Earnings call transcript Q3 2023

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Operator

Good day everyone and welcome to the Lamb Weston Third Quarter Earnings Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Dexter Congbalay. Please go ahead.

Dexter Congbalay

Good morning and thank you for joining us for Lamb Weston's third quarter 2023 earnings call. our lambweston.com. release, issued on is we website our morning, earnings which press available This

that our our are contained risk note may Please the for we Please refer during filings things in differ company's forward-looking statements some see details cautionary risks more expected our about materially forward-looking to due SEC performance and Actual the factors that today. based statements. to how remarks, on on results we'll uncertainties. make and statements

measures. together financial be non-GAAP non-GAAP GAAP include financial for not remarks today's of should These considered and measures Some results. should with replacement a be read our

can to You non-GAAP release. our earnings GAAP the reconciliations find in

provide are Bernadette results the current an Executive Tom today will President our operating Officer; environment, me while Madarieta, and details quarter Financial and Chief XXXX second Bernadette on our Chief fiscal outlook. will overview With our provide and of Werner, Tom updated our Officer.

me Tom. the let call that, turn to over now With

Tom Werner

Thank delivered for you, as to Dexter. Good momentum. call build third good results we our strong today. quarter continued operating you fiscal our joining in morning, and thank We

sales This Specifically strong turn gross XX%, and each expanded EBITDA growth. per in earnings share drove business core grew of our in while segments. margin

world East Lamb in than the strong entire Middle the to completed want is to Europe, of global We've officially colleagues It the a operating for six world are so factories can the our and Europe, pounds recently Lamb-Weston/Meijer. and Africa about their more what key Weston industry. Weston strengthens it the interest global the are Lamb process integrate of ability dedication frozen now footprint. manufacturing on you our with of that we've Lamb enhances of over both to production Weston operations X,XXX team Weston markets in I together remaining class billion to after knowledge serve around deep kicked also thank and the to management, who year. Lamb thank we off capacity serving together members Weston and in deliver a team to or our now purchase customers delivered finish the potato see Lamb EMEA positioned another for X and us commercial and team we add to focus long-term. and This that customers, our and great EMEA's quarter the excited

the turning over Before the Bernadette, current environment. some let call first on quick me to provide updates operating

significant to versus service and when versus remains chicken a prior This macro across driving demand fell prior year restaurant french has a casual in for strong highly segment quarter contributed chains, negatively entire year. contributors which While growth is affected restaurants and In burger by Omicron essentially fry healthy. in and at on the the full dining part overall the traffic fry the that volume. traffic traffic accounted growth segment's pronounced traffic, remains more decline in including restaurant effect contrast, challenging are QSR Foodservice demand. to was the improved environment Total variant. our

a is which rate consumers remain rate, visiting other at attachment or The the outlets which fries solid. fry when restaurant order Foodservice

channels restaurant and retail and we into under macro led performing volatile in currently our home to licensed XXXX is by from how Shipments channels, As encouraged challenging noted, be away restaurant expect fiscal environment. XXXX but remained a and the we're segment through by previously third and for sold with by traffic continue trends category fiscal deal to food-at-home strong products solid. brands. in quarter demand the grew Demand as fries performance continues consumers will

XXXX. will solid into channel We expect fiscal demand remain this in

pricing of years, actions relatively constrained to overall the environment With for for at least supply remain cost next believe demand up and to expected input be generally well counter category inflation couple may holding the industry favorable. as we

by our revenue in to recovery been the good addition, management margins capabilities. execution and to past shown progress drive as gross We made each In the growth over offset building in continuing input year business consumers. core ability further and margin our we've our of cost work on a using our channels by segments. to on of Nonetheless, maximizing and our insights broader data we're leveraging sales markets customers revenue set and variables by evaluating and inflation backed

Pricing actions price/mix new XXXX, of customer the segment with Foodservice some contract than continued for contracts inflation coming escalators in as in years. we benefits renewal Global and structures the for was customer quarter both up line our and quarter in incorporate and we continued rationalize as in improve Retail renewals, driven pricing anticipated pricing pulling better in across fiscal pricing lapping was to the in for we and strategically our portfolios. price we took expectation mix efforts the pricing the the segments respective Despite actions structures product in from forward to

we pricing actions. to rate improvement in continue year-over-year actions. growth XXXX the the XXXX, we expect of our remainder Global any in Retail, will the of we year-over-year In and we to year's additional take price/mix also lap lap fiscal growth price/mix and will expect And as segment, decelerate to actions rate pricing mix continue decelerate and expect pricing last the more notable don't fiscal as Foodservice, During effect. we

this that the recent will by effect price end quarter. increase, third took towards the be tempered of Although

up open America, open also Basin potato production away East believe our have costs respect market to crop early to potatoes we the first-half far Columbia from adds as potato secured purchased in but potato and the meet to as varieties Idaho, of fiscal through in This XXXX. we Coast. potatoes our the harvested are until from North growers the We enough forecast With the secured supply July. in

the targeted locked in to securing upcoming we contract process largely secured of the growing Like basin. growing acres in prices key cost and in agreed shortly. our process in acres prices the XX% crop, line nearly North planted contract and we in respect in potato to in inflation contract contracting America. in of to discussed, the the in have contracted shortly in Europe, previously to completed expect And other the increase basin with prices most be acres potatoes the XX% In regions America the region. to North expect our input With the reflect we've regions to process grown up have increase with for the complete this growers. for We're that Columbia a are have significantly

build strong across core each Weston enabled targets continue X,XXX financial Lamb excited new segments. summary, in about operating of another has quarter So more of will EMEA's that to supply leveraging delivered for the good raise remain EMEA colleagues We're momentum and the our constrained that us our we year growth, industry global customers the and team to around which of for we should earnings help sales than years. remains and next believe serve And better us have joined at the couple QX and finally, least believe category world. that capabilities healthy demand

turn financial of XXXX me results Let a the to over to call updated details now outlook. fiscal Bernadette review our quarter our and third the

Bernadette Madarieta

the the and us of remainder a This want everyone. for I also continuing the delivering morning, good team across raise company. enabled and thank the our to results also warm quarter momentum year. operating Weston Lamb Weston momentum Tom, Lamb strong of to team. to another welcome to has targets the build for add EMEA to good want I Thanks, financial

implementing actions up with carryover the input each benefit we this actions year. pricing as and increase begin of began to that as of quarter counter pricing Let's to Sales billion. manufacturing that inflation. were continue fiscal in third across reflects third the actions initiated fiscal impact well our we was in pricing from The $X.XX we cost results. Price/mix as quarter core to XXXX, XX% segments during our business up XX% product

chain sales offset our overall factors. increased reflects volume restaurant flat, North and growth retail volumes to a in generally was described customers QSR we by America, Tom Our couple which and customers to in traffic shipments earlier, our trends demand while that were of large

certain First, business. price, our efforts by we to improve margin lower exiting lower customer product and strategically continued mix

the and to extent, our dining Foodservice restaurant in lesser affected a reflected also Second, full which largely volumes casual shipments. quarter, and service in softer traffic is

in members that stabilizing availability with progress to better production make our chain production in the and also we key team ingredients, noting forecasting. worth improved It's continue as of supply quarter, as well

Retail on in quarter pandemic. rates and in versus more in impact as production is modest, of high drive was improvements second the since apparent start the rates the improvement result, helped our customer our a fill our segments we largely maintained Foodservice relatively quarters. and This the which our segment, global As fill in have first

including products, our products. pressure consumer That retail will And and expect therefore fries shipments in mix premium to said, high we and of demand demand changes near-term production. fries, batter-coated product continue

Idaho, growing our become volume We consumer and until capacity demand will in next meet expect and continue this the China, the available our Argentina years. couple over of pressure Netherlands to ability investments

in profit the million margins XX.X%. and to XXX expanding basis nearly prior our million result year a as versus increased to points gross quarter Gross quarter $XXX $XXX sales growth of the

benefit counter inflation, Our chain manufacturing gross the in and to mix improve cumulative and supply segments, strong productivity. input reflects each margin executing performance of our as customer as cost to well business product of efforts leveraging pricing and actions

batter significantly prices increase was in and ingredients year side of largely for prices contracted in and a due America, for we pound. from poor again higher for by in edible continued the yields calendar per input XX% XXXX cost in the potato and cost purchases, manufacturing crop open the the North to in realized On increase energy. a quarter, increases oils, labor This coatings, about driven potatoes double-digit cost market

transportation steady decline and quarter prices costs costs, of the reduce our transport ocean charges to trucking quarters. our line. the continuing tailwind to from services reduce industry in as which freight rail, will customers continued the the in to over match We're rates steadily In our their contrast, in freight couple for sales decline past fell

our on impact neutral. gross the be over largely time However, profit will

on from profit. Moving gross

million operating across impacting due to higher our maintain Our and benefit actions to compensation organization. comparability performance, well improved as expenses primarily pay $XX excluding items SG&A as million, reflecting levels $XXX competitive increased to

also in segment. infrastructure, expenses of increase We expenses $X largely designing and behind promotion products including in higher support and IT and new improving a had advertising million branded our to a retail our our related ERP system building

ventures pricing joint items unconsolidated the from Equity drove and actions $XX contracts. Favorable our associated comparability price/mix, largely increased in and currency commodity method with hedging million, adjustments increase. impacting mark-to-market earnings Europe excluding reflecting

in and in volume Price/mix was the earlier. growth initiatives flat, that inflation our reflecting management Moving to domestic America solid North lower described by were QSR business Global and chain priced Tom counter Sales in growth segments. customer XX%, as XX% impact the up margin international was actively markets of customers to was Global large certain lower shipments pricing actions exiting offset up of mix. we revenue in our and segment our the quarter. manage to

relatively contribution only $XXX time quarter product percentage product input cost actions was the million contribution for quarter, level Global's we actions. is was increases customers to some benefit modest increased back from more pricing than margin anticipated. we at a as a segment's a weak which year in pulling product better-than-expected realize prior in the from and manufacturing reflected XX.X%, also pre-pandemic margin Global originally significant pricing to benefits and from bit seasonal which forward a

as exiting Sales well actions Foodservice some as price/mix of product XXXX, restaurants. softer increase realize we price, that manage grew carryover XXXX service pricing inflation. XX% to actions in we to reflecting full lower our benefit by throughout the continue product customer fiscal business XX%, down the well traffic announced segment and and -- about in of in a fiscal taken counter in were driven to as mix, X%, Sales primarily margin lower volumes dining as casual our as

more contribution from to Foodservices the per a or increased cost manufacturing lower volumes. as million impact benefit actions up than offset cumulative product of XX% pound higher and margin $XXX pricing

trade portfolios environment. support with branded was delivered retail supply part inflation. another Our category reflecting in to pricing our This private and quarter segment given across label and constrained by the up XX%, demand XX%, strong sales aided counter strong actions limited price/mix increased

the was the couple this customer of better lap segment years. margin and we X% up losses products in was priced branded incremental up products. Private lower Volume over label lower fill of rates for behind past certain volume our also as

remain costs topped contribution percentage margin retail team $XX the in we category has cumulative than and overall We're XX%, from the mix how very to profitability increased past market more product manufacturing strengthened leader. and our our of couple years Retail's over share, ability with remain the our benefits actions higher margin as to pricing its pound. million offset per portfolio confident and pleased

cash liquidity our our flow. to Moving and position

$XXX a remains quarter liquidity cash solid with strong the $X with and We ratio. billion of ended and sheet a about balance undrawn low leverage Our million revolver.

inflated did transaction, million as days of fiscal which to cash was end the EMEA on take fund Our we our January the at loan fourth of balance most quarter. closed for into $XXX a the couple a new cash term consideration

operations. an debt at target billion, fourth resulting our $X.X of third EMEA X.X the leverage a a basis. net leverage debt the than times quarter, at net Our XX-month the X.X quarter a was updated and the beginning fiscal contribution XXXX more ratio $X.X earnings EMEA using times of transaction, about the would estimated in our resulting fiscal our for in trailing ratio accounting be After end billion from on annualized

Our capital the priorities same. allocation remain

well investing and to dilution. business offset in dividend prioritize as repurchases the as delivering our to to continue share management drive growth growth, for long-term We shareholders

three from processing is first offset In of in by Capital first nearly $XXX repurchases. the the more of that's million year, and is million, three due generated about which $XX is construction earnings, working three up including million to costs and to as This the first nearly largely about higher $XXX last the million we returned dividends than about the increased continue to last $XXX million largely of capacity million quarters, from to Argentina. first of $XXX were expenditures quarters about quarters $XXX year. capital. million expand three cash This $XXX partially operations, quarters year. of share the we in In China Idaho, shareholders, we in increase cash related

to XXXX turn let's our Now outlook.

our Lamb Our Weston of quarter. updated beginning targets fiscal EMEA include in the consolidation fourth financial

strong $XXX For billion up the sales $X.X to fiscal billion, from reflects billion million $XXX increase Weston of Lamb of the our year, our our quarter. consolidation million about increased billion, expected we've to to The our the the in and reflects quarter momentum third target EMEA. $X.X $XXX previous of additional continued $XXX our in increase million target results $X.XX to to $X.XX million fourth

by to contribution growth and and product restaurant driven Excluding by manage strategically quarter business to and expect EMEA, the customer consumer be net price/mix we fourth continue for to a exiting in lower volumes affected lower price the our and the certain mix sales be certain traffic volume as demand. from in -- will margin potential slowdown

to targeting diluted $X.XX per we're of that's earnings our adjusted previous to $X.XX, earnings, from For share up target $X. of $X.XX

is million implies incremental EBITDA $XX which in to our line an will then target, EBITDA adjusted of billion including $X.XX $XX EURXXX. full-year total $X.XX $XX pre-pandemic quarter, billion. of contribute the estimate to amount. to about increase EBITDA And of billion EMEA's to billion, that That that $X.X in million million with up EMEA contribution million that of adjusted the of $XX the million we normalized million fourth in $XXX from $XXX previous unconsolidated our EBITDA Of joint $X.XX ventures to estimate

XX.X%. $XXX fourth strong our EBITDA million our quarter fourth strong our $XXX reflects in full-year and to XX.X%, gross implying the of of to earnings million and third to additional sales margin growth consolidation our a of XX% XX% we're fiscal the quarter quarter. increase in Including EMEA, margin gross target full-year a results targeting expected in The

previous gross excluding our full-year XX%. to of of target raised to XX%. from we've fourth to EMEA, target implies Excluding XX.X%, target EMEA XX% gross XX% up a margin our margin to This XX% quarter

seasonal estimate quarter, expansion healthy versus is quarter believe a be our open typical higher key prior fiscal in gross cost pressures structure. market step XX.X%. implies of from continued margin inflationary prudent, third We of would our inputs, notable and year reflecting potatoes, the cost also consumers. impact down this for of it result this a Significantly volume gross inflation a as patterns on declines the margin While

million, $XXX to million largely SG&A, With million. $XXX to $XXX impacting to that's EMEA. excluding Weston items our of The comparability consolidation million Lamb from the we of previous reflects up target $XXX increase respect expect of expenses

capital increased $XXX behind This associated with expansion $XXX spending investments, reflects to $XXX expenditures addition, our capital capital our estimate well consolidation as as EMEA. of to million, to $XXX up increase between million. million spending from of the we million for previous estimate In accelerated

We in targets, adjustments you also find made our can financial which to release. other earnings

And the for with that, let turn me over Tom call closing to comments. back some

Tom Werner

Bernadette. Thanks,

environment targets our Let the and we are increased this me saying executing in sum in challenging it operating financial up for year. by confident are

that making people, have positioned profitable we're We and to to will over production the capacity sustainable us good long-term. category also believe continue our growth growth trends the feel support infrastructure in about in investments new the well and

for to take your today and joining questions. you we're us Thank now ready

Operator

Instructions] sir. from first Thank you. from Please Barclays. go Lazar ahead, Andrew We'll [Operator take your question

Andrew Lazar

Great. much. Thanks Good so morning, everybody.

Tom Werner

Andrew. morning, Good

Bernadette Madarieta

Andrew. morning, Good

Andrew Lazar

Yes. key Lamb margins necessarily off, a excluding as not that But margins I of the ceiling. to what see now see know I've to To levels course, that, with moving recent the start pre-pandemic then a Thanks. I transaction, further guess above that Weston the visibility margin did pre-pandemic extent expansion are gross got provide follow-up. just factors how it? And you that's forward

Bernadette Madarieta

Andrew. Bernadette. Yes. This morning, Good is

we're as revenue, key that at margin look we that and execution our and our well I markets managing make we'll those. continue to As to our now focused management focused our maximizing piece sales revenue channel do we that Tom growth capabilities our think on We're mentioned. on is we're on work to continuing look across the as as and that margins, sure

Andrew Lazar

a for as with all where into XX% I in that have for one reasons Thank constraints pricing fiscal the you. shouldn't and to last we been have And what coming said any the constraints ‘XX for incremental or year going being you some is, quarter, pricing quarters? the I'm costs could growth couple mentioned some at the we as as expect getting forward main need capacity roll fiscal as starting you incremental implemented With be given have should you the some to have down well, guess guess grower fourth we we crop, coming current the of pricing flattish I of in year? expected think incremental ease, positive another scenario I volume actions. you you both expect up volume to coming

Tom Werner

Yes, Andrew, this is Tom.

noted plan roll which actions kind in up starts to we June, going to going we're And overall we things, pricing is we as of to of, third our of for XXXX, the we couple end continue be. number The a a as deflationary in have at -- quarter. some taken fiscal the inflation what So evaluate at are not period. the here all

is be XX%. cost crop up going Our to

as so And input overall evaluating cost we complex. the start

As done determine the continue to going year, do and good actions may we take. going to we're we've team a marketing And to do we're we to pricing inflation, offset to job the orders, very every the have that.

noted we the up do based of months the as the XX, contract XX just over pricing what on catch prepared to nature our so a in of last remarks, had And were. we've lot constraints

evaluate And pandemic. really we're levels in at inflationary going environment to going so part. margin back so to I forward, and what's before we're continue the And the of to terms more feel getting about first that's where good going input on execute in normalized

traffic. in volume, terms of we is. as performing QSRs the terms It's tremendously feel category well part where about I of -- noted, the overall Second good in are

trading on people so some is down. you segment, going we we're Our have do the casual seeing things some happening like softness are Foodservice, dining economic so today, as when

business as evaluate think, the going to higher last rationalized to have our initiative. marketplace, revenue months, growth continue we level, us of to opportunities part our over to throughput operations in which and going management mix opportunities We forward. the back a and is product our And I on get to take running Andrew, give customer XX XX that's or

of is capacity So to we've a coming the got on. other lot thing remember

And that's off this Our America to falls, be shortly the then production shifts of to to going is terms XX first North evaluating next American going turn over so that, directionally how after Argentina China, [Indiscernible] we'll have XX China. look fall capacity in again in months. from to we're

So we opportunities to as the we're around prepared getting that evaluate globe. turn capacity on

Andrew Lazar

much. so you Thank Great.

Tom Werner

Yes.

Operator

Palmer We'll hear JPMorgan. from Tom next from

Tom Palmer

thanks and the for morning Good question.

Tom Werner

Good morning, Tom.

Bernadette Madarieta

morning. Good

Tom Palmer

I clarifying Maybe just off Europe expectations for business. the could start

that. doing such EBITDA normal of is costs about million from on past You over bit fourth fourth next the has certain think quarters assumption seasonality at are headwinds other reasons make consistent a in would then couple quarter as lower adjusted noted year-over-year better been I results the But of than at be year figure we then Are when the quarter? $XXX and business look pretty of least. or this And or that a this bit with that? guidance not grows that excluded general earnings the EBITDA that cost this year, the might top there

Bernadette Madarieta

Good Tom. Yes. morning,

we're you we a our to year take at increases. order be then guidance see move prior we provided, that on look And in also you quarter a EMEA, As from will to third typically price fourth fourth gross quarter our seasonality. based as lapping going margins just excluding step down

going And well. deceleration forward that the we we of continue see that as see so to we're move forward. we of pull did some mentioned as to pricing also effects Again, a

third that quarter. in fourth quarter effect of that wouldn't noting in And you're see there's we that, so some

main And take that where guide as the think what we the are a prudent guidance always triggers fourth seeing we're to as we affect quarter. the a But going back do, quarter. those end and we are we approach going in of the end to step at fourth to you're take for

Tom Palmer

kind I you. maybe noted, the gross of, you know decline Thank in margin, fourth And normal a more Understood. just then quarter. seasonal the on

side cadence remarks. than has maybe your in about there pricing, or being that of you're a quarter. timing prepared than help seem you of it that like you the at Is bit a consider therefore retail mentioned anything decline I think quarterly to it better a expecting expected more with you in expected was less because quarter fourth mean, least for than getting late much normalization on talking Bernadette, instance, ago, know and anything given the normal would shifted I were XQ pricing that? the quarter action? beyond prudent I the you're

Bernadette Madarieta

Yes, prior there we and more seeing pull quarter then higher more forward in couple was prices. and a market was of open up There a also that ended bringing benefit in are purchases little at I think things. bit the we much

Just given the ended way up yield from that this perspective. crop year the a

So say those are greatest. impacting two that would the I items that are the

Tom Palmer

Great. Thank you.

Operator

from Adam Sachs. Samuelson Goldman

Your line is open.

Adam Samuelson

morning, Good everyone. you. Thank Yes.

Tom Werner

Good morning, Adam.

Bernadette Madarieta

Good morning.

Adam Samuelson

morning. Good

So, run a roll about European the higher? of, Bernadette, reflecting, that ‘XX as actual point fiscal business, is why, of, million that kind have would XX-months? be to would is or reasons kind the about, pre-pandemic learning ‘XX, trailing on the rate. alluded Just above And pre-pandemic some consistent on of, now of, you reference? first of pieces moving XXX% run kind what Europe over basis thinking kind us help our JV just like think the quarter a the the ‘XX fiscal lower moving the profitability business. for that about with as be question rate, and the key as for seem -- we Do EBITDA of next XX-months you you're EURXXX or fourth think into year-on-year of business could the of, guidance into kind you can kind consolidated the given fiscal

Bernadette Madarieta

EURXXX what time our a to having number rate that look would amount million first, say And we're the normalized being introducing to the to ways happen able not in we of at overnight, business to going over one time. going Yes, customer, we're certainly to looking guidance, bring that But then of to are to and common our I operations supply ours to as over that chain Adam. we to bringing forward revenue for run upside at working the terms that's opportunities it’s and of to quarter to see it’s our business. take we basis. those this happen this that that, fourth of phase as we continue methodologies for thanks responses looking as in the a progress. look year things be some with question, this growth work EMEA bring on as continue more into I couple that the in would to be A grow integrate capabilities to there's of But management on we going

Tom Werner

just Adam. I'll add, Yes. And

they've have running now that business in over confident of tremendous And put the we business foundation we and through has management the and going all a tremendous with global management the are customers EMEA trajectory team the have more with it international of the managed things the I'm and volatility XX a on. that our overall that We team that last months -- amount in in serve the reach place now to all markets.

confident to into serve different a in where to manner one So our lot ever we customers over going is the allow really And we have I'm super integrated capabilities global team. business time, have. a to do that to than get us

looking enough. I that forward going We So do integrate team done leadership to has and that we business. it's a as accomplishment there I'm great team over forward. a going tremendous we're can't that with to the what excited what emphasize and got business

Adam Samuelson

the or this capabilities doing around consolidating. that, or around of one color. Chinese then JV That's of, capacity rest you're in And things Idaho kind Does coatings sizable, helpful network the any CapEx of outlook of, Argentine, which just in the the even kind at are pretty kind All Groningen now, the you the on in right. quarter was the year CapEx, of or battering the inclusive increase you're with the the a of, or left timing change pulling that forward.

magnitude Well, of, for timing a of, year of high think of for capacity what we us next at should level? consolidated kind a range low CapEx think help about, how Just it's kind CapEx up? about as been, new and that the even step

Bernadette Madarieta

able capital dynamics to being happy Yes, no supply to at sure a capacity sooner sure where that's the which the are that reflected of chain accelerate things just our to just that when equipment we our take have items out those We items to long of in we overall Really some so on not up that, come these going in this there. wanted there look on of those bring pieces other spending times this any would factories. time. with year. and for have terms we spending, been but And that in, number lead given is to as we've capital make we continue were make we needed bring to build as a

we're that when bring online. So capacity no to going change

certainly capital do X to. we we'll update expansions to referred every months on year-end, in capacity over given XX As give of pounds that the all bringing significant we at spending we'll look our next the we expenditures but year to as with XX of billion another guidance, time, fourth quarter that next our with have capital when year, we

Adam Samuelson

all right. I'll really All pass on. it helpful, That's

Unidentified Company Representative

Yes. Hey, just kind Adam, everybody. of for it's [Indiscernible],

of again is spring the online. be ‘XX, going Idaho ‘XX, going of timing bit right? mid, ‘XX. yes, now of timing be kind here's initial sometime American that to coming of Just kind is Is, early Netherlands And right kind the the influx. fall to one's then -- capacity of of little Argentina ‘XX, to of China is fall more the early But right now. falls, calendar are a that's where thoughts be to going in is quite

Adam Samuelson

you. Thank

Operator

next hear of Galbo Bank [Operator Peter from Instructions] We'll from America.

Peter Galbo

for Thanks the morning. Good taking guys. question. Hey,

Tom Werner

Peter. morning, Good

Bernadette Madarieta

Peter. morning, Good

Peter Galbo

took, there didn't area your of, end hear retail actions? would but of, the in come in pricing just you where to to about, one maybe it global, that XQ. maybe on that, thoughts could at think just love in in of any, opine expected the early Foodservice in we gone I was as plantings kind was the towards any addition year, comments In if bit like mentioned incremental you that incremental little incremental pricing have And least you more ground there's then April? no a here first kind seems this Tom, into

Tom Werner

Yes.

up a good catch in or terms past our the of So job done we've Foodservice kind year two, the of, segment, to inflation. really over

and year, as I going every look business. offset we we get how enough, -- fiscal inflation. input this in inflationary to need We're do earlier, to And think And we do to comfortable And that's we're as I so we're we'll I XXXX, in evaluating environment our say said feel can't about our still on what materialize. and then inflation then at where our cost we're together to an that. as

so the do. pricing actions past to our that's, And in going what as we're and kind all do, we have offset in going inflation continue and segments evaluate to we'll we're to of, to

So…

Bernadette Madarieta

that our in to quarter then there'll on update Basin there, be the impact the in Yes, a an is, so the process so the Idaho, of with of call. we'll the And Foodservice the increase, are other next crop, Columbia of the it as small just timing announcement. provide fourth currently only planting relates thing more given we in

Peter Galbo

you wanted spend it were, And helpful. that. then at of, then on didn't allocation sound through clarify of a that's forward a any from you And context lot to no out it Okay, of from pretty turned just a as like far of, capital but Obviously, move with going guys accelerating CapEx being maybe next on, position this past in the is point. the follow-up just to The maybe on of, high kind debt's strength, question of broader and that? as maybe you're spend kind Bernadette, to year, Adam's some spend. are pulling just kind CapEx.

can other You much. in yield started for Thanks you comment the a on bit how pretty of relative the very seeing maybe to stock kind dividend peers, capital setup to buy pillars back the quarter. low allocation? of within little is of The just some you're

Bernadette Madarieta

Yes.

So continue in strength we're category and this long-term. first, to going invest confident still the Tom the really if latter As of to question for take we're I mentioned, the

relates it perspective. for the low cash us happen our overall or open equity As to long-term ratio, or position certain should our and from an we up other things M&A for flexibility maintain want to to debt

And so good feel we we're about where at.

shown, into take buybacks consideration opportunistically and as allocation sense. it going share continue we management changed, capital have also to in hasn't makes we when our we've So we're offset to buyback dilution. the But as past will to

months. large XX your pulled in We've a And spending. of the of just next necessarily lot to happening got the terms we then total to projects question much spending, on first capital XX over capital haven't forward confirm

And long that on some some of equipment. was just lead time

Peter Galbo

guys. Got very it. Thanks much

Operator

from Jefferies. Dickerson Rob

open. Your line is

Rob Dickerson

like but the first Maybe expense the pre-existing changed, how question, remarks, much. of the that so Great. taking for just kind maybe kind just, I interest [Indiscernible]. interest debt? on Thanks more doesn't mechanical maybe looks quickly clearly expectation it change my then and hasn't assumption prepared debt expense I so the explain, with would Meijer. Maybe It loan just of year think from in of, the assumed term missed some

Bernadette Madarieta

more No, question. offsetting which that is interest having is we're What capitalized some of that we're these overall. of is great -- more heavy expense putting Yes. capital related of projects, interest some that which to a that's finding

that's there. you're seeing that So all

Rob Dickerson

it. Got

guiding more would the So debt even that still a that you're -- would like but interest we that would that given event incremental probably like though there be QX not deal. assume and

of mechanics the actual the about thinking Just acquisition?

Bernadette Madarieta

Yes, you're exactly right.

it thinking right. You're about

Rob Dickerson

Tom number we've also -- synergies be? then Okay, just -- that about commentary pre-pandemic? just there through. to we're way that and about come another are been these talking rate But could of, of kind all Maybe kind a yes, run it the what then is been Meijer of JV ask all lot the kind talking we've super. should on just some just synergies potential million $XXX vis-à-vis, or kind that the of sorry, Bern, And Meijer on maybe around and of seed

of, sight over actually to curious synergy quantify closed them you've just past like you So to better transaction, over the on, do three the kind line the you I'm potential having without feel months, years? few next have two of like

Tom Werner

Yes.

And on business been we indicated different specific a number, going business management the I I'm not prior, than the So, terrific business and not that get much track. move has. I give testament indicated. again, will over run we that to we're I a tell XX-months what going that to than give XX-months the much expect synergies a it our a ever and we've integration to is the going on but better and and better this -- do of it now strategies to is implemented will specific team better that trajectory on number that that have improve we're we've that than the next XX-months a that last trajectory business and that confident we that's that EMEA in has has is well got and next fully numbers, have the over position to than you is believe over -- the ever will I'm rate back business going but team going where confident more that that I'm that direction we to

Rob Dickerson

that let's that would kind on that don't talk would have guess, is your do it. It And I I just a could let's enter speaking, fried. of, say allows with bit to that customers is saw kind a fryers? basis to say of, about. Thanks. it. like other more maybe to ability you attack a little maybe your it's super. technology to product, the you seems clearly then you Domino's more if Got quickly, to assume spend you try not then fun that minute, something -- proprietary Maybe with That's just And baked. have that? I

Tom Werner

Yes.

better-than-expected. was and channels for also, time of not to We've talking it, I'm about with we're first going a about going super in So product. monitor get well-known done and going product step. that the how other performing, getting but been into we're customers. long And technology, excited it's all work big chains to that with to that we're non-fry continue channel I've into terms it's performing a non-fry that

potato innovation do you time great As product team performing we But we lead and do I it's products, today, but particular with are items. tell exciting have happening we'll continue those what a to is and will long that non-fried that amazingly. working is on

So, hats we'll getting work been But and off the to do to it's put off pay years into to a lot and long market see marketplace. a well it to of and continue monitor really in comment it. the of that time great it's team that

Rob Dickerson

Thanks it, Got so super. much.

Operator

from [Operator Instructions] We'll William of from next Bank hear America. Reuter

William Reuter

you is the also have handful you facilities. Good active questions, two of morning. new I I first M&A, building -- mentioned in just are a

within You're more going And the now businesses changes be the be you you're there? types would you about consolidating supply where you the active? I guess, where going make expect chain what still at lot you of guess, that and to I talked like do to be feel you're the operational point do JV could of you active? a or

Tom Werner

Yes.

it. going as potato me going globe we're So, great evaluating returns, playbook balance growing to acquisitions opportunity around part category, current it's earlier, strong, one strong the always sure and intent have with make if to the Bernadette of it's footprint number for manufacturing doing our sheet, the is to and potential we're the we'll within we only expanding and in have good invested we But be point Category that's so comes strategic made able the be not four execute the company the a have up, projects an our we to important on. focus. investment, it's

consistent be And six so past on years. the table. that's to the I've in And always been going over that

to where markets all on footprint, sheet our -- investing So, balance capital right is. feel in around at. to about positioning We're the expand I our the I the where strategy. support feel about ourselves industry good in We're our our world. it’s good we're customers

William Reuter

could year, way that is to Okay. able in you're trying this colour then there that And event the some fill what second be? with impact what provide question, purchases purchases Just of about year? that you around to were think my tailwind the any contracted open for additional next to market

Bernadette Madarieta

was of little bit impact Yes, in that we yield we different there an short quality. haven't this for impact quantified open market were yield those year purchases. last the versus A on year and

open cost in the bring is fewer this While we needing year market purchases, are higher. to significantly

to a but we this have year that, there meaningful similar quantified is not last So year. impact

William Reuter

Great.

Okay. all for me. That's you. Thank

Tom Werner

into And the have reason go one other really you weren't that to that open had I market the thing. open and the Bill, much Hey, is to mean, don't have we yields good crop typically, at go all. an crop average market we because this to year.

William Reuter

Thank Great. you.

Operator

a have go from do ahead. follow-up Lazar from Barclays. We Andrew Please

Andrew Lazar

Thanks so much.

announced super the with one. Meijer. you quick joint a venture Just Tom, when acquisition,

consolidation dialogue in whether would, things you, happened, I'm were right another there if don't know, curious of be you certainly sort with European, of you've in environment one months to closed or not looking more up chatter of, to kind further just that of, the would intended there likely you your also sooner and over whatever operating message curious somewhat if in it potential couple generally. picked this a transaction I'm saw has of outside broader, the maybe dialogue? Belgium. see for time ago I send the this more we're just be now competitive right theatre much a Thanks. one couple -- right, you're or the the of is transaction conversations that more others And announcing in pace or was We it, since a sort months of that or to was hearing fragmented, more it and expectation if mentioned think a that that for Europe? you'd hope I action that the of, what that

Tom Werner

be Yes, get Andrew, into continuing how are or to but great I can. with not conversations consistent, happening, I Andrew, over as we this years active question. we’re the several what position can't as Obviously, last is

I hopefully from Weston and that but what I and certainly want with the I'm sector market table think got sure notice, know it's people do leave Meijer, and the to people but come clear intention fragmentation the transaction to they Lamb to it private is got a an to what we'll do. pretty -- known they're of you of standpoint I'll to and love at would took I the industry --

Andrew Lazar

you. Thank

Operator

to conclude Dexter to today's turn like for portion the any over closing comments. I back does Q&A would today's conference. or conference additional That of

Dexter Congbalay

Thanks for this joining the call morning.

send Thank for sessions, any feel [Technical and e-mail time. an Difficulty] have to follow-up joining call. please you want If the to you. everybody for Thanks

Operator

conclude does your all That you thank for today's teleconference. We participation.

disconnect. now may You

Lamb Weston (LW) 6 Apr 232023 Q3 Earnings call transcript