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    LW
    Earnings call· May 2026(Q4 FY26)

    Lamb Weston Holdings, Inc. LW

    Jul 24, 2026 Source

    Executive summary

    Lamb Weston Q4 FY26 — Strong North America Performance and Strategic Realignment

    Lamb Weston delivered a solid Q4 FY26, driven by robust performance in North America, marked by strong volume growth and improved customer relationships. The company successfully advanced its Focus to Win strategy, exceeding initial cost savings targets. However, the International segment faced significant headwinds from challenging market conditions in EMEA, input cost volatility, and geopolitical impacts, prompting strategic footprint optimization and a renewed focus on global profitability.

    Highlights

    5

    • North America segment EBITDA margin expanded to 26% for the full year FY26.

    • Exceeded first-year milestone of $100 million in cost savings program, targeting $250 million by FY28.

    • Generated $943 million cash from operations, up $75 million year-over-year, and $537 million in free cash flow for FY26.

    • Returned $321 million to shareholders in FY26, including $113 million in stock repurchases.

    • North America sales volume grew 11% in Q4 FY26, leading to 6 consecutive quarters of volume growth.

    Concerns

    4

    • International segment net sales declined 2% in Q4 FY26, driven by a 2% sales volume decline and 4% price/mix decline.

    • Adjusted EBITDA declined $6 million year-over-year in Q4, primarily due to international challenges and higher input costs.

    • Experienced higher raw potato costs and fixed cost absorption issues in International due to slower European demand and Middle East conflict impacts.

    • Input cost volatility in Q4, with edible oils and transportation costs substantially increasing.

    Guidance & targets

    18
    CategoryTargetConfidence
    Net sales growth
    flat to up 1%
    high materiality
    High
    Adjusted Operating Income
    $720 million to $800 million
    high materiality
    High
    Adjusted EPS
    $2.95 to $3.25
    high materiality
    High
    Diluted common shares outstanding
    137.5 million and 139 million
    medium materiality
    High
    Adjusted EBITDA
    $1.1 billion to $1.2 billion
    high materiality
    High
    Cash used for capital expenditures
    $380 million to $410 million
    high materiality
    High
    Investments (accrual basis)
    up to $350 million
    high materiality
    High
    Operating cash flow
    $750 million to $800 million
    high materiality
    High
    Effective tax rate
    25.5% to 27.5%
    medium materiality
    High
    Interest expense
    $190 million
    medium materiality
    High
    SG&A
    decline
    medium materiality
    High
    Equity earnings from JV
    grow modestly
    medium materiality
    High
    North America net sales (comparable week basis)
    flat to up low single digits
    high materiality
    High
    North America EBITDA
    flat to up low single digits
    high materiality
    High
    International segment top line
    down low single digits
    high materiality
    High
    International segment EBITDA
    improve between 40% and 50%
    high materiality
    High
    Net sales
    flat
    medium materiality
    High
    EBITDA
    decline in the low teens
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    North America
    Delivered strong Q4 performance with significant sales volume growth and EBITDA dollar expansion. Full year saw stabilization, volume growth, and healthy profit profile. Price/mix declined due to modest investment and mix shift to lower-priced channels.
    Net sales growth Q4 FY26: 9%Sales volume growth Q4 FY26: 11%Price/mix decline Q4 FY26: 2%EBITDA dollar growth Q4 FY26: 17% or $45 million
    		—9% (sales volume, full year FY26)11% (sales volume, Q4 FY26)26% (segment EBITDA margin, full year FY26)
    International
    Faced challenging market conditions in EMEA, including impacts from the Middle East conflict, leading to net sales and volume declines in Q4. Growth in Asia Pacific and Latin America was offset by EMEA. Full year saw growth in Asia Pacific and Latin America but overall decline in constant currency.
    Sales volume decline Q4 FY26: 2%Price/mix decline Q4 FY26: 4%Net sales growth full year FY26: 1% (5% favorable currency, 2% sales volume, -6% price/mix)Net sales decline full year FY26 (constant currency): 4%
    		—2% (sales volume, full year FY26)-2% (net sales, Q4 FY26)—

    Operational metrics

    18
    Cost savings program target
    $250 million
    annualized run rate

    Target for annualized run rate savings.

    Cost savings program achievement
    $100 millionexceeded milestone
    Year 1 (FY26)

    Exceeded the first-year milestone of the cost savings program.

    Shareholder returns
    $321 million
    FY26

    Total capital returned to shareholders since going public is greater than $2.2 billion.

    Stock repurchases
    $63 million
    Q4 FY26

    Amount of stock repurchased in the fourth quarter.

    Quarterly dividend
    $0.38
    Q1 FY27

    Next quarterly dividend announced.

    Net debt
    $3.8 billion
    Q4 FY26
    Net debt to adjusted EBITDA leverage ratio
    3.4x
    trailing 12-month
    Available liquidity
    $1.3 billion
    Q4 FY26

    Liquidity remains strong.

    Net Promoter Score (NPS)
    increasedover last year
    FY26

    Measured by proprietary research, indicating improved customer trust.

    Capacity utilization
    10 points
    future

    Expected improvement in EMEA utilization rates following facility closure.

    Potato crop status
    strong startslightly ahead of historical timing
    current crop year

    To support increased sales volume growth.

    Potato crop status
    favorable start
    current crop year

    Our expectation is for an average crop.

    Input cost inflation
    up more than expected
    Q4 FY26

    Impacted Q4 and carried into Q1 FY27 finished goods costs.

    SG&A
    $16 millionincreased
    Q4 FY26
    Employee engagement scores
    improved
    FY26

    Result of focus on continuous improvement and performance culture.

    Net sales from new items
    increased
    FY26

    Consistent focus on innovation.

    Restaurant traffic
    flat
    Q4 FY26

    QSR traffic also flat, with QSR chicken up 3% and QSR burger down 4%.

    QSR traffic
    declined 2%
    Q4 FY26

    Challenging market conditions in EMEA.

    Industry KPIs

    7
    MetricValueDetails
    Brand platform growthdouble digits%
    Organic net revenue growth7%%
    Adjusted EPS operating income$2.90USD
    Retailer trade negotiation statusearly innings
    Volume mix vs pricing decomposition-3%%
    Elasticity consumer response commentaryflat%
    Category growth benchmark channel shift dataflat%

    Product announcements

    5
    ProductTypeDetails
    Alexia olive oil productexpansion
    Disruptive innovation launcheslaunch
    Private label innovationlaunch
    Alexia seasoned itemslaunch
    Lamb Weston batter line extensionsexpansion

    Deals & partnerships

    1
    nullClosure of an older production facility to optimize EMEA footprint.

    The facility represents about 10% of EMEA production capacity. This action, while difficult, will rebalance capacity with demand and build a foundation for more effective network utilization and lower costs.

    Capital programs

    3
    Marda Platt, Argentina production facilityopened

    Benefit: clear advantage to deliver some of the highest quality and premium product in the region

    Opened in fiscal '26. Performance and profit improved throughout the year as production ramped up. Volume is up, utilization is better, and there is room to grow.

    Inner Mongolia, China production facilityopened

    Benefit: additional local processing capacity in a growing market

    Opened in 2023. Grew volume and net sales double digits since opening.

    Brookeisenborsed, Netherlands facility closureannounced intention to close

    Benefit: rebalance capacity with demand and build a foundation for more effective network utilization and lower costs

    Older production facility representing about 10% of EMEA production capacity. Announced in early June, following temporary curtailment of another line in the Netherlands during Q4.

    Risks & headwinds

    7
    Middle East conflict impactQ4 FY26, carrying into H1 FY27

    higher incremental freight costs

    Mitigation: Strategic realignment and cost savings initiatives.

    Challenging market conditions in EMEAQ4 FY26 and ongoing

    International segment net sales declined 2% (Q4 FY26), sales volume declined 2% (Q4 FY26), price/mix declined 4% (Q4 FY26)

    Mitigation: Footprint optimization (facility closures), reduced acreage, consolidating production into more cost-efficient plants.

    Volatile input cost inflationQ4 FY26, carrying into Q1 FY27

    up more than expected in Q4 FY26, substantial increase in edible oils and transportation costs

    Mitigation: Cost savings program, hedging against oil, working with customers on pricing.

    Higher raw potato costsQ4 FY26, carrying into Q1 FY27

    null

    Mitigation: Reduced acreage in EMEA, expectation of average crop for current season.

    Higher fixed cost absorption due to slower European demandQ4 FY26

    null

    Mitigation: Facility closures to improve utilization rates.

    Potato write-offs and Argentina startup costsFY26

    incremental $33 million of pretax charges (FY26)

    Mitigation: These are lapping items, expected to improve International EBITDA in FY27.

    Mix shift towards lower-priced channelsQ4 FY26 and ongoing

    contributed to 2% price/mix decline in North America (Q4 FY26)

    Mitigation: Innovation (higher-margin LTOs), cost savings to offset impact.

    What to watch in Q1 FY27

    5

    North America contract negotiations

    next quarter
    Currentearly innings of contracting
    Targetupdate on progress and pricing environment

    Why it matters

    Contracting outcomes will determine pricing and volume for a significant portion of North America business in FY27.

    As I think about price/mix, as you mentioned, Andrew, we have grown volumes and we see a more balanced supply and demand in some of our regions. That allows us to be a bit more thoughtful about how we go after incremental volume. And as you look at our quarter performance, last quarter, we had shared that we had recently taken a price increase in our North America business to cover that input cost inflation across all of our categories, except potatoes. And as we start to look at the impacts of potential price mix in the future, we'll base the need for pricing changes on that input cost inflation and the margin requirements it takes to invest in our business to be able to support our customers. So like I said, contracting is just starting off, and we'll give an update next quarter.

    Q&A highlights

    6

    Are all options on the table for international footprint optimization, or are there structural limitations?

    Jan Craps confirmed that technically, everything is on the table for the ongoing strategy work, which is fact-based and disciplined, focusing on market clusters and growth algorithms. Mike Smith added that the team is actively addressing EMEA challenges by reducing acres, closing older facilities to improve utilization, and noting industry-wide production delays.

    “technically, everything is on the table as we look through the different country clusters and their role to drive the growth algorithm.”

    asked by Andrew Lazar · answered by Jan Eli B. Craps

    2 min read7 chapters

    Detailed Narrative

    01

    Executive Chair's Vision and Priorities

    Jan Craps, the new Executive Chair, outlined his vision focusing on people, strategy, and resources. He emphasized building a performance culture with individual and entity targets, strengthening leadership talent, and implementing an organizational design for faster decision-making. His compensation is tied to stock price, aligning with shareholder interests.

    02

    Focus to Win Strategy Progress

    CEO Mike Smith highlighted significant progress in fiscal '26, reaffirming customer partnerships, improving Net Promoter Score in the U.S., and achieving six consecutive quarters of volume growth. The strategy also focused on executional excellence, supply chain optimization, and disruptive innovation.

    03

    International Footprint Optimization

    The company is actively optimizing its global supply chain, including closing an older production facility in Brookeisenborsed, Netherlands, representing about 10% of EMEA capacity. This action aims to rebalance capacity with demand, improve network utilization, and lower costs, following a temporary curtailment of a line in the Netherlands in Q4.

    04

    Cost Savings Program Success

    Lamb Weston exceeded its first-year milestone of $100 million in annualized run-rate savings from a program targeting at least $250 million by the end of fiscal 2028. These structural savings in supply chain, manufacturing, and SG&A have helped offset inflation and support customer investments.

    05

    Talent and Leadership Appointments

    The leadership team was strengthened with key appointments, including Jim Gray as CFO and Amit Phillip as Chief Strategy and Technology Officer. These additions bring global and strategic expertise, supporting the company's focus on talent development and strategic clarity.

    06

    Capital Discipline and Cash Flow

    The company demonstrated improved capital discipline, significantly reducing capital expenditures by over $240 million year-over-year to $410 million in FY26. This contributed to a substantial increase in free cash flow to $537 million and strong cash from operations of $943 million.

    07

    North America Performance and Customer Relationships

    The North America segment delivered strong results, with net sales up 9% and sales volume up 11% in Q4 FY26. This was driven by customer wins, share gains, and strong retention, alongside an improved Net Promoter Score, indicating strengthened customer trust and partnerships.

    AI-generated summary of the company’s earnings call. Not investment advice.