Lamb Weston Holdings, Inc.

Good day and welcome to the Lamb-Weston first quarter earnings call. Today's conference is being recorded. At this time, I'd like to turn the presentation over to Mr. Dexter Kongbile, VP of Investor Relations and Strategy. Please go ahead, sir.

Good morning and thank you for joining us for Lamb-Weston's first quarter 2024 earnings call. This morning, we issued our earnings press release, which is available on our website, lambweston.com. Please note that during our remarks, we'll make some forward-looking statements about the company's expected performance that are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our SEC filings for more details on our forward-looking statements. Some of today's remarks include non-GAAP financial measures. These non-GAAP financial measures should not be considered a replacement for and should be read together with our GAAP results. you can find the GAAP non-GAAP reconciliations in our earnings release. With me today are Tom Warner, our President and Chief Executive Officer, and Bernadette Madriada, our Chief Financial Officer. Tom will provide an overview of the current operating environment. Bernadette will then provide details on our first quarter results, as well as our updated outlook for fiscal 2024. With that, let me now turn the call over to Tom.

Thank you, Dexter. Good morning, and thank you for joining our call today. We delivered a strong start to the year as we continued to execute on our strategies to drive sustainable, profitable growth. Our integration of our EMEA operations is progressing well. Our capacity expansion in China is now up and running, and our other expansion and modernization efforts around the globe remain on track. Our supply chain teams continue to drive productivity savings, and our commercial teams remain focused on serving our customers and driving innovation across all channels. While our volume was down versus the prior year, it was in line with our expectations and was primarily driven by our decisions to exit lower priced, lower margin business. We should see our year-over-year volume trends improve as the year progresses as we begin to lap and backfill exited volumes with higher margin business. Overall, we feel good about the health of the category, our first quarter financial results, and our operating momentum, and have raised our sales and earning targets for the year. Let me now turn to the current operating environment. The global frozen potato category continues to be solid with overall demand and supply balanced. Fry attachment rates, which is a rate at which consumers order fries when visiting a restaurant or other food service outlets across our key markets, have remained largely steady and above pre-pandemic levels. Restaurant traffic in our key markets was generally solid. In the U.S., overall restaurant traffic was flat versus the prior year quarter as QSR traffic growth offset further traffic declines in full-service restaurant channels. We believe that this is the cumulative effect of inflation and other macro pressures on the consumer over the past few years favoring QSR traffic and tempering full-service and casual dining traffic. While overall traffic growth did slow sequentially from about 1% in our physical fourth quarter as quick service restaurant traffic growth cooled, much of that weakness was in June. And we're encouraged that both QSR and full service restaurant traffic trends improved as the quarter progressed. In Europe, restaurant traffic grew in many of our key markets. In the UK, traffic was up mid-single digits with growth in both QSR and full service restaurants. Growth was also solid in France, Germany, Italy, and Spain. In Asia, China restaurant traffic growth was very strong but off depressed levels as the country rebounded from severe COVID-related restrictions. Traffic in Japan was solid in both QSR and full-service restaurants. We suspect that restaurant traffic trends will be volatile in the near term as high interest rates, high inflation, and uncertainty continues to affect consumers. That said, frozen potato demand has proven resilient during the most challenging economic times, and we continue to be confident in the long-term growth prospects of the global category. Now, with respect to costs, we continue to expect input cost inflation in the mid to high single digits, largely driven by higher contract prices for potatoes, including a 20% increase in North America and a 35% to 40% increase in Europe. Much of our inflation-driven pricing across our channels has either already been announced or included in price escalators within existing contracts. Customer contracts representing about 20% of our North American business are in the process of being finalized, and we feel good in the aggregate about the likely pricing and terms. Over the long term, we continue to expect pricing actions and supply chain productivity improvements will be the primary levers to offset inflation. We'll also continue to drive improvements in product and customer mix to benefit sales growth and profitability. Now, with respect to the upcoming potato crop, we are harvesting and processing the crops in our growing regions in both North America and Europe. And we believe the crops in the Columbia Basin, Idaho, Alberta, and the Midwest are in line with pre-pandemic historical averages. In Europe, we believe that the crop will also be in line with historical averages as a result of improved growing conditions. We'll provide our final assessment of the crop, including how it performs out of stores when we report our second quarter results in early January. So, in summary, we delivered solid results in the first quarter and continue to have good operating momentum. The overall category remains healthy with demand and supply largely balanced. And finally, at this time, we believe the potato crops in our growing regions in North America or in Europe will be aligned with pre-pandemic averages. Let me now turn the call over to Bernadette.