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Feb 26, 2023
Lamb Weston Q3 2023 Earnings Report
Lamb Weston's Q3 2023 earnings were reported, revealing significant increases in net sales, income from operations, and diluted EPS compared to the prior year, with updated financial targets reflecting the consolidation of the European joint venture.
Key Takeaways
Lamb Weston reported strong fiscal third quarter 2023 results, with net sales increasing by 31% to $1,254 million and diluted EPS increasing by 66% to $1.21. The company updated its fiscal 2023 outlook, including net sales of $5.25 billion to $5.35 billion and diluted EPS of $4.42 to $4.57.
Net sales increased 31% to $1,254 million.
Income from operations increased 99% to $266 million.
Net income increased 64% to $175 million.
Diluted EPS increased 66% to $1.21.
Lamb Weston
Lamb Weston
Forward Guidance
Lamb Weston updated its financial targets for fiscal 2023, which now include the consolidation of LW EMEA.
Positive Outlook
- Net sales of $5.25 billion to $5.35 billion, including $300 million to $325 million of sales attributable to the consolidation of LW EMEA’s results in the fiscal fourth quarter.
- Net income of $639 million to $664 million and Diluted EPS of $4.42 to $4.57, including a net benefit from items impacting comparability of $8.1 million ($9.0 million after-tax, or $0.07 per share) during the first three quarters of fiscal 2023.
- Adjusted Net Income of $630 million to $655 million, Adjusted Diluted EPS of $4.35 to $4.50, and Adjusted EBITDA including unconsolidated joint ventures of $1,180 million to $1,210 million.
- Gross margins including the consolidation of LW EMEA of 27 percent to 27.5 percent. Excluding the consolidation of LW EMEA, the Company raised its gross margin estimate to 28 percent to 28.5 percent, which is above the Company’s previous target of 27 percent to 28 percent.
- Depreciation and amortization expense of approximately $220 million, up from the Company’s previous estimate of approximately $210 million, reflecting the additional depreciation and amortization expense associated with the consolidation of LW EMEA.
Challenges Ahead
- The Company continues to believe that the near-term macroenvironment in North America and Europe will remain volatile as we face higher costs for raw potatoes and other key inputs, and as consumer demand and restaurant traffic continue to be affected by inflationary pressures.
- Cash used for capital expenditures of $700 million to $725 million, up from the Company’s previous estimated range of $475 million to $525 million, reflecting accelerated spending behind capital expansion investments and additional capital expenditures associated with the consolidation of LW EMEA.
- SG&A, excluding items impacting comparability, of $550 million to $570 million, up from the Company’s previous estimate of $525 million to $550 million, largely reflecting the consolidation of LW EMEA.
- An effective tax rate (full year), excluding items impacting comparability, of 23 percent to 24 percent. The Company’s previous estimate was 24 percent.
- Equity method investment earnings (loss) from unconsolidated joint ventures in Europe and the U.S. was a loss of $23.3 million