Lamb Weston Q4 Earnings Call Highlights

Lamb Weston posted solid Q4 growth, with net sales up 6% year over year and volume up 7%, marking the company’s sixth straight quarter of sales-volume growth. North America drove the gains, with segment EBITDA up 17% and margins reaching 26% for the year. International operations remained under pressure, as sales fell 2% in Q4 due to weaker European demand, higher freight and raw potato costs, and disruption tied to the Middle East conflict. The company is also reviewing its international footprint and has announced plans to close an older Netherlands plant. Management highlighted stronger cash generation and a better outlook for fiscal 2027, with operating cash flow up to $943 million and free cash flow of $537 million in fiscal 2026. For fiscal 2027, Lamb Weston expects flat to slightly higher sales and adjusted EPS of $2.95 to $3.25, while continuing cost savings and capital discipline.

Lamb Weston NYSE: LW reported higher fourth-quarter sales and continued volume growth in fiscal 2026, led by North America, while international operations faced pressure from weaker European demand, higher costs and disruption tied to the Middle East conflict. Fourth-quarter net sales increased 6% from a year earlier, including a 7% increase in sales volume and a 2% favorable currency effect, partly offset by a 3% decline in price and mix. On a constant-currency basis, net sales rose 4%. The quarter marked Lamb Weston's sixth consecutive quarter of sales-volume growth.

“We made meaningful progress as an organization in fiscal 2026,” President and CEO Mike Smith said, pointing to the stabilization of the company’s North American business, progress on cost savings and reduced capital spending.

North America net sales rose 9% in the fourth quarter, as volume increased 11%, supported by customer wins, share gains, retention and an extra week in the fiscal calendar. Price and mix declined 2%, with price investments and a shift toward lower-priced channels, including chains and private label, each contributing to the decline. North American segment EBITDA increased 17%, or $45 million, in the quarter. Smith said volume growth, modest price-and-mix investment and cost savings more than offset inflation. The segment ended the fiscal year with a 26% EBITDA margin, according to Smith. U.S. restaurant traffic was flat during the quarter, based on Circana Crest data cited by Chief Financial Officer Jim Gray. Quick-service restaurant traffic was also flat, as 3% growth in quick-service chicken traffic was largely offset by a 4% decline in quick-service burger traffic. Smith said the company extended several large customer contracts during the year, supported customer rollouts and introduced higher-margin limited-time offers. He also said Lamb Weston’s U.S. net promoter score rose from the prior year and was the highest among major competitors, according to the company’s proprietary research. For the full fiscal year, North America net sales increased 3%, with a 9% volume increase partly offset by a 6% price-and-mix decline. The company said the 53rd week in fiscal 2026 added $86 million to annual North American sales.

International net sales declined 2% in the fourth quarter. Sales volume fell 2% and price and mix declined 4%, while currency provided a partial offset. Growth in Asia-Pacific and Latin America was more than offset by conditions in Europe, the Middle East and Africa, including shipment disruption and higher freight costs.