Lamb Weston reported third-quarter fiscal 2026 results with higher sales but significantly lower profitability, while increasing the midpoint of its full-year net sales and adjusted EBITDA outlook and reducing expected capital expenditures, according to its April 1 earnings release.

For the 13 weeks ended February 22, 2026, net sales increased 3% year on year to USD 1,564.8m. Income from operations declined 49% to USD 126.6m, while net income fell 63% to USD 54.0m. Diluted earnings per share decreased to USD 0.39 from USD 1.03 in the prior-year quarter.

On an adjusted basis, income from operations declined 38% to USD 170.1m, adjusted net income fell 39% to USD 100.0m, adjusted diluted EPS declined 37% to USD 0.72, and adjusted EBITDA decreased 27% to USD 271.7m.

“Driven by continued solid performance in our North America segment, we delivered another quarter in line with our expectations,” said Mike Smith, president and CEO of Lamb Weston. “Our team’s disciplined execution of our Focus to Win strategy continues to strengthen Lamb Weston and position us to drive long-term shareholder value. We are taking proactive steps to better align supply and demand, and we are acting with urgency to navigate the competitive international environment.”

Net sales increased by USD 44.3m compared to the prior-year quarter, including a favourable foreign currency impact of USD 47.4m. At constant currency, net sales were essentially flat, as a 7% increase in volume was offset by a 7% decline in price/mix. Volume growth was driven by North America customer wins, share gains and strong retention, while the decline in price/mix reflected continued price and trade support and a shift toward value-oriented channels and brands.

The company also reported softer industry demand in key international markets and increased competitive dynamics, most notably affecting its EMEA business.

Gross profit declined USD 90.9m to USD 331.6m. Adjusted gross profit decreased USD 92.9m to USD 327.5m, primarily reflecting unfavourable global price/mix and a net USD 32.5m pre-tax charge related to the write-off of excess raw potatoes in the International segment due to lower than planned sales volumes.

Total manufacturing cost per pound increased, reflecting the raw potato write-off, higher fixed factory burden costs associated with underutilised international production facilities and inflationary pressures across key input categories. These higher costs were partially offset by cost savings initiatives and improved operating efficiencies in North America.

Selling, general and administrative expenses declined USD 7.4m to USD 156.8m. Adjusted SG&A increased USD 9.4m to USD 157.4m, reflecting normalized compensation and benefit accruals and USD 12.7m of write-offs of capitalized costs associated with projects no longer under development.

In North America, net sales increased 5% to USD 1,035.0m. Volume rose 12%, driven by customer contract wins, share gains and growth, while price/mix declined 7%. Adjusted EBITDA for the segment declined USD 12.8m to USD 289.8m.

In the International segment, net sales declined 1% to USD 529.8m, including a favourable foreign currency impact of USD 43.7m. At constant currency, net sales declined 9%, with volume down 2% and price/mix at constant currency down 7%. Adjusted EBITDA declined USD 75.6m to USD 18.5m.

The decline in International adjusted EBITDA was attributed to lower sales, higher manufacturing costs per pound, including the USD 32.5m pre-tax write-off of excess raw potatoes, and increased fixed factory burden costs associated with underutilised production facilities.

During the quarter, the company closed its Munro, Argentina plant and consolidated Latin America production into its facility in Mar del Plata. It also temporarily curtailed a production line in the Netherlands beginning early in the fourth fiscal quarter of 2026.

For the first three quarters of fiscal 2026, cash provided by operating activities increased to USD 595.6m from USD 485.3m. Capital expenditures declined to USD 256.6m from USD 563.1m in the prior-year period.

As of February 22, 2026, the company had USD 57.5m in cash and cash equivalents and USD 1.26bn of available liquidity under its revolving credit facility.

Lamb Weston returned USD 51.4m to shareholders through dividends in the third quarter and USD 204.7m during the first three quarters of fiscal 2026.

For fiscal 2026, the company updated its outlook. Net sales are now expected in the range of USD 6.45bn to USD 6.55bn, compared with a previous range of USD 6.35bn to USD 6.55bn. Adjusted EBITDA is expected between USD 1.08bn and USD 1.14bn, compared with a previous range of USD 1.00bn to USD 1.20bn. Expected capital expenditures were reduced to approximately USD 400m from approximately USD 500m.

The company stated that its net sales guidance includes an approximate 1.8% benefit from anticipated favourable foreign currency translation, reflects enacted tariffs, includes the impact of a 53rd week in the fiscal period, and assumes ongoing disruption in certain Middle East markets.