Lamb Weston (LW 69.96, +4.01, +6.09%) opened higher by more than 6%
after beating quarterly expectations.
The company, which was spun-off from ConAgra (CAG 33.38, -0.07, -0.21%) in late 2016, is an Idaho-headquartered producer, distributor, and marketer of frozen potato products, from fries to potato pancakes, as well as other sweet potato, appetizer, and vegetable products. It prides itself on “seeing possibilities in potatoes.” For its first quarter, Lamb Weston reported above-consensus earnings of $0.73 per share on an 11.9% year/year jump in revenue to $914.9 mln, which was also ahead of expectations.
Volume grew 4%, fueled by growth in Global and Retail segments. Price/mix rose 8% thanks to pricing actions and favorable product and customer mix.
Gross margin improved to 25.2% from 24.0% thanks to a favorable price/mix, higher volume, and supply chain efficiency savings.
The company realized sales growth in all segments. Global segment net sales grew 13% year/year to $466.8 mln. Price/mix grew 8% thanks to pricing actions taken in the previous year and improvements in customer and product mix. Volume grew 5% due to limited time product offerings and higher sales to strategic customers in the U.S. and key international markets.
Foodservice net sales increased 7% to $297.8 mln. Price/mix also grew 7%, benefiting from pricing actions taken last year. Volume declined slightly, as higher sales of higher-margin products offset losses from some lower-margin products.
Retail segment net sales increased 26% to $116.2 mln. Price/mix grew 13% thanks to higher prices across private label and branded portfolios and improved mix. Volume also grew 13% due to distribution gains.
Looking forward to the remainder of the fiscal year, Lamb Weston expects that net sales will show mid-single digit growth. Adjusted EBITDA is expected between $860 mln and $870 mln.
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