Lamb Weston Holdings, Inc. Bank of America SMID Cap Virtual Conference

Well, first, Peter, thanks for having us. We appreciate the opportunity to connect. I think maybe coming out of the Q4 year-end, it was important to understand how maybe solid the performance in North America was, and then also really update everyone on how the challenges with the Middle East and just changes in cost of oil and shipment disruption was impacting our EMEA business as part of international. Maybe just for modeling purposes, the only thing I would probably say is just remind everybody that fiscal year 2026 was 53 weeks. Then we were trying to be pretty diligent in giving you estimates of what 2026 would look like if it was restated on a 52-week basis, and then our guidance is from there. Right? As people come to know me at Lamb Weston, I tend to like kind of growth rates, and/or margin expansion type of guidance because I think it's more indicative of the underlying drivers of the business.

Our guidance was really shaped on 52-week 2026 as a base.

Yeah, I think initially just outside in, you are attracted to the business because of just the tremendous margin structure that exists across the entire food supply chain. What the consumer enjoys in terms of a french fry product versus what a food service operator or a restaurant earns in terms of margin, the simplicity of the product in terms of making it in the back room of the kitchen. Then, honestly, the arbitrage that the french fry processors make and then also the farmers, right? It is a relatively rewarding crop to grow. So that is initially you can kind of look at that and say, "Well, that is pretty exciting." What is really more here that I have learned as I have been here for the first 4 months was just really enduring customer relationships.

Lamb really has demonstrated a lot of global leadership with some of the biggest and most challenging customers, and shown time and time again an ability to succeed both in delivering quality, just consistency of service, delivering innovation. We will talk a little bit more about those. I think the second piece is just a really resilient supply chain and a really pretty strong manufacturing cost position, especially in North America. Really have come to believe that given the setup in terms of the Columbia Basin in Idaho where the potatoes grow, the concentration of our manufacturing assets and the way that they have matured over time through really focused CapEx investment to get the utilization right, and then the ability to distribute frozen product throughout North America. Those three things come together and they really do lend to themselves to a strong cost position.

Then maybe the piece that is also interesting is just I think there is some real breathing space around growth. Whether it is innovation in existing customers. Mike Smith has talked a lot about there is a whole bunch of restaurants that actually do not have fryers and do not have refrigeration, and yet there is some really interesting things that we can do in innovation when we think about air fryer penetration in households. So, how can we think about the product? Obviously, you always have to deliver it food safe, with some type of kill step in there, but the breathing space around growth is pretty cool. Whether that is, and I am talking North America, but also obviously internationally, and we are in the midst of that too.

Those have been kind of the three, maybe more kind of positive surprises that after kind of getting your feet wet a little bit, that I have come to known about Lamb Weston.

Well, I think the challenge is that, some of the folks on the call know, there's constant between, you have a product that Mother Nature gives you every year, and you're going to have variability in that. How can you reduce that variability? How can you mitigate some of that volatility to really get towards more of a consistent profit stream that you all of the people attending here love and kind of want to come and predict. I think that takes real agility. It takes some building some competencies across the management team and how we do stuff and how we look at the business. That's always going to be ongoing, whether you're in any type of food product that, whether it's dairy, ag, animal protein, et cetera.

I think the other piece here that is, maybe, I think it was kind of a perceived challenge. I think it comes away as a negative sometimes when it's way overblown, but it's like we're constantly looking at SAP and our different systems and making sure that we're getting the most out of our applications. How are we using AI within those systems in order to just see our market space better, make the more informed decisions, and reduce costs as we go forward. I think Lamb Weston has a better toolkit than they're given credit for. But we got to continue to work that.

Yeah. Well, having I think time to reflect on that and really, let's sort of put ourselves in what has been the situation with a lot of food companies. You come out of COVID, you have this amazing consumer demand bounce back, 2021, 2022. Supply chains tightened up in a lot of places. There was a lot of demand. It wasn't just in the U.S., it was really globally, right? It really taxed and honestly, I think one of the ways that companies that supply food products had to rationalize was through price. You did see a lot of price increase in 2023, 2024. I think that we've come back off of that. I think that the grocery basket got expensive for consumers. That's often a reference point. The cost of dining out really jumped up.