Lamb Weston reports Q2 2026 performance with volume growth, cost savings progress and dividend increase

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

Mike Smith, President and CEO at Lamb Weston:

"Our performance this quarter reflects the positive momentum we are building across the business. We delivered robust volume growth and gained share in priority markets and key categories, demonstrating Lamb Weston's commitment to deliver quality, innovation, and value."

"Our team is executing at a high level, and we remain on track to achieve our USD 100 million cost savings program target for fiscal 2026. In addition, the board approved a 3 percent increase to the quarterly dividend, which has increased each year since Lamb Weston went public."

Q2 2026 commentary
 

Q2 results of operations

Net sales increased USD 17.2 million, to USD 1,618.1 million versus the prior year quarter, and included a favorable foreign currency impact of USD 24.4 million. Net sales at constant currency(2) was essentially flat, as an 8 percent increase in volume was offset by an 8 percent decline in price/mix. Volume growth was driven by customer wins, share gains and retention, particularly in North America and Asia. The decline in price/mix reflects the ongoing support of customers through price and trade, including the carryover impact of fiscal 2025 pricing, in a competitive global market environment.

Gross profit increased USD 46.5 million versus the prior year quarter to USD 324.3 million. Adjusted Gross Profit(1) declined USD 15.6 million to USD 327.9 million, primarily due to unfavorable price/mix. Total manufacturing cost per pound was lower, reflecting the benefits from cost savings initiatives and improved operating efficiencies in the North America segment. These initiatives more than offset inflationary pressures in key input categories other than raw product and higher manufacturing costs per pound in the International segment due to less favorable operating conditions and elevated production expenses.

Selling, general and administrative expenses ("SG&A") declined USD 13.7 million versus the prior year quarter to USD 171.0 million. Adjusted SG&A(1) declined USD 7.8 million versus the prior year quarter to USD 145.1 million, reflecting the benefits of ongoing cost savings initiatives, partially offset by compensation and benefits accruals.

Net income increased to USD 62.1 million from a prior year quarter net loss of USD 36.1 million. Diluted EPS increased to USD 0.44 versus a prior year quarter diluted loss per share of USD 0.25. Adjusted Net Income(1) declined USD 8.2 million over the prior year quarter to USD 96.7 million, and Adjusted Diluted EPS(1) declined USD 0.04 from the prior year quarter to USD 0.69. The decline in Adjusted Net Income(1) and Adjusted Diluted EPS(1) largely reflects the lower Adjusted Gross Profit(1), partially offset by lower Adjusted SG&A(1).

Adjusted EBITDA(1) declined USD 8.5 million from the prior year quarter to USD 285.7 million. Lower Adjusted Gross Profit(1) and Adjusted Equity Method Investment Earnings were partially offset by lower Adjusted SG&A(1).

The Company's effective tax rate(3) in the second quarter of 2026 was 36.7 percent, versus (59.0) percent in the second 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 addition, the Company recorded USD 14.4 million of discrete tax expense in the second quarter of fiscal 2025, primarily related to the establishment of a full valuation allowance against certain international deferred tax assets.

Excluding these items, the Company's effective tax rate(3) was 31.8 percent in the second quarter of 2026, versus 24.7 percent in the prior year quarter. Compared to the second quarter of fiscal 2025, the effective tax rate excluding the impact of these items is higher primarily due to having a larger proportion of losses in certain jurisdictions with no expected tax benefits.

 

Q2 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, was essentially flat at USD 1,069.5 million compared to the prior year quarter. Volume increased 8 percent, driven by recent customer contract wins, share gains and growth across channels. In response, the Company has restarted its curtailed North American production lines. Price/mix declined 8 percent, driven by the ongoing support of customers through price and trade, including the carryover impact from fiscal 2025 pricing, and an unfavorable mix.

North America Segment Adjusted EBITDA increased USD 18.6 million to USD 287.8 million compared to the prior year quarter. The increase was driven by higher volumes, lower manufacturing costs per pound, and lower Adjusted SG&A(1), reflecting benefits from cost savings initiatives, including operating efficiencies. These gains were partially offset by continued price and trade support for customers.
 

International summary

Net sales for the International segment, which includes all sales to customers outside of North America, increased 4 percent, or USD 19.8 million, to USD 548.6 million compared to the prior year quarter, including a favorable foreign currency impact of USD 22.6 million. Net sales at constant currency(2) declined 1 percent. Volume increased 7 percent, driven by growth in Asia and with multinational chain customers. Price/mix at constant currency(2) declined 8 percent, reflecting ongoing price and trade to support customers in a continued competitive environment as well as an unfavorable mix.

International Segment Adjusted EBITDA declined USD 21.4 million to USD 27.2 million compared to the prior year quarter. The decrease was primarily attributable to higher manufacturing costs per pound, including increased fixed factory burden costs resulting from lower utilization of international production facilities and start-up expenses associated with the new production facility in Argentina. These higher manufacturing costs were partially offset by benefits from cost savings initiatives and higher sales volume.
 

Equity method investment earnings

Equity method investment earnings from unconsolidated joint ventures were USD 3.2 million and USD 2.1 million for the second quarter of fiscal 2026 and 2025, respectively. Adjusted Equity Method Investment Earnings(1) was USD 3.2 million and USD 11.1 million for the second quarter of fiscal 2026 and 2025, respectively. The decline of USD 7.9 million in earnings was primarily the result of lower production volume 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

During the first half of fiscal 2026, net cash provided by operating activities increased USD 101.1 million to USD 530.4 million compared to the prior year, primarily driven by USD 53.7 million of favorable working capital changes, led by lower inventories in North America and a USD 47.4 million increase in net income, adjusted for non-cash items.

Capital expenditures were USD 155.7 million during the first half of fiscal 2026, down USD 330.7 million from the prior year period. The decrease reflects the completion of major growth investments during fiscal 2025 and early fiscal 2026.

As of November 23, 2025, the Company had USD 82.7 million of cash and cash equivalents, with USD 1.35 billion of available liquidity under its revolving credit facility.
 

Capital returned to shareholders

In the second quarter of fiscal 2026, the Company returned USD 51.6 million to shareholders through cash dividends and repurchased USD 39.6 million of common stock under its share repurchase program, consisting of 617,623 shares at an average price of USD 64.18 per share. Approximately USD 308 million remains authorized and available for repurchase under the share repurchase program.

On December 17, 2025, the Board of Directors authorized a 3% increase in the quarterly dividend, or USD 0.01, to USD 0.38 per share of Lamb Weston common stock. The dividend is payable on February 27, 2026 to shareholders of record as of the close of business on January 30, 2026. 

 

Fiscal 2026 Outlook

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

Fiscal 2026 Guidance

The Company’s guidance includes its current view of the anticipated impact of enacted tariffs by the U.S. and other countries but does not include potential effects of evolving trade policies, such as future changes in tariffs or other trade policies, including retaliatory measures or countermeasures. 

End Notes

 

• (1)Adjusted Gross Profit, Adjusted SG&A, Adjusted Income from Operations, Adjusted Net Income, Adjusted Diluted EPS, Adjusted Equity Method Investment Earnings, 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.