Executive Summary

Q1 FY26 delivered volume-led top-line growth and broad-based beats vs S&P Global consensus: revenue $1.659B vs $1.616B*, Adjusted EPS $0.74 vs $0.53*, and Adjusted EBITDA $302M vs $254M*; management reaffirmed FY26 outlook despite price/mix pressure and higher taxes .
Mix headwinds persisted (price/mix −7% at constant currency) as LW continued price and trade support; volumes rose 6% on customer wins/retention, especially in North America and Asia .
Guidance maintained: FY26 net sales (cc) $6.35–$6.55B and Adjusted EBITDA $1.0–$1.2B; capex ~$500M. LW now includes enacted tariff impacts (approx. $25M annualized exposure) and raised FY26 tax-rate guide to 26–27% from ~26% .
Near-term margin cadence: Q2 gross margin expected roughly flat to Q1, with a seasonal step-up in Q3; International margins face start-up costs (Argentina) and maintenance-driven burden in Q2 .
Potential stock reaction catalysts: material beats vs estimates*, reaffirmed outlook, visible cost-savings ramp, and restart of a curtailed U.S. line signaling sustained demand momentum .

What Went Well and What Went Wrong

What Went Well
- Volume momentum: +6% company-wide volumes on customer wins/retention; North America +5% volumes, International +6% (Asia and multinational chains) .
- Cost actions and cash generation: Adjusted SG&A −$24M YoY to $132M and cash from ops $352M, driven by cost savings and working capital improvements (lower inventories) .
- Clear strategic execution: “Focus to Win” advancing—LW realigned sales coverage, added broker model to underpenetrated channels, restarted a curtailed line to sustain fill rates, and began shipping from the new Argentina facility; “we are energized and excited by the emerging evidence of results” (CEO) .
What Went Wrong
- Price/mix headwinds: Price/mix −7% at constant currency, reflecting carryover from FY25 price/trade investments and unfavorable channel mix; gross profit declined to $342M (Adj GP $339M) .
- Higher effective tax rate: ETR rose to 42.7% (Adj ETR 30.2%) due to discrete items (valuation allowance on certain international DTAs), pressuring Adjusted Net Income/Adjusted EPS YoY .
- Equity JV softness and start-up costs: Equity method swung to a $0.6M loss (from +$11.3M LY) and International incurred ~$3.5–$4M start-up costs in Argentina; International margins also pressured by competitive pricing .

Financial Results

Metric	Q3 2025	Q4 2025	Q1 2026
Revenue ($USD Millions)	$1,520.5	$1,675.8	$1,659.3
GAAP Diluted EPS ($)	$1.03	$0.85	$0.46
Adjusted Diluted EPS ($)	$1.10	$0.87	$0.74
Adjusted EBITDA ($USD Millions)	$363.8	$284.9	$302.2
Gross Profit ($USD Millions)	$422.5	$342.3	$342.4

Actual vs S&P Global Consensus (Q1 FY26):

Metric	Consensus*	Actual
Revenue ($USD Millions)	$1,615.7*	$1,659.3
Adjusted EBITDA ($USD Millions)	$254.1*	$302.2
Adjusted EPS ($)	$0.53*	$0.74

Values marked with “*” retrieved from S&P Global.

Segment Breakdown (Q1 FY26):

Segment	Net Sales ($MM)	YoY %	Volume	Price/Mix (cc)	Segment Adjusted EBITDA ($MM)	YoY %
North America	$1,084.6	(2%)	+5%	−7%	$260.0	(6%)
International	$574.7	+4%	+6%	−6%	$57.2	+11%

Key KPIs (Q1 FY26):

KPI	Q1 FY26
Volume growth (company)	+6%
Price/Mix at constant currency	−7%
Effective Tax Rate / Adj ETR	42.7% / 30.2%
Cash from Operations	$352.0M
Capital Expenditures	$79.2M
Dividends Paid	$51.7M
Share Repurchases	$10.4M
Cash & Equivalents	$98.6M
Revolver Availability	$1,318.4M

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales (constant currency)	FY 2026	$6.35–$6.55B	$6.35–$6.55B	Maintained
Adjusted EBITDA	FY 2026	$1.00–$1.20B	$1.00–$1.20B	Maintained
Capital Expenditures	FY 2026	~$500M	~$500M	Maintained
Effective Tax Rate	FY 2026	~26% (prior commentary)	26%–27% (H1 low-30%s, H2 low-20%s)	Raised slightly
Tariff Assumptions	FY 2026	Excluded from guide	Included; ~+$25M annualized exposure to palm oil/ingredients	Added
Dividends	Ongoing	$0.37 quarterly declared 7/15/25	$0.37 declared 9/25/25 for Nov 28 payment	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3–Q4 FY25)	Current Period (Q1 FY26)	Trend
Cost Savings (“Focus to Win”)	Announced program; $250M run-rate by FY28; $200M by FY27; invest for FCF/ROIC	Tracking to $100M FY26 (2/3 gross profit, 1/3 SG&A); run-rate weighted to H2	Positive execution
Volume vs Price/Mix	Volumes rebounded on wins; price investments pressured mix	Vol +6%; price/mix −7% (cc); NA +5% vol; Intl +6% vol	Mixed: vol up, mix down
Contracting & Customer Wins	Visibility improved; wins across channels	~75% of global open volume secured; earlier-than-planned conversions; restart curtailed line	Positive momentum
Tariffs	FY26 guide previously excluded tariff impacts	Now included; ~$25M palm oil/ingredient exposure; potential March vote on Indonesia	New headwind, managed
Capacity & Supply/Demand	Industry rationality; some delays/cancellations ex-N.A.	Restarted curtailed U.S. line for demand; still see rational capacity additions	Cautiously constructive
Potato Crop/Raw Costs	NA contracts down mid‑single‑digit; EU flat; timing into H2 FY26	NA crop above avg in key basins; EU above avg; benefit to costs from Q2 onward	Slight tailwind H2
International Expansion	Netherlands ramped; Argentina slated for production Aug ’25	Argentina plant shipping in early Q2; start-up costs ~$3.5–4M in Q1; ramp over time	Near-term drag, LT growth
Working Capital/FCF	FY25 working-cap improvements; FY26 focus on FCF	Operating cash $352M; target ~$60M WC benefit in FY26; leverage ~3.1x TTM	Positive FCF focus
Sales Model	Direct sales strength [historical]	Augmenting with brokers in underpenetrated channels; direct force retained	Commercial reach expanding
Restaurant Traffic	QSR traffic soft, burger weaker	QSR flat overall; UK −4%; burger down; chicken QSR up	Macro overhang persists

Management Commentary

“The Lamb Weston team delivered a strong start to the fiscal year with solid volume growth and positive customer momentum… our Focus to Win strategy [is] beginning to deliver” — Mike Smith, CEO .
“We are acting with urgency to implement our new strategic plan… tracking to our plan of achieving at least $250 million of annual run-rate savings by fiscal year end 2028” .
“We are restarting a curtailed line in the latter part of the second quarter to ensure we maintain strong customer fill rates” .
“We had secured approximately 75% of our global open contract volume and at pricing levels generally consistent with expectations” — CFO .
“Our tariff exposure… primarily palm oil and other ingredients… about $25 million annualized; we’ve included this in guidance” — CFO .
“Gross profit margins in the second quarter [to be] relatively flat with the first quarter… low single‑digit inflation going forward including benefit of lower raw potato prices” — CFO .

Q&A Highlights

Capacity & line restart: LW restarted a previously curtailed U.S. line to meet demand and protect fill rates; industry capacity additions appear rational with some delays/cancellations; easier to restart curtailed line than new plant start-up .
Price/mix trajectory: Expect mid–high single-digit price declines at cc in H1, moderating in H2 as new contracts roll in; Q2 gross margin roughly flat vs Q1 with seasonal step-up in Q3 .
Tariffs: ~$25M annualized exposure, mainly palm oil imports from Indonesia/Malaysia; now embedded in FY26 outlook; potential policy vote could alter exposure .
Commercial model: Augmenting direct sales with brokers in underpenetrated channels while retaining direct strength; internal teams supportive of the shift .
Cost savings phasing: On track for $100M FY26 (2/3 in H2); about two-thirds to gross profit and one-third to SG&A; incremental $7M one-time items in Q1 SG&A won’t repeat .

Estimates Context

Q1 FY26 beats vs S&P Global: Adjusted EPS $0.74 vs $0.53*, Revenue $1,659M vs $1,616M*, Adjusted EBITDA $302M vs $254M* (broad beats, driven by volume and lower SG&A, partially offset by mix and higher taxes) .
Q2 FY26 S&P Global consensus: EPS $0.63*, Revenue $1,591M*, EBITDA $273M*; management guides gross margin flat Q/Q and flags added start-up/maintenance burden in International .
Values marked with “*” retrieved from S&P Global.

Key Takeaways for Investors

Volume momentum and cost actions are offsetting price/mix and tax headwinds, yielding broad beats vs consensus* and stable FY26 guidance; near-term margin cadence implies a steadier H1 and seasonal step-up in H2 .
Reaffirmed FY26 outlook with tariff impacts now embedded reduces uncertainty; slight uptick in tax-rate guide is manageable against cost savings and working-capital gains .
North America demand signals are strong enough to restart capacity; industry capacity additions remain rational, supporting a constructive medium-term supply/demand setup .
International growth is underpinned by Asia/QSR wins and Argentina capacity, but start-up costs and regional competition temper margins in the near term .
Watch mix headwinds (private label growth vs branded, ongoing customer support) and equity JV profitability as potential swing factors on EPS .
Short-term trading: beats + reiteration + capacity restart can support sentiment; monitor Q2 gross margin progression and tariff/palm-oil developments. Medium-term: execution on $250M savings, innovation pipeline, and contracting discipline are key to margin rebuild and FCF acceleration .

Appendix: Additional Details

Cash & capital returns: $352M operating cash flow; $79M capex as large growth projects wind down; $52M dividends and $10M buybacks in Q1; $348M repurchase authorization remaining .
Segment color: NA net sales $1,085M (−2%) with +5% volumes and −7% price/mix; International $575M (+4%) with +6% volumes and −6% price/mix at cc; respective Adj EBITDA $260M and $57M .

All document-based figures cited above come from Lamb Weston’s Q1 FY26 8‑K/press release and earnings call, and prior-quarter materials as referenced. Values marked with “*” were retrieved from S&P Global.

Lamb Weston Holdings, Inc. (LW)·Q1 2026 Earnings Summary