Lamb Weston Highlights Continued Strong Execution Of Strategic Growth Initiatives, Issues Long-Term Financial Targets, And Increases Share Repurchase Authorization

Published online: Oct 31, 2023 Articles
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Eagle, Idaho -- (BUSINESS WIRE) -- In connection with its 2023 Investor Day, Lamb Weston Holdings, Inc. (NYSE: LW) is highlighting its continued progress against its strategic growth initiatives, providing updated long-term financial targets, reaffirming its fiscal 2024 outlook, and announcing an increase to its share repurchase authorization.

Key to achieving the company’s goal of continued shareholder value creation are the following competitive strengths and strategies:

  • Focus on the attractive, growing frozen potato category;
  • Leading market positions, including No. 1 in North America and No. 2 globally, to support customer growth across all regions and channels;
  • Advantaged global manufacturing footprint with advanced production capabilities focused on higher-margin, premium products;
  • Established, long-term customer relationships and product portfolio;
  • Innovation leadership, which creates opportunities to drive growth and expand its total addressable market;
  • Strong balance sheet to maintain financial flexibility; and
  • Disciplined and balanced capital allocation priorities, including reinvesting in the business and returning cash to shareholders.

“Over the last several years, Lamb Weston has strengthened our position as a leading global producer, distributor and marketer of frozen potato products,” said Werner. “Our global supply chain optimization and disciplined, results-driven capital allocation strategy have created a more profitable, high-growth business that we believe is well-positioned to support customers, leverage our global scale and create value for our shareholders. We are confident in our ability to build on our strong foundation, and remain committed to investing in our business to support sustainable, profitable growth over the long term.”

Long-Term Financial Targets

The company is providing long-term targets that align with the Company’s objectives of delivering top- and bottom-line growth, including:

  • Net sales growth in the low-to-mid-single digits, driven by a balance of volume growth and price and mix;
  • Adjusted EBITDA(1) growth in the mid-to-high-single digits, supported by net price realization, mix improvement, supply chain productivity and SG&A leverage; and
  • Adjusted Diluted EPS(1) growth in the high single digits driven by a flexible capital structure and execution of the Company’s capital allocation strategies, including share repurchases.

In addition, the company is providing other long-term financial targets, including:

  • Selling, general and administrative expenses, excluding advertising and promotion expenses, of 10.5 percent to 11.0 percent of net sales;
  • Capital expenditures of approximately 9 percent of net sales; and
  • Net debt to Adjusted EBITDA(1) leverage ratio of up to 3.5 times.

Fiscal 2024 Outlook

The company is also reaffirming its fiscal 2024 financial targets that it provided during its fiscal first quarter 2024 earnings call on October 5, 2023, as follows:

  • Net sales of $6.8 billion to $7.0 billion;
  • Net income of $800 million to $870 million, and Diluted EPS of $5.47 to $5.92;
  • Adjusted Net Income(1) of $805 million to $875 million, and Adjusted Diluted EPS(1) of $5.50 to $5.95; and
  • Adjusted EBITDA(1) of $1,540 million to $1,620 million.

Increase In Share Repurchase Authorization And Capital Allocation Update

Lamb Weston has returned more than $1.2 billion to shareholders in the form of share repurchases and dividends to shareholders since becoming an independent public company in 2016.

In this regard, the Lamb Weston Board of Directors has increased the company’s share repurchase authorization to an aggregate amount of $500 million, including approximately $124 million of remaining unused capacity under the Board’s previous repurchase authorization. The program has no expiration date.

Under the share repurchase program, the company is authorized to repurchase shares of common stock through one or more open market transactions, privately negotiated transactions or a combination of the foregoing. The timing and amount of share repurchases will be subject to the Company’s evaluation of market conditions, applicable legal requirements and other factors.

Lamb Weston remains committed to leveraging its strong cash flow generation to further support growth and return cash to shareholders, with a balanced approach to capital allocation that is focused on three main priorities:

Supporting growth and scale through strategic investments to increase manufacturing flexibility, enhance innovation, and improve its information technology infrastructure;

Returning cash to shareholders with a target dividend payout ratio of 25 percent to 35 percent of net income and opportunistic share repurchases under its newly expanded authorization; and

Evaluating M&A opportunities designed to enhance growth opportunities, expand its manufacturing footprint to be more cost competitive, and strengthen capabilities in local markets.

End Notes

(1) Adjusted EBITDA, Adjusted Diluted EPS, and Adjusted Net Income are non-GAAP financial measures. Please see the discussion of non-GAAP financial measures at the end of this press release for more information.