Frozen potato products specialist Lamb Weston announced results for the first quarter of fiscal 2026 on September 30 and reaffirmed its full year financial targets for 2026. The Eagle, Idaho, USA-headquartered company is a major supplier to restaurants and retailers around the world, offering an extensive assortment of products ranging from classic and extra crispy fries to sweet potatoes, snacks, appetizers and potato side dishes.
“Our team delivered a strong start to the fiscal year with solid volume growth and positive customer momentum, underscoring the strength of our value proposition and our operating model,” said Mike Smith, president and chief executive officer. “We believe our sharpened executional focus and strategic plans behind our Focus to Win strategy are beginning to deliver and position us to drive long-term growth and sustainable value for our shareholders.”
Net sales rose by $5.2 million, to $1,659.3 million versus the prior year quarter, including a favorable foreign currency impact of $23.7 million. Net sales at constant currency decreased by 1 percent, as a 6 percent increase in volume was more than offset by a 7 percent decline in price/mix.
Volume growth was driven by customer wins and retention, particularly in North America and Asia, as well as lapping an approximately $15 million charge in the prior year quarter related to a voluntary product withdrawal.
Price/mix was in line with expectations and reflects the carryover impact of fiscal 2025 price and trade investments to support customers, ongoing price and trade support, and unfavorable channel product mix within the company’s segments.
Gross profit declined $13.6 million versus the prior year quarter to $342.4 million. Adjusted Gross Profit fell $14.2 million versus the prior year quarter to $338.9 million due primarily to unfavorable price/mix. This was partially offset by higher sales volumes, lower manufacturing costs per pound driven by cost savings initiatives, and the benefit of lapping an approximately $39 million charge in the prior year related to a voluntary product withdrawal.
Selling, general and administrative expenses (SG&A) increased $9.7 million versus the prior year quarter to $153.6 million. Adjusted SG&A declined $24.0 million versus the prior year quarter to $132.4 million, reflecting the benefits of ongoing cost savings initiatives and $7.3 million of miscellaneous income primarily from an insurance recovery and property tax refunds.
Net income declined $63.1 million from the prior year quarter to $64.3 million. Diluted EPS fell $0.42 versus the prior year quarter to $0.46. Adjusted Net Income(1) declined $9.7 million year-over-year to $103.0 million, and Adjusted Diluted EPS declined $0.04 from the prior year quarter to $0.74. The decrease in Adjusted Net Income and Adjusted Diluted EPS largely reflect a higher effective tax rate and lower Equity Method Investment Earnings as described below, partially offset by higher Adjusted Income from Operations.
Adjusted EBITDA increased $2.8 million from the prior year quarter to $302.2 million. Lower Adjusted SG&A was partially offset by lower Adjusted Gross Profit and Equity Method Investment Earnings (Loss).
North America Summary
Net sales for the North America segment, which includes all sales to customers in the United States, Canada and Mexico, declined 2 percent, or $19.1 million, to $1,084.6 million versus the prior year quarter. Volume increased 5 percent compared to the prior year quarter supported by recent customer contract wins and growth across channels. Price/mix declined 7 percent driven by the carryover impact from fiscal 2025 price investments, the ongoing support of customers through price and trade and an unfavorable channel mix.
North America Segment Adjusted EBITDA decreased $18.0 million to $260.0 million compared to the prior year quarter. The decline primarily reflects price and trade in support of customers, partially offset by higher sales volumes, lower manufacturing costs per pound and Adjusted SG&A, which included the benefit of cost savings initiatives. Results also benefited from lapping an approximately $21 million charge related to a voluntary product withdrawal in the prior year.
International Summary
Net sales for the International segment, which includes all sales to customers outside of North America, increased 4 percent, or $24.3 million, to $574.7 million year-over-year, including a favorable $24.5 million from foreign currency translation. Net sales at constant currency was flat. Volume increased 6 percent, led primarily by growth in Asia and with multinational chain customers. Price/mix at constant currency declined 6 percent, driven by investments to support customers as well as ongoing price and trade support.
International Segment Adjusted EBITDA increased $5.8 million to $57.2 million year-over-year, reflecting higher sales volumes and lower manufacturing costs per pound. The improvement primarily reflects lapping an approximately $18 million charge related to the prior year’s voluntary product withdrawal, lower potato prices and benefits from ongoing cost savings initiatives. These benefits were partially offset by $3.5 million in start-up costs associated with the new manufacturing facility in Argentina, which is expected to support future growth.
Fiscal 2026 Outlook
The company has reaffirmed its financial targets for fiscal 2026 as follows:
• Net sales at constant currency in the target range of $6.35 billion to $6.55 billion.
• Adjusted EBITDA target range of $1.00 billion to $1.20 billion.
• Cash used for capital expenditures of approximately $500 million.
Lamb Weston’s guidance includes its current view of the anticipated impact of enacted tariffs by the US and other governments, but does not include potential effects of evolving trade policies, including future changes in tariffs or retaliatory measures.
