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

Key business performance and outlook

• North America showed solid performance, with strong customer relationships and resilient supply chain supporting margin structure.

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

• International business faced challenges from Middle East disruptions and cost inflation, but expects these to be temporary.

• Capacity utilization in North America is in the high 80s to low 90s, with recent facility closures optimizing cost structure.

• Internationally, plant closures and network optimization in Europe aim to align fixed costs with demand, while growth is expected in China and Latin America.

Market dynamics and competitive landscape

• Industry demand is sensitive to input costs and pricing, with elasticity supporting restaurant operator margins.

• Global competition is increasing, especially in Asia, as local capacity in China and India ramps up, impacting export flows.

• Potato varietals and landed costs influence regional competitiveness, with North America maintaining advantages in certain clusters.

• European crop yields are challenged by heat, tightening supply and potentially firming up input costs and pricing.

• Innovation and value-added products are key strategies for differentiation in competitive markets.

Financial metrics and guidance

• Fiscal 2027 guidance anticipates continued price mix headwinds in the first half, with input cost inflation (notably oil, freight, packaging) driving pricing discussions.

• Potato costs are down slightly, but other costs are up, resulting in net inflation of about 3% for the year.

• Gross margin is expected to be pressured in Q1 due to input cost inflation and channel mix, but improvement is anticipated as pricing actions take effect.

• EBITDA growth for the year is driven primarily by international recovery, with normalization after one-off events and improved plant utilization.

• North America EBITDA is expected to be flat, with cost savings and innovation supporting future margin expansion.