Lamb Weston Stock Pops On Q3 Earnings Beat

  • Lamb Weston Holdings Inc LW reported third-quarter FY22 sales growth of 7% year-on-year to $955 million, missing the consensus of $968.52 million.
  • Volume declined 5%, reflecting lower export volume and lower shipments to retail channels.
  • Net sales from the Global segment rose 2% Y/Y, Foodservice increased 34%, and the Retail segment declined 12%.
  • Gross profit increased 12.4% Y/Y to $221 million, and the gross margin expanded 110 basis points to 23.1%.
  • The operating margin was 14%, and operating income for the quarter rose 33% to $134 million.
  • Adjusted EBITDA increased 31% Y/Y to $219.6 million.
  • EPS of $0.73 beat the analyst consensus of $0.44.
  • Lamb Weston held $428.6 million in cash and equivalents as of February 27, 2022. Net cash from operating activities for the nine months totaled $174 million.
  • The company said Q3 growth was tempered by softer restaurant traffic due to the effects of the Omicron variant of the COVID-19 virus and an inability to fully serve customer demand due to widespread industry supply chain constraints.
  • Outlook: Lamb Weston continues to expect FY22 sales growth to be above its long-term target of low-to-mid single digits.
  • The company expects FY22 gross margin of 19% - 20% versus prior view of 18% - 20%.
  • Price action: LW shares are trading higher by 6.20% at $64.19 on the last check Thursday.
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