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Nov 27, 2022
Lamb Weston Q2 2023 Earnings Report
Lamb Weston's financial performance significantly improved, marked by increased sales and profitability.
Key Takeaways
Lamb Weston reported strong Q2 2023 results with a 27% increase in net sales, a 138% increase in income from operations, and a 217% increase in net income. The company also updated its fiscal year 2023 outlook, raising its sales, gross margin and earnings targets.
Net sales increased 27% to $1,277 million.
Income from operations increased 138% to $272 million.
Net income increased 217% to $103 million.
Diluted EPS increased 223% to $0.71.
Lamb Weston
Lamb Weston
Forward Guidance
Lamb Weston updated its financial targets for fiscal 2023. Net sales are expected to be $4.8 billion to $4.9 billion. Net income is expected to be $580 million to $620 million, and Diluted EPS of $4.03 to $4.28. Adjusted Net Income is expected to be $540 million to $580 million, Adjusted Diluted EPS of $3.75 to $4.00, and Adjusted EBITDA including unconsolidated joint ventures of $1,050 million to $1,100 million.
Positive Outlook
- Carryover benefit of pricing actions taken in fiscal 2022, as well as actions taken in fiscal 2023, is expected to more than offset the effects of input cost inflation, including higher raw potato costs and softer sales volumes.
- Net sales of $4.8 billion to $4.9 billion, with growth versus the prior year expected to be primarily driven by the benefit of pricing actions to counter significant input and transportation cost inflation.
- Net income of $580 million to $620 million and Diluted EPS of $4.03 to $4.28, including a net benefit from items impacting comparability of $51.1 million during the first half of fiscal 2023.
- Gross margins for the full year and for the second half of fiscal 2023 of 27 percent to 28 percent.
- Adjusted EBITDA including unconsolidated joint ventures of $1,050 million to $1,100 million, with forecasted earnings growth versus the prior year primarily driven by higher sales and gross margin expansion.
Challenges Ahead
- The Company expects sales volumes may be pressured during the second half of fiscal 2023 as a result of the impact of continuing supply chain disruptions on run-rates and throughput in its production facilities.
- The Company expects sales volumes may be pressured due to the potential for a slowdown in restaurant traffic, most notably in casual dining and other full-service restaurants, as consumers continue to face a challenging macroeconomic environment.
- SG&A, excluding items impacting comparability, of $525 million to $550 million, reflecting higher expected incentive compensation and benefits costs.
- SG&A reflects increased investments to upgrade the Company’s information systems and ERP infrastructure, and higher advertising and promotion expenses.
- Gross margins will be impacted by input cost inflation, including higher raw potato costs, and softer sales volumes.