Lamb Weston Holdings, Inc.

Thank you for joining us for Lamb Weston's second quarter 2025 earnings call. Earlier today, we issued our earnings press release and posted our slides that we'll use for today's call. You can find both 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 to non-GAAP reconciliations in our earnings release and the appendix to our presentation. With me today are Tom Warner, our President and Chief Executive Officer, and Bernadette Madriada, our Chief Financial Officer. Let me now turn the call over to Tom. Thank you, Dexter.

Good morning, and thank you for joining our call today. Let me start with the leadership change we announced earlier today. As you've likely seen, I will be stepping down as CEO, and Mike Smith, our current COO, will become Lam Weston's next president and CEO beginning January 3, 2025. The Board and I believe now is the right time to transition to allow a new leader to guide Lam Weston's into its next chapter of growth, and I could not be more thrilled to hand over the reins to Mike. His appointment represents the culmination of a thoughtful, years-long succession planning process by the Board, and we are confident he is the right leader to guide Lamwesson forward. Over the course of his 17-year career at Lamwesson, Mike has developed a deep understanding of all critical aspects of our business and operational opportunities, and driven growth across multiple areas of the company. I've had the pleasure of working closely with Mike and have witnessed firsthand his value-based leadership style and steadfast focus on people, as well as his thorough understanding of the business. I'm confident that with Mike at the helm, Lamb-Weston will drive profit and deliver value for our shareholders. Now turning to our results. Our second quarter performance was below our expectations and not what we aimed to achieve at Lamb-Weston. Slide four provides a snapshot of the key themes that we'll be discussing with you today. We expect the challenging operating environment will persist in the near term, as weak restaurant traffic trends and additional capacity expansions announced by our competitors since our investor day last year add to the current imbalance in global industry supply and demand, especially outside North America. In this new reality, we're evaluating opportunities beyond our initial restructuring plan to adjust our operations, including reducing manufacturing and supply chain costs and operating expenses. In addition, we're evaluating opportunities to drive the top line by improving sales execution while also expanding our total addressable market by leveraging proprietary technologies to serve non-traditional Fry customers. As we discussed on our last quarter's earnings call, we expect to significantly reduce our capital spending next year as we shift away from growth capital to focus on base, modernization, and environmental capital. We expect these steps to increase our free cash flow, which would provide more flexibility to step up capital returns to our shareholders. We'll address each of these points during this call. Let me now turn it over to Bernadette to discuss details on our second quarter results.

Thanks, Tom, and good morning, everyone. Starting on slide five, you can see that net sales declined 8% compared with the year-ago quarter. Volume declined 6%, primarily driven by declining restaurant traffic in the US and many of our key international markets. Customer share losses, net of gains, and the carryover impact of our decisions last year to exit certain lower price and lower margin business in EMEA to strategically manage customer and product mix. While the effects of these three factors were largely in line with our expectations, the declines in sales and volume were more than what we anticipated for the quarter as we experienced incremental customer share losses in both business segments due to an increasingly competitive environment. Price mix declined 2% as compared to the prior year quarter, which was just below our target for the period. Our pricing actions in North America were in line with our expectations. However, pricing in our international markets was more competitive. Channel and product mix was also in line with our expectations, but unfavorable versus the prior year quarter, reflecting customer share losses exceeding customer gains. For our North America segment specifically, sales declined 8% versus the prior year quarter. Volume declined 5% and included the carryover impact of smaller and regional customer share losses in food away from home channels in the prior year, and share losses in certain chain restaurant accounts. The majority of the decline, however, was due to the drop in restaurant traffic in the U.S. According to restaurant industry data providers, U.S. restaurant traffic in the second quarter declined about 2% versus the prior year, although trends improved modestly versus our fiscal first quarter as QSRs did continue to step up promotional activity. Traffic at QSR chains specializing in hamburgers in the second quarter declined about 1.5% versus the year-ago period. We continue to be encouraged by the improving trend in traffic and the steady fry attachment rate, but as a reminder, many of these promotional meal deals have consumers trading down from a medium serving size to a small French fry serving size. As a result, while we benefit from improving traffic trends, The effect of the trade down in serving sizes acts as a partial, and with some customers, a significant headwind to our volumes. Price mix in North America declined 3%, reflecting the planned investments that we made to retain and attract volume, as well as unfavorable channel and product mix. For our international segment, sales declined 6% versus the prior year quarter. Volume declined 6%, driven by several factors. First, restaurant traffic declined or softened sequentially in many of our key international markets. While restaurant traffic in the UK, our largest market in Europe, was flat, traffic declined in Germany, France, and Spain. In Japan, QSR traffic grew versus the prior year, but decelerated versus our fiscal first quarter. Traffic growth in China remains soft. Second, we experienced incremental customer share losses resulting from a more intense competitive environment, most notably in the Middle East and certain markets in Asia Pacific. And third, we continued to realize the carryover effect of exiting certain lower priced and lower margin business in EMEA. This was the last quarter that this will serve as a headwind. Price mix was flat versus the prior year quarter, as incremental pricing actions to compete in key international markets offset the benefit of inflation-driven pricing actions in EMEA. Moving on from sales. On slide six, you can see that adjusted EBITDA fell $95 million versus the prior year quarter to $282 million. The decrease is largely attributable to a $135 million decline in adjusted gross profit. That was due primarily to four factors. First, price mix declined due to the planned pricing actions to retain customers and attract incremental volume. Second, higher manufacturing cost per pound, which reflects input cost inflation and inefficiencies associated with lower production, and lower factory and potato utilization rates. Third, we incurred incremental production costs related to unplanned facility downtimes and additional startup costs associated with our new capacity expansions. And finally, while not impacting EBITDA, we incurred $16 million of higher depreciation expense that's largely related to our capacity expansions in China and Idaho that were completed last fiscal year. Adjusted SG&A declined $12 million to $165 million. We reduced adjusted SG&A despite an incremental $7 million of non-cash amortization related to our new ERP system that went live in the third quarter of fiscal 2024. Continued execution of our expense reduction initiatives, including those associated with our restructuring plan, drove most of the improvement, with the remainder largely due to lower performance-based compensation and benefit accruals. For North America specifically, adjusted EBITDA declined $55 million to $267 million, driven by a combination of unfavorable price mix, lower sales volumes, higher manufacturing cost per pound, and incremental production costs. For our international segment, adjusted EBITDA declined $53 million to $47 million. Higher manufacturing cost per pound and incremental production costs drove the decline, and the increasingly competitive environment in each region affected our ability to use price to fully offset inflation. Moving to our liquidity position and cash flow on slide seven. We ended the second quarter with about $80 million of cash and $1.2 billion available under our revolving credit facility. Our net debt was $4 billion, which puts our leverage ratio at 3.4 times on a trailing 12-month basis. In the first half of the year, we generated nearly $430 million of cash from operations, which is down about $25 million versus the prior year due to lower earnings, which were partially offset by favorable changes in working capital. Capital expenditures for the first half of the year Net of proceeds from blue chip swap transactions in Argentina were $486 million as we completed our expansion in the Netherlands during the second quarter and continued construction of our Argentina facility. We expect our capital spending during the second half of the year to significantly decline as we continue to target total annual capital expenditures of $750 million in fiscal 2025. During the quarter, we returned about $52 million to shareholders in the form of cash dividends. We did not repurchase any shares under our share repurchase authorization during the second quarter. I'll now turn it back over to Tom, who will cover the next few slides. Tom?