Lamb Weston Holdings, Inc. (NYSE:LW) Q1 2024 Earnings Call Transcript

Bernadette Madarieta: Yes. So we feel really good about EMEA performance. We have not given the prior year comp because as you know the EMEA sales were not reported in the prior year in our sales number. It was recorded in our equity-method earnings. But our estimates is largely in line for the remainder of the year at the run rate that we saw for EMEA in Q4 and Q1 from a sales perspective of about $360 million.

Adam Samuelson: Okay. All right. I appreciate that color. I will pass it on. Thanks.

Operator: We will now take our next question from Matt Smith with Stifel.

Matt Smith: Hi. Good morning.

Tom Werner: Good morning.

Matt Smith: I wanted to ask about the impact of walking away from low-margin contracts in this mix management you have been pursuing. That’s weight on volumes over the past couple of quarters, and you mentioned that the actions in the International segment and the US segment will be fully lapped by the fourth quarter. So, do you expect to be in a position to be growing volumes as you exit this year? Meaning you’ve lapped those — you’ve lapped the drag from walking away from those contracts and you’ve made some progress on the backfill with higher margin business?

Tom Werner: Yes. Matt, I fully expect as I said earlier that, in the back half of the year we should start to see positive volume trends and that’s a function of lapping the exited business, but also we have line-of-sight to additional business that we are going to start to backfill with, and it takes time, but I fully expect based on how we’ve got the business forecast and the opportunities we have that we are going to start seeing positive volume trends in the back half.

Matt Smith: Okay. Thank you for that. And maybe if I could ask one more question here. You mentioned that the capacity in China came online in the quarter. Do you have any update to the timing for the American Falls facility? Is that still expected to be on time for beginning production early in 2024?

Tom Werner: Yes. We still expect in the late spring of 2024, early summer for American Falls to transition to our vertical start-up and it takes some time to get the plant up and running, but absolutely, late spring or early summer.

Matt Smith: Thank you, Tom. I’ll leave it there, and pass it on.

Tom Werner: Thanks.

Operator: We will now take our next question from Rob Dickerson with Jefferies.

Tom Werner: Hey, Rob, you might be on mute.

Operator: Due to no response, we’ll move on to —

Tom Werner: We’ll move on to next the question.

Operator: Would you like to move on?

Tom Werner: Yes, please.

Operator: Okay. We will now move on to Robert Moskow with TD Cowen.

Robert Moskow: Yes. Hi there. Thanks for the question.

Bernadette Madarieta: Good morning.

Robert Moskow: I hate to keep the magnifying glass on volume, but Tom, when you talk about positive volume in the back half, the way we had modeled it was that the easy comparisons to the volume you walked away from really started in size in fourth and not in third. So, is that correct? And if so, can we expect positive volume in third as well even though the volume you walked away from may not have been as much?

Bernadette Madarieta: Yes.

Tom Werner: Go ahead, Bernadette. Go.

Bernadette Madarieta: As it relates to the volume in our North America segment, I think I alluded to the fact that we started to walk away from that in third and fourth quarter. In our International segment, we started to see the effect of what we exited in the fourth quarter of last year. So, as we said, we do expect to see volume continue to improve both as we lap that business we exited and as we bring on new business.