Lamb Weston (LW) beats Q1 guidance, raises full-year outlook

215 billion Lamb Weston Holdings, Inc. (NYSE: LW) announced today its results for the first quarter of fiscal 2027 and updates its full-year financial targets for fiscal 2027. “We are off to a solid start to the year, delivering first quarter net sales and profit above our expectations,” said Mike Smith, president and chief executive officer of Lamb Weston. “Our first quarter results were driven by continued momentum in North America where our strong customer relationships fueled sales volume growth and we continued to drive cost savings.

“For our International segment, which overall performed in line with our expectations for the first quarter, EMEA continues to face challenging market conditions. As we worked through prior year crop carry in costs, Segment Adjusted EBITDA has improved sequentially. We have taken action to balance our network utilization as demonstrated by ending production at Broekhuizenvorst and successfully transitioning customer fulfillment within Lamb Weston's network enabling further cost optimization. “We continue to experience unexpected inflationary pressure across key input costs and freight expense.

Our teams are addressing cost inflation by working with suppliers and hedging where possible. Furthermore, we have benefited from capacity optimization initiatives started over a year ago in North America, which have led to an approximate 10 percentage point increase in utilization. These efforts will enable us to overdeliver forecasted savings from our cost savings program. “At the same time, we continue to make meaningful progress advancing our Focus to Win strategy, including cross-functional efforts to sharpen our prioritization of markets and channels.

” Q1 Results of Operations Net Sales $ in millions Q1 2026 Sales Price/mix FX Q1 2027 % Change % Change Volume excl. FX ((1) Lamb Weston $ 1,660 $ 36 $ (30 ) $ 4 $ 1,670 1 % — % Net sales increased 1 percent due to a 2 percent increase in sales volume and an immaterial favorable currency impact, partially offset by a 2 percent decrease in price/mix. 75 1 % Net income and Adjusted Net Income((1)) decreased 55 percent and zero percent, respectively. Adjusted EBITDA((1)) decreased 5 percent.

Higher sales volume was more than offset by lower price/mix and both higher cost of sales and selling, general and administrative expenses. Total manufacturing cost per pound increased due mostly to the International segment driven by EMEA performance. Selling, general and administrative expenses increased primarily due to lapping $7 million of non-recurring miscellaneous income in the first quarter fiscal 2026. Ongoing cost savings mostly offset increases in outside services and fixed expense.

North America Segment Net Sales $ in millions Q1 2026 Sales Price/mix FX Q1 2027 % Change % Change Volume excl. FX ((1) North America $ 1,085 $ 73 $ (19 ) $ 2 $ 1,141 5 % 5 % Net sales increased 5 percent. Sales volume grew for the seventh consecutive quarter and increased 7 percent, driven by higher demand from existing customers and customer wins. Price/mix declined 2 percent resulting from price and trade support for customers and continued mix shift toward faster-growing chain customers and private-label products.

Segment Adjusted EBITDA $ in millions Q1 2026 Q1 2027 % Change North America $ 260 $ 287 11 % Segment Adjusted EBITDA increased 11 percent. Higher sales volumes, cost savings initiatives and $5 million in tariff refunds, as well as an increase in equity method investment earnings, more than offset price and trade support for customers, customer and product mix and inflation in key input cost categories. International Segment Net Sales $ in millions Q1 2026 Sales Price/mix FX Q1 2027 % Change % Change Volume excl. FX ((1) International $ 575 $ (37 ) $ (11 ) $ 2 $ 529 (8 )% (8 )% Net sales declined 8 percent.

Sales volume declined 6 percent and price/mix declined 2 percent. Segment Adjusted EBITDA $ in millions Q1 2026 Q1 2027 % Change International $ 57 $ 27 (54 )% Segment Adjusted EBITDA declined in line with the Company's expectations due to lower sales volume and lower net sales mostly in Europe and higher manufacturing costs per pound including the impact of the carry in of prior year higher potato costs, factory underutilization and inflation. Cash Flows, Capital Expenditures and Liquidity Cash provided by operating activities was $235 million and decreased $117 million compared to the prior-year period.

Cash provided by operating activities in the prior-year period benefited from a $136 million improvement in inventories as the Company was beginning its Cost Savings Program. Current quarter cash provided by operating activities benefited by $59 million from an increase in accounts payable as the Company works with supplier partners to improve terms. Other changes to working capital items were attributed to normal course of business. Furthermore, reported net income declined by $35 million.

Capital expenditures were $91 million during the first quarter of fiscal 2027, up $12 million from the prior-year period. Capital expenditures during the quarter reflect ongoing investments in the reliability of production facilities as well as strategic optimization investments. 24 billion of additional available liquidity under its revolving credit facility. Capital Returned to Shareholders In the first quarter of fiscal 2027, the Company returned $52 million to shareholders through cash dividends.

The Company did not repurchase any shares during the first quarter of fiscal 2027. Approximately $245 million remains authorized and available for repurchase under the Company's share repurchase program. 38 per share of Lamb Weston common stock. The dividend is payable on December 4, 2026, to shareholders of record as of the close of business on November 6, 2026.

485 billion (b) Represents estimated cash outflows for capital expenditures. On an accrual basis, capital expenditures are expected to be approximately $330 to $350 million. 0 million; and, Net cash provided by operating activities of $750 million to $800 million. End Notes (1) Adjusted Net Income, Adjusted Diluted EPS, Adjusted Income from Operations, Adjusted EBITDA, and net sales excluding FX are non-GAAP financial measures.

Net sales excluding FX presents results as if foreign currency exchange rates had remained constant between the current and prior-year periods. This measure is calculated by translating current year financial data into United States dollars using the prior year average exchange rates, which is the same basis used for the prior year results. Please see the discussion of non-GAAP financial measures, including a discussion of guidance provided on a non-GAAP basis, and the associated reconciliations at the end of this press release for more information.

(2) The adjusted effective tax rate is calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings. m. ET on October 6, 2026. S.

S. and Canada should dial +1 213-279-1505. The conference ID is 8701350. The conference call and accompanying presentation also may be accessed live on the internet.

m. ET at About Lamb Weston Lamb Weston is a leading supplier of frozen potato products to restaurants and retailers around the world. For more than 75 years, Lamb Weston has led the industry in innovation, introducing inventive products that simplify back-of-house management for its customers and make things more delicious for their customers. From the fields where Lamb Weston potatoes are grown to proactive customer partnerships, Lamb Weston always strives for more and never settles.

Because, when we look at a potato, we see possibilities. com Non-GAAP Financial Measures To supplement the financial information included in this press release, the Company has presented Adjusted Gross Profit, Adjusted SG&A, Adjusted Cost Savings Program and Restructuring Expenses, Adjusted Income from Operations, Adjusted Income Tax Expense (Benefit), Adjusted Net Income, Adjusted Diluted EPS, and Adjusted EBITDA, each of which is considered a non-GAAP financial measure. The Company also presents net sales excluding FX, which provides information on net sales as if foreign currency exchange rates had remained constant between the current and prior-year periods.

The non-GAAP financial measures presented in this press release should be viewed in addition to, and not as an alternative for, financial measures prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) that are also presented in this press release. These measures are not substitutes for their comparable GAAP financial measures, such as gross profit, SG&A, cost savings and restructuring expenses, income from operations, income tax expense, net income, diluted earnings per share, net sales, and other measures prescribed by GAAP, and there are limitations to using non-GAAP financial measures.

For example, the non-GAAP financial measures presented in this press release may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define these non-GAAP financial measures the same way as the Company does. Management uses these non-GAAP financial measures to assist in analyzing what management views as the Company’s core operating performance for purposes of business decision making.

Management believes that presenting these non-GAAP financial measures provides investors with useful supplemental information because they (i) provide meaningful supplemental information regarding financial performance by excluding impacts of foreign currency exchange translation and unrealized mark-to-market derivative gains and losses and other items affecting comparability between periods; (ii) permit investors to view the Company’s operating and financial performance using the same tools that management uses to evaluate performance across periods and to make budgeting, operating and strategic decisions; and (iii) otherwise provide supplemental information that may be useful to investors in evaluating the Company’s operating and financial performance.

In addition, the Company believes that the presentation of these non-GAAP financial measures, when considered together with the most directly comparable GAAP financial measures and corresponding reconciliations to those GAAP financial measures, provides investors with additional tools to understand the factors and trends affecting the Company's underlying business than could be obtained absent these disclosures. The Company has also provided guidance in this press release with respect to certain non-GAAP financial measures, including Adjusted EBITDA, Adjusted Diluted EPS and Adjusted Income from Operations.

The Company cannot predict certain items that are included in reported GAAP results, including items such as costs and other charges relating to the Company’s Cost Savings Program, Restructuring Plan or other cost savings initiatives; strategic developments; impacts of unrealized mark-to-market derivative gains and losses; impacts of foreign currency exchange gains and losses; other non-recurring items such as accruals for legal proceedings or other claims, shareholder activism expenses, and pension settlement costs; and other items impacting comparability.

This list is not inclusive of all potential items, and the Company intends to update the list as appropriate as these items are evaluated on an ongoing basis. In addition, the items that cannot be predicted can be highly variable and could potentially have significant impacts on the Company’s GAAP financial measures. As such, prospective quantification of these items is not feasible without unreasonable efforts, and a reconciliation of forward-looking Adjusted EBITDA, Adjusted Diluted EPS and Adjusted Income from Operations to net income, diluted EPS or income from operations has not been provided.

Forward-Looking Statements This press release contains forward-looking statements within the meaning of the federal securities laws. Words such as “expect,” "deliver," "drive," "will," "increase," "continue," "enable," "optimize," "make," "advance," "address," "improve," “outlook,” “target,” and variations of such words and similar expressions are intended to identify forward-looking statements.

Examples of forward-looking statements include, but are not limited to, statements regarding: the Company’s business and financial outlook and prospects; the Company’s plans and strategies and anticipated benefits therefrom, including with respect to the Company’s cost savings initiatives; anticipated capital expenditures and investments; input and other costs; anticipated conditions in the Company’s industry; and global economic conditions. These forward-looking statements are based on management’s current expectations and are subject to uncertainties and changes in circumstances.

Readers of this press release should understand that these statements are not guarantees of performance or results. Many factors could affect these forward-looking statements and the Company’s actual financial results and cause them to vary materially from the expectations contained in the forward-looking statements, including those set forth in this press release.