Lamb Weston Raises FY2027 Outlook After North America Volume Growth

Lamb Weston (NYSE: LW) raised its fiscal 2027 outlook after first-quarter net sales, adjusted diluted earnings per share and adjusted EBITDA exceeded the company’s guidance, supported by continued volume growth in North America. The stronger regional performance was partly offset by lower international sales and earnings, while reported GAAP results were reduced by restructuring, legal and other comparability items.

For the 13 weeks ended August 30, 2026, net sales rose 1% year over year to $1.67 billion. Total sales volume increased 2.2%, while price and mix declined 1.8%. Foreign currency translation provided a favorable $4 million impact.

Adjusted diluted EPS increased 1% to $0.75, while adjusted net income was essentially unchanged at $103 million. Adjusted EBITDA declined 5% to $286 million, and adjusted income from operations fell 14% to $178 million.

On a GAAP basis, operating income dropped 47% to $82 million, net income fell 55% to $29 million and diluted EPS declined 54% to $0.21. Adjustments included expenses associated with the company’s cost-savings and restructuring initiatives, legal proceedings and other claims, foreign-exchange losses and stock-based compensation.

North America extends volume growth

North America net sales increased 5%, reflecting a 6.7% gain in volume that more than offset a 1.7% decline in price and mix. The quarter marked the seventh consecutive period of sales-volume growth in the region, with Lamb Weston citing expansion among existing customers and new business wins.

North America adjusted EBITDA rose 11% to $287 million from $260 million. The company said its diverse quick-service restaurant customer base, including its exposure to chicken-focused operators, contributed to the regional performance.

The 1.7% price-and-mix decline represented a 70-basis-point sequential improvement from the fiscal fourth quarter. Lamb Weston said the first-quarter decrease was split approximately evenly between price and mix.

International net sales fell 8%, as volume declined 6.4% and price and mix decreased 2%. Adjusted EBITDA for the segment dropped to $27 million from $57 million, which the company said was in line with its expectations. Unallocated corporate costs increased to $28 million from $15 million.

In Europe, Lamb Weston is working toward network utilization above 90% as it seeks further cost efficiencies. The company also implemented a pricing action after prolonged heat and dry conditions reduced expected potato-crop quality and tonnage. Management said Lamb Weston remains in a position to meet demand, supported by grower relationships and disciplined contracting, and is working with customers to modify product specifications where needed.

Cost program and operating priorities

Lamb Weston said it is continuing to implement organizational changes intended to increase speed, simplicity, accountability and consistency. It has also launched a zero-based budgeting process to identify additional savings.

Excluding a nonrecurring benefit in the prior-year quarter, selling, general and administrative expenses were essentially flat year over year, according to the presentation. Management said it continues to pursue opportunities to simplify the business and improve its cost structure and capital efficiency under its Focus to Win strategy.

Operating cash flow totaled $235 million in the quarter, down from $352 million a year earlier. Free cash flow was $144 million after $91 million of capital expenditures. At August 30, the company had $3.93 billion of total debt, $166 million of cash and a net-debt-to-adjusted-EBITDA ratio of 3.3 times.

Fiscal 2027 outlook increased

Lamb Weston now expects fiscal 2027 net sales to grow by a low-single-digit percentage from fiscal 2026 sales adjusted to a 52-week basis. Its previous outlook called for growth of zero to 1%.

The company increased its adjusted EBITDA forecast to between $1.125 billion and $1.215 billion from $1.1 billion to $1.2 billion. Adjusted diluted EPS is now expected to range from $3.05 to $3.35, compared with the previous range of $2.95 to $3.25.

Adjusted income from operations is projected at $730 million to $810 million. Lamb Weston also expects net interest expense of $185 million to $190 million, an adjusted effective tax rate of 25% to 27%, and operating cash flow of $750 million to $800 million. The capital-spending forecast remains $380 million to $410 million.

For the fiscal second quarter, management expects net sales to increase by a low-single-digit percentage and adjusted EBITDA to rise by a high-single-digit to low-double-digit percentage.

The outlook remains subject to uncertainty around European potato quality and availability, rising raw-material costs, the effectiveness of pricing actions and the execution of restructuring and cost-saving measures. Lamb Weston said it expects pricing and savings initiatives to help mitigate higher input costs, but its forward-looking non-GAAP guidance excludes several potentially significant and variable items that cannot be reasonably forecast.