Lamb Weston offers ‘solid’ assessment and outlook for 2018

Lamb Weston Holdings assessed its second quarter 2018 results and updated its outlook for fiscal 2018, painting a positive picture on both fronts.

“Our second quarter and first half results were solid,” said Tom Werner, president and CEO. “Our commercial teams have worked through customer contract negotiations, and now that those discussions are largely behind us, we’re focused on our ongoing commitment to deliver industry-leading service, drive innovation and service limited time offerings with our customers. Our supply chain teams continued to focus on managing cost and capacity utilization, as well as successfully starting up our new 300 million pound french fry production line in Richland, Washington.

“In addition, with this year’s potato crop fully harvested, we consider it to be consistent overall with historical averages, and that storability will also likely be consistent with planned expectations. With our solid first half performance and some key milestones now behind us, we have better clarity on how we see the rest of the year unfolding, and have raised our annual outlook for sales growth and EBITDA accordingly.”

Second quarter 2018 highlights include:

• Net sales increased 4 percent to $825 million
• Income from operations increased 11 percent to $140 million. Adjusted income from operations increased 7 percent to $144 million
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) including unconsolidated joint ventures increased 12 percent to $189 million
• Diluted earnings per share (EPS) was $0.52, compared with $0.59 in second quarter 2017
• Adjusted diluted EPS was $0.54, compared with $0.63 in second quarter 2017
• Raised quarterly dividend by 2 percent

“We expect growth in demand to continue not just through fiscal 2018, but also for the foreseeable future,” Werner said, adding that the new fry plant in Hermiston is expected to be operational in the fourth quarter of fiscal 2019.

“This new capacity will support our customers’ growth in North America as well as Asia, where demand growth has been, and is projected to remain, strong. In addition to funding this $250 million investment, we expect to generate sufficient earnings and cash flow to support the recent increase in our dividend, as well as provide flexibility to take advantage of future potential growth opportunities. By continuing to take a balanced, returns-driven approach when deploying capital, we remain confident in our ability to support our customers and create value for our shareholders over the long term.”

Highlights from the updated 2018 outlook include:

• Net sales are expected to increase mid-single digits, up from a previous estimate of low-to-mid single digits
• Adjusted EBITDA including unconsolidated joint ventures is expected to be $780 million-$790 million, up from a previous estimate of $740 million-$760 million