Lamb Weston Holdings, Inc. · NYSE:LW

Lamb Weston — Investor Day (October 2016)

85 slides from Lamb Weston's investor day presentation, Oct 13, 2016

Slide 1: Investor Day Presentation
lambWestowaaa SEEING POSSIBILITIES IN POTATOES Investor Day . Presentation October 13, 2016
Slide 3: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. We undertake no responsibil
Slide 6: Agenda
Agenda Introduction to Lamb Weston Tom Werner Frozen potato category, brand strength and innovation Mike Smith Break – Fry bar Quality and supply chain excellence Rick Martin Financial history and outlook John Gehring Summary Tom Werner Q&A Tom Werner Product showcase © Lamb Weston | 6
Slide 7: Our leadership
Our leadership Micheline Carter Eryk Spytek John Gehring CHRO General Counsel Interim CFO Tim McLevish Tom Werner Rick Martin Rod Hepponstall Sharon Miller Mike Smith Executive Chairman President & CEO Global Operations Foodservice & Retail Global Business Unit Growth & Strategy © Lamb Weston | 7
Slide 8: Key takeaways from today
Key takeaways from today Why we present a compelling investment opportunity • Lamb Weston is uniquely positioned to capture industry growth • An understanding of Lamb Weston and our position as a value-added, global leader in frozen potatoes • Deeper knowledge of the frozen potato category © Lamb We
Slide 9: A compelling opportunity
A compelling opportunity Growing global category demand Favorable North America and global industry dynamics Our advantaged global scale, capabilities and leading market position Attractive financial outlook • Meaningful total shareholder return • Growing revenues • Expanding margins • Strong free c
Slide 10: Our Vision
Our Vision To be the world’s number one frozen potato company by inspiring our customers through industry leading innovation, execution and continuous improvement, while nurturing an inventive Lamb Weston culture © Lamb Weston | 10
Slide 11: Lamb Weston is a leader in an attractive and growing global category
Lamb Weston is a leader in an attractive and growing global category • Value-added global brand • Longstanding and collaborative customer relationships • Operational scale and integrated supply chain • Proven leadership team Well-positioned to • Clear strategic plan create shareholder value © Lamb W
Slide 12: Global frozen potato category
Global frozen potato category • $13 billion category, growing to $15 billion by 2020 • Majority of fries are sold in the foodservice (away from home) channel, accounting for 80% of all global sales • North America and Europe are the two biggest geographic markets by volume • French fries are among t
Slide 14: Overview of Lamb Weston
Overview of Lamb Weston Key Facts Segment Breakdown FY 2016 • Net sales: $3B in a $13B category Global Large US-based chain restaurants and all Lamb Financials • Adjusted EBITDA: $593m1 Weston’s international businesses Smaller regional chain restaurants, independents, • Number 1 in NA frozen potato
Slide 15: 60 years of continuous expansion
60 years of continuous expansion 2016 Acquired Opened TaiMei Potato state-of-the-art Industry in Innovation Center Expanded Shangdu, China Opened sweet in Richland, WA operations into Joint venture potato operation Taber, Alberta, ConAgra Foods formed to create in Delhi, LA Joint venture Canada acqu
Slide 16: Share in North America
42% in North America Category size = $6B © Lamb Weston | 16 Source: NPD PotatoTrack, NPD SupplyTrack, IRI 2016
Slide 17: Share globally
23% globally Category size = $13B © Lamb Weston | 17 Source: Euromonitor, GTIS, LW market information 2015
Slide 18: Positioned for the future with our global footprint
Positioned for the future with our global footprint Taber, Alberta Lamb Weston/Meijer Wisbech, UK Corporate Headquarters Kruiningen, Holland Lipetsk, Russia Asia Sales Support Eagle, ID Kennewick, WA Oosterbierum, Holland Hollabrunn, Austria Shenyang, China Bergen op Zoom, Holland Shangdu, China Seo
Slide 19: Export model augmented by local production in select markets
Export model augmented by local production in select markets © Lamb Weston | 19
Slide 20: Competing in growing markets across the globe
Competing in growing markets across the globe Frozen potato imports: estimated 2015-2020 CAGR 10.7% Russian Region 9.7% Eastern Europe 15.8% China (1.2%) Japan Mexico 6.5% 4.5% Caribbean Africa Asia 17.8% 7.2% Central America 6.8% Middle East 9.3% 9.7% South America Oceania 15.9% © Lamb Weston | 20
Slide 21: With a solid position in fast-growing, emerging markets
With a solid position in fast-growing, emerging markets Lamb Weston Share 27% 25% 19% 18% China Mexico Middle East Russia © Lamb Weston | 21 Source: Euromonitor, GTIS, LW market information 2015
Slide 22: Expanding our footprint to support growing markets
Expanding our footprint to support growing markets Shangdu, China Lipetsk, Russia © Lamb Weston | 22
Slide 23: Building on our legacy of processing innovation
Building on our legacy of processing innovation In 1960, founder F. Gilbert Lamb invented the In 1983, Lamb Weston pioneered its Lamb Water Knife – a device that uses Automatic Defect Removal System high-velocity water flow to send potatoes removing critical and major defects on high through station
Slide 25: Delivering superior customer value through our differentiated supply chain
Delivering superior customer value through our differentiated supply chain Quality and consistency Agricultural Best-in-class management customer service Global Customer Sustainability footprint Value © Lamb Weston | 25
Slide 26: Our leadership
Our leadership Micheline Carter Eryk Spytek John Gehring CHRO General Counsel Interim CFO Tim McLevish Tom Werner Rick Martin Rod Hepponstall Sharon Miller Mike Smith Executive Chairman President & CEO Global Operations Foodservice & Retail Global Business Unit Growth & Strategy © Lamb Weston | 26
Slide 27: Clear strategy for growth
Clear strategy for growth Expand our category-leading position in North America Optimize global footprint and capabilities to capture emerging-market growth Cultivate new opportunities and drive growth through deep customer partnerships, both domestically and internationally Relentlessly pursue effe
Slide 28: A track record of delivering results
A track record of delivering results Revenue Adjusted EBITDA1,2 (in millions) (in millions) $3,200 $600 $593 18% $2,994 $3,000 $2,925 $550 17% $2,815 $526 $2,800 $503 $500 16% $2,600 $2,400 $450 15% 2014 2015 2016 2014 2015 2016 1Includes proportionate share of Joint Venture (affiliate) EBITDA 2Excl
Slide 29: Well positioned to create long-term shareholder value
Well positioned to create long-term shareholder value We are confident in our ability to consistently FY 2016 Base Long-term Outlook meet our long-term financial goals to drive value for shareholders In line with Net Sales $3.0B recent annual growth 1,2 Mid to high Adjusted EBITDA $593M single digit
Slide 30: Our Vision
Our Vision To be the world’s number one frozen potato company by inspiring our customers through industry leading innovation, execution and continuous improvement, while nurturing an inventive Lamb Weston culture © Lamb Weston | 30
Slide 31: Frozen Potato: An Established Category with Room for Growth
Frozen Potato: An Established Category with Room for Growth Mike Smith SVP Growth & Strategy © Lamb Weston | 31
Slide 32: French fries are one of the most important items on menus in the US
French fries are one of the most important items on menus in the US, driving both traffic and profitability Of all fries are sold Most profitable food item Of all US restaurants Of all restaurant in the foodservice channel on restaurant menu serve fries transactions include fries © Lamb Weston | 32
Slide 33: Consumer interest in fries remains strong
Consumer interest in fries remains strong Most popular foods/beverages by generation Under 18 18-34 35-49 50-64 65+ French Fries CSDs CSDs French Fries Trad. Coffee CSDs Burgers French Fries Burger French Fries Pizza French Fries Burger CSDs Tap Water Burgers Mexican Mexican Iced Tea Iced Tea Chick
Slide 34: Category projected to grow 2.6B lbs by 2020, a $15B industry
Globally, the category is projected to grow 2.6B lbs by 2020, resulting in a $15B industry Frozen Processed Potato Category Volume (billion lbs) 29.1 +2.6B lbs 25.2 26.4 23.7 2005 2010 2015 2020 © Lamb Weston | 34 Source: Euromonitor 2016
Slide 35: Growth coming from large, established markets as well as emerging regions
Growth coming from large, established markets as well as emerging regions 8% 8% 10 8% 7% 8 Category Size in B lbs 6% % Growth 2015-2020 5% 5% 5% 6 5% 4% 4% 4 3% 2% 2% 2 0.5% 0.5% 1% 0 0% North Latin America Europe Africa Russia Middle East China Other Asia Oceania America © Lamb Weston | 35 Source:
Slide 36: Significant opportunity to grow in emerging areas
With significant opportunity to grow in these emerging areas Per Capita Consumption Population (lbs per capita) (millions) Africa 0.5 993.3 Middle East 3.3 406.1 Asia 0.6 3,940.8 South America 3.6 409.6 Europe 15.5 537.0 US 28.2 318.7 0 5 10 15 20 25 30 © Lamb Weston | 36 Source: Euromonitor, GTIS,
Slide 37: New store openings driving future emerging market consumption
New store openings are driving future emerging market consumption Units ('000) 400 ME/Africa 350 Latin America 300 250 200 150 Asia Pacific 100 50 0 2015 2020 © Lamb Weston | 37 Source: Euromonitor 2016
Slide 38: NA frozen potato exports continue to increase
To meet this global demand, NA frozen potato exports continue to increase North America frozen potato exports have shown strong long-term growth, expanding from 15% of NA industry capacity to over 20% in last 7 years Frozen Potato Exports from North America (million lbs) 2,500 2,000 1,500 1,000 500
Slide 39: US menu penetration remains strong
In the US, menu penetration remains strong, with growth in new menu applications of all restaurant menus include fries Topped/seasoned fries represent more profitability for both the operator and the manufacturer of menus now include topped/ seasoned fries; 6% growth over past 5 years © Lamb Weston
Slide 40: US fry manufacturer sales reaching highest level in years
Leading to US fry manufacturer sales reaching highest level in years US Frozen Potato Manufacturer Shipments (billion lbs) 7.89 7.62 +270M lbs 7.42 7.27 2012 2013 2014 2015 © Lamb Weston | 40 Source: NPD PotatoTrack YE Dec 2015
Slide 41: Lamb Weston is outpacing US fry $ category growth
Lamb Weston is outpacing US fry $ category growth 6.3% 4.7% Category Lamb Weston © Lamb Weston | 41 Source: NPD PotatoTrack YE Dec 2015
Slide 42: Key takeaways – frozen potato category
Key takeaways – frozen potato category • Fry category is critically important to a restaurant operator, driving both revenue and profitability • The industry is experiencing strong growth globally and is expected to reach $15B in sales by 2020 • Growth is coming from both NA and emerging markets • W
Slide 44: Leader in brand awareness and purchase preference
Leader in brand awareness and purchase preference Unaided Frozen Potato Brand Awareness Purchase Preference among users & in Foodservice nonusers of each brand Lamb Weston 41% Cavendish, McCain 37% 3% Lamb US Foods, Weston, Simplot 37% 9% 30% Sysco, Sysco 24% 15% Monarch 5% Cavendish 5% Simplot, 19%
Slide 45: Strong brand awareness reflected in overall performance
Strong brand awareness reflected in overall performance Overall Quality and Service Performance as Perceived by Operators Top 2 box (9 or 10 rating on a 10 point scale) 52% 37% 38% Lamb Weston McCain Simplot © Lamb Weston | 45 Source: Datassential Proprietary Study 2013
Slide 46: Strategic investments in our innovation capabilities
Strategic investments in our innovation capabilities © Lamb Weston | 46
Slide 47: Broad diverse portfolio meets all eating occasions and segments
Broad diverse portfolio meets all eating occasions and segments © Lamb Weston | 47
Slide 49: Product innovation driven by insights on consumer needs
Product innovation driven by insights on consumer needs Lattice Chips Seashore Fries Natural Fries © Lamb Weston | 49
Slide 50: Robust innovation pipeline
Robust innovation pipeline Sweet Waffle Waffle Organic Garlic Oil Drizzle House Cut Fries Seasoned Twister Fries Waffled Hash Brown © Lamb Weston | 50
Slide 52: Key takeaways – brand and innovation
Key takeaways – brand and innovation • Importance of insights to Lamb Weston brand strength and innovation development • Industry-leading innovation across our 60+ year history • Innovation beyond product and process • One of the broadest product portfolios in the industry • Importance of innovation
Slide 53: Quality and supply chain excellence
Quality and supply chain excellence Rick Martin Chief Supply Chain Officer © Lamb Weston | 53
Slide 54: Supply chain mission
Supply chain mission Delight CUSTOMERS Efficiently PROCESS Sustainably GROW © Lamb Weston | 54
Slide 55: Delivering superior customer value through our differentiated supply chain
Delivering superior customer value through our differentiated supply chain Quality and consistency Agricultural Best-in-class management customer service Global Customer Sustainability footprint Value © Lamb Weston | 55
Slide 56: Global footprint in prime growing regions sets foundation for efficiency
Global footprint in prime growing regions sets foundation for efficiency Processing Facility Includes joint venture facilities Plants Pounds Countries © Lamb Weston | 56
Slide 57: Advantaged manufacturing in Pacific Northwest
Advantaged manufacturing in Pacific Northwest Why the Pacific Northwest? • Perfect climate for potatoes • Consistent crop performance • Community of local growers – capable of meeting demand • Close proximity to port for exporting • Allows LW to leverage scale Processing Facility Includes joint vent
Slide 58: Differentiated approach to agricultural management
Differentiated approach to agricultural management • Collaborate closely with growers – deep relationship • Utilize large contracted position • Design contracts to align on critical performance metrics • Leverage our scale in the Columbia Basin • Diversify growing regions • Operate a large company p
Slide 59: Innovation in agronomy – the future of potato farming
Innovation in agronomy – the future of potato farming Combining science with technology • Robust data analytics • Optimal moisture & nutrients • Fertility guideline by variety • Weather impacts Implementation • Grower relationships • Reduced growing costs • Improved crop quality and yield Benefit ©
Slide 60: Potato utilization
Potato utilization Other Grades Expanded High Range Quality Small Size Hash Brown Mashed Retail © Lamb Weston | 60
Slide 61: Ensuring quality consistency, year over year
Ensuring quality consistency, year over year size, shape, defects, bruise, Finished specific gravity (density) Product Variability Consistency © Lamb Weston | 61
Slide 62: The Lamb Weston processing quality advantage
The Lamb Weston processing quality advantage Cultivating a culture of quality through proprietary training programs Reinforcing continuous improvement mindset through people development Leveraging innovation to develop state-of-the-art tools for processing Equipping our plants with capital investmen
Slide 63: Over the past 3 years, we have invested to meet industry growth
Over the past 3 years, we have invested to meet industry growth Boardman, OR Richland, WA Bergen op Zoom, Lipetsk, Russia* The Netherlands* © Lamb Weston | 63 * Through our Lamb Weston Meijer joint venture
Slide 64: Logistics excellence
Logistics excellence • Expertise in all 3 major transportation modes • Knowledge in frozen warehouse management • Cost and service focus • Experienced-tenured leadership © Lamb Weston | 64
Slide 66: Recognized for best-in-class customer service
Recognized for best-in-class customer service • McDonald’s Korea Assured Supplier award for efforts during the West Coast port slow down Case Fill 99.5%+ • McDonald’s Sustainability Award • Wendy’s Gold Link Award for Supplier Excellence • Gordon Foodservice Cornerstone Award – for the 3rd time Orde
Slide 67: Sustainability through stewardship of our resources
Sustainability through stewardship of our resources • Sustainable Agriculture From where we work, to the land we cultivate. – Leveraging our own farm Sustainability is threaded – Merging the art of farming with science and technology through our entire business, • Operational Efficiency from our pro
Slide 68: Key takeaways – our advantaged supply chain
Key takeaways – our advantaged supply chain • We know potatoes better than anyone else; expertise built through 50+ years in processing • We understand the value we bring to our customers and the drivers of our differentiated supply chain • Manufacturing capabilities and supply chain across the glob
Slide 70: Business & financial strength
Business & financial strength Attractive Investment Strong Great Financial Business Profile Attractive Global Top and Bottom Line Category Fundamentals Growth + Strong Margins and Lamb Weston Strengths Cash Flows + Balanced Capital Allocation Strong Team © Lamb Weston | 70
Slide 71: Long track record of sales growth
Long track record of sales growth Net Sales ($ billions) $3.0 $1.3 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 © Lamb Weston | 71
Slide 72: Strong, consistent financial performance
Strong, consistent financial performance Lamb Weston has consistently improved margins while driving best-in-class Net Sales and EBITDA growth Net Sales Adjusted EBITDA Adjusted EBITDA Margin2,3 ($B) ($M)1,3 $593 17.6% $3.0 $2.9 $526 16.1% $503 16.0% $2.8 2014A 2015A 2016A 2014A 2015A 2016A 2014A 20
Slide 73: Drivers of profitable growth
Drivers of profitable growth Targeting sustainable, profitable top-line growth driven by strategic priorities and supported by attractive category dynamics Top-Line Margin Growth Drivers Drivers Consistent growth across Disciplined pricing and customer base mix management Build out presence and capa
Slide 74: Attractive financial profile relative to Food & Beverage sector
Attractive financial profile relative to Food & Beverage sector Organic Net Sales CAGR – Adjusted EBITDA Margin – Last 3 Fiscal Years Last Fiscal Year1 3.1% 17.6% Large Cap Large Cap Food Average2 2.2% Food Average2 17.6% Mid Cap Mid Cap Food Average3 2.0% Food Average3 15.8% Source: Company filings
Slide 75: Well positioned to create long-term shareholder value
Well positioned to create long-term shareholder value We are confident in our ability to consistently FY 2016 Base Long-term Outlook meet our long-term financial goals to drive In line with value for shareholders Net Sales $3.0B recent annual growth 1,2 Mid to high Adjusted EBITDA $593M single digit
Slide 76: Strong cash flow and liquidity
Strong cash flow and liquidity Our cash flow generation, solid balance sheet and • Strong EBITDA margins liquidity provide Strong Cash Flow flexibility to invest • Strong operating cash flows in the business and return Generation capital to shareholders • Working capital and CAPEX discipline • Lamb
Slide 77: Capital allocation priorities
Capital allocation priorities Long-Term Lamb Weston Capital Deployment Strategy: We plan to implement Disciplined, Returns-Based Approach a balanced, returns- driven approach to Investments in growth – use of cash organic and attractive acquisition opportunities Strategic delevering over time to mai
Slide 78: Fiscal year 2017 outlook
Fiscal year 2017 outlook Solid results FY 2016 Base FY 2017 Outlook reflecting good fundamentals and a strong start in first quarter Net Sales $3.0B Low single digit growth 1,2 Adjusted EBITDA $593M High single digit growth 1Includes proportionate share of Joint Venture (affiliate) EBITDA 2Excludes
Slide 80: Our investment opportunity is compelling
Our investment opportunity is compelling Growing global category demand Favorable North America and global industry dynamics Our advantaged global scale, capabilities and leading market position Attractive financial outlook • Meaningful total shareholder return • Growing revenues • Expanding margins
Slide 81: Lamb Weston is a leader in an attractive and growing global category
Lamb Weston is a leader in an attractive and growing global category • Value-added global brand • Longstanding and collaborative customer relationships • Operational scale and integrated supply chain • Proven leadership team Well-positioned to • Clear strategic plan create shareholder value © Lamb W
Slide 82: Our Vision
Our Vision To be the world’s number one frozen potato company by inspiring our customers through industry leading innovation, execution and continuous improvement, while nurturing an inventive Lamb Weston culture © Lamb Weston | 82
Slide 85: Reconciliation tables
Reconciliation tables FY16 FY15 FY14 Net income attributable to Lamb Weston $ 285.3 $ 268.3 $ 260.9 Interest expense 5.9 6.1 5.3 Income tax expense 144.5 140.4 117.7 Depreciation and amortization 95.9 96.4 79.2 Interest expense, income tax expense and depreciation and amortization included in equity

Lamb Weston — Investor Day (October 2016) on 6ix

Lamb Weston — Investor Day (October 2016)

Slide 1: Investor Day Presentation

Slide 2: Dexter Congbalay, Investor Relations

Slide 3: Forward-Looking Statements

Slide 4: Tim McLevish, Executive Chairman

Slide 5: Tom Werner, President and CEO

Slide 6: Agenda

Slide 7: Our leadership

Slide 8: Key takeaways from today

Slide 9: A compelling opportunity

Slide 10: Our Vision

Slide 11: Lamb Weston is a leader in an attractive and growing global category

Slide 12: Global frozen potato category

Slide 13: Lamb Weston: Introduction to our business

Slide 14: Overview of Lamb Weston

Slide 15: 60 years of continuous expansion

Slide 16: Share in North America

Slide 17: Share globally

Slide 18: Positioned for the future with our global footprint

Slide 19: Export model augmented by local production in select markets

Slide 20: Competing in growing markets across the globe

Slide 21: With a solid position in fast-growing, emerging markets

Slide 22: Expanding our footprint to support growing markets

Slide 23: Building on our legacy of processing innovation

Slide 24: With industry-leading product innovation

Slide 25: Delivering superior customer value through our differentiated supply chain

Slide 26: Our leadership

Slide 27: Clear strategy for growth

Slide 28: A track record of delivering results

Slide 29: Well positioned to create long-term shareholder value

Slide 30: Our Vision

Slide 31: Frozen Potato: An Established Category with Room for Growth

Slide 32: French fries are one of the most important items on menus in the US

Slide 33: Consumer interest in fries remains strong

Slide 34: Category projected to grow 2.6B lbs by 2020, a $15B industry

Slide 35: Growth coming from large, established markets as well as emerging regions

Slide 36: Significant opportunity to grow in emerging areas

Slide 37: New store openings driving future emerging market consumption

Slide 38: NA frozen potato exports continue to increase

Slide 39: US menu penetration remains strong

Slide 40: US fry manufacturer sales reaching highest level in years

Slide 41: Lamb Weston is outpacing US fry $ category growth

Slide 42: Key takeaways – frozen potato category

Slide 43: Brand strength and innovation

Slide 44: Leader in brand awareness and purchase preference

Slide 45: Strong brand awareness reflected in overall performance

Slide 46: Strategic investments in our innovation capabilities

Slide 47: Broad diverse portfolio meets all eating occasions and segments

Slide 48: Innovation in sweet potatoes

Slide 49: Product innovation driven by insights on consumer needs

Slide 50: Robust innovation pipeline

Slide 51: Innovation beyond product and process

Slide 52: Key takeaways – brand and innovation

Slide 53: Quality and supply chain excellence

Slide 54: Supply chain mission

Slide 55: Delivering superior customer value through our differentiated supply chain

Slide 56: Global footprint in prime growing regions sets foundation for efficiency

Slide 57: Advantaged manufacturing in Pacific Northwest

Slide 58: Differentiated approach to agricultural management

Slide 59: Innovation in agronomy – the future of potato farming

Slide 60: Potato utilization

Slide 61: Ensuring quality consistency, year over year

Slide 62: The Lamb Weston processing quality advantage

Slide 63: Over the past 3 years, we have invested to meet industry growth

Slide 64: Logistics excellence

Slide 65: Driving efficiency in logistics

Slide 66: Recognized for best-in-class customer service

Slide 67: Sustainability through stewardship of our resources

Slide 68: Key takeaways – our advantaged supply chain

Slide 69: Financial history and outlook

Slide 70: Business & financial strength

Slide 71: Long track record of sales growth

Slide 72: Strong, consistent financial performance

Slide 73: Drivers of profitable growth

Slide 74: Attractive financial profile relative to Food & Beverage sector

Slide 75: Well positioned to create long-term shareholder value

Slide 76: Strong cash flow and liquidity

Slide 77: Capital allocation priorities

Slide 78: Fiscal year 2017 outlook

Slide 79: Summary