Lamb Weston Q2 2024 Earnings Report
Key Takeaways
Lamb Weston's Q2 2024 results showed a 36% increase in net sales to $1,732 million, driven by the LW EMEA Acquisition. Net income increased by 109% to $215 million and diluted EPS increased by 108% to $1.48. However, results included a $71 million pre-tax charge for the write-off of excess raw potatoes.
Net sales increased by 36% to $1,732 million, including $376 million from the LW EMEA Acquisition.
Net income increased by 109% to $215 million, with diluted EPS rising to $1.48.
Adjusted EBITDA increased 15% to $377 million.
The company reaffirmed its net sales target of $6.8 billion to $7.0 billion for fiscal year 2024.
Lamb Weston
Lamb Weston
Lamb Weston Revenue by Segment
Lamb Weston Revenue by Geographic Location
Forward Guidance
Lamb Weston updated its financial targets for fiscal 2024, reaffirming net sales target of $6.8 billion to $7.0 billion and Adjusted EBITDA target range of $1,540 million to $1,620 million. The company increased its targets for GAAP net income to $830 million to $900 million and Adjusted Net Income target to $830 million to $900 million.
Positive Outlook
- Reaffirming net sales target of $6.8 billion to $7.0 billion, including $1.1 billion to $1.2 billion of incremental sales attributable to the consolidation of the financial results of LW EMEA during the first three quarters of the fiscal year.
- The Company continues to target net sales, excluding incremental sales attributable to the LW EMEA Acquisition, to grow 6.5 percent to 8.5 percent, with price/mix expected to increase low-double-digits percentage points.
- Increased targets for GAAP net income to $830 million to $900 million and Diluted EPS of $5.70 to $6.15, including a net loss from foreign currency exchange and unrealized mark-to-market derivative gains and losses and items impacting comparability of $2.0 million ($1.4 million after-tax, or $0.01 per share) during the first half of fiscal 2024.
- Reaffirmed target range for Adjusted EBITDA(2) to $1,540 million to $1,620 million (+27 percent compared to fiscal 2023 using the mid-point), which includes a $70.9 million pre-tax charge(1) for the write-off of excess raw potatoes.
- Raised Adjusted Net Income(2) target to $830 million to $900 million and its Adjusted Diluted EPS(2) target to $5.70 to $6.15. The increases in these targets reflect the lower SG&A expense estimate as well as a lower interest expense estimate of $140 million to account for revised project-related capitalized interest.
Challenges Ahead
- The Company continues to target sales volumes to decline mid-single-digits percentage points, largely reflecting the carryover impact of the Company’s decisions to strategically manage customer and product mix by exiting certain lower-priced and lower-margin business in the prior year.
- The Company expects gross profit growth will be partially offset by SG&A of $745 million to $755 million.
- Cash used for capital expenditures of $900 million to $950 million, up from the Company’s previous estimate of $800 million to $900 million, reflecting the timing of expenditures related to the construction of previously-announced capacity expansion efforts in China, Idaho, the Netherlands and Argentina.
- Non-GAAP results include a $70.9 million charge ($53.9 million after-tax, or $0.37 per share) related to a write-off of excess raw potatoes.
- The total charge to the reporting segments was as follows: $63.3 million to the North America segment and $7.6 million to the International segment.
Revenue & Expenses
Visualization of income flow from segment revenue to net income