Lamb Weston (LW) 2 Oct 242025 Q1 Earnings call transcript

Good day, and welcome to the Lamb Weston First Quarter Fiscal Year 2025 Earnings Call. Today's call is being recorded.

At this time, I'd like to turn the call over to Dexter Congbalay. Please go ahead.

Good morning, and thank you for joining us for Lamb Weston's first quarter 2025 earnings call. earnings which our our available issued lambweston.com. website, we press is release, on Yesterday,

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

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 an the Bernadette details current an Executive XXXX Tom today reduction will President our operating Officer; environment updated me and provide first Madarieta, and our that and well Financial quarter and Chief potato yesterday cost we announced Chief year's crop. as then will results our fiscal as overview With our actions outlook. update of Werner, Tom this on on Officer.

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

Thank financial you, first better-than-expected for and Dexter. Sales expectations. that joining you above with and target, came volume quarter line generally our results were in the price/mix. We today. in Good our call by for our morning, delivered thank driven

North in markets a in in improvement execution our key business, volume in of Our slight offset share as more America. customer traffic our and performance inflation-driven than investments reflected price/mix our in increased many solid only actions international recapture win new trends. efforts international price and pricing to key Overall, markets restaurant

to above and slightly better sales performance. EBITDA Adjusted SG&A the for was our target quarter due

higher-than-anticipated partially manufacturing However, costs. by this offset was

restaurant we performance to by relative traffic demand our continue remain global and first expectations, While we're expect through challenging XXXX. frozen encouraged fiscal potato to our to quarter

effect QSRs first of improving stepped U.S. the summer our saw restaurant data as restaurant quarter, during to months during inflation. and consumers adjust menu activity fiscal to as According trends the price traffic industry continue we of cumulative up providers, promotional early evidence to

negative. traffic remained However,

Overall, the we traffic a XXXX prior QSR as during U.S. the that fourth X% our the X% That's versus down quarter. sequential fiscal restaurant traffic quarter improvement down as observed was from well year. in

hamburger, at chain in was channel highly during important QSR Traffic an about specializing improvement our fourth in XXXX fried than our from a more X%. first consumption, down for That's down quarter fiscal fiscal X% quarter.

QSR our in trends traffic hamburger as month increased. quarter promotional Importantly, each first activity sequentially of improved

traffic, have that it's We're promotional many fry. obviously down a meal small note medium from these fry restaurant but pleased important in to to with of growth deals the consumers trading a

benefit down partial So a traffic and headwinds trends, size acts from improving while for serving as consumers volumes. our we trading

our international about in first traffic the the our from Outside were traffic in we in XXXX which than U.K., trends overall key market markets a what X%. largest restaurant quarter down sequentially X%, Europe, quarter. is declined observed Restaurant in in about our fiscal decline softer of our U.S., fourth

the fourth grew in essentially was In in Traffic at Italy In to but and slightly traffic about continue quarter. overall quarter, flat. than being fourth rate restaurant Asia, rise, was both Spain Germany, slower down France after also only in the X% traffic Japan. China traffic while down and a in

category the to global we and remain menus to well trends, steady. as traffic fries fry confident long-term are over rate reasons traffic as consumers' that their importance demand key global This Unlike growth its improve. return will historical why time our rates largely were of international fry customers' global rates resilience the U.S. in changes the attachment markets key in as the for

if not in traffic about and decline traffic been that XXXX. through driven fiscal the believe also supply-demand expectations imbalance all, by that's much, the demand our Given we will trends, persist

With respect existing is large expected. had outcome season customers. bigger with largely us, chain behind the restaurant customer good and overall We retaining for as contracts to was the for competing customer essentially the and we success these contracts, business protecting share in

had business, contract we International most customer third in Pricing in some new success total, more in we'll in our competitive new customer winning in chain to broadly expected. volume and and wins associated also associated segment, but, line was meaningful We beginning with what restaurant our customers with begin these realize was quarter. notably with fiscal renewals

to our and lost, transition and customers half of recapture indirectly to we new XXXX. regional we system leverage smaller either fiscal the customers continue the that directly in or our the in ERP the customers to sales respect new from With direct acquire U.S., force to second

contracts, restaurant or regain chain larger line the with been customer level also pricing to broadly we was but have when in what competitive, needed new As business expected. with share

supply cash we improve and cost With actions. which reduce during as chain our to a call, key respect opportunities expenses evaluating been structure, flow. a we to announced restructuring down operating plan, noted our we includes earnings costs, of drive have Yesterday, number previous

facility, of yesterday. closed million production this First, our capacity X%. We at reduces facility in pound Connell, higher North cost one XXX our Washington which this nearly total our America we than stopped is more Closing older by site permanently capacity facilities.

lines on in and lower production finished elevated production we're across America our Second, levels. efficient, work steadily focus lines curtailing more our North schedules down network cost and goods more manufacturing our inventory to temporarily

to capacity actions future recently Together, will and reshaping capital us utilization And our help third, production rates we're leverage capabilities. network better these manage across manufacturing investments, expenditures. modernize investments reduce

our corporate and charges headcount global our are This as International in as and manufacturing, we the segments restructuring as unfilled. that as cost expect to with provide incur our and the savings that generate details will and our In members both in well well currently addition, functions. we're America we'll chain positions connection Bernadette plan. about positions X% commercial organizations North supply team in affects our across eliminating job by approximately certain reducing

the proactive and are but competitiveness improve These our steps in environment to operating efficiency, operating results. very tough decisions, financial current necessary

Now Europe. in we harvesting At and and averages. above processing both crop. the slightly the historical time, Alberta Columbia North crops to the potato America Idaho, and Basin, our crops in this growing are in We're the Midwest the regions believe

a in X% begin contract the realize As in fiscal potato the aggregate to in a XXXX agreed to will North third decrease of for in lower crop, these reminder, our we quarter. America, the prices prices beginning we've potato and benefit

few and and below later was the and Belgium in potato since well With planning growing months average weather be main in the Europe, the respect to the for Germany in Netherlands, would late that market due a regions the we crop industry's completely the to expected ago, crop Northern conditions. Northern poor France varieties

the were However, in averages. crop. which currently good European and potato the crop outlook We improved September, growing aggregate conditions for believe with the will be the in in historical August line

expect mid- crops Europe of reflecting final and associated when largely the will fixed North in We'll Europe high our second potato provide with our we our we in the our price increase, single-digit early in cost January. results to increase potato America assessment Overall, price contracts. quarter report

of volume our generally quarter results price/mix we expectations, strict operating So management solid costs. by in with line were performance, first delivered in driven and improved that summary,

and negative, we months, While they U.S. the to view have in remain take trends continue modestly recent restaurant consumer. and traffic potato cautious of a improved demand frozen

likely protect challenging will improve flow and improve announced to averages. restructuring time, in our the our this efficiency, European this be during a North with line at And the environment. that bottom line and crop cash we slightly potato operating We've America average will operating believe historical be crop plan finally, above in

to over discussion Bernadette fiscal detailed turn of results, Let plan our for outlook. call our me updated restructuring a first now quarter our the more and XXXX

morning, everyone. and Tom, Thanks, good

financial generally in our line As Tom expectations. with noted, were our results

price/mix. Specifically, sales the quarter, single to than with ago better-than-projected we due compared less volume declined X% while digits was expected decline the year high the and

declined largely and the effects lower first in certain exit reflected with quarter carryover Europe X% volume a priced year share business traffic and in lower the last the restaurant North trends margin and in U.S. losses the of ago, year America, soft customer of Compared

the voluntary previously the in that quarter decline. in product our began extent, our the to offset growth key lesser affecting fiscal overall markets quarter Volume a of To contributed first international withdrawal fourth XXXX partially also announced sales decline.

driven actions in mix in we pricing Price/mix with year to benefit inflation year due of of Europe the trade price/mix. last prior as in actions investments as increase benefit tempered North increased pricing the and X% took as America. compared product targeted and the price carryover the channel in as well Unfavorable well

sales. from on Moving

Our adjusted factors. due million profit gross to primarily million to $XXX three declined $XXX

to cost million quarter, the anticipated $XX the than of was range $XX primarily product million the voluntary $XX to we million to It higher the due product. in withdrawal. to about due decline higher-than-expected that First, was the dispose

China was depreciation $XX related our adjusted fiscal completed Idaho Second, gross that's expense year. the expansions last more profit higher than million decline in that to and largely were of to due capacity

The utilization net more factory these warehousing volumes decline offset the the sales actions. input cost rates. a primarily rest and which costs well manufacturing lower inflation contributed also higher of reflects To driven Together, extent, per with from cost the pound, benefit inefficiencies lesser by than as lower decline. factors associated was to as higher pricing

of was the the was below basis XXX margin was shortfall, of related XX% which costs largely our in points quarter reflected to the target gross voluntary product XXX the XXX Of withdrawal. greater-than-expected remainder basis higher-than-expected XX%. to pound. XX.X%, per Our points manufacturing impact nearly about to The nearly

ERP million third $X actions noncash investments the information million our spending new offset amortization our and due inflation live to reduce million in system related infrastructure. of fiscal SG&A $X incremental technology $XXX that went XXXX. to increased Aggressive of in to to quarter Adjusted an

All led of adjusted $XXX million. of EBITDA to this

was cost product it impact which net $XXX the pricing largely more year of better the benefit from pound than we withdrawal, higher due actions. that's per million voluntary what prior While to quarter, offset manufacturing than about the guided, and down versus the

our and impact the largely which smaller and growth Mexico, losses to prior year in as offset away America in North segment, was includes segments. and regional declined X% Sales customer versus traffic quarter. Canada declining The of volume decline X% all U.S., channels to partially channels Volume retail channels. Moving food restaurant by share in sales as the in carryover the customers the from home well in by U.S. in our was driven declined

X%, was carryover regional channel actions reflecting unfavorable pricing extent, mix partially inflation taken investments in and with and, fiscal increased XXXX, the offset chain lesser restaurant benefit for customers in contracts price. and of product a driven Price/mix large to by targeted which

combined, million $XX of investments more manufacturing higher than segment declined cost remaining million million which, $XXX charge America of pricing included decline prior and mix withdrawal. actions. EBITDA carryover to the pound, product $XXX the per the related and combination year price to benefit offset The adjusted voluntary an reflects North approximately and largely in trade unfavorable

our Sales in in North to the International outside Price/mix counter year largely prior segment, increased X%, cost to input all sales channels actions includes this quarter. reflecting announced pricing increased X% customers year which versus inflation. America, of

business decision volume outside headwind lower-margin due XXXX early X% XXXX. the to declined fiscal certain lesser in to key EMEA product Volume decline. to continue of Growth quarter and business EMEA a second lower-priced a in tempered extent, in international exit overall exits voluntary be withdrawal. during the our the EMEA strategic markets of and, will in These to fiscal

largely $XX million was voluntary driven half decline inflation cost pricing million related International per of $XX higher about the benefit which by of million. manufacturing EBITDA product offset the declined was actions. to to or adjusted by driven About The withdrawal. $XX that remainder partially pound, segment

Moving liquidity our flow. cash to position and

million billion ended $X cash first sheet We maintain liquidity. to revolving of ample with a credit solid available continue $XXX quarter about the under global our and We balance with facility.

Our which leverage was about puts Xx. debt million, $X.X ratio at our net

a term facility. available to from to existing million million revolving by we We proceeds the of loan. global pay borrowings into term week, under million Last credit used increased $XXX our $XXX million an off liquidity the loan entering and loan our $XXX new $XXX

leverage ratio result, no impact had our liquidity, not increased affected. and available total was a our our As on debt, it

in In $XXX operations amount changes cash a despite which, decline from first quarter, earnings, working of the about the generated favorable in we capital. year we last is due million same generated to

further restructuring expect year of during our improvements capital the as execute We balance working plan. we the

about were we as continued capacity the finalize expansion our for in Idaho and expansion and $XXX capital Netherlands of Net projects construction Argentina. our spending expenditures million

in spending be year, accounted capital highest capital We our expect for of our our quarter almost will the for it the as updated first half spending quarter annual target.

spent share. $XX shares average shareholders, to more million per at of of over dividends. $XX in cash just During repurchase to million the quarter, than million returned $XXX we X.X including million price than an We $XX more

Before we first announced additional restructuring details on yesterday. provide the discussing outlook, me our let plan

the help but As rates, and hard asset business our decisions lower Tom current these production us These noted, were to utilization reduce manage costs more trends. expenses. and adjust necessary cost to leverage efficient, actions will assets

The we've actions certain and on include Lamb Weston carefully headcount the a impact X% and global elimination reduction our not positions. family. unfilled We our in lightly, job take the this do considered of

these We cost currently fiscal XXXX We've actions of SG&A of fiscal outlook. benefiting $XX expenses. with about X/X estimate our X/X incorporated that generate in savings million savings these will total updated in sales benefiting approximately and XXXX,

million. in benefits We about expect estimated of $XX savings with further fiscal XXXX annualized

restructuring, the the depreciation the quarter. we a to most charge is to our at record assets million of and expect of primarily XX% charge which reflects in record the noncash facility. of expect $XXX We About million accelerated Connell with second pretax to associated $XXX

of that and production facility, raw are XX% the severance line the costs in the costs of our workforce employee-related cash and remaining The teardown other not costs. restructuring other Connell charges used cleanup other to will reduction associated with cost the with associated curtailment, closing be permanently due comprised miscellaneous and contracted potatoes production

Additionally, and every capital. dollar scrutinized every we've of project

approximately result, entering $XXX now XXXX the $XXX expenditures fiscal of our expect which As down we is a million year. in capital from plan million,

in system due to plants the be significant our current projects deferring next canceling our and the in first The environment. A built, phase which, manufacturing or the of modernization decline due the once North will implementation deferring portion largely reduction reflects deployed remaining America. of ERP build is operating of to

needed Netherlands deferred, build committed and While system ERP to the investments complete projects Argentina. have we implementation will to prioritizing the and been the the are next phase benefits but our strategic of deliver, the integrated that are an in

expect next expansion we in will efforts completed spend capacity with decrease to base amortization In fiscal relates expense. capital as be for year. expenditures, our currently and we're XXXX, it As this be annual of projects will modernization our in end capital and expenditures the we year's depreciation notable a targeting strategic by line fiscal expect

million In for addition, projects expect we to $XXX our spend environmental capital facilities. approximately manufacturing at

regulations, variety issued by Our manufacturing and to involve handling the environmental laws intake along of processes waste with activities, water subject of disposal requirements authorities. a and which permits and are governmental

To comply states spend next in including we options $XXX potential to evaluating incentives. expect for factors. regulations the estimate X operate years. other government will these We're vary us in we in comply the regulations, these with require the which laws lessen to based on approximately to may expenditures, changes the million over and The

provide include target build. And lastly, may practice, late phase past ERP the we fiscal our costs expenditures capital a to XXXX we'll restart July. when capital with Consistent in spending next year provide XXXX next our outlook specific of fiscal for

target to to or $X.X to of outlook. XXXX to of net growth. volume basis X%, sales continuing turning fiscal our We're constant driving billion growth on billion a $X.X updated currency X% a Now our with range sales

on range our adjusted and For customer deleveraging will the low deliver less pound, to curtailed billion of gross as targeting per earnings, higher which plants our additional $X.XX cost $X.XX the relates end fixed temporarily we low expect put related of product of lines at favorable the our in billion. target well range factors end These manufacturing to We're due cost as to to to the margins. mix. pressure EBITDA

aggressively from cost plan manufacturing, the as this estimated of much pressure our million and business. that the as offset savings to of well manage supply restructuring we efforts across chain to generate $XX SG&A look to with expect We'll

our discrete targets estimated to million, interest year proportion as approximately include of million million to account and approximately rate $XXX our reflect million a target reducing $XXX full SG&A from $X of range between our to previous increasing XX% for updates our $XXX and during million average adjusted financial the as approximately balances Other segment increasing $XXX our effective estimate $XXX tax other from by expense from debt items. to income year well to XX% to our International higher higher to million

lower our In expense for EBITDA we've we diluted end adjusted estimates to of per earnings our our addition, rate, since range, interest and we're adjusted targeting target $X.XX. range effective tax and our updated to the since reduced share $X.XX

continuing and So in invest the protect to free by summary, while profitability adjusting cash we're ensure current and flow, responding to our execute spending challenging our in environment to positive strategy.

now it for to turn Tom comments. me Let some closing over

first focusing their operating want to customer to I costs. Weston our efficiencies priorities quarter share, thank our reinvigorate Bernadette. manage Thanks, efforts aggressively our near-term for Lamb results improve for team and executing deliver and growth, on to drive

this Our team environment. on to also focus strategies during will our long-term continue challenging

positioned and customers our when to stakeholders. our levers returns -- So demand grows better support value to historical to levels, and we're for create continue

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

Lazar We'll Barclays. [Operator to go Instructions] Andrew first with

first my Tom, pricing. around is I question guess,

expected to North mid-single quarter think it I said year. last America America, the was in as in first positive. And North pricing digit you impact of And originally from price/mix was down low the carryover mentioned. I I guess, had also get you specifically you to in and be positive, really

that But was knew coming. presumably, you

on pricing customers needed the you and such expected? have negotiations of might So a I'm these in customer trade And retain is of you of maybe large that was sense some trying make than that were to more and get investments North what to better it some to favorable America.

historically and pricing obviously, of And supply-demand about sort investors of course, has a is because, the I very rational imbalance what's worried reason been the of ask a environment. the obviously state more

first my question. that's So

Andrew. Yes,

we mix, expected. season we what pricing line overall, with pricing certainly carryover in a was -- contracting environment expected. But what from we we the had experienced last and had that into with We the better year, so the some in played it. So line was that

So it's pricing. really it's mix sales some in in of of a lot the first of terms it overall quarter --

the of operating it's what contracting was now. line into to the And encouraging It is kind we're on supply-demand -- the We've through stabilized environment expected thing based coming we gone in dynamics the right we've with season. so contracting in forward. season me the going

season, where we feel I the contracting feel really good we're and good think how a I ended position. about So at. good -- up we're we're I in about

have and or sort taking your I of then than And utilization higher of to if levels. curious sort because America competitive generally at of utilization heard Lamb capacity is about if you've moves industry similar challenges. sort I'm what at other visibility thinking much of or set competitors good North of players And guess, you seen you're your seeing reduction already specific or Weston of some

the Really traffic some get imbalance supply-demand the these affect to way some quickly be can to industry positive time. of trying in that potential weak knowing trends to how for continue start likely sense a will reductions actually in of a restaurant

Great Yes. question, Andrew.

tough this the of on it's couple made for last to of environment operating days be being we we think traffic fiscal challenged. going year. based to some rest think with decisions I And the continue the here in really challenged we're restaurant in

-- it, insight may or to I decisions to manage manage they're what competitive Weston. may So And the we're going into to have manage what no they their not does, want do. making they How business. Lamb set the

manage do what company, continue of to we -- the that. and manage do and best make is but to So decisions to interest we'll this

been capacity asking lot we're that going and asked of think everybody's is question get everybody's the a announcements. I been there's to --

But additions near-term around to work think those the them, we're the tell on the to what dealing seen. based I based it we through will are pause and going some time of on be environment as environment people but remains all globe. may rethink with

take our from Ken next We'll with question Goldman JPMorgan.

bit for that a able little Can improvements commentary you be about little plants. in the the to that's more your that from, $XXX wanted to ask environmental you through on your spent I financial might how well? time little bit really might show be bit? about might the walk a where in us million mitigate line and that a as And up statements where what is coming that maybe

at to related capacity to relates wastewater again, our to continue manufacturing $XXX Ken, to be as investments million, at is plants Yes. current capital will order this run it that levels. in needed the primarily them

our as going that to that, So of and look of on an give vary on regulations, at we'll different timing guidance. update the specific we provide depending that's more as we

any federal, process, we lessen terms for other cetera, state, to or over be years. that. that to, not regulatory wanted be incentives to frame large bodies, in updates opportunities of et certainly will early X in we it a in though, government up we'll whether as terms looking And whether provide We But the move expenditure capital there's next and it throughout. of

you're, rest And now. sort plans? to word ERP then that but choices pieces to what of little in through the understand I the of implementation given the certainly in I walk bit decision sort Can business temporarily want a some delaying you sacrificing, of made those Okay. your just the of the moving use you've don't the delay right all us

in done financial Any ERP medium-term targets longer some the term that is well? impact given mind some of positive benefits to as as a with just result, implementation your

Yes.

timing as focused future implementation, on the paused had we've as far business ensuring the releases of ERP as the that the So work implementation, last stabilization. and after we we on

able be restart with once benefits major get and time So capital that to the that those occurring pause of time. we're the does that work it our timing by to the from that opportune in the expansions It that benefits but terms we'll an able at being and process, of to year the obtain are time. and was we ERP, that spending of -- complete end in at where this delay that be confident we'll

major that relates see impact this and opportunity for delay at it guidance As the future to any don't affect time. to we that,

with Goldman next our question Samuelson from take Sachs. We'll Adam

just year. bit -- in for in the being you also manufacturing of gross couple recall months and alluded part to given to that is larger ago. it the than little expectation product a item lower production curtailments. higher the margin a of I on the basis thought on quarter Clearly, a per the related first pound wanted to dig updated a cost But you the

maybe on more I of put the those. a context just bit magnitude little was can you hoping

As we consider? historic how and the any differences operations year closures, think restructuring given there of any -- to about the -- how and margins, differ America of North between and is from impact that should the to we And International seasonality? earnings timing the over would balance the margins phasing of the

Yes. Good Adam. -- question, great

idle relates less the that seeing it fixed attributable as to favorable channel within As do cost, And that segments. explained, is to deleveraging the of also higher plants. have the lot in we the we're mix manufacturing cost from I a our lines

offset a the to savings cost of looking discussed. that that are lot We with incremental $XX of we million

more as at our something assets And for to footprint is necessarily because that the been we continue we've plant cost example, that have of modernization modernize, these that And of just manufacturing modernization flexibility made is we don't every that American we been ensures the plants. relates in. we which to that point have have not with And time, lower older at Falls, some I over make same. have that to that want we investing another as

idle to plants, perspective. it's from can at product make what plants that's capacity you'll based so different why we've the decisions a and see of reason And those made on the that some

back of to this additional our throughout But we're up, impacted gross year, going move that pull we and deleveraging. those brought improvement. will as fixed as cost back that on lines -- So because see gets volume margin be we

key the as cost to think saving just as laying terms of think some and just items early you're the about of Okay. the about And we then about CapEx, that XXXX. in some plans trying up I updated the items think of

Just you so to -- million $XX saving the a on the million that's it's just year be Is from total, year-on-year for target to, clear, an total or million Bernadette? this piece $XX 'XX. -- CapEx that cost incremental to $XX that in to benefit you alluded alluded

You because said said rate to presuming Netherlands $XXX next for environmental more CapEx right year, and CapEx the equal start $XXX million. million, you're which the Argentina steps you D&A, go-forward I'm plus base which, depreciating, up saying was or

to Just sure we're make same about all numbers. talking the

Yes.

couple of there. things a So

million the as to the it to First, we'll year $XX million, because $XX an $XX seeing next next year, million year. we're additive relates incremental it's see this the savings

to it relates the new plants D&A include closer to we related D&A, the million, it be As $XXX will to online. additional bring will which that

then And question I Did was there in miss there. it? another

incremental. the Plus

Well, next CapEx range $XXX you're plus will year of saying million the give effectively, so of -- that environmental. minus, in million, or $XXX including

Okay. helpful. very That's

top only expenditures did I $XXX thing of want additional the million. And mention ERP when other there be that say, I if we would on next and to also begin the the phase of the

with America. Galbo our next from of take Peter Bank question We'll

to to other Adam's the impact idling want just side of of the gross lines kind and of margin back actually the go question argument. on I test

just get So say, lines pulled up leave those let's that in lower? structurally the margins back if don't right, theory, next year, does

you that down, simply fixed year cost we year? that improve incremental Or potential because doesn't looks more of this stay environment million of further do deleverage second If in those mitigate stay the deleverage go next away? lines the have in like the for margin a fixed through in and cost demand quarter environment savings cost do doesn't to $XX outside there fourth

Yes.

to said, Bernadette that's is near going now. -- about in going So persist the certainly, actions term. taken the what terms it operating in how Peter, address right in to just margin we're environment is we've talked And it impact, she the of gross

return will will and category the However, restaurant speak. rebound, to believe we in -- traffic growth, to so

the these of so we're the important are past modernizing which we're to of over we this the also make, put future our decisions, at decisions, We've been And in years looking it's the also going the we growth make category. but making of footprint the as -- challenging business. capital terms several in

and improve time our got they're this what issue, as sequentially, does. I We've view although trends and down, see through seeing seen a get said quarter, we're short-term as but we so first the of comments period traction. we to in some in And restaurant traffic a still

is Netherlands ever. as the coming we will China, category I online management well we're but great am is footprint, a assets the short-term that positioned that in when thing as this and new and we've of modernized strong out, as will Falls decision, our -- this Argentina So be with coming -- confident the our out come rebounds in American in

Okay. And then Bernadette, maybe just a clarification.

the like at On $XX think million the SG&A I midpoint. it's reduction,

you said saving million from goes to X/X think of I $XX cost SG&A. the

make So whole that doesn't up bucket. the

should rest what's How Just think the Is it of about the that? we compensation reduction? expense?

The reduction rest in SG&A? of the

In SG&A guidance, yes.

lot of related it is costs. A Yes. people

We'll take Palmer from with our Tom Citi. next question

up and to Is just of think still these this between sales composition expectation price/mix volume. for X I expectation? shifts the I the growth. for ago, was Or quarter the the there flattish are then coming wanted year the any follow A on from growth items?

by the for this year expectation driven of to Thanks Yes. the for the the be is question, volume. remainder Tom. for That is still

deleverage. of just on that, And guess, discussion the understand wanted kind Okay. I I on to fixed cost

change. volume outlook sounds has for So the the it little like year

closing the added of kind being so pressure what's cited is lines. is And margin this

has lines I closing would benefits ultimately think for profitability. that

the fixed the I added like overhang? of volume why sounds is if it unchanged. an again, deleverage is guess, big outlook not factor So And the incremental that cost

Yes.

our lines that costs over temporarily will. allocated if -- the footprint, The being capacity you permanent at Connell, benefit. a is that we at have fixed fewer pounds, are same curtailment throughout So the curtailed

occurring. so that's And the is where deleveraging

in managing are of our inventories. the process We down also

high have inventory level. a We very

fiscal get less, as we end we our inventories so so year. the can that this better take And running in combination a into we place

with why struggle quarter can we ago it just so this outlook little I talk a if wasn't But is guess, the changed. in later. volume I about factored Okay.

We'll Robert with take question TD next our from Moskow Cowen.

Two things. you the to Is incentives give I ERP disruption. come them in pricing year to negative it customers the goes that after the to Because to Foodservice fair for rest still get say to North have America? back think of

started do? yet? So you a follow-up Or a on can how going? that acceleration to an update Have lot give is And us you after. more there that's

Yes.

anticipated we for we on the account-by-account what we're it's kind Foodservice And channel, with this every line in is as speak, for year. again, environment, basis. so it's the pricing current working -- to year, do of an our how So

managing terms we're detail it in So interaction. customer great of with

The behind pricing I are said, larger contracted largely us. discussions, like

forward, move account-by-account to and in managing be the channel teams and Foodservice going it's an we market as the So on the really basis it.

We visibility high to of the level and to have coming quarters. taking, out some over a going actions continue but months we're it's of to the play

said, to pricing Yes. competitive, add, investment on environment but And I just -- emphasize if as disciplined. overall Tom Tom. for that year And could be is the track. want to is just been continues it's our I pricing the

though, will You relative quarter. first the see the year to greater pricing investment, during of the balance

price/mix. some see we will so And negative

Okay.

going to up. it's step So

it. we As expect

we as Yes, absolutely. expected, though,

don't Got in still it, getting a these just like reductions, my now, demand not follow-up these place. got is you unchanged I any it. hypotheticals, That's and but say, let's and you've know fine. they're worse, made And year from capacity or is all

that Is do balance? you in back utilization where supply-demand industry think is compared where would And the it that get then to in alone enough? sufficient to scenario now? be that Is

Yes.

into same hypotheticals to earlier, we're the -- industry total, feeling back I'll go all comments going and Robert, made to get I'm I but some in thing. of the is So not the

the And taking how on so what's decisions terms our we based in company best made for actions. we're of

the do. through think capacity again, restaurant traffic. -- terms announcements a there's seen overall be what And closely it of will it's to in in we're out only of -- to be -- for quarters, in trend of several additional that But potentially got getting take I again, And actions but it's this just watch we're Lamb going may determined are and move restaurant the we that thing but industry we -- in be industry, not Weston, paused, remains that's traffic, next time balanced as for the terms monitoring be we to we'll supply-demand.

from Rob take with our We'll Dickerson next Jefferies. question

bit at little at share but It's this in North disruption just kind So in in some out maybe got the ERP seems the QX, It of America, clearly time, loss. bit sounds I the guess, fair maybe still like share got was coming least volume loss, better same of like just question from QX. in right, little it first QX. amount QX, pressure is on a better a a in of of it the

that, as you the kind kind you as then the that And year, that lap back the secondly, this should as share of lift, right, half get we is through think especially of there come implied rest of nice back.

So I'm might just regain any curious as if provide color progression coming. could you to how share maybe be the

Yes.

QX, that we wins, in year. business So and start this QX are seeing seeing fiscal will Rob, we

our accounts The kind things. And board. the with challenged, thing that down clouds volumes up are traffic so it the on restaurant of base of some known key those across are business is being

with of we're confident the while back accounts. in, in closely happening half So terms monitoring what's we're we're business base our bringing in the

winning it's back a to the based what's And on going in but right with we're year. on going so half we're restaurant market, customers the traffic murky in little back, the be of now

Yes.

another just of as enough. closure, It's if of quick kind kind plant that simple sure is. Okay, okay. kind not Fair quantify me. of total percent for maybe one a capacity what your And just then of just America can estimate global I'm the North you

X% about That's of Yes. our capacity.

America. North In

in North million XXX America, pounds.

We'll next Securities. Fargo Torrente take question our with Wells Marc from

newer one, costs the context other then any versus time facilities? on any curtailments? building Just last color relative manufacturing also And there. facility, around sizing And Connell the sizing appreciate the planned the you for on other and I line capacity on

Yes.

didn't it's And required We but decision, impactful facilities the now production decision. that things And expenditures Connell go lightly. in when through terms decisions look cost you future our capabilities, to these potential take decision just of people, So the we things. we litany go -- those any a at are, that And to capital difficult all look of community, currently. the it's the parameters through right have in we you at produce. and make footprint, of

through again, it's And decision was specifically just what decision it's then that to And metrics, drove close and it's difficult, hard. the the -- you Connell. go

a right the it impacting was company, of the long-term footprint lot things, the but You're of decision to do.

called Okay. Europe. production additional internationally key some out new strong this? there, And And regions. Maybe how then international outside much volume trends enabling some you've is of also color

Yes. No.

in we that we're seeing a America, particularly That's plant spring it good in will light wins, seeing region. pickup where which online is are Pacific to large upcoming in some of coming the Latin the be in our positive business, our International year. there. As relates Asia Also of next

of that's So lot driving a it.

customer to to alluding to much a of hit was going lot that our in quarter. we're Tom in the begin third customer As and wins been of see International segment, have wins,

next with Matt Smith Stifel. our question We'll take from

has to in wanted to I so the amount like around pricing your back with business. It you're line what discussion the come investment the -- in expectations. in pricing and relatively been seeing sounds the far,

higher low for -- in anticipated. referenced price part explanation investments -- the or than end, and EBITDA of you But investments higher taking the and to originally price trade

X and So those investment you difference? you against balance perhaps still help seeing me bit to each a more that's Are business can that's Foodservice price in the dynamics and other? the come

for coming is as what expected Yes. the relating Matt, cost investments, fair was our is as to basis pricing year. gross profit. say we line relates on to pricing with of it's it our Most the in it our to it that

quarter, that much have hitting in positive alluded first up, may was to, investment, you the is of I see be think, did X%. But I as quarter. beginning second pricing Tom going think to In

We'll take next from JPMorgan. Casella question our with Carla

terms million I'm versus inventory And bucket little then Or that's about? you that you wondering can that potato mostly is bit noncash write-down? the on the a is the $XXX is of in another the that XX% different also piece noncash, items million of cash? to it talked of charges, $XXX

Yes.

the we as related that's there. placed be related the noncash, of on So the going accelerated balance that XX% to the had depreciation Connell to that's to mainly facility it the value

that attributable to cash paying related in is expenditures be of remainder about but to and for, XX% Connell contracted the potatoes be production the That's cost. not we the to need then curtailments going other largely cash will will The related to curtailments.

your lower you for used, change your potato will be Okay. And any the then for paying with year year and will volumes your Great. year? or that pricing this haven't that suppliers next negotiations and of next contract given for that contracts

No.

through we'll do time -- as our every typically -- that provide year, every we'll we which we April go the we as the call or process, is appropriate year, July. at we'll So insights do

our changes about but through It needs, of process expect The front so that's on we at we're terms on how any the -- go those in negotiations, of the will it. change all but not end we based this. may

a see are lose? you Okay. volume-based thought lot may would lower, you And I guess, the step-up discounts a my material pricing? in Are volumes getting the of you if is that

that. I'm not and negotiations, typically to going of No, those the specifics in comment so talk to middle comment right that not We the going on works. I'm how of -- about all we're

target? just target. then change And to question, Okay. Any leverage your one leverage current

changes. No

is X.Xx? So that at

I That's with Xx as at shared, correct. optionality. think And I I'm comfortable it provides we're as right now. that

to this Congbalay the call any remarks. for session. over closing I'd back or question-and-answer our time, to conclude will turn At additional Mr. like That

today. joining for call the Thanks

to the day. for a a up than again, up we set joining set want follow-up time. As usual, you good thanks call, if Other a and e-mail and have can call, please me, that,

We That appreciate will call. your conclude today's participation.