Lamb Weston reaffirms $6.35B–$6.55B FY26 revenue outlook as cost savings and customer wins support strategy

Earnings Call Insights: Lamb Weston Holdings, Inc. (LW) Q1 2026

MANAGEMENT VIEW

* Mike Smith, President and CEO, stated the company delivered first quarter results "that exceeded our expectations and show commercial momentum in our business." He emphasized the early progress on the "Focus to Win" strategic plan and highlighted strong volume growth as a result of organization-wide efforts in innovation, quality, and customer focus. Smith pointed out, "We are acting with urgency to implement our new strategic plan, Focus to Win, including working to deliver our Cost Savings Program, which is in their early innings but tracking to our plan of achieving at least $250 million of annual run rate savings by fiscal year-end 2028."
* Smith announced the restart of a previously curtailed line in response to "sustained volume growth in North America" and highlighted the shipment commencement from a new manufacturing facility in Argentina, with most production destined for export within Latin America.
* The CEO reported that innovation continues as a core focus, with new global hubs established and upcoming product launches, including "garlic and parmesan crinkle cut fries and dill pickle seasoned fries, as well as expanding our licensed brands with PAW Patrol waffle fries and shaped tots."
* Bernadette Madarieta, CFO, stated, "First quarter net sales were essentially flat, increasing $5 million, including a $24 million favorable impact from foreign currency translation. On a constant currency basis, net sales declined 1% compared with the prior year. Volume increased 6%, driven by customer wins and retention, led primarily by gains in North America and Asia."
* Madarieta noted, "Price/mix at constant currency rates was in line with our expectations, declining 7% compared with the prior year."

OUTLOOK

* The company reaffirmed its fiscal 2026 outlook, "expect[ing] revenue at constant currency rates in the range of $6.35 billion to $6.55 billion, which is a 2% decline to 2% increase."
* Management expects "year-over-year volume growth behind customer momentum in both segments" and anticipates "price/mix will be unfavorable at constant currency."
* Adjusted EBITDA guidance was reiterated at "$1 billion to $1.2 billion."
* The outlook includes tariffs for the balance of the year and factors in "gross profit margins in the second quarter to be relatively flat with the first quarter due primarily to...first quarter input cost inflation being flat to slightly down compared with a year ago."
* Tax rate guidance was updated to a range of 26% to 27%, with the first half expected in the low 30s and the second half in the low 20s.

FINANCIAL RESULTS

* Adjusted EBITDA was reported as $302 million for the quarter.
* Volume increased 6%, with North America volume up 5% and International volume up 6%.
* North America segment net sales declined 2% year-over-year, with a 7% decrease in price/mix, while International segment net sales increased 4% (including a $24 million positive foreign currency impact).
* The company generated $352 million of cash from operations and $273 million in free cash flow.
* Capital expenditures for the quarter were $79 million, with fiscal 2026 capex expected at $500 million.
* $62 million was returned to shareholders in the quarter through dividends and share repurchases.

Q&A

* Andrew Lazar, Barclays: Asked about the rationale for restarting the curtailed production line amid industry supply-demand dynamics and further capacity delays. Mike Smith responded that the restart was to maintain customer fill rates due to "the demand signals that we're seeing on the business, the volume and the customers that we're bringing on board." Smith noted, "the pace of new announcements has definitely slowed" in industry capacity.
* Lazar also inquired about price/mix decline expectations. Madarieta said "we're expecting mid- to high single-digit decrease in price and then moderating to low to mid in the back half of the year."
* Thomas Palmer, JPMorgan: Sought clarification on gross margin seasonality and tariff exposure. Madarieta confirmed a "more seasonal increase" in North America and stated tariff exposure "would expect it to be about $25 million" annually, now included in guidance.
* Peter Galbo, BofA Securities: Questioned the use of brokers alongside the direct sales force. Smith clarified, "We are maintaining that direct sales force...We are augmenting that direct sales force with a broker in some of our underpenetrated channels."
* Max Gumport, BNP Paribas: Asked about customer wins and volume growth timing. Smith explained some customer conversions occurred earlier than expected in Q1, driving the volume increase.
* Matthew Smith, Stifel: Queried on cost savings phasing. Madarieta stated, "we're on track to deliver the $100 million target that we set for fiscal '26."

SENTIMENT ANALYSIS

* Analysts' tone was neutral to slightly positive, focusing on clarification and sustainability of volume growth, cost savings, and margin trends, with some skepticism around pricing and competitive pressures.
* Management maintained a confident and proactive tone, frequently referencing urgency, execution, and early positive results. Smith repeatedly emphasized "acting with urgency" and the company's "clear North Star."
* Compared to the previous quarter, both analysts and management maintained a similar tone, though management's commentary in this call reflected increased confidence in execution and volume momentum.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for fiscal 2026 was reaffirmed with no change in revenue or EBITDA ranges.
* Strategic messaging shifted from outlining the new "Focus to Win" plan in the previous quarter to reporting early traction and specific execution examples this quarter.
* Management maintained its focus on customer centricity and operational excellence, now supplementing the direct sales force with brokers for underpenetrated channels.
* Analysts' questions in both quarters centered on margin sustainability, competitive dynamics, and cost control, though the current quarter had more granular inquiries about volume timing and phasing of cost savings.
* Management confidence increased, particularly regarding the acceleration of customer wins and progress on cost savings.

RISKS AND CONCERNS

* Management cited competitive pressures in international markets, especially in Europe and Latin America, as ongoing risks.
* Tariffs were incorporated into guidance for the first time, with palm oil and other ingredient imports representing an expected $25 million annual exposure.
* The start-up of the Argentina facility and increased competitive activity in Brazil were highlighted as potential headwinds.
* Price/mix headwinds remain, with expectations for continued declines, especially in the first half of the year.
* Customer contract renewals involve ongoing price investments and may impact near-term profitability, particularly in international markets.

FINAL TAKEAWAY

Lamb Weston emphasized the early positive impact of its "Focus to Win" strategy, underscored by strong volume growth, accelerated customer wins, and progress on cost savings initiatives that are on track to deliver $100 million in fiscal 2026. The company reaffirmed its full-year revenue and EBITDA guidance, despite ongoing pressures from price/mix declines and increased competitive activity in some markets. Management remains confident in its ability to drive profitable growth and create shareholder value through targeted customer engagement, operational efficiencies, and disciplined capital allocation, while closely monitoring macroeconomic and industry risks.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/lw/earnings/transcripts]

MORE ON LAMB WESTON

* Lamb Weston Holdings, Inc. (LW) Q1 2026 Earnings Call Transcript [https://seekingalpha.com/article/4826966-lamb-weston-holdings-inc-lw-q1-2026-earnings-call-transcript]
* Lamb Weston: Spending Discipline Takes Hold In Q1 [https://seekingalpha.com/article/4826990-lamb-weston-spending-discipline-takes-hold-in-q1]
* Lamb Weston Is Finally Turning The Corner [https://seekingalpha.com/article/4826936-lamb-weston-is-finally-turning-the-corner]
* Lamb Weston rallies after topping estimates on improved demand from chicken chains [https://seekingalpha.com/news/4500190-lamb-weston-rallies-after-topping-estimates-on-improved-demand-from-chicken-chains]
* Lamb Weston Non-GAAP EPS of $0.74 beats by $0.21, revenue of $1.66B beats by $40M [https://seekingalpha.com/news/4500168-lamb-weston-non-gaap-eps-of-0_74-beats-by-0_21-revenue-of-1_66b-beats-by-40m]