 34: One of the highest-margin food items on the menu
ONE OF THE HIGHEST-MARGIN FOOD ITEMS ON THE MENU
Slide 35: Strong contributor to restaurant's profits
Strong contributor to restaurant’s profits Average Contribution Margin in U.S. Restaurants1 French Fries 81% Side Salad 81% 8x Side Dishes Baked Potato 80% more servings White Rice 78% than the next most Mashed Potatoes 77% popular appetizer or side Mac & Cheese 80% Appetizers Nachos 78% Chips & Sal
Slide 36: Compelling historical demand indicates continued growth
Compelling historical demand indicates continued growth 2017-2022 Global Frozen Potato Demand1 (lbs. in billions) CAGR 3% CAGR 5% 33.4 31.6 32.3 28.9 29.7 28.6 2017 2018 2019 2020 2021 2022 (1) Sources: GlobalData, NielsenIQ, Circana Potato Track and Lamb Weston estimates. 36 | © 2023 Lamb Weston, I
Slide 37: Continued solid growth across developed and emerging markets
Continued solid growth across developed and emerging markets Global Frozen Potato Category (lbs. in billions) CAGR 2% - 4% Developed Emerging 36.9 to 40.7 Markets Markets 33.4 20221 24.4B lbs. 9.0B lbs. 2017-20221 CAGR 2%+ 5%+ 2022-2027E2 CAGR LSD% MSD% 20221 2027E2 (1) Sources: GlobalData, NielsenI
Slide 38: Demand reflects solid per capita consumption growth
Demand reflects solid per capita consumption growth CAGR Per Capita Consumption (lbs./year)1 2016-2022 Australia 1% Developed Markets UK 4% US 4% Germany 1% Japan 5% 0.0 10.0 20.0 30.0 40.0 50.0 Brazil 8% 2%+ Emerging Markets Malaysia 8% Colombia 5% 2022 – 2027E CAGR Mexico 4% Global Per Capita Chin
Slide 39: QSRs key to driving per capita consumption
QSRs key to driving per capita consumption 83% U.S. Restaurant Traffic Growth 2025E vs. 20192 QSRs 2%+ FSRs (18%) of U.S. fry servings are ordered from QSR1 All Restaurants (2%) (1) Source: Circana Group/CREST® 12ME July 2023. (2) Source: Circana Group/CREST® Future of Foodservice June 2023. 39 | ©
Slide 40: Growing global QSRs support worldwide demand
Growing global QSRs support worldwide demand Emerging Markets Developed Markets LATIN AMERICA ASIA MIDDLE EAST 2022-2027E QSR Unit 21% 6% 9% 12% 4% 3% 7% 8% 3% 2% 6% Growth1 Fry Order 47% 56% 48% 44% 47% 54% 52% 73% 46% 50% 45% Frequency2 (1) Absolute change over period. Source: GlobalData, Septembe
Slide 41: Value Added Coatings
VALUE ADDED COATINGS
Slide 42: Growing coated fry consumption
Growing coated fry consumption U.S. Coated French Fry Consumption1 (excludes retail channels) CAGR 6% Growing more than 2x faster 5 than overall U.S. fry demand CAGR 3% More profitable and higher 4 return on investment than Pounds in billions uncoated products 3 Requires increased investment in prod
Slide 43: Drivers underlying shift to coated fries
Drivers underlying shift to coated fries Percent of U.S. Dining Percent of Total Fry Servings Consumers Selecting Crispiness as Occasions Off-Premises1 Eaten Off-Premises1 Most Important Attribute for Fries2 FSR QSR 31% 84% 77% 42% (+12pp vs. 2019) (+7pp vs. 2019) (+13pp vs. 2019) (+27pp vs. tempera
Slide 44: Coated vs. uncoated market
Coated vs. uncoated market VS. 44 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 45: Innovating for Growth
INNOVATING FOR GROWTH
Slide 46: Rich history of innovation
Rich history of innovation Twister CrissCut Dippers Grown in Idaho Crispy on Delivery 46 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 47: Dedicated innovation centers
Dedicated innovation centers Bergen op Zoom, The Netherlands Richland, Washington Shanghai, China 47 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 48: New innovative products
New innovative products Crispy on Delivery Thin Regular Cut Colossal Crisp Thin Straight Cut Tavern Traditions Colossal Crisp Thick ‘n Crispy Fries 48 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 49: Positioning Ourselves for Future Success
POSITIONING OURSELVES FOR FUTURE SUCCESS
Slide 50: Targeting non-traditional customers through innovation
Targeting non-traditional customers through innovation QSR QSR QSR QSR Sandwich/ Pizza Coffee/Tea C-Store Deli 7% 7% 16% 5% 47% of U.S. Restaurant Traffic is at Non-Traditional Fry Customers1 QSR QSR Healthy QSR Mexican Donut Asian Fast-casual 5% 4% 2% <1% (1) Source: Circana Group/CREST® 12ME July
Slide 51: 51 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
51 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 52: Expanding total addressable market
Expanding total addressable market QSR Pizza QSR Coffee/Sandwich QSR Mexican 52 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 53: Accelerate Customer and Category Growth
ACCELERATE CUSTOMER AND CATEGORY GROWTH
Slide 54: North America segment
North America segment Sales Channels Quick service and full-service restaurants Foodservice distributors Non-commercial channels Retail channels Market Position #1 in restaurant and foodservice channels #1 in retail channels Leading Brands Restaurants and foodservice: Lamb Weston brand, restaurant o
Slide 55: Consistent and strong North American demand
Consistent and strong North American demand1 CAGR 3% CAGR 4% 12.1 12.2 11.5 10.7 10.7 10.6 2017 2018 2019 2020 2021 2022 (1) Source: GlobalData, NielsenIQ, Circana Group/Potato Track and Lamb Weston estimates. 55 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 56: Strong historical performance in North America
Strong historical performance in North America Adjusted Segment Net Sales1 Adjusted Segment EBITDA1 EBITDA Margin1 (includes unconsolidated joint ventures) (excluding unconsolidated joint ventures) 26.6% $4,249 $1,162 $3,497 21.0% 19.8% $3,035 $664 $712 2021 2022 2023 2021 2022 2023 2021 2022 2023 (
Slide 57: International segment
International segment Sales Channels Quick service and full-service restaurants Non-commercial channels Foodservice distributors Retail channels Market Position #2 globally Strong positions in key #3 in EMEA emerging markets Leading Brands Restaurants and foodservice: Lamb Weston brand, restaurant o
Slide 58: Compelling growth of international demand
Compelling growth of international demand1 CAGR 3% CAGR 5% 21.2 20.1 20.2 19.0 18.2 18.0 2017 2018 2019 2020 2021 2022 (1) Sources: GlobalData, Global Trade Atlas and Lamb Weston estimates. 58 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 59: Expect solid volume growth from emerging and developed markets
Expect solid volume growth from emerging and developed markets Estimated Frozen Potato Consumption in CY 20221 2022-2027E LSD% MSD% MSD% MSD% LSD% CAGR 10 8 (lbs. in billions) 6 4 2 0 Europe Asia LatAm MEA Oceania 2017-2022 2% 6% 6% 3% 1% CAGR (1) Sources: GlobalData and Lamb Weston estimates. 59 |
Slide 60: Capturing international demand driving performance
Capturing international demand driving performance Adjusted Segment Net Sales1 Adjusted Segment EBITDA2 EBITDA Margin2 (includes unconsolidated joint ventures) (excluding unconsolidated joint ventures) $1,101 $231 15.0% 12.5% $636 $602 $131 5.9% $78 2021 2022 2023 2021 2022 2023 2021 2022 2023 (1) I
Slide 61: Differentiated Global Supply Chain to Drive Growth
DIFFERENTIATED GLOBAL SUPPLY CHAIN TO DRIVE GROWTH
Slide 62: 62 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
62 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 63: 63 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
63 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 64: Driving supply chain savings
Driving supply chain savings Gross Annualized Supply Chain Productivity Savings (fiscal 2021 to present) Procurement ~$65M Transportation & Warehousing ~$50M Manufacturing ~$70M Total ~$185M 64 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 65: Driving supply chain savings
Driving supply chain savings Portfolio Optimization Productivity Operational Efficiency Portfolio Simplification Margin Improvement 65 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 66: Manufacturing
MANUFACTURING
Slide 67: Investing to modernize assets
Investing to modernize assets Increase flexibility to produce wider range of products (e.g., coated) Improve profitability through product mix and efficiencies Ensure production and food safety Extend life of older lines in cost-effective manner Drive sustainability priorities 67 | © 2023 Lamb Westo
Slide 68: Potato sourcing priorities
Potato sourcing priorities Assured supply / reduced volatility Competitive cost Grown sustainably 68 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 69: Sustainability Commitment
SUSTAINABILITY COMMITMENT
Slide 70: Sustainability goals for 2030
Sustainability goals for 2030 2030 Production Goals 20% reduction in Scope 1 and 2 carbon emissions per pound produced 20% reduction in water use per pound produced Sustainable Production 50% reduction in food waste from the Agriculture production process Zero waste to landfill Packaging Sourcing In
Slide 71: Summary of key points
Summary of key points Capitalizing on attractive, growing category Transforming portfolio Expanding total addressable market Delivering solid sales growth globally Investing in our supply chain to support growth and drive productivity 71 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, In
Slide 72: Bernadette Madarieta
Bernadette Madarieta Chief Financial Officer
Slide 73: Well-positioned to create shareholder value
Well-positioned to create shareholder value Industry Attractive Strong Financial Leader Category Profile 73 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 74: Financial Profile
FINANCIAL PROFILE
Slide 75: Track record of sales and earnings growth
Track record of sales and earnings growth Adjusted Net Sales Adjusted EBITDA1 2 ($ Billions) EBITDA Margin1 ($ Millions) (excluding unconsolidated joint ventures) +100 bps $5.4 22.0% 21.2% 21.5% $1,249 20.5% 19.4% $4.1 $3.8 $3.8 17.3% $3.7 $3.4 $904 $3.2 15.7% $820 $800 $707 $714 $707 2017 2018 2019
Slide 76: Strong profile drives peer-leading shareholder return
Strong profile drives peer-leading shareholder return Market Leadership in Total Shareholder Return Since Spinoff1 Growing Categories (as of October 6, 2023) Price/Mix Management 221% Strong Cash Flow 126% Global Scale 62% Disciplined Capital Allocation Experienced Leadership Team Lamb S&P 500 S&P F
Slide 77: Long-Term Top & Bottom-Line Growth Opportunities
LONG-TERM TOP & BOTTOM-LINE GROWTH OPPORTUNITIES
Slide 78: Compelling drivers to support long-term growth
Compelling drivers to support long-term growth Invest Optimize Capitalize Expand to transform customer and on global total addressable capabilities and product mix scale market capacity Drive Sustainable, Profitable Growth and Cash Flow Over Long Term 78 | © 2023 Lamb Weston, Inc. All Rights Reserve
Slide 79: Increasing exposure to high-growth international markets
Increasing exposure to high-growth international markets Adjusted Segment EBITDA Net Sales (excludes unallocated costs) 15% 10% 20% 34% 85% 90% 80% 66% 2022 2024E 2022 2024E N. America International N. America International 79 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Propriet
Slide 80: Sales growth profile and long-term algorithm
Sales growth profile and long-term algorithm Net Sales Growth Long-Term Net Sales (excluding acquisitions) Growth Algorithm 20% Low-to-Mid Single Digits COVID-19 6.5%- 12% 26% 8.5% 2%-4% 2%-3% 10% Volume 8% Price/Mix 6% 5% 9% LDD (inflation) 6% % 4% 5% 2% 2% 1% 3% 3% North America International -3%
Slide 81: Margin expansion opportunity
Margin expansion opportunity Revenue Growth Management Adjusted Gross Margin1 Net Price Realization ++ ++ 28.0% Mix Improvement 20.5% Supply Chain Productivity 2022 2023 2024E 2025+ (1) See GAAP to non-GAAP reconciliation at the end of this presentation. 81 | © 2023 Lamb Weston, Inc. All Rights Rese
Slide 82: Pricing value opportunity
Pricing value opportunity Indexed Average Price Per Pound Menu Price1 110 CAGR: +5% 109 108 Indexing to customer 107 menu price increases 106 LW Net Price2 vs. our costs enables CAGR: +3% Lamb Weston to 105 capture our share of 104 value created by 103 our products 102 101 100 2018 2019 2020 (1) Sou
Slide 83: Value in action: an in-market example
Value in action: an in-market example Revenue Per Serving (est. 6 oz.) Menu Price Change (%): Q4 2021 - Q1 2023 $3.59 33% 33% $2.44 19% 15% 9% 9% 8% 9% 7% Chain Rev/Serving Lamb Weston Rev/Serving Fry costs were fixed by contract. Source: Technomic. 83 | © 2023 Lamb Weston, Inc. All Rights Reserved
Slide 84: Revenue growth management: Core principles
Revenue growth management: Core principles Price Assortment (Mix) Promotion Trade Maximize Prioritizing product mix Understanding optimal Understanding optimal revenues by utilizing that blends profitability investment that drives discounts that drive external/internal data today and investing for d
Slide 85: Measuring price elasticity response
Measuring price elasticity response Full year: FY2023 vs. prior year Elasticity Response by Geographic Market North America International (x EMEA & LWAMSA) Total Lamb Weston (x EMEA & LWAMSA) -40% -30% -20% -10% 0% 10% 20% 30% 40% Volume % change Price % change 85 | © 2023 Lamb Weston, Inc. All Righ
Slide 86: Opportunity to drive margin improvement in International
Opportunity to drive margin improvement in International North America International Adjusted Segment EBITDA Margin1 Adjusted Segment EBITDA Margin1 (excluding unconsolidated joint ventures) (excluding unconsolidated joint ventures) ++ 26.6% 15.0% 21.0% 12.5% Price Assortment Promotion Trade 2021 20
Slide 87: Targeting SG&A leverage over time
Targeting SG&A leverage over time 2024-2025 SG&A as Percent of Net Sales1 (excluding items impacting comparability) Elevated due to ERP implementation and other strategic investments NA ERP implementation 10.5% - 11.0% expected to be completed 2026 11%+ 9.7% 10.1% 9.5% Long-Term Target Includes non-
Slide 88: Capital Allocation
CAPITAL ALLOCATION lambWestowa
Slide 89: Robust operating cash flow generation
Robust operating cash flow generation Net Cash Provided by Operating Activities ($ Millions) $1,000- ++ $1,100 $762 $447 2017 2023 2024E 2025E+ 89 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 90: Capital allocation framework
Capital allocation framework Excess cash Reinvest in Return Capital returned to Business of Capital Structure shareholders and/or acquisitions Capital Expenditures Dividends Maintain Solid Balance Sheet Share Repurchases 90 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 91: Capital expenditures expected to normalize after peak investment years
Capital expenditures expected to normalize after peak investment years Capital Expenditures Capital Expenditures ($ Millions) as % Net Sales $800- Investments focused $900 13.8% 12.0%- on more competitive 13.0% $736 and reliable asset 9.1% 9.0% 9.0% ~9% base to deliver 7.5% flexibility and margin $3
Slide 92: Disciplined M&A process
Disciplined M&A process Attractive ROI Flexible Access To Production Key Markets Channel Innovation Access M&A 92 | © 2023 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 93: Committed to returning cash to shareholders
Committed to returning cash to shareholders Cumulative Cash Returned to Shareholders Dividend Policy ($ Millions) Target payout ratio of 25% to 35% $1.2B Share Repurchases $376 Offset equity compensation dilution (~$60M/year) $276 Opportunistic repurchases based on available cash using a disciplined
Slide 94: Capital structure provides flexibility
Capital structure provides flexibility FY23 Q1 241 Solid issuer ratings Total Debt $3.5B $3.4B S&P: BB+ (stable) Moody’s: Ba2 (stable) Cash $0.3B $0.2B Strong liquidity2 $1.0B U.S. revolver (undrawn) €400M Euro revolver (€260M available) Net Debt $3.2B $3.3B Favorable weighted average cost of debt N
Slide 95: Attractive debt maturity profile
Attractive debt maturity profile Debt Maturities1 ($ Millions, as of August 27, 2023) $1,285 ~85% of debt matures after 2026 $700 $523 $439 $386 $60 $47 $23 2024 2025 2026 2027 2028 2029 2030 2031 2032 Credit Facilities2 Term Loans Senior Notes (1) Excludes $7M of lease financing obligations. (2) Cr
Slide 96: FY24 and Long-Term Algorithm
FY24 AND LONG-TERM ALGORITHM
Slide 97: Raised FY 2024 financial targets
Raised FY 2024 financial targets Net Adjusted Adjusted Sales EBITDA Diluted EPS $6.8B to $7.0B $1.54B to $1.62B $5.50 to $5.95 Organic growth of 6.5% to SG&A of $765M to $775M Interest expense of ~$155M 8.5% Depreciation and Effective tax rate of 23% to $1.1B to $1.2B of incremental amortization 24%
Slide 98: Long-term financial targets
Long-term financial targets Long-Term Target Drivers Net Sales Low-to-Mid Balance of volume growth and price/mix Growth Single Digits Net price realization Adjusted Mid-to-High Mix improvement EBITDA Growth Single Digits Supply chain productivity SG&A leverage Adjusted Diluted High Single Flexible c
Slide 99: Tom Werner
Tom Werner President and Chief Executive Officer
Slide 100: Key takeaways from today
Key takeaways from today Our strategies and investments have us positioned to capture our share of growth Global supply and demand expected to remain balanced over the long-term Well-Positioned to Drive Peer- Expected continued category growth in North America Leading and International markets Share
Slide 101: Thank You
Thank You For any questions or inquires please contact: Dexter.Congbalay@lambweston.com
Slide 102: Q&A
LambWestonmae SEEING POSSIBILITIES IN POTATOES Q&A
Slide 103: Appendix
Appendix
Slide 104: GAAP to non-GAAP reconciliations
GAAP to non-GAAP reconciliations Fiscal Years Ended May 28, May 27, May 26, May 31, (in millions) 2017 2018 2019 2020 Net income attributable to Lamb Weston Holdings, Inc. $ 326.9 $ 416.8 $ 478.6 $ 365.9 Interest expense, net 61.2 108.8 107.1 108.0 Income tax expense 170.2 121.2 133.6 112.3 Income f
Slide 105: GAAP to non-GAAP reconciliations
GAAP to non-GAAP reconciliations Fiscal Years Ended May 30, May 29, May 28, (in millions) 2021 2022 2023 Net income $ 317.8 $ 200.9 $ 1,008.9 Interest expense, net 118.3 161.0 109.2 Income tax expense 90.5 71.8 224.6 Income from operations including equity method investment earnings (loss) (a) 526.6
Slide 106: GAAP to non-GAAP reconciliations
GAAP to non-GAAP reconciliations (a) Until February 28, 2023, we held a 50 percent equity interest in Lamb-Weston/Meijer v.o.f. (“LW EMEA”), a European joint venture. On that date, we acquired the remaining equity interest in LW EMEA and increased our ownership in LW EMEA to 100%. We began consolida
Slide 107: GAAP to non-GAAP reconciliations
GAAP to non-GAAP reconciliations Thirteen Weeks Ended August 28, August 27, (in millions) 2022 2023 Net income $ 231.9 $ 234.8 Interest expense, net 26.0 30.7 Income tax expense 73.7 69.9 Income from operations including equity method investment earnings (a) 331.6 335.4 Depreciation and amortization
Slide 108: GAAP to non-GAAP reconciliations
GAAP to non-GAAP reconciliations (a) We hold a 50 percent equity interest in Lamb Weston RDO. We account for our investment in Lamb Weston RDO under the equity method of accounting. We accounted for our investment in LWAMSA and LW EMEA under the equity method of accounting until July 2022 and Februa
Slide 109: GAAP to non-GAAP reconciliations
GAAP to non-GAAP reconciliations For the Thirteen Weeks Ended August 28, August 27, August 28, August 27, 2022 2023 2022 2023 (in millions, except per share amounts) Net Income Diluted EPS (e) As reported $ 231.9 $ 234.8 $ 1.60 $ 1.60 Unrealized derivative losses (gains) (a) (104.2) (20.5) (0.72) (0
Slide 110: GAAP to non-GAAP reconciliations
GAAP to non-GAAP reconciliations Fiscal Years Ended May 28, May 27, May 26, May 31, May 30, May 29, May 28, (in millions, except for percentages) 2017 2018 2019 2020 2021 2022 2023 Net sales $ 3,168.0 $ 3,423.7 $ 3,756.5 $ 3,792.4 $ 3,670.9 $ 4,098.9 $ 5,350.6 Adjusted EBITDA 707.1 820.4 904.3 799.8
Slide 111: GAAP to non-GAAP reconciliations
GAAP to non-GAAP reconciliations Fiscal Years Ended May 30, May 29, May 28, (in millions, except for percentages) 2021 2022 2023 Selling, general and administrative expenses $ 357.2 $ 387.6 $ 550.0 Unrealized derivative losses (gains) (a) — — 4.2 Foreign currency exchange losses (1.3) 3.3 5.5 Item i
Slide 112: GAAP to non-GAAP reconciliations
GAAP to non-GAAP reconciliations Fiscal Years Ended May 28, May 27, May 26, May 31, May 30, May 29, May 28, (in millions, except for percentages) 2017 2018 2019 2020 2021 2022 2023 Net sales $ 3,168.0 $ 3,423.7 $ 3,756.5 $ 3,792.4 $ 3,670.9 $ 4,098.9 $ 5,350.6 Cost of sales 2,389.2 2,544.2 2,753.0 2
Slide 113: Segment Adjusted EBITDA
Segment Adjusted EBITDA Fiscal Years Ended May 30, May 29, May 28, (in millions, except for percentages) 2021 2022 2023 North America Net sales $ 3,034.7 $ 3,497.3 $ 4,249.4 Adjusted EBITDA 664.4 711.6 1,162.3 Adjusted equity method investment earnings (loss) 20.6 15.2 22.3 Interest expense, income
Slide 114: LTM Sales
LTM Sales Thirteen Weeks Ended November 27, February 26, May 28, August 27, Last Twelve (in millions) 2022 2023 2023 2023 Months Net Sales North America $ 1,062.5 $ 1,070.8 $ 1,160.5 $ 1,135.4 $ 4,429.2 International 214.0 182.8 534.4 529.9 1,461.1 Total net sales $ 1,276.5 $ 1,253.6 $ 1,694.9 $ 1,6