Full Year 2026 Lamb Weston Holdings Inc Earnings Call

July 24, 2026

Speaker #1: Good day and welcome to the Lamb Western 4th Quarter and Full Year Fiscal 2026 earnings call. Today's call is being recorded. At this time, I'd like to turn the call over to Debbie Hancock.

Speaker #1: Please go ahead.

Speaker #2: Thank you. Good morning, and thank you for joining us for Lamb Western's 4th Quarter and Full Year Fiscal 2026 earnings call. I'm Debbie Hancock, Lamb Western's Vice President of Investor Relations.

Speaker #2: Earlier today, we issued our press release and posted slides that we will use for our discussion today. You will find both on our website at lambwestern.com.

Speaker #1: Good day and welcome to the Lamb Weston fourth quarter and full year fiscal 2026 earnings call. Today's call is being recorded. At this time, I'd like to turn the call over to Debbie Hancock.

Speaker #2: Please note that during our remarks, we will make forward-looking statements about the company's expected performance that are based on our current expectations. Actual results may differ materially due to risks and uncertainties.

Speaker #1: Please go ahead.

Speaker #2: Thank you. Good morning, and thank you for joining us for Lamb Weston's fourth quarter and full year fiscal 2026 earnings call. I'm Debbie Hancock, Lamb Weston's vice president of investor relations.

Speaker #2: Please refer to the cautionary statements and risk factors contained in our SEC filings for more details on our forward-looking statements. Some of today's remarks include non-GAAP financial measures.

Speaker #2: These non-GAAP financial measures should not be considered a replacement for and should be read together with our GAAP results. You can find the GAAP to non-GAAP reconciliations in our earnings release in the appendix to our presentation.

Speaker #2: Earlier today, we issued our press release and posted slides that we will use for our discussion today. You will find both on our website at lambweston.com.

Speaker #2: Joining me today are Yon Kreps, Executive Chair, Mike Smith, President and CEO, and Jim Gray, Chief Financial Officer. Each will provide prepared remarks and then will be available to take your questions.

Speaker #2: I will now turn the call over to Yon.

Speaker #3: Thank you, Debbie, and good morning, everyone. I'm happy to be with you today for my first earnings call at Lamb Western. I will start with observations from my first month as Executive Chair, then turn the call over to Mike and Jim for their review of our performance.

Speaker #3: I will come back at the end of our call with additional remarks about the roadmap ahead, before we take your questions. In the next hour, we plan to spend about two-thirds of our time on prepared remarks and leave about 20 minutes for questions.

Speaker #2: Joining me today are Yon Kreps, executive chair; Mike Smith, president and CEO; and Jim Gray, chief financial officer. Each will provide prepared remarks and then will be available to take your questions.

Speaker #2: I will now turn the call over to Yon.

Speaker #3: It's a real pleasure to work with this board, management team, and partners. I joined Lamb Western in early February after more than 20 years with ABI, most recently as a CEO and co-chair of Advisor APAC, and APAC CEO for ABI.

Speaker #3: Thank you, Debbie, and good morning, everyone. I'm happy to be with you today for my first earnings call at Lamb Weston. I will start with observations from my first month as executive chair, then turn the call over to Mike and Jim for their review of our performance.

Speaker #3: Now, let me share what attracted me to Lamb Western. First, the company operates in an attractive and growing category. Expanding volume, price, mix, and margins over time.

Speaker #3: I will come back at the end of our call with additional remarks about the roadmap ahead before we take your questions. In the next hour, we plan to spend about two-thirds of our time on prepared remarks and leave about 20 minutes for questions.

Speaker #3: Largely serving food service customers on multi-year contracts. Second, Lamb Western is a scaled leader with an advantage plant network in this great category. With a strong and growing core North American profit pool, significant cash generation potential, and a meaningful turnaround opportunity, an optionality across our international footprint.

Speaker #3: It's a real pleasure to work with this board, management team, and partners. I joined Lamb Weston in early February after more than 20 years with ABI, most recently as a CEO and co-chair of Budweiser APAC, and APAC CEO for ABI.

Speaker #3: Now, let me share what attracted me to Lamb Weston. First, the company operates in an attractive and growing category. Expanding volume, price, mix, and margins over time.

Speaker #3: And third, Lamb Western has a seasoned board-making swift and purposeful decisions to drive incremental value for shareholders. My role as Executive Chair has several key responsibilities.

Speaker #3: Largely serving food service customers on multi-year contracts. Second, Lamb Weston is a scaled leader with an advantage plant network in this great category. With a strong and growing core North American profit pool, significant cash generation potential, and a meaningful turnaround opportunity, an optionality across our international footprint.

Speaker #3: Chairing a deeply engaged board of directors to set a company's priorities and track its progress. Focusing on people through talent development and building a performance culture.

Speaker #3: Leading the next leg of our strategy development, including where to play, how to win, in organic moves like M&A and partnership or divestitures, and driving a clear growth algorithm.

Speaker #3: And third, Lamb Weston has a seasoned board-making swift and purposeful decisions to drive incremental value for shareholders. My role as executive chair has several key responsibilities.

Speaker #3: Mentoring Mike and the executive leadership team, providing insights on priority topics like embedding a cost culture, realizing tech and benchmarking opportunities, where my past experience complements the leadership team's expertise.

Speaker #3: Chairing a deeply engaged board of directors to set the company's priorities and track its progress. Focusing on people through talent development and building a performance culture.

Speaker #3: And finally, working with Mike as he continues to lead the daily operations of the organization as a CEO, translating our strategic plan into a robust operational plan, and driving the execution of our strategy and our teams to deliver results.

Speaker #3: Leading the next leg of our strategy development, including where to play, how to win, in organic moves like M&A and partnership or divestitures, and driving a clear growth algorithm.

Speaker #3: It's an exciting time to be part of Lamb Western. Let me wrap up my opening remarks with observations and reflections from my global onboarding sprint so far.

Speaker #3: Over my first 100 days, I spent a significant amount of time meeting our teams and getting to know our people. They are passionate about our business.

Speaker #3: And finally, working with Mike as he continues focus to win. I will discuss some of these efforts later in our call, and this will culminate in an investor day in early calendar '27.

Speaker #3: I've engaged with our colleagues at more than 15 plants in the US, in the UK, Europe, China, and Australia, so more than half of our facilities.

Speaker #3: I've visited farms, customers, and stores, and I've spoken with select analysts, bankers, investors, and industry players. I've been struck by the energy and ideas across our value chain and ecosystem.

Translating our strategic plan into a robust operational plan and driving the execution of our strategy and our teams to deliver results.

It's an exciting time to be part of Lamb Weston.

Let me wrap up my opening remarks with observations and reflections from my global onboarding sprint so far.

Speaker #3: I'm encouraged that we rebounding confidently from a period of uneven execution and disrupted market dynamics. Controlling the controllables, including rebuilding North American volumes on a more resilient and efficient supply chain.

Over my first 100 days. I spent a significant amount of time, meeting our teams and getting to know our people.

They are passionate about our business.

I've engaged with our colleagues at more than 15 plants in the U.S., the U.K., Europe, China, and Australia.

Speaker #3: And I see a leadership team that is embracing more strategic clarity and choices, a deeper performance culture, and sharper focus on costs, cash flow, and consistency.

so more than half of our facilities,

I visited farms, customers, and stores, and I've spoken with select analysts, bankers, investors, and industry players.

Speaker #3: While the focus to win strategy is in its first year, I view it as the right first steps for Lamb Western. Implement it with an essential customer-first mindset.

I've been struck by the energy and IDs across our value chain and ecosystem.

Speaker #3: Have your execution of the first phase of focus to win as a key step of a broader program to improve performance and returns on capital at Lamb Western.

I'm encouraged that we are rebounding confidently from a period of uneven execution and disrupted market dynamics.

Controlling the controllables including rebuilding North American volumes on a more resilient and efficient supply chain.

Speaker #3: I'm encouraged by our team's progress and execution of this first phase. In parallel, we are driving initiatives to expand those efforts more broadly across the organization, in subsequent phases of focus to win.

And I see a leadership team that is embracing more strategic Clarity and choices.

A deeper performance culture, and a sharper focus on costs, cash flow, and consistency.

Speaker #3: I will discuss some of these efforts later in our call, and this will culminate in an investor day in early calendar 27. The key message I want you to take from me is that there is focus and alignment in driving this company to achieve its full potential.

While the Focus to Win strategy is in its first year, I view it as the right first step for Lamb Weston. It was implemented with an essential customer-first mindset.

Have your execution of the first phase of Focus to Win as a key step of a broader program to improve performance and returns on capital at Lamb Weston.

Speaker #3: To that end, and in support of this opportunity, I have made a significant personal investment in Lamb Western shares, and my compensation is tied to the stock price.

Of this first phase.

Speaker #3: I don't participate in the annual incentive plan, I am rewarded if you or shareholders are rewarded. With that, let me hand it over to Mike.

In parallel, we are driving initiatives to expand those efforts more broadly across the organization in subsequent phases of focus to win.

Speaker #4: Thank you, Yon. It's great to have you and Jim with us today. I am excited about the work we are doing together to accelerate and build on the foundation we have in place.

Speaker #3: The key message I want you to take from me is that there is focus and alignment in driving this company to achieve its full potential.

Speaker #4: And good morning to everyone joining us today to discuss our fourth quarter and full-year results. The key message I want to leave with you today is that we made meaningful progress as an organization in fiscal 26.

Speaker #3: To that end, and in support of this opportunity, I have made a significant personal investment in Lamb Weston shares, and my compensation is tied to the stock price.

Speaker #3: I don't participate in the annual incentive plan. I am rewarded if you or shareholders are rewarded. With that, let me hand it over to Mike.

Speaker #4: I told you a year ago that Lamb Western was on a journey to rebuild its credibility with both our customers and investors. I believe fiscal 26 was a strong step toward that goal.

Speaker #4: Thank you, Yon. It's great to have you and Jim with us today. I am excited about the work we are doing together to accelerate and build on the foundation we have in place.

Speaker #4: We delivered for our customers in the way they expect of us. And we delivered on the financial targets and key performance milestones that we shared with you on our July 2025 call.

Speaker #4: I want to start again this quarter by thanking the Lamb Western teams around the world for their efforts in executing a new strategy in a challenging and dynamic market.

Speaker #4: I told you a year ago that Lamb Weston was on a journey to rebuild its credibility with both our customers and investors. I believe fiscal '26 was a strong step toward that goal.

Speaker #4: Together, we delivered a solid quarter and year. Led by the strength of North America. Throughout fiscal 26, we stabilized our North America business, growing volume, sales, and EBITDA for the full year, and ending with a 26% segment EBITDA margin.

Speaker #4: We delivered for our customers in the way they expect of us. And we delivered on the financial targets and key performance milestones that we shared with you on our July 2025 call.

Speaker #4: Internationally, in the fourth quarter, we faced disruption in shipments and volatile input cost inflation from the Middle East. Jim will speak to our fourth quarter performance shortly.

Speaker #4: I want to start again this quarter by thanking the Lamb Weston teams around the world for their efforts in executing a new strategy in a challenging and dynamic market.

Speaker #4: As we've previously discussed, market conditions drove greater competition and pricing pressure, notably in EMEA. We are controlling the controllables, and setting a strategic plan to maximize returns across our global footprint.

Speaker #4: Including closing a facility in the Netherlands. We invested effectively. Significantly reducing capital expenditures, and delivering strong cash flow. And we returned 321 million dollars to shareholders, bringing our total return since going public to greater than 2.2 billion.

Throughout fiscal '26, we stabilized our North America business, growing volume, sales, and average for the full year, and ending with a 26% segment EBITDA margin.

Internationally, in the fourth quarter, we faced disruption in shipments and volatile input cost inflation from the Middle East.

Jim will speak to our fourth quarter performance shortly.

Speaker #4: Today, I'm going to focus on what we accomplished this past year. My first full fiscal year as CEO. Jim will then review the financials, and Yon will speak to the strategic work he is leading as executive chair.

As we've previously discussed, market conditions drove greater competition and pricing pressure, notably in AMEA.

We are controlling the controllables and setting a strategic plan to maximize returns across our global footprint, including closing a facility in the Netherlands.

Speaker #4: Within our focus to win strategy, strengthening customer partnerships has been my top priority since taking over as CEO. We have worked to reaffirm our role as a trusted partner.

We invested effectively, significantly reducing capital expenditures and delivering strong cash flow.

Speaker #4: We drove the mantra of customer-centricity across the organization. We focused our commercial teams on joint business partnerships and value-added relationships. Our supply chain organization was laser-focused on meeting our customers' quality, service, and order fill rate requirements.

And we returned $321 million to shareholders, bringing our total return since going public to greater than $2.2 billion.

Today I'm going to focus on what we accomplished this past year—my first full fiscal year as CEO.

Speaker #4: And our marketing and innovation teams ensured we armed our customers with insights in many items to stand out in the marketplace. These efforts have delivered six consecutive quarters of volume growth.

Jim will then review, the financials and yon will speak to the Strategic work. He is leading as executive chair.

Within our Focus to win strategy. Strengthening customer Partnerships has been my top priority since taking over as CEO.

Speaker #4: And in Q4, volume and share grew in North America despite the demand challenged market. And we grew in opportunity regions such as Asia Pacific and Latin America.

We have worked to reaffirm our role as a trusted partner.

We drove the Mantra of customer centricity across the organization.

We focused our commercial teams on joint business partnerships and value-added relationships.

Speaker #4: During the year, we extended several of our largest strategic customers' contracts. We seamlessly supported significant new customer rollouts. We partnered on many innovation, including value-add, higher margin LTOs.

Our supply chain organization was laser-focused on meeting our customers' quality, service, and order fill rate requirements.

Speaker #4: And we facilitated the store and geographic expansions of our customers. In the US, where we measure net promoter score, according to proprietary research, our NPS increased over last year and is the highest among major competitors.

And our Marketing and Innovation teams ensured we armed our customers with insights and menu items to stand out in the marketplace.

These efforts have delivered six consecutive quarters of volume growth.

And in Q4, volume and share grew in North America, despite the demand-challenged market.

Speaker #4: Our customers value Lamb Western. They trust us. They demand our quality. They rely on our service, and our innovation. We are committed to creating value together.

And we grew in opportunity regions such as Asia Pacific and Latin America.

During the year, we extended several of our largest strategic customers contracts.

We seamlessly supported significant new customer rollouts.

Speaker #4: Executional excellence is another strategic pillar we significantly advanced this past year. Similar to reaffirming customers' trust, this was another top priority for me. Our increasingly nimble supply chain team facilitated this customer success, meeting the demand and incremental North America volume, while also driving improved operational efficiencies recurring cost savings, and de-bottlenecking plants to increase capacity.

We partnered on menu innovation, including value and higher-margin LTOs.

And we facilitated the store and geographic expansions of our customers.

In the U.S., where we measure Net Promoter Score, according to proprietary research, our NPS increased over last year and is the highest among major competitors.

They trust us.

They demand our quality.

Speaker #4: We are moving in the right direction, with opportunity for improvement as we bring standardization and adopt best practices across our manufacturing network. As we further develop our demand planning systems, we believe that outstanding individual plant operating teams can be even better together.

They rely on our service and our innovation.

We are committed to creating value together.

Executional excellence is another strategic pillar. We significantly advanced this past year.

Similar to reaffirming customers' trust, this was another top priority for me.

Speaker #4: Outside North America, we are optimizing supply chain assets globally to reduce our costs and better meet future customer demand. During fiscal 26, we opened a new state-of-the-art production facility in Mar del Plata, Argentina.

Our increasingly nimble supply chain team facilitated this customer success.

Meeting the demand incremental, North America volume while. Also driving improved operational, efficiencies recurring cost savings and debottlenecking plants to increase capacity.

Speaker #4: This facility provides us with a clear advantage to deliver some of the highest quality and premium product in the region. As we ramped up production, performance and profit improved throughout the year.

We are moving in the right direction with the opportunity for improvement as we bring standardization and adopt best practices across our manufacturing network.

Speaker #4: We closed an older legacy facility and consolidated production into one location. Volume is up. Utilization is better, and we have room to grow. In China, our newest facility in Inner Mongolia has a similar trajectory.

As we further develop our demand planning systems, we believe that outstanding individual plant operating teams can be even better together.

Outside North America, we are optimizing supply chain assets globally to reduce our costs and better meet future customer demand.

Speaker #4: Opened in 2023, this facility provides us with additional local processing capacity in a growing market. We've grown volume and net sales double digits since opening the facility.

During fiscal 2026, we opened the new state-of-the-art production facility in Marta Platt, Argentina.

This facility provides us with a clear advantage to deliver some of the highest quality and premium products in the region.

Speaker #4: These strategic facilities are big bets in important growth regions that take time to build to optimal utilization. Our local presence has led to expansion of our market opportunity and additional customer wins.

As we ramped up production, performance and profit improved throughout the year.

We closed an older legacy facility and consolidated production into one location.

Speaker #4: In Europe, our efforts to meet global customer demand and maintain a competitive advantage have led to the reduction in our footprint. During Q4, we temporarily curtailed a line in the Netherlands, and in early June, we announced our intention to close an older production facility in Brookhuizenvorst, which is also in the Netherlands.

Volume is up, utilization is better and we have room to grow.

In China, our newest facility in Inner Mongolia has a similar trajectory.

opened in 2023. This facility provides us with additional local processing capacity in a growing Market.

We've grown volume in that sales double digits since opening the facility.

Speaker #4: That facility represents about 10% of our EMEA production capacity. These actions, while difficult, will rebalance our capacity with demand and build a foundation for more effective network utilization and lower costs.

These strategic facilities are big bets in important growth regions that take time to build to optimal utilization.

Our local presence has led to the expansion of our market opportunity and additional customer wins.

In Europe.

Speaker #4: And as it has been reported in the media, the industry has announced some delays to new production. There is significant work being done behind these decisions about where to play and how to win.

Our efforts to meet global customer demand and maintain a competitive advantage have led to the reduction in our footprint.

Speaker #4: Yon will speak to this next lay of our strategy work shortly. Another significant deliverable in our executing with excellence pillar is lowering costs and improving productivity.

During Q4, we temporarily curtailed the line in the Netherlands. And in early June, we announced our intention to close an older production facility in Broek op Langedijk, which is also in the Netherlands.

That facility represents about 10% of our AMA production capacity.

Speaker #4: The team has done a tremendous job of identifying and successfully executing against opportunities. A year ago, we launched a cost savings program to deliver at least 250 million dollars of annualized run rate savings by the end of fiscal 2028.

These actions, while difficult, will rebalance our capacity with demand and build a foundation for more effective network utilization and lower costs.

And as it has been reported in the media, the industry has announced some delays to new production.

Speaker #4: After year one, we exceeded our first-year milestone of 100 million dollars. This is the result of a lot of hard work from everyone at Lamb Western.

There is significant work being done Behind these decisions about where to play and how to win, Yan will speak to this next lay of our of our strategy work shortly.

Speaker #4: Based on the success of the program to date in delivering structural savings to supply chain, reducing our manufacturing cost per pound, and reducing SG&A costs, we will continue to pursue additional opportunities to improve our cost structure and capital efficiency.

Another significant deliverable in our executing with Excellence, pillar is lowering costs and improving productivity.

The team has done a tremendous job of identifying and successfully executing against opportunities.

Speaker #4: These savings have offset inflation and allowed us to invest in targeted support for our customers and to offset some mixed headwinds. We believe the investments that we have made in our customers has strengthened our base and will lead to future opportunities to create value together.

A year ago, we launched a cost-savings program to deliver at least 250 million dollars of annualized run rate savings by the end of fiscal 2028.

After year one, we exceeded our first-year milestone of $100 million.

This is the result of a lot of hard work from everyone at Lamb Weston.

Speaker #4: Our price mix investment has moderated in Q4, and the combination of strong volume demand and cost savings is beginning to show results. As evidenced by our fourth quarter North America EBITDA margin expansion and dollar growth.

Based on the success of the program to date in delivering structural savings to the supply chain, reducing our manufacturing costs per pound, and reducing SG&A costs.

Speaker #4: Finally, disruptive innovation remains a key unlock in our value-add for customers and consumers. Innovation drives traffic, unlocks new markets, and anticipates consumers' changing taste preferences.

We will continue to pursue additional opportunities to improve our cost structure and capital efficiency.

These savings have offset inflation and allowed us to invest in targeted support for our customers, and to offset some mixed headwinds.

Speaker #4: In fiscal 2026, we launched new items at retail, including private label innovation and new Alexia seasoned items, and with food service, we introduced operator and distributor innovation as well as Lamb Western batter line extensions.

We believe the investments that we have made in our customers have strengthened our base and will lead to future opportunities to create value together.

Speaker #4: Our consistent focus on innovation has increased the percentage of net sales coming from new items. Key KPI in measuring our innovation success. In this month, we launched new items aligned to consumer preferences.

Our price/mix investment is moderated in Q4, and the combination of strong volume demand and cost savings is beginning to show results, as evidenced by our fourth quarter North America IBA margin expansion and dollar growth.

Finally disruptive, innovation remains a key. Unlock in our value, add for customers and consumers.

Speaker #4: Expanding our Alexia olive oil product into additional retailers and launching similar products into the food service channel. There is more to come this fall with disruptive innovation launches for both retail and food service.

Innovation drives traffic, unlocks new markets, and anticipates consumers' changing taste preferences.

New Alexia seasoned items.

Speaker #4: At the core of our success is our people. Throughout the year, we worked to develop a continuous improvement in performance culture. As leaders, my team and I led with transparency and clarity.

And with Foodservice, we introduced operator and distributor innovation, as well as Lamb Weston batter line extensions.

Speaker #4: We ended the year with improved employee engagement scores, and we are building on this going forward. We also added depth to our board and management.

Our consistent focus on innovation has increased the percentage of net sales coming from new items, a key KPI in measuring our innovation success.

And this month.

Speaker #4: With additional global and strategic expertise from Yon, and more recently, the addition of Jim as CFO. Earlier this month, Amit Phillip joined us in the new role of Chief Strategy and Technology Officer.

We launched new items aligned to Consumer preferences, expanding our Alexia, all of oil product into additional retailers and launching similar products into the Food Service Channel.

There is more to come this fall with disruptive innovation launches for both retail and foodservice.

Speaker #4: Amit brings expertise from a distinguished career spanning consulting, technology, and food manufacturing. Including leadership roles at Treehouse Foods and the Hershey Company. In closing, we delivered a solid year driven by sustainable results.

At the core of our success is our people.

Throughout the year, we work to develop a continuous Improvement in performance culture.

As leaders, my team and I led with transparency and clarity.

Speaker #4: Including a strong recovery in our North America business. Meaningful progress in executing focus to win especially with customers and execution. A greater than anticipated achievement of cost savings.

We ended the year with improved employee engagement scores, and we are building on this going forward.

We also added depth to our Board and management with additional global and strategic expertise from Yan.

And more recently, the addition of Jim as CFO.

Speaker #4: Improved capital discipline and strong return of capital to shareholders. And strengthened engagement with our teams and new executive team members. The year was not without its challenges.

Earlier this month, Amit Phillip joined us in the new role of Chief Strategy and Technology Officer.

Speaker #4: As the international segment absorbed startup costs associated with our new Argentina plant and an industry slowdown in the EMEA region. And across the business, we faced volatile inflation at year end due to the Middle East conflict.

A mitt brings expertise from a distinguished career spanning Consulting technology and food manufacturing, including leadership roles at Treehouse Foods and the Hershey Company.

In closing.

We delivered a solid year, driven by sustainable results.

Including a strong recovery in our North American Business.

Speaker #4: We are addressing these issues head on. I am proud of what we accomplished this year, and we have strong plans to continue driving progress in fiscal 27 and beyond.

Meaningful progress in executing 'Focus to Win,' especially with customers and execution.

A greater-than-anticipated achievement of cost savings.

Speaker #4: I will now turn the call over to Jim to review the financials and our outlook.

Improved capital discipline and strong return of capital to shareholders.

Speaker #2: Thank you, Mike, and good morning to everyone. I've been with Lamb Western since April, and it has been a pleasure getting to know the team and see our operations in the basin as well as the Netherlands.

And strengthen engagement with our teams and new executive team members.

Speaker #2: We have a great team, and I'm excited about the opportunities to create shareholder value. Let's turn to our performance which was a solid result fueled by North America.

The year was not without its challenges, as the international segment absorbed startup costs associated with our new Argentina plant and an industry slowdown in the MIA region.

And across the business. We faced volatile inflation at year end due to the Middle East conflict.

We are addressing these issues head-on.

Speaker #2: Fourth quarter net sales for the company increased 6%, led by a 7% increase in sales volume, and 2% favorable currency impact, partially offset by 3% decline in price mix.

I am proud of what we accomplished this year, and we have strong plans to continue driving progress in fiscal '27 and beyond.

I will now turn the call over to Jim to review the financials and our outlook.

Speaker #2: It was the sixth consecutive quarter of sales volume growth. On a constant currency basis, net sales were up 4%. As Mike said, our North America segment had a strong Q4.

Thank you, Mike, and good morning to everyone.

I've been with Lamb Weston since April, and it has been a pleasure getting to know the team and to see our operations in the Basin as well as in the Netherlands.

We have a great team.

Speaker #2: North America net sales increased 9% with sales volume up 11% as momentum continued with customer wins share gains and strong retention as well as the addition of an extra week.

And I'm excited about the opportunities to create shareholder value.

Let's turn to our performance, which was a solid result fueled by North America.

Speaker #2: Price mix declined only 2% with price and mix equally impacting the quarter. Modest investment in price and trade and a continued mix shift towards lower price channels including chain and private label drove the change.

Fourth quarter net sales for the company increased 6%, led by a 7% increase in sales volume and a 2% favorable currency impact, partially offset by a 3% decline in price/mix.

It was the sixth consecutive quarter of sales volume growth.

On a constant currency basis, net sales were up 4%.

Speaker #2: Looking at the underlying market drivers for this quarter, as reported by Sir Connor Crest, US restaurant traffic was flat. QSR traffic was also flat, led by 3% growth in QSR chicken largely offset by a 4% decline in QSR burger traffic.

As Mike said, our North America segment had a strong Q4.

North American net sales increased 9%, with sales volume up 11%, as momentum continued with customer wins, share gains, and strong retention, as well as the addition of an extra week.

Speaker #2: In our international segment, net sales declined 2%, led by a sales volume decline of 2%, and price mix decline of 4%. Partially offset by favorable currency impact.

Price. Next, declined, with only 2%, and price and mix equally impacting the quarter.

Speaker #2: Sales growth in Asia Pacific and Latin America was more than offset by challenging market conditions in EMEA. Including the impact of the Middle East conflict which began early in our fourth quarter of fiscal 2026.

Modest investment in price and trade, and a continued mix shift towards lower-priced channels, including chain and private label, drove the change.

Looking at the underlying market drivers for this quarter, as reported by Sira Crest.

Us restaurant. Traffic was flat.

Speaker #2: Internationally, QSR traffic in the quarter declined 2% in the UK and France, and 1% in Italy, however was up slightly in Germany and Spain.

Qsr traffic was also flat led by 3% growth in qsr chicken, largely offset by a 4% decline in qsr Burger traffic.

In our International segment, net sales declined 2%.

Speaker #2: Adjusted EBITDA declined 6 million compared to last year, as North America adjusted EBITDA dollars grew 17% or 45 million dollars. In Q4, North America sales volume grew with modest price mix investment and cost savings more than offset inflation.

Led by a sales volume decline of 2%, and price mix decline of 4%.

Partially offset by for favorable currency impacts.

Sales growth in Asia-Pacific and Latin America was more than offset by challenging market conditions in EMIA.

Speaker #2: Our international decline was driven by EMEA challenges. We were carrying higher raw potato costs into the quarter, and we experienced higher fixed cost absorption due to slower European demand.

including the impact of the Middle East conflict, which began early in our fourth quarter of fiscal 2026.

Italy.

However, it was up slightly in Germany and Spain.

Speaker #2: Furthermore, we incurred higher incremental freight costs as a result of the Middle East conflict. For the company, inflation in the quarter was up more than we had expected, all inputs other than raw potato prices were up, with a substantial increase in edible oils and transportation costs.

Adjusted EBITDA declined $6 million compared to last year, as North America adjusted EBITDA dollars grew 17%, or $45 million.

Speaker #2: Demand for biodiesel has driven up the cost of most edible oils and while we are hedged against oil, we are seeing spot price inflation.

In Q4, North America sales volume grew, with modest price, mix investment, and cost savings more than offsetting inflation.

Our international decline was driven by AMEA challenges.

Speaker #2: The input cost volatility experienced in Q4 impacted the quarter. And also carried into the cost of our finished goods, which we will move through in the first quarter of fiscal 27.

We were carrying higher raw potato costs into the quarter, and we experienced higher fixed cost absorption due to slower European demand.

Furthermore, we incurred higher incremental freight costs as a result of the Middle East conflict.

Speaker #2: Adjusted SG&A increased 16 million dollars in the quarter as cost savings benefits were more than offset by higher incentive compensation. On a full year basis, net sales increased 2%, led by a 7% increase in sales volume, and 1% increase in favorable currency impact.

For the company, inflation in the quarter was up more than we had expected. All inputs other than raw potato prices were up, with a substantial increase in edible oils and transportation costs.

Speaker #2: Partially offset by a 6% decrease in price mix. The North America segment delivered 3% net sales growth for the year, led by a 9% increase in sales volume, partially offset by a 6% price mix decline.

Demand for biodiesel has driven up the cost of most edible oils. And while we are hedged against oil, we are seeing spot price inflation.

The input cost volatility experienced in Q4 impacted the quarter and also carried into the cost of our finished goods, which we will move through in the first quarter of fiscal 2027.

Speaker #2: This included an 86 million dollar benefit from the 53rd week. International segment net sales increased 1%, led by a 5% favorable currency impact, and 2% sales volume growth, notably in Asia Pacific and Latin America.

Adjusted SG&A increased $16 million in the quarter, as cost savings benefits were more than offset by higher incentive compensation.

Speaker #2: These gains were partially offset by a 6% decline in price mix. On a constant currency basis, net sales were down 4%. In addition, the extra week added 41 million dollars to the full year results.

On a full-year basis, net sales increased 2%, led by a 7% increase in sales volume and a 1% increase from favorable currency impact.

Partially offset by a 6% decrease in price/mix.

Speaker #2: Full year adjusted EBITDA was down 9% as international challenges were only partly offset by growth in North America. In North America, higher sales volume, lower manufacturing cost per pound, and the benefit of cost savings more than offset inflation and price mix investment.

The North America segment delivered 3% net sales growth for the year, led by a 9% increase in sales volume, partially offset by a 6% price/mix decline.

This included an $86 million benefit from the 53rd week.

International segment, net sales, increased 1% led by a 5% favorable currency impact.

And 2% sales, volume growth notably in Asia Pacific and Latin America.

Speaker #2: Internationally, the decline in EBITDA was driven by lower organic sales given the competitive environment, as well as higher manufacturing cost per pound. The higher costs included write-offs of excess potatoes, lower utilization of our international production facilities, and startup expenses for our new plant in Argentina.

These gains were partially offset by a 6% decline in price/mix.

On a constant-currency basis, net sales were down 4%.

In addition, the extra week added $41 million to the full-year results.

Speaker #2: These were only partially offset by the benefits of cost savings initiatives. The extra week added 29 million dollars in adjusted EBITDA for the year.

Boyer adjusted Eva was down 9% as International challenges. Were only partly offset by growth in North America.

Speaker #2: Cash generation has improved significantly this year. In fiscal 2026, we generated 943 million dollars of cash from operations, up 75 million dollars versus last year.

In North America, higher sales volume, lower manufacturing costs per pound, and the benefit of cost savings more than offset inflation and price/mix investment.

Internationally, the decline in EBA was driven by lower organic sales, given the competitive environment, as well as higher manufacturing costs per pound.

Speaker #2: The increase is largely attributable to 55 million of favorable changes in working capital. Capital expenditures were 410 million dollars in the year, down more than 240 million dollars year over year.

The higher costs include a write-off of excess potatoes.

Lower utilization of our international production facilities, and startup expenses for our new plant in Argentina.

Speaker #2: Our focus on execution and capital discipline has enabled us to deliver 537 million dollars in free cash flow, for fiscal 26, a significant increase year over year.

These were only partially offset by the benefits of cost-savings initiatives.

The extra week, added 29 million and adjusted ibida for the year.

Speaker #2: Our liquidity remains strong with approximately 1.3 billion available under our revolving credit facility, net debt was 3.8 billion dollars, and our net debt to adjusted EBITDA leverage ratio was 3.4 times on a trailing 12-month basis.

Cash generation has improved significantly this year.

In fiscal 2026, we generated 943 million of cash from operations up, 75 million versus last year.

The increase is largely attributable to $55 million of favorable changes in working capital.

Speaker #2: For the full year, we have returned 321 million dollars to shareholders, including 208 million dollars in cash dividends, and 113 million dollars of stock repurchases, of which 63 million was repurchased in the fourth quarter.

Capital expenditures were $410 million in the year, down more than $240 million year-over-year.

Speaker #2: In addition, we announced this morning the next quarterly dividend of 38 cents per share, to be payable on September 4th. As we look to fiscal 27, our position with customers lower cost base, improved operating efficiencies, and the lap of one-time items provides us with a view to expect earnings to grow faster than sales in the coming year.

Our focus on execution and capital discipline has enabled us to deliver $537 million in free cash flow for fiscal 2026, a significant increase year-over-year.

and available under our revolving credit facility.

Net debt was $3.8 billion, and our net debt to adjusted EBITDA leverage ratio was 3.4 times on a trailing 12-month basis.

Speaker #2: In fiscal 27, we expect net sales to be flat to up 1% versus a 52-week adjusted net sales base of 6.5 billion for fiscal 2026.

For the full year, we have returned $3,201 million to shareholders, including $208 million in cash dividends and $113 million of stock repurchases, of which $63 million was repurchased in the fourth quarter.

Speaker #2: We are focused on sustainable earnings growth. In fiscal 27, our adjusted operating income target is a range of 720 million to 800 million dollars.

In addition, we announced this morning the next quarterly dividend of $0.38 per share, to be payable on September 4th.

Our position with customers lowers our cost base.

Speaker #2: The benefits of lower raw potato costs incremental supply chain cost savings initiatives favorable fixed cost absorption from higher utilization and the lapping of fiscal 2026 potato write-offs in Argentina startup costs is anticipated to be modest mostly offset by inflation and essentially all other input cost areas.

Improved operating efficiencies, and the lap of certain one-time items, provides us with a view to expect earnings to grow faster than sales in the coming year.

In fiscal '27, we expect net sales to be flat to up 1%.

Versus a 52-week, adjusted net sales base of $6.5 billion for fiscal 2026.

Speaker #2: We will continue to drive cost savings in both cost of sales and SG&A. In fiscal 2027, we expect SG&A to decline as a result of these efforts.

We are focused on sustainable earnings growth.

In fiscal 2027, our adjusted operating income target is a range of $720 million to $800 million.

Speaker #2: Equity earnings from our JV in North America is anticipated to grow modestly as we have restarted curtailed lines. We expect interest rate expense of approximately 190 million dollars and effective tax rate in the range of 25.5% to 27.5%.

The benefits of lower raw potato costs and incremental supply chain cost savings initiatives.

Favorable fixed cost absorption from higher utilization.

And the lapping of fiscal 2026 potato write-offs and Argentina startup costs.

Speaker #2: We anticipate adjusted EPS to be in the range of $2.95 to $3.25 versus the 52-week fiscal 26 adjusted EPS number of $2.90. We anticipate diluted common shares outstanding to be between 137.5 million and 139 million.

Is anticipated to be modest, mostly offset by inflation and essentially all other input cost areas.

Expect SG&A to decline as a result of these efforts.

Equity earnings from our JV. And North America is anticipated to grow modestly, as we have restarted curtailed lines.

Speaker #2: Adjusted EBITDA is expected to be in the range of 1.1 billion to 1.2 billion versus a comparable 1 billion 128 million over the 52-week period if fiscal 26.

We expect interest rate expense of approximately 190 million dollars.

And an effective tax rate in the range of 25.5% to 27.5%.

Speaker #2: In fiscal 27, we anticipate cash used for capital expenditures of approximately 380 to 410 million dollars. This estimate includes carrying amounts from projects started in the prior year.

We anticipate adjusted EPS to be in the range of $2.95 to $3.00.

versus the fiscal '22, week 52, adjusted EPS number of $2.90,

Speaker #2: Going forward, on an accrual basis, we anticipate investments of up to 350 million. We are improving capital efficiency through the better pacing of investments process improvements to deep bottleneck, which also expands capacity, and strong rigor on returns on investment.

We anticipate diluted common shares outstanding to be between 137.5 million and 139.0 million.

Speaker #2: In addition, our anticipated wastewater related spend will largely be complete by the end of fiscal 27. Operating cash flow remains strong and is expected to be in the range of 750 to 800 million.

Adjusted EBITDA is expected to be in the range of $1.1 billion to $1.2 billion, versus a comparable $1.128 billion over the 52-week period in fiscal '26.

In fiscal '27, we anticipate cash used for capital expenditures of approximately $380 to $410 million.

Speaker #2: As we expect to hold the investment in working capital relatively flat year over year, despite an anticipated increase in net sales. Our company net sales outlook of flat to up 1% assumes flat global restaurant traffic.

This estimate includes carrying amounts from projects started in the prior year.

Going forward on an approval basis, we anticipate investments of up to $350 million.

We are improving capital efficiency through better pacing of investments.

Process improvements to a deep bottleneck, which also expands capacity.

Speaker #2: Our range for EBITDA outcomes on the low slide largely reflects uncertainty around the Middle East impacts on global input cost volatility through the first half of fiscal 27.

And strong rigor on returns on investment.

In addition, our anticipated wastewater-related spend will largely be complete by the end of fiscal '27.

Speaker #2: The upper end of our EBITDA range would assume more favorable net sales from customers channel and product mix as well as delivery of cost savings.

Operating cash flow remains strong and is expected to be in the range of $750 to $800 million.

As we expect to hold the investment in working capital relatively flat year-over-year, despite an anticipated increase in net sales.

Speaker #2: North America is expected to continue top line sales volume growth and market share gains. Net sales on a comparable week basis is expected to be flat to up low single digits with low single digit volume growth and low single digit price mix decline.

Our company net sales outlook is flat to up.

1% assumes. Flat Global Restaurant traffic.

Speaker #2: North America EBITDA is anticipated to be flat to up low single digits as modest price mix investments combined with cost inflation are anticipated to be offset by sales volume growth and our ongoing cost savings initiatives.

Arranged for EBITDA outcomes on the low side, largely reflects uncertainty around the Middle East impacts on global input cost volatility through the first half of fiscal '27.

The upper end of our EBITDA range would assume more favorable.

Speaker #2: product mix as well as delivery of cost savings. North America is expected to continue top line sales volume growth and market share gains. Net sales on a comparable week basis is expected to be flat to up low single digits with low single digit volume growth and low single digit price mix decline.

Net sales from customers Channel and and product mix as well as delivery of cost savings.

Speaker #2: Our international segment top line is anticipated to be down low single digits. Driven by the challenging competitive conditions in EMEA, price mix investment is expected to be low to mid single digits partially offset by low single digit volume growth.

Speaker #2: We expect top line growth in the other regions and international. International segment EBITDA is anticipated to improve between 40 and 50 percent as we lap an incremental 33 million dollars of pre-tax charges for potato write-offs.

Speaker #2: As well as startup costs from our Argentina facility. Overall segment EBITDA is expected to reflect positive contributions from international regions outside of EMEA SG&A savings and operating leverage.

Speaker #2: Partially offset by price investments from carryover and a competitive environment. To help with modeling the cadence through the year, in Q1 we expect the carryover effects from the cost of prior year potato crop and edible oil inflation to have a greater impact.

Speaker #2: For the first quarter, we anticipate net sales to be flat and EBITDA to decline in the low teens. Before growth ramps through the remainder of the year.

Speaker #2: Shifting to an update on the potato crop. In North America, the crop year is off to strong start with favorable weather and crop development slightly ahead of historical timing.

Speaker #2: Our contracted acreage is modestly higher year over year to support increased sales volume growth. In Europe, the crop year is also off to a favorable start with good growing conditions across key regions.

Speaker #2: For the first quarter we anticipate net sales to be flat and EBITDA to decline in the low teens. Before growth ramps through the remainder of the year.

Speaker #2: Our expectation is for an average crop. But it is early in the season. Planted acreage is down year over year with a more pronounced reduction in contracted volumes across the industry including our own.

Speaker #2: Shifting to an update on the potato crop. In North America, the crop year is off to strong start with favorable weather and crop development slightly ahead of historical timing.

Speaker #2: With that, let me hand it back to Jon.

Speaker #1: Thank you, Jim. When I joined Lem Weston, I decided to invest significant time and energy in a deep onboarding process to get to know the business well and identify the biggest opportunities for this turnaround.

Speaker #1: My global onboarding sprint and deep engagement so far with fellow board members senior leaders and the broader team and partners have reinforced the reasons I joined Lem Weston and are informing how we unlock additional value in the business rapidly from here.

Speaker #1: We have a strong foundation a good start with a focus to win strategy and an opportunity to be even bolder in our decisions braver in our performance targets connecting with even more urgency in our initiatives and execution.

Speaker #2: With that, let me hand it back to Jon.

Speaker #1: Thank you, Jim. When I joined Lamb Weston, I decided to invest significant time and energy in a deep onboarding process to get to know the business well and identify the biggest opportunities for this turnaround.

Speaker #1: We have momentum underway to make the business more predictable more profitable and more valuable. To accelerate change with incremental initiatives and to drive structural change throughout the business, I'm focused on three priorities.

Speaker #1: My global onboarding sprint and deep engagement so far with fellow board members senior leaders and the broader team and partners have reinforced the reasons I joined Lamb Weston and are informing how we unlock additional value in the business rapidly from here.

Speaker #1: People, strategy, and resources. I'm driving three key initiatives within each priority. So first, people. My top priorities unlocking are greatest assets. Our people. Our first initiative within our people strategy is performance culture.

Speaker #1: We have a strong foundation a good start with a focus to win strategy and an opportunity to be even bolder in our decisions braver in our performance targets and acting with even more urgency in our initiatives and execution.

Speaker #1: In fiscal 26, we added ROIC and free cash flow already to our compensation metrics. To fully achieve the potential of Lem Weston, we're re building a performance culture by adding enterprise entity and individual targets.

Speaker #1: People, strategy, and resources. I'm driving three key initiatives within each priority. So first, people. My top priority is unlocking our greatest assets, our people.

Speaker #1: We are driving individual accountability and ownership through the tighter use of individual KPIs based on hard quantitative results. We encourage stronger collaboration among our teams through country and region level entity targets for net sales adjusted EBITDA and cash generation.

Speaker #1: Our first initiative within our people strategy is performance culture. In fiscal 26, we added ROIC and free cash flow already to our compensation metrics.

Speaker #1: A change we have already approved for this fiscal 27. For example, Mike's five individual targets as a CEO are designed to deliver holistic improvements.

Speaker #1: To fully achieve the potential of Lamb Weston, we're building a performance culture by adding enterprise entity and individual targets. We are driving individual accountability and ownership through the tighter use of individual KPIs based on hard quantitative results.

Speaker #1: Including net sales growth, big bets innovation growth, targeted growth in some focused regions, as well as ambitious SG&A targets and EBITDA margin improvements. Our second initiative within people strategy is leadership talent.

Speaker #1: We encourage stronger collaboration among our teams through country and region level entity targets for net sales adjusted EBITDA and cash generation. A change we have already approved for this fiscal 27.

Speaker #1: Here, recent appointments including Jim as CFO and Amit as Chief Strategy and Tech Officer are strengthening our talent bench. We are elevating the talent management process and strengthening our succession planning to ensure we are identifying and developing top tier talent around the world.

Speaker #1: For example, Mike's five individual targets as a CEO are designed to deliver holistic improvements. Including net sales growth, big bets innovation growth, targeted growth in some focused regions, as well as ambitious SG&A targets and EBITDA margin improvements.

Speaker #1: Finally, people strategy addresses organization design. We are implementing an organizational design with focus which focuses on simplicity and accountability to enable faster decision making.

Speaker #1: Our second initiative within people strategy is leadership talents. Here, recent appointments including Jim as CFO and Amit as Chief Strategy and Tech Officer are strengthening our talent bench.

Speaker #1: My second priority is strategy. We kicked off rigorous new strategy work that defines which market clusters or logical groups of countries profitable growth will come from.

Speaker #1: We are elevating the talent management process and strengthening our succession planning to ensure we are identifying and developing top tier talent around the world.

Speaker #1: Where to play in this landscape and how to win in these priority markets so we drive sustainable profitable growth. As Mike and Jim have shared, we have made big progress over the past year we confirming our leadership with North American customers.

Speaker #1: That business has stabilized. It is operating with less volatility and the team delivered a strong year with a healthy profit profile and more efficient operations.

Speaker #1: My second priority is strategy. We kicked off rigorous new strategy work that defines which market clusters or logical groups of countries profitable growth will come from.

Speaker #1: With more room for growth. As we look beyond North America, we are working to identify new routes to growth and value creation with the right international footprints.

Speaker #1: We will make choices and allocate different roles to different geographic clusters with sharper resource allocation. We will use M&A partnerships and divestitures together with our organic growth priorities to navigate and execute these outcomes across clusters.

Speaker #1: That business has stabilized. It is operating with less volatility and the team delivered a strong year with a healthy profit profile and more efficient operations.

Speaker #1: This will lead to a renewed growth algorithm. Thirds is our resources priority. Over the past year with focus to win, the company already began implementing a cost program.

Speaker #1: With more room for growth. As we look beyond North America, we are working to identify new routes to growth and value creation with the right international footprints.

Speaker #1: And we are now taking that further to drive a deeper cost culture in SG&A capital expenditures and working capital driving immediate impact on the business results.

Speaker #1: Across the globe we're creating a culture connected to cost where costs are reset to zero and justified on current business value rather than historical habit spend is connected to strategic outcomes through granular KPIs and savings help rebuild margin and fund high return innovation market expansion and organizational resilience.

Speaker #1: This will lead to a renewed growth algorithm. Third is our resources priority. Over the past year we've focused to win the company already began implementing a cost program.

Speaker #1: We also implementing more rigorous plant rankings and adopting best practices to continue to drive supply chain efficiency. Finally, we invest smartly behind clear and simple technology priorities including leveraging the potential of AI to be ever more efficient over time.

Speaker #1: And we are now taking that further to drive a deeper cost culture in SG&A capital expenditures and working capital driving immediate impact on the business results.

Speaker #1: Looking ahead, we expect to drive outcomes in a business with more durable growth and less volatility than many anticipate. There is a high sense of urgency in the organization to drive change and impact in an accelerated way.

Speaker #1: I'm m energized by our momentum and potential. We see significant opportunities to build a high performance culture sharpen our strategic clarity and growth algorithm and strengthen our cost discipline supply efficiency and tech capabilities.

Speaker #1: And we're undertaking this as a seasoned and aligned board and leadership team. We look forward to sharing more with you in future calls and at our investor day in early calendar 27.

Speaker #1: We will now take your questions.

Speaker #2: Thank you. If you would like to ask a question, you may signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment.

Speaker #2: Once again, star one for questions. We'll go first to Andrew Lazar with Barclays.

Speaker #3: Great. Thanks so much. Good morning, everybody.

Speaker #4: Good morning, Andrew.

Speaker #3: Great. Thanks. Maybe first off, just for you, Jan, I realize management and the board are still working through various possible actions to sort of solve for sort of international profitability.

And we are undertaking this as a seasoned and aligned Board and leadership team.

Speaker #3: I guess my question is whether there are certain limits to what actions can be taken or are all options on the table regarding where and how the company should compete.

We look forward to sharing more with you in future calls and at our Investor Day in early calendar '27.

We will now take your questions.

Speaker #3: Or are there certain maybe structural limitations around what can be done that maybe I'm not aware of?

Thank you. If you would like to ask a question, you may signal by pressing star 1 on your telephone keypad.

Speaker #1: Yeah. Thank you, Andrew and great to connect again. Thank you for your question. Yeah. So as I mentioned, we've kind of in the middle of our strategy work now.

If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, star 1 for questions.

We'll go first to Andrew Lazar with Barclays.

Great, thanks so much. Good morning, everybody.

Morning, Andrew.

Speaker #1: It's really a fact based discipline process. And we're really looking at net landed costs. Where do the profit pools develop? And what are the clusters of countries that will drive our growth?

Speaker #1: And then we looked at where to play? How to win? And really essentially it sets us up to make choices between these country clusters as we grow as we build our growth algorithm.

Great, thanks. Um, maybe first off, just just for you yawn. I realize Management in the board are are still working through, you know, various possible, actions to sort of solve for sort of international profitability. I guess, my question is, is whether there are certain limits to what actions can be taken? Or, you know, are all options on the table regarding, you know, where, where, where and how the company should compete or are there certain maybe structural limitations around. What can be done that, that maybe I'm not aware of

Speaker #1: And as a result, we're going to be allocating different roles to different country clusters. Where today maybe every country is trying to achieve everything, in a certain way, it will be more there will be more clarity as to what is the mission of each country cluster.

Speaker #1: Which will also drive sharper resource allocation. So that will then in turn drive any decisions on M&A partnerships and divestitures that will really be a result of this work.

Speaker #1: And to your point, technically everything is on the table as we look through the different country clusters and their role to drive the growth algorithm.

Speaker #1: So we really in the middle of the work right now and we will come back to you with more details at the investor day.

Speaker #1: But the other thing is the team is not sitting still while we do the strategy work, right? So maybe it's helpful, Andrew, if I hand it over to Mike and maybe Mike, you can talk us through how we're improving the EMEA results in the shorter term as well.

Yeah. Thank you. Andrew, and great to connect again. Thank you for your question. Um, yes. So, uh, as I mentioned we um we we've kind of in the middle of our strategy work. Now is really a, a fact based discipline process. Um, and we are we're really looking at net landed costs where do the profit pools, um, develop. Um, and you know what are the the clusters of countries that will drive our growth? And and, you know, then we looked at, you know, we have to play, um, how to win. Uh, and, and really centrally it sets us up to make, uh, choices, uh, between these country clusters. Um, as we grow as we build our, our growth algorithm and, you know, as a result, we are going to be allocating different roles to different country clusters. Um, you know where today, maybe every country is trying to achieve everything. In a certain way uh to be more, there will be more clarity as we as to what is the mission of of each country cluster, which will also drop

Drive sharply resource allocation.

Speaker #4: Yeah. Thanks, Jan. Andrew, as I think about the work that we're doing right now is as Jim cited, LATAM, APAC had a good quarter and really some of the challenges we're seeing are in EMEA.

Speaker #4: But we're not sitting back. We're really trying to control what we can control. I think one thing to remind the group is that the industry spacing three challenges really.

Speaker #4: Last season we experienced really high yields more acres were planted and that led to a lot of extra potatoes in the marketplace which then were processed.

Speaker #4: The second piece was around the fact that there was a lot of excess capacity in the marketplace. Some of that was driven by demand.

Speaker #4: Part of that was driven by less exports from Europe as new capacity was built in some of those developing markets. And then the third area challenge for Europe is really around the traffic slowdown similar to what we've seen in other areas around the globe.

Speaker #4: The thing we're doing in each of those areas is that when you think about the potato crop, it resets every year. And as we shared and prepared remarks, we reduced our acres in EMEA and there's some industry reports out there that suggest that acres are down across the EMEA region.

Speaker #4: We recently announced closing a Brook Heisenborsch. We believe that'll improve our utilization rates by about 10 points and get us into those high 80s, low 90s.

Speaker #4: We're also facilities that we've closed or curtailed into more cost efficient plants. And I'll tell you by doing some of that, I have a lot of confidence that we're going to be able to serve our customers even better.

Speaker #4: There's even been some media reports out there that there's been other companies that are delayed some new production. And then the last thing I'd just say is as it relates to some of the pressure around traffic, we are seeing some softer traffic in the area but in EMEA we have some clear initiatives and programs in place that are going to help us offset the impact through lower costs.

Challenges really, you know, last uh, season, we experienced really high yields, a more Acres were planted and that led to a lot of extra potatoes in the marketplace, which then were processed, you know, um, the second piece was around the fact that there was a lot of excess capacity in the marketplace. Some of that was driven by demand, uh, part of, that was driven by less exports from Europe as, uh, new capacity was built in some of those developing markets and then the third area, uh, challenge for Europe is really around. Um, you know, the traffic slowdown similar to what we've seen in other areas around the globe. You know, the, the thing we're doing in each of those areas is that, you know, when you think about the potato crop it resets every year. And as we shared in a prepared remarks, we reduced our Acres, uh, in in Amia and, you know, there's some industry reports out there that suggests that acres are down across the mere region. You know, we recently announced, uh, closing a brook, heisen boars we believe that'll improve our utilization rates uh, by about 10 points and

Speaker #4: So really proud of what the team's doing and they have plans in each one of our regions. The globe.

Speaker #3: Really, really helpful color. Appreciate it. And then just one quick follow up. I know it's probably still early in the process a bit but I guess where is Lam on sort of negotiations with some of the key sort of customers that come up for contract renewals as we go forward?

Speaker #3: And I guess I'm trying to get a sense of the visibility you have to sort of pricing and the competitive environment in North America in 27.

Get us into those high 80s low 90s. Um you know we're also consolidating that Brooke, kaisen boards and some of the other facilities that we've closed or curtailed into more cost-efficient plants and I'll tell you by doing some of that. I have a lot of confidence that we're going to be able to serve our customers even better. Um you know, there's even been some media reports out there that there's been other companies that have delayed uh some new production and then the last thing I'd just say is as it relates to some of the pressure around traffic um,

Speaker #3: Now that industry utilization's back into the low 90s. Thanks so much.

Speaker #4: Yeah. So I'd say when it comes to contracting, we're in the very early innings of that just kicking things off. I think one thing to remind the group about is we have moved to that contracting calendar about a third of our large QSRs come due for a contracting every year similar to what we've had the last two years.

You know, we are seeing some softer track traffic in the area, but in EMEA, we have some clear initiatives and programs in place that are going to help us offset the impact through lower costs. So, really proud of what the team's doing, and they have plans in each one of our regions around the globe.

Speaker #4: And so we'll see that for this fiscal year as well. There's nothing I would say that sticks out to me as being an anomaly this year but like I said, we're early in that process and we'll share an update next quarter.

Speaker #4: As I think about price mix, as you mentioned, Andrew, we have grown volumes and we see a more balanced supply and demand in some of our regions.

Really, really helpful color. Appreciate it. And then just 1, um, 1 quick, follow-up. I know, it's probably still early in in the process a bit but I guess where, where is lamb on, sort of sort of negotiations, with some of the, the key sort of customers, that that come up for contract renewals, as we go forward. And I guess, I'm trying to get a sense of the visibility, you have to sort of pricing and the competitive environment in North America, in 27, you know, now that industry utilizations back into the the low 90s. Thanks so much.

Speaker #4: That allows us to be a bit more thoughtful about how we go after incremental volume. And as you look at our quarter performance, last quarter we had shared that we had recently taken a price increase in our North America business to cover that input cost inflation across all of our categories except potatoes.

Speaker #4: And as we start to look at the impacts of potential price mix in the future, we'll base the need for pricing changes on that input cost inflation and the margin requirements it takes to invest in our business to be able to support our customers.

Speaker #4: So like I said, contracting is just starting off and we'll give an update next quarter.

Yeah, so I'd say when it comes to Contracting, you know, we're in the the very early Innings of that just kicking things off. Um, I think 1 thing to remind, uh, the group about is we have moved to that um, Contracting calendar of about a third of our large qsrs come due for, uh, a Contracting every year. Similar to what we've had the last 2 years. And so, we'll see that uh, for this fiscal or fiscal year as well. Um, there's nothing I would say that sticks out to me as as being an anomaly, uh, this year, but like I said, we're early in in uh, that process and we'll share an update, um, you know, our next quarter, you know, as I think about, uh, price. Mix. You know, as you mentioned Andrew, we have grown volumes and we see a more balanced supply and demand in some of our regions. Um,

Speaker #3: Great. Thanks so much.

Speaker #2: Thank you. We'll take our next question from Peter Galbo. With Bank of America.

Speaker #5: Hey, guys. Good morning. Thanks for taking the question. Maybe Mike, just to ask on the back of Andrew's question around kind of the country cluster work.

Speaker #5: As it relates more so to capacity in the manufacturing network, I mean, assuming the US is kind of in a state now that's better and maybe you're not going to do as much there, a lot of the capacity expansion that's happened in the last five or six years has been international.

You know, that allows us to be a bit more thoughtful, about how we go after incremental volume. And you know, I, you know, as you look at our, our quarter performance um, you know, last quarter we had shared that we had recently taken a price increase in our North America business to cover uh that input cost inflation across all of our categories, except potatoes. And as we start to look at uh, you know the impacts of potential price mix in the future. Um we'll base the need for pricing changes on that input cost inflation and the margin requirements. It takes to invest in in our business to be able to support our customers. So uh like I said you know, Contracting is just starting off and we'll give an update. Uh next quarter,

Speaker #5: And so a lot of those plants, I would imagine, are relatively new. And so as you go through the process of identifying countries and areas you want to be or don't want to be, just how are you factoring in how new some of this capacity is and how you've spent a lot of capital in some of these markets?

Great. Thanks so much.

Thank you. We'll take our next question from Peter Galbo with Bank of America.

Speaker #5: And to kind of give that up now after, again, these are probably highly efficient plants, just how that's factoring into the decision making.

Hey guys. Uh, good morning, thanks for thanks for taking the questions. Um, maybe like just to to ask on the back of Andrew's question around kind of the, the country cluster work, um, as it relates more so, to to capacity and the manufacturing Network, I mean,

Speaker #4: Yeah. I think one thing to keep in mind, Peter, is listen, our company has been around for 75 years in this industry. It's been around for a long time and there are a lot of older facilities around the world.

Speaker #4: When I think about the capacity out there, a lot of it is kind of driven by new additions in some of those developing markets.

Assuming the U.S. is kind of in a state now, that's better, and maybe you're not going to do as much there. A lot of the capacity expansion that's happened in the last, you know, five or six years has been international. And so a lot of those plants, I would imagine, are relatively new.

Speaker #4: And that's reduced that export demand like I said earlier out of Europe. When I look at our side of the business, we're closing older facilities that have that are close to their end of their useful life.

And and so as you go through the process of identifying countries and areas you want to be or don't want to be just how are you factoring in? Um you know how how new some of this capacity is and and and how you know you've spent a lot of capital in some of these markets and to kind of give that up now after again these are probably highly efficient plants just just how that's factoring into the decision making

Speaker #4: We're able to move that volume into more productive, more efficient facilities which reduces our costs and optimizes our network. As I mentioned and prepared remarks, the media has reported that there are other manufacturers that have curtailed lines or delayed previously announced new capacity and I think the one thing to remember when it comes to these new lines scaling a modern fry line it's a pretty significant undertaking.

Speaker #4: You're already know it involves a lot of capital like you just said. But you really need a reliable source of high quality raw potatoes and then there's some other various complexities that go into that.

You know, when I think about the capacity, uh, out there, you know, a lot of it is, um, kind of driven by, uh, new additions in some of those developing markets, and that’s reduced that export demand—like I said earlier, out of Europe. Um, you know, when I, uh, when I look at our, uh, side of the business, you know, we’re closing older facilities that have, um,

Speaker #4: One that you may not think about is energy. And it takes a lot of energy to run these plants. And so that requires securing the right electricity and approvals to be able to operate it and so forth.

Speaker #4: So as we think about our asset position, we feel really good about where we're at in North America. And kind of the advantage position that we're in and location that we're in, we have great assets and great locations.

that are close to the end of their useful life. We're able to move that volume into more productive, more efficient facilities, which reduces our costs and optimizes our network. You know, as I mentioned in the prepared remarks, the media has reported that there are other manufacturers that have curtailed lines or delayed previously announced new capacity. And I think the one thing to remember when it comes to these new lines,

Speaker #4: And we continue to evaluate that manufacturing footprint around the globe and make sure that we balance it with supply and demand. But like I said, it's about reducing our footprint in some of the older higher cost facilities and moving that into more efficient facilities that we've recently built.

Speaker #5: Got it. Okay. Thanks for that, Mike. And Jan, helpful to get your comments just on overall strategy. I think maybe the one piece that we didn't hear about today is on the pause on the ERP program that was put in place two years ago that was obviously kind of a core to modernizing the network and probably helping to simplify and improve things.

You know, scaling a modern fry line. It's a pretty significant undertaking. You already know, it involves a lot of capital, like you just said, but you really need a reliable source of high-quality raw potatoes. And, you know, then there's some other various complexities, uh, uh, that that go into that, you know, 1, that you may not think about is energy and it takes a lot of, uh, energy to run these plants. And so, you know, that requires securing the right, uh, electricity and, and approvals to, to be able to operate it and and so forth. So, as we think about our asset position, we feel really good about where we're at uh, in North America and kind of the advantaged uh position that we're in and location.

Speaker #5: Just where do we stand on that? Is there work being done around restarting that program that was paused? Is it something that Ahmed needs to come in and be a bit more first before we make a decision?

Speaker #5: Just help us understand kind of where we stand at this point. Thanks very much.

That we're in, we have great assets and and great locations. And we continue to evaluate that manufacturing footprint around the globe and make sure that we balance it with supply and demand. But like I said, it's about uh reducing our footprint in some of the uh older higher cost facilities and uh moving down into more efficient facilities that we recently built

Speaker #6: No, that's a good question as well. I think we brought Ahmed in and of course one of his priorities is strategy and the other one is technology.

Got it, okay.

Speaker #6: And in technology, to your point, one of the reasons that we combine these two areas is that they go very well together, right? So I think on the technology front, there is some clear priorities put in place.

Speaker #6: We'll have to do with data governance. Indeed, the ERP approach, which is more like a these days more like a lean backbone and then of course things like AI and cybersecurity are quite relevant in that context.

Thanks for that Mike and and yon um you know, helpful to get your comments just on overall strategy. I I think maybe the 1 piece that we didn't hear about today. Um, is on, you know, the pause on the Erp program that was put in place 2 years ago, that was obviously kind of a core to, to modernizing the network and and probably helping to simplify and improve things just where, where do we stand on that? Is there is there work being done around, you know, restarting that program that was paused. Is it something that Ahmed needs to come in and and be a bit more first before we make a decision just help us, understand kind of where we stand uh, at at this point. Thanks very much.

Speaker #6: And as Ahmed gets on board, this is for sure one of the elements that he's looking at on how best to organize it. And suffice to say that this company has some learnings on how to do things and what kind of things to avoid and we'll be sure to take that into account as we progress the agenda.

Speaker #2: Thank you. We'll take our next question from Tom Palmer with JP Morgan.

No that that's a good question as well. I think um we brought amitin and um of course 1 of his priorities is strategy and other 1 is technology. Uh, and in technology to your point, you know, 1 of the reasons that we combine, these 2 areas is that they they go very well together, right? So, um, I think on the technology from, um, there is some clear priorities, um, put in place we'll have to do with data governance, uh, indeed, the, the Erp approach which is more like,

Speaker #7: Good morning and thanks for the questions. First off, I did want to follow up a little bit about North America. I think if we look back over time, there have been periods where maybe innovation, right, coated fries products that you guys developed that didn't require fryers.

Speaker #7: Have been key drivers of winning customers. And I think there have been other times where maybe price is kind of the key determinant. In terms of winning certain customers.

These days is more like a lean backbone and then of course, things like Ai and and cyber security are quite relevant in that context and as Amit gets on boards, um, you know, this is for sure 1 of the elements that he's looking at on how best to organize it. Um, and, you know, suffice to say that, you know, this company has some learnings on how to do things and what, what kind of things to avoid, and I will be sure to take that into account as we as we progress the agenda.

Speaker #7: I mean, where do we stand in North America today kind of within that cycle? And then I guess as we think about the coming year and how you're thinking about price negotiations, maybe a little color in kind of how much that first part of that question guides your assumptions for the back half as you go through these negotiations.

Thank you. We'll take our next question, from Tom Palmer with JP Morgan.

Speaker #4: Yeah. Maybe Tom, I'll take us back to what we're doing around focus to win. Because it has more to do with kind of the team and the execution rather than pricing or maybe to what you're alluding to, buying business.

Good morning and, uh, thanks for the questions. Um, first off, I, I did want to follow up a little bit about North America, I think, if we look back over time, there have been periods, uh, where maybe Innovation right coded fries, um, you know, products that that you guys developed that didn't require Friars, have been a key, drivers of winning customers. And I think there have been other times where

Speaker #4: Really over this last year, there's been kind of three pillars that focus to win that have stuck out to me. One, we're building those customer partnerships.

Speaker #4: They're valuing the quality of the consistency the service the innovation that we deliver to them. And I think that's proven by the fact we have a strong NPS score with those customers.

Speaker #4: The second piece is we've been really focused on the cost savings program. And we've identified some additional cost savings above that current program. And we'll allow us to offset some of that price mix.

Maybe price is, is kind of the key determinant um in terms of winning certain customers. I mean, where do we stand in North America today kind of within that cycle and then I I guess as we think about the coming year and and how you're thinking about price negotiations, um maybe a little color in kind of how much that that first part of that question guides your your assumptions for the back half as you go through these negotiations.

Speaker #4: The last piece is you mentioned innovations super important. It drives loyalty. It expands the market. And I think some perfect examples are those that we shared today.

Speaker #4: We're also seeing some renewed interest from customers around LTOs globally. And that's exciting to see as well. And as you know, innovation has higher price points which drives margin accretion.

Speaker #4: So we feel really good about the progress that we're making in North America. And you can see that in the results in Q4.

Speaker #5: Tom, maybe I'd add that so as we always think about, well, are there is the North America customer channel mix sort of what's its posture towards pricing?

Speaker #5: What I've noticed is that if we have freight rate changes and there's freight pressure, that's almost a separate negotiation and it can happen almost any time during the year.

Speaker #5: On some of our multi-year contracts, we have some variability elements that are tied to underlying cost inputs. Maybe edible oil price is changing in the market.

Speaker #5: Some of our larger customers know that's an element of our cost. And clearly as we have a two or a three-year contract, that pricing of that element is always going to be kind of dynamic and passing through.

The service, The Innovation that that we delivered to them. And I think that's proven by the fact, we have a strong MPS score with those customers. The second piece is we've been really focused on the cost Savings Program and we've identified some additional cost savings, uh, above that current program. And we'll uh, that will allow us to offset. Uh, some of that uh, price mix. Um, the last piece, as you mentioned Innovations, super important, uh, you know, it drives loyalty it expands the market and I think, uh, some perfect examples, are those that we share today. We're also seeing some renewed interest from customers around lto globally, and that's exciting to, to see as well. And as you know, uh, you know, innovation has higher price points and which drives, uh, margin accretion. So we feel really good about the progress that we're making in North America. And you can see that in the results, uh, in Q4

Speaker #5: So while you asked the question a little bit like, well, this upcoming fall, contracting for calendar 2027 with a lot of our food service customers, is true, I would just say that our customers are also seeing the underlying cost inflation.

Speaker #5: And that there are elements in how we price into the marketplace that are a bit more dynamic as we go through each year.

Speaker #7: Great. Thank you for that. And Jim, maybe I could just follow up on that inflation picture. How does it net out? It sounds like it may be a little bit different regionally, but kind of when we think about the two segments, inflation or deflation, I guess, when weighing potatoes versus all these other pieces that are more inflationary.

Tom, great, maybe I'd add that, you know. So you know, as we always think about, well are there is the North America customer Channel mixed sort of what's its posture towards pricing. You know, what I've noticed is that, you know, if we have Freight rate changes, you know, and there's Freight pressure, that's almost a separate negotiation and it can happen. Almost turn any time during the year on some of our multi-year contracts. We have, we have some variability elements that are tied to underlying cost inputs, you know, maybe edible oil, uh, prices changing in the market, some of our larger customers know, that's an element of our cost. And clearly as we have

Have a 2- or 3-year contract.

That.

Speaker #5: Yeah. I think net if you do take in the maybe an expectation of the more of the client in the potato cost in Europe although let's see what that crop looks like right now given some of the heat.

Speaker #5: And then in the US, we're about 3% inflation. And so that means other than potato our inflation is a little bit higher.

Pricing of that element is always going to be, you know, kind of dynamic and passing through. So, you know, while you asked the question a little bit like, well, this upcoming fall, you know, contracting for calendar 2027 with a lot of our food service customers, uh, is true. I would just say that our customers are also seeing the underlying cost inflation, um, and that there are elements in how we price into the marketplace that are, um, a bit more dynamic as we go through each year.

Great, thank you for that. And Jim, maybe I could just follow up on that inflation picture.

Speaker #7: Thank you.

Speaker #5: Yeah.

How does it net out? It sounds like it may be a little bit different regionally, but when we think about the two segments,

Speaker #2: Thank you. We'll take our next question from Max Gumpert with BNP Paribas.

Inflation or deflation. I guess when weighing potatoes versus all these other pieces that are more inflationary.

Speaker #8: Hey. Thanks for the question. On North America, your outlook for sales and EBITDA would suggest margins could be relatively flat for North America in 2027.

Speaker #8: I understand you've got modest price mix investments combined with cost inflation which are tied to the offset by volume growth and some ongoing cost savings initiatives.

Yeah, I think you know net if you do take in the uh maybe an expectation of the of the more, more of a the client in the potato cost in Europe. Although you know, let's see what that crop looks like right now. Given some of the Heat

Um, and then in the US, we're at about 3% inflation.

Speaker #8: Can you talk a bit more about how you're viewing the current segment margin level and whether you see any opportunity to build from here going forward?

Um, and so that means, other than potato, our inflation is a little bit, uh, a little bit higher.

On our other employment.

Speaker #6: Yep. Yeah. Maybe

Speaker #4: let me touch on this just quickly. I think price mix moderated in the back half of fiscal 2026 like we had forecasted. I think as you think about fiscal 2027, we expect modest price mix investments.

Thank you. We'll take our next question from Max.

Speaker #4: And a lot of that's going to be the result of decisions we made in last contracting season that will be carrying over into this calendar year.

Hey, thanks for the question on North America. Your outlook for sales and EBITDA—I would suggest margins could be...

relatively flat for North America in 2017. I understand you've got modest price/mix investments combined with cost inflation, which

Speaker #4: But at the end of the day, we're winning with customers and growing and we expect some volume growth. Like I said, some modest price mix investment and we'll continue to execute against our cost savings program that you talked about to offset that inflation and some of the cost volatility.

Are expected to be offset by volume growth and some ongoing cost savings initiatives. But can you talk a bit more about how you're viewing the, uh, current segment margin level? And whether you see any opportunity to build from here going forward?

Speaker #5: Yeah. Maybe on just on what would be on the upper end of what we would see in North America clearly if there is some continued inflation or unexpected inflation, maybe it's an edible oils, maybe it's in corrugated or polybags or maybe it's in freight.

Speaker #5: We're going to have to be working with customers on pricing that through. So we'll be very agile and thinking about the timing of that.

Speaker #5: But we're also look at what we can get favorable channel mix. And we can get favorable product mix. And what that means is within the food service, do we generally see our food service operators relying on the attachment rates and relying on the value of French fries as part of the meal offering and whether that's part of a value meal or part of a broader serving to consumers, I think there is potential at least within the US economy in terms of where wage growth is and stuff that away from home eating at least in terms of dollar spend is still going to be healthy for our customers.

Yep. Yeah, maybe just let me touch on this just quickly. You know, I think um, you know, price makes moderated and the back half of fiscal 26. Um, like we had forecasted, I think as you think about, uh, fiscal 27, we expect modest price mix Investments, and a lot of that's going to be the result of decisions we made in last Contracting season. That will be carrying over, uh, into this, uh, this calendar year. Um, but at the end of the day, you know, we're winning with customers and, and growing and uh, we expect some volume growth. Uh, like I said, some modest price mixed investment and we'll continue to execute against our cost savings program. That you talked about to offset that.

Inflation, and some of the cost of volatility.

Yeah, maybe on just on, you know, what would be on the upper end of what we would see in North America?

Speaker #5: And so we very much look at that opportunity. On the upside for North America.

Speaker #7: Great. And then just a follow-up

You know, clearly if there is, um, some continued inflation or unexpected inflation—maybe it's in edible oils, maybe it's in corrugated or poly bags, or maybe it's in freight—you know, we're going to have to be working with customers on pricing that through. So we'll be very agile in thinking about the timing of that, but we're also looking at, you know, whether we can get favorable channel mix and we can get favorable product mix.

Speaker #8: on CapEx. So you mentioned how obviously on an accrual basis, CapEx is moving lower. In 2027. And you mentioned that going forward on an accrual basis, you anticipate investments of up to $350 million but that's an upper end.

Speaker #8: Can you talk about whether you see any further opportunity to reduce CapEx even further as you go forward in time?

Speaker #5: Yeah. I think what we are using is not just thinking about our approach around zero-based doesn't just kind of stop with expenses. It also thinks about our capital investments and the global team does an amazing job prioritizing opportunities.

On the value of of french fries as part of the meal offering whether that's part of a value meal or part of, you know, a broader serving to Consumers, I think there is, um, potential at least within the US economy. Um, in terms of where wage growth is and stuff that, uh, away from home eating, at least, in terms of dollar spend is still going to be healthy for our customers. And so we very much look at that opportunity. Um, on the upside for for North America.

Speaker #5: And so within that, to the extent that we're going to get leaner on some of the existing investments that are currently in our plan that adds up to that accrual of $350, if we can take $10 million or $20 million out of that number, we have a list.

Speaker #5: And so number five or number six or number seven on that list may offer a high teens type of ROI and pretty quick payback.

Great and then just a follow-up on on Capital. So you mentioned how, you know, obviously on an incredible basis capex is, is moving lower than 27 and you mentioned that going forward on an Excel basis. You anticipate Investments of up to 350 million dollars but that's an uptrend. Can you talk about whether you see any further opportunity to to reduce capex, even further as as you go forward in time?

Speaker #5: We're going to choose at that time whether or not to pursue that or if it feels like, hey, maybe some of the inflation on those types of capital projects is more expensive than we might pause and deliver a lower accrual amount.

Speaker #5: But we definitely have a list and we would like to prioritize what we go after.

Speaker #8: Okay. Great. Thanks very much. I'll leave it there.

Yeah I I think you know what we are using is is not just thinking about, you know, our approach around, you know, zero-based doesn't just kind of stopped with expenses. It also thinks about our Capital Investments and you know the the the global team does an amazing job prioritizing opportunities. Um and so within that to the extent that we're going to get, you know, leaner on some of the existing Investments that are currently in our plans that adds up to that approval of 350, if we can take 10 million or 20 million out of that number,

Speaker #2: Thank you. We'll take our next question from Scott Marks with Jefferies.

Speaker #6: Hey. Good morning. Thanks very much for taking our questions. I wanted to just follow up on the North America conversation. Obviously, this past year was pretty solid from a volume perspective.

we have a list and so number 5 or number 6 or number 7 on that list may offer, you know, a high teens, you know, type of Roi and and pretty quick payback, we're going to choose at that time, uh, whether or not to pursue that or if it feels like, hey, maybe some

Speaker #6: And just wondering, as you think about going forward, how do you think about number one maintaining those gains holding the share that you've picked up but also as we look to fiscal 2027, maybe talk about which channels or opportunities you see as the most realistic or the most priority for your team.

Uh, some of the inflation on those types of capital projects is more expensive than we'll—. We might pause and deliver a lower accrual amount, um, but we definitely have a list and we would like to prioritize what we go after.

Okay, great. Thanks very much. Tell you about their...

Thank you. We'll take our next question from Scott Marx with Jefferies.

Speaker #4: Yeah. As I think about the business into the future here into 2027, we feel really good about the work that we've done this past year.

Speaker #4: Like I mentioned, we've delivered some strong results. Our customer MPS scores have improved. We're delivering innovation. To the team and we're having our customers come to us, asking for more innovation and talking about LTOs which is all positive.

Speaker #4: Like I mentioned, we will be lapping some of the pricing decisions that we made in 2026. But I have a little bit of a carryover into 2027 but feel really good about our plan for 2027 in that North America business.

Hey, good morning. Thanks very much for for taking our questions. Um, wanted to just follow up on the, the North America conversation. Um, obviously this past year, um, was pretty pretty solid from from the volume perspective and I'm just wondering as you think about going forward, how do you, how do you think about number 1, maintaining those gains, um, holding the share that you've picked up, but also as we look at fiscal 27, maybe talk about which channels or opportunities you see as as you know, the most um, the most realistic or the most priority for your team.

Speaker #5: And we encourage you to go try our olive oil. Innovation. It's quite tasty. And it sells at a better price point.

Speaker #6: It does. Okay. Understood. Thank you. And then just a quick follow-up on the CapEx conversation just to piggyback off of the one Max asked.

Speaker #6: Just a moment ago, as we think about this accrual rate of $350 million, obviously, that's a material step down from what the business is talking about just about a year, a year and a half ago.

Speaker #6: I think it was a $450 million base target. Previously, so just wondering with that big of a reduction, if I have that correct, how do you think about maintaining the status quo of the business, investing for growth, investing for efficiency with that much coming out of the coming out of the base investments?

Yeah, you know, as I, I, um, think about the business, uh, you know, into the future here into 27. Um, you know, we feel really good about the work that we've done this past year. Like I mentioned, uh, you know, we've delivered, uh, some strong results, our customer MPS scores, uh, have improved. Uh, we're delivering Innovation, uh, uh, to the team and we're having our customers, um, come to us, ask for more asking for more Innovation. And, and talking about lto which is all positive. Like I mentioned, we will be, uh, lapping some of the pricing decisions that we made in 26, but I have a little bit of a carryover, uh, in in the 27 but feel really good about, uh, our plan for 27 in that North American Business.

And we encourage you to go try our olive oil innovation—it's quite tasty, and it sells at a better price point.

Tough.

Speaker #5: Yeah. Hey, Scott. Look, I think our reliability level of spend, just staying in business on the plans, I believe it's less than $350. And so we still have dollars that we're putting into really optimizing.

Speaker #5: And so Sylvia and her team globally have ideas around each of the plants in terms of where we can actually make kind of major production line changes.

Okay. Understood, thank you. And then just a quick follow-up on, on, on the capex conversation. Uh, just just to take you back off of of the 1, Max asked, uh, just a moment ago, you know, as we think about this, this approval rate of 350 million. Obviously, that's a, a material step down from, from what the business was talking about. Just just about a year, a year and a half ago, I think it was at 450 million dollar base Target. Um,

Speaker #5: And when we do that, one, we put in new equipment which usually runs with better water usage, lower energy cost, and maybe it even expands our capacity because we've debottled part of a particular production line.

Previously. Um, so just just wondering with with that big of of reduction if if I have that correct, you know, how do you think about maintaining? You know the status quo of the business investing for growth Investing For efficiency with with that much coming out of the coming out of out of the base Investments.

Speaker #5: And so we're just thinking about how we pace those investments as we go forward. And so I think there's still a substantial amount of budget left in the $350 amount.

Yeah, hey Scott, you know, look, I think our reliability, uh, level of spend, you know, just staying in business on the plants—I believe it's less than $350. Um, and so we still have...

Speaker #5: I think we should always as a company, because what management may present to the board may say, hey, we have some really fantastic ideas.

Speaker #5: That lead to payback and we want to have a little agility on that number. But for right now, for 2027, we're going to accrue to $350 million in new projects.

Speaker #2: Thank you. That will conclude our question and answer session at this time. I'd like to turn the call back over to Ms. Hancock for any additional or closing remarks.

Speaker #3: Thanks. Thank you. And I want to thank everyone for joining us today. Just a reminder that the replay of the call will be available on our website later this afternoon.

Kind of measure production, line changes. And when we do that 1, we we we put in new equipment, which usually runs with, you know, better water usage, lower energy cost and maybe it even expands our capacity because we Deb bottled part of, you know, a particular production line. And so, we're just thinking about how we Pace those Investments, um, you know, as we go forward. And so, I think there's still substantial amount of budget left in in the, the 350 amount.

Speaker #3: Have a great day.

I think we should always as a company because the, you know, what management may present to the board may say, hey we have some really fantastic ideas, um, that lead the payback and you know, if we want to have a little agility on that number, but for right now, for 2027, we're going to approve to 350 million in new projects,

Thank you. That will conclude our question and answer session. At this time, I'd like to turn the call back over to Miss Hancock for any additional or closing remarks.

Thanks, thank you. And, um, I want to thank everyone for joining us today. Just a reminder that the replay of the call will be available on our website later this afternoon. Have a great day.

That will conclude today's call. We appreciate your participation.

Operator: Good day, welcome to the Lamb Weston Q4 and full year fiscal 2026 Earnings Call. Today's call is being recorded. At this time, I'd like to turn the call over to Debbie Hancock. Please go ahead.

Operator: Good day, welcome to the Lamb Weston Q4 and Full Year Fiscal 2026 Earnings Call. Today's call is being recorded. At this time, I'd like to turn the call over to Debbie Hancock. Please go ahead.

Debbie Hancock: Thank you. Good morning, thank you for joining us for Lamb Weston's Q4 and full year fiscal 2026 earnings call. I'm Debbie Hancock, Lamb Weston's vice president of investor relations. Earlier today, we issued our press release and posted slides that we will use for our discussion today. You will find both on our website at lambweston.com. Please note that during our remarks, we will make forward-looking statements about the company's expected performance that are based on our current expectations. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our SEC filings for more details on our forward-looking statements. Some of today's remarks include non-GAAP financial measures. These non-GAAP financial measures should not be considered a replacement for and should be read together with our GAAP results.

Debbie Hancock: You can find the GAAP to non-GAAP reconciliations in our earnings release in the appendix to our presentation. Joining me today are Jan Craps, executive chair, Mike Smith, president and CEO, and Jim Gray, chief financial officer. Each will provide prepared remarks and then will be available to take your questions. I will now turn the call over to Jan.

Jan Craps: Thank you, Debbie, and good morning, everyone. I'm happy to be with you today for my first earnings call at Lamb Weston. I will start with observations from my first month as executive chair, then turn the call over to Mike and Jim for their review of our performance. I will come back at the end of our call with additional remarks about the roadmap ahead before we take your questions. In the next hour, we plan to spend about two-thirds of our time on prepared remarks and leave about 20 minutes for questions. It's a real pleasure to work with this board, management team and partners. I joined Lamb Weston in early February after more than 20 years with ABI, most recently as a CEO and co-chair of Budweiser APAC and APAC CEO for ABI. Now let me share what attracted me to Lamb Weston.

Jan Craps: First, the company operates in an attractive and growing category, expanding volume, price, mix, and margins over time, largely serving food service customers on multi-year contracts. Second, Lamb Weston is a scaled leader with an advantage plant network in this great category, with a strong and growing core North American profit pool, significant cash generation potential, and a meaningful turnaround opportunity and optionality across our international footprints. Third, Lamb Weston has a seasoned board making swift and purposeful decisions to drive incremental value for shareholders. My role as executive chair has several key responsibilities. Chairing a deeply engaged board of directors to set the company's priorities and track its progress. Focusing on people through talent development and building a performance culture.

Jan Craps: Leading the next leg of our strategy development, including where to play, how to win, inorganic moves like M&A and partnership or divestitures, and driving a clear growth algorithm. Mentoring Mike and the executive leadership team, providing insights on priority topics like embedding a cost culture, realizing tech and benchmarking opportunities, where my past experience complements the leadership team's expertise. Finally, working with Mike as he continues to lead the daily operations of the organization as a CEO, translating our strategic plan into a robust operational plan, and driving the execution of our strategy and our teams to deliver results. It's an exciting time to be part of Lamb Weston. Let me wrap up my opening remarks with observations and reflections from my global onboarding sprint so far. Over my first 100 days, I spent a significant amount of time meeting our teams and getting to know our people.

Jan Craps: They are passionate about our business. I've engaged with our colleagues at more than 15 plants in the US, in the UK, Europe, China, and Australia, so more than half of our facilities. I visited farms, customers, and stores, and I've spoken with select analysts, bankers, investors, and industry players. I've been struck by the energy and ideas across our value chain and ecosystem. I'm encouraged that we are rebounding confidently from a period of uneven execution and disrupted market dynamics. Controlling the controllables, including rebuilding North American volumes on a more resilient and efficient supply chain. I see a leadership team that is embracing more strategic clarity and choices, a deeper performance culture, and sharper focus on costs, cash flow, and consistency.

Jan Craps: While the Focus to Win strategy is in its first year, I view it as the right first steps for Lamb Weston, implemented with an essential customer-first mindset. I view execution of the first phase of Focus to Win as a key step of a broader program to improve performance and returns on capital at Lamb Weston. I'm encouraged by our team's progress and execution of this first phase. In parallel, we are driving initiatives to expand those efforts more broadly across the organization in subsequent phases of Focus to Win. I will discuss some of these efforts later in our call, and this will culminate in an investor day in early calendar 2027. The key message I want you to take from me is that there is focus and alignment in driving this company to achieve its full potential.

Jan Craps: To that end, in support of this opportunity, I have made a significant personal investment in Lamb Weston shares, and my compensation is tied to the stock price. I don't participate in the annual incentive plan. I am rewarded if you, our shareholders, are rewarded. With that, let me hand it over to Mike.

Mike Smith: Thank you, Jan. It's great to have you and Jim with us today. I am excited about the work we are doing together to accelerate and build on the foundation we have in place. Good morning to everyone joining us today to discuss our Q4 and full year results. The key message I want to leave with you today is that we made meaningful progress as an organization in fiscal 2026. I told you a year ago that Lamb Weston was on a journey to rebuild its credibility with both our customers and investors. I believe fiscal 2026 was a strong step toward that goal. We delivered for our customers in the way they expect of us, and we delivered on the financial targets and key performance milestones that we shared with you on our July 2025 call.

Mike Smith: I want to start again this quarter by thanking the Lamb Weston teams around the world for their efforts in executing our new strategy in a challenging and dynamic market. Together, we delivered a solid quarter and year, led by the strength of North America. Throughout fiscal 2026, we stabilized our North America business, growing volume, sales, and EBITDA for the full year, and ending with a 26% segment EBITDA margin. Internationally, in the Q4, we faced disruption in shipments and volatile input cost inflation from the Middle East. Jim will speak to our Q4 performance shortly. As we've previously discussed, market conditions drove greater competition and pricing pressure, notably in EMEA. We are controlling the controllables and setting a strategic plan to maximize returns across our global footprint, including closing a facility in the Netherlands. We invested effectively, significantly reducing capital expenditures and delivering strong cash flow.

Mike Smith: We returned $321 million to shareholders, bringing our total return since going public to greater than $2.2 billion. Today, I'm going to focus on what we accomplished this past year, my first full fiscal year as CEO. Jim will then review the financials, Jan will speak to the strategic work he is leading as Executive Chair. Within our Focus to Win strategy, strengthening customer partnerships has been my top priority since taking over as CEO. We have worked to reaffirm our role as a trusted partner. We drove the mantra of customer centricity across the organization. We focused our commercial teams on joint business partnerships and value-added relationships. Our supply chain organization was laser-focused on meeting our customers' quality, service, and order fill rate requirements. Our marketing and innovation teams ensured we armed our customers with insights and menu items to stand out in the marketplace.

Mike Smith: These efforts have delivered six consecutive quarters of volume growth. In Q4, volume and share grew in North America despite a demand-challenged market. We grew in opportunity regions such as Asia Pacific and Latin America. During the year, we extended several of our largest strategic customers' contracts. We seamlessly supported significant new customer rollouts. We partnered on menu innovation, including value-add, higher margin LTOs, and we facilitated the store and geographic expansions of our customers. In the US, where we measure net promoter score, according to proprietary research, our NPS increased over last year and is the highest among major competitors. Our customers value Lamb Weston. They trust us. They demand our quality. They rely on our service and our innovation. We are committed to creating value together. Executional excellence is another strategic pillar we significantly advanced this past year.

Mike Smith: Similar to reaffirming customers' trust, this was another top priority for me. Our increasingly nimble supply chain team facilitated this customer success, meeting the demand in incremental North America volume while also driving improved operational efficiencies, recurring cost savings, and debottlenecking plants to increase capacity. We are moving in the right direction with the opportunity for improvement as we bring standardization and adopt best practices across our manufacturing network. As we further develop our demand planning systems, we believe that outstanding individual plant operating teams can be even better together. Outside North America, we are optimizing supply chain assets globally to reduce our costs and better meet future customer demand. During fiscal 2026, we opened a new state-of-the-art production facility in Mar del Plata, Argentina. This facility provides us with a clear advantage to deliver some of the highest quality and premium product in the region.

Mike Smith: As we ramped up production, performance and profit improved throughout the year. We closed an older legacy facility and consolidated production into one location. Volume is up, utilization is better, and we have room to grow. In China, our newest facility in Inner Mongolia has a similar trajectory. Opened in 2023, this facility provides us with additional local processing capacity in a growing market. We've grown volume and net sales double digits since opening the facility. These strategic facilities are big bets in important growth regions that take time to build to optimal utilization. Our local presence has led to expansion of our market opportunity and additional customer wins. In Europe, our efforts to meet global customer demand and maintain a competitive advantage have led to the reduction in our footprint.

Mike Smith: During Q4, we temporarily curtailed a line in the Netherlands. In early June, we announced our intention to close an older production facility in Broekhuizenvorst, which is also in the Netherlands. That facility represents about 10% of our EMEA production capacity. These actions, while difficult, will rebalance our capacity with demand and build a foundation for more effective network utilization and lower costs. As it has been reported in the media, the industry has announced some delays to new production. There is significant work being done behind these decisions about where to play and how to win. Jan will speak to this next layer of our strategy work shortly. Another significant deliverable in our executing with excellence pillar is lowering costs and improving productivity. The team has done a tremendous job of identifying and successfully executing against opportunities.

Mike Smith: A year ago, we launched a cost savings program to deliver at least $250 million of annualized run rate savings by the end of fiscal 2028. After year one, we exceeded our first-year milestone of $100 million. This is the result of a lot of hard work from everyone at Lamb Weston. Based on the success of the program to date in delivering structural savings to supply chain, reducing our manufacturing cost per pound, and reducing SG&A costs, we will continue to pursue additional opportunities to improve our cost structure and capital efficiency. These savings have offset inflation and allowed us to invest in targeted support for our customers and to offset some mix headwinds. We believe the investments that we have made in our customers has strengthened our base and will lead to future opportunities to create value together.

Mike Smith: Our price mix investment has moderated in Q4, and the combination of strong volume demand and cost savings is beginning to show results, as evidenced by our Q4 North America EBITDA margin expansion and dollar growth. Finally, disruptive innovation remains a key unlock in our value add for customers and consumers. Innovation drives traffic, unlocks new markets, and anticipates consumers' changing taste preferences. In fiscal 2026, we launched new items at retail, including private label innovation and new Alexia seasoned items. With food service, we introduced operator and distributor innovation, as well as Lamb Weston batter line extensions. Our consistent focus on innovation has increased the percentage of net sales coming from new items, a key KPI in measuring our innovation success.

Mike Smith: This month, we launched new items aligned to consumer preferences, expanding our Alexia olive oil product into additional retailers and launching similar products into the food service channel. There is more to come this fall with disruptive innovation launches for both retail and food service. At the core of our success is our people. Throughout the year, we worked to develop a continuous improvement in performance culture. As leaders, my team and I led with transparency and clarity. We ended the year with improved employee engagement scores, and we are building on this going forward. We also added depth to our board and management with additional global and strategic expertise from Jan, and more recently, the addition of Jim as CFO. Earlier this month, Amit Philip joined us in the new role of Chief Strategy and Technology Officer.

Mike Smith: Amit brings expertise from a distinguished career spanning consulting, technology, and food manufacturing, including leadership roles at TreeHouse Foods and The Hershey Company. In closing, we delivered a solid year driven by sustainable results, including a strong recovery in our North America business, meaningful progress in executing Focus to Win, especially with customers and execution, a greater than anticipated achievement of cost savings, improved capital discipline and strong return of capital to shareholders, and strength and engagement with our teams and new executive team members. The year was not without its challenges, as the international segment absorbed startup costs associated with our new Argentina plant and an industry slowdown in the EMEA region. Across the business, we faced volatile inflation at year-end due to the Middle East conflict. We are addressing these issues head-on.

Mike Smith: I am proud of what we accomplished this year, and we have strong plans to continue driving progress in fiscal 2027 and beyond. I will now turn the call over to Jim to review the financials and our outlook.

Jim Gray: Thank you, Mike, and good morning to everyone. I've been with Lamb Weston since April, and it has been a pleasure getting to know the team and see our operations in the Basin, as well as the Netherlands. We have a great team, and I'm excited about the opportunities to create shareholder value. Let's turn to our performance, which was a solid result fueled by North America. Q4 net sales for the company increased 6%, led by a 7% increase in sales volume and 2% favorable currency impact, partially offset by 3% decline in price mix. It was the sixth consecutive quarter of sales volume growth. On a constant currency basis, net sales were up 4%. As Mike said, our North America segment had a strong Q4.

Jim Gray: North America net sales increased 9%, with sales volume up 11%, as momentum continued with customer wins, share gains, and strong retention, as well as the addition of an extra week. Price mix declined only 2%, with price and mix equally impacting the quarter. Modest investment in price and trade and a continued mix shift towards lower priced channels, including chain and private label, drove the change. Looking at the underlying market drivers for this quarter, as reported by Circana CREST, US restaurant traffic was flat. QSR traffic was also flat, led by 3% growth in QSR chicken, largely offset by a 4% decline in QSR burger traffic. In our International segment, net sales declined 2%, led by a sales volume decline of 2% and price mix decline of 4%, partially offset by favorable currency impacts.

Jim Gray: Sales growth in Asia Pacific and Latin America was more than offset by challenging market conditions in EMEA, including the impact of the Middle East conflict, which began early in our Q4 of fiscal 2026. Internationally, QSR traffic in the quarter declined 2% in the UK and France and 1% in Italy, however, was up slightly in Germany and Spain. Adjusted EBITDA declined $6 million compared to last year, as North America Adjusted EBITDA dollars grew 17%, or $45 million. In Q4, North America sales volume grew with modest price mix investment and cost savings more than offset inflation. Our International decline was driven by EMEA challenges. We were carrying higher raw potato costs into the quarter, and we experienced higher fixed cost absorption due to slower European demand. Furthermore, we incurred higher incremental freight costs as a result of the Middle East conflict.

Jim Gray: For the company, inflation in the quarter was up more than we had expected. All inputs other than raw potato prices were up, with a substantial increase in edible oils and transportation costs. Demand for biodiesel has driven up the cost of most edible oils, and while we are hedged against oil, we are seeing spot price inflation. The input cost volatility experienced in Q4 impacted the quarter and also carried into the cost of our finished goods, which we will move through in Q1 of fiscal 2027. Adjusted SG&A increased $16 million in the quarter as cost savings benefits were more than offset by higher incentive compensation. On a full year basis, net sales increased 2%, led by a 7% increase in sales volume and 1% increase in favorable currency impact, partially offset by a 6% decrease in price mix.

Jim Gray: The North America segment delivered 3% net sales growth for the year, led by a 9% increase in sales volume, partially offset by a 6% price mix decline. This included an $86 million benefit from the 53rd week. International segment net sales increased 1%, led by a 5% favorable currency impact and 2% sales volume growth, notably in Asia Pacific and Latin America. These gains were partially offset by a 6% decline in price mix. On a constant currency basis, net sales were down 4%. In addition, the extra week added $41 million to the full year results. Full year adjusted EBITDA was down 9% as International challenges were only partly offset by growth in North America. In North America, higher sales volume, lower manufacturing cost per pound, and the benefit of cost savings more than offset inflation and price mix investment. Internationally, the decline in EBITDA was driven by lower organic sales given the competitive environment, as well as higher manufacturing cost per pound.

Jim Gray: The higher costs included write-offs of excess potatoes, lower utilization of our international production facilities, and start-up expenses for our new plant in Argentina. These were only partially offset by the benefits of cost savings initiatives. The extra week added $29 million in adjusted EBITDA for the year. Cash generation has improved significantly this year. In fiscal 2026, we generated $943 million of cash from operations, up $75 million versus last year. The increase is largely attributable to $55 million of favorable changes in working capital. Capital expenditures were $410 million in the year, down more than $240 million year over year.

Jim Gray: Our focus on execution and capital discipline has enabled us to deliver $537 million in free cash flow for fiscal 2026, a significant increase year over year. Our liquidity remains strong with approximately $1.3 billion available under our revolving credit facility. Net debt was $3.8 billion, and our net debt to adjusted EBITDA leverage ratio was 3.4 times on a trailing 12-month basis. For the full year, we have returned $321 million to shareholders, including $208 million in cash dividends and $113 million of stock repurchases, of which $63 million was repurchased in Q4. In addition, we announced this morning the next quarterly dividend of $0.38 per share to be payable on 4 September.

Jim Gray: As we look to fiscal 2027, our position with customers, lower cost base, improved operating efficiencies, and the lap of one-time items provides us with a view to expect earnings to grow faster than sales in the coming year. In fiscal 2027, we expect net sales to be flat to up 1% versus a 52-week adjusted net sales base of $6.5 billion for fiscal 2026. We are focused on sustainable earnings growth. In fiscal 2027, our adjusted operating income target is a range of $720 million to $800 million. The benefits of lower raw potato costs, incremental supply chain cost savings initiatives, favorable fixed cost absorption from higher utilization, and the lapping of fiscal 2026 potato write-offs and Argentina startup costs is anticipated to be mostly offset by inflation in essentially all other input cost areas. We will continue to drive cost savings in both cost of sales and SG&A.

Jim Gray: In fiscal 2027, we expect SG&A to decline as a result of these efforts. Equity earnings from our JV in North America is anticipated to grow modestly as we have restarted curtailed lines. We expect interest rate expense of approximately $190 million, an effective tax rate in the range of 25.5% to 27.5%. We anticipate adjusted EPS to be in the range of $2.95 to $3.25, versus the 52-week fiscal 2026 adjusted EPS number of $2.90. We anticipate diluted common shares outstanding to be between 137.5 million and 139 million. Adjusted EBITDA is expected to be in the range of $1.1 billion to $1.2 billion, versus a comparable $1,128 million over the 52-week period of fiscal 2026. In fiscal 2027, we anticipate cash used for capital expenditures of approximately $380 to $410 million. This estimate includes carrying amounts from projects started in the prior year.

Jim Gray: Going forward, on an accrual basis, we anticipate investments of up to $350 million. We are improving capital efficiency through the better pacing of investments, process improvements to debottleneck, which also expands capacity, and strong rigor on returns on investment. In addition, our anticipated wastewater related spend will largely be complete by the end of fiscal 2027. Operating cash flow remains strong and is expected to be in the range of $750 to $800 million, as we expect to hold the investment in working capital relatively flat year over year, despite an anticipated increase in net sales. Our company net sales outlook of flat to up 1% assumes flat global restaurant traffic. Our range for EBITDA outcomes on the low side largely reflects uncertainty around the Middle East impacts on global input cost volatility through the H1 of fiscal 2027.

Jim Gray: The upper end of our EBITDA range would assume more favorable net sales from customers, channel, and product mix, as well as delivery of cost savings. North America is expected to continue top line sales volume growth and market share gains. Net sales on a comparable week basis is expected to be flat to up low single digits, with low single-digit volume growth and low single-digit price mix decline. North America EBITDA is anticipated to be flat to up low single digits as modest price mix investments, combined with cost inflation, are anticipated to be offset by sales volume growth and our ongoing cost savings initiatives. Our international segment top line is anticipated to be down low single digits. Driven by the challenging competitive conditions in EMEA, price mix investment is expected to be low to mid-single digits, partially offset by low single-digit volume growth.

Jim Gray: We expect top line growth in the other regions in International. International segment EBITDA is anticipated to improve between 40% and 50% as we lap an incremental $33 million of pre-tax charges for potato write-offs, as well as start-up costs from our Argentina facility. Overall segment EBITDA is expected to reflect positive contributions from international regions outside of EMEA, SG&A savings, and operating leverage, partially offset by price investments from carryover and a competitive environment. To help with modeling the cadence through the year, in Q1, we expect the carryover effects from the cost of prior year potato crop and edible oil inflation to have a greater impact. For Q1, we anticipate net sales to be flat and EBITDA to decline in the low teens before growth ramps through the remainder of the year. Shifting to an update on the potato crop.

Jim Gray: In North America, the crop year is off to a strong start with favorable weather and crop development slightly ahead of historical timing. Our contracted acreage is modestly higher year over year to support increased sales volume growth. In Europe, the crop year is also off to a favorable start with good growing conditions across key regions. Our expectation is for an average crop, but it is early in the season. Planted acreage is down year over year with a more pronounced reduction in contracted volumes across the industry, including our own. With that, let me hand it back to Jan.

Jan Craps: Thank you, Jim. When I joined Lamb Weston, I decided to invest significant time and energy in a deep onboarding process to get to know the business well and identify the biggest opportunities for this turnaround. My global onboarding sprint and deep engagement so far with fellow board members, senior leaders, and the broader team and partners, have reinforced the reasons I joined Lamb Weston and are informing how we unlock additional value in the business rapidly from here. We have a strong foundation, a good start with a Focus to Win strategy, and an opportunity to be even bolder in our decisions, braver in our performance targets, and acting with even more urgency in our initiatives and execution. We have momentum underway to make the business more predictable, more profitable, and more valuable.

Jan Craps: To accelerate change with incremental initiatives and to drive structural change throughout the business, I'm focused on three priorities: people, strategy, and resources. I'm driving three key initiatives within each priority. First, people. My top priority is unlocking our greatest assets, our people. Our first initiative within our people strategy is performance culture. In fiscal 2026, we added ROIC and free cash flow already to our compensation metrics To fully achieve the potential of Lamb Weston, we are building a performance culture by adding enterprise, entity, and individual targets. We are driving individual accountability and ownership through the tighter use of individual KPIs based on hard quantitative results. We encourage stronger collaboration among our teams through country and region-level entity targets for net sales, adjusted EBITDA, and cash generation, a change we have already approved for this fiscal 2027.

Jan Craps: For example, Mike's five individual targets as a CEO are designed to deliver holistic improvements, including net sales growth, big bets innovation growth, targeted growth in some focused regions, as well as ambitious SG&A targets and EBITDA margin improvements. Our second initiative within people strategy is leadership talent. Here, recent appointments, including Jim as CFO and Amit as Chief Strategy and Tech Officer, are strengthening our talent bench. We are elevating the talent management process and strengthening our succession planning to ensure we are identifying and developing top-tier talent around the world. Finally, people strategy addresses organization design. We are implementing an organizational design which focuses on simplicity and accountability to enable faster decision-making. My second priority is strategy.

Jan Craps: We kicked off rigorous new strategy work that defines which market clusters or logical groups of countries profitable growth will come from, where to play in this landscape, and how to win in these priority markets so we drive sustainable profitable growth. As Mike and Jim have shared, we have made big progress over the past year, reconfirming our leadership with North American customers. That business has stabilized. It is operating with less volatility, and the team delivered a strong year with a healthy profit profile and more efficient operations, with more room for growth. As we look beyond North America, we are working to identify new routes to growth and value creation with the right international footprints. We will make choices and allocate different roles to different geographic clusters with sharper resource allocation.

Jan Craps: We will use M&A partnerships and divestitures together with our organic growth priorities to navigate and execute these outcomes across clusters. This will lead to a renewed growth algorithm. Third is our resources priority. Over the past year with Focus to Win, the company already began implementing a cost program, and we are now taking that further to drive a deeper cost culture in SG&A, capital expenditures, and working capital, driving immediate impact on the business results. Across the globe, we are creating a culture connected to costs, where costs are reset to zero and justified on current business value rather than historical habits. Spend is connected to strategic outcomes through granular KPIs, and savings help rebuild margin and fund high return innovation, market expansion, and organizational resilience. We're also implementing more rigorous plant rankings and adopting best practices to continue to drive supply chain efficiency.

Jan Craps: Finally, we invest smartly behind clear and simple technology priorities, including leveraging the potential of AI to be ever more efficient over time. Looking ahead, we expect to drive outcomes in a business with more durable growth and less volatility than many anticipate. There is a high sense of urgency in the organization to drive change and impact in an accelerated way. I'm energized by our momentum and potential. We see significant opportunities to build a high-performance culture, sharpen our strategic clarity and growth algorithm, and strengthen our cost discipline, supply efficiency, and tech capabilities. We are undertaking this as a seasoned and aligned board and leadership team. We look forward to sharing more with you in future calls and at our Investor Day in early calendar 2027. We will now take your questions.

Operator: Thank you. If you would like to ask a question, you may signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, star one for questions. We'll go first to Andrew Lazar with Barclays.

Andrew Lazar: Great. Thanks so much. Good morning, everybody.

Jan Craps: Morning, Andrew.

Andrew Lazar: Great. Thanks. Maybe first off, just for you, Jan, I realize management and the board are still working through various possible actions to sort of solve for international profitability. I guess my question is whether there are certain limits to what actions can be taken or are all options on the table regarding where and how the company should compete? Or are there certain, maybe structural limitations around what can be done that maybe I'm not aware of?

Jan Craps: Yeah. Thank you, Andrew, and great to connect again. Thank you for your question. Yeah. As I mentioned, we're kind of in the middle of our strategy work now. It's really a fact-based discipline process. We're really looking at net landed costs, where do the profit pools develop? What are the clusters of countries that will drive our growth? Then we looked at where to play, how to win, and really, centrally, it sets us up to make choices between these country clusters as we build our growth algorithm. As a result, we are going to be allocating different roles to different country clusters. Where today, maybe every country is trying to achieve everything in a certain way, there will be more clarity as to what is the mission of each country cluster, which will also drive sharper resource allocation.

Jan Craps: That will then, in turn, drive any decisions on M&A partnerships and divestitures. That will really be a result of this work. To your point, technically, everything is on the table as we look through the different country clusters and their role to drive the growth algorithm. We're really in the middle of the work right now, and we will come back to you with more details at the Investor Day. The other thing is, the team is not sitting still while we do the strategy work, right? Maybe it's helpful, Andrew, if I hand it over to Mike, and maybe Mike, you can talk us through how we are improving the EMEA results in the shorter term as well.

Mike Smith: Yeah. Thanks, Jan. Andrew, as I think about the work that we're doing right now, as Jim cited, LATAM, APAC, had a good quarter. Really some of the challenges we're seeing are in EMEA. We're not sitting back. We're really trying to control what we can control. I think one thing to remind the group is that the industry's facing three challenges, really. Last season, we experienced really high yields. More acres were planted, and that led to a lot of extra potatoes in the marketplace, which then were processed. The second piece was around the fact that there was a lot of excess capacity in the marketplace. Some of that was driven by demand. Part of that was driven by less exports from Europe as new capacity was built in some of those developing markets.

Mike Smith: The third area of challenge for Europe is really around the traffic slowdown, similar to what we've seen in other areas around the globe. The thing we're doing in each of those areas is that, when you think about the potato crop, it resets every year. As we shared in the prepared remarks, we reduced our acres in EMEA, and there's some industry reports out there that suggest that acres are down across the EMEA region. We recently announced closing of Broekhuizenvorst. We believe that'll improve our utilization rates by about 10 points and get us into those high 80s, low 90s. We're also consolidating that Broekhuizenvorst and some of the other facilities that we've closed or curtailed into more cost-efficient plants.

Mike Smith: I'll tell you, by doing some of that, I have a lot of confidence that we're going to be able to serve our customers even better. There's even been some media reports out there that there's been other companies that have delayed some new production. The last thing I'd just say is, as it relates to some of the pressure around traffic, we are seeing some softer traffic in the area, but in EMEA, we have some clear initiatives and programs in place that are going to help us offset the impact through lower costs. Really proud of what the team's doing, and they have plans in each one of our regions around the globe.

Andrew Lazar: Really, really helpful color. Appreciate it. Just one quick follow-up. I know it's probably still early in the process a bit, but I guess, where is Lamb on negotiations with some of the key customers that come up for contract renewals as we go forward? I guess I'm trying to get a sense of the visibility you have to pricing and the competitive environment in North America in 2027, now that industry utilization's back into the low 90s. Thanks so much.

Mike Smith: Yeah. I'd say when it comes to contracting, we're in the very early innings of that, just kicking things off. I think one thing to remind the group about is we have moved to that contracting calendar. About a third of our large QSRs come due for contracting every year, similar to what we've had the last two years. We'll see that for this fiscal year as well. There's nothing I would say that sticks out to me as being an anomaly this year, but like I said, we're early in that process, and we'll share an update next quarter. As I think about price mix, as you mentioned, Andrew, we have grown volumes, and we see a more balanced supply and demand in some of our regions. That allows us to be a bit more thoughtful about how we go after incremental volume.

Mike Smith: As you look at our quarter performance, last quarter, we had shared that we had recently taken a price increase in our North America business to cover that input cost inflation across all of our categories except potatoes. As we start to look at the impacts of potential price mix in the future, we'll base the need for pricing changes on that input cost inflation and the margin requirements it takes to invest in our business to be able to support our customers. Like I said, contracting is just starting off, and we'll give an update next quarter.

Andrew Lazar: Great. Thanks so much.

Operator: Thank you. We'll take our next question from Peter Galbo with Bank of America.

Peter Galbo: Hey, guys. Good morning. Thanks for taking the question. Maybe, Mike, just to ask on the back of Andrew's question around the country cluster work as it relates more so to capacity in the manufacturing network. Assuming the US is in a state now that's better and maybe you're not going to do as much there, a lot of the capacity expansion that's happened in the last five or six years has been international. A lot of those plants I would imagine are relatively new.

Peter Galbo: As you go through the process of identifying countries and areas you want to be or don't want to be, just how are you factoring in how new some of this capacity is and how you've spent a lot of capital in some of these markets, and to kind of give that up now after, again, these are probably highly efficient plants. Just how that's factoring into decision-making.

Mike Smith: Yeah, I think, one thing to keep in mind, Peter, is listening to this, our company's been around for 75 years, and this industry's been around for a long time. There are a lot of older facilities around the world. When I think about the capacity out there, a lot of it is driven by new additions in some of those developing markets, and that's reduced that export demand, like I said earlier, out of Europe. When I look at our side of the business, we're closing older facilities that are close to their end of their useful life. We're able to move that volume into more productive, more efficient facilities, which reduces our costs and optimizes our network. As I mentioned in prepared remarks, the media's reported that there are other manufacturers that have curtailed lines or delayed previously announced new capacity.

Mike Smith: I think the one thing to remember when it comes to these new lines, scaling a modern fry line, it's a pretty significant undertaking. You already know it involves a lot of capital, like you just said, but you really need a reliable source of high-quality raw potatoes. Then there's some other various complexities that go into that. One that you may not think about is energy, and it takes a lot of energy to run these plants. That requires securing the right electricity and approvals to be able to operate it and so forth. As we think about our asset position, we feel really good about where we're at in North America and the advantaged position that we're in and location that we're in.

Mike Smith: We have great assets in great locations, and we continue to evaluate that manufacturing footprint around the globe and make sure that we balance it with supply and demand. Like I said, it's about reducing our footprint in some of the older, higher cost facilities and moving that into more efficient facilities that we recently built.

Peter Galbo: Got it. Okay. Thanks for that, Mike. Jan, helpful to get your comments just on overall strategy. I think maybe the one piece that we didn't hear about today is on the pause on the ERP program that was put in place two years ago. That was obviously a core to modernizing the network and probably helping to simplify and improve things. Just where do we stand on that? Is there work being done around restarting that program that was paused? Is it something that Amit needs to come in and see a bit more first before we make a decision? Just help us understand where we stand at this point. Thanks very much.

Jan Craps: That's a good question as well. I think, we brought Amit in and, of course, one of his priorities is strategy. Another one is technology. In technology, to your point, one of the reasons that we combine these two areas is that they go very well together, right? I think on the technology front, there is some clear priorities put in place will have to do with data governance. Indeed, the ERP approach, which these days, more like a lean backbone. Then, of course, things like AI and cybersecurity are quite relevant in that context. As Amit gets on board, this is for sure one of the elements that he's looking at on how best to organize it.

Jan Craps: Suffice to say that this company has some learnings on how to do things and what kind of things to avoid, and we'll be sure to take that into account as we progress the agenda.

Operator: Thank you. We'll take our next question from Tom Palmer with J.P. Morgan.

Tom Palmer: Good morning, thanks for the questions. First off, I did want to follow up a little bit about North America. I think if we look back over time, there have been periods where maybe innovation, coated fries, products that you guys developed that didn't require fryers, have been key drivers of winning customers. I think there have been other times where maybe price is kind of the key determinant in terms of winning certain customers. Where do we stand in North America today within that cycle? Then, I guess as we think about the coming year and how you're thinking about price negotiations, maybe a little color in how much that first part of that question guides your assumptions for the back half as you go through these negotiations.

Mike Smith: Yeah, maybe, Tom, I'll take us back to what we're doing around Focus to Win, because it has more to do with the team and the execution rather than pricing or maybe to what you're alluding to, buying business. Really over this last year, there's been three pillars of that Focus to Win that have stuck out to me. One, we're building those customer partnerships. They're valuing the quality, the consistency, the service, the innovation that we deliver to them. I think that's proven by the fact we have a strong NPS score with those customers. The second piece is we've been really focused on the cost savings program, and we've identified some additional cost savings above that current program, and it will allow us to offset some of that price mix. The last piece, as you mentioned, innovation's super important. It drives loyalty. It expands the market.

Mike Smith: I think some perfect examples are those that we shared today. We're also seeing some renewed interest from customers around LTOs globally, and that's exciting to see as well. As you know, innovation has higher price points, which drives margin accretion. We feel really good about the progress that we're making in North America, and you can see that in the results in Q4.

Jim Gray: Tom, maybe I'd add that, as we always think about, is the North America customer channel mix, what's its posture towards pricing? What I've noticed is that if we have freight rate changes, and there's freight pressure, that's almost a separate negotiation, and it can happen almost any time during the year. On some of our multi-year contracts, we have some variability elements that are tied to underlying cost inputs. Maybe edible oil price is changing in the market. Some of our larger customers know that's an element of our cost. Clearly, as we have a two or a three-year contract, that pricing of that element is always going to be dynamic in passing through. While you asked the question a little bit like, well, this upcoming fall, contracting for calendar 2027 with a lot of our food service customers is true.

Jim Gray: I would just say that our customers are also seeing the underlying cost inflation, and that there are elements in how we price into the marketplace that are a bit more dynamic as we go through each year.

Tom Palmer: Great. Thank you for that. Jim, maybe I could just follow up on that inflation picture. How does it net out? It sounds like it may be a little bit different regionally, but when we think about the two segments, inflation or deflation, I guess, when weighing potatoes versus all these other pieces that are more inflationary.

Jim Gray: Yeah, I think net, if you do take in maybe an expectation of more of a decline in the potato cost in Europe, although, let's see what that crop looks like right now, given some of the heat. Then in the US, we're about 3% inflation. So that means other than potato, our inflation is a little bit higher on our other input.

Tom Palmer: Got it. Thank you.

Jim Gray: Yeah.

Operator: Thank you. We'll take our next question from Max Gumport with BNP Paribas.

Max Gumport: Hey, thanks for the question. On North America, your outlook for sales and EBITDA would suggest margins could be relatively flat for North America in 2027. I understand you've got modest price mix investments combined with cost inflation, which are expected to be offset by volume growth and some ongoing cost savings initiatives. Can you talk a bit more about how you're viewing the current segment margin level and whether you see any opportunity to build from here going forward?

Mike Smith: Yeah, maybe let me touch on this just quickly. I think price mix moderated in the back half of fiscal 2026, like we had forecasted. I think as you think about fiscal 2027, we expect modest price mix investments, and a lot of that's going to be the result of decisions we made in last contracting season that we'll be carrying over into this calendar year. At the end of the day, we're winning with customers and growing, and we expect some volume growth. Like I said, some modest price mix investment, and we'll continue to execute against our cost savings program that you talked about to offset that inflation and some of the cost volatility.

Jim Gray: Yeah, maybe just on what would be on the upper end of what we would see in North America. Clearly, if there is some continued inflation or unexpected inflation, maybe it's in edible oils, maybe it's in corrugated or poly bags, or maybe it's in freight. We're going to have to be working with customers on pricing that through. We'll be very agile in thinking about the timing of that. We'll also look at what we can get favorable channel mix, and we can get favorable product mix. What that means is within food service, do we generally see our food service operators relying on the attachment rates and relying on the value of French fries as part of the meal offering, whether that's part of a value meal or part of a broader serving to consumers?

Jim Gray: I think there is potential, at least within the US economy, in terms of where wage growth is and stuff that away from home eating, at least in terms of dollar spend, is still going to be healthy for our customers. We very much look at that opportunity on the upside for North America.

Max Gumport: Great. Just a follow-up on CapEx. You mentioned how obviously on an accrual basis, CapEx is moving lower in 2027, and you mentioned that going forward on an accrual basis, you anticipate investments of up to $350 million, but that's an upper end. Can you talk about whether you see any further opportunity to reduce CapEx even further as you go forward in time?

Jim Gray: I think what we are using is not just thinking about our approach around zero-based. Doesn't just kind of stop with expenses. It also thinks about our capital investments. The global team does an amazing job prioritizing opportunities. Within that, to the extent that we're going to get leaner on some of the existing investments that are currently in our plan, that adds up to that accrual of $350. If we can take $10 million or $20 million out of that number, we have a list. Number five or number six or number seven on that list may offer a high teens type of ROI and pretty quick payback.

Jim Gray: We're going to choose at that time whether or not to pursue that, or if it feels like, hey, maybe some of the inflation on those types of capital projects is more expensive, then we might pause and deliver a lower accrual amount. We definitely have a list, and we would like to prioritize what we go after.

Max Gumport: Okay, great. Thanks very much. I'll leave it there.

Operator: Thank you. We'll take our next question from Scott Marks with Jefferies.

Scott Marks: Hey, good morning. Thanks very much for taking our questions. Wanted to just follow up on the North America conversation. Obviously, this past year was pretty solid from a volume perspective. Just wondering, as you think about going forward, how do you think about, number one, maintaining those gains, holding the share that you've picked up, but also, as we look to fiscal 2027, maybe talk about which channels or opportunities you see as the most realistic or the most priority for your team?

Mike Smith: Yeah. As I think about the business into the future here, into 2027, we feel really good about the work that we've done this past year. Like I mentioned, we've delivered some strong results. Our customer NPS scores have improved. We're delivering innovation to the team, and we're having our customers come to us asking for more innovation and talking about LTOs, which is all positive. Like I mentioned, we will be lapping some of the pricing decisions that we made in 2026. That'll have a little bit of a carryover into 2027, but feel really good about our plan for 2027 in that North American business.

Jim Gray: We encourage you to go try our olive oil innovation. It's quite tasty, and it sells at a better price point.

Scott Marks: Okay, understood. Thank you. Just a quick follow-up on the CapEx conversation, just to piggyback off of the one Max asked just a moment ago. As we think about this accrual rate of $350 million, obviously, that's a material step down from what the business was talking about just about a year and a half ago. I think it was a $450 million base target previously. Just wondering, with that big of a reduction, if I have that correct, how do you think about maintaining the status quo of the business, investing for growth, investing for efficiency with that much coming out of the base investments?

Jim Gray: Yeah. Hey, Scott. Look, I think our reliability level of spend, just staying in business on the plants, I believe it's less than $350 million. We still have dollars that we're putting in to really optimizing. Sylvia and her team globally have ideas around each of the plants in terms of where we can actually make kind of major production line changes. When we do that, one, we put in new equipment, which usually runs with better water usage, lower energy cost, and maybe it even expands our capacity because we've debottlenecked part of a particular production line. We're just thinking about how we pace those investments as we go forward. I think there's still a substantial amount of budget left in the $350 million amount.

Jim Gray: I think we should always as a company, because what management may present to the board may say, Hey, we have some really fantastic ideas that lead to payback, and we want to have a little agility on that number. For right now, for 2027, we're going to accrue to $350 million in new projects.

Operator: Thank you. That will conclude our question and answer session. At this time, I'd like to turn the call back over to Ms. Hancock for any additional or closing remarks.

Debbie Hancock: Thanks. Thank you. I want to thank everyone for joining us today. Just a reminder that the replay of the call will be available on our website later this afternoon. Have a great day.

Operator: That will conclude today's call. We appreciate your participation.

Full Year 2026 Lamb Weston Holdings Inc Earnings Call

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