Lamb Weston Cuts FY25 Outlook After Weak Q2 Results; Names Michael Smith CEO; Stock Plunges

Lamb Weston Holdings

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Kaufen / Verkaufen

(RTTNews) - Shares of Lamb Weston Holdings, Inc. (LW) were losing around 18 percent in the pre-market activity on the NYSE after the supplier of frozen potato products on Thursday lowered its fiscal 2025 outlook after reporting a loss in its second quarter with weak net sales.

Further, the company announced the appointment of Michael Smith, its current Chief Operating Officer, as President and Chief Executive Officer and as a Board member, effective January 3, 2025. Smith succeeds Thomas Werner, who is stepping down as CEO and as Board member, but will serve in an advisory role through August 31, 2025.

Smith joined Lamb Weston in 2007 and has served in senior leadership roles during his 17-year career at the company.

In addition, the Board of Directors declared a quarterly dividend of $0.37 per share of Lamb Weston common stock, a $0.01 increase. The dividend is payable on February 28 to stockholders of record as of the close of business on January 31.

Regarding the results and the outlook revision, Werner, President and CEO, said, "Our financial results in the second quarter were below our expectations. Higher-than-expected manufacturing costs and softer volumes accounted for the shortfall, while price/mix and operating expenses were broadly in line with our targets for the quarter. In terms of the broader operating environment, we expect challenging conditions to persist through the remainder of fiscal 2025 and into fiscal 2026..."

For fiscal 2025, the company now expects net income of $330 million to $350 million and earnings per share of $2.30 to $2.45. The previous outlook was net income range of $395 million to $445 million and earnings per share range of $2.70 to $3.15.

Adjusted net income target has been reduced to $440 million to $460 million, or $3.05 to $3.20 per share, compared to previous view of $600 million to $615 million or $4.15 to $4.35 per share.

Analysts on average expect the company to report earnings of $4.20 per share, according to figures compiled by Thomson Reuters. Analysts' estimates typically exclude special items.

Further, the company reduced adjusted EBITDA target range to $1.17 billion to $1.21 billion from a previous target of approximately $1.38 billion.

Annual net sales target is $6.35 billion to $6.45 billion, lower than previous range of $6.6 billion to $6.8 billion. Analysts project sales of $6.65 billion for the year.

The revision primarily reflected the increased competitive environment on price/mix and volume in its International Segment, incremental volume pressure in North America, and its financial performance in the second quarter.

In its second quarter, net loss was $36.1 million, compared to prior year's net earnings of $215.0 million. Loss per share was $0.25, compared to earnings of $1.48 in the same period last year.

Adjusted earnings were $94.5 million or $0.66 per share for the period. Analysts projected $1.01 per share.

Net sales dropped 8 percent to $1.60 billion from $1.73 billion in the same period last year. The Street was looking for revenues of $1.67 billion.

Volume declined 6 percent, largely reflecting the impact of soft global restaurant traffic trends.

On the NYSE, Lamb Weston shares closed Wednesday's trading at $78.22, down 4.98 percent. In pre-market activity, the shares were trading 18.2 percent lower at $64.00.

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