Lamb Weston : FY25 Q2 Presentation

LW

Fiscal Q2 2025 Earnings and Updated Outlook

December 19, 2024

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Today's Presenters

Tom Werner

Bernadette Madarieta

President and Chief Executive Officer

Chief Financial Officer

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Today's Key Messages

Changes in industry dynamics have impacted both sales and EBITDA in the near-term

Incremental industry capacity added since Investor Day

Ongoing pressure on demand

We are acting proactively to address these changes, including removing capacity from the market and aggressively managing our cost base

We expect capital expenditures will decline as we complete our strategic expansions at the end of this year and shift capital spending to maintenance, modernization, and environmental expenditures

We remain committed to returning excess capital to our shareholders through steady dividend increase and share repurchase

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'

vs.

'

et Sales

Total LW (8)%

Volume (6)%

Price/Mix (2)%

$1,732M

North America (8)%

Volume (5)%: Pressure on

restaurant traffic and carryover

$1,601M

impact of prior-year share losses,

net of gains

Price/Mix (3)%: Planned

investments in price and

unfavorable mix

International (6)%

Volume (6)%: Pressure on

restaurant traffic, incremental

customer share losses in key

international markets, and carryover

impact of prior-year exits of low-

margin business in EMEA

Price/Mix flat: Incremental pricing

A olume

Intl

olume

A Price Mix

Intl Price Mix

actions in more competitive

environment in key international

markets

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'

vs.

'

Adjusted EBITDA

Decline driven by lower net sales and

$377M1

adjusted gross profit

Adjusted gross profit decline reflects:

Lower price/mix

$282M1

Higher manufacturing costs per

pound

Incremental production costs

related to inefficiencies from

unplanned factory downtimes

and new plant start-up costs

Higher depreciation expense

SG&A favorability driven by

aggressive expense reduction

initiatives

orth America

International

nallocated S

A

(1) See GAAP to Non-GAAP reconciliations at the end of this presentation.

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Liquidity, Leverage and Cash Flow

Liquidity1

Leverage1

H1'25 Cash Flow

~$80M cash and

~$4.0B net debt2

~$430M net cash provided

equivalents

by operating activities

3.4x leverage ratio2

$1.2B availability under

$486M capital

revolving credit facility

expenditures3

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Capacity Reset: Capacity Announcements

(lbs. in millions; calendar years)

40,000

35,000

Normalized Period

Rapid Expansion in Industry Capacity

Lamb Weston expanded early

~50% incremental volume

to meet demand

13%

announced located in Europe

3.5bn+ lbs. of capacity

announced post October 2023

6%

4%

Investor Day

4%

4%

Peers

2%

2018

LW

Demand Growth %

3%

2

30,000

Lamb Weston permanently

closed Connell, WA facility in

(9)%

2024, reducing ~300mm lbs.

2020

of capacity

COVID

2016

2017

2019

2021

2022

2023

2024

Utilization

2016:

2017:

2019:

2021:

2022:

2023:

2024:

Rate (%)

98%

100%

100%

97%

99%

97%

91%

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Supply1 / Demand2 Reset

(lbs. in millions; calendar years)

8.6 billion lbs. of incremental capacity vs. 3.6 - 7.4 billion lbs. of incremental demand3

Actual

(projections do not reflect potential industry capacity reduction)

Capacity

99%

97%

Utilization

42,781

43,616

44,276

40,839

38,460

35,638

34,428

LW

Peers

Peers Post

Investor Day

2022

Annual

Demand

Growth

2023

2024E

2025E

2026E

2027E

2028E

Implied Capacity Utilization

2%

90%

87%

85%

85%

85%

3%

9

89%

88%

88%

90%

91%

90%

4%

92%

90%

90%

92%

94%

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Cost Cutting Initiatives

Manufacturing Cost Reduction

Previously Announced

Incremental Initiatives

Reduction in operating expenses, including headcount

Continue to review every area of business to add efficiency and

reductions approximating 4% of the Company's global

further cost reduction

workforce and the elimination of certain unfilled job positions

FY'

: approximately $55 million in pre-tax cost savings and

Sylvia Wilks joined recently as new Chief Supply Chain Officer

reduction in working capital

About 1/3 benefiting cost of sales and 2/3 benefiting SG&A

Multiple opportunities identified to drive cost savings and

expenses

improve performance

FY'

6: estimated annualized savings of about $85 million

Permanent closure of the manufacturing facility in Connell, WA

Implemented first stage of lean manufacturing program across

all North America production

Reducing ~300 million pounds of capacity and

representing more than a 5% reduction of total capacity in

North America

Will roll full program out to all new international production lines

as they open

Temporary curtailment of certain production lines and schedules across manufacturing network in North America

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Disclaimer

Lamb Weston Holdings Inc. published this content on December 19, 2024, and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on December 19, 2024 at 12:58:06.066.