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Aug 29, 2021
Lamb Weston Q1 2022 Earnings Report
Lamb Weston's financial performance declined in Q1 2022 due to higher costs and operational challenges, despite a sales increase driven by recovery in frozen potato demand.
Key Takeaways
Lamb Weston's Q1 2022 results showed a 13% increase in net sales to $984 million, driven by volume growth, but income from operations, net income, and diluted EPS declined significantly due to higher manufacturing and distribution costs, input cost inflation, and operational challenges.
Net sales increased 13% to $984 million, driven by volume growth.
Income from operations decreased 56% to $60 million due to higher costs.
Net income decreased 67% to $30 million, impacted by lower operating income and equity method investment earnings.
Diluted EPS decreased 67% to $0.20, reflecting the decline in net income.
Forward Guidance
Lamb Weston anticipates net sales growth above its long-term target, but expects net income and Adjusted EBITDA to be pressured due to inflation, operational challenges, and supply chain disruptions.
Positive Outlook
- Fiscal 2022 net sales growth will be above its long-term target of low-to-mid single digits.
- Net sales growth in the second quarter of fiscal 2022 will be driven largely by higher volume.
- Ongoing recovery in demand for frozen potato products.
- Favorable comparison to relatively soft shipments in the second quarter of fiscal 2021.
- Net sales growth in the second half of fiscal 2022 to reflect more of a balance of higher volume and improved price/mix as recent pricing actions are fully implemented in the market.
Challenges Ahead
- Net income and Adjusted EBITDA including unconsolidated joint ventures will be pressured for the remainder of fiscal 2022.
- Significant inflation for key production inputs, packaging and transportation compared to fiscal 2021 levels.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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