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Lamb Weston Tops Q3 EPS by 28c

Apr 07, 2022 09:08
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Lamb Weston Holdings Inc (NYSE:LW) reported Q3 EPS of $0.73, $0.28 better than the analyst estimate of $0.45. Revenue for the quarter came in at $955 million versus the consensus estimate of $976.89 million.

Fiscal 2022 Outlook:

The Company continues to expect fiscal 2022 net sales growth will be above its long-term target of low-to-mid single digits. The Company anticipates net sales growth in the fourth quarter of fiscal 2022 will be driven largely by price/mix, reflecting the Company's pricing actions to offset input and transportation cost inflation. The Company expects sales volumes in the fourth quarter will continue to be tempered by disruptions to the Company's production and logistics networks, as well as the effects of inflation and COVID-19 variants on restaurant traffic and consumer demand.

The Company expects net income and Adjusted EBITDA including unconsolidated joint ventures in the fourth quarter of fiscal 2022 will continue to be pressured, as it manages through significant inflation for key production inputs, transportation and packaging, as well as industrywide operational challenges, including labor and commodities shortages, resulting from volatility in the broader supply chain. In addition, the Company expects higher raw potato costs on a per pound basis due to the impact of extreme summer heat that negatively affected the yield and quality of potato crops in the Pacific Northwest.

Taking these headwinds into account, the Company expects its full year fiscal 2022 gross margin to be 19 percent to 20 percent. The Company previously expected its full year fiscal 2022 gross margin to be 18 percent to 20 percent.

For the fourth quarter of fiscal 2022, the Company is targeting a gross margin of 19 percent to 21 percent. In addition, the Company expects that ongoing investments in information technology, including the second phase of its ERP project, will increase SG&A expenses as compared to the fourth quarter of fiscal 2021. The Company expects that these investments will improve its ability to support growth and margin improvement over the long-term.

In addition, for fiscal 2022, the Company continues to expect:

Depreciation and amortization of approximately $190 million,

Interest expense of approximately $163 million, which includes a $53.3 million loss (an aggregate call premium of $39.6 million of cash and a write-off of $13.7 million of previously unamortized debt issuance costs associated with the redeemed senior notes) on the extinguishment of debt that the Company recognized during the second quarter of fiscal 2022, and

Effective tax rate of approximately 22 percent.

The Company reduced its estimate for cash used for capital expenditures, excluding acquisitions, to approximately $325 million from its previous estimate of $450 million, due to the projected timing of expenditures related to certain capacity expansion projects.

For earnings history and earnings-related data on Lamb Weston click here.

Lamb Weston Tops Q3 EPS by 28c
 

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