Lamb Weston (LW) Bank of America SMID Cap Virtual Conference summary

Key financial and operational highlights

• North America performance remained solid, with strong margin structure and resilient supply chain, despite industry-wide cost and demand challenges.

• Fiscal 2026 guidance is based on a 52-week year, with growth rates and margin expansion as key indicators.

• Capacity utilization in North America is in the high 80s to low 90s, following facility closures and industry-wide hesitancy to add new capacity due to rising capital costs.

• International operations are adjusting to shifting global supply, with plant closures in Europe and a focus on ramping utilization in China and Latin America.

• Input cost inflation, especially in edible oil, freight, and packaging, is expected to drive pricing discussions and actions in fiscal 2027.

Growth opportunities and innovation

• Enduring customer relationships and global leadership in quality and innovation are seen as key competitive advantages.

• Innovation is targeting both food service and household channels, including air fryer products and new product formats.

• Expansion in multinational chains is expected to grow gross profit dollars, even as price mix is impacted by channel shifts.

• Cost savings initiatives and manufacturing optimization are ongoing, supporting margin expansion in North America.

• International growth is driven by increased utilization in new plants and network optimization, particularly outside EMEA.

Market dynamics and challenges

• The global French fry market is experiencing increased competition, especially from new capacity in China and India, affecting export flows.

• Potato crop conditions in North America are balanced, while Europe faces heat-related yield challenges, tightening supply and raising input costs.

• Gross margin pressure is expected in early fiscal 2027 due to input cost inflation, with improvement anticipated as pricing actions take effect.

• International EBITDA growth is expected from lapping one-time events and ramping plant utilization, while EMEA remains challenged by inflation and geopolitical disruptions.

• Health and wellness trends, including GLP-1 usage, are not seen as materially impacting core meal occasions or fry demand.