Lamb Weston Reports First Quarter Fiscal 2026 Results; Reaffirms Fiscal Year 2026 Outlook

Lamb Weston Holdings, Inc. (NYSE: LW) has announced its results for the first quarter of fiscal 2026 and reaffirmed its full year financial targets for fiscal 2026. 

Mike Smith, President and CEO, Lamb Weston:

“The Lamb Weston team delivered a strong start to the fiscal year with solid volume growth and positive customer momentum, underscoring the strength of our value proposition and our operating model. We believe our sharpened executional focus and strategic plans behind our Focus to Win strategy are beginning to deliver and position us to drive long-term growth and sustainable value for our shareholders.”

Q1 2026 Commentary

Q1 Results of Operations

Net sales increased USD5.2 million, to USD1,659.3 million versus the prior year quarter, including a favorable foreign currency impact of USD23.7 million. Net sales at constant currency(2) declined 1 percent, as a 6 percent increase in volume was more than offset by a 7 percent decline in price/mix. Volume growth was driven by customer wins and retention, particularly in North America and Asia, as well as lapping an approximately USD15 million charge in the prior year quarter related to a voluntary product withdrawal. Price/mix was in line with the Company's expectations and reflects the carryover impact of fiscal 2025 price and trade investments to support customers, ongoing price and trade support, and unfavorable channel product mix within the Company's segments.

Gross profit declined USD13.6 million versus the prior year quarter to USD342.4 million. Adjusted Gross Profit(1) declined USD14.2 million versus the prior year quarter to USD338.9 million due primarily to unfavorable price/mix. Unfavorable price/mix was partially offset by higher sales volumes, lower manufacturing costs per pound driven by cost savings initiatives, and the benefit of lapping an approximately USD39 million charge in the prior year related to a voluntary product withdrawal. 

Net income declined USD63.1 million from the prior year quarter to USD64.3 million. Diluted EPS declined USD0.42 versus the prior year quarter to USD0.46. Adjusted Net Income(1) declined USD9.7 million year-over-year to USD103.0 million, and Adjusted Diluted EPS(1) declined USD0.04 from the prior year quarter to USD0.74. The decrease in Adjusted Net Income(1) and Adjusted Diluted EPS(1) largely reflect a higher effective tax rate and lower Equity Method Investment Earnings as described below, partially offset by higher Adjusted Income from Operations(1). 

Adjusted EBITDA(1) increased USD2.8 million from the prior year quarter to USD302.2 million. Lower Adjusted SG&A(1) was partially offset by lower Adjusted Gross Profit(1) and Equity Method Investment Earnings (Loss). 

The Company’s effective tax rate(3) in the first quarter of 2026 was 42.7 percent, versus 28.5 percent in the first quarter of fiscal 2025. The results in both periods reflect the impact of items outlined in the Reconciliations of Non-GAAP Financial Measures in the tables accompanying this press release. In the first quarter of fiscal 2026, the Company also recorded USD10.2 million of discrete tax expense, primarily related to the establishment of a non-cash full valuation allowance against certain international deferred tax assets. Excluding these items, the Company’s effective tax rate(3) was 30.2 percent in the first quarter of 2026, versus 30.8 percent in the prior year quarter.

Q1 2026 Segment Highlights

North America Summary:

Net sales for the North America segment, which includes all sales to customers in the U.S., Canada and Mexico, declined 2 percent, or USD19.1 million, to USD1,084.6 million versus the prior year quarter. Volume increased 5 percent compared to the prior year quarter supported by recent customer contract wins and growth across channels. Price/mix declined 7 percent driven by the carryover impact from fiscal 2025 price investments, the ongoing support of customers through price and trade and an unfavorable channel mix. 

North America Segment Adjusted EBITDA decreased USD18.0 million to USD260.0 million compared to the prior year quarter. The decline primarily reflects price and trade in support of customers, partially offset by higher sales volumes, lower manufacturing costs per pound and Adjusted SG&A(1), which included the benefit of cost savings initiatives. Results also benefited from lapping an approximately USD21 million charge related to a voluntary product withdrawal in the prior year.

International Summary:

Net sales for the International segment, which includes all sales to customers outside of North America, increased 4 percent, or USD24.3 million, to USD574.7 million year-over-year, including a favorable USD24.5 million from foreign currency translation. Net sales at constant currency(2) was flat. Volume increased 6 percent, led primarily by growth in Asia and with multinational chain customers. Price/mix at constant currency(2) declined 6 percent, driven by investments to support customers as well as ongoing price and trade support. 

International Segment Adjusted EBITDA increased USD5.8 million to USD57.2 million year-over-year, reflecting higher sales volumes and lower manufacturing costs per pound. The improvement primarily reflects lapping an approximately USD18 million charge related to the prior year’s voluntary product withdrawal, lower potato prices and benefits from ongoing cost savings initiatives. These benefits were partially offset by USD3.5 million in start-up costs associated with the new manufacturing facility in Argentina, which is expected to support future growth.

Equity Method Investment Earnings (Loss)

Equity method investment earnings (loss) from unconsolidated joint ventures were a loss of USD0.6 million and earnings of USD11.3 million for the first quarter of fiscal 2026 and 2025, respectively. The decline in earnings was primarily the result of lower net sales and an unfavorable mix of sales. The results for the current and prior-year quarters reflect earnings associated with the Company’s 50 percent interest in Lamb Weston/RDO Frozen, an unconsolidated potato processing joint venture in Minnesota.

Cash Flows, Capital Expenditures and Liquidity

Net cash provided by operating activities increased USD21.8 million to USD352.0 million, primarily reflecting favorable working capital, led by lower finished goods inventories in North America, compared to the last day of the first quarter of fiscal 2025. 

Capital expenditures, net of proceeds from blue chip swap transactions, were USD79.2 million during the first quarter of fiscal 2026, down USD256.4 million from the prior year period. This reduction reflects the completion of growth-based investments in Argentina, the Netherlands and the U.S. As of August 24, 2025, the Company had USD98.6 million of cash and cash equivalents, with USD1,318.4 million of available liquidity under its revolving credit facility.

Capital Returned to Shareholders

In the first quarter of fiscal 2026, the Company returned USD51.7 million to shareholders through cash dividends. In addition, the Company repurchased USD10.4 million of its common stock under the Company’s share repurchase program, with 187,259 shares repurchased at an average price of USD55.34 per share. The Company has approximately USD348 million remaining that is authorized and available for repurchase under the share repurchase program. In addition, on September 25, 2025, the Board of Directors declared a quarterly dividend of USD0.37 per share of Lamb Weston common stock. The dividend is payable on November 28, 2025 to shareholders of record as of the close of business on October 31, 2025.

Fiscal 2026 Outlook

 

• Net sales at constant currency in the target range of USD 6.35 billion to USD 6.55 billion.
• Adjusted EBITDA (1) target range of USD 1.00 billion to USD 1.20 billion.
• Cash used for capital expenditures of approximately USD 500 million.
• The Company’s guidance includes its current view of the anticipated impact of enacted tariffs by the United States and other governments but does not include potential effects of evolving trade policies, including future changes in tariffs or retaliatory measures.

Focus to Win

During the fourth quarter of fiscal 2025, the Company announced Focus to Win, a comprehensive plan designed to improve execution and drive profitable growth. The Focus to Win strategic plan aligns the organization around four guiding principles: focusing investments on priority global markets and segments; strengthening customer partnerships; achieving executional excellence; and setting the pace for innovation. The plan also includes the Cost Savings Program which is expected to deliver at least USD250 million of annualized run rate savings by the end of fiscal year 2028.

The Company believes it is on track to deliver at least USD100 million of expected savings and an additional USD60 million of working capital improvements by the end of fiscal year 2026. In connection with these strategic initiatives, the Company expects to recognize total pre-tax charges of USD70 million to USD100 million, most of which will be paid in fiscal 2026, including approximately USD32 million recorded in the first fiscal quarter primarily related to the Cost Savings Program.26.

End Notes

 

• (1) Adjusted Gross Profit, Adjusted SG&A, Adjusted Income from Operations, Adjusted Net Income, Adjusted Diluted EPS, and Adjusted EBITDA are non-GAAP financial measures. Please see the discussion of non-GAAP financial measures, including a discussion of guidance provided on a non-GAAP basis, and the associated reconciliations at the end of this press release for more information.
• (2) Net sales and price/mix growth at constant currency are non-GAAP financial measures that show results as if foreign currency exchange rates had remained constant between the current and prior year periods. These measures are calculated by translating current year financial data into United States dollars using the prior year average exchange rates, which is the same basis used for the prior year results. See the discussion of non-GAAP financial measures in this press release as well as the associated reconciliations under Segment Information and Reconciliation of Net Sales at Constant Currency in the accompanying tables for more information.
• (3) The effective tax rate is calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings.