Lamb Weston Raises Fiscal 2027 Outlook After Strong First Quarter

Lamb Weston Holdings, Inc. has reported first-quarter fiscal 2027 results above its expectations, supported by continued volume growth in North America and ongoing cost-saving initiatives. The company has also raised its full-year fiscal 2027 outlook for net sales, Adjusted EBITDA and Adjusted Diluted EPS.

Lamb Weston reported first-quarter net sales of USD 1.67 billion, up 1% from $1.66 billion in the same period of fiscal 2026. Net sales benefited from a 2% increase in sales volume and a small favorable currency impact, partly offset by a 2% decline in price/mix. 

The company reported net income of USD 29 million, compared with USD 64 million a year earlier. Adjusted Net Income remained stable at USD 103 million. Adjusted EBITDA declined 5% to USD 286 million from USD 302 million, while reported diluted EPS fell to USD 0.21 from USD 0.46. Adjusted Diluted EPS increased slightly to USD 0.75 from USD 0.74.

North America Delivers Continued Volume Growth

Lamb Weston's North American business remained the strongest contributor to first-quarter performance. 

Net sales in the segment increased 5% to USD 1.141 billion, compared with USD 1.085 billion in the prior-year quarter. Sales volume increased 7%, marking the seventh consecutive quarter of volume growth. The company attributed the increase to stronger demand from existing customers and new customer wins.

Price/mix declined 2%, reflecting pricing and trade support for customers as well as a continued shift toward faster-growing chain customers and private-label products.

North America Segment Adjusted EBITDA increased 11% to USD 287 million, compared with USD 260 million in the first quarter of fiscal 2026. 

Higher sales volumes, cost-saving initiatives, USD 5 million in tariff refunds and increased earnings from equity-method investments more than offset customer price and trade support, customer and product mix effects and inflation in key input costs.

International Business Faces Challenging Conditions

Lamb Weston's International segment reported a more difficult quarter, particularly in Europe. 

International net sales declined 8% to USD 529 million, compared with USD 575 million in the prior-year period. Sales volume decreased 6%, while price/mix declined 2%. 

Segment Adjusted EBITDA fell 54% to USD 27 million, compared with USD 57 million in the first quarter of fiscal 2026. 

The company said the decline was in line with its expectations and was primarily related to lower sales volume and net sales, particularly in Europe. Higher manufacturing costs per pound also affected profitability, reflecting the carry-in of higher potato costs from the prior year, factory underutilization and inflation.

Lamb Weston said EMEA continues to face challenging market conditions. However, as the company works through higher prior-year crop carry-in costs, International Segment Adjusted EBITDA improved sequentially.

The company has also taken steps to optimize its manufacturing network. This included ending production at its Broekhuizenvorst facility and transitioning customer fulfillment to other locations within Lamb Weston's network, which the company expects will support further cost optimization.

Capacity Optimization Supports Cost Savings

Lamb Weston continues to experience inflationary pressure across several input categories as well as freight costs. The company is addressing these pressures through supplier negotiations and hedging activities where possible. 

At the same time, capacity optimization initiatives launched more than a year ago in North America have increased utilization by approximately 10 percentage points.

According to Lamb Weston, these initiatives are expected to allow the company to exceed the savings originally forecast under its cost savings program.

Higher sales volume was more than offset at the consolidated level by lower price/mix and increased cost of sales and selling, general and administrative expenses. Total manufacturing cost per pound increased, primarily because of International segment performance and conditions in EMEA.

Selling, general and administrative expenses also increased, partly because the company was comparing against the first quarter of fiscal 2026, which included USD 7 million of non-recurring miscellaneous income. Ongoing cost savings largely offset higher outside services and fixed expenses.

Focus to Win Strategy Continues

Lamb Weston said it is making progress on its Focus to Win strategy, including cross-functional work to sharpen its prioritization of markets and channels. 

The company expects to complete this work over the coming months and plans to provide further details on its long-term roadmap at an Investor Day in early calendar 2027.

Mike Smith, President and Chief Executive Officer of Lamb Weston:

"We are off to a solid start to the year, delivering first quarter net sales and profit above our expectations."

Smith highlighted continued momentum in North America, where customer relationships supported volume growth and cost-saving initiatives continued to deliver benefits. He also noted the challenges facing EMEA and the company's actions to improve network utilization and optimize costs.

Operating Cash Flow and Capital Expenditure

Lamb Weston generated USD 235 million in cash from operating activities during the first quarter of fiscal 2027, down USD 117 million from the prior-year period.

The year-earlier period benefited from a USD 136 million improvement in inventories as the company began its Cost Savings Program. In the current quarter, operating cash flow benefited by USD 59 million from an increase in accounts payable as Lamb Weston works with suppliers to improve payment terms.

Other working-capital changes were described as normal business activity, while the decline in reported net income also reduced operating cash flow. 

Capital expenditures totaled USD 91 million, an increase of USD 12 million from the prior-year period. The spending included ongoing investments in production-facility reliability and strategic optimization projects. 

As of August 30, 2026, Lamb Weston had USD 166 million in cash and cash equivalents, USD 98 million higher than at the end of fiscal 2026. The company also had USD 1.24 billion of additional available liquidity under its revolving credit facility.

USD 52 Million Returned to Shareholders

During the first quarter, Lamb Weston returned USD 52 million to shareholders through cash dividends. The company did not repurchase shares during the quarter.

Approximately USD 245 million remains authorized and available under its share repurchase program. 

On October 5, 2026, Lamb Weston's Board of Directors declared a quarterly dividend of USD 0.38 per share. The dividend will be paid on December 4, 2026, to shareholders of record as of the close of business on November 6, 2026.

Lamb Weston Raises Fiscal 2027 Outlook

Following its first-quarter performance, Lamb Weston raised several elements of its fiscal 2027 financial outlook.

The updated net sales outlook calls for growth from fiscal 2026's 52-week-adjusted net sales of USD 6.485 billion.

Lamb Weston's updated Adjusted EBITDA target of USD 1.125 billion to USD 1.215 billion compares with its previous range of USD 1.10 billion to USD 1.20 billion. The company also increased its Adjusted Diluted EPS outlook from USD 2.95–USD 3.25 to USD 3.05–USD 3.35.

Capital expenditure guidance remains unchanged at $380 million to $410 million in estimated cash outflows. On an accrual basis, capital expenditures are expected to be approximately $330 million to $350 million.

Other fiscal 2027 targets include depreciation and amortization expense of approximately USD 410 million, diluted common shares outstanding of 137.5 million to 139.0 million, and net cash provided by operating activities of USD 750 million to USD 800 million.

Looking Ahead

Lamb Weston enters the remainder of fiscal 2027 with stronger-than-expected first-quarter results, continued volume momentum in North America and additional cost savings expected from capacity optimization. 

At the same time, the company will continue addressing challenging conditions in EMEA, higher potato and manufacturing costs, inflation and freight expenses. Its network optimization efforts, including the transition of production and customer fulfillment following the closure of Broekhuizenvorst production, are expected to support cost efficiency.

The company said its ongoing Focus to Win work will further define its market and channel priorities, with additional details expected at its Investor Day in early 2027.