Lamb Weston Holdings, Inc. — Form 10-Q
Reporting period: First quarter of fiscal 2027, the 13 weeks ended August 30, 2026; comparisons are with the 13 weeks ended August 24, 2025. Lamb Weston produces and markets value-added frozen potato products through its North America and International segments. Fiscal 2027 has 52 weeks, compared with 53 weeks in fiscal 2026.
Financial performance
| Metric | Q1 FY2027 | Q1 FY2026 | Change |
|---|---|---|---|
| Net sales | $1,670.3 million | $1,659.3 million | Up 1%; essentially flat excluding FX |
| Gross profit | $266.5 million | $342.4 million | Down $75.9 million |
| Gross margin | 16.0% | 20.6% | Down 4.7 percentage points |
| Income from operations | $82.2 million | $156.5 million | Down $74.3 million |
| Net income | $29.1 million | $64.3 million | Down 55% |
| Diluted EPS | $0.21 | $0.46 | Down $0.25 |
| Adjusted EBITDA (non-GAAP) | $285.6 million | $302.2 million | Down $16.6 million |
| Operating cash flow | $234.8 million | $352.0 million | Down $117.2 million |
| Capital expenditures | $88.7 million | $77.6 million | Up $11.1 million |
Adjusted gross profit was $316.8 million, down $22.1 million; adjusted gross margin was approximately 19.0%, versus 20.4%. Adjusted SG&A was $139.2 million, up $6.8 million. Interest expense, net, was $42.4 million, down $1.3 million. The reported effective tax rate was 36.7%, versus 42.7%; excluding specified comparability items, the company reported rates of 27.2% and 30.2%, respectively.
Segments
- North America: Sales rose 5% to $1,141.4 million; volume increased 7%, partly offset by a 2% decline in price/mix. Segment Adjusted EBITDA increased 11% to $287.3 million.
- International: Sales fell 8% to $528.9 million as volume declined 6% and price/mix fell 2%. Segment Adjusted EBITDA decreased 54% to $26.5 million.
Balance sheet and liquidity
At August 30, 2026, cash and cash equivalents were $166.3 million. Total debt and financing obligations were $3,941.2 million, including $279.3 million of short-term borrowings; cash less total debt and financing obligations was approximately negative $3.8 billion. The company reported $1,239.3 million of available capacity under its revolving credit facility and compliance with debt covenants. Current assets were $2,049.8 million and current liabilities were $1,409.0 million. Stockholders’ equity was $1,806.7 million.
Cash from operations less capital expenditures was approximately $146.1 million. Cash and cash equivalents increased $98.1 million during the quarter. The company paid $52.2 million in dividends and repaid $16.5 million of debt and financing obligations. No shares were repurchased under the public share repurchase program; employee share withholding accounted for the reported 150,016 shares purchased.
Material changes and management commentary
- Management attributed lower adjusted gross profit to unfavorable global price/mix and increased manufacturing cost per pound, including prior-year cost carryover, underused International production capacity, and inflation in inputs and freight. Cost savings, lapping Argentina start-up costs, and about $5 million of tariff refunds partly offset these pressures.
- North America benefited from customer wins, higher demand, savings initiatives, and stronger joint-venture earnings. Management said EMEA market conditions remained challenging, while International Segment Adjusted EBITDA improved sequentially from fiscal Q4 2026.
- Operating cash flow fell year over year, in part because the prior-year quarter benefited from a $136.3 million inventory reduction. Current-quarter cash flow benefited from a $59.2 million increase in accounts payable.
Outlook, unusual items, and risks
Updated fiscal 2027 outlook, on a 52-week comparable basis: low-single-digit net sales growth and mid-single-digit earnings growth. Management expects low-single-digit sales volume growth and price/mix flat to slightly positive. It cited inflation in key inputs and freight and said it is pursuing cost savings and reviewing contract price-escalation terms. No absolute earnings or sales forecast was provided in the supplied filing text.
The company recorded $34.2 million of restructuring and cost-savings charges in the quarter, including $21.3 million of accelerated depreciation. It expects a further $30 million to $50 million of charges during the remainder of fiscal 2027, primarily for demolition of the Connell, Washington plant and closure of the Broekhuizenvorst, Netherlands plant. It also recorded $33.0 million of accruals for legal proceedings and other claims, treated as a comparability item in non-GAAP reconciliations.
Material litigation includes securities-related claims, frozen-potato antitrust class actions, and a groundwater nitrate case scheduled for trial in September 2027. The company says it intends to defend the matters; for most, it cannot predict the outcome or estimate potential loss. It states that its existing accrual for legal proceedings includes its best current estimate of probable losses for the groundwater matter.
Key stated business risks include restaurant traffic and consumer demand, inflation and tariffs, commodity availability and prices, operational and capacity utilization challenges, execution of cost-saving plans and capital projects, information-technology disruptions, international conditions, debt levels, and litigation. Management said disclosure controls were effective and there were no material changes in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether North America’s volume gains and International performance improve, and how the Netherlands closure affects capacity utilization and customer fulfillment.
- Progress toward fiscal 2027 sales and earnings outlook, including the realization of planned savings and the effects of input, freight, tariff, and price/mix trends.
- Cash conversion and working-capital movements, particularly the extent to which operating cash flow depends on changes in payables and inventories.
- Debt, refinancing and liquidity needs, and the company’s ability to sustain dividends and other capital returns.
- Timing and total cost of restructuring actions, plus developments and potential financial exposure in the disclosed legal proceedings.
- Non-GAAP results alongside GAAP results: Adjusted EBITDA excludes, among other items, $33.0 million of legal accruals and $34.2 million of restructuring-related charges this quarter.