Lamb Weston Holdings, Inc.

We're about to begin. Good day and welcome to the Lam Weston Fourth Quarter and Fiscal Year 2025 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Debbie Hancock, Vice President of Investor Relations. Please go ahead.

Good morning, and thank you for joining us for Lam Weston's Fourth Quarter and Full Year Fiscal 2025 Earnings Call. I'm Debbie Hancock, Lamb Weston's Vice President of Investor Relations. Earlier today, we issued our press release and posted slides that we will use for our discussion today. You can find both on our website, lambweston.com. Please note that during our remarks, we will be making forward-looking statements about the company's expected performance that are based on our current expectations. 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. Joining me today are Mike Smith, our President and CEO, and Bernadette Madrieta, our Chief Financial Officer. Let me now turn the call over to Mike.

Thank you, Debbie. Good morning, and thank you for joining us today. I first want to thank our Lam Weston team around the globe for their hard work and strong execution. Fiscal 2025 was a year of substantial change for Lam Weston. In addition to me becoming CEO, we recently added significant new and relevant experience to the board with six new members, including a new chairman, Bradley Alford. as well as Lawrence Curcius, Paul Mace, Timothy McLevish, Ruth Kimmelschuh, and Scott Osfeld. Management and the new board have a high sense of urgency and are aligned on capitalizing on the many opportunities we collectively see to drive results in our business. Today's results evidence the momentum we continue to build with customers and the visibility we have in our business as we work to rebuild credibility with investors. We are focused on controlling what we can control, and are taking advantage of opportunities to drive results and improve execution through a cost savings program we announced today, along with our customer-centric focus to win strategy for long-term success. Successful execution of these plans will help drive improved performance, including free cash flow and long-term returns. To drive further alignment, along with sales and adjusted EBITDA, free cash flow and returns on capital have been added to our compensation plans for fiscal 2026. This alignment continues at the board level, which for 2026, the board has unanimously elected to receive their compensation in equity in the company. We believe these cumulative actions are readying the organization to further support customers and accelerate our performance when demand returns to growth. Turning to business results, Lamb Weston ended the year with momentum in customer wins and retention, delivering results ahead of our updated expectations for fiscal 2025. The team is executing at a high level, and our long-standing commitment to quality, service, and innovation is driving success with customers globally. We had a strong fourth quarter that came in above our expectations. Volume was up with wins across channels and geographies, and net sales grew. Price mix declined, reflecting our support of customers with price and trade as we managed the competitive environment and soft restaurant traffic. We're also seeing the benefits of our cost savings in our cost structure. Adjusted EBITDA increased in the quarter, and we made significant progress in improving working capital. For the full year, our success in the second half enabled us to end the year with volume up. As discussed on earlier calls, our full-year profit was impacted by actions to support customers in a competitive environment, higher costs from production curtailments, and higher inventories during the year, as well as inflationary pressures. We offset some of this impact by delivering slightly above our cost savings target with $59 million of savings for the year. Since January, when I took on the role of CEO, I've worked closely with the board and management team to drive change with urgency and better position our business for success. Over the past several months, and with the support of outside resources, we undertook an end-to-end assessment of our operations. We developed a strategic plan to drive targeted decision-making and actions. and we are now executing on a plan to unlock near and long-term value. This plan, which we call Focus to Win, includes zero-based budgeting, assessing our non-core assets, and augmenting our commercial go-to-market. We're already making progress. You can see in our better-than-expected results announced today, but we know that the work and the real opportunities are ahead of us. We are operating in an industry with rapidly changing dynamics and a global consumer environment that remains uncertain. It requires a new approach, a focus to win. Global demand for French fries remains strong, but the market dynamics are evolving in important ways. Growth in food delivery, expanding QSR concepts, and air fryers changing how we cook at home are creating an opportunity that demands innovation and new approaches. Geographic growth is greatest in emerging markets where margin profiles are lower, but also where QSR formats are expanding. And following market shortages during COVID, the long-term attractiveness of our industry has created the potential for future supply demand imbalance, most notably outside the U.S. As previously discussed, while new capacity has been announced globally, we do not expect it all to be built. We have already begun to see industry consolidation and decisions to postpone or cancel capacity additions. We believe these postponements and cancellations could continue as the industry has been rational over time. Importantly, not all new capacity is created equal. Geographic exposure, capabilities, reliability of raw materials sourcing, and quality determine the markets and channels impacted by new capacity. We believe that much of the new capacity in developing markets, like India and the Middle East, does not have the capability to produce higher margin premium items, which is the strategic focus for Lamb Weston. We believe the work we performed on the market confirmed our right to win in our key geographies, segments, and product categories. We are operating in some of the lowest cost potato growing regions, and we are investing in capabilities aligned to growth opportunities and to our customers' needs to win and grow profitably over time. Let's talk about our focus to win strategy. To differentiate Lamb Weston in today's market, we are defining where to play through a strategic framework that focuses our resources and efforts on the most attractive growth opportunities across markets, channels, and product segments. How we expect to win is targeted. Strengthen our customer partnerships, execute with excellence, and set the pace for innovation. We are creating a repeatable cycle with four elements that drive growth and profitability for Lamb Westin. First, we are focusing investments on priority global markets and segments. Second, We are strengthening customer partnerships. Third, we are achieving executional excellence. And finally, we are setting the pace for innovation. We'll talk more about these shortly. But at the core, we will do what our team does better than anyone else, be our customer's number one partner, a world-class potato company, and an industry-leading innovator. Our focus will be on geographies, channels, and products where we can both differentiate and lead. We've built our business in part by being something for everyone, but going forward, we will continue to partner with excellence in our core markets. We will invest to grow in markets, channels, and product categories with more attractive profit opportunities where customers value our full product and service offerings. We will focus our resources on markets and segments where we have the greatest advantage and reevaluate non-core assets and markets. We will close the capability gaps in our organization and we will target premium market segments where innovation is a differentiator. We must transform how we operate. It is how we will win. First, strengthen customer partnerships. Lamb Weston remains a partner of choice for our customers. Our third-party research confirms that our value, relationships, and service are best in class. Our opportunity is to expand what we've done with our largest customers to our priority customer targets and geographies. enhancing our joint business planning activities and capabilities. Second, achieve executional excellence. To be a partner of choice for our customers and to successfully and profitably operate in an increasingly competitive market, everything we do, we must do with excellence across all functions of the company. For example, in supply chain, we are focused on operating an advantage global footprint aligned to our growth plan with a streamlined distribution network and revamped continuous improvement team with a focus on plant productivity. This includes simplifying and standardizing operations across locations, driving OE improvement via our Lamb-Weston manufacturing operating culture, and embedding a zero loss mindset in raw potato and materials usage. Finally, to differentiate in a competitive marketplace with changing customer preferences, we must continue Lamb-Weston's long track record of being an innovation leader. Our innovation efforts have delivered incremental improvements that directly enhance the customer and consumer experience. Looking ahead, we're expanding our ambition to include breakthrough innovations such as lamb west and fast fries that allow operators and non-traditional fry channels to provide customers with fast and crispy fry offerings. These customers unlock new sources of value in channels that don't traditionally serve fries. This next chapter broadens our innovation efforts beyond product level and into areas such as process technology. Finally, we have created global innovation hubs to orchestrate disruptive innovation platforms. We believe this will create a global network of insights and innovation specialists centered on two innovation hubs, North America and international. In concert with these plans and as part of our focus to win strategy, Today, we announced cost savings that are designed to better align our organization with the environment, improve efficiency, and focus on our biggest opportunities. We have identified at least $250 million of annualized run rate savings that we expect to achieve by the end of fiscal 2028 that Bernadette will talk about more in a moment. We believe these actions will lower our cost base and help ensure we remain competitive while reallocating resources on a more targeted basis to invest for growth. As I've discussed, customer and consumer preferences for our products remain high, though execution in this period of macro uncertainty will be paramount to the future success of the company. We must control what we can control to continue delivering best-in-class returns on our business. This includes streamlining our organization, implementing zero-based budgeting, and strategically investing to improve productivity and strengthen our manufacturing network. But we also should not lose sight of the bigger picture. which is that Lamb Weston will be poised to deliver for our customers with an improved cost structure and operations. When our customers see increased demand in their business, we don't know exactly when that will be, but when it does happen, we have confidence that it will, and we will be well-positioned to win when it does. I'll now turn it over to Bernadette to review the fourth quarter and fiscal year performance and walk through our outlook.