Company: LW
Filing Date: 2025-04-03
Form Type: 10-Q
Source: 0001679273-25-000026
Chunk: 77

Company: Lamb Weston Holdings, Inc.
Filing Date: 2025-04-03
Form: 10-Q
Item: Part I, Item 8
Chunk 77
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19

This MD&A is provided as a supplement to the consolidated financial statements and related condensed notes included elsewhere herein to help provide an understanding of our financial condition, changes in financial condition and results of our operations. Our MD&A is based on financial data derived from the financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). We have also presented Adjusted EBITDA, Adjusted Gross Profit, Adjusted Selling, General and Administrative expenses (“SG&A”), Adjusted Restructuring Expense, and Adjusted Equity Method Investment Earnings, each of which is considered a non-GAAP financial measure, to supplement the financial information included in this report. Refer to “Non-GAAP Financial Measures” below for the definitions of Adjusted EBITDA, Adjusted Gross Profit, Adjusted SG&A, Adjusted Restructuring Expense, and Adjusted Equity Method Investment Earnings, and a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, net income, gross profit, SG&A, restructuring expense, or equity method investment earnings, as applicable. For more information, refer to the “Results of Operations” and “Non-GAAP Financial Measures” sections below.

Executive Summary

As a result of the actions we took in early fiscal 2025 to drive operational and cost efficiencies, volume trends sequentially improved in the third quarter and we are delivering the cost savings and reduced capital spending outlined in our October 1, 2024 announced restructuring plan (the “Restructuring Plan”). 

We continue to be affected by soft restaurant traffic trends as consumer buying power is stretched due to rising prices and economic uncertainty. According to industry publications, global quick service restaurant (QSR) traffic worsened in our fiscal third quarter. QSR hamburger trends declined further with traffic worsening sequentially each month during the quarter. QSR restaurant traffic was down with declines in our larger markets, the U.S. and the United Kingdom, as well as declines in France, Germany and Italy.   

During our second fiscal quarter, we took steps to rationalize capacity, permanently closing a manufacturing facility and temporarily curtailing additional lines. Since our second fiscal quarter, industry participants have announced additional capacity, primarily outside of the U.S. Against a backdrop of lower restaurant traffic and increasing manufacturing capacity, we have undertaken a thorough end-to-end review, including an engagement with AlixPartners, a leading global business advisory firm, to assist us in evaluating opportunities for near- and long-term value creation and cost savings, further building