Lamb Weston (LW) Q4 2024 earnings summary

Executive summary

• Q4 and FY2024 results were disappointing, with sales and earnings falling short of targets due to executional challenges, soft global demand, market share losses, and a voluntary product withdrawal.

• Fiscal Q4 2024 net sales declined 5% year-over-year to $1.61B, with net income down 74% to $130M and diluted EPS down 74% to $0.89.

• Full year 2024 net sales rose 21% to $6.47B, driven by acquisitions, but net income fell 28% to $726M and diluted EPS dropped 28% to $4.98.

• Leadership is focused on regaining volume, improving execution, and driving long-term growth through cost reduction and operational adjustments.

• Adjusted Q4 results showed a 26% decline in income from operations and a 40% drop in adjusted net income.

Financial highlights

• Q4 sales declined $83 million (5%) to $1.61 billion; volume down 8%, price/mix up 3%.

• Adjusted gross profit fell $72 million to $363 million; adjusted EBITDA down $50 million to $283 million.

• Q4 adjusted EBITDA fell 15% year-over-year to $283M; full year adjusted EBITDA rose 13% to $1.42B.

• Q4 gross profit increased $8.5M to $388M, including a $24.9M unrealized gain from commodity hedging.

• Net debt leverage ratio at 2.7x Adjusted EBITDA; net debt declined by $40 million to $3.75 billion.

Outlook and guidance

• FY2025 sales targeted at $6.6–$6.8 billion (2–5% growth), driven mainly by volume.

• Adjusted EBITDA guidance: $1.38–$1.48 billion; diluted EPS: $4.35–$4.85; net income: $630M–$705M.

• Volume expected to decline in H1 FY2025 due to share losses and soft restaurant traffic, with recovery in H2.

• Capex for FY2025 forecasted at ~$850 million, mainly for capacity expansion and IT upgrades.

• Adjusted SG&A targeted at $740–$750 million, up $70 million year-over-year due to compensation, ERP amortization, and advertising.