Lamb Weston Holdings, Inc. (LW) stock is trading up more than 5% on Tuesday after the frozen products provider reported better-than-expected fiscal 2027 first-quarter results and raised its fiscal 2027 guidance.
The company reported earnings of 75 cents per share, beating the Wall Street estimate for a loss of 59 cents.
Net sales increased 1% year over year to $1.67 billion, beating the analyst consensus estimate of $1.65 billion.
The company posted an adjusted EBITDA of $286 million, compared with $302 million a year earlier.
Lamb Weston ended the quarter with $166 million in cash and cash equivalents and $1.24 billion of additional available liquidity under its revolving credit facility.
Financial Highlights and Management Commentary
The company's net sales growth of 1% was driven by a 2% increase in sales volume and a favorable currency impact, partially offset by a 2% decrease in price/mix.
CEO Mike Smith said the quarter benefited from continued momentum in North America, where strong customer relationships supported sales-volume growth.
The company said its capacity optimization initiatives started over a year ago and led to a nearly 10% increase in utilization for its North America segment.
The company recorded sequential improvement in adjusted EBITDA for its International segment, though the Europe, the Middle East, and Africa region continues to face challenging market conditions.
Management focused on balancing its network utilization and ended production at its Broekhuizenvorst facility.
Inflation Remains A Headwind
The company continues to face uneven inflationary pressure across key input costs and freight expense.
Management is focusing on improving supplier relations, its hedging strategy, and capacity optimization initiatives to address inflationary concerns.
Lamb Weston Raises Fiscal 2027 Outlook
Lamb Weston raised its fiscal 2027 outlook for net sales, adjusted EBITDA and adjusted earnings per share.
The company expects fiscal 2027 net sales growth in low single digits, up from 0.0% to 1.0% previously.
Adjusted earnings are expected to range from $3.05 to $3.35 per share, compared with the analyst estimate of $3.01.
Lamb Weston expects adjusted EBITDA in the range of $1.125 billion to $1.215 billion, while capital expenditures between $380 to $410 million.
During the quarter, the company returned $52 million to shareholders through cash dividends. The company reported that $245 million remains authorized and available for repurchase under its share repurchase program.
Lamb Weston's board declared a quarterly dividend of 38 cents per share. The dividend is payable Dec. 4 to shareholders of record as of Nov. 6.
LW Price Action: Lamb Weston Holdings shares were trading at $46.83 at the time of publication on Tuesday, according to market data.
