Lamb Weston (LW 49.65, +2.48) has spiked 5.3% in pre-market after beating first quarter expectations.
The potato company, whose spin-off from ConAgra (CAG 33.41, +0.07) was completed in late 2016, reported above-consensus first quarter earnings of $0.57 per share on a 5.3% year-over-year increase in revenue to $817.50 million, which also exceeded expectations.
Lamb Weston's revenue growth rate was supported by a 3.0% increase in price/mix and 2.0% volume growth with increases observed across all business segments.
Global segment net sales grew 4.0% to $413.90 million with price/mix increasing 3.0% due to price increases and improvements in customer and product mix. Volume increased 1.0% due to domestic market growth. The global segment is comprised of the top 100 North American based restaurant chain customers and the company's international business. The segment's product contribution margin edged up 1.0% due to favorable price/mix and volume gains that were largely offset by inflation in commodity, manufacturing, transportation, and warehousing costs.
Foodservice segment net sales rose 7.0% to $279.40 million with price-mix growing 6.0% thanks to the carryover effect of pricing in fiscal year 2017. Volume grew 1.0% thanks to broad-based growth in customer base. The segment's product contribution margin jumped 14.0% due to favorable price/mix that was partially offset by inflation in commodity, manufacturing, transportation, and warehousing costs.
Retail segment net sales rose 3.0% to $92.00 million, but price/mix declined 6.0% due to higher trade spending. Volume jumped 9.0% due to the introduction of Grown in Idaho-branded products and growth of private label products. The segment's product contribution margin fell 16.0% due to higher trade spending and higher transportation and warehousing costs.
The company reaffirmed its guidance for fiscal year 2018, expecting that revenue growth rate will be in the low to mid-single digits. Interest expense is expected to be between $105 million and $110 million.