Lamb Weston Holdings, Inc. · NYSE:LW
Lamb Weston — Q2 2025 Earnings Presentation
26 slides from Lamb Weston's earnings presentation, Dec 19, 2024
Slide 1: Fiscal Q2 2025 Earnings and Updated Outlook
Fiscal Q2 2025 Earnings and Updated Outlook December 19, 2024 © 2024 Lamb Weston, Inc. All Rights Reserved I Proprietary & Confidential. DO NOT forward, copy or distribute.
Slide 2: 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,” “will,” “adapt,” “remove,” “manage,” “decline,” “remain,” “return,” “increase,” “drive,” “improve,” “outlook,” “target,” and va
Slide 3: Today's Presenters
Today’s Presenters Tom Werner Bernadette Madarieta President and Chief Executive Officer Chief Financial Officer 3 | © 2024 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 4: Today's Key Messages
Today’s Key Messages Changes in industry dynamics have impacted both sales and EBITDA in the near-term Incremental industry capacity added since Investor Day Ongoing pressure on demand We are acting proactively to address these changes, including removing capacity from the market and aggressively ma
Slide 5: Q2'25 vs. Q2'24 Net Sales
’ vs. ’ et Sales Total LW (8)% Volume (6)% Price/Mix (2)% $1,732M North America (8)% Volume (5)%: Pressure on restaurant traffic and carryover $1,601M impact of prior-year share losses, net of gains Price/Mix (3)%: Planned investments in price and unfavorable mix International (6)% Volume (6)%: Pres
Slide 6: Q2'25 vs. Q2'24 Adjusted EBITDA
’ vs. ’ Adjusted EBITDA Decline driven by lower net sales and adjusted gross profit $377M1 Adjusted gross profit decline reflects: Lower price/mix Higher manufacturing costs per $282M1 pound Incremental production costs related to inefficiencies from unplanned factory downtimes and new plant start-u
Slide 7: Liquidity, Leverage and Cash Flow
Liquidity, Leverage and Cash Flow Liquidity1 Leverage1 H1’25 Cash Flow ~$80M cash and ~$4.0B net debt2 ~$430M net cash provided equivalents by operating activities 3.4x leverage ratio2 $1.2B availability under $486M capital revolving credit facility expenditures3 (1) As of November 24, 2024. (2) See
Slide 8: Capacity Reset: Capacity Announcements
Capacity Reset: Capacity Announcements (lbs. in millions; calendar years) Normalized Period Rapid Expansion in Industry Capacity Lamb Weston expanded early ~50% incremental volume 40,000 to meet demand 13% announced located in Europe 3.5bn+ lbs. of capacity announced post October 2023 6% Investor Da
Slide 9: Supply / Demand Reset
Supply1 / Demand2 Reset (lbs. in millions; calendar years) 8.6 billion lbs. of incremental capacity vs. 3.6 – 7.4 billion lbs. of incremental demand3 Actual (projections do not reflect potential industry capacity reduction) Capacity 99% 97% Utilization 43,616 44,276 40,839 42,781 35,638 38,460 34,42
Slide 10: Cost Cutting Initiatives
Cost Cutting Initiatives Previously Announced Incremental Initiatives Reduction in operating expenses, including headcount Continue to review every area of business to add efficiency and reductions approximating 4% of the Company’s global further cost reduction Cost Reduction workforce and the elimi
Slide 11: FY 2025 Outlook
FY 2025 Outlook Net Sales Prior Updated % Growth Outlook Outlook Incorporates shortfall to ’ expectations Net Sales $6.6B – $6.8B $6.35B – $6.45B Sales change primarily due to % Growth 2% – 5% (2%) – 0% reduction in forecasted volume Adjusted EBITDA change primarily due to lower volumes, more Adj. E
Slide 12: FY'25 Net Sales Outlook Update
FY’ et Sales Outlook pdate Drivers of Change in Sales Outlook ’ sales shortfall drives one $6.6B - $6.8B fourth of change orth America Segment in H ’ : Volume reduction primarily reflects $6.35B - $6.45B unexpected loss of chain customer, net of customer wins, and downsizing of serving sizes Modest
Slide 13: FY'25 Adj. EBITDA Outlook Update
FY’ Adj. EBITDA Outlook pdate Drivers of Change in EBITDA Outlook ’ sales shortfall drives one third ~$1.38B of change International Segment in H ’ : Increased competitive dynamics on volume and price $1.17B - $1.21B orth America Segment in H ’ : Reduced sales volume Less favorable mix Significant c
Slide 14: H2'25E Outlook
H ’ E Outlook Net Sales Adjusted EBITDA Adjusted EBITDA as % Net Sales $3.1B – $3.2B $600M – $640M $3.1B 20.4%1 19.5% – 20% $627M1 H2'24 H2'25E H2'24 H2'25E H2'24 H2'25E (1) See GAAP to Non-GAAP reconciliations at the end of this presentation. 14 | © 2024 Lamb Weston, Inc. All Rights Reserved Lamb W
Slide 15: Capital Expenditures Outlook
Capital Expenditures Outlook Capital Expenditures $ Millions (as % of Net Sales) Capex underinvestment Delayed capex during COVID-19 spend Post Covid $100 million reduction in FY’ capital expenditures 15.3% from previous estimate at 13.8% FY’ 9% Pre-covid Avg. : 9% Environmental capital 11.2% $992 B
Slide 16: Capital Return Outlook
Capital Return Outlook Share Repurchases Cumulative Cash Returned to Shareholders ($ in millions) Increase share repurchase authorization to $750 million from $500 million, of which ~$190 million has been $1.6bn utilized Opportunistic repurchase based on available cash using a disciplined approach $
Slide 17: Today's Key Messages
Today’s Key Messages The operating environment in the near term will remain challenging as additional capacity expansions are announced during a period of ongoing pressure on demand We’re proactively adapting to this dynamic environment by strategically adjusting our capacity footprint, reducing cap
Slide 18: Q&A
LambWestonaas ‘SEEING POSSIBILITIES IN POTATOES Q&A
Slide 19: Appendix
Appendix (1) Numbers may vary due to rounding.
Slide 20: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Thirteen Weeks Ended Q2'25 vs. Q2'24 Adjusted EBITDA November 24, November 26, (in millions) 2024 2023 Net income (loss) $ (36) $ 215 Interest expense, net 43 29 Income tax expense 13 66 Income from operations including equity method investment earnings 21 310 Deprec
Slide 21: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Thirteen Weeks Ended Last twelve months Adjusted EBITDA November 24, August 25, May 26, February 25, Last Twelve (in millions) 2024 2024 2024 2024 Months Net income (loss) (a) $ (36) $ 127 $ 130 $ 146 $ 367 Interest expense, net 43 45 40 36 165 Income tax expense 13
Slide 22: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations (a) Net income (loss) included the following: The thirteen weeks ended August 25, 2024 include an approximately $39 million loss related to the voluntary product withdrawal that ocurred in the first quarter of fiscal 2025. An estimated $40 million loss was related to
Slide 23: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Thirteen Weeks Ended H2’24 Adjusted EBITDA May 26, February 25, H2 (in millions) 2024 2024 2024 Net income (loss) (a) $ 130 $ 146 $ 276 Interest expense, net 40 36 76 Income tax expense 51 43 94 Income from operations including equity method investment earnings 221 2
Slide 24: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations (a) Net income (loss) included the following: An estimated $40 million loss was related to the voluntary product withdrawal, for the thirteen weeks ended May 26, 2024. The total charge to the reporting segments was $19 million to the North America segment and $21 mil
Slide 25: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Leverage Ratio November 24, ($ in billions) 2024 Total Debt $ 4.1 Cash $ 0.1 Net Debt $ 4.0 TTM Adjusted EBITDA $ 1.2 Net Debt/Adj. EBITDA 3.4 x 25 | © 2024 Lamb Weston, Inc. All Rights Reserved Lamb Weston, Inc. Proprietary
Slide 26: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Free Cash Flow (in millions) 2017 2018 2019 2020 2021 2022 2023 2024 1Q 2025 2Q 2025 Operating Cash Flow $ 447 481 $ 681 $ 574 $ 553 $ 418 $ 762 $ 798 $ 330 $ 99 Capital Expenditures 287 307 334 208 163 306 736 974 336 151 Additions to PPE 287 307 334 168 147 290 654