Lamb Weston Raises Full-Year EPS Forecast To $3.05-$3.35 As European Weakness Cuts Quarterly Profit
North American volume carried the first quarter, while reported net income fell to $29 million from $64 million a year earlier.
Lamb Weston raised its full-year profit outlook in an 8-K filed Tuesday, lifting its adjusted earnings-per-share forecast to $3.05 to $3.35 from $2.95 to $3.25. Reported net income for the first quarter still fell 55% to $29 million, as a weak European business and cost inflation offset gains in North America.
What the release says
The frozen potato supplier's 8-K furnishes a press release with first-quarter results for fiscal 2027. Net sales rose 1% to $1.67 billion. Volume grew 2%, partly offset by a 2% decline in price and product mix.
Net income was $29 million, or $0.21 per share, against $64 million, or $0.46, a year earlier. Adjusted net income was flat at $103 million, and adjusted earnings per share edged up to $0.75 from $0.74. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, with adjustments) fell 5% to $286 million from $302 million.
The company said higher volume was more than offset by lower price and mix and by higher cost of sales and administrative expenses. Manufacturing cost per pound rose, mostly in International, driven by Europe.
By segment:
- North America sales rose 5%, with volume up 7% for a seventh straight quarter. Segment adjusted EBITDA climbed 11% to $287 million from $260 million, helped by $5 million in tariff refunds.
- International sales fell 8% to $529 million from $575 million, on a 6% volume decline and a 2% drop in price and mix. Segment adjusted EBITDA fell 54% to $27 million from $57 million.
The new guidance
Full-year adjusted EBITDA is now forecast at $1.125 billion to $1.215 billion, up from $1.10 billion to $1.20 billion. Net sales are expected to rise by a low-single-digit percentage, versus the prior 0.0% to 1.0%. Capital spending guidance of $380 million to $410 million is unchanged.
Other targets were updated too: net interest expense of about $185 million to $190 million and an adjusted tax rate of about 25.0% to 27.0%. Adjusted operating income is forecast at $730 million to $810 million, and operating cash flow at $750 million to $800 million.
CEO Mike Smith said the company is "off to a solid start to the year." He said it faces "unexpected inflationary pressure across key input costs and freight expense," and is working with suppliers and hedging where possible.
Cash, costs and Europe
Cash from operations was $235 million, down $117 million from a year earlier, when inventories improved by $136 million. This quarter got a $59 million lift from higher accounts payable. Capital spending was $91 million, up $12 million.
The company ended the quarter with $166 million in cash and $1.24 billion of available liquidity under its revolving credit facility. It paid $52 million in dividends and bought back no shares, with about $245 million still authorized. The board declared a $0.38 quarterly dividend, payable December 4 to holders of record on November 6.
Smith said capacity moves begun over a year ago in North America lifted plant utilization by roughly 10 percentage points. He said Europe, the Middle East and Africa continue to face "challenging market conditions," and that the company ended production at its Broekhuizenvorst plant to balance its network.
What to watch
Lamb Weston holds a conference call at 9:00 a.m. ET Tuesday. Smith said the company will lay out its long-term roadmap at an Investor Day in early calendar 2027.
The next dated items are the call Tuesday morning and the December 4 dividend payment, with the roadmap promised for early 2027.
