Lamb Weston Reports Third Quarter Fiscal 2026 Results

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

Mike Smith, Lamb Weston president and CEO:

"Driven by continued solid performance in our North America segment, we delivered another quarter in line with our expectations. Our team's disciplined execution of our Focus to Win strategy continues to strengthen Lamb Weston and position us to drive long-term shareholder value. We are taking proactive steps to better align supply and demand, and we are acting with urgency to navigate the competitive international environment. Our focus on operational rigor and cost discipline continues to drive strong productivity, and we now expect to exceed our cost reduction target of at least USD 250 million by fiscal year-end 2028."

Q3 2026 Commentary

Q3 Results of Operations

Net sales increased USD 44.3 million, to USD 1,564.8 million versus the prior year quarter, including a favorable foreign currency impact of USD 47.4 million. Net sales at constant currency(2) was essentially flat, as a 7 percent increase in volume was offset by a 7 percent decline in price/mix. Volume growth was driven by North America customer wins, share gains and strong retention. The decline in price/mix reflects continued price and trade support for customers and consumer shifts toward value-oriented channels and brands, including increased sales to chain customers, which generally carry lower pricing. The Company also experienced softer industry demand in key international markets as well as increased competitive industry dynamics, which most notably affected the Company's EMEA business.

Gross profit declined USD 90.9 million versus the prior year quarter to USD 331.6 million. Adjusted Gross Profit(1) declined USD 92.9 million to USD 327.5 million, primarily reflecting unfavorable global price/mix, as well as a net USD 32.5 million pre-tax charge related to the write-off of excess raw potatoes in the International segment due to lower than planned sales volumes resulting from softer market demand. Total manufacturing cost per pound increased, which reflected the raw potato write-off, increased fixed factory burden costs associated with underutilized international production facilities and inflationary pressures across key input categories globally. These higher costs were partially offset by the benefits of the Company's cost savings initiatives as well as improved operating efficiencies in the North America segment.

Selling, general and administrative expenses ("SG&A") declined USD 7.4 million versus the prior year quarter to USD 156.8 million. Adjusted SG&A(1) increased USD 9.4 million versus the prior year quarter to USD 157.4 million. Adjusted SG&A(1) continues to benefit from ongoing cost savings initiatives; however, these savings were more than offset by normalized compensation and benefit accruals tied to performance achievement, and USD 12.7 million of write-offs of capitalized costs associated with certain projects no longer under development.

Net income declined USD 92.0 million from the prior year quarter to USD 54.0 million, and Diluted EPS declined USD 0.64 versus the prior year quarter to USD 0.39. Adjusted Net Income(1) declined USD 64.4 million over the prior year quarter to USD 100.0 million, and Adjusted Diluted EPS(1) declined USD 0.43 from the prior year quarter to USD 0.72. The decline in Adjusted Net Income(1) and Adjusted Diluted EPS(1) reflects the lower Adjusted Gross Profit(1) and higher Adjusted SG&A(1), partially offset by lower income tax expense.

Adjusted EBITDA(1) declined USD 101.3 million from the prior year quarter to USD 271.7 million, also reflecting the reduction in Adjusted Gross Profit(1) and higher Adjusted SG&A(1).

The Company's effective tax rate(3) for the third quarter of 2026 was 35.9 percent, versus 28.3 percent in the third quarter of fiscal 2025. The effective tax rate for the current quarter reflects impacts of the comparability items, most notably the expenses related to the Company's Cost Savings Program and Restructuring Plan, as discussed in more detail in the Reconciliations of Non-GAAP Financial Measures in the tables accompanying this press release. Excluding these items, the Company's effective tax rate(3) was 21.8 percent for the third quarter of 2026, versus 28.1 percent for the prior year quarter. Compared to the third quarter of fiscal 2025, the effective tax rate excluding the impact of these items is lower primarily due to having a smaller proportion of losses with no expected tax benefits in certain jurisdictions.
 

Q3 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, increased 5 percent to USD 1,035.0 million compared to the prior year quarter. Volume increased 12 percent, driven by customer contract wins, share gains and growth. Price/mix declined 7 percent, reflecting price and trade support for customers and a mix shift toward faster-growing chain customers and private-label products, which generally carry lower pricing than other channels.

North America Segment Adjusted EBITDA declined USD 12.8 million to USD 289.8 million compared to the prior year quarter. Higher volumes, lower manufacturing costs per pound, and lower Adjusted SG&A(1), reflecting cost savings initiatives and improved operating efficiencies, were more than offset by continued price and trade support for customers and an unfavorable mix. 
 

International Summary

Net sales for the International segment, which includes all sales to customers outside of North America, declined 1 percent, or USD 4.4 million, to USD 529.8 million compared to the prior year quarter, including a favorable foreign currency impact of USD 43.7 million. Net sales at constant currency(2) declined 9 percent. Volume declined 2 percent, driven by softer demand in key international markets. Price/mix at constant currency(2) declined 7 percent, primarily reflecting ongoing price and trade to support customers and, to a lesser extent, an unfavorable mix that favors lower priced geographies and products.

International Segment Adjusted EBITDA declined USD 75.6 million to USD 18.5 million compared to the prior year quarter. The decrease was primarily attributable to lower sales, higher manufacturing costs per pound, including a net USD 32.5 million pre-tax charge for the write-off of excess raw potatoes due to lower than planned sales volumes and increased fixed factory burden costs associated with underutilized international production facilities. The higher manufacturing costs were partially offset by benefits from cost savings initiatives.

To improve utilization and respond to the challenging operating environment in the International segment, the Company closed its Munro, Argentina plant during the third quarter and consolidated Latin America production into its new, modern facility in Mar del Plata, Argentina. As previously disclosed, the Company also temporarily curtailed a production line in the Netherlands beginning early in the fourth fiscal quarter of 2026. 
 

Cash Flows, Capital Expenditures and Liquidity

Compared with the first three quarters of fiscal 2025, cash provided by operating activities increased USD 110.3 million to USD 595.6 million. The increase largely relates to USD 130.0 million of favorable changes in working capital, led by lower inventories in North America and timing of collections of trade receivables, partially offset by a USD 19.7 million decrease in net income, adjusted for non-cash items.

Capital expenditures were USD 256.6 million during the first three quarters of fiscal 2026, down USD 306.5 million from the prior year period. The decrease reflects completion of major growth initiatives as well as the Company's ongoing initiatives to reduce structural capital intensity as part of its Focus to Win strategy.

As of February 22, 2026, the Company had USD 57.5 million of cash and cash equivalents, with USD 1.26 billion of additional available liquidity under its revolving credit facility. 
 

Capital Returned to Shareholders

In the third quarter of fiscal 2026, the Company returned USD 51.4 million to shareholders through cash dividends.

In the first three quarters of fiscal 2026, the Company returned a total of USD 204.7 million to shareholders. This includes USD 154.7 million through cash dividends and USD 50.0 million through repurchases of common stock, with an aggregate of 804,882 shares repurchased at an average price of USD 62.12 per share.

The Company did not repurchase shares during the third quarter due to trading restrictions associated with certain announcements that have since been disclosed. Following the end of the restrictions, the Company implemented a Rule 10b5-1 trading plan for future purchases. As of March 30, 2026, 1,053,429 shares of common stock were repurchased under the Company's share repurchase program for an aggregate purchase price of $43.7 million. As of that date, approximately $264 million remained authorized for repurchase under our share repurchase program. 

On March 31, 2026, the Board of Directors declared a quarterly dividend of $0.38 per share of Lamb Weston common stock. The dividend is payable on June 5, 2026, to shareholders of record as of the close of business on May 8, 2026.
 

Fiscal 2026 Outlook

The Company updated its financial targets for fiscal 2026 as follows:

The Company's net sales guidance includes an approximate 1.8% benefit from an anticipated favorable foreign currency translation. The guidance also reflects the Company's current assessment of the anticipated impact of enacted tariffs by the U.S. and other countries but does not include potential effects of evolving trade policies or the potential for refunds, if any, relating to legal challenges or policy reversals. The guidance range takes into account the current expectation for ongoing disruption in certain markets in the Middle East. In addition, the fiscal 2026 outlook includes the contribution of a 53rd week in the fiscal period, which occurs in the fourth quarter of fiscal 2026.
 

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 present 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.