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LW's Q4 earnings of $0.87 and sales of $1.68B beat estimates and rose year over year.
Q4 volume rose 8% on contract wins, offsetting soft traffic and price/mix declines across segments.
LW forecasts FY26 sales of $6.35B-$6.55B and adjusted EBITDA between $1B and $1.2B.
Lamb Weston Holdings, Inc. (LW - Free Report) reported solid fourth-quarter fiscal 2025 results, wherein both the top and bottom lines beat the Zacks Consensus Estimate and increased year over year.
The company returned to growth in the second half of the year, supported by customer wins and improved retention. Management introduced its “Focus to Win” strategic plan, which includes targeted cost savings and working capital improvements to enhance profitability and cash flow. The plan reflects a sharpened focus on core markets and customer relationships, positioning the company for long-term success in a competitive environment.
LW’s adjusted earnings were 87 cents per share, beating the Zacks Consensus Estimate of 64 cents. The increase of 12% was primarily driven by lower income tax expense resulting from reduced adjusted gross profit, partially offset by lower adjusted equity method investment earnings.
Net sales amounted to $1,675.8 million, beating the Zacks Consensus Estimate of $1,593 million. The top line increased 4% year over year.
Lamb Weston’s fiscal fourth-quarter volume rose 8% compared with the same quarter last year, driven by contract wins across all channels and geographic regions, and to a lesser extent, by lapping an approximately $22 million sales headwind from a previously announced voluntary product withdrawal in the prior-year quarter. This growth was partially offset by soft global restaurant traffic, which declined in the low single digits in the United States and United Kingdom, LW’s largest markets. Our model expected a volume increase of 2% in the quarter.
However, the price/mix dipped 4% due to the company’s strategic efforts to partner with customers on pricing and trade promotions in response to an increasingly competitive environment across both the North America and International segments. We expected the price/mix to decline 2.7% in the quarter.
The adjusted gross profit decreased $19.5 million, reaching $343.5 million. This decline was mainly caused by a negative price/mix, which was partially offset by lower manufacturing costs per pound. The improvement in manufacturing costs reflected the lapping of an approximately $40 million negative impact from the prior-year voluntary product withdrawal, as well as lower raw potato costs in the current year.
These benefits were partially offset by higher fixed factory absorption costs resulting from temporarily curtailed production, low single-digit inflation in key input costs, including labor, ingredients such as grains and starches used in product coatings, oil and packaging, as well as higher depreciation expense tied to recent capacity expansions in China, the United States and the Netherlands.
Adjusted selling, general and administrative (SG&A) expenses fell $16.4 million year over year, totaling $155.6 million, associated with the lower advertising and promotion expenses, lapping of increased expenses related to the ERP transition in the prior-year quarter and cost savings from the company’s fiscal 2025 Restructuring Plan. These were somewhat offset by the timing of compensation accruals.
Adjusted EBITDA rose $1.5 million year over year, reaching $284.9 million. This growth was driven by reduced adjusted SG&A expenses, partially offset by a decline in adjusted gross profit.
LW Provides Q4 Insights by Segment
Net sales for the North America segment, which covers customers in the United States, Canada and Mexico, were down 1%, reaching $1,103.1 million compared with the prior-year quarter. Sales volume rose 4%, driven by gains with regional, small and retail customers. These gains were partially offset by low single-digit declines in restaurant traffic.
The price/mix of the segment fell 5%, reflecting planned investments in pricing and trade to remain competitive in an increasingly challenging market. This decline was partially offset by favorable channel and product mix, supported by growth in regional, small and retail channels. The North America segment’s adjusted EBITDA declined in the range of $18.6 million to $257.9 million.
Net sales for the International segment, which includes all customers outside North America, grew 15% to $572.7 million. Volume rose 16%, reflecting growth across all regions and the lapping of the prior-year voluntary product withdrawal. These gains were partially offset by a decline in restaurant traffic in the United Kingdom and relatively flat traffic in other major international markets.
The price/mix of the segment declined 1% due to a continued competitive environment. International segment adjusted EBITDA rose in the range of $22.2 million to $62.6 million.
Lamb Weston’s Financial Health Snapshot
The company ended the quarter with cash and cash equivalents of $70.7 million, long-term debt and financing obligations (excluding the current portion) of $3,682.8 million and total shareholders’ equity of $1,737.7 million.
The company generated $868.3 million as net cash from operating activities for the 52 weeks ending May 25, 2025, wherein capital expenditures, net of proceeds from blue chip swap transactions, amounted to $650.7 million.
In fiscal 2025, Lamb Weston returned $488.9 million to its shareholders through cash dividends and share repurchases. This includes $206.9 million in cash dividends and $282 million in share repurchases. In total, the company repurchased 4,867,449 shares during fiscal 2025. As of fiscal year-end, approximately $358 million remained authorized and available for repurchases under the program.
Lamb Weston also declared a quarterly dividend of 37 cents per share, payable on Aug. 29, 2025, to its stockholders of record as of Aug 1.
What to Expect From LW in FY26?
The company expects its annual net sales target range to be $6.35-$6.55 billion. Lamb Weston anticipates an adjusted EBITDA in the range of $1,000 million to $1,200 million. Capital expenditures are expected to total approximately $500 million.
LW’s Share Price Performance
Shares of this Zacks Rank #4 (Sell) company have gained 6.6% in the past three months compared with the industry’s 2% growth.
The Zacks Consensus Estimate for TreeHouse Foods’ current financial-year sales indicates growth of 0.4% from the year-ago numbers. THS delivered a trailing four-quarter earnings surprise of 58.8%, on average.
Post Holdings, Inc. (POST - Free Report) operates as a consumer-packaged goods holding company in the United States and internationally. It currently has a Zacks Rank of 2 (Buy). POST delivered a trailing four-quarter earnings surprise of 22.9%, on average.
The consensus estimate for Post Holdings’ current fiscal-year sales and earnings indicates growth of 2.6% and 5.3%, respectively, from the prior-year levels.
The Chefs' Warehouse, Inc. (CHEF - Free Report) distributes specialty food and center-of-the-plate products in the United States, the Middle East and Canada. It currently carries a Zacks Rank of 2. CHEF delivered a trailing four-quarter earnings surprise of 10.2%, on average.
The Zacks Consensus Estimate for The Chefs' Warehouse’s current fiscal-year sales and earnings indicates growth of 6% and 12.2%, respectively, from the prior-year levels.
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Lamb Weston's Q4 Earnings Beat Estimates, Sales Rise 4% Y/Y
Key Takeaways
Lamb Weston Holdings, Inc. (LW - Free Report) reported solid fourth-quarter fiscal 2025 results, wherein both the top and bottom lines beat the Zacks Consensus Estimate and increased year over year.
The company returned to growth in the second half of the year, supported by customer wins and improved retention. Management introduced its “Focus to Win” strategic plan, which includes targeted cost savings and working capital improvements to enhance profitability and cash flow. The plan reflects a sharpened focus on core markets and customer relationships, positioning the company for long-term success in a competitive environment.
LW’s adjusted earnings were 87 cents per share, beating the Zacks Consensus Estimate of 64 cents. The increase of 12% was primarily driven by lower income tax expense resulting from reduced adjusted gross profit, partially offset by lower adjusted equity method investment earnings.
Net sales amounted to $1,675.8 million, beating the Zacks Consensus Estimate of $1,593 million. The top line increased 4% year over year.
Lamb Weston Price, Consensus and EPS Surprise
Lamb Weston price-consensus-eps-surprise-chart | Lamb Weston Quote
LW’s Quarterly Results: Key Metrics & Insights
Lamb Weston’s fiscal fourth-quarter volume rose 8% compared with the same quarter last year, driven by contract wins across all channels and geographic regions, and to a lesser extent, by lapping an approximately $22 million sales headwind from a previously announced voluntary product withdrawal in the prior-year quarter. This growth was partially offset by soft global restaurant traffic, which declined in the low single digits in the United States and United Kingdom, LW’s largest markets. Our model expected a volume increase of 2% in the quarter.
However, the price/mix dipped 4% due to the company’s strategic efforts to partner with customers on pricing and trade promotions in response to an increasingly competitive environment across both the North America and International segments. We expected the price/mix to decline 2.7% in the quarter.
The adjusted gross profit decreased $19.5 million, reaching $343.5 million. This decline was mainly caused by a negative price/mix, which was partially offset by lower manufacturing costs per pound. The improvement in manufacturing costs reflected the lapping of an approximately $40 million negative impact from the prior-year voluntary product withdrawal, as well as lower raw potato costs in the current year.
These benefits were partially offset by higher fixed factory absorption costs resulting from temporarily curtailed production, low single-digit inflation in key input costs, including labor, ingredients such as grains and starches used in product coatings, oil and packaging, as well as higher depreciation expense tied to recent capacity expansions in China, the United States and the Netherlands.
Adjusted selling, general and administrative (SG&A) expenses fell $16.4 million year over year, totaling $155.6 million, associated with the lower advertising and promotion expenses, lapping of increased expenses related to the ERP transition in the prior-year quarter and cost savings from the company’s fiscal 2025 Restructuring Plan. These were somewhat offset by the timing of compensation accruals.
Adjusted EBITDA rose $1.5 million year over year, reaching $284.9 million. This growth was driven by reduced adjusted SG&A expenses, partially offset by a decline in adjusted gross profit.
LW Provides Q4 Insights by Segment
Net sales for the North America segment, which covers customers in the United States, Canada and Mexico, were down 1%, reaching $1,103.1 million compared with the prior-year quarter. Sales volume rose 4%, driven by gains with regional, small and retail customers. These gains were partially offset by low single-digit declines in restaurant traffic.
The price/mix of the segment fell 5%, reflecting planned investments in pricing and trade to remain competitive in an increasingly challenging market. This decline was partially offset by favorable channel and product mix, supported by growth in regional, small and retail channels. The North America segment’s adjusted EBITDA declined in the range of $18.6 million to $257.9 million.
Net sales for the International segment, which includes all customers outside North America, grew 15% to $572.7 million. Volume rose 16%, reflecting growth across all regions and the lapping of the prior-year voluntary product withdrawal. These gains were partially offset by a decline in restaurant traffic in the United Kingdom and relatively flat traffic in other major international markets.
The price/mix of the segment declined 1% due to a continued competitive environment. International segment adjusted EBITDA rose in the range of $22.2 million to $62.6 million.
Lamb Weston’s Financial Health Snapshot
The company ended the quarter with cash and cash equivalents of $70.7 million, long-term debt and financing obligations (excluding the current portion) of $3,682.8 million and total shareholders’ equity of $1,737.7 million.
The company generated $868.3 million as net cash from operating activities for the 52 weeks ending May 25, 2025, wherein capital expenditures, net of proceeds from blue chip swap transactions, amounted to $650.7 million.
In fiscal 2025, Lamb Weston returned $488.9 million to its shareholders through cash dividends and share repurchases. This includes $206.9 million in cash dividends and $282 million in share repurchases. In total, the company repurchased 4,867,449 shares during fiscal 2025. As of fiscal year-end, approximately $358 million remained authorized and available for repurchases under the program.
Lamb Weston also declared a quarterly dividend of 37 cents per share, payable on Aug. 29, 2025, to its stockholders of record as of Aug 1.
What to Expect From LW in FY26?
The company expects its annual net sales target range to be $6.35-$6.55 billion. Lamb Weston anticipates an adjusted EBITDA in the range of $1,000 million to $1,200 million. Capital expenditures are expected to total approximately $500 million.
LW’s Share Price Performance
Shares of this Zacks Rank #4 (Sell) company have gained 6.6% in the past three months compared with the industry’s 2% growth.
Image Source: Zacks Investment Research
Better-Ranked Stocks
TreeHouse Foods, Inc. (THS - Free Report) manufactures and distributes private-brands snacks and beverages in the United States and internationally. It presently flaunts a Zacks Rank of 1(Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TreeHouse Foods’ current financial-year sales indicates growth of 0.4% from the year-ago numbers. THS delivered a trailing four-quarter earnings surprise of 58.8%, on average.
Post Holdings, Inc. (POST - Free Report) operates as a consumer-packaged goods holding company in the United States and internationally. It currently has a Zacks Rank of 2 (Buy). POST delivered a trailing four-quarter earnings surprise of 22.9%, on average.
The consensus estimate for Post Holdings’ current fiscal-year sales and earnings indicates growth of 2.6% and 5.3%, respectively, from the prior-year levels.
The Chefs' Warehouse, Inc. (CHEF - Free Report) distributes specialty food and center-of-the-plate products in the United States, the Middle East and Canada. It currently carries a Zacks Rank of 2. CHEF delivered a trailing four-quarter earnings surprise of 10.2%, on average.
The Zacks Consensus Estimate for The Chefs' Warehouse’s current fiscal-year sales and earnings indicates growth of 6% and 12.2%, respectively, from the prior-year levels.