Lamb Weston : FY23 Q2 Earnings Press Release

Exhibit 99.1

News Release

For more information, please contact:

Investors:

Dexter Congbalay 224-306-1535 [e-mail]

Media:

Shelby Stoolman 208-424-5461 [e-mail]

Lamb Weston Reports Fiscal Second Quarter 2023 Results; Updates Fiscal Year 2023 Outlook

Second Quarter Fiscal 2023 Highlights

• GAAP Results as Compared to Second Quarter Fiscal 2022: o Net sales increased 27% to $1,277 million
  o Income from operations increased 138% to $272 million o Net income increased 217% to $103 million
  o Diluted EPS increased 223% to $0.71
• Non-GAAPResults as Compared to Second Quarter Fiscal 2022:
  o Adjusted Income from Operations(1) increased 114% to $245 million o Adjusted Net Income(1) increased 171% to $185 million
  o Adjusted Diluted EPS(1) increased 172% to $1.28
  o Adjusted EBITDA including unconsolidated joint ventures(1) increased 92% to $335 million
• Paid $35 million in cash dividends; raised quarterly dividend by 14%

Updated Fiscal 2023 Outlook

• Net sales of $4.8 billion to $4.9 billion
• Net income of $580 million to $620 million, and Diluted EPS of $4.03 to $4.28
• Adjusted Net Income(1) of $540 million to $580 million, and Adjusted Diluted EPS(1) of $3.75 to $4.00
• Adjusted EBITDA including unconsolidated joint ventures(1) of $1,050 million to $1,100 million

EAGLE, ID (January 5, 2023) - Lamb Weston Holdings, Inc. (NYSE: LW) announced today its fiscal second quarter 2023 results and updated its fiscal 2023 outlook.

"We delivered strong top and bottom-line results in the quarter," said Tom Werner, President and CEO. "Because of our financial performance in the first half of fiscal 2023 and our broad operating momentum, we have raised our annual sales, gross margin and earnings targets. We expect the continued implementation of pricing actions to counter higher input and potato costs to drive our financial results in the second half, while our volume performance will continue to be affected by supply chain constraints and inflationary pressures on consumers."

"In addition, we look forward to beginning to capture strategic, commercial and operational benefits from the acquisition of our partner's interest in our European joint venture, which we currently expect to close during our fiscal fourth quarter. By leveraging a truly global production footprint, we believe Lamb Weston will be well-positioned to support customers in key markets around the world, and drive sustainable, profitable growth over the long term."

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Summary of Second Quarter FY 2023 Results

($ in millions, except per share)

			Year-Over-Year		YTD	Year-Over-Year
		Q2 2023	Growth Rates		FY 2023	Growth Rates
Net sales	$	1,276.5	27%	$	2,402.1	21%
Income from operations	$	271.8	138%	$	428.8	146%
Net income	$	103.1	217%	$	335.0	438%
Diluted EPS	$	0.71	223%	$	2.32	452%
Adjusted Income from Operations (1)	$	245.3	114%	$	402.3	130%
Adjusted Net Income (1)	$	185.4	171%	$	293.7	211%
Adjusted Diluted EPS(1)	$	1.28	172%	$	2.04	219%
Adjusted EBITDA including
unconsolidated joint ventures(1)	$	334.6	92%	$	562.5	92%

Q2 2023 Commentary

Net sales increased $269.9 million to $1,276.5 million, up 27 percent versus the prior year quarter. Price/mix increased 30 percent, reflecting the benefit of product and freight pricing actions across each of the Company's core business segments to counter input, manufacturing, and transportation cost inflation. Volume declined 3 percent, primarily reflecting an inability to fully serve customer demand in the Company's foodservice and retail channels. The impact of supply chain disruptions during the quarter, including the effects of commodities shortages and onboarding new production workers, continued to affect production run-rates and throughput in the Company's production facilities as well as customer order fulfillment rates. To a lesser extent, softer casual dining and full-service restaurant traffic in the U.S. also contributed to the volume decline as consumers continue to face a challenging macroeconomic environment.

Income from operations increased $157.4 million to $271.8 million, up 138 percent versus the prior year quarter. Adjusted Income from Operations(1), which excludes items impacting comparability, increased $130.9 million to $245.3 million, up 114 percent versus the prior year quarter. The increases were driven by higher sales and gross profit, partially offset by higher selling, general and administrative expenses ("SG&A").

Gross profit increased $176.1 million versus the prior year quarter to $381.6 million, as the benefits from pricing actions more than offset the impact of higher manufacturing and distribution costs on a per pound basis, as well as lower sales volumes. The higher costs per pound primarily reflected double-digit cost inflation for key inputs, including: edible oils, ingredients such as grains and starches used in product coatings, labor, and transportation and warehousing. The increase in costs per pound also reflected higher costs associated with the impact of extreme summer heat that negatively affected the yield and quality of potato crops in the Pacific Northwest in the fall of 2021, as well as the effects of supply chain disruptions on run-rates and throughput in the Company's production facilities. In addition, the increase in gross profit included a $6.5 million increase in unrealized mark-to-market adjustments associated with commodity hedging contracts, which included a $0.4 million gain in the current quarter, compared with a $6.1 million loss related to these items in the prior year quarter.

SG&A increased $18.7 million versus the prior year quarter to $109.8 million, and included a net $26.5 million gain

($19.2 million after-tax, or $0.13 per share) related to actions taken to mitigate the effect of changes in currency rates on the pending purchase of the remaining ownership interest in Lamb-Weston/Meijer v.o.f. ("LWM"), net of other acquisition-related costs. Excluding items impacting comparability, SG&A increased $45.2 million to $136.3 million, primarily due to higher compensation and benefits expense, and to a lesser extent, higher expenses related to improving the Company's information systems and enterprise resource planning ("ERP") infrastructure.

Net income was $103.1 million, up $70.6 million versus the prior year quarter, and Diluted EPS was $0.71, up $0.49 versus the prior year quarter. The increases were driven by higher income from operations, which included a net $26.5 million gain ($19.2 million after-tax, or $0.13 per share) for acquisition-related items, and lower interest expense. Interest expense in the prior year quarter included a loss of $53.3 million ($40.5 million after-tax, or $0.28 per share) associated with the repayment of approximately $1.7 billion of the Company's outstanding senior notes due in 2024 and 2026. The increase in net income and Diluted EPS was partially offset by lower equity method investment earnings, which included a $136.8 million unrealized loss ($101.5 million after-tax, or $0.70 per share) related to mark-to-market

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adjustments associated with natural gas and electricity hedging contracts at LWM, and a $6.3 million unrealized gain

($4.7 million after-tax, or $0.03 per share) in the prior year quarter. The Company has identified the loss associated with the repayment of debt in the prior year quarter, the mark-to-market adjustments related to natural gas and electricity derivatives in the current and prior year quarters, and the LWM acquisition-related items discussed above, as items impacting comparability.

Adjusted Net Income(1) was $185.4 million, up $117.1 million versus the prior year quarter, and Adjusted Diluted EPS(1) was $1.28, up $0.81 versus the prior year quarter. Adjusted EBITDA including unconsolidated joint ventures(1) increased $160.0 million to $334.6 million, up 92 percent versus the prior year quarter. These increases were driven by higher income from operations and equity method investment earnings.

The Company's effective tax rate(2) in the second fiscal quarter was 26.3 percent, versus 22.8 percent in the prior year quarter. Excluding items impacting comparability, the Company's effective tax rate was 25.9 percent for the second fiscal quarter. The Company's effective tax rate varies from the U.S. statutory tax rate of 21 percent principally due to the impact of U.S. state taxes, foreign taxes, permanent differences, and discrete items.

Q2 2023 Segment Highlights

Global

Global Segment Summary

			Year-Over-Year
		Q2 2023	Growth Rates	Price/Mix	Volume
		(dollars in millions)
Net sales	$	692.8	34%	31%	3%
Segment product contribution margin(3)	$	171.0	111%

Net sales for the Global segment, which is generally comprised of the top 100 North American-basedquick-service ("QSR") and full-service restaurant chain customers, as well as all of the Company's international sales, increased $176.1 million to $692.8 million, up 34 percent versus the prior year quarter. The benefit of domestic and international product and freight pricing actions to counter inflationary pressures, as well as favorable mix, drove a 31 percent increase in price/mix. The impact of acquiring a controlling interest in Lamb Weston Alimentos Modernos S.A. ("LWAMSA") in early fiscal 2023, growth in international shipments, and strength in domestic QSR limited time product offerings largely drove the 3 percent increase in volume.

Global segment product contribution margin increased $90.1 million to $171.0 million, up 111 percent versus the prior year quarter. Pricing actions and favorable mix drove the increase, more than offsetting higher manufacturing and distribution costs per pound. As a result of the cumulative benefit of pricing actions and mix improvement efforts during the past two years to counter input cost inflation, the Global segment's product contribution margin percentage in the second quarter approached pre-pandemic levels.

Foodservice

Foodservice Segment Summary

			Year-Over-Year
		Q2 2023	Growth Rates	Price/Mix	Volume
		(dollars in millions)
Net sales	$	357.9	14%	25%	(11%)
Segment product contribution margin(3)	$	130.8	25%

Net sales for the Foodservice segment, which services North American foodservice distributors and restaurant chains generally outside the top 100 North American based restaurant chain customers, increased $44.0 million to $357.9 million, up 14 percent versus the prior year quarter, with price/mix up 25 percent and volume down 11 percent. The carryover benefits of product and freight pricing actions taken in the prior year, as well as actions taken in fiscal 2023, to counter inflationary pressures drove the increase in price/mix. Volume fell during the quarter, reflecting a combination of: the impact of supply chain disruptions on run-rates and throughput in the Company's production facilities;

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incremental losses of certain low-margin business; and, to a lesser extent, a slowdown in restaurant traffic and consumer demand in casual dining and other full-service restaurants.

Foodservice segment product contribution margin increased $26.4 million to $130.8 million, up 25 percent compared to the prior year quarter. Pricing actions drove the increase, and was partially offset by higher manufacturing and distribution costs per pound, unfavorable mix, and the impact of lower sales volumes.

Retail

Retail Segment Summary

			Year-Over-Year
		Q2 2023	Growth Rates	Price/Mix	Volume
		(dollars in millions)
Net sales	$	191.5	34%	43%	(9%)
Segment product contribution margin(3)	$	65.7	207%

Net sales for the Retail segment, which includes sales of branded and private label products to grocery, mass merchant, and club customers in North America, increased $48.9 million to $191.5 million, up 34 percent versus the prior year quarter. The carryover benefits of product and freight pricing actions across the branded and private label portfolios taken in the prior year, as well as actions taken in fiscal 2023, to counter inflation drove a 43 percent increase in price/mix. While consumer demand for frozen potato products remained strong, volume fell 9 percent largely due to the impact of supply chain disruptions on run-rates and throughput in the Company's production facilities, as well as incremental losses of certain low-margin, private label business.

Retail segment product contribution margin increased $44.3 million to $65.7 million, up 207 percent versus the prior year quarter. Pricing actions drove the increase, partially offset by higher manufacturing and distribution costs per pound.

Equity Method Investment Earnings (Loss)

Equity method investment earnings (loss) from unconsolidated joint ventures in Europe and the U.S. was a loss of $107.3 million and earnings of $10.1 million for the second quarter of fiscal 2023 and 2022, respectively. Equity method investment earnings (loss) in the quarter include a $130.1 million unrealized loss related to mark-to-market adjustments associated with currency and commodity hedging contracts, of which $136.8 million ($101.5 million after-tax, or $0.70 per share) related to losses in natural gas and electricity derivatives as commodity markets in Europe have experienced significant volatility. Equity method investment earnings in the prior year quarter include a $3.6 million unrealized gain for mark-to-market adjustments, of which $6.3 million related to gains in natural gas and electricity derivatives ($4.7 million after-tax, or $0.03 per share).

Excluding the items impacting comparability noted above (mark-to-market adjustments related to natural gas and electricity derivatives) and the other mark-to-market adjustments, earnings from equity method investments increased $16.3 million compared to the prior year quarter, reflecting favorable price/mix, partially offset by higher manufacturing and distribution costs, in both Europe and the U.S.

Liquidity and Cash Flows

The Company ended the first half of fiscal 2023, with $419.4 million of cash and cash equivalents and no borrowings outstanding under its $1.0 billion revolving credit facility.

Net cash provided by operating activities was $288.0 million, up $80.5 million versus the first half of the prior year, primarily due to higher earnings. Capital expenditures were $270.3 million for the quarter, up $122.2 million versus the prior year period, primarily reflecting increased investments to support capacity expansion projects and to upgrade the Company's information systems and ERP infrastructure.

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In July 2022, the Company paid $42.3 million to increase its ownership in LWAMSA. The Company's total ownership in the joint venture is now 90 percent. The Company began consolidating LWAMSA's results in its consolidated financial statements following the increase in ownership.

Capital Returned to Shareholders

In the second quarter of fiscal 2023, the Company returned $35.2 million to shareholders through cash dividends. While the Company did not repurchase shares during the second quarter, it repurchased $28.4 million of its common stock during the first half of fiscal 2023, and has approximately $240 million authorized for share repurchases under its existing program.

Fiscal 2023 Outlook

The Company is updating its financial targets for fiscal 2023 as follows. The Company's financial targets do not reflect the pending acquisition of LWM.

• Net sales of $4.8 billion to $4.9 billion, with growth versus the prior year expected to be primarily driven by the benefit of pricing actions to counter significant input and transportation cost inflation. The Company expects sales volumes may be pressured during the second half of fiscal 2023 as a result of the impact of continuing supply chain disruptions on run-rates and throughput in its production facilities, as well as the potential for a slowdown in restaurant traffic, most notably in casual dining and other full-service restaurants, as consumers continue to face a challenging macroeconomic environment. The Company previously expected to deliver the high end of its net sales range of $4.7 billion to $4.8 billion.
• Net income of $580 million to $620 million and Diluted EPS of $4.03 to $4.28, including a net benefit from items impacting comparability of $51.1 million ($41.3 million after-tax, or $0.28 per share) during the first half of fiscal 2023. The Company previously expected to deliver the high end of its net income range of $485 million to $535 million and Diluted EPS range of $3.30 to $3.70, including items impacting comparability of $161.4 million (approximately $123.7 million after-tax, or $0.85 per share) recorded during the first quarter of fiscal 2023.
• Excluding items impacting comparability, Adjusted Net Income(1) of $540 million to $580 million, Adjusted Diluted EPS(1) of $3.75 to $4.00, and Adjusted EBITDA including unconsolidated joint ventures(1) of $1,050 million to $1,100 million, with forecasted earnings growth versus the prior year primarily driven by higher sales and gross margin expansion. Also, excluding items impacting comparability, the Company previously expected to deliver the high end of its Adjusted Net Income(1) range of $360 million to $410 million, Adjusted Diluted EPS(1) range of $2.45 to $2.85, and Adjusted EBITDA including unconsolidated joint ventures(1) range of $840 million to $910 million.
• Gross margins for the full year and for the second half of fiscal 2023 of 27 percent to 28 percent as the carryover benefit of pricing actions taken in fiscal 2022, as well as actions taken in fiscal 2023, is expected to more than offset the effects of: input cost inflation, including higher raw potato costs; and softer sales volumes. The Company previously expected its gross margins to approach 25 percent to 26 percent in the second half of the year.
• SG&A, excluding items impacting comparability, of $525 million to $550 million, reflecting higher expected incentive compensation and benefits costs, increased investments to upgrade the Company's information systems and ERP infrastructure, and higher advertising and promotion expenses. The Company previously targeted SG&A, excluding items impacting comparability, of $475 million to $500 million.

The Company is reaffirming other financial targets, including:

• Interest expense, net of approximately $115 million;
• Depreciation and amortization expense of approximately $210 million;

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