Lamb Weston Holdings Inc Q4 2025 Earnings Call Summary

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

Question: Peter Galbo - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Hey, good morning, Mike and Bernadette. Thanks for the questions. I wanted to start on the EBITDA margin target for the year, I think, is around 17% at the midpoint. And that would kind of be the, I think, the lowest it's been since the company was spun public on a stand-alone basis. So maybe you can just kind of help us understand if you think this is a floor in terms of a margin percentage and I know you guys probably care about dollars more than percentages, but you know what the push and pull factors might be over the next couple of years that that could push that number either higher or lower from that, new kind of [17% there].

Question: Peter Galbo - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Great. That's helpful. And maybe just as a follow-up to both of you, there was a lot of discussion around the improvement in working capital, both in the prepared remarks and in the press release this morning. I guess just, Mike, there's a lot of ways to get there in terms of the working capital improvement, and it looks to be on the inventory side. But maybe just a little bit more detail on what specifically you're planning to do around inventory levels what that might look like in the supply chain as we contemplate to go forward. Thanks very much.

Question: Peter Galbo - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Great, thanks very much guys.

Question: Alexia Howard - Sanford C Bernstein & Co LLC - Analyst : Hi there. So two quick things from me. First of all, can you talk about what went better than expected this quarter and whether any of those trends could persist into fiscal '26?

Question: Alexia Howard - Sanford C Bernstein & Co LLC - Analyst : Very helpful. Can I follow up with a question about the Burger channel. I think you said on a two-year stack, the traffic in there is still down, I believe, high single digits you mentioned. How much exposure do you have to that channel in North America? Because I'm trying to figure out if there's a risk if GLP-1 weight loss drugs really step up next year with the pill version coming out, could that have a material impact? Or are there ways that you can insulate yourself from that kind of outcome next year? Thank you, and I'll pass it on.

Question: Alexia Howard - Sanford C Bernstein & Co LLC - Analyst : Great, thank you very much. I'll pass it on.

Question: Steve Powers - Deutsche Bank AG - Analyst : Great, good morning. Thanks. Mike, I think as part of your outlook, you mentioned that it assumes continued positive customer momentum that you've built in the back half of '25. I just wanted a little bit more clarity there. Is that just the carryover of recent business wins? Or are you assuming a degree of incremental wins that may not have yet been finalized. Just trying to understand exactly what that commentary means. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 23, 2025 / 2:00PM, LW.N - Q4 2025 Lamb Weston Holdings Inc Earnings Call

Question: Steve Powers - Deutsche Bank AG - Analyst : Okay. Great. And then if I could, the outlook, as you mentioned a couple of times, it doesn't include the impact of any additional tariffs or retaliatory countermeasures, which I think I understand. I guess around that, is there a way maybe to offer a little bit of commentary just around how you're assessing the risks and opportunities associated with potential changes in the current status quo -- and what work you're doing just to position yourself against different scenarios that may develop as recent as quickly as the next few weeks. So just how you're thinking about that?

Question: Steve Powers - Deutsche Bank AG - Analyst : Okay. Very good. Perfect. Thanks for that. Appreciate it.

Question: Marc Torrente - Wells Fargo Securities LLC - Analyst : Hey, good morning and thank you for the questions. First, just on your outlook for sales, expected flattish overall price/mix is expected to be down and paying volumes could be flat to up even -- how much of that is driven by the 53rd week falling in Q4? And then with your carryover customer wins and your level of visibility into the year, any more color on expected sales cadence through the year? Thanks.

Question: Marc Torrente - Wells Fargo Securities LLC - Analyst : Okay. I appreciate that. And then bridging out the EBITDA a little more. The decrease seems primarily due to lower gross profit pre-cost savings. Could you help with quantifying some of those larger buckets between pricing investment, inflation, fixed cost absorption? Any other color on front half versus back half phasing on those costs? And when could those costs start to stabilize versus being a headwind.

Question: Marc Torrente - Wells Fargo Securities LLC - Analyst : No, that's helpful. Appreciate it.

Question: Robert Moskow - Cowen and Company LLC - Analyst : Hi, thanks. I appreciate the commentary about what's happening in terms of your -- how you interpret global capacity increases. I was wondering if you could be a little more specific about what's happening in North America. Are there projects going on by your competitors that are still ramping in North America? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 23, 2025 / 2:00PM, LW.N - Q4 2025 Lamb Weston Holdings Inc Earnings Call And if so, I know it's too early to kind of fast forward a year from now, but I think we're all wondering, at what point does your pricing structure kind of stabilize? And I think that what's happening from competitors probably has a lot to do with it. So more specifically, when you said that GBP1 billion to GBP1.5 billion pounds of projects have been delayed, was any of that in North America as well? Thanks.

Question: Robert Moskow - Cowen and Company LLC - Analyst : Okay. Thank you.

Question: Carla Casella - JPMorgan Chase & Co - Analyst : Hi, thanks for taking the question. Just wanted to ask you, your leverage target, is it still about 3.5 times to 4 times range. And do you see taking leverage up to that level? Or is that more just the level in case you opportunity in terms of M&A.

Question: Carla Casella - JPMorgan Chase & Co - Analyst : (multiple speakers) -- Go ahead. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 23, 2025 / 2:00PM, LW.N - Q4 2025 Lamb Weston Holdings Inc Earnings Call

Question: Carla Casella - JPMorgan Chase & Co - Analyst : Okay. That's great. I mean just on that, I was just going to follow-up actually on that note. Are there -- what are you seeing in terms of opportunities? I know you had been looking to more international M&A and buying in some of the regions. Is there any more opportunity for those kind of easier businesses you already know type M&A or anything more off the board you would look at?

Question: Max Gumport - Exane Bnp Paribas - Analyst : Hey, thanks for the question. First, with regards to your strategic framework in determining the geographies that you want to focus on, could you give a bit more color on what your plan might be for geographies where you don't believe if you have a competitive advantage or you don't see strong growth potential? And specifically, how would you view Europe with regard to setting into this framework?

Question: Max Gumport - Exane Bnp Paribas - Analyst : Okay. And then the decision to remove noncash stock-based compensation as an expense with regard to your adjusted metrics, I mean it seems to me a bit like a step backwards as an accounting practice. So I was hoping to get sense for the motivation. I mean, I would view that as a real expense. It's retaining employees. And I think given you're going into a year when incentive comp is normalizing, and the Board is going to be receiving their typical cash retainer and shares of restricted stock. The timing feels a bit odd to me. So can you talk more about the justification for this decision? Thank you.

Question: Max Gumport - Exane Bnp Paribas - Analyst : Thanks very much.