SEGMENTS

3 Months Ended

Aug. 27, 2023

SEGMENTS

SEGMENTS

12.    SEGMENTS

Effective May 29, 2023, to align with our expanded global footprint following the completion of the LW EMEA Acquisition, management, including our chief executive officer (who is our chief operating decision maker), began managing operations in two business segments based on management’s change to the way it monitors performance, aligns strategies, and allocates resources. As a result of this change, we now have two operating segments, each of which is a reportable segment: North America and International. Our chief operating decision maker receives periodic management reports under this structure, which, as discussed above, informs operating decisions, performance assessment, and resource allocation decisions at the segment level. These reportable segments are each managed by a general manager and supported by a cross functional team assigned to support the segment.

	Thirteen Weeks Ended
	August 27,		August 28,
(in millions)	2023		2022
Segment net sales
North America	$	1,135.4	$	955.6
International (a)		529.9		170.0
	$	1,665.3	$	1,125.6

Thirteen Weeks Ended August 27, 2023		North America		International (a)		Unallocated Corporate Costs (c)		Total Company
Adjusted EBITDA	$	379.4	$	89.6	$	(56.2)	$	412.8
Unrealized derivative losses (gains)		—		—		(27.3)		(27.3)
Foreign currency exchange losses		—		—		7.4		7.4
Items impacting comparability:
Inventory step-up from acquisition		—		22.5		—		22.5
Integration and acquisition-related items, net		—		—		4.0		4.0
Depreciation and amortization (d)		43.7		26.2		0.9		70.8
Income (loss) from operations including equity method investment earnings	$	335.7	$	40.9	$	(41.2)		335.4
Interest expense, net								30.7
Income tax expense								69.9
Net income							$	234.8

Thirteen Weeks Ended August 28, 2022
Adjusted EBITDA	$	231.8	$	33.1	$	(30.3)	$	234.6
Unrealized derivative losses		—		—		4.0		4.0
Foreign currency exchange losses		—		—		1.0		1.0
Unconsolidated joint venture unrealized derivative losses (gains)		—		—		(144.5)		(144.5)
Item impacting comparability:
Gain on acquisition of interest in joint ventures (b)		—		(15.1)		—		(15.1)
Depreciation and amortization (d)		41.3		15.8		0.5		57.6
Income from operations including equity method investment earnings	$	190.5	$	32.4	$	108.7		331.6
Interest expense, net								26.0
Income tax expense								73.7
Net income							$	231.9

(a) We acquired the remaining interest in LW EMEA in the fourth quarter of fiscal 2023. Accordingly, LW EMEA’s adjusted EBITDA is reported in the International segment for the thirteen weeks ended August 27, 2023, whereas in the same period in the prior year, our 50% equity interest in LW EMEA was recorded using equity method accounting. As a result, only 50% of LW EMEA’s adjusted EBITDA is reported in the International segment for the thirteen weeks ended August 28, 2022.  

(b) The thirteen weeks ended August 28, 2022 included a $15.1 million (before and after-tax) gain recognized in connection with our acquisition of an additional 40% equity interest in Lamb Weston Alimentos Modernos S.A. (“LWAMSA”) in July 2022. This gain related to remeasuring our previously held 50% equity interest to fair value, recorded in “Equity method investment earnings” in the Consolidated Statements of Earnings, and is excluded from the financial results of our International segment.

(c) Unallocated corporate costs included costs related to corporate support staff and support services, foreign exchange gains and losses and unrealized mark-to-market derivative gains and losses. Support services include, but are not limited to, our administrative, information technology, human resources, finance, and accounting functions that are not specifically allocated to the segments.

Unallocated corporate costs for the thirteen weeks ended August 27, 2023 included unallocated corporate costs of LW EMEA whereas in the same period in the prior year, our portion of LW EMEA’s unallocated corporate costs were recorded in “Equity method investment earnings” in the International segment

(d) Depreciation and amortization included interest expense, income tax expense, and depreciation and amortization from equity method investments of $2.2 million and $8.9 million for the thirteen weeks ended August 27, 2023 and August 28, 2022, respectively.