Lamb Weston Holdings, Inc. (LW): history, ownership, mission, how it works & makes money

A Brief History of Lamb Weston Holdings, Inc.

Lamb Weston Holdings, Inc. is a leading global supplier of frozen potato products, with a significant presence in the foodservice and retail sectors. Established in 2016 as a standalone entity from ConAgra Foods, the company has since focused on expanding its operations and enhancing its market position.

Recent Financial Performance

As of August 25, 2024, Lamb Weston reported net sales of $1,654.1 million, a slight decrease of 1% compared to $1,665.3 million in the prior year. The decline was attributed to a 3% decrease in volume, primarily due to customer share losses and a voluntary product withdrawal initiated in late fiscal 2024. However, the International segment experienced a 4% increase in sales, reaching $550.4 million, primarily due to pricing actions to counter input cost inflation.

Debt and Liquidity Position

As of August 25, 2024, Lamb Weston held total debt and financing obligations of $4,048.9 million, with a combination of fixed and variable-rate debt. The company reported $120.8 million in cash and cash equivalents, alongside $1,004.0 million of available liquidity under its global revolving credit facility. This liquidity is deemed sufficient to meet business requirements for at least the next 12 months.

Operational Adjustments and Restructuring

In response to market conditions, Lamb Weston initiated a restructuring plan in October 2024, which involves the permanent closure of its manufacturing facility in Connell, Washington, and a reduction in operating expenses, including a 4% reduction in global workforce. The company anticipates pre-tax charges of $200 million to $250 million related to this plan, with a significant portion expected to result in future cash expenditures.

Market Position and Strategic Initiatives

Lamb Weston continues to position itself as a market leader through strategic investments in manufacturing capacity expansions in key locations such as the Netherlands and Argentina. The company's focus on operational efficiencies and cost management is expected to enhance its competitive advantage in the frozen potato products market.

As of August 25, 2024, the company reported total stockholders’ equity of $1,836.7 million, reflecting strong retained earnings of $2,775.3 million and a comprehensive income of $183.1 million for the quarter.

A Who Owns Lamb Weston Holdings, Inc. (LW)

Ownership Structure

As of 2024, Lamb Weston Holdings, Inc. (LW) has a diverse ownership structure. The company is publicly traded on the New York Stock Exchange (NYSE) and has numerous institutional and individual shareholders.

Major Shareholders

• Institutional Ownership: Approximately 90% of Lamb Weston’s shares are held by institutional investors.
• Top Institutional Holders:

Insider Ownership

The remaining shares are held by individual investors and company insiders. As of August 25, 2024, insider ownership stands at approximately 1.5% of total shares outstanding, which includes shares held by executives and board members.

Stockholder Equity

The total stockholders' equity as of August 25, 2024, is reported at $1,836.7 million, reflecting a strong balance sheet positioning for growth and shareholder returns.

Recent Share Repurchase Activity

During the first quarter of fiscal 2025, Lamb Weston repurchased 1,412,852 shares of its common stock at an average price of $58.04 per share, totaling approximately $82.0 million. As of August 25, 2024, there is approximately $308 million remaining authorized for repurchase under the company’s share repurchase program.

Dividends

In the thirteen weeks ended August 25, 2024, Lamb Weston paid $51.7 million in cash dividends to stockholders, with a declared dividend of $0.36 per share.

Stock Performance

As of late August 2024, Lamb Weston’s stock price is influenced by its earnings performance, market conditions, and overall investor sentiment. The diluted earnings per share for the first quarter of fiscal 2025 were reported at $0.88, compared to $1.60 in the prior year.

Lamb Weston Holdings, Inc. (LW) Mission Statement

Company Overview

Lamb Weston Holdings, Inc. (LW) is a leading supplier of frozen potato products. The company operates in two segments: North America and International, focusing on high-quality products to meet customer demands in various markets.

Mission Statement

Lamb Weston’s mission is to be the premier supplier of frozen potato products, dedicated to quality, innovation, and sustainability. The company aims to provide exceptional service and value to its customers while fostering a culture of integrity and respect for the environment.

Financial Performance Overview

As of the fiscal first quarter ending August 25, 2024, Lamb Weston reported net sales of $1,654.1 million, which represented a 1% decline compared to the prior year. The North America segment generated $1,103.7 million in sales, a decrease of 3%, while the International segment saw a 4% increase to $550.4 million.

Strategic Initiatives

Lamb Weston is committed to sustainability and operational efficiency, with strategic initiatives aimed at reducing costs and improving the supply chain. The company has initiated a restructuring plan expected to result in total pre-tax charges of $200 million to $250 million in fiscal 2025, primarily due to production line curtailments and asset write-downs.

Debt and Financing Obligations

As of August 25, 2024, Lamb Weston had total debt and financing obligations amounting to $4,048.9 million, with a mix of fixed and variable-rate debt. The company maintained $1,004 million in available liquidity under its global revolving credit facility.

Shareholder Returns

During the thirteen weeks ended August 25, 2024, Lamb Weston repurchased 1,412,852 shares at an aggregate purchase price of $82.0 million, reflecting a commitment to return capital to shareholders. Additionally, the company paid cash dividends totaling $51.7 million during the same period.

Conclusion

Lamb Weston Holdings, Inc. continues to position itself as a leader in the frozen potato market through its mission-driven approach, commitment to sustainability, and strategic financial management.

How Lamb Weston Holdings, Inc. (LW) Works

Business Overview

Lamb Weston Holdings, Inc. operates primarily in the production and distribution of frozen potato products. The company has two main operating segments: North America and International. As of August 25, 2024, Lamb Weston reported segment net sales of $1,103.7 million from North America and $550.4 million from international markets, totaling $1,654.1 million.

Financial Performance

For the first quarter of fiscal 2025, Lamb Weston reported a net income of $127.4 million, down from $234.8 million in the prior year. The earnings per share (EPS) were $0.89 (basic) and $0.88 (diluted).

Revenue Breakdown

The revenue breakdown for the thirteen weeks ended August 25, 2024, is as follows:

Cost Structure

Gross profit for the quarter was reported at $356.0 million, a decline of $143.5 million compared to the previous year. Adjusted gross profit stood at $353.1 million.

Operating Expenses

Selling, General and Administrative (SG&A) expenses were $143.9 million, down by $32.3 million from the prior year.

Adjusted EBITDA

Adjusted EBITDA for the quarter was $289.9 million, down from $412.8 million a year prior, reflecting the impact of lower sales volumes and higher manufacturing costs.

Debt and Liquidity

As of August 25, 2024, Lamb Weston had a total debt of $4,048.9 million, including $2,495.0 million of fixed-rate debt and $1,548.7 million of variable-rate debt. The company reported $120.8 million in cash and cash equivalents and $1,004.0 million of available liquidity under its global revolving credit facility.

Capital Expenditures

Lamb Weston plans total capital expenditures of $750 million for fiscal 2025, which reflects a reduction of $100 million due to restructuring efforts.

Shareholder Returns

During the thirteen weeks ended August 25, 2024, the company repurchased 1,412,852 shares at an average price of $58.04, totaling $82.0 million. Additionally, cash dividends paid amounted to $51.7 million.

Restructuring Plan

On October 1, 2024, Lamb Weston announced a restructuring plan aimed at enhancing operational efficiencies, which includes the closure of its manufacturing facility in Connell, Washington, and a reduction in operating expenses.

Market Conditions and Risks

The company faces market risks related to commodity prices, foreign currency fluctuations, and interest rates. To mitigate these risks, Lamb Weston engages in derivative contracts.

Segment Performance

The Adjusted EBITDA by segment for the first quarter of fiscal 2025 is as follows:

Inventory and Assets

As of August 25, 2024, total inventories were valued at $1,135.7 million, with raw materials and packaging at $130.4 million and finished goods at $908.4 million.

Goodwill and Intangible Assets

The balance of goodwill as of August 25, 2024, was $1,087.5 million, with $747.8 million attributed to North America and $339.7 million to International.

How Lamb Weston Holdings, Inc. (LW) Makes Money

Revenue Streams

Lamb Weston generates revenue primarily through the sale of frozen potato products, which include French fries, wedges, and specialty potato products. The company operates in two main segments: North America and International.

Cost of Sales and Gross Profit

The cost of sales for the first quarter of fiscal 2025 was $1,298.1 million, leading to a gross profit of $356.0 million, down from $499.5 million in the same period the previous year. This decline reflects increased manufacturing costs due to input cost inflation and a significant loss related to a voluntary product withdrawal.

Adjusted EBITDA

Adjusted EBITDA for Lamb Weston decreased to $289.9 million in Q1 FY2025 from $412.8 million in Q1 FY2024. The decline was attributed to lower sales volumes and higher manufacturing costs per pound.

Market Trends and Strategic Initiatives

Lamb Weston has been focusing on expanding its production capacity and modernizing facilities in key markets, including China, the Netherlands, and Argentina. The company anticipates capital expenditures of approximately $750 million for fiscal 2025, a decrease from previous estimates due to restructuring efforts.

Debt and Financing

As of August 25, 2024, Lamb Weston had total debt and financing obligations amounting to $4,048.9 million, with a mix of fixed and variable interest rates. The company has also been actively managing its share repurchase program, with $308 million remaining authorized for repurchase.

Net Income and Earnings Per Share

In Q1 FY2025, Lamb Weston reported a net income of $127.4 million, a decrease from $234.8 million in Q1 FY2024. The diluted earnings per share (EPS) for the quarter were $0.88, compared to $1.60 in the same quarter of the previous year.

Conclusion

Lamb Weston continues to navigate challenges in the market while focusing on operational efficiencies and strategic growth initiatives to enhance profitability and shareholder value.