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Aug 25, 2024
Lamb Weston Q1 2025 Earnings Report
Reported first quarter fiscal 2025 results, announced restructuring plan, and updated fiscal year 2025 outlook.
Key Takeaways
Lamb Weston's first quarter fiscal 2025 results were generally in line with expectations, driven by improved volume performance, solid price/mix, and strict cost management. However, restaurant traffic and frozen potato demand remain soft, leading to restructuring actions to improve efficiency and profitability.
Net sales declined 1% to $1,654 million.
Income from operations decreased 34% to $212 million.
Net income decreased 46% to $127 million.
The company is implementing a restructuring plan expected to generate $55 million in pre-tax cost savings in fiscal 2025.
Lamb Weston
Lamb Weston
Lamb Weston Revenue by Segment
Lamb Weston Revenue by Geographic Location
Revenue by Segment
North America Revenue
CapyFin.comInternational Revenue
CapyFin.comRevenue by Geographic Location
North America Revenue
CapyFin.comInternational Revenue
CapyFin.com Forward Guidance
Lamb Weston reaffirmed net sales of $6.6 billion to $6.8 billion. Reduced GAAP net income target to $395 million to $445 million, and Diluted EPS target to $2.70 to $3.15. Targeting low-end of target ranges of Adjusted EBITDA of $1,380 million to $1,480 million. Reducing Adjusted Net Income target to $600 million to $615 million and Adjusted Diluted EPS target to $4.15 to $4.35. Reducing capital expenditures target by $100 million to $750 million.
Positive Outlook
- Reaffirming net sales target range of $6.6 billion to $6.8 billion, reflecting growth of approximately 2 percent to 5 percent on a constant currency basis.
- The company continues to expect net sales growth will be largely driven by increases in volume.
- Reducing Adjusted SG&A(1) target range to $680 million to $690 million from $740 million to $750 million, reflecting Restructuring Plan cost savings generated by headcount reductions across its commercial and support functions, and the elimination of certain unfilled job positions; as well as other cost savings initiatives not associated with the Restructuring Plan.
- Reaffirmed estimate of depreciation and amortization expense of approximately $375 million.
- Reduced target for cash used for capital expenditures, excluding acquisitions, if any, to approximately $750 million from its previous estimate of approximately $850 million reflecting the rephasing of certain capital projects, including pausing the next phase of its ERP build and implementation.
Challenges Ahead
- Decreased target ranges for GAAP net income to $395 million to $445 million and Diluted EPS to $2.70 to $3.15, including a net after-tax gain from blue chip swap transactions in Argentina.
- Expects to deliver at the low end of its Adjusted EBITDA target range of $1,380 million to $1,480 million.
- Lowered Adjusted Net Income target range of $600 million to $615 million, and Adjusted Diluted EPS of $4.15 to $4.35, as the Company targets the lower end of its Adjusted EBITDA range and increases its estimates for interest expense and effective tax rate
- Increased estimate of interest expense to approximately $185 million from its previous estimate of approximately $180 million to reflect higher average debt outstanding.
- Increased effective tax rate estimate to approximately 25 percent from its previous estimate of 24 percent due to higher proportion of earnings from its international locations with higher tax rates and discrete tax items.
Revenue & Expenses
Visualization of income flow from segment revenue to net income