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.