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Lamb Weston shares jumped in morning trading on Tuesday, October 6, after the frozen potato-products maker reported fiscal first-quarter results that exceeded its own guidance and raised its full-year targets. The stock rose 10.6% in morning trading, according to Investing.com, as investors responded to stronger-than-expected adjusted earnings and the company’s improved outlook.
For the quarter, net sales increased 1% from a year earlier to $1.67 billion. Adjusted diluted earnings per share were $0.75, up from $0.74 a year earlier; adjusted EBITDA was $286 million, down 5%. The results were mixed beneath the headline beat: reported net income fell 55% to $29 million, while operating performance diverged sharply between North America and international markets.
Guidance increase gives investors a stronger full-year target
Lamb Weston raised its fiscal 2027 adjusted diluted EPS outlook to $3.05–$3.35, from $2.95–$3.25. It now expects adjusted EBITDA of $1.125 billion to $1.215 billion, compared with its previous range of $1.10 billion to $1.20 billion. The company also shifted its net-sales growth forecast from 0%–1% to “low single digits,” measured against fiscal 2026 sales adjusted to a 52-week basis.
The update followed a quarter in which sales and profit came in above management’s expectations. The company’s reported adjusted EPS of $0.75 exceeded the $0.59 analyst consensus cited by Investing.com; revenue of $1.67 billion also topped that report’s $1.65 billion consensus. Those comparisons help explain the immediate share-price reaction, while the higher full-year targets signaled management expected the improved performance to carry forward.
Not every outlook measure moved higher: Lamb Weston kept its cash capital-expenditure forecast at $380 million to $410 million. It expects net cash provided by operating activities of $750 million to $800 million for the year, alongside updated ranges for adjusted operating income, interest expense and its adjusted effective tax rate.
North America offsets a weaker international business
North America was the quarter’s growth engine. Segment sales rose 5% to $1.141 billion, with volume up 7%, marking the seventh consecutive quarter of volume growth. The company attributed higher volumes to demand from existing customers and new customer wins, while North American adjusted EBITDA increased 11% to $287 million.
That volume growth came with pricing pressure: North American price and product mix declined 2%, which Lamb Weston linked to price and trade support for customers and a shift toward faster-growing chain customers and private-label products. Higher volumes, cost-saving measures, $5 million in tariff refunds and increased earnings from equity-method investments more than offset those pressures and inflation in key input costs.
International results moved in the opposite direction. Sales fell 8% to $529 million, as volume dropped 6% and price/mix fell 2%. International adjusted EBITDA declined 54% to $27 million, reflecting lower sales—particularly in Europe—and higher manufacturing costs, including expenses tied to prior-year potato costs, underused factory capacity and inflation.
Costs and cash flow remain important parts of the picture
Company-wide adjusted EBITDA fell to $286 million from $302 million a year earlier, even as adjusted net income held flat at $103 million. Lamb Weston said higher volume was more than offset by lower price/mix and higher costs of sales and selling, general and administrative expenses. It also reported that manufacturing cost per pound increased, driven mainly by international operations and conditions in Europe, the Middle East and Africa.
Chief Executive Mike Smith said North American customer relationships supported volume growth and the company continued to deliver cost savings. He also noted unexpected inflation in key inputs and freight, saying Lamb Weston was working with suppliers and using hedging where possible. Capacity-optimization work begun more than a year ago had increased North American utilization by about 10 percentage points, according to the company, and it expects that work to contribute to savings.
Cash from operating activities was $235 million, down $117 million from the prior-year quarter. The comparison was affected by a $136 million inventory improvement that benefited the year-earlier period, while the latest quarter received a $59 million boost from higher accounts payable. Capital spending totaled $91 million, up $12 million year over year, as the company invested in facility reliability and strategic optimization.
Dividend declared; strategy update expected in 2027
Lamb Weston’s board declared a quarterly dividend of $0.38 per share, payable December 4 to shareholders of record at the close of business on November 6. The company said it returned $52 million to shareholders through dividends in the quarter and did not repurchase shares. About $245 million remained authorized for buybacks.
The company also said it is working to refine priorities across markets and sales channels as part of its “Focus to Win” strategy. It expects to complete that work in the coming months and plans to present a longer-term value-creation roadmap at an Investor Day in early calendar 2027. Until then, the key operating question in the reported results is whether North American volume and cost savings can continue to counter weaker international sales and inflation.
