On July 24, 2024, Lamb Weston Holdings Inc (LW, Financial) released its 8-K filing for the fiscal fourth quarter and full year 2024 results. Lamb Weston is North America's largest and the world's second-largest producer of branded and private-label frozen potato products, both by volume and value. The company's portfolio is anchored by French fries, but it also sells sweet potato fries, tater tots, diced potatoes, mashed potatoes, hash browns, and chips. Nearly 70% of revenue comes from its home market of North America, with none of the other 100 countries the company sells into representing a significant share. McDonald's is Lamb Weston's single largest customer at 13% of fiscal 2023 sales, with no other company representing more than 10%. Lamb Weston became an independent company in 2016 when it was spun off from Conagra.
Q4 2024 Performance and Challenges
For the fourth quarter of fiscal 2024, Lamb Weston Holdings Inc (LW, Financial) reported a 5% decline in net sales to $1,612 million, missing the analyst estimate of $1,703.79 million. Income from operations increased by 14% to $213 million, while net income declined by 74% to $130 million. Diluted EPS also fell by 74% to $0.89, significantly below the analyst estimate of $1.27.
Adjusted metrics showed a similar downward trend. Adjusted income from operations declined by 26% to $191 million, adjusted net income fell by 40% to $114 million, and adjusted diluted EPS decreased by 40% to $0.78. Adjusted EBITDA also saw a 15% decline to $283 million.
Full Year 2024 Financial Achievements
Despite the challenges in Q4, Lamb Weston Holdings Inc (LW, Financial) reported strong full-year results. Net sales increased by 21% to $6,468 million, driven by $1,107 million of incremental sales from acquisitions. Income from operations also rose by 21% to $1,065 million. However, net income for the year declined by 28% to $726 million, and diluted EPS fell by 28% to $4.98.
On a non-GAAP basis, adjusted income from operations increased by 16% to $1,085 million, adjusted net income rose by 6% to $740 million, and adjusted diluted EPS grew by 6% to $5.08. Adjusted EBITDA for the year increased by 13% to $1,417 million.
Key Financial Metrics
| Metric | Q4 2024 | Year-Over-Year Growth | FY 2024 | Year-Over-Year Growth |
|---|---|---|---|---|
| Net Sales | $1,611.9 million | (5)% | $6,467.6 million | 21% |
| Income from Operations | $212.5 million | 14% | $1,065.3 million | 21% |
| Net Income | $129.6 million | (74)% | $725.5 million | (28)% |
| Diluted EPS | $0.89 | (74)% | $4.98 | (28)% |
| Adjusted Income from Operations | $191.0 million | (26)% | $1,084.5 million | 16% |
| Adjusted Net Income | $113.7 million | (40)% | $739.9 million | 6% |
| Adjusted Diluted EPS | $0.78 | (40)% | $5.08 | 6% |
| Adjusted EBITDA | $283.4 million | (15)% | $1,416.7 million | 13% |
Commentary and Analysis
"We are disappointed by our fourth quarter performance," said Tom Werner, President and CEO. "Our price/mix results were below our expectations, while market share losses and a slowdown in restaurant traffic in the U.S. and many of our key international markets were greater than we expected. We also incurred losses related to a voluntary product withdrawal."
The company faced several challenges, including market share losses, a slowdown in restaurant traffic, and a voluntary product withdrawal. These factors contributed to the decline in net sales and net income for the quarter. However, the company managed to increase its income from operations and adjusted EBITDA for the full year, indicating resilience in its core operations.
Fiscal 2025 Outlook
Lamb Weston Holdings Inc (LW, Financial) provided its outlook for fiscal 2025, expecting net sales to range between $6.6 billion and $6.8 billion. Net income is projected to be between $630 million and $705 million, with diluted EPS ranging from $4.35 to $4.85. Adjusted EBITDA is expected to be between $1,380 million and $1,480 million.
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Explore the complete 8-K earnings release (here) from Lamb Weston Holdings Inc for further details.
