Lamb Weston (LW) 19 Dec 242025 Q2 Earnings call transcript

Good day, and welcome to the Lamb Weston Second Quarter Fiscal Year 2025 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Dexter Congbalay. Please go ahead.

Good morning, and thank you for joining us for Lamb Weston's Second Quarter 2025 Earnings Call. our use release for issued slides posted we we'll that today's today, earnings and press our Earlier call.

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

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

the our appendix Tom Financial our today the are and our Bernadette me President to can in non-GAAP You find in GAAP presentation. With Werner, Executive to Chief Madarieta, release Officer; Chief Officer. and reconciliations our earnings

Let to over me Tom. turn the now call

thank call morning, our you Good joining Dexter. you, and Thank for today.

leadership we earlier Let me change announced start today. the with

by into thrilled culmination As Lamb a Weston our the of its current guide will you've could now to Board, I right transition to to the guide next more we His chapter Smith, President become I succession Weston's right Lamb and he appointment represents X, Board is a process of not hand planning and reins will Weston be and allow to the and time be growth. as forward. are And leader years-long Mike. next CEO over the XXXX. The confident likely to believe the thoughtful stepping beginning COO, new Mike January down leader is seen, CEO Lamb to I

critical understanding a people and drive of multiple pleasure areas and career business closely his his Weston, of as at leadership the at helm, of opportunities our have Mike working of will I'm for confident and that on all with has course across value focus deep developed of Mike and Lamb style thorough company. well profit the had of growth operational and the value-based I've Mike with deliver the our driven his XX-year understanding as aspects the steadfast Weston shareholders. witnessed business. Lamb firsthand Over

to turning our results. Now

expectations aim at performance Slide of what quarter the was to provides not themes be you and achieve a we X Lamb discussing below today. second our key Weston. that we'll with Our snapshot

announced outside challenging the near environment expect Day supply reality, our term trends persist operating traffic our supply Investor since imbalance global reducing competitors costs beyond to North operating the especially current new including manufacturing year, demand, restaurant last plan opportunities America. In We chain we're restructuring in expansions this industry as expenses. the and in by will and adjust additional weak our capacity and evaluating initial and add our operations to

execution the drive also to nontraditional total to opportunities evaluating expanding improving by we're fry addition, proprietary sales technologies market addressable our In while see line top by customers. leveraging

discussed growth shift earnings our last focus next on capital. and modernization capital we reduce we significantly base, we to to expect As as year our spending call, away on environmental capital from quarter's

cash to free call. provide to capital our We'll up flow, step our increase more to steps returns this which of these each expect We during points address would these shareholders. flexibility

over quarter turn on second to to discuss our Bernadette it Let now details results. me

decision carryover Volume Starting declining traffic mix. compared certain and international our of to markets. with customer everyone. many lower-margin of X, business and morning, the gains, lower-priced exit product strategically our year net see by year restaurant driven X%, X% last good manage in EMEA impact of losses, share key Customer to that the can the and Tom, declined net declined and U.S. Thanks, in and quarter. sales on Slide primarily you ago

what customer the increasingly period. which an compared year competitive in losses X effects declined these sales environment. Price/mix was anticipated we due expectations, quarter, the declines with X% for line in to we more as to the the largely segments than experienced target in prior the for our as quarter incremental were were factors of and share just While volume business both below our

were Our America pricing in actions line in with North our expectations.

international more but was product versus our customer in share competitive. year losses pricing markets exceeding gains. prior customer the However, and with line was our in Channel reflecting also expectations mix unfavorable quarter,

the and losses segment X% the prior regional food For X% declined away-from-home carryover in data of share providers to in second drop the was in and quarter. traffic U.S. channels decline, chain of and declined year. According however, in our accounts. customer North to X% majority year versus quarter sales traffic year Volume U.S. specifically, about impact in the restaurant declined included certain restaurant prior share due the versus prior the the The restaurant industry in America smaller restaurant losses the

in did improved QSR as our Although the the X.X% versus declined trends quarter specializing modestly to period. chain at QSR first versus year continue hamburgers promotional quarter activity. fiscal second ago in up about Traffic step

to many promotional medium a the down these have We from But size to fries serving be a improving serving deals the attachment reminder, of trend as meal continue in and by rate. a size. fry traffic small encouraged trading french steady consumers

a attract of as volumes. Price/mix trade to sizes product a and customers As serving mix. while and as benefit a declined traffic retain acts the our investments made X%, as some we volume effect America well unfavorable down trends, from and improving North result, partial to that we with reflecting headwind planned the in channel significant the in

our sales For declined several year versus the segment, quarter. X%, declined X% International Volume factors. by prior driven

international many of softened or declined markets. traffic restaurant in key our First, sequentially

restaurant flat, in decelerated and Traffic in grew prior the France Japan, In was versus traffic our Spain. While versus Europe, year market QSR Germany, U.K., in first fiscal soft. but traffic China largest quarter. in remained declined our traffic the growth

markets carryover intense the effect incremental realize in losses certain East serve inflation-driven experienced was of flat This was in EMEA. Asia benefit most we will key share compete exiting continue offset the certain priced the environment, margin actions Second, as and from lower that as resulting Middle in business pricing incremental more quarter to Price/mix customer notably headwind. third, actions the the a of lower we a in competitive international pricing to versus markets year Pacific. And quarter prior and in last EMEA.

Moving $XXX factors. was On fell That see that million adjusted versus is Slide can quarter primarily you largely on X, the EBITDA from sales. gross million. to a year adjusted $XX decrease The $XXX in attributable X to to profit. million due decline prior

First, the actions attract price/mix due retain customers volume. to planned to pricing incremental and declined

with and rates. low Second, cost manufacturing which associated higher lower inefficiencies factory and reflects input cost potato inflation utilization production per pound, and

million to that's facility downtime costs start-up additional related finally, in EBITDA, Third, capacity We and of while expansions. And and $XXX despite capacity $X Idaho $XX that were to live last with related impacting our costs incurred adjusted new associated fiscal an the of related noncash million third higher our we $XX production unplanned went to completed incremental XXXX. quarter million. in largely expense reduced year. Adjusted that ERP expansions we our China incurred to SG&A depreciation amortization million fiscal new incremental SG&A not of declined system

lower improvement plan, associated reduction initiatives, remainder of due drove performance-based our to compensation the of our restructuring with with [indiscernible]. those and expense execution most the largely including Continued

per $XXX driven manufacturing $XX million For pound combination incremental declined price/mix, to sales volumes, unfavorable costs. of adjusted the and lower EBITDA North million, cost America production specifically, higher

declined cost Buyer to EBITDA pound International production million each and segment, million. decline and per region $XX the competitive costs our adjusted to manufacturing to offset the environment inflation. For affected fully our price $XX increasingly ability incremental in drove use

cash flow and on under and with position cash to facility. the Slide liquidity revolving billion Moving $X.X our available quarter second We million ended $XX our of credit X. about

prior Our of the XX-month and offset the $XXX In we leverage at X.Xx working million earnings, were year, quarter net partially which first of cash changes capital. Capital transactions Argentina, during operations, Netherlands year due lower facility. net second $XX versus to half million is Argentina blue construction billion, by puts which chip were year, in debt ratio the as down the swap half expenditures we was generated million $X a in first $XXX the the for continued favorable of from on expansion trailing about proceeds which our basis. our from completed of nearly of our in the

capital XXXX. our significantly second annual decline the we of total half in year to million during to continue the expect fiscal target $XXX as spending capital We expenditures of

about returned we any shares quarter. quarter, in second the cash dividends. repurchase million the to the of form not did $XX share authorization during During shareholders under purchase We our

slides. who cover will now back few next the over I'll Tom? to it Tom, turn

has future then. Bernadette. Thanks, estimates view of our year as a demand global our Much Day industry, than growth. more ago, capacity potato we Investor since additions as well including the provided changed of frozen At our

view. we to wanted our updated provide with you So

historical was large above and frozen COVID, to key prior X, Lamb rates resulting the Slide Weston in and operating markets capacity. demand on above our at international industry U.S. shown As potato in growing full the

While a levels saw COVID demand rates. effected of to relatively historical demand short period, pre-COVID for frozen and evidence rebounding quickly potato growth we

would demand. strategically we our As positioned global our a so to capture result, and expand growing share be well to capacity, serve we plan customers of

new projects. East. capacity XXXX. XXXX, announced in market of in as of the as in have and frozen modernization construct XXXX first regions our processors can the and competitors new to the So expansions projects also announced plan, X.X also on of qualify Brazil, time typically some Idaho, of expansions starting legacy major it expansion relatively to and pounds and This were included primarily additional then, Middle China X the the existing as a Day between construct new plans China, some lines. production in early Netherlands but XXXX to and million capacity that chart, facility, processing entrants such takes X India capacity to October and in than Since competitors knowing see relatively more have we our you well years and This includes one as Argentina. By Investor announce potato Europe,

always expected, additional While competitors' not foresee we announcements and are aggregate expansion timing of these the expansions. scale did

X.X including industry announcements, incremental over the up production X we see years. expect can As total capacity X, pounds on calendar these of you in additional next add may the Slide to million

XXs Given more was for are implications on don't these XXXX. That has by capacity pounds estimate all expansions further added strategic industry between billion be no pounds XXXX. there said, know capacity pounds of we that during if years calendar and additions the time XXXX of capacity due and Canal is past global of than capacity high is additional the the XX% all Lamb by near-term other announced utilization. demand incremental of forward be the and environment, more X being are which end operational we of from capacity the couple capacity XX than of operating whether itself XX reductions, slowdown in the in industry total which we and pounds peers. capacity and XXXX, and years. This X completed estimate may announced than previous facility, XXXX, been That's will is closure move nearly down an around Washington if addition supply added end to our what Weston the have billion of utilization the billion X In our by billion

the not Over in to the significantly North the expansion rates in capacity outside to to expect be we medium next returns are historical we completed years, assuming global add the announced the through all if again, term, industry challenged XXs. Accordingly, few operating remain or projects imbalance demand, high will expansions expect and demand utilization may America. even capacity supply mid- current incremental especially and the as environment delayed,

on address improve we we ago, to months implement XX, the been actions have challenging included combat mover early Restructuring an Nearly reducing and to our environment. Slide again you Plan announced the cost This million As closing structure. a temporarily imbalance X track see to lines associated a to of million XXXX savings and with plan annualized remain processing $XX on of in curtailing the We permanently in and facility savings $XX fiscal and schedules. this fiscal production XXXX. cost deliver cost count, head on

this through our we'll opportunities team to on continuing our identified to initiatives months X earlier, execute new cash functions the brought and supply environment, profitability. ago, our of the and reduce these year, effectively profitability Chief chain support noted and we're adjust about operations encouraged have I to as evaluate about to Officer flow. We to and challenging addition, chain more manufacturing to free and back performance the and half and Supply say improve Chain supply a protect we're see manage In improve to the costs. opportunity In she

Let me outlook. the now to our discuss to over turn call Bernadette updated

Thanks, Tom.

short call, fiscal While we challenging has last the anticipated of so during earnings fallen our far for balance expectations. a our environment of performance XXXX

As a as result, we're described. just increasingly the the as Tom for well environment competitive to year the second performance financial targets reducing that our quarter our reflect in

see of range $X.XX billion. can we're new to implies around As also the range billion target our We're to our previous sales XXXX. reducing billion versus from $X.X fiscal adjusted of $X.XX you XX, target estimate $X.XX billion on $X.X billion from the midpoint range X% billion. billion to sales of net sales to EBITDA Slide Using previous a decline reducing of our $X.XX to our range $X.XX

chain Let reflects you through the second affect The annual about the that combination On the the the expectations partially changes. of of some the shortfall impact customer you see new due a half customers. factors downsizing remainder me pressure of volume walk restaurant than sales second sales reflects quarter. key of loss XX, unexpected related the a target benefit to size In forecasted promotional Slide incremental customer, during the greater from that expect we America, our versus wins meals by and serving key reduction of to of the at X/X in offset North impact the year. and can

North price/mix we than to modestly is previous anticipated. previously favorable in from Our estimate down America mix forecast due our less for

pricing forecast we expectations. In volume markets. more as initial be key environment, for incremental as is traffic Our International the resulting from in losses our restaurant essentially competitive our international price our specifically customer reflecting segment, line in well competitive, a largely intense expect as previous remains softer unchanged with primarily forecast, environment share below while to

X% and surge actions the versus competitive gained price/mix, we pricing we're incremental In Weston increasingly for India, in sales year each and East that newer to price pressure America, inflation-driven Asia in a will EMEA, to experiencing implemented regions, Europe market prior an additional of our from EBITDA the volume in by by growth. With some second million the you EBITDA target forecast in entrants and potatoes. in X/X share. In mid-single-digit slows a demand and the our we the Pacific annual decline of but and supply in different inflation. pass decline EBITDA this our in expectations. the volume a offset is reasons. In pricing as mix in impact initial markets, low single-digit reductions remaining our Latin earlier. in the In key the adjusted affecting due cost reduction our respect total earlier performance reflects of short, versus expect Lamb we're addition, counter moderating of along XX, on I environment America also nearly year the less volume we international in Middle of China of growth to the see shortfall as expect to can driven be to net is low ability reduction North favorable described increase that to quarter more competitive due that Slide environment $XXX input our in the which and the adjusted It's Most in partially in

we previous increased range incur to relative utilization. With lower our due from $XXX expect be the will to million, but million current respect costs to potato In $XXX range. to asset our manufacturing to of inefficiencies the likely and we're of SG&A, end forecast, top towards addition, maintaining

to implying can forecast period. billion As to compared deliver our year as the growth on expect $X.X year, $X.X second financial to we on the half with updated see annual X% Slide of the for based you X% of XX, prior billion, sales of

from geographic net our the withdrawal of well last of associated fourth of chain share growth. in our the of the volume increase, contribute recent overall as drive lapping results as of expect recent of impact transition of international ERP America incremental wins contract canceled shipments segment International losses, We regions each voluntary XXXX. with affected quarter our volume both reflecting volume overall higher will that that year's impact across the customer the the majority North forecast benefit primarily We fiscal sales product in and will the

in small of shipments share recent to North volume share benefit the regaining last volume in ERP customer of incremental prior reflect and We expect year chain regional of net from continued growth associated the transition, lapping wins, progress America and year's lost also losses. customers with contract canceled

We pricing year. of second we're in the price/mix as channel expect North down offset will actions mix. half more forecasting of the overall benefits America, be will decline In price/mix than and product improved

forecasting pricing decline I in also key As international price due investments markets. overall our with previously price/mix noted, In International, to prior we're to dynamics competitive expectations. consistent actions response will are our in

we will we to adjusted both prior in In volume potato earnings. in growth North expect largely of international Overall, what actions investments increased benefit line of markets second we to price inefficiencies working will EBITDA, in costs in utilization, cost to to from which but and is asset growth and in planned period. million offset due EBITDA be Moving and which lower drive $XXX $XXX by from price America input North actively deliver the are expect America incremental million we to half, the the address. inflation manufacturing International in impact delivered and to incremental with key

XX. capital to on on Now turning our Slide thoughts expenditures

second Argentina track facility, we target construction our total XXXX. calendar the of about completed As of in will XXXX. $XXX during half I Spending the on mid of $XXX in is million of first and We completed our expansion which million previously on of focus we're our spent modernization Netherlands construction for capital continuing continued Argentina approximately fiscal in expenditures the the be year noted, the facility. continued maintenance, to year, half and as to

$XXX approximately of expenditures million. capital total target to continuing we're XXXX, For

will modernization and annual which base We with efforts, capital amortization depreciation in is line expect our and about for $XXX maintenance expense. be million

focus at treatment be wastewater will that projects manufacturing environmental largely $XXX other our capital million on The for facilities.

last years to we limitations. highlighted we million $XXX spend X total As government strict and regulations the to next comply in quarter, permit about expect increasingly with over

a our XXXX, at spending plus an projects. lower or on so industry sales, each capacity years any of to utilization, do year focus we is base beyond expectations We'll $XX growth significant generally investments to capital, to few environmental additional for least for X% direct not and together up For expect given our modernization which capital. million

that a annual restart point As our I any positive exclude to of inflection Note deploy that described we fiscal expect our should phase next be when free implementation. a amounts just cash the result, ERP flow. XXXX for capital we the

Turning return our we announced to on our Slide authorization. our to share With $XXX thoughts on shareholders approximately XX. under repurchase authorization. increase capital $XXX remaining million Today, million to we this have increase, a

As declared $X.XX authorization, is But flows, to our the combined ago. free than we approach a This the our dividends, in shares public company increase us X in dividend increased history back shares. practice, dividend respect year increase consistent with more program. With been each we'll to has becoming a since cash to provides under continue the disciplined expected buy the with our to use repurchasing to a with $X.XX opportunistically years share. our per increasing quarterly of flexibility

Our remains share. payout target ratio of to per XX% dividend earnings XX%

that above earnings. result of we're While that's range temporarily depressed a today,

Tom Let over the me call now closing turn for to back comments. some

Bernadette. Thanks,

the a pressure today period summarize announced during just term demand. in saying, me we environment let will on remain of challenging operating ongoing expansions as near are So capacity additional by the expect

continue expenditures, to while repurchases and our our modernize leverage navigated dynamic opportunistic managing We're the same production increases our structure We dividend are Lamb shareholders. cash provides we solid to to our returning this adapt share flow. our industry-wide to maintain reducing footprint, with our fundamentals to and to remain unique our that cost and actions and assets. Overall, in value by operations, environment scale to positioned to continue transitory and operating capital improvements tough Weston our At strategically steady environment. adapting the we continuing improving capital taking through to time, shareholders proactively and system deliver challenges committed well adjusting balance lasting and strength these operations remain sheet weather to to make we'll our

again taking and questions, last great Lamb and leadership his has President Lamb team years. want morning. to proud joining I has Mike a CEO, honor, in Lamb Weston's what for as saying and is X that at hands. Thank With just I'm entire serving accomplished the Weston end helm, the and Before you future us the privilege during Weston's team an been with this of

it to Now back over turn let Dexter. me

Thanks, Tom.

Bernadette in Before will opening ready up the year. With shortly investors I want road questions. start that, just after details to of meetings be for new now the to questions, note the the on we're We'll for and call provide January. that with those take your Mike

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

obviously, a we lot I see. X% growth time, Tom, that's and even assuming what more annual over guess, demand a than currently

XXXX, capacity than only the And you utilization now by is I in get appropriately, a have XXs. view in XX%, maybe As And guess been do margin? around mid- I've historically thought? certainly or you EBITDA back light what got it previously that's Weston's where and to as structural talked about normalized would more sort it it's might how lower you this, lower below to much high of follow-up. Lamb is then what of or

Yes. footprint, basis, no on other assuming forwards capacity XX% Andrew, online, to the forward, there's and the to and adjustments reguide EBITDA today, think in our comes we all industry on XX%. here an the go that I based going range believe

in And by EBITDA term, the offset to margins then expecting to look Andrew, term. Yes. XX% the short to margins. pricing said, as expand we'll XX% we're medium-term But inflation Tom longer environment, over

or close industry do And perhaps efficient be some shut obviously capacity given been industry an as now been down of rational then, breaking of think to on less you curtail yet the seems similar Because materially. all or stream, players decisions typically, new have not that's why other of have? you capacity quite that and to and the Tom, in that's dynamic such, light facilities sort coming made and the production sort incremental of it's older,

-- and be now, our seen the -- to the remains what Weston, think it -- I we're it the based certain I from And that in. of competitors, dynamics based evaluating on on I there's our the as that Andrew, be operating managing anticipate may environment me remains be would there anticipate Lamb right industry to -- some I'm -- would actions seen. the But but rest business environment. is we're Yes,

to Andrew, Yes. the expect term, continued going opportunities to short on to forward work to generally And long attachment over evaluate rate. medium we make a we're additional have is french that through be as this, to environment. we in going growth, we sure and This category we'll term costs confidence the manage positive just any difficult business in term reduce fires based profitably and it's the continue move to this balanced

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

International because time Tom, of moving are there's not parts I wanted I fully the spend a on there business actually to that maybe some think lot appreciated.

tied like can in more. the that So think seems maybe year sure you're not incremental called that I'm expecting this to pressure. some mean out fact ended with up how that It maybe were tighter we coming much you've is expecting a potato start better. crop I Europe. I of you

feel And to a price the more. discount kind so competitors ability bit of

that's now, then that share it incremental why coming? would I already you it's helpful. think of of there's that pressure some markets of expected with as and there, the quite be So a the start kind on I pressure kind capacity about how relates that think seeing bit as you're that maybe if Asia, a again, calling necessarily is it you the would existing you maybe get the to that, in light not can of outlines So Europe? And come out the just Asia of if address, markets slide to but could those separately lot Europe worse online? So there's capacity know in and

Yes.

So growing crop the recovered be below was to Europe season. projected It average. initially, the through

had came open procured So down. potatoes, industry the the and high-cost you initial crop some then

and So to competitiveness that -- the it's to pass-through with of customer. market, difficult in that get been terms inflation the of

one pressure -- recall, North our Asia European traction, that's on getting Asia, customers. protected we say so our question on impact America the driving customers, the part market. And ERP and you the in other And the as the we're I that terms we but challenges, your in really International, and some lot would we of had of of when had a specifically of some

business, competitive going so while a there's more And winning just than job a that some great and is it's forward. doing we be anticipated bit -- of little back will the team

Yes. And the add market with the capacity increased only Tom, online ever thing Asia export more I'd come in to than becomes has been. that's an the it it that there, of market,

opportunities look continue to so we'll sales well. move for And as as that to profitably

in been Okay. the significantly you And just out hopefully lower we that out I a we can than if is There's other now -- some look, at Bernadette, quite you idling then margin can gross capacity. a Andrew's called elements just that I gross that go margins, I more question deleverage I manufacturing expected? if question of obviously think margin But around think, factors Or up as of the EBITDA run are I guess, other the there of, level. this through. on back come it bit the again, guess take the level? to deleverage is, a it result have

Yes.

schedules. the think hitting in I -- and of initial we've terms running fiscal year production some plants manufacturing efficiencies production and early this had throughput challenges

get we been to that's as It's And and seeing focused we normal of levels. to a us to on and We continue different new have that operating but going some back are things time -- really Supply so on identified, improvements. disappointing. number a Officer Chain production got improvements. focus who's And going take forward Chief to efficiency

to of of of the reminder, by quarter. the the we'll always margins some seasonality, a and it in the product that the write-offs have first previously the the about. inventory things those a some we bit that affected it be relates in only little see talked fourth us but will higher the as we'll had just withdrawal seasonally, then quarter of And affected gross Yes. to absence related half than in half year back be third Not margins,

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

losses on of, of I what the was pricing to mentioned To that just were clarify not determinant Asia, customer know that was losses? I wanted these expected. in the challenges. ERP extent some

So the I'm like some consideration of of wins with was just that here if trying were part lack to customer service the expected? understand of

Yes.

very As year go we it and a customer negotiation, into every environment. the relates to losses, it's competitive

so to of to And be price, ERP but other all. necessarily factors service any that's some there at or industry going related wasn't

than thought be our originally more customers. service as second entered But a We into it continue we to was competitive the we it's environment going competitive and quarter. to

I see the extended Understood. buyback program. Okay. And did

are Just you guess, as how lower aggressive, to be to shares willing be watch may a the bit that? you I

Yes.

we back the made more of most going have of the So our I cash because investments forward, the in move year. were year, capital free as of to we're half flow mentioned half the and first

market $XXX announced As more buy the cash free to that we're and well, we're we million flow, be back have the the opportunistically as additional in move going authorization increased as to we have we and today shares, forward. excited

and it base we flow cash more at But have we'll maintenance focus that. efforts capital So again, on and modernization as moving we'll forward. leave free that additional

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

change intention. Tom, some opinion morning reiterated don't quote may board you them. this The every insight But significant here. you to sold, be changes, have or to the in know Lamb on management Board you're that know requires addition should its Board, Activist I member's just

letter? plans Just formal sold? if your the belief the will meaningful this curious, time changes, comment, is there at board Board issuing the do open be Activist And to to at know company you being least that that on land a if response can't you is it

to about talk running the on forward. in the earnings, more what's transition company going Ken, the our Mike importantly, business about we're and today going here outlook,

So I'll here what at leave to but that, today. it that's we're talk about

Okay.

Following up, half, a how the comparisons. of you lot guidance? I in terms know in do see of certainly easier moving some pieces back there's

out? possible customers, we kind lap, of just trends, Again, kind consumer a as underlying think about the changes any improvement to of on demand basis, right, like-for-like products? Just are your excluding for volume if that's expecting parse in to sequentially even you

Yes.

quarter. those wins impact customer we'd even seeing that. think from volume are the the of we been of in date, fact talking benefit we've I incremental the expecting start to about that the that previously, are [indiscernible] We seeing third

there, So International a in the of momentum segment. positive lot particularly

go We'll TD next Moskow Robert Cowen. to with

regaining assumptions those back there disruption? new starting from you any from business customers lost you to Do from in achieve half have question, -- in Ken's in numbers? order the to ERP about your that Similar back are to get half today the wins

place. the The line in to back we've of year all our have that in half sight we included the include of wins customer of numbers that

a So unknown in no, wins. there amount large that is there business isn't

And a quick follow-up. Okay.

about North You What saying supplier? willingness lost another in risk customers America. a the there about to Is customer in your are missteps their calendar XXXX? Lamb chain any as concerns reputation from Weston trust

Yes.

than our are about it and discussions large feel of the and of accounts impacted from of in some customers. But had some a board certainly, really think I had the those had, we're it's by address I some channel time food we by ago. most year standpoint, we've of across to that challenges So to a terms the previously where And of time. customer some taken we what we've service the repair and of large, were us of anticipated takes great relationships. challenging more business, regain had we even through some But with those

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

Tom, maybe of question basic the you for just accrual kind a on capacity.

kind those opportunity all one? And [indiscernible] decide years. as fairly globally, seems get of add these leaning this about too. [indiscernible] We what get now have see some that in this are some just that discuss we and time outside when core that we some to United kind because given sound You talking always that drove just well, of X globally. we're that of can online the ex we've [indiscernible] about actually players the new and we're talk there kind operating the the of What smaller U.S. players margin defragment It market, number clearly of it can maybe kind with in players let's obviously, the to spoken some profit, two, the we like too. think [indiscernible] of has deciding is this Lamb then capacity all next hearing of fragmentation the much backdrop first now X normally this number X But over you like been to the other you of is do U.S. issue States capacity because defragmented doesn't the of causing U.S.

Yes, Rob.

ago, that were So capacity there in when between was about go pounds got utilized all added and at based XXXX, you and you look step X growth. the in the at X industry remarks, back X, saw and that XXXX rates, 'XX, I billion said we historical And strategic footprint. decision expand demand on demand my as the our we years recovering made to as

is markets. lot been as China we're in well And slowdown industry growth think dealing additional seeing was with same subsequent America -- and the today of the environment North the Europe, -- we're expansions obviously, restaurant some The seeing to there's I rates. same as that, that capacity in so India a category

I growth, terms category down. the slowed thing and so And seen think the it's in same industry has of

this transitory so as see And of or they're some think, environment capacity based to the I fruition we I they the we'll actually delayed. announcements, on view as earlier, said a if situation. And come

category is same it's So of big viewing combination And the kind change. think the driver. the a categories of the industry and I that's the

Okay.

assuming talk and hate side, come Okay. there's look to map to gross we million, Fair X% I'm here. to the enough. of spoken CapEx past, what CapEx but fiscal you I at out you've be still off, when to similar there right, one think implied. which But then little X% sales CapEx in that of to a little circle, is the And X%, right? is starting total to I this Bernadette, chart, nitpicky the the as X% at which for of that 'XX. is $XXX kind a least CapEx And number about is kind

is be to clearly, seems think X% 'XX, do you sales it to implied sales your does to on you've we what let's the would engineer of little reverse guided kind say, X%. to the CapEx get then can high, side. right, And get it Now in to a 'XX to

comfortable like [indiscernible] I it with million, up being to So very winds X% we'll the is like way. X% guess clarify, $XXX that just that -- if of you're see sales to

Absolutely. I'm very comfortable with $XXX million. the

with Bernstein. Howard Alexia to next go We'll

So of and seeing different weak then and uptake you about demand are at about particularly equation. wondering the for We've side lot your turn just quite going impact of specifically, informs reasons competitors research a have might expectations improvement demand? the forward? follow-up. And you I be capacity about can this moment the GLP-X And I the the the consumer to in between Europe. morning. I that And weight loss imagine about on the drugs, U.S. the I'm talked demand a any U.S.? here What your telling reasons how in an is

Sure.

As versus continued there most demand in where relates quarter inflation, the it fifth declines consumers have of traffic. relates demand, decline restaurant and to the to prior U.S. seen to being face the year consecutive we've in

that's primary we're that. seeing that reason the So

quarter traffic, impact and trends with to turn when inflation promotion that, well increased there we've international the we drives our menu sequentially there's value have we trading meals then As on see affects the and restaurant traffic as the continuing markets, business, and a as accordingly. If those adjust price slowed they're it to first compared bigger as overall, there's value the promotion well. as forecast our to consumers down, meals been adjusted more

everything large a demand significant We it. long But impact we've in perspective, date. the not, seen continue We'll have that anything from to not a expecting term. to we're from seen based though, monitor GLP-X on

one steady. -- the fry just that's have rates Alexia, thing also attachment and been consistent state

be fry, to are are when least might they're they at at buying buying they the restaurants fries still go So same when restaurants did, at they people small now like going same but fries it's -- usually rate. the to the time, the buying a

mentioned Great. ask your TAM opening you're after? are are And new those what they Can I nontraditional you opportunities as markets customers. large in and with how that going a remarks follow-up, about exactly

Yes.

things of not and some past customer shots, terms looking some customers I'll specifics about customer in we're going So the potato Alexia, that done I'm potato with and/or our of entrants of with that. is think we've traditionally the into opportunities. offer fries into way And that's But in things to potentially at frozen specific that the it to the leave it some didn't volume at just get category. potential new

go to Steve We'll Powers next with Bank. Deutsche

that utilization capacity utilization in get industry is much utilization what mean to go a how how about When back I to you industry is guess to does I to XXs from business? different wanted talk the low benchmark? today, slightly of I slack perspective. trying I'm the compared your land

Yes.

get the and and We XXs, low in reasons it's is our adjustments But back the made improve of period, us made was footprint efficient other range, maintenance and low some our footprint the we and we'll we more the addressing. So downtime that the comfortable overall, on we unplanned it. reason utilization challenges that's into to had improving. in We're past we've that. feel the ago the I And about brought we changes seeing our issues we're utilization made up across rate kind several months as utilization some stated today. XX% did earlier, where with

sales that's back business the the is question price really lever to guess I dig the is the Okay. I the job? like -- lean now been those to what's servicing good. And then boil accounts? any hoped. there you a besides you to win those can than I competition good that Very wanted pitch who's really back on is accounts extent to I doing into to just had guess, just guess it and slower down,

about menu some as There's different we those different it's But potentially No. some like customers, they're question -- it. -- -- to about a offering. We it innovation, of is value-added it's talking also we're products, -- doing talking price. no if

some we're winning discussions taking different back. anticipated. of what It's some having And -- forward. we that we're there's it's just So than going longer

LTOs. environment. anything customer in consistency, there's and bring and the Those price Yes. terms table having quality, the if on focused then We're in we to are service addition we're of conversations to that the can competitive

from Max with take We'll question BNP next Gumport Paribas. our

being margin level are EBITDA XX% abate supply an in guiding to the then but 'XX your There's Clearly, line just that other you've get also all you're in the EBITDA margin, the comment you'll to the starting to to and on from so turn to wanted half manufacturing cost-cutting roughly going for price depressed. demand you're that XX% estimate after. those current be investments the could for pressures and look getting temporarily there's observed earnings benefits on. that the second also There's initiatives today environment back how that with go-forward be I inefficiencies.

than adjusted to to I'm So higher get trying more this XX% would you're why it fiscal and that margin you what the second EBITDA normalized expecting year? of for see XX% be your half clarity the on not as

what from going the things more short guide continue improvements time. to Thanks other to medium show over look we'll to term, term But cost those medium XX%, pressures the ahead sure that the that and profitability, XX% pressures everything we we'll to the the we the to and come that Yes. EBITDA question. for with we Certainly, to can can we're to In we as a to now, expect terms in view and continue right are continue. increase the in and able doing to be. make been margins, at we're short back we've for seeing, go range of do

just plan I X here wait Officer a As again, lot been period. a with robust want of we're our we've on to got new this until got we've things more back positive months, has that. to Chief seeing Supply but Chain But come

to with next Matt Smith go Stifel. We'll

has some inefficiencies Or suspension, more that temporarily production expectations? color the of some of you about that near line to it production the Has contributed manufacturing. you your that, time? more term lines. impact you Can impact the both a with how improve talked has for Tom, in lower to that along the and been over you suspended with just little a And provide we've address utilization initiatives of about of seen? in in

those had American we've a little to No, reasons, our weren't to and number them it's improved they're of in line we've been unplanned and with expect different are we issues And for -- improving. production the start-up And is got again, improving. where didn't The some expectations. Falls challenges we that in team run largely plant them. up a and they've anticipate. normally on be. the working I'll bit with But We reiterate, had rates the were Kruiningen

We to to to continue levels and get improve normalized here the expect in term. near that

clarification. one And

mentioned utilization trends? Lamb improving utilization You here. or rate rate of Is reflection from improving traffic your the that a

we're reflection the going just being it's X, lot how here of of got more the utilization processing and No, here the more assuming we're we've running addressed the for normalized a months in back of potatoes be in and how efficient the with that forward. We're lines rate plant the a last of expecting year. half X issues the to more the running and

We'll go next Securities. to Marc Wells Fargo Torrente with

way. the in a just Just asking a utilization, different more little on

out below in So laid you the in line forward you XXs believe most capacity 'XX currently incremental with is of rates from and through industry competitors. you're

So medium capacity expect would utilization to ahead industry the term? over of you be

of line. we're understand, I are in standard kind competitors at we that, overall, know some we're higher. think right I But now. running there's from generally I No, industry what think

QX. color much when expect how that you in had through currently you Okay. higher elevated inventory of during versus out on quarter? inventories progress Any coming finished And working production would seem normalized in you then goods And levels? [indiscernible]? QX, the are Where line

Yes.

goods inventory harvested in usually and inventory and material relates third September second their because at are October. raw As we've and to our just it quarter, our peak potatoes finished

of peak that then we see to the the move forward balance work inventories usually year. we'll those and down you continue throughout as So

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

on know coming I But dividend. increased the your next year. increased one coming looking balance of buybacks at down, is leverage. CapEx down Just question CapEx

leverage have you Just changed -- you with there have you -- the conversations or your agencies? target had or

our to leverage change No Yes. target.

leverage ratio. X.Xx We continue to target the

to you. for to over or closing Mr. Thank in With no I'd questions like any Congbalay additional remarks. turn call queue. the additional back

today. joining everyone, Thanks, the for call

so. could thank please you and holiday, Again, have everyone. we e-mail a do to schedule you, happy follow-up me and have time If any questions,

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