UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November ~~27, 2022~~26, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-37830

LAMB WESTON HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware		61-1797411
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

599 S. Rivershore Lane Eagle, Idaho		83616
(Address of principal executive offices)		(Zip Code)

(208) 938-1047

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 par value	LW	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of December ~~29, 2022,~~28, 2023, the Registrant had ~~143,870,590~~144,372,498 shares of common stock, par value $1.00 per share, outstanding.

Table of Contents

Table of Contents

Part I. FINANCIAL INFORMATION
	Item 1	Financial Statements (Unaudited)
		Consolidated Statements of Earnings	3
		Consolidated Statements of Comprehensive Income	4
		Consolidated Balance Sheets	5
		Consolidated Statements of Stockholders’ Equity	6
		Consolidated Statements of Cash Flows	7
		Condensed Notes to Consolidated Financial Statements (Unaudited)	8
	Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	2018
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	3328
	Item 4	Controls and Procedures	3429

Part II. OTHER INFORMATION			3529
	Item 1	Legal Proceedings	3529
	Item 1A	Risk Factors	3530
	Item 2	Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities	3530
	Item 3	Defaults Upon Senior Securities	3530
	Item 4	Mine Safety Disclosures	3530
	Item 5	Other Information	3530
	Item 6	Exhibits	3631

Signature			3732

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (Unaudited)

Lamb Weston Holdings, Inc.

Consolidated Statements of Earnings

(unaudited, in millions, except per share amounts)


	Thirteen Weeks Ended				Twenty-Six Weeks Ended				Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 27,		November 28,		November 27,		November 28,		November 26,		November 27,		November 26,		November 27,
	2022		2021		2022		2021		2023		2022		2023		2022
Net sales	$	1,276.5	$	1,006.6	$	2,402.1	$	1,990.8	$	1,732.1	$	1,276.5	$	3,397.4	$	2,402.1
Cost of sales		894.9		801.1		1,747.2		1,634.0		1,256.5		894.9		2,422.3		1,747.2
Gross profit		381.6		205.5		654.9		356.8		475.6		381.6		975.1		654.9
Selling, general and administrative expenses		109.8		91.1		226.1		182.2		170.0		109.8		346.2		226.1
Income from operations		271.8		114.4		428.8		174.6		305.6		271.8		628.9		428.8
Interest expense, net		24.6		82.4		50.6		110.3		29.1		24.6		59.8		50.6
Income before income taxes and equity method earnings		247.2		32.0		378.2		64.3		276.5		247.2		569.1		378.2
Income tax expense		36.8		9.6		110.5		18.3		66.2		36.8		136.1		110.5
Equity method investment earnings (loss)		(107.3)		10.1		67.3		16.3		4.7		(107.3)		16.8		67.3
Net income	$	103.1	$	32.5	$	335.0	$	62.3	$	215.0	$	103.1	$	449.8	$	335.0
Earnings per share:
Basic	$	0.72	$	0.23	$	2.33	$	0.43	$	1.48	$	0.72	$	3.10	$	2.33
Diluted	$	0.71	$	0.22	$	2.32	$	0.42	$	1.48	$	0.71	$	3.08	$	2.32
Weighted average common shares outstanding:
Basic		144.0		146.0		144.0		146.1		144.9		144.0		145.3		144.0
Diluted		144.6		146.3		144.6		146.6		145.5		144.6		146.0		144.6

See Condensed Notes to Consolidated Financial Statements.

Table of Contents

Lamb Weston Holdings, Inc.

Consolidated Statements of Comprehensive Income

(unaudited, in millions)


	Thirteen Weeks Ended						Thirteen Weeks Ended						Thirteen Weeks Ended						Thirteen Weeks Ended
	November 27, 2022						November 28, 2021						November 26, 2023						November 27, 2022
			Tax						Tax						Tax						Tax
	Pre-Tax		(Expense)		After-Tax		Pre-Tax		(Expense)		After-Tax		Pre-Tax		(Expense)		After-Tax		Pre-Tax		(Expense)		After-Tax
	Amount		Benefit		Amount		Amount		Benefit		Amount		Amount		Benefit		Amount		Amount		Benefit		Amount
Net income	$	139.9	$	(36.8)	$	103.1	$	42.1	$	(9.6)	$	32.5	$	281.2	$	(66.2)	$	215.0	$	139.9	$	(36.8)	$	103.1
Other comprehensive income (loss):
Reclassification of post-retirement benefits out of accumulated other comprehensive income (loss)		—		—		—		0.1		—		0.1
Unrealized pension and post-retirement benefit obligations loss														(0.2)		0.1		(0.1)		—		—		—
Unrealized currency translation gains (losses)		(16.1)		0.5		(15.6)		(15.6)		0.7		(14.9)		30.5		(0.7)		29.8		(16.1)		0.5		(15.6)
Other		0.3		(0.1)		0.2		—		—		—		(0.2)		—		(0.2)		0.3		(0.1)		0.2
Comprehensive income	$	124.1	$	(36.4)	$	87.7	$	26.6	$	(8.9)	$	17.7	$	311.3	$	(66.8)	$	244.5	$	124.1	$	(36.4)	$	87.7


	Twenty-Six Weeks Ended						Twenty-Six Weeks Ended						Twenty-Six Weeks Ended						Twenty-Six Weeks Ended
	November 27, 2022						November 28, 2021						November 26, 2023						November 27, 2022
			Tax						Tax						Tax						Tax
	Pre-Tax		(Expense)		After-Tax		Pre-Tax		(Expense)		After-Tax		Pre-Tax		(Expense)		After-Tax		Pre-Tax		(Expense)		After-Tax
	Amount		Benefit		Amount		Amount		Benefit		Amount		Amount		Benefit		Amount		Amount		Benefit		Amount
Net income	$	445.5	$	(110.5)	$	335.0	$	80.6	$	(18.3)	$	62.3	$	585.9	$	(136.1)	$	449.8	$	445.5	$	(110.5)	$	335.0
Other comprehensive income (loss):
Reclassification of post-retirement benefits out of accumulated other comprehensive income (loss)		—		—		—		0.2		—		0.2
Unrealized pension and post-retirement benefit obligations loss														(0.4)		0.1		(0.3)		—		—		—
Unrealized currency translation gains (losses)		(47.8)		1.5		(46.3)		(39.4)		2.2		(37.2)		31.3		(0.3)		31.0		(47.8)		1.5		(46.3)
Other		0.5		(0.1)		0.4		—		—		—		(0.2)		—		(0.2)		0.5		(0.1)		0.4
Comprehensive income	$	398.2	$	(109.1)	$	289.1	$	41.4	$	(16.1)	$	25.3	$	616.6	$	(136.3)	$	480.3	$	398.2	$	(109.1)	$	289.1

See Condensed Notes to Consolidated Financial Statements.

Table of Contents

Lamb Weston Holdings, Inc.

Consolidated Balance Sheets

(unaudited, in millions, except share data)


	November 27,		May 29,		November 26,		May 28,
	2022		2022		2023		2023
ASSETS
Current assets:
Cash and cash equivalents	$	419.4	$	525.0	$	78.3	$	304.8
Receivables, less allowance for doubtful accounts of $1.4 and $1.1		508.9		447.3
Receivables, less allowance for doubtful accounts of $2.4 and $2.6						766.2		724.2
Inventories		822.1		574.4		1,153.6		932.0
Prepaid expenses and other current assets		50.7		112.9		82.8		166.2
Total current assets		1,801.1		1,659.6		2,080.9		2,127.2
Property, plant and equipment, net		1,758.2		1,579.2		3,173.6		2,808.0
Operating lease assets		113.9		119.0		140.0		146.1
Equity method investments		263.7		257.4
Goodwill		347.5		318.0		1,065.1		1,040.7
Intangible assets, net		32.0		33.7		109.1		110.2
Other assets		253.2		172.9		476.6		287.6
Total assets	$	4,569.6	$	4,139.8	$	7,045.3	$	6,519.8

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	$	9.0	$	—	$	294.3	$	158.5
Current portion of long-term debt and financing obligations		32.2		32.2		55.0		55.3
Accounts payable		580.6		402.6		834.5		636.6
Accrued liabilities		296.7		264.3		434.0		509.8
Total current liabilities		918.5		699.1		1,617.8		1,360.2
Long-term liabilities:
Long-term debt and financing obligations, excluding current portion		2,701.1		2,695.8		3,252.5		3,248.4
Deferred income taxes		177.7		172.5		260.3		252.1
Other noncurrent liabilities		199.3		211.9		247.0		247.8
Total long-term liabilities		3,078.1		3,080.2		3,759.8		3,748.3
Commitments and contingencies
Stockholders’ equity:
Common stock of $1.00 par value, 600,000,000 shares authorized; 148,330,983 and 148,045,584 shares issued		148.3		148.0
Common stock of $1.00 par value, 600,000,000 shares authorized; 150,694,839 and 150,293,511 shares issued						150.7		150.3
Treasury stock, at cost, 6,326,519 and 4,627,828 common shares						(479.4)		(314.3)
Additional distributed capital		(785.5)		(813.3)		(535.9)		(558.6)
Retained earnings		1,569.2		1,305.5		2,528.6		2,160.7
Accumulated other comprehensive loss		(61.5)		(15.6)
Treasury stock, at cost, 4,460,674 and 3,974,156 common shares		(297.5)		(264.1)
Accumulated other comprehensive income (loss)						3.7		(26.8)
Total stockholders’ equity		573.0		360.5		1,667.7		1,411.3
Total liabilities and stockholders’ equity	$	4,569.6	$	4,139.8	$	7,045.3	$	6,519.8

See Condensed Notes to Consolidated Financial Statements.

Table of Contents

Lamb Weston Holdings, Inc.

Consolidated Statements of Stockholders’ Equity
(unaudited, in millions, except share data)

Thirteen Weeks Ended November 27, 2022 and November 28, 2021





Additional



Accumulated


Common Stock,

Common

Treasury

Paid-in

Other

Total

net of Treasury

Stock

Stock

(Distributed)

Retained

Comprehensive

Stockholders’

Shares

Amount

Amount

Capital

Earnings

Income (Loss)

Equity
Balance at August 28, 2022

143,830,587

$
148.3

$
(297.1)

$
(796.9)

$
1,501.8

$
(46.1)

$
510.0
Dividends declared, $0.245 per share

—

—

—

—

(35.3)

—

(35.3)
Common stock issued

44,008

—

—

1.1

—

—

1.1
Stock-settled, stock-based compensation expense

—

—

—

10.0

—

—

10.0
Repurchase of common stock and common stock withheld to cover taxes

(4,286)

—

(0.4)

—

—

—

(0.4)
Other

—

—

—

0.3

(0.4)

—

(0.1)
Comprehensive income

—

—

—

—

103.1

(15.4)

87.7
Balance at November 27, 2022

143,870,309

$
148.3

$
(297.5)

$
(785.5)

$
1,569.2

$
(61.5)

$
573.0

Balance at August 29, 2021

146,061,016

$
148.0

$
(137.7)

$
(830.2)

$
1,240.0

$
7.3

$
427.4
Dividends declared, $0.235 per share

—

—

—

—

(34.2)

—

(34.2)
Common stock issued

11,427

—

—

—

—

—

—
Stock-settled, stock-based compensation expense

—

—

—

4.4

—

—

4.4
Repurchase of common stock and common stock withheld to cover taxes

(871,795)

—

(50.1)

—

—

—

(50.1)
Comprehensive income

—

—

—

—

32.5

(14.8)

17.7
Balance at November 28, 2021

145,200,648

$
148.0

$
(187.8)

$
(825.8)

$
1,238.3

$
(7.5)

$
365.2


	Thirteen Weeks Ended November 26, 2023 and November 27, 2022
							Additional				Accumulated
	Common Stock,		Common		Treasury		Paid-in				Other		Total
	net of Treasury		Stock		Stock		(Distributed)		Retained		Comprehensive		Stockholders’
	Shares		Amount		Amount		Capital		Earnings		Income (Loss)		Equity
Balance at August 27, 2023		144,926,900	$	150.7	$	(427.8)	$	(548.7)	$	2,354.6	$	(25.8)	$	1,503.0
Dividends declared, $0.280 per share		—		—		—		—		(40.4)		—		(40.4)
Common stock issued		15,679		—		—		(0.2)		—		—		(0.2)
Stock-settled, stock-based compensation expense		—		—		—		12.3		—		—		12.3
Repurchase of common stock and common stock withheld to cover taxes		(574,259)		—		(50.8)		—		—		—		(50.8)
Other		—		—		(0.8)		0.7		(0.6)		—		(0.7)
Comprehensive income		—		—		—		—		215.0		29.5		244.5
Balance at November 26, 2023		144,368,320	$	150.7	$	(479.4)	$	(535.9)	$	2,528.6	$	3.7	$	1,667.7

Balance at August 28, 2022		143,830,587	$	148.3	$	(297.1)	$	(796.9)	$	1,501.8	$	(46.1)	$	510.0
Dividends declared, $0.245 per share		—		—		—		—		(35.3)		—		(35.3)
Common stock issued		44,008		—		—		1.1		—		—		1.1
Stock-settled, stock-based compensation expense		—		—		—		10.0		—		—		10.0
Repurchase of common stock and common stock withheld to cover taxes		(4,286)		—		(0.4)		—		—		—		(0.4)
Other		—		—		—		0.3		(0.4)		—		(0.1)
Comprehensive income (loss)		—		—		—		—		103.1		(15.4)		87.7
Balance at November 27, 2022		143,870,309	$	148.3	$	(297.5)	$	(785.5)	$	1,569.2	$	(61.5)	$	573.0

Twenty-Six Weeks Ended November 27, 2022 and November 28, 2021





Additional



Accumulated


Common Stock,

Common

Treasury

Paid-in

Other

Total

net of Treasury

Stock

Stock

(Distributed)

Retained

Comprehensive

Stockholders’

Shares

Amount

Amount

Capital

Earnings

Income (Loss)

Equity
Balance at May 29, 2022

144,071,428

$
148.0

$
(264.1)

$
(813.3)

$
1,305.5

$
(15.6)

$
360.5
Dividends declared, $0.490 per share

—

—

—

—

(70.5)

—

(70.5)
Common stock issued

285,399

0.3

—

1.3

—

—

1.6
Stock-settled, stock-based compensation expense

—

—

—

17.6

—

—

17.6
Repurchase of common stock and common stock withheld to cover taxes

(486,518)

—

(33.4)

—

—

—

(33.4)
Other

—

—

—

8.9

(0.8)

—

8.1
Comprehensive income

—

—

—

—

335.0

(45.9)

289.1
Balance at November 27, 2022

143,870,309

$
148.3

$
(297.5)

$
(785.5)

$
1,569.2

$
(61.5)

$
573.0

Balance at May 30, 2021

146,191,864

$
147.6

$
(104.3)

$
(836.8)

$
1,244.6

$
29.5

$
480.6
Dividends declared, $0.470 per share

—

—

—

—

(68.6)

—

(68.6)
Common stock issued

387,428

0.4

—

1.5

—

—

1.9
Stock-settled, stock-based compensation expense

—

—

—

9.6

—

—

9.6
Repurchase of common stock and common stock withheld to cover taxes

(1,378,644)

—

(83.5)

—

—

—

(83.5)
Other

—

—

—

(0.1)

—

—

(0.1)
Comprehensive income

—

—

—

—

62.3

(37.0)

25.3
Balance at November 28, 2021

145,200,648

$
148.0

$
(187.8)

$
(825.8)

$
1,238.3

$
(7.5)

$
365.2


	Twenty-Six Weeks Ended November 26, 2023 and November 27, 2022
							Additional				Accumulated
	Common Stock,		Common		Treasury		Paid-in				Other		Total
	net of Treasury		Stock		Stock		(Distributed)		Retained		Comprehensive		Stockholders’
	Shares		Amount		Amount		Capital		Earnings		Income (Loss)		Equity
Balance at May 28, 2023		145,665,683	$	150.3	$	(314.3)	$	(558.6)	$	2,160.7	$	(26.8)	$	1,411.3
Dividends declared, $0.560 per share		—		—		—		—		(81.2)		—		(81.2)
Common stock issued		401,328		0.4		—		(0.2)		—		—		0.2
Stock-settled, stock-based compensation expense		—		—		—		22.2		—		—		22.2
Repurchase of common stock and common stock withheld to cover taxes		(1,698,691)		—		(164.3)		—		—		—		(164.3)
Other		—		—		(0.8)		0.7		(0.7)		—		(0.8)
Comprehensive income		—		—		—		—		449.8		30.5		480.3
Balance at November 26, 2023		144,368,320	$	150.7	$	(479.4)	$	(535.9)	$	2,528.6	$	3.7	$	1,667.7

Balance at May 29, 2022		144,071,428	$	148.0	$	(264.1)	$	(813.3)	$	1,305.5	$	(15.6)	$	360.5
Dividends declared, $0.490 per share		—		—		—		—		(70.5)		—		(70.5)
Common stock issued		285,399		0.3		—		1.3		—		—		1.6
Stock-settled, stock-based compensation expense		—		—		—		17.6		—		—		17.6
Repurchase of common stock and common stock withheld to cover taxes		(486,518)		—		(33.4)		—		—		—		(33.4)
Other		—		—		—		8.9		(0.8)		—		8.1
Comprehensive income (loss)		—		—		—		—		335.0		(45.9)		289.1
Balance at November 27, 2022		143,870,309	$	148.3	$	(297.5)	$	(785.5)	$	1,569.2	$	(61.5)	$	573.0

See Condensed Notes to Consolidated Financial Statements.

Table of Contents

Lamb Weston Holdings, Inc.

Consolidated Statements of Cash Flows

(unaudited, in millions)


	Twenty-Six Weeks Ended				Twenty-Six Weeks Ended
	November 27,		November 28,		November 26,		November 27,
	2022		2021		2023		2022
Cash flows from operating activities
Net income	$	335.0	$	62.3	$	449.8	$	335.0
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangibles and debt issuance costs		102.0		94.9		140.7		102.0
Loss on extinguishment of debt		—		53.3
Stock-settled, stock-based compensation expense		17.6		9.6		22.2		17.6
Equity method investment earnings in excess of distributions		(67.6)		(2.2)		(11.3)		(67.6)
Deferred income taxes		(6.8)		4.3		5.8		(6.8)
Foreign currency remeasurement gain		(16.8)		—		(0.1)		(16.8)
Other		(13.2)		(0.5)		(1.3)		(13.2)
Changes in operating assets and liabilities, net of acquisition:
Changes in operating assets and liabilities, net of acquisitions:
Receivables		(54.8)		(57.7)		(35.2)		(54.8)
Inventories		(240.1)		(101.3)		(216.0)		(240.1)
Income taxes payable/receivable, net		24.8		3.1		27.6		24.8
Prepaid expenses and other current assets		52.7		58.5		68.8		52.7
Accounts payable		140.6		94.7		96.1		140.6
Accrued liabilities		14.6		(11.5)		(91.9)		14.6
Net cash provided by operating activities	$	288.0	$	207.5	$	455.2	$	288.0
Cash flows from investing activities
Additions to property, plant and equipment		(232.9)		(147.1)		(507.6)		(232.9)
Acquisition of interest in joint venture, net		(42.3)		—
Additions to other long-term assets		(37.4)		(1.0)		(58.9)		(37.4)
Acquisition of interests in joint venture, net						—		(42.3)
Acquisition of business, net of cash acquired						(11.2)		—
Other		1.6		0.5		6.9		1.6
Net cash used for investing activities	$	(311.0)	$	(147.6)	$	(570.8)	$	(311.0)
Cash flows from financing activities
Proceeds from short-term borrowings, net						133.7		—
Proceeds from issuance of debt		23.3		1,655.4		28.4		23.3
Repayments of debt and financing obligations		(16.7)		(1,682.1)		(27.7)		(16.7)
Dividends paid		(70.6)		(68.7)		(81.6)		(70.6)
Repurchase of common stock and common stock withheld to cover taxes		(34.9)		(83.5)		(164.3)		(34.9)
Payments of senior notes call premium		—		(39.6)
Other		2.3		(0.8)		(0.5)		2.3
Net cash used for financing activities	$	(96.6)	$	(219.3)	$	(112.0)	$	(96.6)
Effect of exchange rate changes on cash and cash equivalents		14.0		(2.2)		1.1		14.0
Net decrease in cash and cash equivalents		(105.6)		(161.6)		(226.5)		(105.6)
Cash and cash equivalents, beginning of period		525.0		783.5		304.8		525.0
Cash and cash equivalents, end of period	$	419.4	$	621.9	$	78.3	$	419.4

See Condensed Notes to Consolidated Financial Statements.

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Lamb Weston Holdings, Inc.

Condensed Notes to Consolidated Financial Statements

(Unaudited)

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Lamb Weston Holdings, Inc. (“we,” “us,” “our,” the “Company,” or “Lamb Weston”)~~, along with our joint ventures,~~ is a leading global producer, distributor, and marketer of value-added frozen potato products and is headquartered in Eagle, Idaho. ~~We have four~~Beginning in fiscal 2024, in connection with our recent acquisitions and to align with our expanded global footprint, we began managing our operations in two reportable segments: ~~Global, Foodservice, Retail,~~North America and ~~Other.~~International. See Note ~~13,~~12, Segments, for additional information on our reportable segments.

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements present the financial results of Lamb Weston and its consolidated subsidiaries for the thirteen and twenty-six weeks ended November ~~27, 2022~~26, 2023 and November ~~28, 2021,~~27, 2022, and have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America (“~~U.S”~~U.S.”).

These consolidated financial statements are unaudited and include all adjustments that we consider necessary for a fair presentation of such financial statements and consist only of normal recurring adjustments. The preparation of financial statements involves the use of estimates and accruals. The actual results that we experience may differ materially from those estimates. Results for interim periods should not be considered indicative of results for our full fiscal year, which ends the last Sunday in May.

These financial statements and related condensed notes should be read together with the consolidated financial statements and notes in our Annual Report on Form 10-K for the fiscal year ended May ~~29, 2022~~28, 2023 (the “Form 10-K”), where we include additional information on our critical accounting estimates, policies, and the methods and assumptions used in our estimates. We filed the Form 10-K with the Securities and Exchange Commission (“SEC”) on July ~~27, 2022.~~25, 2023.

Certain amounts from prior period consolidated financial statements have been reclassified to conform with current period presentation.

Accounting Pronouncements Not Yet Adopted

In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06, Disclosure Improvements: Codification Amendments in Response to the Securities and Exchange Commission’s Disclosure Update and Simplification Initiative. The amendments in this update modify the disclosure or presentation requirements of a variety of Topics in the Accounting Standards Codification (“ASC”) in response to the SEC’s Release No. 33-10532, Disclosure Update and Simplification Initiative, and align the ASC’s requirements with the SEC’s regulations. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective. Early adoption is prohibited. We do not expect the adoption of this ASU to have a material impact on our consolidated financial statements and related disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The ASU is effective for our Annual Report on Form 10-K for the fiscal year ending May 25, 2025, and subsequent interim periods, with early adoption permitted. We are evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures.

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In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance transparency and decision usefulness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, on a prospective basis, with early adoption permitted. We are evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures.

There were no other accounting pronouncements recently issued that had or are expected to have a material impact on our consolidated financial statements.

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2. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per common share for the periods presented:


	Thirteen Weeks Ended				Twenty-Six Weeks Ended				Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 27,		November 28,		November 27,		November 28,		November 26,		November 27,		November 26,		November 27,
(in millions, except per share amounts)	2022		2021		2022		2021		2023		2022		2023		2022
Numerator:
Net income	$	103.1	$	32.5	$	335.0	$	62.3	$	215.0	$	103.1	$	449.8	$	335.0

Denominator:
Basic weighted average common shares outstanding		144.0		146.0		144.0		146.1		144.9		144.0		145.3		144.0
Add: Dilutive effect of employee incentive plans (a)		0.6		0.3		0.6		0.5		0.6		0.6		0.7		0.6
Diluted weighted average common shares outstanding		144.6		146.3		144.6		146.6		145.5		144.6		146.0		144.6

Earnings per share:
Basic	$	0.72	$	0.23	$	2.33	$	0.43	$	1.48	$	0.72	$	3.10	$	2.33
Diluted	$	0.71	$	0.22	$	2.32	$	0.42	$	1.48	$	0.71	$	3.08	$	2.32

(a)

Potential dilutive shares of common stock under employee incentive plans are determined by applying the treasury stock method to the assumed exercise of outstanding stock options and the assumed vesting of outstanding restricted stock units and performance awards. As of November ~~27, 2022, 0.6~~26, 2023, 0.7 million shares of stock-based awards were excluded from the computation of diluted earnings per share because they would be antidilutive. As of November ~~28, 2021, 0.3~~27, 2022, 0.6 million shares of stock-based awards were excluded from the computation of diluted earnings per share because they would be antidilutive.

3. INCOME TAXES

Income tax expense was $36.8 million and $9.6 million for the thirteen weeks ended November 27, 2022 and November 28, 2021, respectively; and $110.5 million and $18.3 million for the twenty-six weeks ended November 27, 2022 and November 28, 2021, respectively. The effective income tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was 26.3% and 22.8% for the thirteen weeks ended November 27, 2022 and November 28, 2021, respectively; and 24.8% and 22.7% for the twenty-six weeks ended November 27, 2022 and November 28, 2021, respectively, in our Consolidated Statements of Earnings. The effective tax rate varies from the U.S. statutory tax rate of 21% principally due to the impact of U.S. state taxes, foreign taxes, permanent differences, and discrete items. Excluding the impact of the following items, our effective tax rate was 25.9% and 25.5% for the thirteen and twenty-six weeks ended November 26, 2023 and November 27, 2022 ~~respectively:~~was as follows:


	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 26,		November 27,		November 26,		November 27,
(in millions)	2023		2022		2023		2022
Income before income taxes and equity method earnings	$	276.5	$	247.2	$	569.1	$	378.2
Equity method investment earnings (loss)		4.7		(107.3)		16.8		67.3
Income tax expense		66.2		36.8		136.1		110.5
Effective tax rate (a)		23.5%		26.3%		23.2%		24.8%

●(a)

~~Gain associated with~~The effective income tax rate is calculated as the ~~acquisition~~ratio of ~~an additional 40% interest in our Argentina joint venture, Lamb Weston Alimentos Modernos S.A. (“LWAMSA”), which is discussed in Note 6, Joint Venture Investments.~~income tax expense to pre-tax income, inclusive of equity method investment earnings. The effective tax rate varies from the U.S. statutory tax rate of 21% principally due to the impact of U.S. state taxes, foreign taxes and currency, permanent differences, and discrete items.

●

Gains related to actions taken to mitigate the effect of changes in currency rates on the pending purchase of the remaining 50% ownership interest in our European joint venture, Lamb-Weston/Meijer v.o.f. (“LWM”), net of other acquisition-related costs. See Note 6, Joint Venture Investments, for more information.

●

~~Mark-to-market adjustments associated with changes in natural gas and electricity derivatives at LWM, which is discussed in Note 13, Segments.~~

Income Taxes Paid

Income taxes paid, net of refunds, were ~~$92.1~~$101.1 million and ~~$10.3~~$92.1 million during the twenty-six weeks ended November 26, 2023 and November 27, 2022, ~~and November 28, 2021,~~ respectively.

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4. INVENTORIES

Inventories are valued at the lower of cost (determined using the first-in, first-out method) or net realizable value and include all costs directly associated with manufacturing products: materials, labor, and manufacturing overhead. The components of inventories were as follows:


	November 27,		May 29,		November 26,		May 28,
(in millions)	2022		2022		2023		2023
Raw materials and packaging	$	228.0	$	96.1	$	337.2	$	145.7
Finished goods		539.3		426.5		732.0		708.3
Supplies and other		54.8		51.8		84.4		78.0
Inventories	$	822.1	$	574.4	$	1,153.6	$	932.0

5. PROPERTY, PLANT AND EQUIPMENT

The components of property, plant and equipment were as follows:


	November 27,		May 29,		November 26,		May 28,
(in millions)	2022		2022		2023		2023
Land and land improvements	$	118.3	$	114.1	$	169.2	$	163.2
Buildings, machinery, and equipment		3,000.8		2,919.0
Furniture, fixtures, office equipment, and other		98.3		92.1
Buildings, machinery and equipment						3,915.0		3,576.6
Furniture, fixtures, office equipment and other						120.0		112.0
Construction in progress		321.5		156.1		972.5		832.0
Property, plant and equipment, at cost		3,538.9		3,281.3		5,176.7		4,683.8
Less accumulated depreciation		(1,780.7)		(1,702.1)		(2,003.1)		(1,875.8)
Property, plant and equipment, net	$	1,758.2	$	1,579.2	$	3,173.6	$	2,808.0

Depreciation expense was ~~$49.7~~$66.5 million and ~~$44.7~~$49.7 million for the thirteen weeks ended November 26, 2023 and November 27, 2022, ~~and November 28, 2021,~~ respectively; and ~~$97.0~~$132.4 million and ~~$89.2~~$97.0 million for the twenty-six weeks ended November ~~27, 2022~~26, 2023 and November ~~28, 2021,~~27, 2022, respectively. At November ~~27, 2022~~26, 2023 and May ~~29, 2022,~~28, 2023, purchases of property, plant and equipment included in accounts payable were ~~$65.1~~$188.7 million and ~~$38.3~~$82.6 million, respectively.

Interest capitalized within construction in progress for the thirteen weeks ended November 26, 2023 and November 27, 2022, ~~and November 28, 2021,~~ was ~~$4.1~~$13.0 million and ~~$1.6~~$4.1 million, respectively; and ~~$6.1~~$23.5 million and ~~$2.8~~$6.1 million for the twenty-six weeks ended November ~~27, 2022~~26, 2023 and November ~~28, 2021,~~27, 2022, respectively.

6. ~~JOINT VENTURE INVESTMENTS~~GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

~~Consolidated Joint Venture~~

In ~~July 2022, we acquired an additional 40% interest~~The following table presents changes in LWAMSA, which increased our total ownership from 50% to 90%. We recorded LWAMSA’s assets and liabilities at fair value, which included remeasuring our previously held equity interest at fair value, andgoodwill balances, by segment, for the twenty-six weeks ended November 27, 2022, we recognized a $15.1 million gain in “Equity method investment earnings” in our Consolidated Statement of Earnings. The fair value was determined utilizing industry EBITDA multiples and control premium comparable information, which are unobservable inputs, or Level 3 in the fair value hierarchy. We recorded the preliminary fair values as of the date of acquisition.26, 2023:

In connection with the purchase of the additional interest in LWAMSA, we ceased equity method accounting and began consolidating LWAMSA’s financial statements. The net sales, income from operations, and total assets acquired were not material to our consolidated net sales, income from operations, and total assets. LWAMSA’s operating results are included in our Global segment.


(in millions)	North America		International		Total
Balance at May 28, 2023 (a)	$	722.4	$	318.3	$	1,040.7
Acquisition		—		8.5		8.5
Foreign currency translation adjustment		10.1		5.8		15.9
Balance at November 26, 2023	$	732.5	$	332.6	$	1,065.1

(a)

As a result of our change in segments, effective May 29, 2023, goodwill was reassigned to the North America and International segments based on relative fair value using a market-based approach. Before and after the reassignment of our goodwill, we completed impairment assessments and concluded there were no indications of impairment in our segments. See Note 12, Segments, for more information related to the change in segments.

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In September 2022, we announced an expansion of french fry processing capacity in Argentina with the planned construction of a new manufacturing facility in Mar del Plata. The new processing facility is expected to produce more than 200 million pounds of frozen french fries and other potato products per year. Construction of the new line is expected to be completed in fiscal 2025. The total investment is expected to be approximately $240 million. This investment will add to the capacity produced at LWAMSA’s existing production facility in Buenos Aires.

~~Noncontrolling Interest (“NCI”)~~

As of November 27, 2022, total LWAMSA interest not directly attributable to Lamb Weston, or NCI, was $8.1 million and was recorded in “Additional distributed capital” on our Consolidated Balance Sheet. For the thirteen and twenty-six weeks ended November 27, 2022, the net loss attributable to NCI was not significant and was recorded in “Selling, general and administrative expenses” in our Consolidated Statements of Earnings.

~~Unconsolidated Joint Ventures~~

~~Our equity method investments~~Other identifiable intangible assets were as follows:

November 27,

May 29,
(in millions)

2022

2022
LWM (a)

$
233.8

$
211.2
Lamb-Weston/RDO Frozen ("Lamb Weston RDO") (b)


29.2

19.4
LWAMSA (c)


—

26.1
Other


0.7

0.7

$
263.7

$
257.4


	November 26, 2023							May 28, 2023
	Weighted							Weighted
	Average	Gross						Average	Gross
	Useful Life	Carrying		Accumulated		Intangible		Useful Life	Carrying		Accumulated		Intangible
(in millions, except useful lives)	(in years)	Amount		Amortization		Assets, Net		(in years)	Amount		Amortization		Assets, Net
Non-amortizing intangible assets (a)	n/a	$	18.0	$	—	$	18.0	n/a	$	18.0	$	—	$	18.0
Amortizing intangible assets (b)	14		124.2		(33.1)		91.1	14		121.4		(29.2)		92.2
		$	142.2	$	(33.1)	$	109.1		$	139.4	$	(29.2)	$	110.2

(a)	~~We own 50% of LWM, a joint venture with Meijer Frozen Foods B.V. LWM is headquartered in the Netherlands~~Non-amortizing intangible assets represent brands and ~~manufactures and sells frozen potato products principally in Europe and the Middle East.~~trademarks.

(b)

Amortizing intangible assets are principally composed of licensing agreements, brands, and customer relationships. Amortization expense, including developed technology amortization expense, was $2.6 million and $1.5 million for the thirteen weeks ended November 26, 2023 and November 27, 2022, respectively; and $5.3 million and $2.9 million for the twenty-six weeks ended November 26, 2023 and November 27, 2022, respectively. Foreign intangible assets are affected by foreign currency translation.

7. OTHER ASSETS

The components of other assets were as follows:



	November 26,		May 28,
(in millions)	2023		2023
Capitalized software costs	$	227.5	$	175.4
Property, plant and equipment deposits		159.4		30.5
Equity method investments		54.6		43.5
Other		35.1		38.2
Other assets	$	476.6	$	287.6

8. ACCRUED LIABILITIES

The components of accrued liabilities were as follows:


	November 26,		May 28,
(in millions)	2023		2023
Compensation and benefits	$	115.6	$	187.5
Accrued trade promotions		79.3		86.1
Dividends payable to shareholders		40.4		40.8
Taxes payable		36.5		21.2
Accrued interest		31.6		31.1
Current portion of operating lease obligations		28.1		28.5
Derivative liabilities and payables		23.6		53.9
Plant utilities and accruals		21.0		27.2
Other		57.9		33.5
Accrued liabilities	$	434.0	$	509.8

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9. DEBT AND FINANCING OBLIGATIONS

The components of our debt, including financing obligations, were as follows:


(in millions)	November 26, 2023				May 28, 2023
		Amount	Interest Rate			Amount	Interest Rate
Short-term borrowings:
U.S. revolving credit facility	$	175.0	6.682	%	$	—	7.710	%
Euro revolving credit facility		98.5	4.695			149.2	4.230
Other credit facilities		23.5	(a)			11.4	(a)
		297.0				160.6
Long-term debt:
Term A-1 loan facility, due June 2026 (b)		236.2	7.203			243.8	5.210
Term A-2 loan facility, due April 2025 (b)		272.2	7.203			280.3	5.380
Term A-3 loan facility, due January 2030 (b)		438.8	7.353			450.0	6.850
RMB loan facility, due February 2027		122.3	4.545			94.7	4.600
Euro loan facility, due December 2024		82.0	4.101			80.4	2.010
4.875% senior notes, due May 2028		500.0	4.875			500.0	4.875
4.125% senior notes, due January 2030		970.0	4.125			970.0	4.125
4.375% senior notes, due January 2032		700.0	4.375			700.0	4.375
		3,321.5				3,319.2
Financing obligations:
Lease financing obligations due on various dates through 2040		6.9				7.7

Total debt and financing obligations		3,625.4				3,487.5
Debt issuance costs and debt discounts (c)		(23.6)				(25.3)
Short-term borrowings, net of debt discounts		(294.3)				(158.5)
Current portion of long-term debt and financing obligations		(55.0)				(55.3)
Long-term debt and financing obligations, excluding current portion	$	3,252.5			$	3,248.4

(a)	Other credit facilities consist of several short-term facilities at one of our subsidiaries used for working capital needs and have various interest rates.

(b)

The interest rates on the Term A-1, A-2, and A-3 loans do not include anticipated patronage dividends. We ~~own 50% of Lamb Weston RDO, a joint venture with RDO Frozen Co., that operates a potato processing facility in the U.S.~~have received and expect to continue receiving patronage dividends under all three term loan facilities.

(c)	~~In July 2022, we acquired~~Excludes debt issuance costs of $2.1 million and $2.5 million as of November 26, 2023 and May 28, 2023, respectively, related to our U.S. revolving credit facility, which are recorded in “Other assets” on our Consolidated Balance Sheets.

As of November 26, 2023, we had $175.0 million of borrowings outstanding under our U.S. revolving credit facility and $819.6 million of availability under the facility, which is net of outstanding letters of credit of $5.4 million.

For the twenty-six weeks ended November 26, 2023 and November 27, 2022, we paid $89.4 million and $76.6 million of interest on debt, respectively.

For more information about our debt and financing obligations, interest rates, and debt covenants, see Note 8, Debt and Financing Obligations, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of the Form 10-K.

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10. FAIR VALUE MEASUREMENTS

The fair values of cash equivalents, receivables, accounts payable, and short-term debt approximate their carrying amounts due to their short duration.

The following table presents our financial assets and liabilities measured at fair value on a recurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall:


	As of November 26, 2023
							Fair Value
							of Assets
(in millions)	Level 1		Level 2		Level 3		(Liabilities)
Derivative assets (a)	$	—	$	2.4	$	—	$	2.4
Derivative liabilities (a)		—		(21.4)		—		(21.4)
Deferred compensation liabilities (b)		—		(25.8)		—		(25.8)
Fair value, net	$	—	$	(44.8)	$	—	$	(44.8)


	As of May 28, 2023
							Fair Value
							of Assets
(in millions)	Level 1		Level 2		Level 3		(Liabilities)
Derivative assets (a)	$	—	$	3.0	$	—	$	3.0
Derivative liabilities (a)		—		(46.6)		—		(46.6)
Deferred compensation liabilities (b)		—		(22.6)		—		(22.6)
Fair value, net	$	—	$	(66.2)	$	—	$	(66.2)

(a)

Derivative assets and liabilities included in Level 2 primarily represent commodity swaps, option contracts, interest rate swaps and currency contracts. The fair values of our Level 2 derivative assets were determined using valuation models that use market observable inputs including both forward and spot prices for commodities and foreign currencies. Derivative assets are presented within “Prepaid expenses and other current assets” on our Consolidated Balance Sheets and derivative liabilities are presented within “Accrued liabilities” on our Consolidated Balance Sheets.

(b)

The fair values of our Level 2 deferred compensation liabilities were valued using third-party valuations, which are based on the net asset values of mutual funds in our retirement plans. While the underlying assets are actively traded on an ~~additional 40% interest in LWAMSA, increasing~~exchange, the funds are not. Deferred compensation liabilities are primarily presented within “Other noncurrent liabilities” on our ~~total ownership to 90% and began consolidating the joint venture.~~Consolidated Balance Sheets.

~~In September 2022, LWM completed~~As of November 26, 2023, we had $2,170.0 million of fixed-rate and $1,448.5 million of variable-rate debt outstanding. Based on current market rates, the previously announced withdrawal from its joint venture in Russia. In October 2022, we entered into an agreement to acquire the remaining interest in LWM for consideration consisting of €525.0 million in cash and €175.0 million in sharesfair value of our ~~common stock. The number of shares~~fixed-rate debt was estimated to be $1,946.8 million. Any differences between the book value and fair value are due to the difference between the period-end market interest rate and the stated rate of our fixed-rate debt. The fair value of our variable-rate term debt approximates the carrying amount as our cost of borrowing is variable and approximates current market prices.

11. STOCKHOLDERS’ EQUITY

Share Repurchase Program

On October 11, 2023, we announced that our Board of Directors increased our share repurchase authorization to an aggregate amount of $500.0 million, including approximately $124.0 million of remaining unused capacity under the Board’s previous share repurchase authorization. The program has no expiration date. During the thirteen weeks ended November 26, 2023, we repurchased 571,986 shares for an aggregate purchase price of $50.0 million, or a weighted-average price of $87.41 per share. During the twenty-six weeks ended November 26, 2023, we repurchased 1,564,351 shares for an aggregate purchase price of $150.0 million, or a weighted-average price of $95.89 per share. As of November 26, 2023, $450.0 million remained authorized for repurchase under the program.

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Dividends

During the twenty-six weeks ended November 26, 2023, we paid $81.6 million of cash dividends to our common ~~stock~~stockholders. In addition, on December 1, 2023, we paid $40.4 million of cash dividends to ~~be paid will be equal to the U.S. dollar equivalent~~common stockholders of ~~€175.0 million, valued at the volume weighted average~~record as of the ~~trading price~~close of business on November 3, 2023. On December 14, 2023, our Board of Directors declared a cash dividend of $0.36 per share of our common ~~stock for the five trading days immediately preceding the signing date~~stock. This dividend will be paid on March 1, 2024, to common stockholders of record as of the ~~agreement and the five trading days immediately preceding the closing date~~close of the transaction. Upon completion of the transaction, we will own 100% of LWM. We expect to close the transaction in the fourth quarter of fiscal 2023, subject to customary regulatory approvals. Following closing of the transaction, we will include LWM’s operating results in our Global segment.business on February 2, 2024.

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss), net of taxes, as of November 26, 2023 were as follows:


	Foreign						Accumulated
	Currency		Pension and				Other
	Translation		Post-Retirement				Comprehensive
(in millions)	Gain (Loss)		Benefits		Other		Income (Loss)
Balance as of May 28, 2023	$	(27.1)	$	(0.7)	$	1.0	$	(26.8)
Other comprehensive income before reclassifications, net of tax		31.0		(0.3)		(0.2)		30.5
Net current-period other comprehensive income		31.0		(0.3)		(0.2)		30.5
Balance as of November 26, 2023	$	3.9	$	(1.0)	$	0.8	$	3.7

1114

Table of Contents

~~7. GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS~~

~~The following table presents changes in goodwill balances, by segment, during the twenty-six weeks ended November 27, 2022:~~

(in millions)

Global

Foodservice

Retail

Other

Total
Balance at May 29, 2022

$
259.8

$
42.8

$
10.9

$
4.5

$
318.0
Acquisition of interest in joint venture (a)

42.1

—

—

—

42.1
Foreign currency translation adjustment

(12.6)

—

—

—

(12.6)
Balance at November 27, 2022

$
289.3

$
42.8

$
10.9

$
4.5

$
347.5

~~(a)~~

~~In July 2022, we acquired an additional 40% interest in LWAMSA, which increased our total ownership from 50% to 90%, and we recorded $42.1 million of goodwill, that is~~ ~~not~~ ~~deductible for tax purposes, in our Global segment. See Note 6, Joint Venture Investments, for more information.~~

~~Other identifiable intangible assets were as follows:~~

November 27, 2022

May 29, 2022


Weighted







Weighted






Average

Gross

Average

Gross

Useful Life

Carrying

Accumulated

Intangible

Useful Life

Carrying

Accumulated

Intangible
(in millions, except useful lives)

(in years)

Amount

Amortization

Assets, Net

(in years)

Amount

Amortization

Assets, Net
Non-amortizing intangible assets (a)

n/a

$
18.0

$
—

$
18.0

n/a

$
18.0

$
—

$
18.0
Amortizing intangible assets (b)

10


40.8


(26.8)


14.0

10


41.4


(25.7)


15.7



$
58.8

$
(26.8)

$
32.0



$
59.4

$
(25.7)

$
33.7

~~(a)~~

~~Non-amortizing intangible assets represent brands and trademarks.~~

~~(b)~~

Amortizing intangible assets are principally composed of licensing agreements, brands, and customer relationships. Developed technology, which is excluded from this balance, is recorded as “Other assets” on our Consolidated Balance Sheets. Amortization expense, including developed technology amortization expense, was $1.5 million and $1.5 million for the thirteen weeks ended November 27, 2022 and November 28, 2021, respectively; and $2.9 million and $3.0 million for the twenty-six weeks ended November 27, 2022 and November 28, 2021, respectively. Foreign intangible assets are affected by foreign currency translation.

~~8. ACCRUED LIABILITIES~~

~~The components of accrued liabilities were as follows:~~

November 27,

May 29,
(in millions)

2022

2022
Compensation and benefits

$
107.7

$
81.0
Accrued trade promotions

48.0

41.2
Dividends payable to shareholders

35.2

35.3
Accrued interest

26.6

42.1
Other

26.4

30.2
Current portion of operating lease obligations

23.3

22.4
Income taxes payable

17.1

1.7
Franchise, property, and sales and use taxes

12.4

10.4
Accrued liabilities

$
296.7

$
264.3

~~Table of Contents~~

~~9. DEBT AND FINANCING OBLIGATIONS~~12. SEGMENTS

~~The components~~Effective May 29, 2023, to align with our expanded global footprint following the completion of our ~~debt,~~acquisition of the remaining 50% equity interest in Lamb-Weston/Meijer v.o.f., our former European joint venture (“LW EMEA”), management, including ~~financing obligations, were~~our chief executive officer (who is our chief operating decision maker), began managing operations in two business segments based on management’s change to the way it monitors performance, aligns strategies, and allocates resources. As a result of this change, we now have two operating segments, each of which is a reportable segment: North America and International. Our chief operating decision maker receives periodic management reports under this structure, which, as ~~follows:~~discussed above, informs operating decisions, performance assessment, and resource allocation decisions at the segment level. These reportable segments are each managed by a general manager and supported by a cross functional team assigned to support the segment.

November 27,

May 29,
(in millions)

2022

2022
Short-term borrowings:

Other credit facilities

$
9.0

$
—

Long-term debt:

Term A-1 loan facility, due June 2024

251.3

258.7
Term A-2 loan facility, due April 2025

288.4

296.6
RMB loan facility, due February 2027

39.3

19.7
4.875% senior notes, due May 2028

500.0

500.0
4.125% senior notes, due January 2030

970.0

970.0
4.375% senior notes, due January 2032

700.0

700.0

2,749.0

2,745.0
Financing obligations:

Lease financing obligations due on various dates through 2040

6.5

7.0

Total debt and financing obligations

2,764.5

2,752.0
Debt issuance costs (a)

(22.2)

(24.0)
Short-term borrowings

(9.0)

—
Current portion of long-term debt and financing obligations

(32.2)

(32.2)
Long-term debt and financing obligations, excluding current portion

$
2,701.1

$
2,695.8

~~(a)~~

Excludes debt issuance costs of $2.9 million and $3.3 million as of November 27, 2022 and May 29, 2022, respectively, related to our revolving credit facility, which are recorded in “Other assets” on our Consolidated Balance Sheets.


	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 26,		November 27,		November 26,		November 27,
(in millions)	2023		2022		2023		2022
Segment net sales
North America	$	1,167.1	$	1,062.5	$	2,302.5	$	2,018.1
International (a)		565.0		214.0		1,094.9		384.0
	$	1,732.1	$	1,276.5	$	3,397.4	$	2,402.1

At November 27, 2022, we had no borrowings outstanding under our revolving credit facility and $994.6 million of availability under the facility, which is net of outstanding letters of credit of $5.4 million. For the twenty-six weeks ended November 27, 2022, we had no material borrowings under the facility.


Thirteen Weeks Ended November 26, 2023		North America		International (a)		Unallocated Corporate Costs (b)		Total Company
Adjusted EBITDA (c)	$	321.3	$	100.2	$	(44.6)	$	376.9
Unrealized derivative losses		—		—		1.6		1.6
Foreign currency exchange gains		—		—		(9.2)		(9.2)
Items impacting comparability:
Inventory step-up from acquisition		—		(1.8)		—		(1.8)
Integration and acquisition-related items, net		—		—		4.8		4.8
Depreciation and amortization (d)		43.3		26.8		1.1		71.2
Income (loss) from operations including equity method investment earnings	$	278.0	$	75.2	$	(42.9)		310.3
Interest expense, net								29.1
Income tax expense								66.2
Net income							$	215.0

~~For the twenty-six weeks ended November 27, 2022 and November 28, 2021, we paid $76.6 million and $61.4 million of interest on debt, respectively.~~

For more information on our debt and financing obligations, interest rates, and debt covenants, see Note 7, Debt and Financing Obligations, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of the Form 10-K.

~~10. STOCK-BASED COMPENSATION~~

The Compensation and Human Capital Committee (“the Committee”) of our Board of Directors administers our stock compensation plan. The Committee, in its discretion, authorizes grants of restricted stock units (“RSUs”), performance awards payable upon the attainment of specified performance goals (“Performance Shares”), stock options, dividend equivalents, and other stock-based awards. As of November 27, 2022, 6.0 million shares were available for future grant under the plan.

~~RSUs~~

We grant RSUs to eligible employees and non-employee directors. The employee RSUs generally vest over a three-year period following the grant date, while the non-employee director RSUs generally vest one year after the grant date. We estimate the fair value of the RSUs based upon the market price of our common stock on the date of grant.

~~Table of Contents~~

~~Compensation expense is recognized over the period the employee or non-employee director provides service in exchange for the award.~~

~~Performance Shares~~

Performance Shares are granted to certain executives and other key employees with vesting contingent upon meeting various Company-wide performance goals. Awards actually earned range from 0% to 200% of the targeted number of Performance Shares for each of the performance periods. Awards, if earned, would be paid in shares of our common stock. Subject to limited exceptions set forth in our stock plan, any shares earned will generally vest over a three-year service period following the grant date. The value of these Performance Shares is adjusted based upon the market price of our common stock and the anticipated attainment of Company-wide performance goals at the end of each reporting period and amortized as compensation expense over the service period.

We have also granted Performance Shares with vesting contingent upon relative total shareholder return goals, and, under special circumstances, stock price growth goals. Awards actually earned range from 0% to 200%, in the case of awards contingent on total shareholder return goals, or 0% to 300%, in the case of awards contingent on stock price growth goals, of the targeted number of Performance Shares. These Performance Shares are equity-settled awards that vest over a three-year service period following the grant date, and the number of units that actually vest is determined based on the achievement of the performance criteria set forth in the respective award agreement. The awards are measured based on estimated fair value as of the date of grant using a Monte Carlo simulation, and are amortized over the service period.

~~The weighted average Monte Carlo assumptions for Performance Shares granted during the twenty-six weeks ended November 27, 2022 were:~~


	~~Assumptions~~
~~Dividend yield (%)~~		~~0.00 - 1.42~~
~~Expected volatility of stock (%)~~		~~42.99~~
~~Risk-free interest rate (%)~~		~~2.89~~
~~Expected life (years)~~		~~2.82~~
~~Weighted average grant date fair value per unit~~	$	~~91.43 - $118.97~~

~~Stock Options~~

Under special circumstances, we have granted options to employees and non-employee directors for the purchase of stock at exercise prices equal to the fair market value of the underlying stock on the grant date. Options granted to employees generally become exercisable in three annual installments beginning on the first anniversary of the grant date and have a maximum term of seven years. Options granted to non-employee directors generally vest one year after the grant date and have a term of ten years.

~~The weighted average Black-Scholes assumptions for stock options granted during the twenty-six weeks ended November 27, 2022 were:~~


	~~Assumptions~~
~~Weighted average fair value~~	$	~~25.90 - $29.25~~
~~Dividend yield (%)~~		~~1.20 - 1.22~~
~~Expected volatility of stock (%)~~		~~33.73 - 34.06~~
~~Risk-free interest rate (%)~~		~~2.82 - 4.42~~
~~Expected life of stock option (years)~~		~~5.74 - 5.75~~
~~Weighted average exercise price per share~~	$	~~79.66 - $82.73~~

~~Table of Contents~~

~~Stock Based Compensation Grants~~

During the twenty-six weeks ended November 27, 2022, we granted 0.4 million, 0.3 million, and 0.6 million RSUs, Performance Shares, and stock options, respectively, at an average grant date fair value of $79.48, $92.83, and $25.93, respectively.

~~Compensation Expense~~

Our stock-based compensation expense is recorded in “Selling, general and administrative expenses.” Compensation expense for stock-based awards recognized in the Consolidated Statements of Earnings, net of forfeitures, was as follows:

Thirteen Weeks Ended

Twenty-Six Weeks Ended

November 27,

November 28,

November 27,

November 28,
(in millions)

2022

2021

2022

2021
Stock-settled RSUs

$
5.0

$
3.5

$
9.7

$
7.1
Performance Shares

3.7

0.9

6.1

2.5
Stock options

1.3

—

1.8

—
Total compensation expense

$
10.0

$
4.4

$
17.6

$
9.6
Income tax benefit (a)

(1.9)

(0.9)

(3.2)

(1.8)
Total compensation expense, net of tax benefit

$
8.1

$
3.5

$
14.4

$
7.8

~~(a)~~

~~Income tax benefit represents the marginal tax rate, excluding non-deductible compensation.~~

~~Based on estimates at November 27, 2022, total unrecognized compensation expense related to stock-based awards was as follows:~~

Remaining

Weighted

Unrecognized

Average

Compensation

Recognition
(in millions, except data in years)

Expense

Period (in years)
Stock-settled RSUs

$
40.5


1.6
Performance Shares

30.7


2.3
Stock options

12.6

1.8
Total unrecognized compensation expense

$
83.8


Thirteen Weeks Ended November 27, 2022
Adjusted EBITDA	$	299.6	$	60.2	$	(30.9)	$	328.9
Unrealized derivative gains		—		—		(0.4)		(0.4)
Foreign currency exchange losses		—		—		1.4		1.4
Unconsolidated joint venture unrealized derivative losses		—		—		130.1		130.1
Item impacting comparability:
Integration and acquisition-related items, net		—		—		(26.5)		(26.5)
Depreciation and amortization (d)		42.7		16.7		0.4		59.8
Income (loss) from operations including equity method investment earnings	$	256.9	$	43.5	$	(135.9)		164.5
Interest expense, net								24.6
Income tax expense								36.8
Net income							$	103.1

Table of Contents

~~11. FAIR VALUE MEASUREMENTS~~

~~The fair values of cash equivalents, receivables, accounts payable, and short-term debt approximate their carrying amounts due to their short duration.~~

As of November 27, 2022

Fair Value

of Assets
(in millions)

Level 1

Level 2

Level 3

(Liabilities)
Derivative assets (a)

$
—

$
16.9

$
—

$
16.9
Deferred compensation liabilities (b)

—

(22.6)

—

(22.6)
Fair value, net

$
—

$
(5.7)

$
—

$
(5.7)

As of May 29, 2022

Fair Value

of Assets
(in millions)

Level 1

Level 2

Level 3

(Liabilities)
Derivative assets (a)

$
—

$
7.0

$
—

$
7.0
Deferred compensation liabilities (b)

—

(21.6)

—

(21.6)
Fair value, net

$
—

$
(14.6)

$
—

$
(14.6)

~~(a)~~

Derivative assets included in Level 2 primarily represent commodity swaps, option contracts, and currency contracts. The fair values of our Level 2 derivative assets were determined using valuation models that use market observable inputs including both forward and spot prices for commodities. Derivative assets are presented within “Prepaid expenses and other current assets” on our Consolidated Balance Sheets.

~~(b)~~

The fair values of our Level 2 deferred compensation liabilities were valued using third-party valuations, which are based on the net asset values of mutual funds in our retirement plans. While the underlying assets are actively traded on an exchange, the funds are not. Deferred compensation liabilities are primarily presented within “Other noncurrent liabilities” on our Consolidated Balance Sheets.

At November 27, 2022, we had $2,170.0 million of fixed-rate and $588.0 million of variable-rate debt outstanding. Based on current market rates, the fair value of our fixed-rate debt was estimated to be $1,944.7 million. Any differences between the book value and fair value are due to the difference between the period-end market interest rate and the stated rate of our fixed-rate debt. The fair value of our variable-rate term debt approximates the carrying amount as our cost of borrowing is variable and approximates current market prices.

~~12. STOCKHOLDERS’ EQUITY~~

~~Share Repurchase Program~~

Our Board of Directors authorized a program, with no expiration date, to repurchase up to $500.0 million of our common stock. During the thirteen weeks ended November 27, 2022, there were no share repurchases. During the twenty-six weeks ended November 27, 2022, we repurchased 404,476 shares for an aggregate purchase price of $28.4 million, or a weighted average price of $70.11 per share. As of November 27, 2022, $240.6 million remained authorized for repurchase under the program.

~~Table of Contents~~

~~Dividends~~


Twenty-Six Weeks Ended November 26, 2023		North America		International (a)		Unallocated Corporate Costs (b)		Total Company
Adjusted EBITDA (c)	$	700.7	$	189.8	$	(100.8)	$	789.7
Unrealized derivative gains		—		—		(25.7)		(25.7)
Foreign currency exchange gains		—		—		(1.8)		(1.8)
Items impacting comparability:
Inventory step-up from acquisition		—		20.7		—		20.7
Integration and acquisition-related items, net		—		—		8.8		8.8
Depreciation and amortization (d)		87.0		53.0		2.0		142.0
Income (loss) from operations including equity method investment earnings	$	613.7	$	116.1	$	(84.1)		645.7
Interest expense, net								59.8
Income tax expense								136.1
Net income							$	449.8

During the twenty-six weeks ended November 27, 2022, we paid $70.6 million of dividends to our common stockholders. On December 2, 2022, we paid $35.2 million of dividends to stockholders of record as of the close of business on November 4, 2022. On December 14, 2022, our Board of Directors declared a dividend of $0.28 per share of common stock. This dividend will be paid on March 3, 2023, to stockholders of record as of the close of business on February 3, 2023.

~~Accumulated Other Comprehensive Income (“AOCI”)~~

~~Changes in AOCI, net of taxes, as of November 27, 2022 were as follows:~~

Foreign

Accumulated

Currency

Pension and

Other

Translation

Post-Retirement

Comprehensive
(in millions)

Losses

Benefits

Other

Loss
Balance as of May 29, 2022

$
(12.9)

$
(3.3)

$
0.6

$
(15.6)
Other comprehensive income (loss) before reclassifications, net of tax

(46.3)

—

0.4

(45.9)
Amounts reclassified out of AOCI, net of tax

—

—

—

—
Net current-period other comprehensive income (loss)

(46.3)


—

0.4

(45.9)
Balance as of November 27, 2022

$
(59.2)

$
(3.3)

$
1.0

$
(61.5)

~~Table of Contents~~

~~13. SEGMENTS~~

We have four operating segments, each of which is a reportable segment: Global, Foodservice, Retail, and Other. Our chief operating decision maker receives periodic management reports under this structure that generally focus on the nature and scope of our customers’ businesses, which enables operating decisions, performance assessment, and resource allocation decisions at the segment level. The reportable segments are each managed by a general manager and supported by a cross functional team assigned to support the segment.

Thirteen Weeks Ended

Twenty-Six Weeks Ended


November 27,

November 28,

November 27,

November 28,
(in millions)

2022

2021

2022

2021
Net sales








Global

$
692.8

$
516.7

$
1,252.5

$
1,017.9
Foodservice

357.9

313.9

724.3

635.3
Retail

191.5

142.6

361.0

275.1
Other

34.3

33.4

64.3

62.5
Total net sales

$
1,276.5

$
1,006.6

$
2,402.1

$
1,990.8
Product contribution margin (a)








Global

$
171.0

$
80.9

$
254.7

$
123.5
Foodservice

130.8

104.4

269.1

200.8
Retail

65.7

21.4

114.4

36.2
Other (b)

7.5

(6.2)

5.6

(12.8)

375.0

200.5

643.8

347.7
Add: Advertising and promotion expenses (a)

6.6

5.0

11.1

9.1
Gross profit

381.6

205.5

654.9

356.8
Selling, general and administrative expenses (c)

109.8

91.1

226.1

182.2
Income from operations

271.8

114.4

428.8

174.6
Interest expense, net (d)

24.6

82.4

50.6

110.3
Income tax expense

36.8

9.6

110.5

18.3
Equity method investment earnings (loss) (e)

(107.3)

10.1

67.3

16.3
Net income

$
103.1

$
32.5

$
335.0

$
62.3


Twenty-Six Weeks Ended November 27, 2022
Adjusted EBITDA	$	531.4	$	93.3	$	(61.2)	$	563.5
Unrealized derivative losses		—		—		3.6		3.6
Foreign currency exchange losses		—		—		2.4		2.4
Unconsolidated joint venture unrealized derivative gains		—		—		(14.4)		(14.4)
Items impacting comparability:
Integration and acquisition-related items, net		—		—		(26.5)		(26.5)
Gain on acquisition of interest in joint ventures (e)		—		(15.1)		—		(15.1)
Depreciation and amortization (d)		84.0		32.5		0.9		117.4
Income (loss) from operations including equity method investment earnings	$	447.4	$	75.9	$	(27.2)		496.1
Interest expense, net								50.6
Income tax expense								110.5
Net income							$	335.0

(a)

~~Product contribution margin represents net sales less cost~~We acquired the remaining interest in LW EMEA in the fourth quarter of ~~sales~~fiscal 2023. Accordingly, LW EMEA’s adjusted EBITDA is reported in the International segment for the thirteen and ~~advertising and promotion expenses. Product contribution margin includes advertising and promotion expenses because those expenses are directly associated with~~twenty-six weeks ended November 26, 2023, whereas in the same period in the prior year, our 50% equity interest in LW EMEA was recorded using equity method accounting. As a result, only 50% of LW EMEA’s adjusted EBITDA is reported in the International segment ~~performance.~~

~~(b)~~

~~The Other segment primarily includes our vegetable and dairy businesses and unrealized mark-to-market adjustments and realized settlements associated with commodity hedging contracts.~~

~~(c)~~

~~Selling, general and administrative expenses~~ for the thirteen and twenty-six weeks ended November 27, ~~2022~~2022.

(b)

Unallocated corporate costs included ~~a net $26.5 million gain~~costs related to ~~actions taken~~corporate support staff and support services, foreign exchange gains and losses and unrealized mark-to-market derivative gains and losses. Support services include, but are not limited to, ~~mitigate~~our administrative, information technology, human resources, finance, and accounting functions that are not specifically allocated to the ~~effect of changes in currency rates on the pending purchase of the remaining ownership interest in LWM, net of other acquisition-related costs.~~segments.

Unallocated corporate costs for the thirteen and twenty-six weeks ended November 26, 2023 included unallocated corporate costs of LW EMEA, whereas in the same period in the prior year, our portion of LW EMEA’s unallocated corporate costs were recorded in “Equity method investment earnings” in the Consolidated Statements of Earnings in the International segment.

~~(d)~~(c)

The thirteen and twenty-six weeks ended November ~~28, 2021~~26, 2023 included a ~~loss on the extinguishment of debt of $53.3~~$70.9 million ~~which includes an aggregate call premium of $39.6~~charge ($53.9 million after-tax, or $0.37 per share) related to ~~the redemption of our outstanding 4.625% senior notes due 2024 and 4.875% senior notes due 2026, and the~~a write-off of ~~$13.7~~excess raw potatoes. The total charge to the reporting segments was as follows: $63.3 million ~~of previously unamortized debt issuance costs associated with those notes.~~to the North America segment and $7.6 million to the International segment.

~~(e)~~(d)

~~Equity~~Depreciation and amortization included interest expense, income tax expense, and depreciation and amortization from equity method ~~investment earnings (loss) included a $136.8~~investments of $2.1 million ~~unrealized loss~~ and ~~a $6.3~~$8.6 million ~~unrealized gain~~ for the thirteen weeks ended November 26, 2023 and November 27, 2022, ~~and November 28, 2021,~~ respectively; and a ~~$9.5~~$4.3 million and ~~$11.3~~$17.6 million ~~unrealized gain~~ for the twenty-six weeks ended November 26, 2023 and November 27, 2022, and November 28, 2021, respectively, related to mark-to-market adjustments associated with changes in natural gas and electricity derivatives as commodity markets in Europe have experienced significant volatility.respectively.

Equity method investment earnings for the twenty-six weeks ended November 27, 2022 also included a $15.1 million gain recognized in connection with our acquisition of an additional 40% interest in our Argentina joint venture, increasing our ownership from 50% to 90%.

1816

Table of Contents

(e)

The twenty-six weeks ended November 27, 2022 included a $15.1 million (before and after-tax) gain recognized in connection with our acquisition of an additional 40% equity interest in Lamb Weston Alimentos Modernos S.A. (“LWAMSA”) in July 2022. This gain related to remeasuring our previously held 50% equity interest in LWAMSA to fair value, recorded in “Equity method investment earnings” in the Consolidated Statements of Earnings, and is excluded from the financial results of our International segment.

~~14.~~13. COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS

We have financial commitments and obligations that arise in the ordinary course of our business. These include long-term debt, lease obligations, purchase commitments for goods and services, and legal proceedings. Except for the agreement to acquire the remaining interest in LWM for consideration of €525.0 million in cash and €175.0 million in shares of our common stock discussed in Note 6, Joint Venture Investments, thereThere have been no material changes to the commitments, contingencies, guarantees and legal proceedings disclosed in Note 14, Commitments, Contingencies, Guarantees, and Legal Proceedings, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of the Form 10-K.

1917

Table of Contents

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations, which we refer to as “MD&A,” should be read in conjunction with our condensed consolidated financial statements and related notes included in "Financial Information" of this Quarterly Report on Form 10-Q (this ~~"Form 10-Q"~~“Form 10-Q”) and in “Financial Statements and Supplementary Data” of the Company's Annual Report on Form 10-K for the fiscal year ended May ~~29, 2022~~28, 2023 (the “Form 10-K”), which we filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”) on July ~~27, 2022.~~25, 2023.

Forward-Looking Statements

This report, including the MD&A, contains forward-looking statements within the meaning of the federal securities laws. Words such as “will,” “continue,” “may,” “expect,” “would,” “believe,” ~~“acquire,~~“deliver,” “manage,” “anticipate,” “drive,” “leverage,” “benefit,” “increase,~~” “implement,” “improve,~~” “outlook,” and variations of such words and similar expressions are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements regarding our business and financial outlook and prospects, our plans, execution, capital expenditures and investments, ~~operational costs,~~ pricing actions, cash flows, liquidity, dividends, enterprise resource planning (“ERP”) system implementation, ~~pending acquisition~~integration of ~~the remaining equity interest in~~ our former European joint venture, Lamb-Weston/Meijer v.o.f. (“~~LWM”~~LW EMEA”), ~~including the anticipated benefits of the transaction, the expected timing of the completion of the transaction, related financing~~ and ~~the ability of the parties to complete the transaction, and business and financial outlook and prospects, as well as supply chain constraints,~~ inflation, conditions in our industry, and the global ~~economic conditions.~~economy. These forward-looking statements are based on management’s current expectations and are subject to uncertainties and changes in circumstances. Readers of this report should understand that these statements are not guarantees of performance or results. Many factors could affect these forward-looking statements and our actual financial results and cause them to vary materially from the expectations contained in the forward-looking statements, including those set forth in this report. These risks and uncertainties include, among other things: the availability and prices of raw materials and other commodities; labor shortages and other operational challenges; an uncertain general economic environment, including inflationary pressures and recessionary concerns, any of which could adversely impact our business, financial condition or results of operations, including the demand and prices for our products; the occurrence of any event, change or other circumstances that could give rise to the termination of our agreement to acquire the remaining equity interest in LWM; the risk that the necessary regulatory approvals for the LWM acquisition may not be obtained or may be obtained subject to conditions that are not anticipated; the risk that the LWM acquisition will not be consummated in a timely manner or at all; risks that any of the closing conditions to the LWM acquisition may not be satisfied or may not be satisfied in a timely manner; risks related to disruption of management time from ongoing business operations due to the LWM acquisition; failure to realize the benefits expected from the LWM acquisition; and the effect of the announcement of the LWM acquisition on our ability to retain customers and retain and hire key personnel, maintain relationships with suppliers and on our operating results and businesses generally; risks associated with integrating acquired businesses, including ~~LWM;~~LW EMEA; levels of labor and people-related expenses; our ability to successfully execute our long-term value creation strategies; our ability to execute on large capital projects, including construction of new production lines or facilities; difficulties, disruptions or delays in implementing new technology, including our new ERP system; the competitive environment and related conditions in the markets in which we operate; political and economic conditions of the countries in which we conduct business and other factors related to our international operations; disruptions in the global economy caused by conflicts such as the war in Ukraine and conflicts in the Middle East and the possible related heightening of our other known risks; impacts on our business due to health pandemics or other contagious outbreaks, such as the COVID-19 pandemic, including impacts on demand for our products, increased costs, disruption of supply, other constraints in the availability of key commodities and other necessary services or restrictions imposed by public health authorities or governments; levels of pension, labor and people-related expenses; our ability to successfully execute our long-term value creation strategies; our ability to execute on large capital projects, including construction of new production lines or facilities; the competitive environment and related conditions in the markets in which we and our joint ventures operate; political and economic conditions of the countries in which we and our joint ventures conduct business and other factors related to our international operations; disruption of our access to export mechanisms; risks associated with other possible acquisitions; our debt levels; changes in our relationships with our growers or significant customers; ~~the success of our joint ventures;~~ actions of governments and regulatory factors affecting our ~~businesses or joint ventures;~~businesses; the ultimate outcome of litigation or any product recalls; our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends; and other risks described in our reports filed from time to time with the SEC. We caution readers not to place undue reliance on any forward-looking statements included in this report, which speak only as of the date of this report. We undertake no responsibility for updating these statements, except as required by law.

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Overview

Lamb Weston Holdings, Inc. (“we,” “us,” “our,” ~~“the Company,~~the “Company,” or “Lamb Weston”)~~, along with our joint ventures,~~ is a leading global producer, distributor, and marketer of value-added frozen potato products. We ~~along with our joint ventures,~~ are the number one supplier of value-added frozen potato products in North America and a leading supplier of value-added frozen potato products internationally, with a strong and growing presence in high-growth emerging markets. We ~~along with our joint ventures,~~ offer a broad product portfolio to a diverse channel and customer base in over 100 countries. French fries represent the majority of our value-added frozen potato product portfolio.

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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”) ~~and certain other financial data (including product contribution margin, on a consolidated basis,~~. We have also presented Adjusted EBITDA, ~~Adjusted EBITDA including unconsolidated joint ventures, Adjusted Income from Operations, Adjusted Net Income, and Adjusted Diluted EPS) that~~which is ~~prepared using~~considered a non-GAAP financial ~~measures.~~measure, to supplement the financial information included in this report. Refer to “Non-GAAP Financial Measures” below for the ~~definitions~~definition of ~~product contribution margin,~~ Adjusted EBITDA, ~~Adjusted EBITDA including unconsolidated joint ventures, Adjusted Income from Operations, Adjusted Net Income, and Adjusted Diluted EPS,~~ and a reconciliation of ~~these~~this non-GAAP financial ~~measures~~measure to ~~gross profit, income from operations,~~its most directly comparable GAAP financial measure, net ~~income, or diluted earnings per share, as applicable.~~income. For more information, refer to the “Results of Operations” and “Non-GAAP Financial Measures” sections below.

Executive Summary

~~The following highlights~~In the second quarter of fiscal 2024, we drove solid sales and earnings growth, reflecting: the carryover benefit of inflation-driven pricing actions taken in the prior year; incremental sales and earnings from the acquisition of the remaining equity interest in LW EMEA (the “LW EMEA Acquisition”), our ~~financial results~~former joint venture in Europe; favorable mix; and supply chain productivity savings. While sales volumes, excluding the benefit of acquisitions, declined compared with the second quarter of fiscal 2023, ~~compared with~~our volume performance improved sequentially versus our fiscal fourth and first quarters, reflecting resilient global demand and the gradual addition of new business to replace the lower-margin volume that we chose to exit in the prior ~~year~~fiscal year. Volume elasticities in response to inflation-based pricing actions across our portfolio have continued to remain low during the quarter. ~~For more information, refer to the “Results of Operations” section below.~~

●

~~Net sales increased 27% to $1,276.5 million~~

●

~~Income from operations increased 138% to $271.8 million~~

●

Net income increased 217% to $103.1 million, and diluted earnings per share increased 223% to $0.71, including items impacting comparability, as discussed below, of $110.3 million ($82.3 million after-tax, or $0.57 per share)

●

~~Adjusted Income from Operations increased 114% to $245.3 million~~

●

~~Adjusted Net Income increased 171% to $185.4 million, and Adjusted Diluted EPS increased 172% to $1.28~~

●

~~Adjusted EBITDA including unconsolidated joint ventures increased 92% to $334.6 million~~

●

~~We returned $35.2 million of cash to stockholders through dividends~~

~~We drove strong sales growth, earnings growth,~~ and ~~gross margin expansion~~ Adjusted EBITDA in the second quarter ~~by continuing~~increased as favorable price/mix and incremental earnings from the consolidation of the financial results of LW EMEA more than offset a $70.9 million charge to ~~execute pricing actions across each of our business segments to counter significant~~write-off excess raw potatoes in North America, higher input and manufacturing ~~and supply chain cost inflation. The increase in net sales was partially offset by~~costs on a ~~decline in sales volume, primarily reflecting an inability to fully serve customer demand in our foodservice and retail channels due to~~per pound basis, the impact of supply chain disruptions on run-rates and throughput in our production facilities, and to a lesser extent, softer restaurant traffic and demand trends in the U.S., especially at casual dining and full-service restaurants, as consumers adjusted to the severe inflationary environment. Overall traffic at large quick service restaurants (“QSR”) in the U.S. remained solid.

~~The increase in net income was driven by higher~~lower sales ~~and gross profit and lower interest expense, and was partially offset by sharply lower equity method investment earnings~~volumes and higher selling, general and administrative ~~expenses~~ (“SG&A”). expenses. The ~~following items impacted comparability~~charge for excess raw potatoes largely reflected a reduction to our sales volume estimate, compared with the January 2023 estimate used to determine the number of acres to contract, as well as a solid potato crop, after two years of below average crop, in our second quarter results and were excluded when providing Adjusted Income from Operations, Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA, and Adjusted EBITDA including unconsolidated joint ventures:growing regions in North America.

●

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 extinguishment of debt (see “Liquidity and Capital Resources”).

In the first half of fiscal 2024, we generated net cash from operating activities of $455.2 million, up $167.2 million compared to the first half of fiscal 2023, primarily due to higher earnings. We ended the second quarter with $78.3 million of cash and cash equivalents and $175.0 million of borrowings outstanding under our $1.0 billion U.S. revolving credit facility. In addition, we returned an aggregate of $90.8 million to our common stockholders during the quarter, including $50.0 million of share repurchases and $40.8 million in cash dividends. In October 2023, we increased our share repurchase authorization to $500.0 million, and in December 2023, we increased our quarterly cash dividend to common stockholders by 29% to $0.36 per share.

●

The decrease in equity method investment earnings included a $136.8 million unrealized loss ($101.5 million after-tax, or $0.70 per share) in the second quarter of fiscal 2023 related to mark-to-market adjustments associated

In November 2023, our greenfield french fry processing facility in Ulanqab, Inner Mongolia, China became operational as scheduled. Our capacity expansion and modernization efforts in Idaho, Argentina, and the Netherlands remain on track. In addition, at the beginning of our third quarter of fiscal 2024, we began transitioning certain central systems and functions in North America to a new ERP system, as part of our multi-year effort to upgrade our information systems and ERP infrastructure across the company.

Outlook

In fiscal 2024, we expect to deliver net sales and earnings growth, and to benefit from incremental sales and earnings during the first three quarters of the fiscal year, as compared to the first three quarters of fiscal 2023, from the consolidation of the financial results of LW EMEA. In addition to the incremental sales related to the consolidation of LW EMEA, we expect pricing actions to drive net sales growth for fiscal 2024, as we expect sales volumes will continue to be pressured by our decisions to strategically manage our customer and product mix by exiting certain lower-priced and lower-margin business. We also anticipate that demand for our products in the near term may be tempered by softer restaurant traffic trends, as compared to the prior year period, in North America and other key markets as our customers and consumers generally both respond to challenging macroeconomic environments.

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with natural gas and electricity hedging contracts in Europe, reflecting the volatility of those energy markets in that region, and a $6.3 million unrealized gain ($4.7 million after-tax, or $0.03 per share) in the prior year quarter.

●

SG&A 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 LWM, net of other acquisition-related costs.

In October 2022, we entered into an agreement to acquire the remaining interest in LWM for consideration consisting of €525.0 million in cash and €175.0 million in shares of our common stock. Upon completion of the transaction, we will own 100% of LWM. We expect earnings growth for fiscal 2024 to ~~close this transaction~~be largely driven by sales and gross profit growth, and that the rate of input cost inflation, driven largely by higher potato costs, will, in aggregate, moderate as compared to fiscal 2023 inflation rates. We anticipate that the increase in gross profit will be partially offset by the $64.6 million pre-tax charge incurred in the ~~fourth~~second quarter of fiscal ~~2023, subject~~2024 to ~~customary regulatory approvals. After closing, we will include LWM’s operating~~write-off excess raw potatoes, and by higher SG&A, reflecting: incremental expense attributable to the consolidation of the financial results ~~within~~of LW EMEA; increased investments to upgrade our ~~Global segment.~~information systems and ERP infrastructure; non-cash amortization of intangible assets associated with the LW EMEA Acquisition; and higher compensation and benefits expenses due to increased employee headcount.

~~Outlook~~

~~During the second half of fiscal 2023, we expect increases in price/mix in each of our core business segments to be the primary driver of net sales growth versus the prior year period.~~ We ~~expect supply chain disruptions, including the effects of commodities shortages and onboarding new production workers, and changes in product mix will~~ continue to ~~impact run-rates and throughput in our production facilities, and affect our customer fulfillment rates. We also expect sales volume trends and demand will continue to be volatile as consumers~~believe in the ~~U.S.~~long-term growth outlook for the frozen potato category and ~~our key international markets continue~~that Lamb Weston is well-positioned to ~~respond~~drive sustainable, profitable growth, and to better serve customers around the ~~current inflationary environment. We expect our gross margins will be largely consistent with~~world as we seek to leverage the ~~levels that we delivered in~~commercial and operational benefits from the ~~first half of the year due to the carryover benefits of pricing actions taken in fiscal 2022,~~LW EMEA Acquisition, as well as ~~actions being taken~~the benefits we expect from our previously announced capacity expansion investments in ~~fiscal 2023 to offset input cost inflation, including an increase in raw potato costs as a result of higher contract rates~~China, the U.S., Argentina, and the impact of below-average crop yields as a result of significant heat waves late in the season in our growing regions in the Pacific Northwest. We expect LWM’s earnings may improve as compared to the prior year period as a result of the continued implementation of pricing actions to counter cost inflation.

While the near-term global demand trends may be volatile as consumers navigate the current challenging macroenvironment, our investments to expand capacity in Idaho, China, and Argentina, along with our intent to acquire the remaining equity interest in our LWM joint venture, reflect our belief in the long-term health and growth outlook of the frozen potato category.Netherlands.

Results of Operations

WeEffective May 29, 2023, to align with our expanded global footprint following the completion of the LW EMEA Acquisition, management, including our chief executive officer (who is our chief operating decision maker), began managing operations in two business segments based on management’s change to the way it monitors performance, aligns strategies, and allocates resources. As a result of this change, we now have ~~four~~two operating segments, each of which is a reportable ~~segments: Global, Foodservice, Retail,~~segment: North America and ~~Other.~~International. We report net sales and ~~product contribution margin~~Adjusted EBITDA by segment and on a consolidated ~~basis. Product contribution margin, when presented on a consolidated~~ basis, is a non-GAAP financial measure. Product contribution margin represents net sales less cost of sales and advertising and promotion (“A&P”) expenses. Product contribution margin includes A&P expenses because those expenses are directly associated with the performance of the Company’s segments. Net sales and product contribution marginwhich are the primary measures reported to our chief operating decision maker for purposes of allocating resources to our segments and assessing their performance. Adjusted EBITDA is a non-GAAP financial measure. For additional information on our reportable segments, Segment Adjusted EBITDA, and ~~product contribution margin,~~Adjusted EBITDA, see ~~“Non-GAAP Financial Measures” below and~~ Note ~~13,~~12, Segments, of the Condensed Notes to Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this ~~report.~~report and “Non-GAAP Financial Measures” below.Prior period segment data has been retrospectively adjusted to conform with current period classification.

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Thirteen Weeks Ended November ~~27, 2022~~26, 2023 compared to Thirteen Weeks Ended November ~~28, 2021~~27, 2022

Net Sales ~~Gross Profit,~~ and ~~Product Contribution Margin~~Segment Adjusted EBITDA

Thirteen Weeks Ended


November 27,

November 28,

%
(in millions, except percentages)

2022

2021

Increase
Segment net sales

Global

$
692.8

$
516.7

34%
Foodservice

357.9


313.9

14%
Retail

191.5

142.6

34%
Other

34.3

33.4

3%

$
1,276.5

$
1,006.6

27%

Segment product contribution margin

Global

$
171.0

$
80.9

111%
Foodservice

130.8


104.4

25%
Retail

65.7

21.4

207%
Other

7.5

(6.2)

221%

375.0

200.5

87%
Add: Advertising and promotion expenses

6.6

5.0

32%
Gross profit

$
381.6

$
205.5

86%


	Thirteen Weeks Ended
	November 26,		November 27,		%
(in millions, except percentages)	2023		2022		Increase (Decrease)
Segment net sales
North America	$	1,167.1	$	1,062.5	10%
International		565.0		214.0	164%
	$	1,732.1	$	1,276.5	36%

Segment Adjusted EBITDA
North America	$	321.3	$	299.6	7%
International		100.2		60.2	66%

Net Sales

Compared to the prior year quarter, net sales for the second quarter of fiscal ~~2023~~2024 increased ~~$269.9~~$455.6 million, or ~~27%~~36%, to ~~$1,276.5 million.~~$1,732.1 million, and included $375.8 million of incremental sales attributable to the consolidation of the financial results of LW EMEA following the completion of the LW EMEA Acquisition in February 2023.

Net sales, excluding the incremental sales attributable to the LW EMEA Acquisition, grew 6% versus the prior year quarter. Price/mix increased ~~30%~~12%, reflecting the benefit of inflation-driven pricing actions across each of our ~~core~~ business segments, ~~to counter input, manufacturing,~~ and favorable mix, partially offset by lower customer transportation ~~cost inflation.~~charges. Volume declined 3%6%, primarily reflecting ~~an inability~~the carryover effect of our decisions to ~~fully serve customer demand in our foodservice~~exit certain lower-priced 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 our 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 decline as consumers face a challenging macroeconomic environment.

Global segment net sales increased $176.1 million, or 34%, to $692.8 million. Price/mix increased 31% and volume increased 3%. The benefit of domestic and international product and freight pricing actions to offset inflation, as well as favorable mix, drove the 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 increase in volume.

Foodservice segment net sales increased $44.0 million, or 14%, to $357.9 million. Price/mix increased 25%, while volume decreased 11%. The carryover benefits of product and freight pricing actions takenlower-margin business in the prior year ~~as well as actions taken in fiscal 2023~~ to ~~counter inflation, drove the increase in price/~~strategically manage customer and product mix. Volume ~~fell, reflecting a combination of: the supply chain disruptions on run-rates and throughput~~elasticities in ~~our production facilities; incremental losses of certain low-margin business; and,~~response to ~~a lesser extent, a slowdown in restaurant traffic and consumer demand in casual dining and other full-service restaurants.~~

~~Retail segment net sales increased $48.9 million, or 34%, to $191.5 million. Price/mix increased 43%, while volume decreased 9%. The carryover benefits of product and freight~~inflation-based pricing actions across ~~the branded and private label portfolios taken in the prior year, as well as actions taken in fiscal 2023~~our portfolio continued to counter inflation, drove the increase in price/mix. While consumer demand for frozen potato products remained strong, volume fell largely due to the impact of supply chain disruptions on run-rates and throughput in our production facilities, as well as incremental losses of certain low-margin, private label business.remain low.

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~~Other~~North America segment net sales, which includes all sales to customers in the U.S., Canada, and Mexico, increased ~~$0.9~~$104.6 million, or 3%10%, to ~~$34.3~~$1,167.1 million. Price/mix increased ~~5% and was driven by higher prices in our vegetable business. Volume decreased 2%~~14%, reflecting the ~~negative effect~~carryover benefits of inflation-driven pricing actions taken in fiscal 2023, and favorable mix, partially offset by lower customer transportation charges. Volume declined 4%, primarily reflecting the carryover impact of our decisions to exit certain lower-priced and lower-margin business in the prior fiscal year.

International segment net sales, which includes all sales to customers outside of North America, increased $351.0 million, or 164%, to $565.0 million, and included $375.8 million of incremental sales attributable to the consolidation of the ~~extreme summer heat on~~financial results of LW EMEA. International segment net sales, excluding the ~~yield~~incremental sales attributable to the LW EMEA Acquisition, declined 12% compared to the prior year quarter. Price/mix increased 10%, driven by the carryover benefit of inflation-driven pricing actions taken in fiscal 2023, as well as favorable mix, partially offset by lower customer transportation charges. Volume, excluding the benefit from the LW EMEA acquisition, declined 22%, primarily reflecting our decisions to exit certain lower-priced and ~~quality of the vegetable crops.~~lower-margin business as well as lapping a strong prior year comparison.

Gross Profit ~~and Product Contribution Margin~~

Gross profit increased ~~$176.1~~$94.0 million, or ~~86%~~25%, to ~~$381.6~~$475.6 million, asand included $1.8 million ($1.3 million after-tax, or $0.01 per share) of benefits associated with the sale of inventory stepped-up to fair value in the LW EMEA Acquisition, and a $4.6 million ($3.5 million after-tax, or $0.02 per share) unrealized loss related to mark-to-market adjustments associated with commodity hedging contracts. The prior year quarter included a $0.4 million ($0.3 million after-tax, with no per share impact) unrealized gain related to mark-to-market adjustments associated with commodity hedging contracts.

Excluding unrealized mark-to-market commodity gains and losses and items impacting comparability, gross profit increased $97.2 million, driven primarily by benefits from pricing actions ~~more than offset~~and incremental earnings attributable to the ~~impact~~consolidation of ~~higher manufacturing and distribution costs on~~the financial results of LW EMEA. Gross profit also included a ~~per-pound basis,~~$64.6 million pre-tax charge for the write-off of excess raw potatoes, largely reflecting a reduction to our initial sales estimate that was developed in January 2023 for the following year, as well as ~~lower sales volumes.~~ a solid potato crop in our growing regions in North America.

The increase in gross profit was also partially offset by higher costs per pound, ~~primarily~~which largely reflected ~~double-digit~~mid-single-digit cost inflation, ~~from~~in the aggregate, for key inputs, including: ~~edible oils,~~raw potatoes, ingredients such as grains and starches used in product coatings, ~~labor,~~ and ~~transportation and warehousing.~~labor. 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 fall 2021, as well as the effects of supply chain disruptions on run-rates and throughput in our production facilities. The increase in gross profit also included a $6.5 million increase in unrealized mark-to-market adjustments associated with commodity hedging contracts, which includes a $0.4 million gain in the second quarter, compared with a $6.1 million loss related to these items in the prior year quarter.

Our overall product contribution margin, defined as gross profit less A&P expenses, increased $174.5 million, or 87%, to $375.0 million. The increase was largely driven by higher sales and gross profit (as described above).

Global segment product contribution margin increased $90.1 million, or 111%, to $171.0 million. 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. Global segment cost of sales was $520.5 million, up 20% compared to the second quarter of fiscal 2022, primarily due to higher manufacturing and distribution costs, as well as higher sales volumes.

~~Foodservice segment product contribution margin increased $26.4 million, or 25%, to $130.8 million. Pricing actions drove the increase, and~~ was partially offset by ~~higher manufacturing and distribution~~supply chain productivity savings as well as lower costs per pound, unfavorable mix, and the impact of lower sales volumes. Foodservice segment cost of sales was $225.4 million, up 8% compared to the second quarter of fiscal 2022, primarily due to higher manufacturing and distribution costs, partially offset by lower sales volumes.

Retail segment product contribution margin increased $44.3 million, or 207%, to $65.7 million. Pricing actions drove the increase, partially offset by higher manufacturing and distribution costs per pound. Retail segment cost of sales was $122.2 million, a 3% increase compared to the second quarter of fiscal 2022, primarily due to higher manufacturing and distribution costs, partially offset by lower sales volumes.

Other segment product contribution margin increased $13.7 million to $7.5 million in the second quarter of fiscal 2023, as compared to a loss of $6.2 million in the second quarter of fiscal 2022. These amounts include a $2.0 million gain and an $8.6 million loss related to unrealized mark-to-market adjustments and realized settlements associated with commodity hedging contracts reported in the Other segment in fiscal 2023 and 2022, respectively. Excluding these mark-to-market adjustments and realized settlements, Other segment product contribution margin increased $3.1 million, largely due to pricing actions in our vegetable business.for edible oils.

Selling, General and Administrative Expenses

SG&A increased ~~$18.7~~$60.2 million to ~~$109.8~~$170.0 million in the second quarter of fiscal ~~2023,~~2024, and ~~includes a net~~included: $4.8 million ($3.6 million after-tax, or $0.02 per share) of LW EMEA integration and acquisition-related expenses; $3.0 million ($2.2 million after-tax, or $0.01 per share) of unrealized gains related to mark-to-market adjustments associated with currency hedging contracts; and $9.2 million ($6.9 million after-tax, or $0.05 per share) of foreign currency exchange gains. The prior year quarter included $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~~LW EMEA integration and acquisition-related net gains and $1.4 million ($1.0 million after-tax, or $0.01 per share) of foreign currency ~~rates on the pending purchase of the remaining ownership interest in LWM, net of other acquisition-related costs.~~ exchange losses.

Excluding these items, ~~impacting comparability,~~ SG&A increased ~~$45.2~~$42.5 million to ~~$136.3~~$177.4 million, primarily due to ~~higher compensation and benefits expense, and~~incremental expenses attributable to ~~a lesser extent,~~the consolidation of the financial results of LW EMEA; higher expenses related to improving our information systems and ERP ~~infrastructure.~~infrastructure; and higher compensation and benefits expenses.

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Segment Adjusted EBITDA

North America Segment Adjusted EBITDA increased $21.7 million to $321.3 million. The carryover benefit of inflation-driven pricing actions and favorable mix drove the increases, which were partially offset by a $63.3 million charge for the write-off of excess raw potatoes, higher costs per pound, and the impact of lower volumes.

International Segment Adjusted EBITDA increased $40.0 million to $100.2 million, and excluded a net benefit from comparability items of $1.8 million ($1.3 million after-tax, or $0.01 per share) associated with the sale of inventory stepped-up to fair value in the LW EMEA Acquisition. Incremental earnings from the consolidation of the financial results of LW EMEA drove the increase. Excluding the benefit from the LW EMEA Acquisition, higher costs per pound, including a $7.6 million allocated charge for the write-off of excess raw potatoes, and the impact of lower volumes, more than offset favorable price/mix.

Adjusted EBITDA increased $48.0 million to $376.9 million, up 15% compared to the prior year quarter, and included a $70.9 million pre-tax charge for the write-off of excess raw potatoes, of which $6.3 million was recorded in “Equity method investment earnings” in the Consolidated Statement of Earnings. Higher income from operations, which includes the benefit of incremental earnings from LW EMEA, drove the increases.

Interest Expense, Net

Compared with the prior year quarter, interest expense, net ~~decreased $57.8~~increased $4.5 million to ~~$24.6~~$29.1 million, ~~primarily~~ reflecting ~~a loss~~the impact of higher total debt outstanding and higher interest rates on ~~extinguishment of~~our floating rate debt, in the prior year quarter of $53.3 million ($40.5 million after-tax, or $0.28 per share) associated with the redemption in full of our outstanding 4.625% senior notes due 2024 (the “2024 Notes”) and 4.875% senior notes due 2026 (the “2026 Notes”). In addition,partially offset by higher capitalized interest related to our manufacturing expansion projects and interest ~~income were each higher versus the prior year quarter.~~income.

Income Tax Expense

Income tax expense for the second quarter of fiscal 2024 and 2023 ~~and 2022~~ was ~~$36.8~~$66.2 million and ~~$9.6~~$36.8 million, respectively. The effective income tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was ~~26.3%~~23.5% and ~~22.8%~~26.3% for the second quarter of fiscal ~~2023~~2024 and ~~2022, respectively. Excluding items impacting comparability, our effective tax rate for the second quarter of fiscal~~ 2023, ~~and 2022 was 25.9% and 23.4%,~~ respectively. The effective tax rate varies from the U.S. statutory tax rate of 21%, principally due to the impact of U.S. state taxes, foreign taxes and currency, permanent differences, and discrete items.

Equity Method Investment Earnings (Loss)

~~We conduct business through~~Equity method investment earnings (loss) from unconsolidated joint ventures ~~in Europe~~were earnings of $4.7 million and ~~the U.S. and include our share of the earnings (loss) based on our economic ownership interest in them. Our share of earnings and loss from our equity method investments was~~ a loss of $107.3 ~~million and earnings of $10.1~~ million for the second quarter of fiscal 2024 and 2023, ~~and 2022,~~ respectively. ~~Equity~~The results in the current quarter include earnings associated with our 50% interest in Lamb Weston/RDO Frozen, an unconsolidated potato processing joint venture in Minnesota (“Lamb Weston RDO”), while results in the prior year quarter also included earnings associated with our previously held 50% interest in LW EMEA that were classified as equity method investment earnings ~~(loss) included~~(losses) prior to the completion of the LW EMEA Acquisition. The results in the prior year quarter include a $130.1 million ($96.5 million after-tax, or $0.67 per share) unrealized loss related to mark-to-market adjustments associated with currency and commodity hedging contracts in the second quarter of fiscal 2023, 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 included a $3.6 million unrealized gain for mark-to-market adjustments, of which $6.3 million ($4.7 million after-tax, or $0.03 per share) related to gains in natural gas and electricity derivatives.LW EMEA.

Excluding ~~the~~these 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~~investment earnings declined $18.1 million compared to the prior year quarter, ~~reflecting favorable price/mix, partially offset by higher manufacturing and distribution costs,~~largely due to our share of LW EMEA earnings being included in ~~both Europe and~~ the ~~U.S.~~prior year quarter. The results in the second quarter also include a $6.3 million pre-tax charge for the write-off of excess raw potatoes at Lamb Weston RDO.

2522

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Twenty-Six Weeks Ended November ~~27, 2022~~26, 2023 compared to Twenty-Six Weeks Ended November ~~28, 2021~~27, 2022

Net Sales ~~Gross Profit,~~ and ~~Product Contribution Margin~~Segment Adjusted EBITDA

Twenty-Six Weeks Ended


November 27,

November 28,

%
(in millions, except percentages)

2022

2021

Increase
Segment net sales

Global

$
1,252.5

$
1,017.9

23%
Foodservice

724.3


635.3

14%
Retail

361.0

275.1

31%
Other

64.3

62.5

3%

$
2,402.1

$
1,990.8

21%

Segment product contribution margin

Global

$
254.7

$
123.5

106%
Foodservice

269.1


200.8

34%
Retail

114.4

36.2

216%
Other

5.6

(12.8)

144%

643.8

347.7

85%
Add: Advertising and promotion expenses

11.1

9.1

22%
Gross profit

$
654.9

$
356.8

84%


	Twenty-Six Weeks Ended
	November 26,		November 27,		%
(in millions, except percentages)	2023		2022		Increase (Decrease)
Segment net sales
North America	$	2,302.5	$	2,018.1	14%
International		1,094.9		384.0	185%
	$	3,397.4	$	2,402.1	41%

Segment Adjusted EBITDA
North America	$	700.7	$	531.4	32%
International		189.8		93.3	103%

Net Sales

Compared to the first half of fiscal ~~2022,~~2023, net sales increased ~~$411.3~~$995.3 million, or ~~21%~~41%, to ~~$2,402.1 million.~~$3,397.4 million, and included $750.7 million of incremental sales attributable to the consolidation of the financial results of (1) LW EMEA, following the completion of the LW EMEA Acquisition in February 2023, and (2) Lamb Weston Alimentos Modernos S.A., our joint venture in Argentina (“LWAMSA”), following our acquisition in July 2022 of an additional 40% equity interest in LWAMSA (the “LWAMSA Acquisition” and, together with the LW EMEA Acquisition, the “Acquisitions”).

Net sales, excluding the incremental sales attributable to the Acquisitions, grew 10%. Price/mix increased ~~26%~~17%, reflecting the benefit of ~~product and freight~~inflation-driven pricing actions across each of our ~~core~~ business segments, ~~to counter input, manufacturing,~~lower trade spending in North America, and favorable mix, partially offset by lower customer transportation ~~cost inflation.~~charges. Volume declined 5%7%, primarily reflecting ~~an inability~~the carryover effect of our decisions to ~~fully serve customer demand in our foodservice~~exit certain lower-priced and retail channels. The impact of supply chain disruptions during the first half of fiscal 2023, including the effects of commodities shortages and onboarding new production workers, continued to affect production run-rates and throughput in our 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. as consumers face a challenging macroeconomic environment.

Global segment net sales increased $234.6 million, or 23%, to $1,252.5 million. Price/mix increased 23%, while volume was flat. The benefit of domestic and international product and freight pricing actions to offset inflation drove the increase in price/mix. The impact of acquiring a controlling interest in LWAMSA in early fiscal 2023 and growth in international shipments offset a decline in domestic volumes.

Foodservice segment net sales increased $89.0 million, or 14%, to $724.3 million. Price/mix increased 25%, while volume decreased 11%. The carryover benefits of product and freight pricing actions takenlower-margin business in the prior year as ~~well as~~we continue to strategically manage customer and product mix. To a lesser extent, inventory destocking by certain customers in international markets and in select U.S. retail channels also pressured volumes. Volume elasticities in response to inflation-based pricing actions across our portfolio continued to remain low.

North America segment net sales, which includes all sales to customers in the U.S., Canada, and Mexico, increased $284.4 million, or 14%, to $2,302.5 million. Price/mix increased 18%, reflecting the carryover benefit of inflation-driven pricing actions taken in fiscal 2023, lower trade spending, and favorable mix, partially offset by lower customer transportation charges. Volume declined 4%, primarily reflecting the carryover effect of our decisions to ~~counter inflation, drove~~exit certain lower-priced and lower-margin business in the ~~increase~~prior year. To a lesser extent, lower shipments in ~~price/mix.~~response to inventory destocking by certain customers in select U.S. retail channels also pressured volumes.

International segment net sales, which includes all sales to customers outside of North America, increased $710.9 million, or 185%, to $1,094.9 million, and included $750.7 million of incremental sales attributable to the Acquisitions. International segment net sales, excluding the incremental sales attributable to the Acquisitions, declined 11% compared to the prior year period. Price/mix increased 14%, driven by the carryover benefit of inflation-driven pricing actions taken in fiscal 2023, as well as favorable mix, partially offset by lower customer transportation charges. Volume ~~fell,~~declined 25%, primarily reflecting the carryover effect of our decisions to exit certain lower-priced and lower-margin business in the prior year. To a ~~combination of:~~lesser extent, lower shipments in response to inventory destocking by certain customers in several markets in the impact of supply chain disruptions on run-rates and throughput in our production facilities; incremental losses of certain low-margin business; and a slowdown in restaurant traffic and consumer demand in casual dining and other full-service restaurants.Asia-Pacific region also pressured volume.

2623

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Retail segment net sales increased $85.9 million, or 31%, to $361.0 million. Price/mix increased 38%, while volume decreased 7%. 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, largely drove the increase in price/mix. While consumer demand for frozen potato products remained strong, the decline in the segment’s overall volume was due largely to the impact of supply chain disruptions on run-rates and throughput in our production facilities for branded products, as well as incremental losses of certain low-margin, private label business.

Other segment net sales increased $1.8 million, or 3%, to $64.3 million. Price/mix increased 8% and was driven by higher prices in our vegetable business. Volume decreased 5%, reflecting the negative effect of the extreme summer heat on the yield and quality of the vegetable crops.

Gross Profit ~~and Product Contribution Margin~~

Gross profit increased ~~$298.1~~$320.2 million, or ~~84%~~49%, to ~~$654.9~~$975.1 million, asand included $20.7 million of costs ($15.4 million after-tax, or $0.11 per share) associated with the sale of inventory stepped-up to fair value in the LW EMEA Acquisition, and a $27.1 million ($20.2 million after-tax, or $0.14 per share) unrealized gain related to mark-to-market adjustments associated with commodity hedging contracts. The prior year period included a $3.6 million ($2.7 million after-tax, or $0.02 per share) unrealized loss related to mark-to-market adjustments associated with commodity hedging contracts.

Excluding unrealized mark-to-market commodity gains and losses and items impacting comparability, gross profit increased $310.2 million, driven primarily by: benefits from pricing actions, ~~more than offset~~incremental earnings attributable to the ~~impact~~consolidation of ~~higher manufacturing~~the financial results of LW EMEA, and ~~distribution costs on~~lower trade spending in North America. Gross profit also included a ~~per-pound basis,~~$64.6 million pre-tax charge for the write-off of excess raw potatoes, largely reflecting a reduction in our initial sales estimate that was developed in January 2023 for the following year, as well as ~~lower sales volumes.~~ a solid potato crop in our growing regions in North America.

The increase in gross profit was also partially offset by higher costs per pound, ~~predominantly~~which largely reflected ~~double-digit~~mid-to-high single-digit cost inflation, ~~from~~in the aggregate, for key inputs, including: ~~edible oils;~~raw potatoes, ingredients such as grains and starches used in product ~~coatings; transportation;~~coatings, and labor. 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 fall 2021, as well as the effects of supply chain disruptions on run-rates and throughput in our production facilities. The increase in per pound costs was partially offset by supply chain productivity ~~savings.~~

~~Our overall product contribution margin increased $296.1 million, or 85%, to $643.8 million. The increase was largely due to higher sales and gross profit (as described above).~~

Global segment product contribution margin increased $131.2 million, or 106%, to $254.7 million. Pricing actions drove the increase, more than offsetting higher manufacturing and distribution costs per pound,savings as well as ~~unfavorable mix. Global segment cost of sales was $995.6 million, up 12% compared to the first half of fiscal 2022, primarily due to higher manufacturing and distribution costs.~~

Foodservice segment product contribution margin increased $68.3 million, or 34%, to $269.1 million. Pricing actions drove the increase, and was partially offset by higher manufacturing and distributionlower costs per pound, unfavorable mix, and the impact of lower sales volumes. Foodservice segment cost of sales was $452.3 million, up 5% compared to the first half of fiscal 2022, due to higher manufacturing and distribution costs, partially offset by lower sales volumes.

Retail segment product contribution margin increased $78.2 million, or 216%, to $114.4 million. Pricing actions drove the increase, partially offset by higher manufacturing and distribution costs per pound. Retail segment cost of sales was $240.9 million, up 3% compared to the first half of fiscal 2022, primarily due to higher manufacturing and distribution costs, partially offset by lower sales volumes.

Other segment product contribution margin increased $18.4 million to $5.6 million in the first half of fiscal 2023, as compared to a loss of $12.8 million in the first half of fiscal 2022. These amounts include a $6.9 million loss related to unrealized mark-to-market adjustments and realized settlements associated with commodity hedging contracts, and a $16.9 million loss related to the contracts in fiscal 2022. Excluding these mark-to-market adjustments and realized settlements, Other segment product contribution margin increased $8.4 million, largely due to pricing actions in our vegetable business.for edible oils.

Selling, General and Administrative Expenses

SG&A increased ~~$43.9~~$120.1 million to ~~$226.1~~$346.2 million in the first half of fiscal ~~2023,~~2024, and ~~includes a net~~included: $8.8 million of LW EMEA integration and acquisition-related expenses ($6.6 million after-tax, or $0.04 per share); $1.4 million ($1.0 million after-tax, or $0.01 per share) of unrealized losses related to mark-to-market adjustments associated with currency hedging contracts; and $1.8 million ($1.4 million after-tax, or $0.01 per share) of foreign currency exchange gains. The prior year period included: $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~~LW EMEA integration and acquisition-related net gains; and $2.4 million ($1.8 million after-tax, or $0.01 per share) of foreign currency ~~rates on the pending purchase of the remaining ownership interest in LWM, net of other acquisition-related costs.~~ exchange losses.

Excluding these items, ~~impacting comparability,~~ SG&A increased ~~$70.4~~$87.6 million to ~~$252.6~~$337.8 million, primarily due to ~~higher compensation and benefits expense, and~~incremental expenses attributable to the consolidation of the financial results of LW EMEA, higher expenses related to improving our information systems and ERP ~~infrastructure.~~infrastructure, and higher compensation and benefits expenses.

27Segment Adjusted EBITDA

~~Table~~

North America Segment Adjusted EBITDA increased $169.3 million to $700.7 million. The carryover benefit of ~~Contents~~inflation-driven pricing actions, lower trade spending, and favorable mix drove the increases, which were partially offset by a $63.3 million charge for the write-off of excess raw potatoes, higher costs per pound, and the impact of lower volumes.

International Segment Adjusted EBITDA increased $96.5 million to $189.8 million, and excluded $20.7 million ($15.4 million after-tax, or $0.11 per share) of costs associated with the sale of inventory stepped-up to fair value in the LW EMEA Acquisition. Incremental earnings from the consolidation of the financial results of LW EMEA drove the increase. Excluding the benefit from the LW EMEA Acquisition, higher costs per pound, including a $7.6 million allocated charge for the write-off of excess raw potatoes, and the impact of lower volumes, more than offset favorable price/mix.

Interest Expense, Net

Compared with the first half of fiscal ~~2022,~~2024, interest expense, net ~~decreased $59.7~~increased $9.2 million to ~~$50.6 million. The first half~~$59.8 million, reflecting the impact of ~~fiscal year 2022 includes a $53.3 million ($40.5 million after-tax or $0.28 per share) loss~~higher total debt outstanding and higher interest rates on ~~extinguishment of~~our floating rate debt, ~~associated with the redemption in full of~~partially offset by higher capitalized interest related to our ~~2024 Notes~~manufacturing expansion projects and ~~2026 Notes.~~interest income.

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Income Tax Expense

Income tax expense for the first half of fiscal 2024 and 2023 ~~and 2022~~ was ~~$110.5~~$136.1 million and ~~$18.3~~$110.5 million, respectively. The effective income tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was ~~24.8%~~23.2% and ~~22.7%~~24.8% for the first half of fiscal 2024 and 2023, ~~and 2022,~~ respectively. ~~Excluding items impacting comparability, our effective tax rates for the first half of fiscal 2023 and 2022 were 25.5% and 23.0%.~~ The effective tax rate varies from the U.S. statutory tax rate of 21%, principally due to the impact of U.S. state taxes, foreign taxes and currency, permanent differences, and discrete items.

Equity Method Investment Earnings

Equity method ~~investments~~investment earnings from unconsolidated joint ventures were ~~$67.3~~earnings of $16.8 million and ~~$16.3~~$67.3 million for the first half of fiscal 2024 and 2023, ~~and 2022,~~ respectively. ~~Equity method investment~~The results in the current year period include earnings associated with our 50% interest in Lamb Weston RDO, while results in the prior year also included earnings associated with our previously held 50% interest in LW EMEA. The results in the prior year include a $14.4 million unrealized gain ($10.7 million after-tax, or $0.07 per share) related to mark-to-market adjustments associated with currency and commodity hedging contracts ~~in the first half of fiscal 2023, of which $9.5 million ($7.0 million after-tax, or $0.05 per share) related to gains in natural gas~~ and electricity derivatives as commodity markets in Europe have experienced significant volatility. Equity method investment earnings in the first half of fiscal 2022 included a $7.9 million unrealized gain for mark-to-market adjustments, of which $11.3 million ($8.4 million after-tax, or $0.06 per share) related to gains in natural gas and electricity derivatives. Equity method investment earnings in the first half of fiscal 2023 also included a $15.1 million gain (before and after-tax, or $0.10 per share) recognized in connection with the LWAMSA Acquisition, which related to remeasuring our previously held 50% ownership interest ~~in LWAMSA~~ to fair value.

Excluding ~~the~~these items, impacting comparability noted above (mark-to-market adjustments related to natural gas and electricity derivatives and the remeasurement of our previously held ownership interest in LWAMSA) and the other mark-to-market adjustments, earnings from equity method ~~investments increased $29.4~~investment earnings declined $21.0 million compared to the prior year ~~reflecting favorable price/mix, partially offset by higher manufacturing and distribution costs,~~period, largely due to our share of LW EMEA earnings being included in ~~both Europe and~~ the ~~U.S.~~prior year. The results in the current period also include a $6.3 million pre-tax charge for the write-off of excess raw potatoes at Lamb Weston RDO.

Liquidity and Capital Resources

Sources and Uses of Cash

~~We ended the first half~~As of ~~fiscal~~November 26, 2023, ~~with $419.4~~we had $78.3 million of cash and cash equivalents, ~~and $994.6~~with $175.0 million ~~of availability~~in borrowings outstanding under our ~~revolving credit facility, net of letters of credit. As of November 27, 2022, no borrowings were outstanding under the~~$1.0 billion U.S. revolving credit facility.

In October 2022, we entered into an agreement to acquire the remaining interest in LWM for consideration consisting of €525.0 million in cash and €175.0 million in shares of our common stock. We expect to close the transaction in the fourth quarter of fiscal 2023, subject to customary regulatory approvals. We expect to fund the cash portion of this acquisition with new borrowings and cash on hand.

We believe we have sufficient liquidity to meet ~~projected capital expenditures, service existing debt and meet working capital~~our business requirements for at least the next 12 ~~months with current~~months. Cash generated by operations, supplemented by our cash ~~balances~~ and cash ~~from operations,~~equivalents and ~~in the longer term, supplemented as necessary by available borrowings~~availability under our ~~currently undrawn revolving~~ credit ~~facility.~~

~~Table~~facilities, are our primary sources of ~~Contents~~liquidity for funding our business requirements. Our funding requirements include capital expenditures for announced manufacturing expansions in Idaho, the Netherlands, and Argentina, as well as capital investments to upgrade information systems and ERP infrastructure, working capital requirements, and shareholder returns, including cash dividends and repurchases under our share repurchase program.

Cash Flows

Below is a summary table of our cash flows, followed by a discussion of the sources and uses of cash through operating, investing, and financing activities:


	Twenty-Six Weeks Ended				Twenty-Six Weeks Ended
	November 27,		November 28,		November 26,		November 27,
(in millions)	2022		2021		2023		2022
Net cash flows provided by (used for):
Operating activities	$	288.0	$	207.5	$	455.2	$	288.0
Investing activities		(311.0)		(147.6)		(570.8)		(311.0)
Financing activities		(96.6)		(219.3)		(112.0)		(96.6)
		(119.6)		(159.4)		(227.6)		(119.6)
Effect of exchange rate changes on cash and cash equivalents		14.0		(2.2)		1.1		14.0
Net decrease in cash and cash equivalents	$	(105.6)	$	(161.6)		(226.5)		(105.6)
Cash and cash equivalents, beginning of period						304.8		525.0
Cash and cash equivalents, end of period					$	78.3	$	419.4

Table of Contents

Operating Activities

In the first half of fiscal ~~2023,~~2024, cash provided by operating activities increased ~~$80.5~~$167.2 million to ~~$288.0~~$455.2 million, compared with ~~$207.5~~$288.0 million in the same period ~~a year ago.~~of fiscal 2023. The increase related to a ~~$128.5~~$255.6 million increase in income from operations, adjusted for non-cash income and expenses, partially offset by ~~$48.0~~$88.4 million of cash used for unfavorable changes in working ~~capital.~~capital, primarily related to construction-related purchases included in accounts payable and changes in compensation and benefit accruals. See “Results of Operations” in this MD&A for more information related to the increase in income from operations. Unfavorable changes in working capital primarily related to higher-cost finished goods inventories, due primarily to increased potato and input cost inflation. These unfavorable changes were partially offset by an increase in accounts payable due to timing, an increase in accrued liabilities due to higher compensation and benefits accrued in fiscal 2023, compared with the prior year period, and an increase in income taxes payable due to higher taxable income in fiscal 2023, compared with the prior year period.

Investing Activities

Investing activities used ~~$311.0~~$570.8 million of cash in the first half of fiscal ~~2023,~~2024, compared with ~~$147.6~~$311.0 million in the same period in the prior year. The increase primarily relates to our investments into expand our french fry and chopped and formed capacity ~~expansion~~ and ~~our french fry processing line~~other facility modernization efforts in American Falls, ~~Idaho, and our~~Idaho; the construction of a greenfield french fry processing facility in Ulanqab, Inner Mongolia, ~~China.~~China, which became operational in November 2023; and the construction of french fry processing facilities in Mar-del-Plata, Argentina and Kruiningen, the Netherlands. We also used $58.9 million to upgrade our information systems and ERP infrastructure. We expect to use approximately ~~$475~~$900 million to ~~$525~~$950 million ~~for capital expenditures, excluding our pending acquisition of LWM and other acquisitions, if any,~~ in fiscal ~~2023. We also used $42.3 million to acquire an additional ownership interest in our joint venture in Argentina and used $37.4 million to acquire assets associated with the improvement~~2024 as we continue construction of our capacity expansion efforts in Idaho, the Netherlands, and Argentina, as well as capital investments to upgrade our information systems and ~~technology services~~ERP infrastructure.

Financing Activities

During the first half of fiscal 2024, we used $164.3 million of cash to repurchase 1,564,351 shares of our common stock at an average price of $95.89 per share, and we withheld 134,340 shares from employees to cover income and payroll taxes on equity awards that vested during the period. In addition, we paid $81.6 million in cash dividends to common stockholders and $27.7 million of debt and financing obligations. These financing uses were offset by $162.1 million of borrowings during the period primarily under our U.S. revolving credit facility.

In the first half of fiscal 2023, cash used for ~~financing activities decreased $122.7 million to $96.6 million, compared with $219.3 million used during the same period a year ago. During the first half of fiscal 2023,~~ financing activities primarily related to $23.3 million of additional borrowings under our RMB-denominated loan facility, offset by $16.7 million of debt and financing obligation repayments, and the payment of $70.6 million of cash dividends to our common stockholders. In addition, we used $34.9 million of cash to repurchase 404,476 shares of our common stock at an average price of $70.11 per share, and we withheld 82,042 shares from employees to cover income and payroll taxes on equity awards that vested during the period.

~~In the first half of fiscal 2022, financing activities primarily~~ related to issuing senior notes, which generated net proceeds of $1,655.4 million, debt and financing obligation repayments of $1,682.1 million, including the redemption of the 2024 Notes and 2026 Notes, the payment of $68.7 million of cash dividends to our common stockholders, and the payment of an aggregate redemption premium of $39.6 million relating to the notes redemption. In addition, $83.5 million related to the repurchase of 1,264,114 shares of our common stock at an average price of $60.15 per share and withholding 114,530 shares from employees to cover income and payroll taxes on equity awards that vested during the period.

~~Table of Contents~~

For more information about our debt, interest rates, maturity dates, and covenants, see Note 9, Debt and Financing Obligations, of the Condensed Notes to Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this report and Note 7,8, Debt and Financing Obligations of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of the Form 10-K. At November ~~27, 2022,~~26, 2023, we were in compliance with the financial covenant ratios and other covenants contained in our credit agreements.

Obligations and Commitments

~~Except for our pending acquisition of the remaining ownership interest in LWM as discussed in this MD&A, there~~There have been no material changes to the contractual obligations disclosed in “Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Form 10-K.

Non-GAAP Financial Measures

To supplement the financial information included in this report, we have presented ~~product contribution margin on a consolidated basis,~~ Adjusted EBITDA, ~~Adjusted EBITDA including unconsolidated joint ventures, Adjusted Income from Operations, Adjusted Net Income, and Adjusted Diluted EPS, each of~~ which is considered a non-GAAP financial measure.

~~Product contribution margin is one of the primary measures reported~~ Management uses this non-GAAP financial measure to assist in analyzing what management views as our ~~chief~~core operating ~~decision maker~~performance for purposes of allocating resources to our segments and assessing their performance. Product contribution margin represents net sales less cost of sales and A&P expenses. Product contribution margin includes A&P expenses because those expenses are directly associated with the performance of our segments. Our management also uses Adjusted Income from Operations, Adjusted EBITDA and Adjusted EBITDA including unconsolidated joint ventures. Thesebusiness decision making. Management believes that presenting this non-GAAP financial ~~measures reflect management’s exclusion of~~measure provides investors with useful supplemental information because it (i) provides meaningful supplemental information regarding financial performance by excluding foreign currency exchange and unrealized mark-to-market derivative gains and losses and items ~~impacting~~affecting comparability between periods, as(ii) permits investors to view performance using the same tools that management ~~believes these items are not necessarily reflective~~uses to budget, make operating

Table of Contents

and strategic decisions, and evaluate our core operating performance across periods, and (iii) otherwise provides supplemental information that may be useful to investors in evaluating our financial results. In addition, we believe that the ~~underlying operating trends~~presentation of ~~our business. We use these~~this non-GAAP financial ~~measures as a means to evaluate the underlying performance of our business on an ongoing basis, and we believe these measures,~~measure, when considered together with the ~~corresponding~~most directly comparable GAAP financial ~~measures~~measure and the ~~reconciliations~~reconciliation to ~~those measures, provide useful supplemental information regarding~~this GAAP financial measure, provides investors with additional tools to understand the factors and trends affecting ~~Lamb Weston’s~~our underlying business than could be obtained absent these disclosures. ~~We include these~~

The non-GAAP financial ~~measures because management believes they provide useful information to investors~~measure presented in that they provide for greater transparency with respect to supplemental information used by management in its financial and operational decision making. We believe that the presentation of these non-GAAP financial measures, when used in conjunction with GAAP financial measures, is a useful financial analysis tool that can assist investors in assessing our operating performance and underlying prospects. These non-GAAP financial measuresthis report should be viewed in addition to, and not as ~~alternatives~~an alternative for, financial measures prepared in accordance with ~~GAAP. These measures~~GAAP that are also presented in this report. This measure is not a substitute for ~~their~~its comparable GAAP financial ~~measures, such as gross profit, income from operations,~~measure, net income, ~~or diluted earnings per share,~~ and there are limitations to using non-GAAP financial measures. ~~These~~For example, the non-GAAP financial ~~measures~~measure presented in this report may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define ~~these~~this non-GAAP financial ~~measures~~measure the same ~~way.~~way we do.

See “Results of Operations – Thirteen Weeks Ended November 27, 2022 compared to Thirteen Weeks Ended November 28, 2021 – Net Sales, Gross Profit, and Product Contribution Margin” and “Results of Operations – Twenty-Six Weeks Ended November 27, 2022 compared to Twenty-Six Weeks Ended November 28, 2021 – Net Sales, Gross Profit, and Product Contribution Margin” above for a reconciliation of product contribution margin on a consolidated basis to gross profit.

~~Table of Contents~~

The following table reconciles net income to Adjusted ~~EBITDA and Adjusted EBITDA including unconsolidated joint ventures:~~EBITDA:

Thirteen Weeks Ended

Twenty-Six Weeks Ended

November 27,

November 28,

November 27,

November 28,
(in millions)

2022

2021

2022

2021
Net income

$
103.1

$
32.5

$
335.0

$
62.3
Equity method investment loss (earnings)

107.3

(10.1)

(67.3)

(16.3)
Interest expense, net

24.6

82.4

50.6

110.3
Income tax expense

36.8

9.6

110.5

18.3
Income from operations

271.8

114.4

428.8

174.6
Depreciation and amortization

51.2

46.2

99.9

92.2
Adjusted EBITDA

323.0

160.6

528.7

266.8

Unconsolidated Joint Ventures

Equity method investment earnings (loss)

(107.3)

10.1

67.3

16.3
Interest expense, income tax expense, and depreciation and

amortization included in equity method investment earnings

8.6

10.2

17.6

21.2
Items impacting comparability

Impact of LWM natural gas and electricity derivatives (a)

136.8

(6.3)

(9.5)

(11.3)
LWM acquisition-related items, net (b)

(26.5)

—

(26.5)

—
Gain on acquisition of interest in joint venture (c)

—

—

(15.1)

—
Add: Adjusted EBITDA from unconsolidated joint ventures

11.6

14.0

33.8

26.2

Adjusted EBITDA including unconsolidated joint ventures

$
334.6

$
174.6

$
562.5

$
293.0


	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 26,		November 27,		November 26,		November 27,
(in millions)	2023		2022		2023		2022
Net income (a)	$	215.0	$	103.1	$	449.8	$	335.0
Interest expense, net		29.1		24.6		59.8		50.6
Income tax expense		66.2		36.8		136.1		110.5
Income from operations including equity method investment earnings		310.3		164.5		645.7		496.1
Depreciation and amortization (b)		71.2		59.8		142.0		117.4
Unrealized derivative (gains) losses		1.6		(0.4)		(25.7)		3.6
Unconsolidated joint venture unrealized derivative (gains) losses		—		130.1		—		(14.4)
Foreign currency exchange (gains) losses		(9.2)		1.4		(1.8)		2.4
Items impacting comparability:
Inventory step-up from acquisition		(1.8)		—		20.7		—
Integration and acquisition-related items, net		4.8		(26.5)		8.8		(26.5)
Gain on acquisition of interest in joint venture		—		—		—		(15.1)
Adjusted EBITDA	$	376.9	$	328.9	$	789.7	$	563.5

(a)

~~Equity method investment earnings (loss)~~Net income included a $70.9 million charge ($53.9 million after-tax, or $0.37 per share) for the write-off of excess raw potatoes in North America for both the thirteen and twenty-six weeks ended November ~~27, 2022 and November 28, 2021 included~~26, 2023. We recorded a ~~$136.8~~$64.6 million ~~unrealized loss~~charge ($~~101.5~~49.1 million after-tax, or ~~$0.70~~$0.34 per share) in cost of sales, and a $6.3 million ~~unrealized gain~~charge ($~~4.7~~4.8 million after-tax, or $0.03 per share)~~, respectively;~~ in equity method investment earnings. The total charge to the reporting segments was as follows: $63.3 million to the North America segment; and ~~for~~$7.6 million to the twenty-six weeks ended November 27, 2022 and November 28, 2021, included unrealized gains of $9.5 million ($7.0 million after-tax, or $0.05 per share) and $11.3 million ($8.4 million after-tax, or $0.06 per share), respectively, related to mark-to-market adjustments associated with changes in natural gas and electricity derivatives as commodity markets in Europe have experienced significant volatility.International segment.

(b)

~~Income from operations for the thirteen~~Depreciation and ~~twenty-six weeks ended November 27, 2022~~amortization 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~~interest expense, income tax expense, and depreciation and amortization included in ~~currency rates on the pending purchase of the remaining ownership interest in LWM, net of other acquisition-related costs.~~

~~(c)~~

~~Equity~~equity method investment earnings ~~for the twenty-six weeks ended November 27, 2022 included a $15.1 million gain (before and after-tax, or $0.10 per share) recognized in connection with our acquisition~~ of ~~an additional 40% interest in our Argentina joint venture, increasing our ownership from 50% to 90%. The gain related to the remeasuring of our previously held 50% ownership interest to fair value.~~

~~Table of Contents~~

~~The following tables reconcile income from operations to Adjusted Income from Operations, net income to Adjusted Net Income, and diluted EPS to Adjusted Diluted EPS:~~

For the Thirteen Weeks Ended

November 27,

November 28,

November 27,

November 28,

November 27,

November 28,

2022

2021

2022

2021

2022 (a)

2021 (a)
(in millions, except per share amounts)

Income from Operations

Net Income

Diluted EPS
As reported

$
271.8

$
114.4

$
103.1

$
32.5

$
0.71

$
0.22
Items impacting comparability:

Impact of LWM natural gas and electricity derivatives (b)

—

—

101.5

(4.7)

0.70

(0.03)
LWM acquisition-related items, net (c)

(26.5)

—

(19.2)

—

(0.13)

—
Loss on extinguishment of debt (e)

—

—

—

40.5

—

0.28
Total items impacting comparability

(26.5)

—

82.3

35.8

0.57

0.25
Adjusted

$
245.3

$
114.4

$
185.4

$
68.3

$
1.28

$
0.47

For the Twenty-six Weeks Ended

November 27,

November 28,

November 27,

November 28,

November 27,

November 28,

2022

2021

2022

2021

2022 (a)

2021 (a)
(in millions, except per share amounts)

Income from Operations

Net Income

Diluted EPS
As reported

$
428.8

$
174.6

$
335.0

$
62.3

$
2.32

$
0.42
Items impacting comparability:

Impact of LWM natural gas and electricity derivatives (b)

—

—

(7.0)

(8.4)

(0.05)

(0.06)
LWM acquisition-related items, net (c)

(26.5)

—

(19.2)

—

(0.13)

—
Gain on acquisition of interest in joint venture (d)

—

—

(15.1)

—

(0.10)

—
Loss on extinguishment of debt (e)

—

—

—

40.5

—

0.28
Total items impacting comparability

(26.5)

—

(41.3)

32.1

(0.28)

0.22
Adjusted

$
402.3

$
174.6

$
293.7

$
94.4

$
2.04

$
0.64

~~(a)~~

~~Diluted weighted average common shares were 144.6~~$2.1 million and ~~146.3~~$8.6 million for the thirteen weeks ended November 26, 2023 and November 27, 2022, respectively; and ~~November 28, 2021, respectively, and 144.6~~$4.3 million and ~~146.6~~$17.6 million for the twenty-six weeks ended November ~~27, 2022~~26, 2023 and November ~~28, 2021, respectively.~~

~~(b)~~

~~See footnote (a) to the reconciliation of net income to Adjusted EBITDA and Adjusted EBITDA including unconsolidated joint ventures above for a discussion of the item impacting comparability.~~

~~(c)~~

~~See footnote (b) to the reconciliation of net income to Adjusted EBITDA and Adjusted EBITDA including unconsolidated joint ventures above for a discussion of the item impacting comparability.~~

~~(d)~~

See footnote (c) to the reconciliation of net income to Adjusted EBITDA and Adjusted EBITDA including unconsolidated joint ventures above for a discussion of the item impacting comparability. There was no tax on the gain associated with purchasing an additional 40% interest in our Argentina joint venture.

~~(e)~~

The thirteen and twenty-six weeks ended November 28, 2021, include a loss on the extinguishment of debt of $53.3 million ($40.5 million after-tax), which consists of an aggregate redemption premium of $39.6 million related to the redemption of the 2024 Notes and 2026 Notes and the write-off of $13.7 million of debt issuance costs associated with those notes.27, 2022.

Off-Balance Sheet Arrangements

There have been no material changes to the off-balance sheet arrangements disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Form 10-K.

~~Table of Contents~~

Critical Accounting Policies and Estimates

A discussion of our critical accounting policies and estimates can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Form 10-K. There were no material changes to these critical accounting policies and estimates during the first half of fiscal ~~2023.~~2024.

Table of Contents

New and Recently Adopted Accounting Pronouncements

~~There were no accounting pronouncements recently issued that had or are expected to have a material impact on our consolidated financial statements.~~ For a list of our new and recently adopted accounting pronouncements, see Note 1, Nature of Operations and Summary of Significant Accounting Policies, of the Condensed Notes to Consolidated Financial Statements in “Part ~~II,~~I, Item 8.I. Financial ~~Statements and Supplementary Data” included in the Form 10-K.~~Statements” of this report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our operations are exposed to market risks from adverse changes in commodity prices affecting the cost of raw materials and energy, foreign currency exchange rates, and interest rates. In the normal course of business, we may periodically enter into derivative contracts to mitigate these risks, but not for trading purposes. ~~The disruptions in~~All of the ~~global economy caused by the war in Ukraine have resulted in volatility and uncertainty in the markets in which we operate. At the time of this filing, we~~following potential changes are ~~unable to predict or determine the impacts that these events may continue to have~~based on sensitivity analyses performed on our ~~exposure to market risk from commodity prices, foreign currency exchange rates,~~financial positions as of November 26, 2023 and ~~interest rates, among other factors. For more information, refer to “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” included in the Form 10-K.~~May 28, 2023. Actual results may differ materially.

Commodity Price Risk

The objective of our commodity exposure management is to minimize volatility in earnings due to large fluctuations in the price of commodities. We may use commodity swap or forward purchase contracts, in addition to sourcing from multiple providers, to manage risks associated with market fluctuations in oil and energy prices. Based on our open commodity contract hedge positions as of November ~~27, 2022,~~26, 2023, a hypothetical 10 percent decline in market prices applied to the fair value of the instruments would ~~result~~have resulted in a charge to “Cost of sales” of ~~$5.4~~$11.6 million ($~~4.1~~8.7 million after-tax). ~~Additionally, based~~Based on our ~~LWM joint venture’s~~ open commodity contract hedge positions as of ~~November 27, 2022,~~May 28, 2023, a hypothetical 10 percent decline in market prices applied to the fair value of the instruments would ~~result~~have resulted in a charge to ~~“Equity method investment earnings (loss)”~~“Cost of ~~$8.5~~sales” of $9.0 million ($~~6.3~~6.8 million after-tax). ~~Any~~We expect that any change in the fair value of these contracts, real or hypothetical, would be substantially offset by an inverse change in the value of the underlying hedged item.

Foreign Currency Exchange Rate Risk

~~Substantially all~~We are subject to currency exchange rate risk through investments and businesses owned and operated in foreign countries. Our operations in foreign countries export to, and compete with, imports from other regions. As such, currency movements can have a number of direct and indirect impacts on our financial statements. Direct impacts include the translation of our ~~revenue~~international operations’ local currency financial statements into U.S. dollars and the remeasurement impact associated with non-functional currency financial assets and liabilities. Indirect impacts include the change in competitiveness of exports out of the United States (and the impact on local currency pricing of products that are traded internationally). The currency that has the most impact is ~~transacted in U.S. dollars. However, a portion of our operating expenditures and capital purchases are incurred in other currencies, including~~ the ~~Chinese yuan, and our joint ventures outside the U.S. transact in euros and Argentine pesos.~~Euro. From time to time, we may economically hedge currency risk with foreign currency contracts, such as forward contracts. Based on monetary assets and liabilities denominated in foreign currencies, we estimate that a hypothetical 10 percent adverse change in exchange rates versus the U.S. dollar would result in losses of ~~$41.8~~$54.1 million ($~~31.7~~41.1 million after-tax) and ~~$6.5~~$48.8 million ($~~5.0~~37.1 million after-tax) as of November ~~27, 2022~~26, 2023 and May ~~29, 2022,~~28, 2023, respectively. The increased hypothetical risk from May 29, 2022 is primarily related to actions taken to mitigate the effect of changes in currency rates on the pending purchase of the remaining ownership interest in LWM discussed in “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this report.

Interest Rate Risk

We issue fixed and floating rate debt in a proportion that management deems appropriate based on current and projected market conditions, and from time to time, we may enter into interest rate swaps to manage risk. At November ~~27, 2022,~~26, 2023, we had $2,170.0 million of fixed-rate and ~~$588.0~~$1,448.5 million of variable-rate debt outstanding. At May 28, 2023, we had $2,170.0 million of fixed-rate and $1,309.8 million of variable-rate debt outstanding. We have interest rate risk associated with our variable-rate debt. A one percent increase in interest rates related to variable-rate debt would have resulted in an increase in interest expense and a corresponding decrease in income before taxes of ~~$6.0~~$14.7 million annually ($~~4.6~~11.5 million after-tax) and $13.3 million annually ($10.3 million after-tax)at November ~~27, 2022.~~26, 2023 and May 28, 2023, respectively.

~~Table of Contents~~

For more information about our market risks, see Note 9, Debt and Financing Obligations, of the Condensed Notes to Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this report.

Table of Contents

ITEM 4. CONTROLS AND PROCEDURES

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of November ~~27, 2022.~~26, 2023. Based on ~~that~~this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated any change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ~~covered by this report~~ended November 26, 2023. On February 28, 2023, we acquired the remaining 50% equity interest in Lamb-Weston/Meijer v.o.f. (“LW EMEA”), our former European joint venture. We are in the process of evaluating and ~~determined that~~integrating controls and procedures relating to the LW EMEA business, which may result in changes to our internal control over financial reporting. Under SEC guidelines, we are permitted to exclude acquisitions from our assessment of internal control over financial reporting during the first year of an acquisition while integrating the acquired business. We have excluded LW EMEA from our assessment of internal control over financial reporting at November 26, 2023. Except as it may relate to the integration of the LW EMEA business, there ~~was~~have been no ~~change~~changes in our internal control over financial reporting during the quarter ended November ~~27, 2022~~26, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. For the second quarter of fiscal 2024, LW EMEA accounted for 21% of our consolidated net sales and as of November 26, 2023, represented 29% of our consolidated total assets.

~~Table of Contents~~

Part II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note ~~14,~~13, Commitments, Contingencies, Guarantees and Legal Proceedings, of the Condensed Notes to Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this report for information regarding our legal proceedings.

Table of Contents

ITEM 1A. RISK FACTORS

We are subject to various risks and uncertainties in the course of our business. The discussion of these risks and uncertainties may be found under “Part I, Item 1A. Risk Factors” in the Form 10-K. There have been no material changes to the risk factors discussed in the Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, ~~AND~~ USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Total shares of Lamb Weston common stock purchased by the Company during the thirteen weeks ended November ~~27, 2022~~26, 2023 were as follows:


							Approximate Dollar								Approximate Dollar
					Total Number of		Value of Maximum						Total Number of		Value of Maximum
	Total Number		Average		Shares (or Units)		Number of Shares that		Total Number		Average		Shares (or Units)		Number of Shares that
	of Shares (or		Price Paid		Purchased as Part of		May Yet be Purchased		of Shares (or		Price Paid		Purchased as Part of		May Yet be Purchased
	Units)		Per Share		Publicly Announced		Under Plans or Programs		Units)		Per Share		Publicly Announced		Under Plans or Programs
Period	Purchased (a)		(or Unit)		Plans or Programs (b)		(in millions) (b)		Purchased (a)		(or Unit)		Plans or Programs (b)		(in millions) (b)
August 29, 2022 through September 25, 2022		275	$	78.23		—	$	240.6
September 26, 2022 through October 23, 2022		665	$	83.24		—	$	240.6
October 24, 2022 through November 27, 2022		3,346	$	81.84		—	$	240.6
August 28, 2023 through September 24, 2023										76	$	96.82		—	$	123.9
September 25, 2023 through October 22, 2023										229,778	$	87.35		229,049	$	480.0
October 23, 2023 through November 26, 2023										344,405	$	87.51		342,937	$	450.0
Total		4,286								574,259

(a)	Representsrepurchased shares of our common stock under our publicly announced share repurchase program, which were repurchased at a weighted average price of $87.41 per share, and shares withheld from employees to cover income and payroll taxes on equity awards that vested during the period.

(b)

On December 20, 2018, we announced that our Board of Directors (the “Board”) had authorized a $250.0 million share repurchase program with no expiration date. On December 17, 2021, we announced that our Board ~~of Directors~~ had authorized the repurchase of an additional $250.0 million of our common stock under this program, bringing the total amount authorized under the program to $500.0 million of our common stock. On October 11, 2023, we announced that our Board had increased our share repurchase authorization under the program to $500.0 million of our common stock, including $123.9 million of remaining unused capacity under the Board’s previous repurchase authorizations. As of November 26, 2023, approximately $450.0 million remained authorized and available for repurchase under this program. Repurchases under ~~the~~our share repurchase program may be made at our discretion from time to time on the open market, subject to applicable laws, including pursuant to a repurchase plan administered in accordance with Rule 10b5-1 under the Exchange Act, or through privately negotiated transactions.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

~~None.~~Insider Trading Arrangements

During the quarter ended November 26, 2023, none of our directors or officers (as defined in Rule 16a-1 under the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408 of Regulation S-K.

3530

Table of Contents

ITEM 6. EXHIBITS

Exhibit Number		Exhibit Description

~~2.1~~		Sale and Purchase Agreement, by and among Lamb Weston Holdings, Inc., Lamb Weston Holland B.V., Meijer Beheer B.V. and Mr. Kees Meijer, dated as of October 19, 2022, incorporated by reference to Exhibit 2.1 of Lamb Weston Holdings, Inc.’s Current Report on Form 8-K/A filed on October 21, 2022 (File No. 001-37830)*

~~10.1~~		~~Form of Lamb Weston Holdings, Inc. Nonqualified Stock Option Agreement for Non-Employee Directors~~

31.1		Section 302 Certificate of Chief Executive Officer

31.2		Section 302 Certificate of Chief Financial Officer

32.1		Section 906 Certificate of Chief Executive Officer

32.2		Section 906 Certificate of Chief Financial Officer

101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits ~~101.*)~~101)

* Certain portions of this exhibit have been redacted pursuant to Regulation S-K, Item 601(a)(6). This exhibit excludes certain immaterial schedules and exhibits pursuant to the provisions of Regulation S-K, Item 601(a)(5). A copy of any of the omitted information, schedules and exhibits pursuant to Regulation S-K, Item 601(a)(5) and Item 601(a)(6) will be furnished to the Securities and Exchange Commission upon request.

3631

Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LAMB WESTON HOLDINGS, INC.

	By:	/s/ BERNADETTE M. MADARIETA
		BERNADETTE M. MADARIETA
		~~Senior Vice President and~~ Chief Financial Officer
		(Principal Financial Officer)



Dated this ~~5th~~4th day of January, ~~2023.~~2024.

3732


(in millions)	Global		Foodservice		Retail		Other		Total
Balance at May 29, 2022	$	259.8	$	42.8	$	10.9	$	4.5	$	318.0
Acquisition of interest in joint venture (a)		42.1		—		—		—		42.1
Foreign currency translation adjustment		(12.6)		—		—		—		(12.6)
Balance at November 27, 2022	$	289.3	$	42.8	$	10.9	$	4.5	$	347.5


	November 27, 2022							May 29, 2022
	Weighted							Weighted
	Average	Gross						Average	Gross
	Useful Life	Carrying		Accumulated		Intangible		Useful Life	Carrying		Accumulated		Intangible
(in millions, except useful lives)	(in years)	Amount		Amortization		Assets, Net		(in years)	Amount		Amortization		Assets, Net
Non-amortizing intangible assets (a)	n/a	$	18.0	$	—	$	18.0	n/a	$	18.0	$	—	$	18.0
Amortizing intangible assets (b)	10		40.8		(26.8)		14.0	10		41.4		(25.7)		15.7
		$	58.8	$	(26.8)	$	32.0		$	59.4	$	(25.7)	$	33.7


			Remaining
			Weighted
	Unrecognized		Average
	Compensation		Recognition
(in millions, except data in years)	Expense		Period (in years)
Stock-settled RSUs	$	40.5		1.6
Performance Shares		30.7		2.3
Stock options		12.6		1.8
Total unrecognized compensation expense	$	83.8


	As of November 27, 2022
							Fair Value
							of Assets
(in millions)	Level 1		Level 2		Level 3		(Liabilities)
Derivative assets (a)	$	—	$	16.9	$	—	$	16.9
Deferred compensation liabilities (b)		—		(22.6)		—		(22.6)
Fair value, net	$	—	$	(5.7)	$	—	$	(5.7)


	As of May 29, 2022
							Fair Value
							of Assets
(in millions)	Level 1		Level 2		Level 3		(Liabilities)
Derivative assets (a)	$	—	$	7.0	$	—	$	7.0
Deferred compensation liabilities (b)		—		(21.6)		—		(21.6)
Fair value, net	$	—	$	(14.6)	$	—	$	(14.6)


	For the Thirteen Weeks Ended
	November 27,		November 28,		November 27,		November 28,		November 27,		November 28,
	2022		2021		2022		2021		2022 (a)		2021 (a)
(in millions, except per share amounts)	Income from Operations				Net Income				Diluted EPS
As reported	$	271.8	$	114.4	$	103.1	$	32.5	$	0.71	$	0.22
Items impacting comparability:
Impact of LWM natural gas and electricity derivatives (b)		—		—		101.5		(4.7)		0.70		(0.03)
LWM acquisition-related items, net (c)		(26.5)		—		(19.2)		—		(0.13)		—
Loss on extinguishment of debt (e)		—		—		—		40.5		—		0.28
Total items impacting comparability		(26.5)		—		82.3		35.8		0.57		0.25
Adjusted	$	245.3	$	114.4	$	185.4	$	68.3	$	1.28	$	0.47


	For the Twenty-six Weeks Ended
	November 27,		November 28,		November 27,		November 28,		November 27,		November 28,
	2022		2021		2022		2021		2022 (a)		2021 (a)
(in millions, except per share amounts)	Income from Operations				Net Income				Diluted EPS
As reported	$	428.8	$	174.6	$	335.0	$	62.3	$	2.32	$	0.42
Items impacting comparability:
Impact of LWM natural gas and electricity derivatives (b)		—		—		(7.0)		(8.4)		(0.05)		(0.06)
LWM acquisition-related items, net (c)		(26.5)		—		(19.2)		—		(0.13)		—
Gain on acquisition of interest in joint venture (d)		—		—		(15.1)		—		(0.10)		—
Loss on extinguishment of debt (e)		—		—		—		40.5		—		0.28
Total items impacting comparability		(26.5)		—		(41.3)		32.1		(0.28)		0.22
Adjusted	$	402.3	$	174.6	$	293.7	$	94.4	$	2.04	$	0.64