- Well-positioned to drive sustainable, profitable growth through
expanded global footprint, advanced production capabilities and
innovation leadership
- Focused on delivering on long-term financial targets and
peer-leading shareholder returns
- Committed to returning cash to shareholders by targeting a
dividend payout ratio of 25%-35% of net income and newly-increased
$500 million share repurchase authorization
In connection with its 2023 Investor Day, Lamb Weston Holdings,
Inc. (NYSE: LW) is highlighting its continued progress against its
strategic growth initiatives, providing updated long-term financial
targets, reaffirming its fiscal 2024 outlook, and announcing an
increase to its share repurchase authorization. At the Investor
Day, Lamb Weston President and CEO Tom Werner, Chief Operating
Officer Mike Smith, and Chief Financial Officer Bernadette
Madarieta will present a comprehensive overview of the Company’s
strategies to drive sustainable, profitable growth and peer-leading
shareholder returns.
Key to achieving the Company’s goal of continued shareholder
value creation are the following competitive strengths and
strategies:
- Focus on the attractive, growing frozen potato category;
- Leading market positions, including #1 in North America and #2
globally, to support customer growth across all regions and
channels;
- Advantaged global manufacturing footprint with advanced
production capabilities focused on higher-margin, premium
products;
- Established, long-term customer relationships and product
portfolio;
- Innovation leadership, which creates opportunities to drive
growth and expand its total addressable market;
- Strong balance sheet to maintain financial flexibility;
and
- Disciplined and balanced capital allocation priorities,
including reinvesting in the business and returning cash to
shareholders.
“Over the last several years, Lamb Weston has strengthened our
position as a leading global producer, distributor and marketer of
frozen potato products,” said Tom Werner, President and CEO. “Our
global supply chain optimization and disciplined, results-driven
capital allocation strategy have created a more profitable,
high-growth business that we believe is well-positioned to support
customers, leverage our global scale and create value for our
shareholders. We are confident in our ability to build on our
strong foundation, and remain committed to investing in our
business to support sustainable, profitable growth over the long
term.”
Long-Term Financial Targets
The Company is providing long-term targets that align with the
Company’s objectives of delivering top- and bottom-line growth,
including:
- Net sales growth in the low-to-mid-single digits, driven by a
balance of volume growth and price and mix;
- Adjusted EBITDA(1) growth in the mid-to-high-single digits,
supported by net price realization, mix improvement, supply chain
productivity and SG&A leverage; and
- Adjusted Diluted EPS(1) growth in the high single digits driven
by a flexible capital structure and execution of the Company’s
capital allocation strategies, including share repurchases.
In addition, the Company is providing other long-term financial
targets, including:
- Selling, general and administrative expenses, excluding
advertising and promotion expenses, of 10.5 percent to 11.0 percent
of net sales;
- Capital expenditures of approximately 9 percent of net sales;
and
- Net debt to Adjusted EBITDA(1) leverage ratio of up to 3.5
times.
Fiscal 2024 Outlook
The Company is also reaffirming its fiscal 2024 financial
targets that it provided during its fiscal first quarter 2024
earnings call on October 5, 2023, as follows:
- Net sales of $6.8 billion to $7.0 billion;
- Net income of $800 million to $870 million, and Diluted EPS of
$5.47 to $5.92;
- Adjusted Net Income(1) of $805 million to $875 million, and
Adjusted Diluted EPS(1) of $5.50 to $5.95; and
- Adjusted EBITDA(1) of $1,540 million to $1,620 million.
Increase in Share Repurchase Authorization and Capital
Allocation Update
Lamb Weston has returned more than $1.2 billion to shareholders
in the form of share repurchases and dividends to shareholders
since becoming an independent public company in 2016.
In this regard, the Lamb Weston Board of Directors has increased
the Company’s share repurchase authorization to an aggregate amount
of $500 million, including approximately $124 million of remaining
unused capacity under the Board’s previous repurchase
authorization. The program has no expiration date.
Under the share repurchase program, the Company is authorized to
repurchase shares of common stock through one or more open market
transactions, privately negotiated transactions or a combination of
the foregoing. The timing and amount of share repurchases will be
subject to the Company’s evaluation of market conditions,
applicable legal requirements and other factors.
Lamb Weston remains committed to leveraging its strong cash flow
generation to further support growth and return cash to
shareholders, with a balanced approach to capital allocation that
is focused on three main priorities:
- Supporting growth and scale through strategic investments to
increase manufacturing flexibility, enhance innovation, and improve
its information technology infrastructure;
- Returning cash to shareholders with a target dividend payout
ratio of 25 percent to 35 percent of net income and opportunistic
share repurchases under its newly expanded authorization; and
- Evaluating M&A opportunities designed to enhance growth
opportunities, expand its manufacturing footprint to be more cost
competitive, and strengthen capabilities in local markets.
End Notes
(1) Adjusted EBITDA, Adjusted Diluted EPS, and Adjusted Net
Income are non-GAAP financial measures. Please see the discussion
of non-GAAP financial measures at the end of this press release for
more information.
Investor Day Webcast Information
Lamb Weston’s Investor Day presentation will begin today at 9:00
a.m. Eastern Daylight Time and will conclude at approximately 12:30
p.m. Eastern Daylight Time. The event will be webcast live for
interested parties to access at:
https://investors.lambweston.com/events-and-presentations. An
archive of the presentation will be available beginning on
Thursday, Oct. 12, 2023.
About Lamb Weston
Lamb Weston is a leading supplier of frozen potato products to
restaurants and retailers around the world. For more than 70 years,
Lamb Weston has led the industry in innovation, introducing
inventive products that simplify back-of-house management for its
customers and make things more delicious for their customers. From
the fields where Lamb Weston potatoes are grown to proactive
customer partnerships, Lamb Weston always strives for more and
never settles. Because, when we look at a potato, we see
possibilities. Learn more about us at lambweston.com.
Non-GAAP Financial Measures
To supplement the financial information included in this press
release, the Company has presented Adjusted EBITDA, Adjusted
Diluted EPS, and Adjusted Net Income, each of which is considered a
non-GAAP financial measure. The non-GAAP financial measures
presented in this press release should be viewed in addition to,
and not as an alternative for, financial measures prepared in
accordance with accounting principles generally accepted in the
United States of America (“GAAP”) that are also presented in this
press release. These measures are not substitutes for their
comparable GAAP financial measures, such as net income, diluted
earnings per share, or other measures prescribed by GAAP, and there
are limitations to using non-GAAP financial measures. For example,
the non-GAAP financial measures presented in this press release may
differ from similarly titled non-GAAP financial measures presented
by other companies, and other companies may not define these
non-GAAP financial measures the same way as the Company does.
Management uses these non-GAAP financial measures to assist in
analyzing what management views as the Company's core operating
performance for purposes of business decision making. Management
believes that presenting these non-GAAP financial measures provides
investors with useful supplemental information because they (i)
provide meaningful supplemental information regarding financial
performance by excluding foreign currency exchange and unrealized
mark-to-market derivative gains and losses and items affecting
comparability between periods, (ii) permit investors to view
performance using the same tools that management uses to budget,
make operating and strategic decisions, and evaluate historical
performance, and (iii) otherwise provide supplemental information
that may be useful to investors in evaluating the Company's
financial results. In addition, the Company believes that the
presentation of these non-GAAP financial measures, when considered
together with the most directly comparable GAAP financial measures
and the reconciliations to those GAAP financial measures, provides
investors with additional tools to understand the factors and
trends affecting the Company's underlying business than could be
obtained absent these disclosures.
The Company has provided guidance in this press release with
respect to certain non-GAAP financial measures, including non-GAAP
Adjusted EBITDA, Adjusted Diluted EPS, and Adjusted Net Income. The
Company cannot predict certain items that are included in reported
GAAP results, including items such as strategic developments,
integration and acquisition costs and related fair value
adjustments, impacts of unrealized mark-to-market derivative gains
and losses, foreign currency exchange, and items impacting
comparability. This list is not inclusive of all potential items,
and the Company intends to update the list as appropriate as these
items are evaluated on an ongoing basis. In addition, the items
that cannot be predicted can be highly variable and could
potentially have significant impacts on the Company’s GAAP
measures. As such, prospective quantification of these items is not
feasible without unreasonable efforts, and a reconciliation of
forward-looking non-GAAP Adjusted EBITDA, Adjusted Diluted EPS, and
Adjusted Net Income to GAAP net income or diluted earnings per
share has not been provided.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the federal securities laws. Words such as “drive,”
“deliver,” “target,” “increase,” “continue,” “progress,” “will,”
“achieve,” “focus,” “support,” “create,” “expand,” “maintain,”
“reinvest,” “return,” “believe,” “leverage,” “invest,” “grow,”
“outlook,” and variations of such words and similar expressions are
intended to identify forward-looking statements. Examples of
forward-looking statements include, but are not limited to,
statements regarding the Company’s plans, execution, dividends,
share repurchase program, and business and financial outlook and
prospects. These forward-looking statements are based on
management’s current expectations and are subject to uncertainties
and changes in circumstances. Readers of this press release should
understand that these statements are not guarantees of performance
or results. Many factors could affect these forward-looking
statements and the Company’s actual financial results and cause
them to vary materially from the expectations contained in the
forward-looking statements, including those set forth in this press
release. These risks and uncertainties include, among other things:
the availability and prices of raw materials and other commodities;
labor shortages and other operational challenges; an uncertain
general economic environment, including inflationary pressures and
recessionary concerns, any of which could adversely impact the
Company’s business, financial condition or results of operations,
including the demand and prices for the Company’s products; risks
associated with integrating acquired businesses, including the
Company’s former European joint venture; levels of labor and
people-related expenses; the Company’s ability to successfully
execute its long-term value creation strategies; the Company’s
ability to execute on large capital projects, including
construction of new production lines or facilities; the competitive
environment and related conditions in the markets in which the
Company operates; political and economic conditions of the
countries in which the Company conducts business and other factors
related to its international operations; disruptions in the global
economy caused by conflicts such as the war in Ukraine and the
possible related heightening of the Company’s other known risks;
impacts on the Company’s business due to health pandemics or other
contagious outbreaks, such as the COVID-19 pandemic, including
impacts on demand for its products, increased costs, disruption of
supply, other constraints in the availability of key commodities
and other necessary services or restrictions imposed by public
health authorities or governments; disruption of the Company’s
access to export mechanisms; risks associated with other possible
acquisitions; the Company’s debt levels; changes in the Company’s
relationships with its growers or significant customers; actions of
governments and regulatory factors affecting the Company’s
businesses; the ultimate outcome of litigation or any product
recalls; the Company’s ability to pay regular quarterly cash
dividends and the amounts and timing of any future dividends; and
other risks described in the Company’s reports filed from time to
time with the Securities and Exchange Commission. The Company
cautions readers not to place undue reliance on any forward-looking
statements included in this press release, which speak only as of
the date of this press release. The Company undertakes no
responsibility for updating these statements, except as required by
law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231011012855/en/
Investors: Dexter Congbalay 224-306-1535
dexter.congbalay@lambweston.com
Media: Shelby Stoolman 208-424-5461
shelby.stoolman@lambweston.com
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