Lamb Weston Holdings, Inc. (NYSE:LW) shares are trading lower on Friday despite reporting second-quarter FY26 earnings beat.
• Lamb Weston shares are retreating from recent levels. Why is LW stock falling?
Details
The company reported net sales growth of 1% year-over-year to $1.62 billion, ahead of the $1.59 billion estimate.
Overall volume rose 8% led by new customer wins, market share gains, and strong retention, especially in North America and Asia.
However, price/mix declined 8% due to high competition as well as customer support through pricing and trade actions.
Adjusted gross profit down to $327.9 million from $343.5 million a year ago quarter.
SG&A decreased to $171 million from $184.7 million, while adjusted SG&A fell to $145.1 million from $152.9 million, helped by cost savings.
Adjusted EBITDA fell 3% Y/Y to $285.7 million in the quarter.
Adjusted net income was $96.7 million, with adjusted earnings per share of 69 cents, topping the 65 cent estimate.
Balance Sheet & Shareholders Return
Operating cash flow stood at $530.4 million, and capital expenditures stood at $155.7 million in the first half of fiscal 2026.
Cash and equivalents were $82.7 million, with $1.35 billion in available credit facility liquidity.
Capital returned to shareholders totaled $51.6 million, including $39.6 million in repurchases in the second quarter. At the quarter’s end, the company had around $308 million remaining under the share repurchase program.
On Dec. 17, 2025, the board approved a 3% increase in its quarterly dividend, raising it by one cent to 38 cents per share. The dividend will be paid on Feb. 27, 2026, to shareholders of record as of January 30, 2026.
Segment Performance
North America sales remained flat Y/Y at $1.07 billion, as 8% volume growth was offset by an 8% price/mix drop. Segment adjusted EBITDA increased $18.6 million to $287.8 million in the quarter.
International sales rose 4% to $548.6 million, including a $22.6 million currency benefit, while constant-currency sales fell 1% Y/Y. Volume climbed 7% Y/Y, but price/mix declined 8% at constant currency. Adjusted EBITDA dipped $21.4 million to $27.2 million, owing to a rise in manufacturing costs per pound.
Outlook
The company reaffirmed its fiscal 2026 guidance for constant-currency sales of $6.35 billion to $6.55 billion, compared to a $6.52 billion estimate, and adjusted EBITDA of $1 billion to $1.2 billion.
Capital expenditures are projected to be approximately $500 million.
Management Commentary
Mike Smith, Lamb Weston president and CEO, added, “We delivered robust volume growth and gained share in priority markets and key categories, demonstrating Lamb Weston’s commitment to deliver quality, innovation and value. Our team is executing at a high level, and we remain on track to achieve our $100 million cost savings program target for fiscal 2026.”
LW Price Action: Lamb Weston shares are down 20.95% at $46.50 at publication on Friday.
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