10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 26, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to

Commission File Number: 1-37830

LAMB WESTON HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware	61-1797411
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
599 S. Rivershore Lane Eagle, Idaho	83616
(Address of principal executive offices)	(Zip Code)

(208) 938-1047

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 par value	LW	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐    No ☒

As of December 28, 2023, the Registrant had 144,372,498 shares of common stock, par value $1.00 per share, outstanding.

Table of Contents

Part I. FINANCIAL INFORMATION
	Item 1	Financial Statements (Unaudited)
		Consolidated Statements of Earnings	3
		Consolidated Statements of Comprehensive Income	4
		Consolidated Balance Sheets	5
		Consolidated Statements of Stockholders’ Equity	6
		Consolidated Statements of Cash Flows	7
		Condensed Notes to Consolidated Financial Statements (Unaudited)	8
	Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	18
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	28
	Item 4	Controls and Procedures	29
Part II. OTHER INFORMATION			29
	Item 1	Legal Proceedings	29
	Item 1A	Risk Factors	30
	Item 2	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	30
	Item 3	Defaults Upon Senior Securities	30
	Item 4	Mine Safety Disclosures	30
	Item 5	Other Information	30
	Item 6	Exhibits	31
Signature			32

2

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (Unaudited)

Lamb Weston Holdings, Inc.

Consolidated Statements of Earnings

(unaudited, in millions, except per share amounts)

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 26,		November 27,		November 26,		November 27,
	2023		2022		2023		2022
Net sales	$	1,732.1	$	1,276.5	$	3,397.4	$	2,402.1
Cost of sales		1,256.5		894.9		2,422.3		1,747.2
Gross profit		475.6		381.6		975.1		654.9
Selling, general and administrative expenses		170.0		109.8		346.2		226.1
Income from operations		305.6		271.8		628.9		428.8
Interest expense, net		29.1		24.6		59.8		50.6
Income before income taxes and equity method earnings		276.5		247.2		569.1		378.2
Income tax expense		66.2		36.8		136.1		110.5
Equity method investment earnings (loss)		4.7		(107.3)		16.8		67.3
Net income	$	215.0	$	103.1	$	449.8	$	335.0
Earnings per share:
Basic	$	1.48	$	0.72	$	3.10	$	2.33
Diluted	$	1.48	$	0.71	$	3.08	$	2.32
Weighted average common shares outstanding:
Basic		144.9		144.0		145.3		144.0
Diluted		145.5		144.6		146.0		144.6

See Condensed Notes to Consolidated Financial Statements.

3

Lamb Weston Holdings, Inc.

Consolidated Statements of Comprehensive Income

(unaudited, in millions)

	Thirteen Weeks Ended						Thirteen Weeks Ended
	November 26, 2023						November 27, 2022
			Tax						Tax
	Pre-Tax		(Expense)		After-Tax		Pre-Tax		(Expense)		After-Tax
	Amount		Benefit		Amount		Amount		Benefit		Amount
Net income	$	281.2	$	(66.2)	$	215.0	$	139.9	$	(36.8)	$	103.1
Other comprehensive income (loss):
Unrealized pension and post-retirement benefit obligations loss		(0.2)		0.1		(0.1)		—		—		—
Unrealized currency translation gains (losses)		30.5		(0.7)		29.8		(16.1)		0.5		(15.6)
Other		(0.2)		—		(0.2)		0.3		(0.1)		0.2
Comprehensive income	$	311.3	$	(66.8)	$	244.5	$	124.1	$	(36.4)	$	87.7

	Twenty-Six Weeks Ended						Twenty-Six Weeks Ended
	November 26, 2023						November 27, 2022
			Tax						Tax
	Pre-Tax		(Expense)		After-Tax		Pre-Tax		(Expense)		After-Tax
	Amount		Benefit		Amount		Amount		Benefit		Amount
Net income	$	585.9	$	(136.1)	$	449.8	$	445.5	$	(110.5)	$	335.0
Other comprehensive income (loss):
Unrealized pension and post-retirement benefit obligations loss		(0.4)		0.1		(0.3)		—		—		—
Unrealized currency translation gains (losses)		31.3		(0.3)		31.0		(47.8)		1.5		(46.3)
Other		(0.2)		—		(0.2)		0.5		(0.1)		0.4
Comprehensive income	$	616.6	$	(136.3)	$	480.3	$	398.2	$	(109.1)	$	289.1

See Condensed Notes to Consolidated Financial Statements.

4

Lamb Weston Holdings, Inc.

Consolidated Balance Sheets

(unaudited, in millions, except share data)

	November 26,		May 28,
	2023		2023
ASSETS
Current assets:
Cash and cash equivalents	$	78.3	$	304.8
Receivables, less allowance for doubtful accounts of $2.4 and $2.6		766.2		724.2
Inventories		1,153.6		932.0
Prepaid expenses and other current assets		82.8		166.2
Total current assets		2,080.9		2,127.2
Property, plant and equipment, net		3,173.6		2,808.0
Operating lease assets		140.0		146.1
Goodwill		1,065.1		1,040.7
Intangible assets, net		109.1		110.2
Other assets		476.6		287.6
Total assets	$	7,045.3	$	6,519.8
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	$	294.3	$	158.5
Current portion of long-term debt and financing obligations		55.0		55.3
Accounts payable		834.5		636.6
Accrued liabilities		434.0		509.8
Total current liabilities		1,617.8		1,360.2
Long-term liabilities:
Long-term debt and financing obligations, excluding current portion		3,252.5		3,248.4
Deferred income taxes		260.3		252.1
Other noncurrent liabilities		247.0		247.8
Total long-term liabilities		3,759.8		3,748.3
Commitments and contingencies
Stockholders’ equity:
Common stock of $1.00 par value, 600,000,000 shares authorized; 150,694,839 and 150,293,511 shares issued		150.7		150.3
Treasury stock, at cost, 6,326,519 and 4,627,828 common shares		(479.4)		(314.3)
Additional distributed capital		(535.9)		(558.6)
Retained earnings		2,528.6		2,160.7
Accumulated other comprehensive income (loss)		3.7		(26.8)
Total stockholders’ equity		1,667.7		1,411.3
Total liabilities and stockholders’ equity	$	7,045.3	$	6,519.8

See Condensed Notes to Consolidated Financial Statements.

5

Lamb Weston Holdings, Inc.

Consolidated Statements of Stockholders’ Equity
(unaudited, in millions, except share data)

	Thirteen Weeks Ended November 26, 2023 and November 27, 2022
							Additional				Accumulated
	Common Stock,		Common		Treasury		Paid-in				Other		Total
	net of Treasury		Stock		Stock		(Distributed)		Retained		Comprehensive		Stockholders’
	Shares		Amount		Amount		Capital		Earnings		Income (Loss)		Equity
Balance at August 27, 2023		144,926,900	$	150.7	$	(427.8)	$	(548.7)	$	2,354.6	$	(25.8)	$	1,503.0
Dividends declared, $0.280 per share		—		—		—		—		(40.4)		—		(40.4)
Common stock issued		15,679		—		—		(0.2)		—		—		(0.2)
Stock-settled, stock-based compensation expense		—		—		—		12.3		—		—		12.3
Repurchase of common stock and common stock withheld to cover taxes		(574,259)		—		(50.8)		—		—		—		(50.8)
Other		—		—		(0.8)		0.7		(0.6)		—		(0.7)
Comprehensive income		—		—		—		—		215.0		29.5		244.5
Balance at November 26, 2023		144,368,320	$	150.7	$	(479.4)	$	(535.9)	$	2,528.6	$	3.7	$	1,667.7
Balance at August 28, 2022		143,830,587	$	148.3	$	(297.1)	$	(796.9)	$	1,501.8	$	(46.1)	$	510.0
Dividends declared, $0.245 per share		—		—		—		—		(35.3)		—		(35.3)
Common stock issued		44,008		—		—		1.1		—		—		1.1
Stock-settled, stock-based compensation expense		—		—		—		10.0		—		—		10.0
Repurchase of common stock and common stock withheld to cover taxes		(4,286)		—		(0.4)		—		—		—		(0.4)
Other		—		—		—		0.3		(0.4)		—		(0.1)
Comprehensive income (loss)		—		—		—		—		103.1		(15.4)		87.7
Balance at November 27, 2022		143,870,309	$	148.3	$	(297.5)	$	(785.5)	$	1,569.2	$	(61.5)	$	573.0

	Twenty-Six Weeks Ended November 26, 2023 and November 27, 2022
							Additional				Accumulated
	Common Stock,		Common		Treasury		Paid-in				Other		Total
	net of Treasury		Stock		Stock		(Distributed)		Retained		Comprehensive		Stockholders’
	Shares		Amount		Amount		Capital		Earnings		Income (Loss)		Equity
Balance at May 28, 2023		145,665,683	$	150.3	$	(314.3)	$	(558.6)	$	2,160.7	$	(26.8)	$	1,411.3
Dividends declared, $0.560 per share		—		—		—		—		(81.2)		—		(81.2)
Common stock issued		401,328		0.4		—		(0.2)		—		—		0.2
Stock-settled, stock-based compensation expense		—		—		—		22.2		—		—		22.2
Repurchase of common stock and common stock withheld to cover taxes		(1,698,691)		—		(164.3)		—		—		—		(164.3)
Other		—		—		(0.8)		0.7		(0.7)		—		(0.8)
Comprehensive income		—		—		—		—		449.8		30.5		480.3
Balance at November 26, 2023		144,368,320	$	150.7	$	(479.4)	$	(535.9)	$	2,528.6	$	3.7	$	1,667.7
Balance at May 29, 2022		144,071,428	$	148.0	$	(264.1)	$	(813.3)	$	1,305.5	$	(15.6)	$	360.5
Dividends declared, $0.490 per share		—		—		—		—		(70.5)		—		(70.5)
Common stock issued		285,399		0.3		—		1.3		—		—		1.6
Stock-settled, stock-based compensation expense		—		—		—		17.6		—		—		17.6
Repurchase of common stock and common stock withheld to cover taxes		(486,518)		—		(33.4)		—		—		—		(33.4)
Other		—		—		—		8.9		(0.8)		—		8.1
Comprehensive income (loss)		—		—		—		—		335.0		(45.9)		289.1
Balance at November 27, 2022		143,870,309	$	148.3	$	(297.5)	$	(785.5)	$	1,569.2	$	(61.5)	$	573.0

See Condensed Notes to Consolidated Financial Statements.

6

Lamb Weston Holdings, Inc.

Consolidated Statements of Cash Flows

(unaudited, in millions)

	Twenty-Six Weeks Ended
	November 26,		November 27,
	2023		2022
Cash flows from operating activities
Net income	$	449.8	$	335.0
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangibles and debt issuance costs		140.7		102.0
Stock-settled, stock-based compensation expense		22.2		17.6
Equity method investment earnings in excess of distributions		(11.3)		(67.6)
Deferred income taxes		5.8		(6.8)
Foreign currency remeasurement gain		(0.1)		(16.8)
Other		(1.3)		(13.2)
Changes in operating assets and liabilities, net of acquisitions:
Receivables		(35.2)		(54.8)
Inventories		(216.0)		(240.1)
Income taxes payable/receivable, net		27.6		24.8
Prepaid expenses and other current assets		68.8		52.7
Accounts payable		96.1		140.6
Accrued liabilities		(91.9)		14.6
Net cash provided by operating activities	$	455.2	$	288.0
Cash flows from investing activities
Additions to property, plant and equipment		(507.6)		(232.9)
Additions to other long-term assets		(58.9)		(37.4)
Acquisition of interests in joint venture, net		—		(42.3)
Acquisition of business, net of cash acquired		(11.2)		—
Other		6.9		1.6
Net cash used for investing activities	$	(570.8)	$	(311.0)
Cash flows from financing activities
Proceeds from short-term borrowings, net		133.7		—
Proceeds from issuance of debt		28.4		23.3
Repayments of debt and financing obligations		(27.7)		(16.7)
Dividends paid		(81.6)		(70.6)
Repurchase of common stock and common stock withheld to cover taxes		(164.3)		(34.9)
Other		(0.5)		2.3
Net cash used for financing activities	$	(112.0)	$	(96.6)
Effect of exchange rate changes on cash and cash equivalents		1.1		14.0
Net decrease in cash and cash equivalents		(226.5)		(105.6)
Cash and cash equivalents, beginning of period		304.8		525.0
Cash and cash equivalents, end of period	$	78.3	$	419.4

See Condensed Notes to Consolidated Financial Statements.

7

Lamb Weston Holdings, Inc.

Condensed Notes to Consolidated Financial Statements

(Unaudited)

1.    NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Lamb Weston Holdings, Inc. (“we,” “us,” “our,” the “Company,” or “Lamb Weston”) is a leading global producer, distributor, and marketer of value-added frozen potato products and is headquartered in Eagle, Idaho. Beginning in fiscal 2024, in connection with our recent acquisitions and to align with our expanded global footprint, we began managing our operations in two reportable segments: North America and International. See Note 12, Segments, for additional information on our reportable segments.

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements present the financial results of Lamb Weston and its consolidated subsidiaries for the thirteen and twenty-six weeks ended November 26, 2023 and November 27, 2022, and have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America (“U.S.”).

These consolidated financial statements are unaudited and include all adjustments that we consider necessary for a fair presentation of such financial statements and consist only of normal recurring adjustments. The preparation of financial statements involves the use of estimates and accruals. The actual results that we experience may differ materially from those estimates. Results for interim periods should not be considered indicative of results for our full fiscal year, which ends the last Sunday in May.

These financial statements and related condensed notes should be read together with the consolidated financial statements and notes in our Annual Report on Form 10-K for the fiscal year ended May 28, 2023 (the “Form 10-K”), where we include additional information on our critical accounting estimates, policies, and the methods and assumptions used in our estimates. We filed the Form 10-K with the Securities and Exchange Commission (“SEC”) on July 25, 2023.

Certain amounts from prior period consolidated financial statements have been reclassified to conform with current period presentation.

Accounting Pronouncements Not Yet Adopted

In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06, Disclosure Improvements: Codification Amendments in Response to the Securities and Exchange Commission’s Disclosure Update and Simplification Initiative. The amendments in this update modify the disclosure or presentation requirements of a variety of Topics in the Accounting Standards Codification (“ASC”) in response to the SEC’s Release No. 33-10532, Disclosure Update and Simplification Initiative, and align the ASC’s requirements with the SEC’s regulations. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective. Early adoption is prohibited. We do not expect the adoption of this ASU to have a material impact on our consolidated financial statements and related disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The ASU is effective for our Annual Report on Form 10-K for the fiscal year ending May 25, 2025, and subsequent interim periods, with early adoption permitted. We are evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures.

8

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance transparency and decision usefulness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, on a prospective basis, with early adoption permitted. We are evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures.

There were no other accounting pronouncements recently issued that had or are expected to have a material impact on our consolidated financial statements.

2.    EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per common share for the periods presented:

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 26,		November 27,		November 26,		November 27,
(in millions, except per share amounts)	2023		2022		2023		2022
Numerator:
Net income	$	215.0	$	103.1	$	449.8	$	335.0
Denominator:
Basic weighted average common shares outstanding		144.9		144.0		145.3		144.0
Add: Dilutive effect of employee incentive plans (a)		0.6		0.6		0.7		0.6
Diluted weighted average common shares outstanding		145.5		144.6		146.0		144.6
Earnings per share:
Basic	$	1.48	$	0.72	$	3.10	$	2.33
Diluted	$	1.48	$	0.71	$	3.08	$	2.32

(a) Potential dilutive shares of common stock under employee incentive plans are determined by applying the treasury stock method to the assumed exercise of outstanding stock options and the assumed vesting of outstanding restricted stock units and performance awards. As of November 26, 2023, 0.7 million shares of stock-based awards were excluded from the computation of diluted earnings per share because they would be antidilutive. As of November 27, 2022, 0.6 million shares of stock-based awards were excluded from the computation of diluted earnings per share because they would be antidilutive.

3.    INCOME TAXES

Income tax expense for the thirteen and twenty-six weeks ended November 26, 2023 and November 27, 2022 was as follows:

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 26,		November 27,		November 26,		November 27,
(in millions)	2023		2022		2023		2022
Income before income taxes and equity method earnings	$	276.5	$	247.2	$	569.1	$	378.2
Equity method investment earnings (loss)		4.7		(107.3)		16.8		67.3
Income tax expense		66.2		36.8		136.1		110.5
Effective tax rate (a)		23.5%		26.3%		23.2%		24.8%

(a) The effective income tax rate is calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings. The effective tax rate varies from the U.S. statutory tax rate of 21% principally due to the impact of U.S. state taxes, foreign taxes and currency, permanent differences, and discrete items.

Income Taxes Paid

Income taxes paid, net of refunds, were $101.1 million and $92.1 million during the twenty-six weeks ended November 26, 2023 and November 27, 2022, respectively.

9

4.    INVENTORIES

Inventories are valued at the lower of cost (determined using the first-in, first-out method) or net realizable value and include all costs directly associated with manufacturing products: materials, labor, and manufacturing overhead. The components of inventories were as follows:

	November 26,		May 28,
(in millions)	2023		2023
Raw materials and packaging	$	337.2	$	145.7
Finished goods		732.0		708.3
Supplies and other		84.4		78.0
Inventories	$	1,153.6	$	932.0

5.    PROPERTY, PLANT AND EQUIPMENT

The components of property, plant and equipment were as follows:

	November 26,		May 28,
(in millions)	2023		2023
Land and land improvements	$	169.2	$	163.2
Buildings, machinery and equipment		3,915.0		3,576.6
Furniture, fixtures, office equipment and other		120.0		112.0
Construction in progress		972.5		832.0
Property, plant and equipment, at cost		5,176.7		4,683.8
Less accumulated depreciation		(2,003.1)		(1,875.8)
Property, plant and equipment, net	$	3,173.6	$	2,808.0

Depreciation expense was $66.5 million and $49.7 million for the thirteen weeks ended November 26, 2023 and November 27, 2022, respectively; and $132.4 million and $97.0 million for the twenty-six weeks ended November 26, 2023 and November 27, 2022, respectively. At November 26, 2023 and May 28, 2023, purchases of property, plant and equipment included in accounts payable were $188.7 million and $82.6 million, respectively.

Interest capitalized within construction in progress for the thirteen weeks ended November 26, 2023 and November 27, 2022, was $13.0 million and $4.1 million, respectively; and $23.5 million and $6.1 million for the twenty-six weeks ended November 26, 2023 and November 27, 2022, respectively.

6.    GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

The following table presents changes in goodwill balances, by segment, for the twenty-six weeks ended November 26, 2023:

(in millions)	North America		International		Total
Balance at May 28, 2023 (a)	$	722.4	$	318.3	$	1,040.7
Acquisition		—		8.5		8.5
Foreign currency translation adjustment		10.1		5.8		15.9
Balance at November 26, 2023	$	732.5	$	332.6	$	1,065.1

(a) As a result of our change in segments, effective May 29, 2023, goodwill was reassigned to the North America and International segments based on relative fair value using a market-based approach. Before and after the reassignment of our goodwill, we completed impairment assessments and concluded there were no indications of impairment in our segments.  See Note 12, Segments, for more information related to the change in segments.  

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Other identifiable intangible assets were as follows:

	November 26, 2023							May 28, 2023
	Weighted							Weighted
	Average	Gross						Average	Gross
	Useful Life	Carrying		Accumulated		Intangible		Useful Life	Carrying		Accumulated		Intangible
(in millions, except useful lives)	(in years)	Amount		Amortization		Assets, Net		(in years)	Amount		Amortization		Assets, Net
Non-amortizing intangible assets (a)	n/a	$	18.0	$	—	$	18.0	n/a	$	18.0	$	—	$	18.0
Amortizing intangible assets (b)	14		124.2		(33.1)		91.1	14		121.4		(29.2)		92.2
		$	142.2	$	(33.1)	$	109.1		$	139.4	$	(29.2)	$	110.2

(a) Non-amortizing intangible assets represent brands and trademarks.

(b) Amortizing intangible assets are principally composed of licensing agreements, brands, and customer relationships. Amortization expense, including developed technology amortization expense, was $2.6 million and $1.5 million for the thirteen weeks ended November 26, 2023 and November 27, 2022, respectively; and $5.3 million and $2.9 million for the twenty-six weeks ended November 26, 2023 and November 27, 2022, respectively. Foreign intangible assets are affected by foreign currency translation.

7.    OTHER ASSETS

The components of other assets were as follows:

	November 26,		May 28,
(in millions)	2023		2023
Capitalized software costs	$	227.5	$	175.4
Property, plant and equipment deposits		159.4		30.5
Equity method investments		54.6		43.5
Other		35.1		38.2
Other assets	$	476.6	$	287.6

8.   ACCRUED LIABILITIES

The components of accrued liabilities were as follows:

	November 26,		May 28,
(in millions)	2023		2023
Compensation and benefits	$	115.6	$	187.5
Accrued trade promotions		79.3		86.1
Dividends payable to shareholders		40.4		40.8
Taxes payable		36.5		21.2
Accrued interest		31.6		31.1
Current portion of operating lease obligations		28.1		28.5
Derivative liabilities and payables		23.6		53.9
Plant utilities and accruals		21.0		27.2
Other		57.9		33.5
Accrued liabilities	$	434.0	$	509.8

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9.   DEBT AND FINANCING OBLIGATIONS

The components of our debt, including financing obligations, were as follows:

(in millions)	November 26, 2023				May 28, 2023
		Amount	Interest Rate			Amount	Interest Rate
Short-term borrowings:
U.S. revolving credit facility	$	175.0	6.682	%	$	—	7.710	%
Euro revolving credit facility		98.5	4.695			149.2	4.230
Other credit facilities		23.5	(a)			11.4	(a)
		297.0				160.6
Long-term debt:
Term A-1 loan facility, due June 2026 (b)		236.2	7.203			243.8	5.210
Term A-2 loan facility, due April 2025 (b)		272.2	7.203			280.3	5.380
Term A-3 loan facility, due January 2030 (b)		438.8	7.353			450.0	6.850
RMB loan facility, due February 2027		122.3	4.545			94.7	4.600
Euro loan facility, due December 2024		82.0	4.101			80.4	2.010
4.875% senior notes, due May 2028		500.0	4.875			500.0	4.875
4.125% senior notes, due January 2030		970.0	4.125			970.0	4.125
4.375% senior notes, due January 2032		700.0	4.375			700.0	4.375
		3,321.5				3,319.2
Financing obligations:
Lease financing obligations due on various dates through 2040		6.9				7.7
Total debt and financing obligations		3,625.4				3,487.5
Debt issuance costs and debt discounts (c)		(23.6)				(25.3)
Short-term borrowings, net of debt discounts		(294.3)				(158.5)
Current portion of long-term debt and financing obligations		(55.0)				(55.3)
Long-term debt and financing obligations, excluding current portion	$	3,252.5			$	3,248.4

(a) Other credit facilities consist of several short-term facilities at one of our subsidiaries used for working capital needs and have various interest rates.

(b) The interest rates on the Term A-1, A-2, and A-3 loans do not include anticipated patronage dividends. We have received and expect to continue receiving patronage dividends under all three term loan facilities.

(c) Excludes debt issuance costs of $2.1 million and $2.5 million as of November 26, 2023 and May 28, 2023, respectively, related to our U.S. revolving credit facility, which are recorded in “Other assets” on our Consolidated Balance Sheets.

As of November 26, 2023, we had $175.0 million of borrowings outstanding under our U.S. revolving credit facility and $819.6 million of availability under the facility, which is net of outstanding letters of credit of $5.4 million.

For the twenty-six weeks ended November 26, 2023 and November 27, 2022, we paid $89.4 million and $76.6 million of interest on debt, respectively.

For more information about our debt and financing obligations, interest rates, and debt covenants, see Note 8, Debt and Financing Obligations, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of the Form 10-K.

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10.   FAIR VALUE MEASUREMENTS

The fair values of cash equivalents, receivables, accounts payable, and short-term debt approximate their carrying amounts due to their short duration.

The following table presents our financial assets and liabilities measured at fair value on a recurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall:

	As of November 26, 2023
							Fair Value
							of Assets
(in millions)	Level 1		Level 2		Level 3		(Liabilities)
Derivative assets (a)	$	—	$	2.4	$	—	$	2.4
Derivative liabilities (a)		—		(21.4)		—		(21.4)
Deferred compensation liabilities (b)		—		(25.8)		—		(25.8)
Fair value, net	$	—	$	(44.8)	$	—	$	(44.8)

	As of May 28, 2023
							Fair Value
							of Assets
(in millions)	Level 1		Level 2		Level 3		(Liabilities)
Derivative assets (a)	$	—	$	3.0	$	—	$	3.0
Derivative liabilities (a)		—		(46.6)		—		(46.6)
Deferred compensation liabilities (b)		—		(22.6)		—		(22.6)
Fair value, net	$	—	$	(66.2)	$	—	$	(66.2)

(a) Derivative assets and liabilities included in Level 2 primarily represent commodity swaps, option contracts, interest rate swaps and currency contracts. The fair values of our Level 2 derivative assets were determined using valuation models that use market observable inputs including both forward and spot prices for commodities and foreign currencies. Derivative assets are presented within “Prepaid expenses and other current assets” on our Consolidated Balance Sheets and derivative liabilities are presented within “Accrued liabilities” on our Consolidated Balance Sheets.

(b) The fair values of our Level 2 deferred compensation liabilities were valued using third-party valuations, which are based on the net asset values of mutual funds in our retirement plans. While the underlying assets are actively traded on an exchange, the funds are not. Deferred compensation liabilities are primarily presented within “Other noncurrent liabilities” on our Consolidated Balance Sheets.

As of November 26, 2023, we had $2,170.0 million of fixed-rate and $1,448.5 million of variable-rate debt outstanding. Based on current market rates, the fair value of our fixed-rate debt was estimated to be $1,946.8 million. Any differences between the book value and fair value are due to the difference between the period-end market interest rate and the stated rate of our fixed-rate debt. The fair value of our variable-rate term debt approximates the carrying amount as our cost of borrowing is variable and approximates current market prices.

11.   STOCKHOLDERS’ EQUITY

Share Repurchase Program

On October 11, 2023, we announced that our Board of Directors increased our share repurchase authorization to an aggregate amount of $500.0 million, including approximately $124.0 million of remaining unused capacity under the Board’s previous share repurchase authorization. The program has no expiration date. During the thirteen weeks ended November 26, 2023, we repurchased 571,986 shares for an aggregate purchase price of $50.0 million, or a weighted-average price of $87.41 per share. During the twenty-six weeks ended November 26, 2023, we repurchased 1,564,351 shares for an aggregate purchase price of $150.0 million, or a weighted-average price of $95.89 per share. As of November 26, 2023, $450.0 million remained authorized for repurchase under the program.

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Dividends

During the twenty-six weeks ended November 26, 2023, we paid $81.6 million of cash dividends to our common stockholders. In addition, on December 1, 2023, we paid $40.4 million of cash dividends to common stockholders of record as of the close of business on November 3, 2023. On December 14, 2023, our Board of Directors declared a cash dividend of $0.36 per share of our common stock. This dividend will be paid on March 1, 2024, to common stockholders of record as of the close of business on February 2, 2024.

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss), net of taxes, as of November 26, 2023 were as follows:

	Foreign						Accumulated
	Currency		Pension and				Other
	Translation		Post-Retirement				Comprehensive
(in millions)	Gain (Loss)		Benefits		Other		Income (Loss)
Balance as of May 28, 2023	$	(27.1)	$	(0.7)	$	1.0	$	(26.8)
Other comprehensive income before reclassifications, net of tax		31.0		(0.3)		(0.2)		30.5
Net current-period other comprehensive income		31.0		(0.3)		(0.2)		30.5
Balance as of November 26, 2023	$	3.9	$	(1.0)	$	0.8	$	3.7

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12.    SEGMENTS

Effective May 29, 2023, to align with our expanded global footprint following the completion of our acquisition of the remaining 50% equity interest in Lamb-Weston/Meijer v.o.f., our former European joint venture (“LW EMEA”), 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				Twenty-Six Weeks Ended
	November 26,		November 27,		November 26,		November 27,
(in millions)	2023		2022		2023		2022
Segment net sales
North America	$	1,167.1	$	1,062.5	$	2,302.5	$	2,018.1
International (a)		565.0		214.0		1,094.9		384.0
	$	1,732.1	$	1,276.5	$	3,397.4	$	2,402.1

Thirteen Weeks Ended November 26, 2023		North America		International (a)		Unallocated Corporate Costs (b)		Total Company
Adjusted EBITDA (c)	$	321.3	$	100.2	$	(44.6)	$	376.9
Unrealized derivative losses		—		—		1.6		1.6
Foreign currency exchange gains		—		—		(9.2)		(9.2)
Items impacting comparability:
Inventory step-up from acquisition		—		(1.8)		—		(1.8)
Integration and acquisition-related items, net		—		—		4.8		4.8
Depreciation and amortization (d)		43.3		26.8		1.1		71.2
Income (loss) from operations including equity method investment earnings	$	278.0	$	75.2	$	(42.9)		310.3
Interest expense, net								29.1
Income tax expense								66.2
Net income							$	215.0

Thirteen Weeks Ended November 27, 2022
Adjusted EBITDA	$	299.6	$	60.2	$	(30.9)	$	328.9
Unrealized derivative gains		—		—		(0.4)		(0.4)
Foreign currency exchange losses		—		—		1.4		1.4
Unconsolidated joint venture unrealized derivative losses		—		—		130.1		130.1
Item impacting comparability:
Integration and acquisition-related items, net		—		—		(26.5)		(26.5)
Depreciation and amortization (d)		42.7		16.7		0.4		59.8
Income (loss) from operations including equity method investment earnings	$	256.9	$	43.5	$	(135.9)		164.5
Interest expense, net								24.6
Income tax expense								36.8
Net income							$	103.1

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Twenty-Six Weeks Ended November 26, 2023		North America		International (a)		Unallocated Corporate Costs (b)		Total Company
Adjusted EBITDA (c)	$	700.7	$	189.8	$	(100.8)	$	789.7
Unrealized derivative gains		—		—		(25.7)		(25.7)
Foreign currency exchange gains		—		—		(1.8)		(1.8)
Items impacting comparability:
Inventory step-up from acquisition		—		20.7		—		20.7
Integration and acquisition-related items, net		—		—		8.8		8.8
Depreciation and amortization (d)		87.0		53.0		2.0		142.0
Income (loss) from operations including equity method investment earnings	$	613.7	$	116.1	$	(84.1)		645.7
Interest expense, net								59.8
Income tax expense								136.1
Net income							$	449.8

Twenty-Six Weeks Ended November 27, 2022
Adjusted EBITDA	$	531.4	$	93.3	$	(61.2)	$	563.5
Unrealized derivative losses		—		—		3.6		3.6
Foreign currency exchange losses		—		—		2.4		2.4
Unconsolidated joint venture unrealized derivative gains		—		—		(14.4)		(14.4)
Items impacting comparability:
Integration and acquisition-related items, net		—		—		(26.5)		(26.5)
Gain on acquisition of interest in joint ventures (e)		—		(15.1)		—		(15.1)
Depreciation and amortization (d)		84.0		32.5		0.9		117.4
Income (loss) from operations including equity method investment earnings	$	447.4	$	75.9	$	(27.2)		496.1
Interest expense, net								50.6
Income tax expense								110.5
Net income							$	335.0

(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 and twenty-six weeks ended November 26, 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 and twenty-six weeks ended November 27, 2022.  

(b) 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 and twenty-six weeks ended November 26, 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 Consolidated Statements of Earnings in the International segment.

(c) The thirteen and twenty-six weeks ended November 26, 2023 included a $70.9 million charge ($53.9 million after-tax, or $0.37 per share) related to a write-off of excess raw potatoes. The total charge to the reporting segments was as follows: $63.3 million to the North America segment and $7.6 million to the International segment.

(d) Depreciation and amortization included interest expense, income tax expense, and depreciation and amortization from equity method investments of $2.1 million and $8.6 million for the thirteen weeks ended November 26, 2023 and November 27, 2022, respectively; and $4.3 million and $17.6 million for the twenty-six weeks ended November 26, 2023 and November 27, 2022, respectively.

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(e) The twenty-six weeks ended November 27, 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 in LWAMSA 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.

13.   COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS

We have financial commitments and obligations that arise in the ordinary course of our business. These include long-term debt, lease obligations, purchase commitments for goods and services, and legal proceedings. There have been no material changes to the commitments, contingencies, guarantees and legal proceedings disclosed in Note 14, Commitments, Contingencies, Guarantees, and Legal Proceedings, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of the Form 10-K.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations, which we refer to as “MD&A,” should be read in conjunction with our condensed consolidated financial statements and related notes included in "Financial Information" of this Quarterly Report on Form 10-Q (this “Form 10-Q”) and in “Financial Statements and Supplementary Data” of the Company's Annual Report on Form 10-K for the fiscal year ended May 28, 2023 (the “Form 10-K”), which we filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”) on July 25, 2023.

Forward-Looking Statements

This report, including the MD&A, contains forward-looking statements within the meaning of the federal securities laws. Words such as “will,” “continue,” “may,” “expect,” “would,” “believe,” “deliver,” “manage,” “anticipate,” “drive,” “leverage,” “benefit,” “increase,” “outlook,” and variations of such words and similar expressions are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements regarding our business and financial outlook and prospects, our plans, execution, capital expenditures and investments, pricing actions, cash flows, liquidity, dividends, enterprise resource planning (“ERP”) system implementation, integration of our former European joint venture, Lamb-Weston/Meijer v.o.f. (“LW EMEA”), and inflation, conditions in our industry, and the global economy. These forward-looking statements are based on management’s current expectations and are subject to uncertainties and changes in circumstances. Readers of this report should understand that these statements are not guarantees of performance or results. Many factors could affect these forward-looking statements and our actual financial results and cause them to vary materially from the expectations contained in the forward-looking statements, including those set forth in this report. These risks and uncertainties include, among other things: the availability and prices of raw materials and other commodities; labor shortages and other operational challenges; an uncertain general economic environment, including inflationary pressures and recessionary concerns, any of which could adversely impact our business, financial condition or results of operations, including the demand and prices for our products; risks associated with integrating acquired businesses, including LW EMEA; levels of labor and people-related expenses; our ability to successfully execute our long-term value creation strategies; our ability to execute on large capital projects, including construction of new production lines or facilities; difficulties, disruptions or delays in implementing new technology, including our new ERP system; the competitive environment and related conditions in the markets in which we operate; political and economic conditions of the countries in which we conduct business and other factors related to our international operations; disruptions in the global economy caused by conflicts such as the war in Ukraine and conflicts in the Middle East and the possible related heightening of our other known risks; impacts on our business due to health pandemics or other contagious outbreaks, such as the COVID-19 pandemic, including impacts on demand for our products, increased costs, disruption of supply, other constraints in the availability of key commodities and other necessary services or restrictions imposed by public health authorities or governments; disruption of our access to export mechanisms; risks associated with other possible acquisitions; our debt levels; changes in our relationships with our growers or significant customers; actions of governments and regulatory factors affecting our businesses; the ultimate outcome of litigation or any product recalls; our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends; and other risks described in our reports filed from time to time with the SEC. We caution readers not to place undue reliance on any forward-looking statements included in this report, which speak only as of the date of this report. We undertake no responsibility for updating these statements, except as required by law.

Overview

Lamb Weston Holdings, Inc. (“we,” “us,” “our,” the “Company,” or “Lamb Weston”) is a leading global producer, distributor, and marketer of value-added frozen potato products. We are the number one supplier of value-added frozen potato products in North America and a leading supplier of value-added frozen potato products internationally, with a strong and growing presence in high-growth emerging markets. We offer a broad product portfolio to a diverse channel and customer base in over 100 countries. French fries represent the majority of our value-added frozen potato product portfolio.

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This MD&A is provided as a supplement to the consolidated financial statements and related condensed notes included elsewhere herein to help provide an understanding of our financial condition, changes in financial condition and results of our operations. Our MD&A is based on financial data derived from the financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). We have also presented Adjusted EBITDA, which is considered a non-GAAP financial measure, to supplement the financial information included in this report. Refer to “Non-GAAP Financial Measures” below for the definition of Adjusted EBITDA, and a reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure, net income. For more information, refer to the “Results of Operations” and “Non-GAAP Financial Measures” sections below.

Executive Summary

In the second quarter of fiscal 2024, we drove solid sales and earnings growth, reflecting: the carryover benefit of inflation-driven pricing actions taken in the prior year; incremental sales and earnings from the acquisition of the remaining equity interest in LW EMEA (the “LW EMEA Acquisition”), our former joint venture in Europe; favorable mix; and supply chain productivity savings. While sales volumes, excluding the benefit of acquisitions, declined compared with the second quarter of fiscal 2023, our volume performance improved sequentially versus our fiscal fourth and first quarters, reflecting resilient global demand and the gradual addition of new business to replace the lower-margin volume that we chose to exit in the prior fiscal year. Volume elasticities in response to inflation-based pricing actions across our portfolio have continued to remain low during the quarter.

Net income and Adjusted EBITDA in the second quarter increased as favorable price/mix and incremental earnings from the consolidation of the financial results of LW EMEA more than offset a $70.9 million charge to write-off excess raw potatoes in North America, higher input and manufacturing costs on a per pound basis, the impact of lower sales volumes and higher selling, general and administrative (“SG&A”) expenses. The charge for excess raw potatoes largely reflected a reduction to our sales volume estimate, compared with the January 2023 estimate used to determine the number of acres to contract, as well as a solid potato crop, after two years of below average crop, in our growing regions in North America.

In the first half of fiscal 2024, we generated net cash from operating activities of $455.2 million, up $167.2 million compared to the first half of fiscal 2023, primarily due to higher earnings. We ended the second quarter with $78.3 million of cash and cash equivalents and $175.0 million of borrowings outstanding under our $1.0 billion U.S. revolving credit facility. In addition, we returned an aggregate of $90.8 million to our common stockholders during the quarter, including $50.0 million of share repurchases and $40.8 million in cash dividends. In October 2023, we increased our share repurchase authorization to $500.0 million, and in December 2023, we increased our quarterly cash dividend to common stockholders by 29% to $0.36 per share.

In November 2023, our greenfield french fry processing facility in Ulanqab, Inner Mongolia, China became operational as scheduled. Our capacity expansion and modernization efforts in Idaho, Argentina, and the Netherlands remain on track. In addition, at the beginning of our third quarter of fiscal 2024, we began transitioning certain central systems and functions in North America to a new ERP system, as part of our multi-year effort to upgrade our information systems and ERP infrastructure across the company.

Outlook

In fiscal 2024, we expect to deliver net sales and earnings growth, and to benefit from incremental sales and earnings during the first three quarters of the fiscal year, as compared to the first three quarters of fiscal 2023, from the consolidation of the financial results of LW EMEA. In addition to the incremental sales related to the consolidation of LW EMEA, we expect pricing actions to drive net sales growth for fiscal 2024, as we expect sales volumes will continue to be pressured by our decisions to strategically manage our customer and product mix by exiting certain lower-priced and lower-margin business. We also anticipate that demand for our products in the near term may be tempered by softer restaurant traffic trends, as compared to the prior year period, in North America and other key markets as our customers and consumers generally both respond to challenging macroeconomic environments.

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We expect earnings growth for fiscal 2024 to be largely driven by sales and gross profit growth, and that the rate of input cost inflation, driven largely by higher potato costs, will, in aggregate, moderate as compared to fiscal 2023 inflation rates. We anticipate that the increase in gross profit will be partially offset by the $64.6 million pre-tax charge incurred in the second quarter of fiscal 2024 to write-off excess raw potatoes, and by higher SG&A, reflecting: incremental expense attributable to the consolidation of the financial results of LW EMEA; increased investments to upgrade our information systems and ERP infrastructure; non-cash amortization of intangible assets associated with the LW EMEA Acquisition; and higher compensation and benefits expenses due to increased employee headcount.

We continue to believe in the long-term growth outlook for the frozen potato category and that Lamb Weston is well-positioned to drive sustainable, profitable growth, and to better serve customers around the world as we seek to leverage the commercial and operational benefits from the LW EMEA Acquisition, as well as the benefits we expect from our previously announced capacity expansion investments in China, the U.S., Argentina, and the Netherlands.

Results of Operations

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. We report net sales and Adjusted EBITDA by segment and on a consolidated basis, which are the primary measures reported to our chief operating decision maker for purposes of allocating resources to our segments and assessing their performance. Adjusted EBITDA is a non-GAAP financial measure. For additional information on our reportable segments, Segment Adjusted EBITDA, and Adjusted EBITDA, see Note 12, Segments, of the Condensed Notes to Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this report and “Non-GAAP Financial Measures” below. Prior period segment data has been retrospectively adjusted to conform with current period classification.

Thirteen Weeks Ended November 26, 2023 compared to Thirteen Weeks Ended November 27, 2022

Net Sales and Segment Adjusted EBITDA

	Thirteen Weeks Ended
	November 26,		November 27,		%
(in millions, except percentages)	2023		2022		Increase (Decrease)
Segment net sales
North America	$	1,167.1	$	1,062.5	10%
International		565.0		214.0	164%
	$	1,732.1	$	1,276.5	36%
Segment Adjusted EBITDA
North America	$	321.3	$	299.6	7%
International		100.2		60.2	66%

Net Sales

Compared to the prior year quarter, net sales for the second quarter of fiscal 2024 increased $455.6 million, or 36%, to $1,732.1 million, and included $375.8 million of incremental sales attributable to the consolidation of the financial results of LW EMEA following the completion of the LW EMEA Acquisition in February 2023.

Net sales, excluding the incremental sales attributable to the LW EMEA Acquisition, grew 6% versus the prior year quarter. Price/mix increased 12%, reflecting the benefit of inflation-driven pricing actions across each of our business segments, and favorable mix, partially offset by lower customer transportation charges. Volume declined 6%, primarily reflecting the carryover effect of our decisions to exit certain lower-priced and lower-margin business in the prior year to strategically manage customer and product mix. Volume elasticities in response to inflation-based pricing actions across our portfolio continued to remain low.

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North America segment net sales, which includes all sales to customers in the U.S., Canada, and Mexico, increased $104.6 million, or 10%, to $1,167.1 million. Price/mix increased 14%, reflecting the carryover benefits of inflation-driven pricing actions taken in fiscal 2023, and favorable mix, partially offset by lower customer transportation charges. Volume declined 4%, primarily reflecting the carryover impact of our decisions to exit certain lower-priced and lower-margin business in the prior fiscal year.

International segment net sales, which includes all sales to customers outside of North America, increased $351.0 million, or 164%, to $565.0 million, and included $375.8 million of incremental sales attributable to the consolidation of the financial results of LW EMEA. International segment net sales, excluding the incremental sales attributable to the LW EMEA Acquisition, declined 12% compared to the prior year quarter. Price/mix increased 10%, driven by the carryover benefit of inflation-driven pricing actions taken in fiscal 2023, as well as favorable mix, partially offset by lower customer transportation charges. Volume, excluding the benefit from the LW EMEA acquisition, declined 22%, primarily reflecting our decisions to exit certain lower-priced and lower-margin business as well as lapping a strong prior year comparison.

Gross Profit

Gross profit increased $94.0 million, or 25%, to $475.6 million, and included $1.8 million ($1.3 million after-tax, or $0.01 per share) of benefits associated with the sale of inventory stepped-up to fair value in the LW EMEA Acquisition, and a $4.6 million ($3.5 million after-tax, or $0.02 per share) unrealized loss related to mark-to-market adjustments associated with commodity hedging contracts. The prior year quarter included a $0.4 million ($0.3 million after-tax, with no per share impact) unrealized gain related to mark-to-market adjustments associated with commodity hedging contracts.

Excluding unrealized mark-to-market commodity gains and losses and items impacting comparability, gross profit increased $97.2 million, driven primarily by benefits from pricing actions and incremental earnings attributable to the consolidation of the financial results of LW EMEA. Gross profit also included a $64.6 million pre-tax charge for the write-off of excess raw potatoes, largely reflecting a reduction to our initial sales estimate that was developed in January 2023 for the following year, as well as a solid potato crop in our growing regions in North America.

The increase in gross profit was also partially offset by higher costs per pound, which largely reflected mid-single-digit cost inflation, in the aggregate, for key inputs, including: raw potatoes, ingredients such as grains and starches used in product coatings, and labor. The increase in per pound costs was partially offset by supply chain productivity savings as well as lower costs for edible oils.

Selling, General and Administrative Expenses

SG&A increased $60.2 million to $170.0 million in the second quarter of fiscal 2024, and included: $4.8 million ($3.6 million after-tax, or $0.02 per share) of LW EMEA integration and acquisition-related expenses; $3.0 million ($2.2 million after-tax, or $0.01 per share) of unrealized gains related to mark-to-market adjustments associated with currency hedging contracts; and $9.2 million ($6.9 million after-tax, or $0.05 per share) of foreign currency exchange gains. The prior year quarter included $26.5 million ($19.2 million after-tax, or $0.13 per share) of LW EMEA integration and acquisition-related net gains and $1.4 million ($1.0 million after-tax, or $0.01 per share) of foreign currency exchange losses.

Excluding these items, SG&A increased $42.5 million to $177.4 million, primarily due to incremental expenses attributable to the consolidation of the financial results of LW EMEA; higher expenses related to improving our information systems and ERP infrastructure; and higher compensation and benefits expenses.

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Segment Adjusted EBITDA

North America Segment Adjusted EBITDA increased $21.7 million to $321.3 million. The carryover benefit of inflation-driven pricing actions and favorable mix drove the increases, which were partially offset by a $63.3 million charge for the write-off of excess raw potatoes, higher costs per pound, and the impact of lower volumes.

International Segment Adjusted EBITDA increased $40.0 million to $100.2 million, and excluded a net benefit from comparability items of $1.8 million ($1.3 million after-tax, or $0.01 per share) associated with the sale of inventory stepped-up to fair value in the LW EMEA Acquisition. Incremental earnings from the consolidation of the financial results of LW EMEA drove the increase. Excluding the benefit from the LW EMEA Acquisition, higher costs per pound, including a $7.6 million allocated charge for the write-off of excess raw potatoes, and the impact of lower volumes, more than offset favorable price/mix.

Adjusted EBITDA increased $48.0 million to $376.9 million, up 15% compared to the prior year quarter, and included a $70.9 million pre-tax charge for the write-off of excess raw potatoes, of which $6.3 million was recorded in “Equity method investment earnings” in the Consolidated Statement of Earnings. Higher income from operations, which includes the benefit of incremental earnings from LW EMEA, drove the increases.

Interest Expense, Net

Compared with the prior year quarter, interest expense, net increased $4.5 million to $29.1 million, reflecting the impact of higher total debt outstanding and higher interest rates on our floating rate debt, partially offset by higher capitalized interest related to our manufacturing expansion projects and interest income.

Income Tax Expense

Income tax expense for the second quarter of fiscal 2024 and 2023 was $66.2 million and $36.8 million, respectively. The effective income tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was 23.5% and 26.3% for the second quarter of fiscal 2024 and 2023, respectively. The effective tax rate varies from the U.S. statutory tax rate of 21%, principally due to the impact of U.S. state taxes, foreign taxes and currency, permanent differences, and discrete items.

Equity Method Investment Earnings (Loss)

Equity method investment earnings (loss) from unconsolidated joint ventures were earnings of $4.7 million and a loss of $107.3 million for the second quarter of fiscal 2024 and 2023, respectively. The results in the current quarter include earnings associated with our 50% interest in Lamb Weston/RDO Frozen, an unconsolidated potato processing joint venture in Minnesota (“Lamb Weston RDO”), while results in the prior year quarter also included earnings associated with our previously held 50% interest in LW EMEA that were classified as equity method investment earnings (losses) prior to the completion of the LW EMEA Acquisition. The results in the prior year quarter include a $130.1 million ($96.5 million after-tax, or $0.67 per share) unrealized loss related to mark-to-market adjustments associated with currency and commodity hedging contracts in LW EMEA.

Excluding these items, equity method investment earnings declined $18.1 million compared to the prior year quarter, largely due to our share of LW EMEA earnings being included in the prior year quarter. The results in the second quarter also include a $6.3 million pre-tax charge for the write-off of excess raw potatoes at Lamb Weston RDO.

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Twenty-Six Weeks Ended November 26, 2023 compared to Twenty-Six Weeks Ended November 27, 2022

Net Sales and Segment Adjusted EBITDA

	Twenty-Six Weeks Ended
	November 26,		November 27,		%
(in millions, except percentages)	2023		2022		Increase (Decrease)
Segment net sales
North America	$	2,302.5	$	2,018.1	14%
International		1,094.9		384.0	185%
	$	3,397.4	$	2,402.1	41%
Segment Adjusted EBITDA
North America	$	700.7	$	531.4	32%
International		189.8		93.3	103%

Net Sales

Compared to the first half of fiscal 2023, net sales increased $995.3 million, or 41%, to $3,397.4 million, and included $750.7 million of incremental sales attributable to the consolidation of the financial results of (1) LW EMEA, following the completion of the LW EMEA Acquisition in February 2023, and (2) Lamb Weston Alimentos Modernos S.A., our joint venture in Argentina (“LWAMSA”), following our acquisition in July 2022 of an additional 40% equity interest in LWAMSA (the “LWAMSA Acquisition” and, together with the LW EMEA Acquisition, the “Acquisitions”).

Net sales, excluding the incremental sales attributable to the Acquisitions, grew 10%. Price/mix increased 17%, reflecting the benefit of inflation-driven pricing actions across each of our business segments, lower trade spending in North America, and favorable mix, partially offset by lower customer transportation charges. Volume declined 7%, primarily reflecting the carryover effect of our decisions to exit certain lower-priced and lower-margin business in the prior year as we continue to strategically manage customer and product mix. To a lesser extent, inventory destocking by certain customers in international markets and in select U.S. retail channels also pressured volumes. Volume elasticities in response to inflation-based pricing actions across our portfolio continued to remain low.

North America segment net sales, which includes all sales to customers in the U.S., Canada, and Mexico, increased $284.4 million, or 14%, to $2,302.5 million. Price/mix increased 18%, reflecting the carryover benefit of inflation-driven pricing actions taken in fiscal 2023, lower trade spending, and favorable mix, partially offset by lower customer transportation charges. Volume declined 4%, primarily reflecting the carryover effect of our decisions to exit certain lower-priced and lower-margin business in the prior year. To a lesser extent, lower shipments in response to inventory destocking by certain customers in select U.S. retail channels also pressured volumes.

International segment net sales, which includes all sales to customers outside of North America, increased $710.9 million, or 185%, to $1,094.9 million, and included $750.7 million of incremental sales attributable to the Acquisitions. International segment net sales, excluding the incremental sales attributable to the Acquisitions, declined 11% compared to the prior year period. Price/mix increased 14%, driven by the carryover benefit of inflation-driven pricing actions taken in fiscal 2023, as well as favorable mix, partially offset by lower customer transportation charges. Volume declined 25%, primarily reflecting the carryover effect of our decisions to exit certain lower-priced and lower-margin business in the prior year. To a lesser extent, lower shipments in response to inventory destocking by certain customers in several markets in the Asia-Pacific region also pressured volume.

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Gross Profit

Gross profit increased $320.2 million, or 49%, to $975.1 million, and included $20.7 million of costs ($15.4 million after-tax, or $0.11 per share) associated with the sale of inventory stepped-up to fair value in the LW EMEA Acquisition, and a $27.1 million ($20.2 million after-tax, or $0.14 per share) unrealized gain related to mark-to-market adjustments associated with commodity hedging contracts. The prior year period included a $3.6 million ($2.7 million after-tax, or $0.02 per share) unrealized loss related to mark-to-market adjustments associated with commodity hedging contracts.

Excluding unrealized mark-to-market commodity gains and losses and items impacting comparability, gross profit increased $310.2 million, driven primarily by: benefits from pricing actions, incremental earnings attributable to the consolidation of the financial results of LW EMEA, and lower trade spending in North America. Gross profit also included a $64.6 million pre-tax charge for the write-off of excess raw potatoes, largely reflecting a reduction in our initial sales estimate that was developed in January 2023 for the following year, as well as a solid potato crop in our growing regions in North America.

The increase in gross profit was also partially offset by higher costs per pound, which largely reflected mid-to-high single-digit cost inflation, in the aggregate, for key inputs, including: raw potatoes, ingredients such as grains and starches used in product coatings, and labor. The increase in per pound costs was partially offset by supply chain productivity savings as well as lower costs for edible oils.

Selling, General and Administrative Expenses

SG&A increased $120.1 million to $346.2 million in the first half of fiscal 2024, and included: $8.8 million of LW EMEA integration and acquisition-related expenses ($6.6 million after-tax, or $0.04 per share); $1.4 million ($1.0 million after-tax, or $0.01 per share) of unrealized losses related to mark-to-market adjustments associated with currency hedging contracts; and $1.8 million ($1.4 million after-tax, or $0.01 per share) of foreign currency exchange gains. The prior year period included: $26.5 million ($19.2 million after-tax, or $0.13 per share) of LW EMEA integration and acquisition-related net gains; and $2.4 million ($1.8 million after-tax, or $0.01 per share) of foreign currency exchange losses.

Excluding these items, SG&A increased $87.6 million to $337.8 million, primarily due to incremental expenses attributable to the consolidation of the financial results of LW EMEA, higher expenses related to improving our information systems and ERP infrastructure, and higher compensation and benefits expenses.

Segment Adjusted EBITDA

North America Segment Adjusted EBITDA increased $169.3 million to $700.7 million. The carryover benefit of inflation-driven pricing actions, lower trade spending, and favorable mix drove the increases, which were partially offset by a $63.3 million charge for the write-off of excess raw potatoes, higher costs per pound, and the impact of lower volumes.

International Segment Adjusted EBITDA increased $96.5 million to $189.8 million, and excluded $20.7 million ($15.4 million after-tax, or $0.11 per share) of costs associated with the sale of inventory stepped-up to fair value in the LW EMEA Acquisition. Incremental earnings from the consolidation of the financial results of LW EMEA drove the increase. Excluding the benefit from the LW EMEA Acquisition, higher costs per pound, including a $7.6 million allocated charge for the write-off of excess raw potatoes, and the impact of lower volumes, more than offset favorable price/mix.

Interest Expense, Net

Compared with the first half of fiscal 2024, interest expense, net increased $9.2 million to $59.8 million, reflecting the impact of higher total debt outstanding and higher interest rates on our floating rate debt, partially offset by higher capitalized interest related to our manufacturing expansion projects and interest income.

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Income Tax Expense

Income tax expense for the first half of fiscal 2024 and 2023 was $136.1 million and $110.5 million, respectively. The effective income tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was 23.2% and 24.8% for the first half of fiscal 2024 and 2023, respectively. The effective tax rate varies from the U.S. statutory tax rate of 21%, principally due to the impact of U.S. state taxes, foreign taxes and currency, permanent differences, and discrete items.

Equity Method Investment Earnings

Equity method investment earnings from unconsolidated joint ventures were earnings of $16.8 million and $67.3 million for the first half of fiscal 2024 and 2023, respectively. The results in the current year period include earnings associated with our 50% interest in Lamb Weston RDO, while results in the prior year also included earnings associated with our previously held 50% interest in LW EMEA. The results in the prior year include a $14.4 million unrealized gain ($10.7 million after-tax, or $0.07 per share) related to mark-to-market adjustments associated with currency and commodity hedging contracts and a $15.1 million gain (before and after-tax, or $0.10 per share) recognized in connection with the LWAMSA Acquisition, which related to remeasuring our previously held 50% ownership interest to fair value.

Excluding these items, equity method investment earnings declined $21.0 million compared to the prior year period, largely due to our share of LW EMEA earnings being included in the prior year. The results in the current period also include a $6.3 million pre-tax charge for the write-off of excess raw potatoes at Lamb Weston RDO.

Liquidity and Capital Resources

Sources and Uses of Cash

As of November 26, 2023, we had $78.3 million of cash and cash equivalents, with $175.0 million in borrowings outstanding under our $1.0 billion U.S. revolving credit facility. We believe we have sufficient liquidity to meet our business requirements for at least the next 12 months. Cash generated by operations, supplemented by our cash and cash equivalents and availability under our credit facilities, are our primary sources of liquidity for funding our business requirements. Our funding requirements include capital expenditures for announced manufacturing expansions in Idaho, the Netherlands, and Argentina, as well as capital investments to upgrade information systems and ERP infrastructure, working capital requirements, and shareholder returns, including cash dividends and repurchases under our share repurchase program. 

Cash Flows

Below is a summary table of our cash flows, followed by a discussion of the sources and uses of cash through operating, investing, and financing activities:

	Twenty-Six Weeks Ended
	November 26,		November 27,
(in millions)	2023		2022
Net cash flows provided by (used for):
Operating activities	$	455.2	$	288.0
Investing activities		(570.8)		(311.0)
Financing activities		(112.0)		(96.6)
		(227.6)		(119.6)
Effect of exchange rate changes on cash and cash equivalents		1.1		14.0
Net decrease in cash and cash equivalents		(226.5)		(105.6)
Cash and cash equivalents, beginning of period		304.8		525.0
Cash and cash equivalents, end of period	$	78.3	$	419.4

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Operating Activities

In the first half of fiscal 2024, cash provided by operating activities increased $167.2 million to $455.2 million, compared with $288.0 million in the same period of fiscal 2023. The increase related to a $255.6 million increase in income from operations, adjusted for non-cash income and expenses, partially offset by $88.4 million of cash used for unfavorable changes in working capital, primarily related to construction-related purchases included in accounts payable and changes in compensation and benefit accruals. See “Results of Operations” in this MD&A for more information related to the increase in income from operations.

Investing Activities

Investing activities used $570.8 million of cash in the first half of fiscal 2024, compared with $311.0 million in the same period in the prior year. The increase primarily relates to our investments to expand our french fry and chopped and formed capacity and other facility modernization efforts in American Falls, Idaho; the construction of a greenfield french fry processing facility in Ulanqab, Inner Mongolia, China, which became operational in November 2023; and the construction of french fry processing facilities in Mar-del-Plata, Argentina and Kruiningen, the Netherlands. We also used $58.9 million to upgrade our information systems and ERP infrastructure. We expect to use approximately $900 million to $950 million in fiscal 2024 as we continue construction of our capacity expansion efforts in Idaho, the Netherlands, and Argentina, as well as capital investments to upgrade our information systems and ERP infrastructure.

Financing Activities

During the first half of fiscal 2024, we used $164.3 million of cash to repurchase 1,564,351 shares of our common stock at an average price of $95.89 per share, and we withheld 134,340 shares from employees to cover income and payroll taxes on equity awards that vested during the period. In addition, we paid $81.6 million in cash dividends to common stockholders and $27.7 million of debt and financing obligations. These financing uses were offset by $162.1 million of borrowings during the period primarily under our U.S. revolving credit facility.

In the first half of fiscal 2023, cash used for financing activities primarily related to $23.3 million of additional borrowings under our RMB-denominated loan facility, offset by $16.7 million of debt and financing obligation repayments, and the payment of $70.6 million of cash dividends to our common stockholders. In addition, we used $34.9 million of cash to repurchase 404,476 shares of our common stock at an average price of $70.11 per share, and we withheld 82,042 shares from employees to cover income and payroll taxes on equity awards that vested during the period.

For more information about our debt, interest rates, maturity dates, and covenants, see Note 9, Debt and Financing Obligations, of the Condensed Notes to Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this report and Note 8, Debt and Financing Obligations of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of the Form 10-K. At November 26, 2023, we were in compliance with the financial covenant ratios and other covenants contained in our credit agreements.

Obligations and Commitments

There have been no material changes to the contractual obligations disclosed in “Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Form 10-K.

Non-GAAP Financial Measures

To supplement the financial information included in this report, we have presented Adjusted EBITDA, which is considered a non-GAAP financial measure. Management uses this non-GAAP financial measure to assist in analyzing what management views as our core operating performance for purposes of business decision making. Management believes that presenting this non-GAAP financial measure provides investors with useful supplemental information because it (i) provides meaningful supplemental information regarding financial performance by excluding foreign currency exchange and unrealized mark-to-market derivative gains and losses and items affecting comparability between periods, (ii) permits investors to view performance using the same tools that management uses to budget, make operating

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and strategic decisions, and evaluate our core operating performance across periods, and (iii) otherwise provides supplemental information that may be useful to investors in evaluating our financial results. In addition, we believe that the presentation of this non-GAAP financial measure, when considered together with the most directly comparable GAAP financial measure and the reconciliation to this GAAP financial measure, provides investors with additional tools to understand the factors and trends affecting our underlying business than could be obtained absent these disclosures.

The non-GAAP financial measure presented in this report should be viewed in addition to, and not as an alternative for, financial measures prepared in accordance with GAAP that are also presented in this report. This measure is not a substitute for its comparable GAAP financial measure, net income, and there are limitations to using non-GAAP financial measures. For example, the non-GAAP financial measure presented in this report may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define this non-GAAP financial measure the same way we do.

The following table reconciles net income to Adjusted EBITDA:

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 26,		November 27,		November 26,		November 27,
(in millions)	2023		2022		2023		2022
Net income (a)	$	215.0	$	103.1	$	449.8	$	335.0
Interest expense, net		29.1		24.6		59.8		50.6
Income tax expense		66.2		36.8		136.1		110.5
Income from operations including equity method investment earnings		310.3		164.5		645.7		496.1
Depreciation and amortization (b)		71.2		59.8		142.0		117.4
Unrealized derivative (gains) losses		1.6		(0.4)		(25.7)		3.6
Unconsolidated joint venture unrealized derivative (gains) losses		—		130.1		—		(14.4)
Foreign currency exchange (gains) losses		(9.2)		1.4		(1.8)		2.4
Items impacting comparability:
Inventory step-up from acquisition		(1.8)		—		20.7		—
Integration and acquisition-related items, net		4.8		(26.5)		8.8		(26.5)
Gain on acquisition of interest in joint venture		—		—		—		(15.1)
Adjusted EBITDA	$	376.9	$	328.9	$	789.7	$	563.5

(a) Net income included a $70.9 million charge ($53.9 million after-tax, or $0.37 per share) for the write-off of excess raw potatoes in North America for both the thirteen and twenty-six weeks ended November 26, 2023. We recorded a $64.6 million charge ($49.1 million after-tax, or $0.34 per share) in cost of sales, and a $6.3 million charge ($4.8 million after-tax, or $0.03 per share) in equity method investment earnings. The total charge to the reporting segments was as follows: $63.3 million to the North America segment; and $7.6 million to the International segment.

(b) Depreciation and amortization included interest expense, income tax expense, and depreciation and amortization included in equity method investment earnings of $2.1 million and $8.6 million for the thirteen weeks ended November 26, 2023 and November 27, 2022, respectively; and $4.3 million and $17.6 million for the twenty-six weeks ended November 26, 2023 and November 27, 2022.

Off-Balance Sheet Arrangements

There have been no material changes to the off-balance sheet arrangements disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Form 10-K.

Critical Accounting Policies and Estimates

A discussion of our critical accounting policies and estimates can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Form 10-K. There were no material changes to these critical accounting policies and estimates during the first half of fiscal 2024.

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New and Recently Adopted Accounting Pronouncements

For a list of our new and recently adopted accounting pronouncements, see Note 1, Nature of Operations and Summary of Significant Accounting Policies, of the Condensed Notes to Consolidated Financial Statements in “Part I, Item I. Financial Statements” of this report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our operations are exposed to market risks from adverse changes in commodity prices affecting the cost of raw materials and energy, foreign currency exchange rates, and interest rates. In the normal course of business, we may periodically enter into derivative contracts to mitigate these risks, but not for trading purposes. All of the following potential changes are based on sensitivity analyses performed on our financial positions as of November 26, 2023 and May 28, 2023. Actual results may differ materially.

Commodity Price Risk

The objective of our commodity exposure management is to minimize volatility in earnings due to large fluctuations in the price of commodities. We may use commodity swap or forward purchase contracts, in addition to sourcing from multiple providers, to manage risks associated with market fluctuations in oil and energy prices. Based on our open commodity contract hedge positions as of November 26, 2023, a hypothetical 10 percent decline in market prices applied to the fair value of the instruments would have resulted in a charge to “Cost of sales” of $11.6 million ($8.7 million after-tax). Based on our open commodity contract hedge positions as of May 28, 2023, a hypothetical 10 percent decline in market prices applied to the fair value of the instruments would have resulted in a charge to “Cost of sales” of $9.0 million ($6.8 million after-tax). We expect that any change in the fair value of these contracts, real or hypothetical, would be substantially offset by an inverse change in the value of the underlying hedged item.

Foreign Currency Exchange Rate Risk

We are subject to currency exchange rate risk through investments and businesses owned and operated in foreign countries. Our operations in foreign countries export to, and compete with, imports from other regions. As such, currency movements can have a number of direct and indirect impacts on our financial statements. Direct impacts include the translation of our international operations’ local currency financial statements into U.S. dollars and the remeasurement impact associated with non-functional currency financial assets and liabilities. Indirect impacts include the change in competitiveness of exports out of the United States (and the impact on local currency pricing of products that are traded internationally). The currency that has the most impact is the Euro. From time to time, we may economically hedge currency risk with foreign currency contracts, such as forward contracts. Based on monetary assets and liabilities denominated in foreign currencies, we estimate that a hypothetical 10 percent adverse change in exchange rates versus the U.S. dollar would result in losses of $54.1 million ($41.1 million after-tax) and $48.8 million ($37.1 million after-tax) as of November 26, 2023 and May 28, 2023, respectively.

Interest Rate Risk

We issue fixed and floating rate debt in a proportion that management deems appropriate based on current and projected market conditions, and from time to time, we may enter into interest rate swaps to manage risk. At November 26, 2023, we had $2,170.0 million of fixed-rate and $1,448.5 million of variable-rate debt outstanding. At May 28, 2023, we had $2,170.0 million of fixed-rate and $1,309.8 million of variable-rate debt outstanding. We have interest rate risk associated with our variable-rate debt. A one percent increase in interest rates related to variable-rate debt would have resulted in an increase in interest expense and a corresponding decrease in income before taxes of $14.7 million annually ($11.5 million after-tax) and $13.3 million annually ($10.3 million after-tax) at November 26, 2023 and May 28, 2023, respectively.

For more information about our market risks, see Note 9, Debt and Financing Obligations, of the Condensed Notes to Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this report.

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ITEM 4. CONTROLS AND PROCEDURES

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of November 26, 2023. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.      

Changes in Internal Control over Financial Reporting

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated any change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended November 26, 2023. On February 28, 2023, we acquired the remaining 50% equity interest in Lamb-Weston/Meijer v.o.f. (“LW EMEA”), our former European joint venture. We are in the process of evaluating and integrating controls and procedures relating to the LW EMEA business, which may result in changes to our internal control over financial reporting. Under SEC guidelines, we are permitted to exclude acquisitions from our assessment of internal control over financial reporting during the first year of an acquisition while integrating the acquired business. We have excluded LW EMEA from our assessment of internal control over financial reporting at November 26, 2023. Except as it may relate to the integration of the LW EMEA business, there have been no changes in our internal control over financial reporting during the quarter ended November 26, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. For the second quarter of fiscal 2024, LW EMEA accounted for 21% of our consolidated net sales and as of November 26, 2023, represented 29% of our consolidated total assets.

Part II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 13, Commitments, Contingencies, Guarantees and Legal Proceedings, of the Condensed Notes to Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this report for information regarding our legal proceedings.

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ITEM 1A. RISK FACTORS

We are subject to various risks and uncertainties in the course of our business. The discussion of these risks and uncertainties may be found under “Part I, Item 1A. Risk Factors” in the Form 10-K. There have been no material changes to the risk factors discussed in the Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Total shares of Lamb Weston common stock purchased by the Company during the thirteen weeks ended November 26, 2023 were as follows:

							Approximate Dollar
					Total Number of		Value of Maximum
	Total Number		Average		Shares (or Units)		Number of Shares that
	of Shares (or		Price Paid		Purchased as Part of		May Yet be Purchased
	Units)		Per Share		Publicly Announced		Under Plans or Programs
Period	Purchased (a)		(or Unit)		Plans or Programs (b)		(in millions) (b)
August 28, 2023 through September 24, 2023		76	$	96.82		—	$	123.9
September 25, 2023 through October 22, 2023		229,778	$	87.35		229,049	$	480.0
October 23, 2023 through November 26, 2023		344,405	$	87.51		342,937	$	450.0
Total		574,259

(a) Represents repurchased shares of our common stock under our publicly announced share repurchase program, which were repurchased at a weighted average price of $87.41 per share, and shares withheld from employees to cover income and payroll taxes on equity awards that vested during the period.

(b) On December 20, 2018, we announced that our Board of Directors (the “Board”) had authorized a $250.0 million share repurchase program with no expiration date. On December 17, 2021, we announced that our Board had authorized the repurchase of an additional $250.0 million of our common stock under this program, bringing the total amount authorized under the program to $500.0 million of our common stock. On October 11, 2023, we announced that our Board had increased our share repurchase authorization under the program to $500.0 million of our common stock, including $123.9 million of remaining unused capacity under the Board’s previous repurchase authorizations. As of November 26, 2023, approximately $450.0 million remained authorized and available for repurchase under this program. Repurchases under our share repurchase program may be made at our discretion from time to time on the open market, subject to applicable laws, including pursuant to a repurchase plan administered in accordance with Rule 10b5-1 under the Exchange Act, or through privately negotiated transactions.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Insider Trading Arrangements

During the quarter ended November 26, 2023, none of our directors or officers (as defined in Rule 16a-1 under the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408 of Regulation S-K.

30

ITEM 6. EXHIBITS

Exhibit Number	Exhibit Description
31.1	Section 302 Certificate of Chief Executive Officer
31.2	Section 302 Certificate of Chief Financial Officer
32.1	Section 906 Certificate of Chief Executive Officer
32.2	Section 906 Certificate of Chief Financial Officer
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)

31

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LAMB WESTON HOLDINGS, INC.
	By:	/s/ BERNADETTE M. MADARIETA
		BERNADETTE M. MADARIETA
		Chief Financial Officer
		(Principal Financial Officer)
Dated this 4th day of January, 2024.

32

EX-31.1

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

I, THOMAS P. WERNER, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended November 26, 2023 of Lamb Weston Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: January 4, 2024

/s/ THOMAS P. WERNER

THOMAS P. WERNER

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

I, BERNADETTE M. MADARIETA, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended November 26, 2023 of Lamb Weston Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

J

Date: January 4, 2024

/s/ BERNADETTE M. MADARIETA

BERNADETTE M. MADARIETA

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, THOMAS P. WERNER, President and Chief Executive Officer of Lamb Weston Holdings, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge that Lamb Weston Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter ended November 26, 2023 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and that the information contained in such Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Lamb Weston Holdings, Inc. as of and for the periods presented.

January 4, 2024

/s/ THOMAS P. WERNER

THOMAS P. WERNER

President and Chief Executive Officer

(Principal Executive Officer)

A signed original of this written statement required by Section 906 has been provided to Lamb Weston Holdings, Inc. and will be retained by Lamb Weston Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, BERNADETTE M. MADARIETA, Chief Financial Officer of Lamb Weston Holdings, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge that Lamb Weston Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter ended November 26, 2023 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and that the information contained in such Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Lamb Weston Holdings, Inc. as of and for the periods presented.

January 4, 2024

/s/ BERNADETTE M. MADARIETA

BERNADETTE M. MADARIETA

Chief Financial Officer

(Principal Financial Officer)

A signed original of this written statement required by Section 906 has been provided to Lamb Weston Holdings, Inc. and will be retained by Lamb Weston Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - $ / shares	6 Months Ended
	Nov. 26, 2023	Dec. 28, 2023
Cover [Abstract]
Entity Central Index Key	0001679273
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Nov. 26, 2023
Entity File Number	1-37830
Entity Registrant Name	LAMB WESTON HOLDINGS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	61-1797411
Entity Address, Address Line One	599 S. Rivershore Lane
Entity Address, City or Town	Eagle
Entity Address, State or Province	ID
Entity Address, Postal Zip Code	83616
City Area Code	208
Local Phone Number	938-1047
Title of 12(b) Security	Common Stock, $1.00 par value
Trading Symbol	LW
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		144,372,498
Entity Listing, Par Value Per Share	$ 1.00
Current Fiscal Year End Date	--05-26
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Consolidated Statements of Earnings - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Nov. 26, 2023	Nov. 27, 2022	Nov. 26, 2023	Nov. 27, 2022
Consolidated Statements of Earnings
Net sales	$ 1,732.1	$ 1,276.5	$ 3,397.4	$ 2,402.1
Net sales, type	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember
Cost of sales	$ 1,256.5	$ 894.9	$ 2,422.3	$ 1,747.2
Cost of sales, type	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember
Gross profit	$ 475.6	$ 381.6	$ 975.1	$ 654.9
Selling, general and administrative expenses	170.0	109.8	346.2	226.1
Income from operations	305.6	271.8	628.9	428.8
Interest expense, net	29.1	24.6	59.8	50.6
Income before income taxes and equity method earnings	276.5	247.2	569.1	378.2
Income tax expense	66.2	36.8	136.1	110.5
Equity method investment earnings (loss)	4.7	(107.3)	16.8	67.3
Net income	$ 215.0	$ 103.1	$ 449.8	$ 335.0
Earnings per share:
Basic (in dollars per share)	$ 1.48	$ 0.72	$ 3.10	$ 2.33
Diluted (in dollars per share)	$ 1.48	$ 0.71	$ 3.08	$ 2.32
Weighted average common shares outstanding:
Basic (in shares)	144.9	144.0	145.3	144.0
Diluted (in shares)	145.5	144.6	146.0	144.6

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Nov. 26, 2023	Nov. 27, 2022	Nov. 26, 2023	Nov. 27, 2022
Other comprehensive income (loss) - pre-tax amount:
Net income	$ 281.2	$ 139.9	$ 585.9	$ 445.5
Unrealized pension and post-retirement benefit obligations gain (loss)	(0.2)		(0.4)
Unrealized currency translation gains (losses)	30.5	(16.1)	31.3	(47.8)
Other	(0.2)	0.3	(0.2)	0.5
Comprehensive income	311.3	124.1	616.6	398.2
Other comprehensive income (loss) - tax (expense) benefit:
Net income	(66.2)	(36.8)	(136.1)	(110.5)
Unrealized pension and post-retirement benefit obligations gain (loss)	0.1		0.1
Unrealized currency translation gains (losses)	(0.7)	0.5	(0.3)	1.5
Other		(0.1)		(0.1)
Comprehensive income	(66.8)	(36.4)	(136.3)	(109.1)
Other comprehensive income (loss) - after tax amount:
Net income	215.0	103.1	449.8	335.0
Unrealized pension and post-retirement benefit obligations gain (loss)	(0.1)		(0.3)
Unrealized currency translation gains (losses)	29.8	(15.6)	31.0	(46.3)
Other	(0.2)	0.2	(0.2)	0.4
Comprehensive income	$ 244.5	$ 87.7	$ 480.3	$ 289.1

XML

Consolidated Balance Sheets - USD ($) $ in Millions	Nov. 26, 2023	May 28, 2023
Current assets:
Cash and cash equivalents	$ 78.3	$ 304.8
Receivables, less allowance for doubtful accounts of $2.4 and $2.6	766.2	724.2
Inventories	1,153.6	932.0
Prepaid expenses and other current assets	82.8	166.2
Total current assets	2,080.9	2,127.2
Property, plant and equipment, net	3,173.6	2,808.0
Operating lease assets	140.0	146.1
Goodwill	1,065.1	1,040.7
Intangible assets, net	109.1	110.2
Other assets	476.6	287.6
Total assets	7,045.3	6,519.8
Current liabilities:
Short-term borrowings	294.3	158.5
Current portion of long-term debt and financing obligations	55.0	55.3
Accounts payable	834.5	636.6
Accrued liabilities	434.0	509.8
Total current liabilities	1,617.8	1,360.2
Long-term liabilities:
Long-term debt and financing obligations, excluding current portion	3,252.5	3,248.4
Deferred income taxes	260.3	252.1
Other noncurrent liabilities	247.0	247.8
Total long-term liabilities	3,759.8	3,748.3
Commitments and contingencies
Stockholders' equity:
Common stock of $1.00 par value, 600,000,000 shares authorized; 150,694,839 and 150,293,511 shares issued	150.7	150.3
Treasury stock, at cost, 6,326,519 and 4,627,828 common shares	(479.4)	(314.3)
Additional distributed capital	(535.9)	(558.6)
Retained earnings	2,528.6	2,160.7
Accumulated other comprehensive income (loss)	3.7	(26.8)
Total stockholders' equity	1,667.7	1,411.3
Total liabilities and stockholders' equity	$ 7,045.3	$ 6,519.8

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Nov. 26, 2023	May 28, 2023
Receivables
Allowance for doubtful accounts	$ 2.4	$ 2.6
Common stock
Common stock, par value (in dollars per share)	$ 1.00	$ 1.00
Common stock, authorized shares (in shares)	600,000,000	600,000,000
Common stock, issued shares (in shares)	150,694,839	150,293,511
Treasury stock
Treasury stock, common shares (in shares)	6,326,519	4,627,828

XML

Consolidated Statements of Stockholders' Equity - USD ($) $ in Millions	Common Stock	Treasury Stock	Additional Paid-in (Distributed) Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Total
Balance at the beginning of the period at May. 29, 2022	$ 148.0	$ (264.1)	$ (813.3)	$ 1,305.5	$ (15.6)	$ 360.5
Balance at the beginning of the period (in shares) at May. 29, 2022	144,071,428
Increase (Decrease) in Stockholders' Equity
Dividends declared				(70.5)		(70.5)
Common stock issued	$ 0.3		1.3			1.6
Common stock issued (in shares)	285,399
Stock-settled, stock-based compensation expense			17.6			17.6
Repurchase of common stock and common stock withheld to cover taxes		(33.4)				(33.4)
Repurchase of common stock and common stock withheld to cover taxes (in shares)	(486,518)
Other			8.9	(0.8)		8.1
Comprehensive income (loss)				335.0	(45.9)	289.1
Balance at the end of the period at Nov. 27, 2022	$ 148.3	(297.5)	(785.5)	1,569.2	(61.5)	573.0
Balance at the end of the period (in shares) at Nov. 27, 2022	143,870,309
Balance at the beginning of the period at Aug. 28, 2022	$ 148.3	(297.1)	(796.9)	1,501.8	(46.1)	510.0
Balance at the beginning of the period (in shares) at Aug. 28, 2022	143,830,587
Increase (Decrease) in Stockholders' Equity
Dividends declared				(35.3)		(35.3)
Common stock issued			1.1			1.1
Common stock issued (in shares)	44,008
Stock-settled, stock-based compensation expense			10.0			10.0
Repurchase of common stock and common stock withheld to cover taxes		(0.4)				(0.4)
Repurchase of common stock and common stock withheld to cover taxes (in shares)	(4,286)
Other			0.3	(0.4)		(0.1)
Comprehensive income (loss)				103.1	(15.4)	87.7
Balance at the end of the period at Nov. 27, 2022	$ 148.3	(297.5)	(785.5)	1,569.2	(61.5)	573.0
Balance at the end of the period (in shares) at Nov. 27, 2022	143,870,309
Balance at the beginning of the period at May. 28, 2023	$ 150.3	(314.3)	(558.6)	2,160.7	(26.8)	1,411.3
Balance at the beginning of the period (in shares) at May. 28, 2023	145,665,683
Increase (Decrease) in Stockholders' Equity
Dividends declared				(81.2)		(81.2)
Common stock issued	$ 0.4		(0.2)			0.2
Common stock issued (in shares)	401,328
Stock-settled, stock-based compensation expense			22.2			22.2
Repurchase of common stock and common stock withheld to cover taxes		(164.3)				(164.3)
Repurchase of common stock and common stock withheld to cover taxes (in shares)	(1,698,691)
Other		(0.8)	0.7	(0.7)		(0.8)
Comprehensive income (loss)				449.8	30.5	480.3
Balance at the end of the period at Nov. 26, 2023	$ 150.7	(479.4)	(535.9)	2,528.6	3.7	1,667.7
Balance at the end of the period (in shares) at Nov. 26, 2023	144,368,320
Balance at the beginning of the period at Aug. 27, 2023	$ 150.7	(427.8)	(548.7)	2,354.6	(25.8)	1,503.0
Balance at the beginning of the period (in shares) at Aug. 27, 2023	144,926,900
Increase (Decrease) in Stockholders' Equity
Dividends declared				(40.4)		(40.4)
Common stock issued			(0.2)			(0.2)
Common stock issued (in shares)	15,679
Stock-settled, stock-based compensation expense			12.3			12.3
Repurchase of common stock and common stock withheld to cover taxes		(50.8)				(50.8)
Repurchase of common stock and common stock withheld to cover taxes (in shares)	(574,259)
Other		(0.8)	0.7	(0.6)		(0.7)
Comprehensive income (loss)				215.0	29.5	244.5
Balance at the end of the period at Nov. 26, 2023	$ 150.7	$ (479.4)	$ (535.9)	$ 2,528.6	$ 3.7	$ 1,667.7
Balance at the end of the period (in shares) at Nov. 26, 2023	144,368,320

XML

Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares	3 Months Ended			6 Months Ended
	Feb. 25, 2024	Nov. 26, 2023	Nov. 27, 2022	Nov. 26, 2023	Nov. 27, 2022
Dividends
Dividends declared (in dollars per share)	$ 0.36	$ 0.280	$ 0.245	$ 0.560	$ 0.490

XML

Consolidated Statements of Cash Flows - USD ($) $ in Millions	6 Months Ended
	Nov. 26, 2023	Nov. 27, 2022
Cash flows from operating activities
Net income	$ 449.8	$ 335.0
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangibles and debt issuance costs	140.7	102.0
Stock-settled, stock-based compensation expense	22.2	17.6
Equity method investment earnings in excess of distributions	(11.3)	(67.6)
Deferred income taxes	5.8	(6.8)
Foreign currency remeasurement (gain) loss	(0.1)	(16.8)
Other	(1.3)	(13.2)
Changes in operating assets and liabilities, net of acquisitions:
Receivables	(35.2)	(54.8)
Inventories	(216.0)	(240.1)
Income taxes payable/receivable, net	27.6	24.8
Prepaid expenses and other current assets	68.8	52.7
Accounts payable	96.1	140.6
Accrued liabilities	(91.9)	14.6
Net cash provided by operating activities	455.2	288.0
Cash flows from investing activities
Additions to property, plant and equipment	(507.6)	(232.9)
Additions to other long-term assets	(58.9)	(37.4)
Acquisition of business, net of cash acquired/ Acquisition of interests in joint ventures, net	(11.2)	(42.3)
Other	6.9	1.6
Net cash used for investing activities	(570.8)	(311.0)
Cash flows from financing activities
Proceeds from short-term borrowings, net	133.7
Proceeds from issuance of debt	28.4	23.3
Repayments of debt and financing obligations	(27.7)	(16.7)
Dividends paid	(81.6)	(70.6)
Repurchase of common stock and common stock withheld to cover taxes	(164.3)	(34.9)
Other	(0.5)	2.3
Net cash used for financing activities	(112.0)	(96.6)
Effect of exchange rate changes on cash and cash equivalents	1.1	14.0
Net decrease in cash and cash equivalents	(226.5)	(105.6)
Cash and cash equivalents, beginning of period	304.8	525.0
Cash and cash equivalents, end of period	$ 78.3	$ 419.4

XML

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Nov. 26, 2023

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.    NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Lamb Weston Holdings, Inc. (“we,” “us,” “our,” the “Company,” or “Lamb Weston”) is a leading global producer, distributor, and marketer of value-added frozen potato products and is headquartered in Eagle, Idaho. Beginning in fiscal 2024, in connection with our recent acquisitions and to align with our expanded global footprint, we began managing our operations in two reportable segments: North America and International. See Note 12, Segments, for additional information on our reportable segments.

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements present the financial results of Lamb Weston and its consolidated subsidiaries for the thirteen and twenty-six weeks ended November 26, 2023 and November 27, 2022, and have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America (“U.S.”).

These consolidated financial statements are unaudited and include all adjustments that we consider necessary for a fair presentation of such financial statements and consist only of normal recurring adjustments. The preparation of financial statements involves the use of estimates and accruals. The actual results that we experience may differ materially from those estimates. Results for interim periods should not be considered indicative of results for our full fiscal year, which ends the last Sunday in May.

These financial statements and related condensed notes should be read together with the consolidated financial statements and notes in our Annual Report on Form 10-K for the fiscal year ended May 28, 2023 (the “Form 10-K”), where we include additional information on our critical accounting estimates, policies, and the methods and assumptions used in our estimates. We filed the Form 10-K with the Securities and Exchange Commission (“SEC”) on July 25, 2023.

Certain amounts from prior period consolidated financial statements have been reclassified to conform with current period presentation.

Accounting Pronouncements Not Yet Adopted

In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06, Disclosure Improvements: Codification Amendments in Response to the Securities and Exchange Commission’s Disclosure Update and Simplification Initiative. The amendments in this update modify the disclosure or presentation requirements of a variety of Topics in the Accounting Standards Codification (“ASC”) in response to the SEC’s Release No. 33-10532, Disclosure Update and Simplification Initiative, and align the ASC’s requirements with the SEC’s regulations. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective. Early adoption is prohibited. We do not expect the adoption of this ASU to have a material impact on our consolidated financial statements and related disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The ASU is effective for our Annual Report on Form 10-K for the fiscal year ending May 25, 2025, and subsequent interim periods, with early adoption permitted. We are evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance transparency and decision usefulness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, on a prospective basis, with early adoption permitted. We are evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures.

There were no other accounting pronouncements recently issued that had or are expected to have a material impact on our consolidated financial statements.

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EARNINGS PER SHARE

6 Months Ended

Nov. 26, 2023

EARNINGS PER SHARE

EARNINGS PER SHARE

2.    EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per common share for the periods presented:

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 26,		November 27,		November 26,		November 27,
(in millions, except per share amounts)	2023		2022		2023		2022
Numerator:
Net income	$	215.0	$	103.1	$	449.8	$	335.0
Denominator:
Basic weighted average common shares outstanding		144.9		144.0		145.3		144.0
Add: Dilutive effect of employee incentive plans (a)		0.6		0.6		0.7		0.6
Diluted weighted average common shares outstanding		145.5		144.6		146.0		144.6
Earnings per share:
Basic	$	1.48	$	0.72	$	3.10	$	2.33
Diluted	$	1.48	$	0.71	$	3.08	$	2.32

(a) Potential dilutive shares of common stock under employee incentive plans are determined by applying the treasury stock method to the assumed exercise of outstanding stock options and the assumed vesting of outstanding restricted stock units and performance awards. As of November 26, 2023, 0.7 million shares of stock-based awards were excluded from the computation of diluted earnings per share because they would be antidilutive. As of November 27, 2022, 0.6 million shares of stock-based awards were excluded from the computation of diluted earnings per share because they would be antidilutive.

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INCOME TAXES

6 Months Ended

Nov. 26, 2023

INCOME TAXES

INCOME TAXES

3.    INCOME TAXES

Income tax expense for the thirteen and twenty-six weeks ended November 26, 2023 and November 27, 2022 was as follows:

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 26,		November 27,		November 26,		November 27,
(in millions)	2023		2022		2023		2022
Income before income taxes and equity method earnings	$	276.5	$	247.2	$	569.1	$	378.2
Equity method investment earnings (loss)		4.7		(107.3)		16.8		67.3
Income tax expense		66.2		36.8		136.1		110.5
Effective tax rate (a)		23.5%		26.3%		23.2%		24.8%

(a) The effective income tax rate is calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings. The effective tax rate varies from the U.S. statutory tax rate of 21% principally due to the impact of U.S. state taxes, foreign taxes and currency, permanent differences, and discrete items.

Income Taxes Paid

Income taxes paid, net of refunds, were $101.1 million and $92.1 million during the twenty-six weeks ended November 26, 2023 and November 27, 2022, respectively.

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INVENTORIES

6 Months Ended

Nov. 26, 2023

INVENTORIES

INVENTORIES

4.    INVENTORIES

Inventories are valued at the lower of cost (determined using the first-in, first-out method) or net realizable value and include all costs directly associated with manufacturing products: materials, labor, and manufacturing overhead. The components of inventories were as follows:

	November 26,		May 28,
(in millions)	2023		2023
Raw materials and packaging	$	337.2	$	145.7
Finished goods		732.0		708.3
Supplies and other		84.4		78.0
Inventories	$	1,153.6	$	932.0

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PROPERTY, PLANT AND EQUIPMENT

6 Months Ended

Nov. 26, 2023

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT

5.    PROPERTY, PLANT AND EQUIPMENT

The components of property, plant and equipment were as follows:

	November 26,		May 28,
(in millions)	2023		2023
Land and land improvements	$	169.2	$	163.2
Buildings, machinery and equipment		3,915.0		3,576.6
Furniture, fixtures, office equipment and other		120.0		112.0
Construction in progress		972.5		832.0
Property, plant and equipment, at cost		5,176.7		4,683.8
Less accumulated depreciation		(2,003.1)		(1,875.8)
Property, plant and equipment, net	$	3,173.6	$	2,808.0

Depreciation expense was $66.5 million and $49.7 million for the thirteen weeks ended November 26, 2023 and November 27, 2022, respectively; and $132.4 million and $97.0 million for the twenty-six weeks ended November 26, 2023 and November 27, 2022, respectively. At November 26, 2023 and May 28, 2023, purchases of property, plant and equipment included in accounts payable were $188.7 million and $82.6 million, respectively.

Interest capitalized within construction in progress for the thirteen weeks ended November 26, 2023 and November 27, 2022, was $13.0 million and $4.1 million, respectively; and $23.5 million and $6.1 million for the twenty-six weeks ended November 26, 2023 and November 27, 2022, respectively.

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GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

6 Months Ended

Nov. 26, 2023

GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

6.    GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

The following table presents changes in goodwill balances, by segment, for the twenty-six weeks ended November 26, 2023:

(in millions)	North America		International		Total
Balance at May 28, 2023 (a)	$	722.4	$	318.3	$	1,040.7
Acquisition		—		8.5		8.5
Foreign currency translation adjustment		10.1		5.8		15.9
Balance at November 26, 2023	$	732.5	$	332.6	$	1,065.1

(a) As a result of our change in segments, effective May 29, 2023, goodwill was reassigned to the North America and International segments based on relative fair value using a market-based approach. Before and after the reassignment of our goodwill, we completed impairment assessments and concluded there were no indications of impairment in our segments.  See Note 12, Segments, for more information related to the change in segments.  

Other identifiable intangible assets were as follows:

	November 26, 2023							May 28, 2023
	Weighted							Weighted
	Average	Gross						Average	Gross
	Useful Life	Carrying		Accumulated		Intangible		Useful Life	Carrying		Accumulated		Intangible
(in millions, except useful lives)	(in years)	Amount		Amortization		Assets, Net		(in years)	Amount		Amortization		Assets, Net
Non-amortizing intangible assets (a)	n/a	$	18.0	$	—	$	18.0	n/a	$	18.0	$	—	$	18.0
Amortizing intangible assets (b)	14		124.2		(33.1)		91.1	14		121.4		(29.2)		92.2
		$	142.2	$	(33.1)	$	109.1		$	139.4	$	(29.2)	$	110.2

(a) Non-amortizing intangible assets represent brands and trademarks.

(b) Amortizing intangible assets are principally composed of licensing agreements, brands, and customer relationships. Amortization expense, including developed technology amortization expense, was $2.6 million and $1.5 million for the thirteen weeks ended November 26, 2023 and November 27, 2022, respectively; and $5.3 million and $2.9 million for the twenty-six weeks ended November 26, 2023 and November 27, 2022, respectively. Foreign intangible assets are affected by foreign currency translation.

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OTHER ASSETS

6 Months Ended

Nov. 26, 2023

OTHER ASSETS

OTHER ASSETS

7.    OTHER ASSETS

The components of other assets were as follows:

	November 26,		May 28,
(in millions)	2023		2023
Capitalized software costs	$	227.5	$	175.4
Property, plant and equipment deposits		159.4		30.5
Equity method investments		54.6		43.5
Other		35.1		38.2
Other assets	$	476.6	$	287.6

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ACCRUED LIABILITIES

6 Months Ended

Nov. 26, 2023

ACCRUED LIABILITIES

ACCRUED LIABILITIES

8.   ACCRUED LIABILITIES

The components of accrued liabilities were as follows:

	November 26,		May 28,
(in millions)	2023		2023
Compensation and benefits	$	115.6	$	187.5
Accrued trade promotions		79.3		86.1
Dividends payable to shareholders		40.4		40.8
Taxes payable		36.5		21.2
Accrued interest		31.6		31.1
Current portion of operating lease obligations		28.1		28.5
Derivative liabilities and payables		23.6		53.9
Plant utilities and accruals		21.0		27.2
Other		57.9		33.5
Accrued liabilities	$	434.0	$	509.8

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DEBT AND FINANCING OBLIGATIONS

6 Months Ended

Nov. 26, 2023

DEBT AND FINANCING OBLIGATIONS

DEBT AND FINANCING OBLIGATIONS

9.   DEBT AND FINANCING OBLIGATIONS

The components of our debt, including financing obligations, were as follows:

(in millions)	November 26, 2023				May 28, 2023
		Amount	Interest Rate			Amount	Interest Rate
Short-term borrowings:
U.S. revolving credit facility	$	175.0	6.682	%	$	—	7.710	%
Euro revolving credit facility		98.5	4.695			149.2	4.230
Other credit facilities		23.5	(a)			11.4	(a)
		297.0				160.6
Long-term debt:
Term A-1 loan facility, due June 2026 (b)		236.2	7.203			243.8	5.210
Term A-2 loan facility, due April 2025 (b)		272.2	7.203			280.3	5.380
Term A-3 loan facility, due January 2030 (b)		438.8	7.353			450.0	6.850
RMB loan facility, due February 2027		122.3	4.545			94.7	4.600
Euro loan facility, due December 2024		82.0	4.101			80.4	2.010
4.875% senior notes, due May 2028		500.0	4.875			500.0	4.875
4.125% senior notes, due January 2030		970.0	4.125			970.0	4.125
4.375% senior notes, due January 2032		700.0	4.375			700.0	4.375
		3,321.5				3,319.2
Financing obligations:
Lease financing obligations due on various dates through 2040		6.9				7.7
Total debt and financing obligations		3,625.4				3,487.5
Debt issuance costs and debt discounts (c)		(23.6)				(25.3)
Short-term borrowings, net of debt discounts		(294.3)				(158.5)
Current portion of long-term debt and financing obligations		(55.0)				(55.3)
Long-term debt and financing obligations, excluding current portion	$	3,252.5			$	3,248.4

(a) Other credit facilities consist of several short-term facilities at one of our subsidiaries used for working capital needs and have various interest rates.

(b) The interest rates on the Term A-1, A-2, and A-3 loans do not include anticipated patronage dividends. We have received and expect to continue receiving patronage dividends under all three term loan facilities.

(c) Excludes debt issuance costs of $2.1 million and $2.5 million as of November 26, 2023 and May 28, 2023, respectively, related to our U.S. revolving credit facility, which are recorded in “Other assets” on our Consolidated Balance Sheets.

As of November 26, 2023, we had $175.0 million of borrowings outstanding under our U.S. revolving credit facility and $819.6 million of availability under the facility, which is net of outstanding letters of credit of $5.4 million.

For the twenty-six weeks ended November 26, 2023 and November 27, 2022, we paid $89.4 million and $76.6 million of interest on debt, respectively.

For more information about our debt and financing obligations, interest rates, and debt covenants, see Note 8, Debt and Financing Obligations, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of the Form 10-K.

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FAIR VALUE MEASUREMENTS

6 Months Ended

Nov. 26, 2023

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

10.   FAIR VALUE MEASUREMENTS

The fair values of cash equivalents, receivables, accounts payable, and short-term debt approximate their carrying amounts due to their short duration.

The following table presents our financial assets and liabilities measured at fair value on a recurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall:

	As of November 26, 2023
							Fair Value
							of Assets
(in millions)	Level 1		Level 2		Level 3		(Liabilities)
Derivative assets (a)	$	—	$	2.4	$	—	$	2.4
Derivative liabilities (a)		—		(21.4)		—		(21.4)
Deferred compensation liabilities (b)		—		(25.8)		—		(25.8)
Fair value, net	$	—	$	(44.8)	$	—	$	(44.8)

	As of May 28, 2023
							Fair Value
							of Assets
(in millions)	Level 1		Level 2		Level 3		(Liabilities)
Derivative assets (a)	$	—	$	3.0	$	—	$	3.0
Derivative liabilities (a)		—		(46.6)		—		(46.6)
Deferred compensation liabilities (b)		—		(22.6)		—		(22.6)
Fair value, net	$	—	$	(66.2)	$	—	$	(66.2)

(a) Derivative assets and liabilities included in Level 2 primarily represent commodity swaps, option contracts, interest rate swaps and currency contracts. The fair values of our Level 2 derivative assets were determined using valuation models that use market observable inputs including both forward and spot prices for commodities and foreign currencies. Derivative assets are presented within “Prepaid expenses and other current assets” on our Consolidated Balance Sheets and derivative liabilities are presented within “Accrued liabilities” on our Consolidated Balance Sheets.

(b) The fair values of our Level 2 deferred compensation liabilities were valued using third-party valuations, which are based on the net asset values of mutual funds in our retirement plans. While the underlying assets are actively traded on an exchange, the funds are not. Deferred compensation liabilities are primarily presented within “Other noncurrent liabilities” on our Consolidated Balance Sheets.

As of November 26, 2023, we had $2,170.0 million of fixed-rate and $1,448.5 million of variable-rate debt outstanding. Based on current market rates, the fair value of our fixed-rate debt was estimated to be $1,946.8 million. Any differences between the book value and fair value are due to the difference between the period-end market interest rate and the stated rate of our fixed-rate debt. The fair value of our variable-rate term debt approximates the carrying amount as our cost of borrowing is variable and approximates current market prices.

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STOCKHOLDERS' EQUITY

6 Months Ended

Nov. 26, 2023

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

11.   STOCKHOLDERS’ EQUITY

Share Repurchase Program

On October 11, 2023, we announced that our Board of Directors increased our share repurchase authorization to an aggregate amount of $500.0 million, including approximately $124.0 million of remaining unused capacity under the Board’s previous share repurchase authorization. The program has no expiration date. During the thirteen weeks ended November 26, 2023, we repurchased 571,986 shares for an aggregate purchase price of $50.0 million, or a weighted-average price of $87.41 per share. During the twenty-six weeks ended November 26, 2023, we repurchased 1,564,351 shares for an aggregate purchase price of $150.0 million, or a weighted-average price of $95.89 per share. As of November 26, 2023, $450.0 million remained authorized for repurchase under the program.

Dividends

During the twenty-six weeks ended November 26, 2023, we paid $81.6 million of cash dividends to our common stockholders. In addition, on December 1, 2023, we paid $40.4 million of cash dividends to common stockholders of record as of the close of business on November 3, 2023. On December 14, 2023, our Board of Directors declared a cash dividend of $0.36 per share of our common stock. This dividend will be paid on March 1, 2024, to common stockholders of record as of the close of business on February 2, 2024.

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss), net of taxes, as of November 26, 2023 were as follows:

	Foreign						Accumulated
	Currency		Pension and				Other
	Translation		Post-Retirement				Comprehensive
(in millions)	Gain (Loss)		Benefits		Other		Income (Loss)
Balance as of May 28, 2023	$	(27.1)	$	(0.7)	$	1.0	$	(26.8)
Other comprehensive income before reclassifications, net of tax		31.0		(0.3)		(0.2)		30.5
Net current-period other comprehensive income		31.0		(0.3)		(0.2)		30.5
Balance as of November 26, 2023	$	3.9	$	(1.0)	$	0.8	$	3.7

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SEGMENTS

6 Months Ended

Nov. 26, 2023

SEGMENTS

SEGMENTS

12.    SEGMENTS

Effective May 29, 2023, to align with our expanded global footprint following the completion of our acquisition of the remaining 50% equity interest in Lamb-Weston/Meijer v.o.f., our former European joint venture (“LW EMEA”), 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				Twenty-Six Weeks Ended
	November 26,		November 27,		November 26,		November 27,
(in millions)	2023		2022		2023		2022
Segment net sales
North America	$	1,167.1	$	1,062.5	$	2,302.5	$	2,018.1
International (a)		565.0		214.0		1,094.9		384.0
	$	1,732.1	$	1,276.5	$	3,397.4	$	2,402.1

Thirteen Weeks Ended November 26, 2023		North America		International (a)		Unallocated Corporate Costs (b)		Total Company
Adjusted EBITDA (c)	$	321.3	$	100.2	$	(44.6)	$	376.9
Unrealized derivative losses		—		—		1.6		1.6
Foreign currency exchange gains		—		—		(9.2)		(9.2)
Items impacting comparability:
Inventory step-up from acquisition		—		(1.8)		—		(1.8)
Integration and acquisition-related items, net		—		—		4.8		4.8
Depreciation and amortization (d)		43.3		26.8		1.1		71.2
Income (loss) from operations including equity method investment earnings	$	278.0	$	75.2	$	(42.9)		310.3
Interest expense, net								29.1
Income tax expense								66.2
Net income							$	215.0

Thirteen Weeks Ended November 27, 2022
Adjusted EBITDA	$	299.6	$	60.2	$	(30.9)	$	328.9
Unrealized derivative gains		—		—		(0.4)		(0.4)
Foreign currency exchange losses		—		—		1.4		1.4
Unconsolidated joint venture unrealized derivative losses		—		—		130.1		130.1
Item impacting comparability:
Integration and acquisition-related items, net		—		—		(26.5)		(26.5)
Depreciation and amortization (d)		42.7		16.7		0.4		59.8
Income (loss) from operations including equity method investment earnings	$	256.9	$	43.5	$	(135.9)		164.5
Interest expense, net								24.6
Income tax expense								36.8
Net income							$	103.1

Twenty-Six Weeks Ended November 26, 2023		North America		International (a)		Unallocated Corporate Costs (b)		Total Company
Adjusted EBITDA (c)	$	700.7	$	189.8	$	(100.8)	$	789.7
Unrealized derivative gains		—		—		(25.7)		(25.7)
Foreign currency exchange gains		—		—		(1.8)		(1.8)
Items impacting comparability:
Inventory step-up from acquisition		—		20.7		—		20.7
Integration and acquisition-related items, net		—		—		8.8		8.8
Depreciation and amortization (d)		87.0		53.0		2.0		142.0
Income (loss) from operations including equity method investment earnings	$	613.7	$	116.1	$	(84.1)		645.7
Interest expense, net								59.8
Income tax expense								136.1
Net income							$	449.8

Twenty-Six Weeks Ended November 27, 2022
Adjusted EBITDA	$	531.4	$	93.3	$	(61.2)	$	563.5
Unrealized derivative losses		—		—		3.6		3.6
Foreign currency exchange losses		—		—		2.4		2.4
Unconsolidated joint venture unrealized derivative gains		—		—		(14.4)		(14.4)
Items impacting comparability:
Integration and acquisition-related items, net		—		—		(26.5)		(26.5)
Gain on acquisition of interest in joint ventures (e)		—		(15.1)		—		(15.1)
Depreciation and amortization (d)		84.0		32.5		0.9		117.4
Income (loss) from operations including equity method investment earnings	$	447.4	$	75.9	$	(27.2)		496.1
Interest expense, net								50.6
Income tax expense								110.5
Net income							$	335.0

(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 and twenty-six weeks ended November 26, 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 and twenty-six weeks ended November 27, 2022.  

(b) 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 and twenty-six weeks ended November 26, 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 Consolidated Statements of Earnings in the International segment.

(c) The thirteen and twenty-six weeks ended November 26, 2023 included a $70.9 million charge ($53.9 million after-tax, or $0.37 per share) related to a write-off of excess raw potatoes. The total charge to the reporting segments was as follows: $63.3 million to the North America segment and $7.6 million to the International segment.

(d) Depreciation and amortization included interest expense, income tax expense, and depreciation and amortization from equity method investments of $2.1 million and $8.6 million for the thirteen weeks ended November 26, 2023 and November 27, 2022, respectively; and $4.3 million and $17.6 million for the twenty-six weeks ended November 26, 2023 and November 27, 2022, respectively.

(e) The twenty-six weeks ended November 27, 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 in LWAMSA 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.

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COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS

6 Months Ended

Nov. 26, 2023

COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS

COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS

13.   COMMITMENTS, CONTINGENCIES, GUARANTEES AND LEGAL PROCEEDINGS

We have financial commitments and obligations that arise in the ordinary course of our business. These include long-term debt, lease obligations, purchase commitments for goods and services, and legal proceedings. There have been no material changes to the commitments, contingencies, guarantees and legal proceedings disclosed in Note 14, Commitments, Contingencies, Guarantees, and Legal Proceedings, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of the Form 10-K.

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NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Nov. 26, 2023

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements present the financial results of Lamb Weston and its consolidated subsidiaries for the thirteen and twenty-six weeks ended November 26, 2023 and November 27, 2022, and have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America (“U.S.”).

These consolidated financial statements are unaudited and include all adjustments that we consider necessary for a fair presentation of such financial statements and consist only of normal recurring adjustments. The preparation of financial statements involves the use of estimates and accruals. The actual results that we experience may differ materially from those estimates. Results for interim periods should not be considered indicative of results for our full fiscal year, which ends the last Sunday in May.

These financial statements and related condensed notes should be read together with the consolidated financial statements and notes in our Annual Report on Form 10-K for the fiscal year ended May 28, 2023 (the “Form 10-K”), where we include additional information on our critical accounting estimates, policies, and the methods and assumptions used in our estimates. We filed the Form 10-K with the Securities and Exchange Commission (“SEC”) on July 25, 2023.

Certain amounts from prior period consolidated financial statements have been reclassified to conform with current period presentation.

Inventories

Inventories are valued at the lower of cost (determined using the first-in, first-out method) or net realizable value and include all costs directly associated with manufacturing products: materials, labor, and manufacturing overhead.

Accounting Pronouncements Not Yet Adopted

Accounting Pronouncements Not Yet Adopted

In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06, Disclosure Improvements: Codification Amendments in Response to the Securities and Exchange Commission’s Disclosure Update and Simplification Initiative. The amendments in this update modify the disclosure or presentation requirements of a variety of Topics in the Accounting Standards Codification (“ASC”) in response to the SEC’s Release No. 33-10532, Disclosure Update and Simplification Initiative, and align the ASC’s requirements with the SEC’s regulations. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective. Early adoption is prohibited. We do not expect the adoption of this ASU to have a material impact on our consolidated financial statements and related disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The ASU is effective for our Annual Report on Form 10-K for the fiscal year ending May 25, 2025, and subsequent interim periods, with early adoption permitted. We are evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance transparency and decision usefulness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, on a prospective basis, with early adoption permitted. We are evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures.

There were no other accounting pronouncements recently issued that had or are expected to have a material impact on our consolidated financial statements.

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EARNINGS PER SHARE (Tables)

6 Months Ended

Nov. 26, 2023

EARNINGS PER SHARE

Schedule of computation of basic and diluted earnings per common share

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 26,		November 27,		November 26,		November 27,
(in millions, except per share amounts)	2023		2022		2023		2022
Numerator:
Net income	$	215.0	$	103.1	$	449.8	$	335.0
Denominator:
Basic weighted average common shares outstanding		144.9		144.0		145.3		144.0
Add: Dilutive effect of employee incentive plans (a)		0.6		0.6		0.7		0.6
Diluted weighted average common shares outstanding		145.5		144.6		146.0		144.6
Earnings per share:
Basic	$	1.48	$	0.72	$	3.10	$	2.33
Diluted	$	1.48	$	0.71	$	3.08	$	2.32

(a) Potential dilutive shares of common stock under employee incentive plans are determined by applying the treasury stock method to the assumed exercise of outstanding stock options and the assumed vesting of outstanding restricted stock units and performance awards. As of November 26, 2023, 0.7 million shares of stock-based awards were excluded from the computation of diluted earnings per share because they would be antidilutive. As of November 27, 2022, 0.6 million shares of stock-based awards were excluded from the computation of diluted earnings per share because they would be antidilutive.

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INCOME TAXES (Tables)

6 Months Ended

Nov. 26, 2023

INCOME TAXES

Schedule of income tax expense

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 26,		November 27,		November 26,		November 27,
(in millions)	2023		2022		2023		2022
Income before income taxes and equity method earnings	$	276.5	$	247.2	$	569.1	$	378.2
Equity method investment earnings (loss)		4.7		(107.3)		16.8		67.3
Income tax expense		66.2		36.8		136.1		110.5
Effective tax rate (a)		23.5%		26.3%		23.2%		24.8%

(a) The effective income tax rate is calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings. The effective tax rate varies from the U.S. statutory tax rate of 21% principally due to the impact of U.S. state taxes, foreign taxes and currency, permanent differences, and discrete items.

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INVENTORIES (Tables)

6 Months Ended

Nov. 26, 2023

INVENTORIES

Schedule of components of inventories

	November 26,		May 28,
(in millions)	2023		2023
Raw materials and packaging	$	337.2	$	145.7
Finished goods		732.0		708.3
Supplies and other		84.4		78.0
Inventories	$	1,153.6	$	932.0

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PROPERTY, PLANT AND EQUIPMENT (Tables)

6 Months Ended

Nov. 26, 2023

PROPERTY, PLANT AND EQUIPMENT

Schedule of property, plant and equipment

	November 26,		May 28,
(in millions)	2023		2023
Land and land improvements	$	169.2	$	163.2
Buildings, machinery and equipment		3,915.0		3,576.6
Furniture, fixtures, office equipment and other		120.0		112.0
Construction in progress		972.5		832.0
Property, plant and equipment, at cost		5,176.7		4,683.8
Less accumulated depreciation		(2,003.1)		(1,875.8)
Property, plant and equipment, net	$	3,173.6	$	2,808.0

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GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS (Tables)

6 Months Ended

Nov. 26, 2023

GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS

Schedule of changes in the carrying amount of goodwill

(in millions)	North America		International		Total
Balance at May 28, 2023 (a)	$	722.4	$	318.3	$	1,040.7
Acquisition		—		8.5		8.5
Foreign currency translation adjustment		10.1		5.8		15.9
Balance at November 26, 2023	$	732.5	$	332.6	$	1,065.1

(a) As a result of our change in segments, effective May 29, 2023, goodwill was reassigned to the North America and International segments based on relative fair value using a market-based approach. Before and after the reassignment of our goodwill, we completed impairment assessments and concluded there were no indications of impairment in our segments.  See Note 12, Segments, for more information related to the change in segments.  

Schedule of other identifiable intangible assets, non-amortizing intangible assets

	November 26, 2023							May 28, 2023
	Weighted							Weighted
	Average	Gross						Average	Gross
	Useful Life	Carrying		Accumulated		Intangible		Useful Life	Carrying		Accumulated		Intangible
(in millions, except useful lives)	(in years)	Amount		Amortization		Assets, Net		(in years)	Amount		Amortization		Assets, Net
Non-amortizing intangible assets (a)	n/a	$	18.0	$	—	$	18.0	n/a	$	18.0	$	—	$	18.0
Amortizing intangible assets (b)	14		124.2		(33.1)		91.1	14		121.4		(29.2)		92.2
		$	142.2	$	(33.1)	$	109.1		$	139.4	$	(29.2)	$	110.2

(a) Non-amortizing intangible assets represent brands and trademarks.

(b) Amortizing intangible assets are principally composed of licensing agreements, brands, and customer relationships. Amortization expense, including developed technology amortization expense, was $2.6 million and $1.5 million for the thirteen weeks ended November 26, 2023 and November 27, 2022, respectively; and $5.3 million and $2.9 million for the twenty-six weeks ended November 26, 2023 and November 27, 2022, respectively. Foreign intangible assets are affected by foreign currency translation.

Schedule of other identifiable intangible assets, amortizing intangible assets

	November 26, 2023							May 28, 2023
	Weighted							Weighted
	Average	Gross						Average	Gross
	Useful Life	Carrying		Accumulated		Intangible		Useful Life	Carrying		Accumulated		Intangible
(in millions, except useful lives)	(in years)	Amount		Amortization		Assets, Net		(in years)	Amount		Amortization		Assets, Net
Non-amortizing intangible assets (a)	n/a	$	18.0	$	—	$	18.0	n/a	$	18.0	$	—	$	18.0
Amortizing intangible assets (b)	14		124.2		(33.1)		91.1	14		121.4		(29.2)		92.2
		$	142.2	$	(33.1)	$	109.1		$	139.4	$	(29.2)	$	110.2

(a) Non-amortizing intangible assets represent brands and trademarks.

(b) Amortizing intangible assets are principally composed of licensing agreements, brands, and customer relationships. Amortization expense, including developed technology amortization expense, was $2.6 million and $1.5 million for the thirteen weeks ended November 26, 2023 and November 27, 2022, respectively; and $5.3 million and $2.9 million for the twenty-six weeks ended November 26, 2023 and November 27, 2022, respectively. Foreign intangible assets are affected by foreign currency translation.

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OTHER ASSETS (Tables)

6 Months Ended

Nov. 26, 2023

OTHER ASSETS

Schedule of components of other assets

	November 26,		May 28,
(in millions)	2023		2023
Capitalized software costs	$	227.5	$	175.4
Property, plant and equipment deposits		159.4		30.5
Equity method investments		54.6		43.5
Other		35.1		38.2
Other assets	$	476.6	$	287.6

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ACCRUED LIABILITIES (Tables)

6 Months Ended

Nov. 26, 2023

ACCRUED LIABILITIES

Schedule of components of accrued liabilities

	November 26,		May 28,
(in millions)	2023		2023
Compensation and benefits	$	115.6	$	187.5
Accrued trade promotions		79.3		86.1
Dividends payable to shareholders		40.4		40.8
Taxes payable		36.5		21.2
Accrued interest		31.6		31.1
Current portion of operating lease obligations		28.1		28.5
Derivative liabilities and payables		23.6		53.9
Plant utilities and accruals		21.0		27.2
Other		57.9		33.5
Accrued liabilities	$	434.0	$	509.8

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DEBT AND FINANCING OBLIGATIONS (Tables)

6 Months Ended

Nov. 26, 2023

DEBT AND FINANCING OBLIGATIONS

Schedule of debt, including financing obligations

(in millions)	November 26, 2023				May 28, 2023
		Amount	Interest Rate			Amount	Interest Rate
Short-term borrowings:
U.S. revolving credit facility	$	175.0	6.682	%	$	—	7.710	%
Euro revolving credit facility		98.5	4.695			149.2	4.230
Other credit facilities		23.5	(a)			11.4	(a)
		297.0				160.6
Long-term debt:
Term A-1 loan facility, due June 2026 (b)		236.2	7.203			243.8	5.210
Term A-2 loan facility, due April 2025 (b)		272.2	7.203			280.3	5.380
Term A-3 loan facility, due January 2030 (b)		438.8	7.353			450.0	6.850
RMB loan facility, due February 2027		122.3	4.545			94.7	4.600
Euro loan facility, due December 2024		82.0	4.101			80.4	2.010
4.875% senior notes, due May 2028		500.0	4.875			500.0	4.875
4.125% senior notes, due January 2030		970.0	4.125			970.0	4.125
4.375% senior notes, due January 2032		700.0	4.375			700.0	4.375
		3,321.5				3,319.2
Financing obligations:
Lease financing obligations due on various dates through 2040		6.9				7.7
Total debt and financing obligations		3,625.4				3,487.5
Debt issuance costs and debt discounts (c)		(23.6)				(25.3)
Short-term borrowings, net of debt discounts		(294.3)				(158.5)
Current portion of long-term debt and financing obligations		(55.0)				(55.3)
Long-term debt and financing obligations, excluding current portion	$	3,252.5			$	3,248.4

(a) Other credit facilities consist of several short-term facilities at one of our subsidiaries used for working capital needs and have various interest rates.

(b) The interest rates on the Term A-1, A-2, and A-3 loans do not include anticipated patronage dividends. We have received and expect to continue receiving patronage dividends under all three term loan facilities.

(c) Excludes debt issuance costs of $2.1 million and $2.5 million as of November 26, 2023 and May 28, 2023, respectively, related to our U.S. revolving credit facility, which are recorded in “Other assets” on our Consolidated Balance Sheets.

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FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Nov. 26, 2023

FAIR VALUE MEASUREMENTS

Schedule of financial assets and liabilities measured at fair value on recurring basis

	As of November 26, 2023
							Fair Value
							of Assets
(in millions)	Level 1		Level 2		Level 3		(Liabilities)
Derivative assets (a)	$	—	$	2.4	$	—	$	2.4
Derivative liabilities (a)		—		(21.4)		—		(21.4)
Deferred compensation liabilities (b)		—		(25.8)		—		(25.8)
Fair value, net	$	—	$	(44.8)	$	—	$	(44.8)

	As of May 28, 2023
							Fair Value
							of Assets
(in millions)	Level 1		Level 2		Level 3		(Liabilities)
Derivative assets (a)	$	—	$	3.0	$	—	$	3.0
Derivative liabilities (a)		—		(46.6)		—		(46.6)
Deferred compensation liabilities (b)		—		(22.6)		—		(22.6)
Fair value, net	$	—	$	(66.2)	$	—	$	(66.2)

(a) Derivative assets and liabilities included in Level 2 primarily represent commodity swaps, option contracts, interest rate swaps and currency contracts. The fair values of our Level 2 derivative assets were determined using valuation models that use market observable inputs including both forward and spot prices for commodities and foreign currencies. Derivative assets are presented within “Prepaid expenses and other current assets” on our Consolidated Balance Sheets and derivative liabilities are presented within “Accrued liabilities” on our Consolidated Balance Sheets.

(b) The fair values of our Level 2 deferred compensation liabilities were valued using third-party valuations, which are based on the net asset values of mutual funds in our retirement plans. While the underlying assets are actively traded on an exchange, the funds are not. Deferred compensation liabilities are primarily presented within “Other noncurrent liabilities” on our Consolidated Balance Sheets.

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STOCKHOLDERS' EQUITY (Tables)

6 Months Ended

Nov. 26, 2023

STOCKHOLDERS' EQUITY

Schedule of changes in AOCI, net of tax

	Foreign						Accumulated
	Currency		Pension and				Other
	Translation		Post-Retirement				Comprehensive
(in millions)	Gain (Loss)		Benefits		Other		Income (Loss)
Balance as of May 28, 2023	$	(27.1)	$	(0.7)	$	1.0	$	(26.8)
Other comprehensive income before reclassifications, net of tax		31.0		(0.3)		(0.2)		30.5
Net current-period other comprehensive income		31.0		(0.3)		(0.2)		30.5
Balance as of November 26, 2023	$	3.9	$	(1.0)	$	0.8	$	3.7

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SEGMENTS (Tables)

6 Months Ended

Nov. 26, 2023

SEGMENTS

Schedule of segment net sales

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	November 26,		November 27,		November 26,		November 27,
(in millions)	2023		2022		2023		2022
Segment net sales
North America	$	1,167.1	$	1,062.5	$	2,302.5	$	2,018.1
International (a)		565.0		214.0		1,094.9		384.0
	$	1,732.1	$	1,276.5	$	3,397.4	$	2,402.1

Schedule of the reconciliation of adjusted EBITDA to net income

Thirteen Weeks Ended November 26, 2023		North America		International (a)		Unallocated Corporate Costs (b)		Total Company
Adjusted EBITDA (c)	$	321.3	$	100.2	$	(44.6)	$	376.9
Unrealized derivative losses		—		—		1.6		1.6
Foreign currency exchange gains		—		—		(9.2)		(9.2)
Items impacting comparability:
Inventory step-up from acquisition		—		(1.8)		—		(1.8)
Integration and acquisition-related items, net		—		—		4.8		4.8
Depreciation and amortization (d)		43.3		26.8		1.1		71.2
Income (loss) from operations including equity method investment earnings	$	278.0	$	75.2	$	(42.9)		310.3
Interest expense, net								29.1
Income tax expense								66.2
Net income							$	215.0

Thirteen Weeks Ended November 27, 2022
Adjusted EBITDA	$	299.6	$	60.2	$	(30.9)	$	328.9
Unrealized derivative gains		—		—		(0.4)		(0.4)
Foreign currency exchange losses		—		—		1.4		1.4
Unconsolidated joint venture unrealized derivative losses		—		—		130.1		130.1
Item impacting comparability:
Integration and acquisition-related items, net		—		—		(26.5)		(26.5)
Depreciation and amortization (d)		42.7		16.7		0.4		59.8
Income (loss) from operations including equity method investment earnings	$	256.9	$	43.5	$	(135.9)		164.5
Interest expense, net								24.6
Income tax expense								36.8
Net income							$	103.1

Twenty-Six Weeks Ended November 26, 2023		North America		International (a)		Unallocated Corporate Costs (b)		Total Company
Adjusted EBITDA (c)	$	700.7	$	189.8	$	(100.8)	$	789.7
Unrealized derivative gains		—		—		(25.7)		(25.7)
Foreign currency exchange gains		—		—		(1.8)		(1.8)
Items impacting comparability:
Inventory step-up from acquisition		—		20.7		—		20.7
Integration and acquisition-related items, net		—		—		8.8		8.8
Depreciation and amortization (d)		87.0		53.0		2.0		142.0
Income (loss) from operations including equity method investment earnings	$	613.7	$	116.1	$	(84.1)		645.7
Interest expense, net								59.8
Income tax expense								136.1
Net income							$	449.8

Twenty-Six Weeks Ended November 27, 2022
Adjusted EBITDA	$	531.4	$	93.3	$	(61.2)	$	563.5
Unrealized derivative losses		—		—		3.6		3.6
Foreign currency exchange losses		—		—		2.4		2.4
Unconsolidated joint venture unrealized derivative gains		—		—		(14.4)		(14.4)
Items impacting comparability:
Integration and acquisition-related items, net		—		—		(26.5)		(26.5)
Gain on acquisition of interest in joint ventures (e)		—		(15.1)		—		(15.1)
Depreciation and amortization (d)		84.0		32.5		0.9		117.4
Income (loss) from operations including equity method investment earnings	$	447.4	$	75.9	$	(27.2)		496.1
Interest expense, net								50.6
Income tax expense								110.5
Net income							$	335.0

(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 and twenty-six weeks ended November 26, 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 and twenty-six weeks ended November 27, 2022.  

(b) 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 and twenty-six weeks ended November 26, 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 Consolidated Statements of Earnings in the International segment.

(c) The thirteen and twenty-six weeks ended November 26, 2023 included a $70.9 million charge ($53.9 million after-tax, or $0.37 per share) related to a write-off of excess raw potatoes. The total charge to the reporting segments was as follows: $63.3 million to the North America segment and $7.6 million to the International segment.

(d) Depreciation and amortization included interest expense, income tax expense, and depreciation and amortization from equity method investments of $2.1 million and $8.6 million for the thirteen weeks ended November 26, 2023 and November 27, 2022, respectively; and $4.3 million and $17.6 million for the twenty-six weeks ended November 26, 2023 and November 27, 2022, respectively.

(e) The twenty-six weeks ended November 27, 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 in LWAMSA 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.

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NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Segments (Details) - segment	3 Months Ended	6 Months Ended
	Nov. 26, 2023	Nov. 26, 2023
Segments
Number of reportable segments	2	2

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EARNINGS PER SHARE - Tabular Disclosure (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Nov. 26, 2023	Nov. 27, 2022	Nov. 26, 2023	Nov. 27, 2022
Numerator:
Net income	$ 215.0	$ 103.1	$ 449.8	$ 335.0
Net income, basic	215.0	103.1	449.8	335.0
Net income, diluted	$ 215.0	$ 103.1	$ 449.8	$ 335.0
Denominator:
Basic weighted average common shares outstanding (in shares)	144.9	144.0	145.3	144.0
Add: Dilutive effect of employee incentive plans (in shares)	0.6	0.6	0.7	0.6
Diluted weighted average common shares outstanding (in shares)	145.5	144.6	146.0	144.6
Earnings per share:
Basic (in dollars per share)	$ 1.48	$ 0.72	$ 3.10	$ 2.33
Diluted (in dollars per share)	$ 1.48	$ 0.71	$ 3.08	$ 2.32

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EARNINGS PER SHARE - Antidilutive Securities (Details) - shares shares in Millions	6 Months Ended
	Nov. 26, 2023	Nov. 27, 2022
EARNINGS PER SHARE
Antidilutive securities (in shares)	0.7	0.6

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INCOME TAXES - General Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Nov. 26, 2023	Nov. 27, 2022	Nov. 26, 2023	Nov. 27, 2022
INCOME TAXES
Income before income taxes and equity method earnings	$ 276.5	$ 247.2	$ 569.1	$ 378.2
Equity method investment earnings (loss)	4.7	(107.3)	16.8	67.3
Income tax expense	$ 66.2	$ 36.8	$ 136.1	$ 110.5
Effective tax rate (as a percent)	23.50%	26.30%	23.20%	24.80%
Statutory tax rate (as a percent)	21.00%	21.00%	21.00%	21.00%

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INCOME TAXES - Income Taxes Paid (Details) - USD ($) $ in Millions	6 Months Ended
	Nov. 26, 2023	Nov. 27, 2022
INCOME TAXES
Income taxes paid, net of refunds	$ 101.1	$ 92.1

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INVENTORIES (Details) - USD ($) $ in Millions	Nov. 26, 2023	May 28, 2023
Components of inventories
Raw materials and packaging	$ 337.2	$ 145.7
Finished goods	732.0	708.3
Supplies and other	84.4	78.0
Inventories	$ 1,153.6	$ 932.0

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PROPERTY, PLANT AND EQUIPMENT - Components (Details) - USD ($) $ in Millions	Nov. 26, 2023	May 28, 2023
Property, Plant and Equipment
Property, plant and equipment, at cost	$ 5,176.7	$ 4,683.8
Less accumulated depreciation	(2,003.1)	(1,875.8)
Property, plant and equipment, net	3,173.6	2,808.0
Land and land improvements
Property, Plant and Equipment
Property, plant and equipment, at cost	169.2	163.2
Buildings, machinery, and equipment
Property, Plant and Equipment
Property, plant and equipment, at cost	3,915.0	3,576.6
Furniture, fixtures, office equipment, and other
Property, Plant and Equipment
Property, plant and equipment, at cost	120.0	112.0
Construction in progress
Property, Plant and Equipment
Property, plant and equipment, at cost	$ 972.5	$ 832.0

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PROPERTY, PLANT AND EQUIPMENT - Depreciation Expense (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Nov. 26, 2023	Nov. 27, 2022	Nov. 26, 2023	Nov. 27, 2022
Property, Plant and Equipment
Depreciation expense	$ 66.5	$ 49.7	$ 132.4	$ 97.0

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PROPERTY, PLANT AND EQUIPMENT - Purchases in Accounts Payable (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Nov. 26, 2023	May 28, 2023
Property, Plant and Equipment
Purchases of property, plant and equipment included in accounts payable	$ 188.7	$ 82.6

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PROPERTY, PLANT AND EQUIPMENT - Interest Capitalized (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Nov. 26, 2023	Nov. 27, 2022	Nov. 26, 2023	Nov. 27, 2022
Construction in progress
Property, Plant and Equipment
Interest capitalized	$ 13.0	$ 4.1	$ 23.5	$ 6.1

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GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Carrying Amount of Goodwill (Details) $ in Millions	6 Months Ended
	Nov. 26, 2023 USD ($)
Goodwill
Balance at the beginning period	$ 1,040.7
Acquisition	8.5
Foreign currency translation adjustment	15.9
Balance at the end of the period	1,065.1
North America
Goodwill
Balance at the beginning period	722.4
Foreign currency translation adjustment	10.1
Balance at the end of the period	732.5
International
Goodwill
Balance at the beginning period	318.3
Acquisition	8.5
Foreign currency translation adjustment	5.8
Balance at the end of the period	$ 332.6

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GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Weighted Average Useful Life (Details)	Nov. 26, 2023	May 28, 2023
Weighted Average
Amortizing Intangible Assets
Weighted Average Useful Life, amortizing intangible assets (in years)	14 years	14 years

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GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Amortizing Intangible Assets (Details) - USD ($) $ in Millions	Nov. 26, 2023	May 28, 2023
Amortizing Intangible Assets
Amortizing intangible assets, gross	$ 124.2	$ 121.4
Accumulated amortization	(33.1)	(29.2)
Amortizing intangible assets, net	$ 91.1	$ 92.2

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GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Other Identifiable Intangible Assets (Details) - USD ($) $ in Millions	Nov. 26, 2023	May 28, 2023
Other Identifiable Intangible Assets
Non-amortizing intangible assets	$ 18.0	$ 18.0
Amortizing intangible assets, net	91.1	92.2
Other identifiable intangible assets, net	109.1	110.2
Other identifiable intangible assets, gross	$ 142.2	$ 139.4

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GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS - Amortization Expense (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Nov. 26, 2023	Nov. 27, 2022	Nov. 26, 2023	Nov. 27, 2022
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS
Amortization expense	$ 2.6	$ 1.5	$ 5.3	$ 2.9

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OTHER ASSETS (Details) - USD ($) $ in Millions	Nov. 26, 2023	May 28, 2023
Other Assets
Capitalized software costs	$ 227.5	$ 175.4
Property, plant and equipment deposits	159.4	30.5
Equity method investments	54.6	43.5
Other	35.1	38.2
Other assets	$ 476.6	$ 287.6

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ACCRUED LIABILITIES (Details) - USD ($) $ in Millions	Nov. 26, 2023	May 28, 2023
ACCRUED LIABILITIES
Compensation and benefits	$ 115.6	$ 187.5
Accrued trade promotions	79.3	86.1
Dividends payable to shareholders	40.4	40.8
Taxes payable	36.5	21.2
Accrued interest	31.6	31.1
Current portion of operating lease obligations	28.1	28.5
Derivative liabilities and payables	23.6	53.9
Plant utilities and accruals	21.0	27.2
Other	57.9	33.5
Accrued liabilities	$ 434.0	$ 509.8

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DEBT AND FINANCING OBLIGATIONS - Tabular Disclosure - Components (Details) - USD ($) $ in Millions	Nov. 26, 2023	May 28, 2023
Debt and Financing Obligations
Short-term borrowings	$ 297.0	$ 160.6
Long-term debt	3,321.5	3,319.2
Financing obligations	6.9	7.7
Total debt and financing obligations	3,625.4	3,487.5
4.875% Senior Notes, due May 2028 | Senior Notes
Debt and Financing Obligations
Long-term debt	$ 500.0	$ 500.0
Interest rate (as a percent)	4.875%	4.875%
4.125% Senior Notes, due January 2030 | Senior Notes
Debt and Financing Obligations
Long-term debt	$ 970.0	$ 970.0
Interest rate (as a percent)	4.125%	4.125%
4.375% Senior Notes, due January 2032 | Senior Notes
Debt and Financing Obligations
Long-term debt	$ 700.0	$ 700.0
Interest rate (as a percent)	4.375%	4.375%
Term A-1 loan facility, due June 2026 | Secured Debt
Debt and Financing Obligations
Long-term debt	$ 236.2	$ 243.8
Interest rate (as a percent)	7.203%	5.21%
Term A-2 loan facility, due April 2025 | Secured Debt
Debt and Financing Obligations
Long-term debt	$ 272.2	$ 280.3
Interest rate (as a percent)	7.203%	5.38%
Term A-3 loan facility, due January 2030 | Secured Debt
Debt and Financing Obligations
Long-term debt	$ 438.8	$ 450.0
Interest rate (as a percent)	7.353%	6.85%
RMB loan facility, due February 2027 | Term Loan
Debt and Financing Obligations
Long-term debt	$ 122.3	$ 94.7
Interest rate (as a percent)	4.545%	4.60%
Other Credit Facilities | Line of Credit
Debt and Financing Obligations
Short-term borrowings	$ 23.5	$ 11.4
Revolving Credit Facility, November 2016 | Secured Debt | Revolving Credit Facility
Debt and Financing Obligations
Short-term borrowings	$ 175.0
Interest rate (as a percent)	6.682%	7.71%
Euro revolving credit facility | Secured Debt | Revolving Credit Facility
Debt and Financing Obligations
Short-term borrowings	$ 98.5	$ 149.2
Interest rate (as a percent)	4.695%	4.23%
Euro loan facility, due December 2024 | Term Loan
Debt and Financing Obligations
Long-term debt	$ 82.0	$ 80.4
Interest rate (as a percent)	4.101%	2.01%

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DEBT AND FINANCING OBLIGATIONS - Tabular Disclosure - Current and Noncurrent (Details) - USD ($) $ in Millions	Nov. 26, 2023	May 28, 2023
Debt and Financing Obligations
Total debt and financing obligations	$ 3,625.4	$ 3,487.5
Debt issuance costs and debt discounts	(23.6)	(25.3)
Short-term borrowings, net of debt discounts	(294.3)	(158.5)
Current portion of long-term debt and financing obligations	(55.0)	(55.3)
Long-term debt and financing obligations, excluding current portion	$ 3,252.5	$ 3,248.4

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DEBT AND FINANCING OBLIGATIONS - General Information (Details) - USD ($) $ in Millions	Nov. 26, 2023	May 28, 2023
Debt and Financing Obligations
Short-term borrowings	$ 297.0	$ 160.6
Revolving Credit Facility, November 2016 | Secured Debt | Revolving Credit Facility
Debt and Financing Obligations
Debt issuance costs, line of credit arrangements, net	2.1	$ 2.5
Short-term borrowings	175.0
Available amount	819.6
Letter of credit outstanding	$ 5.4

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DEBT AND FINANCING OBLIGATIONS - Interest Paid (Details) - USD ($) $ in Millions	6 Months Ended
	Nov. 26, 2023	Nov. 27, 2022
Debt and Financing Obligations
Interest paid	$ 89.4	$ 76.6

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FAIR VALUE MEASUREMENTS - Fair Value Hierarchy (Details) - USD ($) $ in Millions	Nov. 26, 2023	May 28, 2023
Fair value, net
Derivative Asset, Statement of Financial Position	Prepaid Expense and Other Assets, Current	Prepaid Expense and Other Assets, Current
Derivative Liability, Statement of Financial Position	Accrued Liabilities, Current	Accrued Liabilities, Current
Recurring
Fair value, net
Derivative assets	$ 2.4	$ 3.0
Derivative liabilities	(21.4)	(46.6)
Deferred compensation liabilities	(25.8)	(22.6)
Fair value, net	(44.8)	(66.2)
Recurring | Level 2
Fair value, net
Derivative assets	2.4	3.0
Derivative liabilities	(21.4)	(46.6)
Deferred compensation liabilities	(25.8)	(22.6)
Fair value, net	$ (44.8)	$ (66.2)

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FAIR VALUE MEASUREMENTS - Debt Outstanding (Details) $ in Millions	Nov. 26, 2023 USD ($)
Carrying Value | Fixed Rate Debt
Fair Value Measurements
Debt	$ 2,170.0
Carrying Value | Variable Rate Debt
Fair Value Measurements
Debt	1,448.5
Level 2 | Fair Value | Fixed Rate Debt
Fair Value Measurements
Debt	$ 1,946.8

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STOCKHOLDERS' EQUITY - Share Repurchase Program (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended	6 Months Ended
	Nov. 26, 2023	Nov. 26, 2023	Oct. 11, 2023
Share Repurchase Program
Authorization to repurchase common stock not to exceed			$ 500.0
Number of shares repurchased (in shares)	571,986	1,564,351
Treasury stock value	$ 50.0	$ 150.0
Remaining amount authorized of share repurchase program	$ 450.0	$ 450.0
Share Repurchase Authorization, Previous Fiscal Years
Share Repurchase Program
Remaining amount authorized of share repurchase program			$ 124.0
Weighted Average
Share Repurchase Program
Shares purchased, weighted-average price (in dollars per share)	$ 87.41	$ 95.89

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STOCKHOLDERS' EQUITY - Dividends Paid (Details) - USD ($) $ in Millions		6 Months Ended
	Dec. 01, 2023	Nov. 26, 2023	Nov. 27, 2022
Dividends
Dividends paid	$ 40.4	$ 81.6	$ 70.6

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STOCKHOLDERS' EQUITY - Dividends Declared (Details) - $ / shares	3 Months Ended			6 Months Ended
	Feb. 25, 2024	Nov. 26, 2023	Nov. 27, 2022	Nov. 26, 2023	Nov. 27, 2022
Dividends
Dividends declared (in dollars per share)	$ 0.36	$ 0.280	$ 0.245	$ 0.560	$ 0.490
Dividends declared per common share, declared date	Dec. 14, 2023
Dividends declared per common share, payable date	Mar. 01, 2024
Dividends declared per common share, record date	Feb. 02, 2024

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STOCKHOLDERS' EQUITY - Accumulated Other Comprehensive Income (Loss) (Details) $ in Millions	6 Months Ended
	Nov. 26, 2023 USD ($)
Changes in AOCI:
Balance at the beginning of the period	$ 1,411.3
Balance at the end of the period	1,667.7
Accumulated Other Comprehensive Income (Loss)
Changes in AOCI:
Balance at the beginning of the period	(26.8)
Other comprehensive income before reclassifications, net of tax	30.5
Net current-period other comprehensive income	30.5
Balance at the end of the period	3.7
Foreign Currency Translation Gains (Losses)
Changes in AOCI:
Balance at the beginning of the period	(27.1)
Other comprehensive income before reclassifications, net of tax	31.0
Net current-period other comprehensive income	31.0
Balance at the end of the period	3.9
Pension and Post-Retirement Benefits
Changes in AOCI:
Balance at the beginning of the period	(0.7)
Other comprehensive income before reclassifications, net of tax	(0.3)
Net current-period other comprehensive income	(0.3)
Balance at the end of the period	(1.0)
Other
Changes in AOCI:
Balance at the beginning of the period	1.0
Other comprehensive income before reclassifications, net of tax	(0.2)
Net current-period other comprehensive income	(0.2)
Balance at the end of the period	$ 0.8

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SEGMENTS - Step Acquisition (Details)	Feb. 28, 2023
Lamb-Weston Meijer v.o.f. ("LW EMEA")
Business Combination, Description
Business acquisition, percentage of voting interests acquired (as a percent)	50.00%

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SEGMENTS - General Information (Details) - segment	3 Months Ended	6 Months Ended
	Nov. 26, 2023	Nov. 26, 2023
Segments
Number of operating segments	2	2
Number of reportable segments	2	2

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SEGMENTS - Net Sales (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Nov. 26, 2023	Nov. 27, 2022	Nov. 26, 2023	Nov. 27, 2022
Net Sales
Net sales	$ 1,732.1	$ 1,276.5	$ 3,397.4	$ 2,402.1
North America
Net Sales
Net sales	1,167.1	1,062.5	2,302.5	2,018.1
International
Net Sales
Net sales	$ 565.0	$ 214.0	$ 1,094.9	$ 384.0

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SEGMENTS - Reconciliation (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Nov. 26, 2023	Nov. 27, 2022	Nov. 26, 2023	Nov. 27, 2022
Segment Information
Adjusted EBITDA	$ 376.9	$ 328.9	$ 789.7	$ 563.5
Unrealized derivative losses (gains)	1.6	(0.4)	(25.7)	3.6
Foreign currency exchange losses (gains)	(9.2)	1.4	(1.8)	2.4
Unconsolidated joint venture unrealized derivative losses (gains)		130.1		(14.4)
Inventory step-up from acquisition	(1.8)		20.7
Integration and acquisition-related items, net	4.8	(26.5)	8.8	(26.5)
Gain on acquisition of interest in joint ventures				(15.1)
Depreciation and amortization	71.2	59.8	142.0	117.4
Income (loss) from operations including equity method investment earnings	310.3	164.5	645.7	496.1
Interest expense, net	29.1	24.6	59.8	50.6
Income tax expense	66.2	36.8	136.1	110.5
Net income	215.0	103.1	449.8	335.0
Operating Segments | North America
Segment Information
Adjusted EBITDA	321.3	299.6	700.7	531.4
Depreciation and amortization	43.3	42.7	87.0	84.0
Income (loss) from operations including equity method investment earnings	278.0	256.9	613.7	447.4
Operating Segments | International
Segment Information
Adjusted EBITDA	100.2	60.2	189.8	93.3
Inventory step-up from acquisition	(1.8)		20.7
Gain on acquisition of interest in joint ventures				(15.1)
Depreciation and amortization	26.8	16.7	53.0	32.5
Income (loss) from operations including equity method investment earnings	75.2	43.5	116.1	75.9
Corporate, Non-Segment
Segment Information
Adjusted EBITDA	(44.6)	(30.9)	(100.8)	(61.2)
Unrealized derivative losses (gains)	1.6	(0.4)	(25.7)	3.6
Foreign currency exchange losses (gains)	(9.2)	1.4	(1.8)	2.4
Unconsolidated joint venture unrealized derivative losses (gains)		130.1		(14.4)
Integration and acquisition-related items, net	4.8	(26.5)	8.8	(26.5)
Depreciation and amortization	1.1	0.4	2.0	0.9
Income (loss) from operations including equity method investment earnings	$ (42.9)	$ (135.9)	$ (84.1)	$ (27.2)

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SEGMENTS - Equity Method Investments (Details)	May 29, 2022
Lamb-Weston Meijer v.o.f. ("LW EMEA")
Equity Method Investments
Equity method investment, ownership interest (as a percent)	50.00%
Lamb Weston Alimentos Modernos S.A. ("LWAMSA")
Equity Method Investments
Equity method investment, ownership interest (as a percent)	50.00%

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SEGMENTS - Inventory Write-off (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended	6 Months Ended
	Nov. 26, 2023	Nov. 26, 2023
Inventory Write-off
Write-off of excess raw potatoes	$ 70.9	$ 70.9
Write-off of excess raw potatoes, after tax	$ 53.9	$ 53.9
Write-off of excess raw potatoes, after tax, per share (in dollars per share)	$ 0.37	$ 0.37
North America
Inventory Write-off
Write-off of excess raw potatoes	$ 63.3	$ 63.3
International
Inventory Write-off
Write-off of excess raw potatoes	$ 7.6	$ 7.6

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SEGMENTS - Depreciation and Amortization (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Nov. 26, 2023	Nov. 27, 2022	Nov. 26, 2023	Nov. 27, 2022
SEGMENTS
Interest expense, income tax expense, and depreciation and amortization from equity method investments	$ 2.1	$ 8.6	$ 4.3	$ 17.6

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SEGMENTS - Step Acquisition (Details) - USD ($) $ in Millions	6 Months Ended
	Nov. 27, 2022	Jul. 05, 2022
Business Combination, Step Acquisition
Business combination, step acquisition, equity interest in acquiree, remeasurement gain (loss), before tax	$ 15.1
Business combination, step acquisition, equity interest in acquiree, remeasurement gain (loss), after tax	$ 15.1
Lamb Weston Alimentos Modernos S.A. ("LWAMSA")
Business Combination, Description
Business acquisition, percentage of voting interests acquired (as a percent)		40.00%

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Pay vs Performance Disclosure - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Nov. 26, 2023	Nov. 27, 2022	Nov. 26, 2023	Nov. 27, 2022
Pay vs Performance Disclosure
Net Income (Loss)	$ 215.0	$ 103.1	$ 449.8	$ 335.0

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Insider Trading Arrangements	3 Months Ended
	Nov. 26, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false