Lamb Weston Posts Strong Volume Growth and Dividend Increase as FY26 Outlook Reaffirmed
Volume Gains Offset Price Declines in a Competitive Market
Lamb Weston Holdings, Inc. (NYSE: LW) reported its second quarter fiscal 2026 results, marked by notable 8% volume growth across North America and Asia, even as overall net sales remained nearly flat due to an offsetting 8% drop in price/mix. This dynamic reflects the company’s strategic focus on supporting customers through competitive pricing while winning new contracts and retaining share in key markets. Favorable currency impacts contributed $24.4 million to reported sales.
CEO Mike Smith credited the volume uptick to customer wins and successful execution across priority categories, highlighting operational efficiency and cost-saving measures as crucial factors in navigating the challenging global environment.
Profitability Improved but Adjusted Earnings Remain Pressured
Lamb Weston's gross profit jumped $46.5 million year-over-year to $324.3 million. Net income reversed from a $36.1 million loss a year ago to a $62.1 million profit, reflecting improved operations and lower restructuring costs. Diluted EPS reached $0.44, a sharp turnaround from last year’s negative $0.25 per share. However, adjusted metrics showed softness, with Adjusted Net Income down 8% and Adjusted EBITDA declining 3% as lower pricing outweighed the volume gains and cost efficiencies.
| Q2 FY26 | Y/Y Growth | YTD FY26 | YTD Y/Y Growth |
|---|---|---|---|
| Net Sales ($M) | 1,618.1 | 3,277.3 | 1% |
| Net Income ($M) | 62.1 | 126.4 | 38% |
| Diluted EPS | 0.44 | 0.90 | 41% |
| Adjusted EBITDA ($M) | 285.7 | 587.8 | -1% |
| Adj. Net Income ($M) | 96.7 | 199.7 | -8% |
North America Volume Drives Segment Strength; International Faces Headwinds
In North America, sales were essentially flat, but volumes rose 8% due to new contract wins and market share gains. The segment’s Adjusted EBITDA increased 7% to $287.8 million, driven by operational efficiencies and cost savings that more than offset the continued competitive pricing. Lamb Weston responded to demand by restarting previously idled North American production lines.
The International segment saw a 4% net sales increase (including a $22.6 million positive currency effect) and 7% volume growth, but a decline in Adjusted EBITDA (-44% to $27.2 million) amid higher production costs and a less favorable product mix.
| Segment | Net Sales ($M) | Volume Growth | Price/Mix Change | Adj. EBITDA ($M) | Adj. EBITDA Y/Y |
|---|---|---|---|---|---|
| North America | 1,069.5 | +8% | -8% | 287.8 | +7% |
| International | 548.6 | +7% | -8% | 27.2 | -44% |
Dividend Hiked, Cash Flows Solid; Guidance Held Steady
The Board approved a 3% increase in Lamb Weston’s quarterly dividend to $0.38 per share, reinforcing a shareholder return strategy that also saw $51.6 million in dividends paid and $39.6 million in buybacks this quarter. Capital expenditures dropped sharply from the prior year, following the completion of key growth projects. Cash from operations rose to $530.4 million year-to-date, helped by lower inventories and improved profitability.
Lamb Weston reaffirmed its full-year fiscal 2026 guidance, expecting net sales of $6.35 billion to $6.55 billion and Adjusted EBITDA of $1.0 to $1.2 billion, reflecting confidence in its cost management and market momentum despite continued global uncertainty.
Cost Savings and Volume Growth Remain Central to Strategy
Looking ahead, Lamb Weston is on track to hit its $100 million cost savings target for the year, as efficiency gains and operational discipline remain a central focus. Management highlighted that while competitive pricing and macroeconomic headwinds continue to impact mix and margin, volume strength and execution underpin its optimism for achieving long-term goals.
For investors, the results spotlight the importance of watching Lamb Weston's execution in international cost control and the continued ability to drive volume growth without eroding margin—a delicate balance that could determine the next phase for this leading frozen potato producer.
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