Lamb Weston Holdings Inc Q1 2026 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Andrew Lazar - Barclays Services Corp - Analyst : Maybe to start, you noted that Lamb Weston has restarted a previously curtailed production line in the US, and I guess more broadly, I'm just curious how this squares with the current supply, demand imbalance for the industry overall that you've talked about the last couple quarters. And if you heard of any further industry capacity delays or outright cancellations beyond, I think, what you shared in the international sphere last quarter.

Question: Andrew Lazar - Barclays Services Corp - Analyst : That's really helpful, thanks. And then I know Bernadette, last quarter, I think you talked about a low-to mid-single-digit year-over-year decline in price mix for the first fiscal half of the year, and I'm curious if that still holds. And if so, I guess it would mean a not inconsequential -- sequential improvement in price mix and fiscal 2Q if I have that right. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 30, 2025 / 2:00PM, LW.N - Q1 2026 Lamb Weston Holdings Inc Earnings Call

Question: Thomas Palmer - JPMorgan Chase & Co - Analyst : First, I just wanted to kind of clarify some of the gross margin commentary about more flat quarter over quarter. The items you noted seemed to be more related to the international segment like the rising potato costs and the plant startup costs. Maybe just in in North America, an update there, are we seeing more of the normal seasonal increase to think about as we shift from 1Q to 2Q or are there kind of items there to think about as well?

Question: Thomas Palmer - JPMorgan Chase & Co - Analyst : Okay, thank you. And then I just wanted to clarify on the tariff commentary that it's now included in guidance but was not previously, what is your tariff exposure and I think previously you kind of discussed it is not being meaningful is there any update there?

Question: Peter Galbo - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Bernadette, understanding kind of some of the nuance on the second quarter gross margin, but I guess if I just look at the first quarter performance, it wouldn't be all that different from history, I think it was a roughly flat gross margin Q-on-Q versus 4Q, which is kind of what the old Lamb Weston would have been even pre-COVID. So I think that the seasonality maybe follows. So I guess the question is Q2 aside, should we be thinking about some of the historical seasonality on the gross margin line returning in the second half, at least as it relates to 3Q and 4Q, that would just be helpful as we kind of model out the rest of the year.

Question: Peter Galbo - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Okay, great. And Mike, I just wanted to touch on something you brought up in the slides, noting on I think expanding the usage of brokers in North America. Historically, the strength of Lamb Weston was truly the direct sales force. I think it was a competitive advantage maybe you have that some of your competitors didn't. So I just want to understand the change in philosophy or the change in thinking and expanding out to using a broker network, how that's being I guess received internally by the direct sales force. I mean again it's a nuance but it seems like a meaningful change to how you've operated versus history. Thanks very much.

Question: Max Gumport - Exane Bnp Paribas - Analyst : I was hoping you could unpack the contribution of customer wins (technical difficulty) to growth in North America. So first, just if you'd be able to quantify that roughly in point terms in terms of what that drove. And then with these games really first starting to get called out in the fiscal 4Q of '25, is there any reason why that benefit doesn't [stick] (technical difficulty) in the 2Q and 3Q and then how would you think about that progressing from there? Thanks very much.

Question: Max Gumport - Exane Bnp Paribas - Analyst : Okay, and then just coming back to the 1Q versus 2Q gross margin comments that's been asked but one other way I want to just get my head around it would be clearly coming into the year you expected to return to the normal cadence which would have been a pretty meaningful, a few 100 basis points, I believe, step up from 1Q to 2Q. I think it's fair to say one cu risk margin came in a couple hundred basis points above what you might have expected. And I realize you now expect inflation to accelerate from 1Q to 2Q. Has your view on the absolute gross margin (technical difficulty) has it changed (technical difficulty) at all because of the timing of inflation or is it really just a matter of a meaningfully better than expected 1Q gross margin. Thanks very much.

Question: Matthew Smith - Stifel, Nicolaus & Company Inc - Analyst : Mike, could you talk about the impact of restarting the curtailed line in the second quarter? Should we think of there being higher fixed cost absorption as a line comes on or is that a cleaner startup process relative to when you open a new plant? And then how do you think about that line going forward? Do you expect production to be maintained on that line or have you learned that you can turn these off and turn them on based on different times of the year and when it's most efficient to use that capacity?

Question: Matthew Smith - Stifel, Nicolaus & Company Inc - Analyst : Thank you Bernadette. And as a follow-up, can you talk about the phasing of cost savings in fiscal '26? I think cost savings came in above your expectation in the first quarter, but you still expect to be on track for the $100-million run rate and fiscal '26 or exiting the year. Are you raising your expected cost savings for the year or is it just more flowed through in the first quarter than you anticipated or maybe it was a larger contribution from the carry in benefits from last year's restructuring savings? Just a little clarification out there. Thank you.

Question: Jacob Henry, CFA - Cowen and Company LLC - Analyst : Hi, this is Jacob Henry on for Rob. Just one question for me. I'm wondering if you can provide any additional details on the pricing of the contracts you signed this quarter. Just curious how those came in versus expectations. I know you guys are winning a good amount of new business, but curious if you are finding -- you have to discount maybe more than you expected. Thanks.

Question: Steve Powers - Deutsche Bank AG - Analyst : Mike, I'm following up on your comments kind of throughout the call on just the importance of customer service and the efforts that you've all been able to make in terms of the supply chain enabling better customer service delivery on your part. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 30, 2025 / 2:00PM, LW.N - Q1 2026 Lamb Weston Holdings Inc Earnings Call I guess when you think about the overall scorecard, and I'm guess I'm focused mostly on North America in this question, but product quality, order fill rates, just all the different dynamics of customer service. Is that scorecard kind of at this point universally green in your estimation or there are areas where you still see room for further improvement that are priorities for the organization?

Question: Steve Powers - Deutsche Bank AG - Analyst : Okay, thank you for that. And then Bernadette, I don't -- so apologies if I missed this, but just on the plants, the new facility in Argentina, how long do you expect that to take before it is up to target utilization levels? I'm not sure I caught that and I don't know how the competitive activity called out in Brazil impacts that just your outlook for the ramp up in that facility. Thank you.

Question: Steve Powers - Deutsche Bank AG - Analyst : Okay, is there a timeline to kind of hit target utilization at this point?

Question: Marc Torrente - Wells Fargo Securities LLC - Analyst : Just first on SG&A, came in a bit lower than expectations. Part of that was the non-recurrent $7 million and then maybe some timing shift in strategic investments. So how should we think about the underlying run rate of SG&A going forward and any phasing of net cost savings ahead? Thanks.

Question: Marc Torrente - Wells Fargo Securities LLC - Analyst : Okay, got it. And then new customer wins, they materialize a bit quicker than anticipated which pull forward some of the expected volume growth in the year. Maybe could you talk to visibility and other new customer wins that have yet to start and ability to sustain volume momentum ahead even if I guess, traffic across the industry remains muted. Thanks.

Question: William Reuter - Bofa Merrill Lynch Asset Holdings Inc - Analyst : I just have two. The first, on the new customer wins is some of this creating customer specific products that may not have margins that are as high as your existing customers. I guess how is the profitability of the new additions? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 30, 2025 / 2:00PM, LW.N - Q1 2026 Lamb Weston Holdings Inc Earnings Call

Question: William Reuter - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Got it. And then just secondarily on the CapEx going forward $500 million this year. When we look to outyears, I think you mentioned $400 million this year of maintenance and $100 million of environmental. Should that be the range that we should be thinking about over the next two or three years subsequently?

Question: William Reuter - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Got it (multiple speakers)--