Lamb Weston Holdings, Inc 10-Q for FY2023 Q2

Lamb Weston Holdings, Inc. (LW)

10-Q 2023-01-05 For: 2022-11-27

Added on April 07, 2026

About this 10-Q

Lamb Weston Holdings, Inc filed this 10-Q on January 5, 2023, covering the quarter ended November 27, 2022 (FY2023 Q2).

Headline figures

Quarter ended November 27, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.28B; up 26.8% from $1.01B a year earlier
Net income: $103.1M; up 217.2% from net income of $32.5M a year earlier
Diluted EPS: $0.71; up 222.7% from $0.22 a year earlier

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Delaware		61-1797411
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

599 S. Rivershore Lane Eagle, Idaho		83616
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 par value	LW	New York Stock Exchange


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

Part I. FINANCIAL INFORMATION
	Item 1	Financial Statements (Unaudited)
		Consolidated Statements of Earnings	3
		Consolidated Statements of Comprehensive Income	4
		Consolidated Balance Sheets	5
		Consolidated Statements of Stockholders’ Equity	6
		Consolidated Statements of Cash Flows	7
		Condensed Notes to Consolidated Financial Statements (Unaudited)	8
	Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	33
	Item 4	Controls and Procedures	34

Part II. OTHER INFORMATION			35
	Item 1	Legal Proceedings	35
	Item 1A	Risk Factors	35
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	35
	Item 3	Defaults Upon Senior Securities	35
	Item 4	Mine Safety Disclosures	35
	Item 5	Other Information	35
	Item 6	Exhibits	36

Signature			37


	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 27,		November 28,		November 27,		November 28,
	2022		2021		2022		2021
Net sales	$	1,276.5	$	1,006.6	$	2,402.1	$	1,990.8
Cost of sales		894.9		801.1		1,747.2		1,634.0
Gross profit		381.6		205.5		654.9		356.8
Selling, general and administrative expenses		109.8		91.1		226.1		182.2
Income from operations		271.8		114.4		428.8		174.6
Interest expense, net		24.6		82.4		50.6		110.3
Income before income taxes and equity method earnings		247.2		32.0		378.2		64.3
Income tax expense		36.8		9.6		110.5		18.3
Equity method investment earnings (loss)		(107.3)		10.1		67.3		16.3
Net income	$	103.1	$	32.5	$	335.0	$	62.3
Earnings per share:
Basic	$	0.72	$	0.23	$	2.33	$	0.43
Diluted	$	0.71	$	0.22	$	2.32	$	0.42
Weighted average common shares outstanding:
Basic		144.0		146.0		144.0		146.1
Diluted		144.6		146.3		144.6		146.6


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Thirteen Weeks Ended						Thirteen Weeks Ended
	November 27, 2022						November 28, 2021
			Tax						Tax
	Pre-Tax		(Expense)		After-Tax		Pre-Tax		(Expense)		After-Tax
	Amount		Benefit		Amount		Amount		Benefit		Amount
Net income	$	139.9	$	(36.8)	$	103.1	$	42.1	$	(9.6)	$	32.5
Other comprehensive income (loss):
Reclassification of post-retirement benefits out of accumulated other comprehensive income (loss)		—		—		—		0.1		—		0.1
Unrealized currency translation gains (losses)		(16.1)		0.5		(15.6)		(15.6)		0.7		(14.9)
Other		0.3		(0.1)		0.2		—		—		—
Comprehensive income	$	124.1	$	(36.4)	$	87.7	$	26.6	$	(8.9)	$	17.7


	November 27,		May 29,
	2022		2022
ASSETS
Current assets:
Cash and cash equivalents	$	419.4	$	525.0
Receivables, less allowance for doubtful accounts of $1.4 and $1.1		508.9		447.3
Inventories		822.1		574.4
Prepaid expenses and other current assets		50.7		112.9
Total current assets		1,801.1		1,659.6
Property, plant and equipment, net		1,758.2		1,579.2
Operating lease assets		113.9		119.0
Equity method investments		263.7		257.4
Goodwill		347.5		318.0
Intangible assets, net		32.0		33.7
Other assets		253.2		172.9
Total assets	$	4,569.6	$	4,139.8

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	$	9.0	$	—
Current portion of long-term debt and financing obligations		32.2		32.2
Accounts payable		580.6		402.6
Accrued liabilities		296.7		264.3
Total current liabilities		918.5		699.1
Long-term liabilities:
Long-term debt and financing obligations, excluding current portion		2,701.1		2,695.8
Deferred income taxes		177.7		172.5
Other noncurrent liabilities		199.3		211.9
Total long-term liabilities		3,078.1		3,080.2
Commitments and contingencies
Stockholders’ equity:
Common stock of $1.00 par value, 600,000,000 shares authorized; 148,330,983 and 148,045,584 shares issued		148.3		148.0
Additional distributed capital		(785.5)		(813.3)
Retained earnings		1,569.2		1,305.5
Accumulated other comprehensive loss		(61.5)		(15.6)
Treasury stock, at cost, 4,460,674 and 3,974,156 common shares		(297.5)		(264.1)
Total stockholders’ equity		573.0		360.5
Total liabilities and stockholders’ equity	$	4,569.6	$	4,139.8


	Thirteen Weeks Ended November 27, 2022 and November 28, 2021
							Additional				Accumulated
	Common Stock,		Common		Treasury		Paid-in				Other		Total
	net of Treasury		Stock		Stock		(Distributed)		Retained		Comprehensive		Stockholders’
	Shares		Amount		Amount		Capital		Earnings		Income (Loss)		Equity
Balance at August 28, 2022		143,830,587	$	148.3	$	(297.1)	$	(796.9)	$	1,501.8	$	(46.1)	$	510.0
Dividends declared, $0.245 per share		—		—		—		—		(35.3)		—		(35.3)
Common stock issued		44,008		—		—		1.1		—		—		1.1
Stock-settled, stock-based compensation expense		—		—		—		10.0		—		—		10.0
Repurchase of common stock and common stock withheld to cover taxes		(4,286)		—		(0.4)		—		—		—		(0.4)
Other		—		—		—		0.3		(0.4)		—		(0.1)
Comprehensive income		—		—		—		—		103.1		(15.4)		87.7
Balance at November 27, 2022		143,870,309	$	148.3	$	(297.5)	$	(785.5)	$	1,569.2	$	(61.5)	$	573.0

Balance at August 29, 2021		146,061,016	$	148.0	$	(137.7)	$	(830.2)	$	1,240.0	$	7.3	$	427.4
Dividends declared, $0.235 per share		—		—		—		—		(34.2)		—		(34.2)
Common stock issued		11,427		—		—		—		—		—		—
Stock-settled, stock-based compensation expense		—		—		—		4.4		—		—		4.4
Repurchase of common stock and common stock withheld to cover taxes		(871,795)		—		(50.1)		—		—		—		(50.1)
Comprehensive income		—		—		—		—		32.5		(14.8)		17.7
Balance at November 28, 2021		145,200,648	$	148.0	$	(187.8)	$	(825.8)	$	1,238.3	$	(7.5)	$	365.2


	Twenty-Six Weeks Ended November 27, 2022 and November 28, 2021
							Additional				Accumulated
	Common Stock,		Common		Treasury		Paid-in				Other		Total
	net of Treasury		Stock		Stock		(Distributed)		Retained		Comprehensive		Stockholders’
	Shares		Amount		Amount		Capital		Earnings		Income (Loss)		Equity
Balance at May 29, 2022		144,071,428	$	148.0	$	(264.1)	$	(813.3)	$	1,305.5	$	(15.6)	$	360.5
Dividends declared, $0.490 per share		—		—		—		—		(70.5)		—		(70.5)
Common stock issued		285,399		0.3		—		1.3		—		—		1.6
Stock-settled, stock-based compensation expense		—		—		—		17.6		—		—		17.6
Repurchase of common stock and common stock withheld to cover taxes		(486,518)		—		(33.4)		—		—		—		(33.4)
Other		—		—		—		8.9		(0.8)		—		8.1
Comprehensive income		—		—		—		—		335.0		(45.9)		289.1
Balance at November 27, 2022		143,870,309	$	148.3	$	(297.5)	$	(785.5)	$	1,569.2	$	(61.5)	$	573.0

Balance at May 30, 2021		146,191,864	$	147.6	$	(104.3)	$	(836.8)	$	1,244.6	$	29.5	$	480.6
Dividends declared, $0.470 per share		—		—		—		—		(68.6)		—		(68.6)
Common stock issued		387,428		0.4		—		1.5		—		—		1.9
Stock-settled, stock-based compensation expense		—		—		—		9.6		—		—		9.6
Repurchase of common stock and common stock withheld to cover taxes		(1,378,644)		—		(83.5)		—		—		—		(83.5)
Other		—		—		—		(0.1)		—		—		(0.1)
Comprehensive income		—		—		—		—		62.3		(37.0)		25.3
Balance at November 28, 2021		145,200,648	$	148.0	$	(187.8)	$	(825.8)	$	1,238.3	$	(7.5)	$	365.2


	November 27,		May 29,
(in millions)	2022		2022
Raw materials and packaging	$	228.0	$	96.1
Finished goods		539.3		426.5
Supplies and other		54.8		51.8
Inventories	$	822.1	$	574.4


(in millions)	Global		Foodservice		Retail		Other		Total
Balance at May 29, 2022	$	259.8	$	42.8	$	10.9	$	4.5	$	318.0
Acquisition of interest in joint venture (a)		42.1		—		—		—		42.1
Foreign currency translation adjustment		(12.6)		—		—		—		(12.6)
Balance at November 27, 2022	$	289.3	$	42.8	$	10.9	$	4.5	$	347.5


	November 27, 2022							May 29, 2022
	Weighted							Weighted
	Average	Gross						Average	Gross
	Useful Life	Carrying		Accumulated		Intangible		Useful Life	Carrying		Accumulated		Intangible
(in millions, except useful lives)	(in years)	Amount		Amortization		Assets, Net		(in years)	Amount		Amortization		Assets, Net
Non-amortizing intangible assets (a)	n/a	$	18.0	$	—	$	18.0	n/a	$	18.0	$	—	$	18.0
Amortizing intangible assets (b)	10		40.8		(26.8)		14.0	10		41.4		(25.7)		15.7
		$	58.8	$	(26.8)	$	32.0		$	59.4	$	(25.7)	$	33.7


	Assumptions
Dividend yield (%)		0.00 - 1.42
Expected volatility of stock (%)		42.99
Risk-free interest rate (%)		2.89
Expected life (years)		2.82
Weighted average grant date fair value per unit	$	91.43 - $118.97


	Twenty-Six Weeks Ended
	November 27,		November 28,
	2022		2021
Cash flows from operating activities
Net income	$	335.0	$	62.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangibles and debt issuance costs		102.0		94.9
Loss on extinguishment of debt		—		53.3
Stock-settled, stock-based compensation expense		17.6		9.6
Equity method investment earnings in excess of distributions		(67.6)		(2.2)
Deferred income taxes		(6.8)		4.3
Foreign currency remeasurement gain		(16.8)		—
Other		(13.2)		(0.5)
Changes in operating assets and liabilities, net of acquisition:
Receivables		(54.8)		(57.7)
Inventories		(240.1)		(101.3)
Income taxes payable/receivable, net		24.8		3.1
Prepaid expenses and other current assets		52.7		58.5
Accounts payable		140.6		94.7
Accrued liabilities		14.6		(11.5)
Net cash provided by operating activities	$	288.0	$	207.5
Cash flows from investing activities
Additions to property, plant and equipment		(232.9)		(147.1)
Acquisition of interest in joint venture, net		(42.3)		—
Additions to other long-term assets		(37.4)		(1.0)
Other		1.6		0.5
Net cash used for investing activities	$	(311.0)	$	(147.6)
Cash flows from financing activities
Proceeds from issuance of debt		23.3		1,655.4
Repayments of debt and financing obligations		(16.7)		(1,682.1)
Dividends paid		(70.6)		(68.7)
Repurchase of common stock and common stock withheld to cover taxes		(34.9)		(83.5)
Payments of senior notes call premium		—		(39.6)
Other		2.3		(0.8)
Net cash used for financing activities	$	(96.6)	$	(219.3)
Effect of exchange rate changes on cash and cash equivalents		14.0		(2.2)
Net decrease in cash and cash equivalents		(105.6)		(161.6)
Cash and cash equivalents, beginning of period		525.0		783.5
Cash and cash equivalents, end of period	$	419.4	$	621.9


	November 27,		May 29,
(in millions)	2022		2022
Land and land improvements	$	118.3	$	114.1
Buildings, machinery, and equipment		3,000.8		2,919.0
Furniture, fixtures, office equipment, and other		98.3		92.1
Construction in progress		321.5		156.1
Property, plant and equipment, at cost		3,538.9		3,281.3
Less accumulated depreciation		(1,780.7)		(1,702.1)
Property, plant and equipment, net	$	1,758.2	$	1,579.2


	November 27,		May 29,
(in millions)	2022		2022
Short-term borrowings:
Other credit facilities	$	9.0	$	—

Long-term debt:
Term A-1 loan facility, due June 2024		251.3		258.7
Term A-2 loan facility, due April 2025		288.4		296.6
RMB loan facility, due February 2027		39.3		19.7
4.875% senior notes, due May 2028		500.0		500.0
4.125% senior notes, due January 2030		970.0		970.0
4.375% senior notes, due January 2032		700.0		700.0
		2,749.0		2,745.0
Financing obligations:
Lease financing obligations due on various dates through 2040		6.5		7.0

Total debt and financing obligations		2,764.5		2,752.0
Debt issuance costs (a)		(22.2)		(24.0)
Short-term borrowings		(9.0)		—
Current portion of long-term debt and financing obligations		(32.2)		(32.2)
Long-term debt and financing obligations, excluding current portion	$	2,701.1	$	2,695.8


			Remaining
			Weighted
	Unrecognized		Average
	Compensation		Recognition
(in millions, except data in years)	Expense		Period (in years)
Stock-settled RSUs	$	40.5		1.6
Performance Shares		30.7		2.3
Stock options		12.6		1.8
Total unrecognized compensation expense	$	83.8


	Assumptions
Weighted average fair value	$	25.90 - $29.25
Dividend yield (%)		1.20 - 1.22
Expected volatility of stock (%)		33.73 - 34.06
Risk-free interest rate (%)		2.82 - 4.42
Expected life of stock option (years)		5.74 - 5.75
Weighted average exercise price per share	$	79.66 - $82.73


	As of November 27, 2022
							Fair Value
							of Assets
(in millions)	Level 1		Level 2		Level 3		(Liabilities)
Derivative assets (a)	$	—	$	16.9	$	—	$	16.9
Deferred compensation liabilities (b)		—		(22.6)		—		(22.6)
Fair value, net	$	—	$	(5.7)	$	—	$	(5.7)


	As of May 29, 2022
							Fair Value
							of Assets
(in millions)	Level 1		Level 2		Level 3		(Liabilities)
Derivative assets (a)	$	—	$	7.0	$	—	$	7.0
Deferred compensation liabilities (b)		—		(21.6)		—		(21.6)
Fair value, net	$	—	$	(14.6)	$	—	$	(14.6)


	Foreign						Accumulated
	Currency		Pension and				Other
	Translation		Post-Retirement				Comprehensive
(in millions)	Losses		Benefits		Other		Loss
Balance as of May 29, 2022	$	(12.9)	$	(3.3)	$	0.6	$	(15.6)
Other comprehensive income (loss) before reclassifications, net of tax		(46.3)		—		0.4		(45.9)
Amounts reclassified out of AOCI, net of tax		—		—		—		—
Net current-period other comprehensive income (loss)		(46.3)		—		0.4		(45.9)
Balance as of November 27, 2022	$	(59.2)	$	(3.3)	$	1.0	$	(61.5)


	For the Thirteen Weeks Ended
	November 27,		November 28,		November 27,		November 28,		November 27,		November 28,
	2022		2021		2022		2021		2022 (a)		2021 (a)
(in millions, except per share amounts)	Income from Operations				Net Income				Diluted EPS
As reported	$	271.8	$	114.4	$	103.1	$	32.5	$	0.71	$	0.22
Items impacting comparability:
Impact of LWM natural gas and electricity derivatives (b)		—		—		101.5		(4.7)		0.70		(0.03)
LWM acquisition-related items, net (c)		(26.5)		—		(19.2)		—		(0.13)		—
Loss on extinguishment of debt (e)		—		—		—		40.5		—		0.28
Total items impacting comparability		(26.5)		—		82.3		35.8		0.57		0.25
Adjusted	$	245.3	$	114.4	$	185.4	$	68.3	$	1.28	$	0.47


	For the Twenty-six Weeks Ended
	November 27,		November 28,		November 27,		November 28,		November 27,		November 28,
	2022		2021		2022		2021		2022 (a)		2021 (a)
(in millions, except per share amounts)	Income from Operations				Net Income				Diluted EPS
As reported	$	428.8	$	174.6	$	335.0	$	62.3	$	2.32	$	0.42
Items impacting comparability:
Impact of LWM natural gas and electricity derivatives (b)		—		—		(7.0)		(8.4)		(0.05)		(0.06)
LWM acquisition-related items, net (c)		(26.5)		—		(19.2)		—		(0.13)		—
Gain on acquisition of interest in joint venture (d)		—		—		(15.1)		—		(0.10)		—
Loss on extinguishment of debt (e)		—		—		—		40.5		—		0.28
Total items impacting comparability		(26.5)		—		(41.3)		32.1		(0.28)		0.22
Adjusted	$	402.3	$	174.6	$	293.7	$	94.4	$	2.04	$	0.64


							Approximate Dollar
					Total Number of		Value of Maximum
	Total Number		Average		Shares (or Units)		Number of Shares that
	of Shares (or		Price Paid		Purchased as Part of		May Yet be Purchased
	Units)		Per Share		Publicly Announced		Under Plans or Programs
Period	Purchased (a)		(or Unit)		Plans or Programs (b)		(in millions) (b)
August 29, 2022 through September 25, 2022		275	$	78.23		—	$	240.6
September 26, 2022 through October 23, 2022		665	$	83.24		—	$	240.6
October 24, 2022 through November 27, 2022		3,346	$	81.84		—	$	240.6
Total		4,286

Exhibit Number		Exhibit Description

2.1		Sale and Purchase Agreement, by and among Lamb Weston Holdings, Inc., Lamb Weston Holland B.V., Meijer Beheer B.V. and Mr. Kees Meijer, dated as of October 19, 2022, incorporated by reference to Exhibit 2.1 of Lamb Weston Holdings, Inc.’s Current Report on Form 8-K/A filed on October 21, 2022 (File No. 001-37830)*

10.1		Form of Lamb Weston Holdings, Inc. Nonqualified Stock Option Agreement for Non-Employee Directors

31.1		Section 302 Certificate of Chief Executive Officer

31.2		Section 302 Certificate of Chief Financial Officer

32.1		Section 906 Certificate of Chief Executive Officer

32.2		Section 906 Certificate of Chief Financial Officer

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101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*)

* Certain portions of this exhibit have been redacted pursuant to Regulation S-K, Item 601(a)(6). This exhibit excludes certain immaterial schedules and exhibits pursuant to the provisions of Regulation S-K, Item 601(a)(5). A copy of any of the omitted information, schedules and exhibits pursuant to Regulation S-K, Item 601(a)(5) and Item 601(a)(6) will be furnished to the Securities and Exchange Commission upon request.

	LAMB WESTON HOLDINGS, INC.

	By:	/s/ BERNADETTE M. MADARIETA
		BERNADETTE M. MADARIETA
		Senior Vice President and Chief Financial Officer
		(Principal Financial Officer)



Dated this 5th day of January, 2023.


Date: January 5, 2023

/s/ THOMAS P. WERNER
THOMAS P. WERNER
Chief Executive Officer (Principal Executive Officer)

J
Date: January 5, 2023

/s/ BERNADETTE M. MADARIETA
BERNADETTE M. MADARIETA Senior Vice President and Chief Financial Officer (Principal Financial Officer)


January 5, 2023

/s/ THOMAS P. WERNER
THOMAS P. WERNER
Chief Executive Officer (Principal Executive Officer)