EAGLE, IDAHO — A focus on customers and success within the company’s supply chain and commercial teams helped lift full-year results at Lamb Weston Holdings, Inc.
Net income in the year ended May 27 totaled $416.8 million, equal to $2.83 per share on the common stock, up 28% from $326.9 million, or $2.22 per share, in fiscal 2017.
Sales for fiscal 2018 were $3,423.7 million, up 8% from $3,168 million in the same period a year ago.
“We’re pleased with our strong performance in the quarter and for the full year, and feel good about the operating momentum that we’ve built,” said Tom Werner, president and chief executive officer. “Our financial results reflect the favorable operating environment that we’ve enjoyed over the last couple of years. They also reflect our continued focus on delivering on our strategic and operational objectives through an ongoing commitment to support our customers’ growth by investing in additional capacity, maintaining high levels of service, and developing innovative products and limited time offerings.
“For fiscal year 2019, we anticipate the operating environment will remain generally favorable, with continued solid global demand growth for frozen potato products and high processing capacity utilization levels in North America. As a result, we’re targeting another year of strong sales growth, driven by a good balance of higher price/mix and volume. We also expect to deliver another year of solid earnings growth by offsetting input, manufacturing and distribution cost inflation, while significantly stepping up investments to improve operating efficiency and drive growth over the long term. By continuing to support our customers’ growth and executing our strategies, we believe that we remain well-positioned to create value for our shareholders in fiscal 2019 and beyond.”
Lamb Weston’s Global segment generated $1,744.2 million in sales during fiscal 2018, a 7% increase over the same period of the previous year.
“In our Global segment, we continue to focus on our traditional customer base of chain restaurants to drive domestic growth,” Mr. Werner said during a July 25 conference call with analysts. “We successfully renewed contracts for a large portion of our North America volume based, including implementing new pricing structures and partnering with customers to drive growth through limited time offerings and innovation. Going forward, we’ll continue to support customer growth across North America and in fast-growing international markets, like China and Southeast Asia, while expanding our innovation focus to increasingly include nontraditional outlets, such as convenience stores, sandwich and bakery concepts.”
Retail sales grew 17% in fiscal 2018 to $449.2 million, and volume was up 122%.
“In Retail, we drove category growth and gained market share by leveraging our three-tier strategy of offering premium Alexia-branded, mainstream-branded and private label products,” Mr. Werner said. “At the beginning of our fiscal year, we launched our new mainstream brand, Grown In Idaho. Today, Grown In Idaho has an ACV (all-commodity volume) of nearly 85% in the grocery channel and total market share of about 4%. In addition, our Alexia-branded and licensed brand products have increased share over the past year.”
Lamb Weston’s Foodservice segment saw sales rise 7% to $1,099.1 million.
“In our Foodservice segments, we’ve taken steps to align resources to build and strengthen relationships across our Foodservice customer base, including our distributor partners, small and regional restaurant chains, and independent restaurants,” Mr. Werner said. “Most notably, over the past few months, we’ve expanded our direct sales force and eliminated our remaining broker relationships. We’ve completed hiring a new sales and support team that hit the ground running as we transitioned to a direct sales model in June.”
Looking ahead to fiscal 2019, Lamb Weston said it expects adjusted EBITDA in the range of $860 million to $870 million and net sales to grow mid-single digits. Cash used for capital expenditures is projected at approximately $360 million, excluding acquisitions, of which approximately $200 million is related to completing the construction of the company’s 300-million-lb french fry production line in Hermiston, Ore.