LW Reports Q1 2026 Earnings: Adjusted EPS of $0.74 Beats Estimates

Lamb Weston (LW.US) announced its first quarter fiscal year 2026 results, with adjusted diluted EPS reaching $0.74. This figure surpasses the analyst estimate of $0.54, indicating a strong performance relative to market expectations, despite a 5% year-over-year decline. Net sales for the quarter were $1,659.3 million, showing a slight increase of $5.2 million compared to the prior year quarter. Adjusted net income for the quarter was $103.0 million.

Segment Performance Highlights

The North America segment experienced a 2% decline in net sales, totaling $1,084.6 million, primarily due to a 7% decrease in price/mix. However, volume for the segment increased by 5%, driven by new customer contracts and growth across various channels. Adjusted EBITDA for North America decreased by 6% to $260.0 million, partially offset by higher sales volumes and lower manufacturing costs.

Conversely, the International segment reported a 4% increase in net sales to $574.7 million, aided by a favorable foreign currency impact of $24.5 million. Volume growth in this segment was robust at 6%, particularly in Asia and with multinational chain customers. International Segment Adjusted EBITDA rose by 11% to $57.2 million, benefiting from lower potato prices and ongoing cost savings initiatives, despite incurring $3.5 million in start-up costs for a new manufacturing facility in Argentina.

Management Outlook and Strategic Initiatives

Management reaffirmed its financial targets for fiscal year 2026, projecting net sales at constant currency in the range of $6.35 billion to $6.55 billion. Adjusted EBITDA is expected to be between $1.00 billion and $1.20 billion. These targets reflect the company's current view, including the anticipated impact of enacted tariffs.

The company's "Focus to Win" strategy is on track, with expectations to deliver at least $250 million of annualized run rate savings by the end of fiscal year 2028. This includes at least $100 million of expected savings and an additional $60 million in working capital improvements by the end of fiscal year 2026. The strategy aims to improve execution and drive profitable growth through focused investments, stronger customer partnerships, executional excellence, and innovation.