Company: LW
Filing Date: 2025-07-23
Form Type: 10-K
Source: 0001679273-25-000049
Chunk: 59

Company: Lamb Weston Holdings, Inc.
Filing Date: 2025-07-23
Form: 10-K
Item: Item 1A
Chunk 59
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 for certain commodities that are necessary for our products, such as potatoes and edible oils. Adverse weather conditions and natural disasters may disrupt the productivity of our facilities or the operation of our supply chain and can reduce crop size and crop quality, which in turn could reduce our supplies of raw potatoes, lower recoveries of usable raw potatoes, increase the prices of our raw potatoes, increase our cost of transporting and storing raw potatoes, or disrupt our production schedules or efficiencies. In addition, water is an important part of potato processing. In times of water stress, we may be subject to decreased availability or less favorable pricing for water, which could impact our manufacturing and distribution operations. For example, during the summer of 2024, our Quincy, Washington production facility temporarily curtailed operations due to concerns of water and electricity availability, as extreme temperatures and dry weather taxed both power grids and water sources. Further, a decrease in the availability of water in certain regions caused by droughts or other factors could increase competition for land and resources in areas that have more favorable growing conditions, and thereby increase costs for such land and resources.

The increasing concern over climate change also may result in more regional, federal, and/or global legal and regulatory requirements to reduce or mitigate the effects of greenhouse gases, as well as more stringent regulation of water rights. In the event that such regulation is enacted and is more aggressive than the sustainability measures that we are currently undertaking to monitor our emissions, improve our energy efficiency, and reduce, reclaim, and reuse water, we may be subject to curtailment or reduced access to resources or experience significant increases in our costs of operation and delivery. In addition, increasing regulation of utility providers, fuel emissions, or fuel suppliers could substantially increase the distribution and supply chain costs of our products. Further, we may experience significant increases in our compliance costs, capital expenditures, and other financial obligations to adapt our business and operations to meet new regulations and standards. For example, in fiscal 2026, we expect our capital expenditures to include approximately $100 million for environmental projects, largely focused on wastewater treatment at our production facilities. Further, we expect to spend about $500 million in the aggregate over the next six years to comply with government environmental regulations and permit limitations.

Even if we make changes to align ourselves with such legal or regulatory requirements, we may still be subject to significant penalties or potential litigation if such laws and regulations are interpreted and applied in a manner inconsistent with our practices. Also, consumers and customers may place an increased priority on purchasing products that are sustainably