Lamb Weston Holdings Inc.

04/07/2021 | Press release | Distributed by Public on 04/07/2021 08:51

FY21 Q3 Earnings Financial Schedules

Income Statement

Lamb Weston Holdings, Inc.
Consolidated Statements of Earnings
(unaudited, in millions, except per share amounts)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
February 28, February 23, February 28, February 23,
2021 (1) 2020 2021 (1) 2020
Net sales $ 895.8 $ 937.3 $ 2,663.4 $ 2,945.5
Cost of sales 699.1 686.9 2,029.4 2,161.4
Gross profit 196.7 250.4 634.0 784.1
Selling, general and administrative expenses 96.1 87.9 258.1 258.1
Income from operations 100.6 162.5 375.9 526.0
Interest expense, net 29.3 25.2 89.6 78.8
Income before income taxes and equity method earnings 71.3 137.3 286.3 447.2
Income tax expense 16.3 35.7 76.2 115.1
Equity method investment earnings (2) 11.1 9.8 42.2 35.4
Net income $ 66.1 $ 111.4 $ 252.3 $ 367.5
Earnings per share
Basic $ 0.45 $ 0.76 $ 1.72 $ 2.51
Diluted $ 0.45 $ 0.76 $ 1.72 $ 2.50
Dividends declared per common share $ 0.235 $ 0.230 $ 0.695 $ 0.630
Computation of diluted earnings per share:
Net income $ 66.1 $ 111.4 $ 252.3 $ 367.5
Diluted weighted average common shares outstanding 147.2 147.2 147.1 147.1
Diluted earnings per share $ 0.45 $ 0.76 $ 1.72 $ 2.50
(1) The thirteen and thirty-nine weeks ended February 28, 2021, include incremental costs resulting from the pandemic's effect on the Company's manufacturing and supply chain operations, as well as incremental warehousing and transportation costs, and costs to enhance employee safety measures, including purchases of safety and health screening equipment, and retaining sales employees. In addition, the thirty-nine weeks ended February 28, 2021, include incremental costs related to processing raw potatoes out of storage longer than prior years.
(2) The thirteen and thirty-nine weeks ended February 23, 2020, both include a $2.6 million loss related to the withdrawal from a multiemployer pension plan by Lamb Weston RDO.

Balance Sheet

Lamb Weston Holdings, Inc.
Consolidated Balance Sheets
(unaudited, dollars in millions, except share data)
February 28, May 31,
2021 2020
ASSETS
Current assets:
Cash and cash equivalents $ 714.3 $ 1,364.0
Receivables, less allowance for doubtful accounts of $1.0 and $1.3 375.6 342.1
Inventories 571.5 486.7
Prepaid expenses and other current assets 98.0 109.8
Total current assets 1,759.4 2,302.6
Property, plant and equipment, net 1,498.2 1,535.0
Operating lease assets 148.6 167.0
Equity method investments 303.1 250.2
Goodwill 333.7 303.8
Intangible assets, net 37.5 38.3
Other assets 77.7 65.4
Total assets $ 4,158.2 $ 4,662.3
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ - $ 498.7
Current portion of long-term debt and financing obligations 32.0 48.8
Accounts payable 303.6 244.4
Accrued liabilities 254.6 233.0
Total current liabilities 590.2 1,024.9
Long-term liabilities:
Long-term debt and financing obligations, excluding current portion 2,712.3 2,992.6
Deferred income taxes 157.8 152.5
Other noncurrent liabilities 246.2 252.3
Total long-term liabilities 3,116.3 3,397.4
Commitments and contingencies
Stockholders' equity:
Common stock of $1.00 par value, 600,000,000 shares authorized; 147,564,905 and 146,993,751 shares issued 147.6 147.0
Additional distributed capital (841.4) (862.9)
Retained earnings 1,213.8 1,064.6
Accumulated other comprehensive income (loss) 22.8 (40.5)
Treasury stock, at cost, 1,282,466 and 954,858 common shares (91.1) (68.2)
Total stockholders' equity 451.7 240.0
Total liabilities and stockholders' equity $ 4,158.2 $ 4,662.3

Cash Flows

Lamb Weston Holdings, Inc.
Consolidated Statements of Cash Flows
(unaudited, dollars in millions)
Thirty-Nine Weeks Ended
February 28, February 23,
2021 2020
Cash flows from operating activities
Net income $ 252.3 $ 367.5
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangibles and debt issuance costs 143.3 137.5
Stock-settled, stock-based compensation expense 17.6 18.2
Earnings of joint ventures in excess of distributions (29.9) (6.5)
Deferred income taxes 1.0 25.3
Other 9.4 1.2
Changes in operating assets and liabilities, net of acquisition:
Receivables (30.4) (24.3)
Inventories (80.6) (94.6)
Income taxes payable/receivable, net 28.2 8.1
Prepaid expenses and other current assets (6.5) 1.8
Accounts payable 60.9 2.1
Accrued liabilities 9.5 (0.6)
Net cash provided by operating activities $ 374.8 $ 435.7
Cash flows from investing activities
Additions to property, plant and equipment (92.1) (127.8)
Additions to other long-term assets (14.6) (24.2)
Acquisition of business, net of cash acquired - (116.7)
Investment in equity method joint venture - (22.6)
Other 0.5 1.5
Net cash used for investing activities $ (106.2) $ (289.8)
Cash flows from financing activities
Proceeds (payments) of short-term borrowings, net (498.8) 12.7
Repayments of debt and financing obligations (297.6) (327.1)
Dividends paid (100.9) (87.7)
Repurchase of common stock and common stock withheld to cover taxes (22.9) (28.9)
Proceeds from issuance of debt - 299.3
Other 0.3 4.0
Net cash used for financing activities $ (919.9) $ (127.7)
Effect of exchange rate changes on cash and cash equivalents 1.6 (0.3)
Net increase (decrease) in cash and cash equivalents (649.7) 17.9
Cash and cash equivalents, beginning of the period 1,364.0 12.2
Cash and cash equivalents, end of period $ 714.3 $ 30.1

Segments

Lamb Weston Holdings, Inc.
Segment Information
(unaudited, dollars in millions)
Thirteen Weeks Ended
Year-Over-
February 28, February 23, Year Growth
2021 2020 Rates Price/Mix Volume
Segment sales
Global $ 478.5 $ 487.1 (2%) 0% (2%)
Foodservice 219.5 283.0 (22%) 2% (24%)
Retail 162.5 132.2 23% 10% 13%
Other 35.3 35.0 1% 7% (6%)
$ 895.8 $ 937.3 (4%) 2% (6%)
Segment product contribution margin (1) (2)
Global $ 79.3 $ 109.3 (27%)
Foodservice 70.2 99.8 (30%)
Retail 33.1 28.8 15%
Other 8.7 5.9 47%
191.3 243.8 (22%)
Advertising and promotion expenses 5.4 6.6 (18%)
Gross profit $ 196.7 $ 250.4 (21%)
Thirty-Nine Weeks Ended
Year-Over-
February 28, February 23, Year Growth
2021 2020 Rates Price/Mix Volume
Segment sales
Global $ 1,401.9 $ 1,544.3 (9%) 0% (9%)
Foodservice 697.3 893.3 (22%) 4% (26%)
Retail 457.1 393.6 16% 8% 8%
Other 107.1 114.3 (6%) 3% (9%)
$ 2,663.4 $ 2,945.5 (10%) 2% (12%)
Segment product contribution margin (1) (2)
Global $ 249.8 $ 341.0 (27%)
Foodservice 243.7 313.5 (22%)
Retail 99.0 86.2 15%
Other 32.4 26.0 25%
624.9 766.7 (18%)
Advertising and promotion expenses 9.1 17.4 (48%)
Gross profit $ 634.0 $ 784.1 (19%)
(1) Product contribution margin is one of the primary measures reported to the Company's chief operating decision maker for purposes of allocating resources to the Company's segments and assessing their performance. Product contribution margin represents net sales less cost of sales and advertising and promotion expenses. Product contribution margin includes advertising and promotion expenses because those expenses are directly associated with the performance of the Company's segments. Product contribution margin, when presented on a consolidated basis, is a non-GAAP financial measure. See "Non-GAAP Financial Measures" in this press release for a description of non-GAAP financial measures and the table above for a reconciliation of product contribution margin on a consolidated basis to gross profit.
(2) See footnote (1) to the Consolidated Statements of Earnings above for a discussion of the incremental costs resulting from the pandemic's effect on the Company's financial results for the thirteen and thirty-nine weeks ended February 28, 2021.

Recon of Non GAAAP (1)

Lamb Weston Holdings, Inc.
Reconciliation of Non-GAAP Financial Measures
(unaudited, dollars in millions, except per share amounts)
There were no items impacting comparability during the thirteen and thirty-nine weeks ended February 28, 2021.
Thirteen Weeks Ended February 23, 2020
Equity
Income Income Method
From Interest Tax Investment Diluted
Operations Expense Expense (1) Earnings Net Income EPS
As reported $ 162.5 $ 25.2 $ 35.7 $ 9.8 $ 111.4 $ 0.76
Items impacting comparability (2):
Loss on withdrawal from multiemployer pension plan - - 0.6 2.6 2.0 0.01
Total items impacting comparability - - 0.6 2.6 2.0 0.01
Adjusted (3) $ 162.5 $ 25.2 $ 36.3 $ 12.4 $ 113.4 $ 0.77
Thirty-Nine Weeks Ended February 23, 2020
Equity
Income Income Method
From Interest Tax Investment Diluted
Operations Expense Expense (1) Earnings Net Income EPS
As reported $ 526.0 $ 78.8 $ 115.1 $ 35.4 $ 367.5 $ 2.50
Items impacting comparability (2):
Loss on withdrawal from multiemployer pension plan - - 0.6 2.6 2.0 0.01
Total items impacting comparability - - 0.6 2.6 2.0 0.01
Adjusted (3) $ 526.0 $ 78.8 $ 115.7 $ 38.0 $ 369.5 $ 2.51
(1) Income tax expense is calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings. Items impacting comparability are tax effected at the marginal rate based on the applicable tax jurisdiction.
(2) See footnote (2) to the Consolidated Statements of Earnings above for a discussion of the item impacting comparability.
(3) Adjusted income tax expense, equity method investment earnings, net income, and diluted earnings per share are non-GAAP financial measures. Management excludes items impacting comparability between periods as it believes these items are not necessarily reflective of the ongoing operations of Lamb Weston. These non-GAAP financial measures provide a means to evaluate the performance of Lamb Weston on an ongoing basis using the same measures that are frequently used by the Company's management and assist in providing a meaningful comparison between periods. See also "Non-GAAP Financial Measures" in this press release.

Recon of Non GAAP (2)

Lamb Weston Holdings, Inc.
Reconciliation of Non-GAAP Financial Measures
(unaudited, dollars in millions)
To supplement the financial information included in this press release, the Company has presented Adjusted EBITDA and Adjusted EBITDA including unconsolidated joint ventures, which are a non-GAAP financial measures. The following table reconciles net income to Adjusted EBITDA and Adjusted EBITDA including unconsolidated joint ventures.
Thirteen Weeks Ended Thirty-Nine Weeks Ended
February 28, February 23, February 28, February 23,
2021 2020 2021 2020
Net income $ 66.1 $ 111.4 $ 252.3 $ 367.5
Equity method investment earnings (11.1) (9.8) (42.2) (35.4)
Interest expense, net 29.3 25.2 89.6 78.8
Income tax expense 16.3 35.7 76.2 115.1
Income from operations 100.6 162.5 375.9 526.0
Depreciation and amortization 46.3 44.8 138.5 132.6
Adjusted EBITDA (1) 146.9 207.3 514.4 658.6
Unconsolidated Joint Ventures (2)
Equity method investment earnings 11.1 9.8 42.2 35.4
Interest expense, income tax expense, and depreciation and
amortization included in equity method investment earnings 9.1 8.0 25.5 24.9
Items impacting comparability (3)
Loss on withdrawal from multiemployer pension plan - 2.6 - 2.6
Add: Adjusted EBITDA from unconsolidated joint ventures 20.2 20.4 67.7 62.9
Adjusted EBITDA including unconsolidated joint ventures (1) $ 167.1 $ 227.7 $ 582.1 $ 721.5
(1) Adjusted EBITDA and Adjusted EBITDA including unconsolidated joint ventures are non-GAAP financial measures. Lamb Weston presents these measures because the Company believes they provide a means to evaluate the performance of the Company on an ongoing basis using the same measure frequently used by the Company's management and assist in providing a meaningful comparison between periods. Any analysis of non-GAAP financial measures should be done only in conjunction with results presented in accordance with GAAP. These non-GAAP financial measures are not intended to be a substitute for GAAP financial measures and should not be used as such. See also "Non-GAAP Financial Measures" in this press release.
(2) Lamb Weston holds equity interests in three potato processing joint ventures, including 50% of Lamb-Weston/Meijer v.o.f., Lamb-Weston/RDO Frozen, and Lamb Weston Alimentos Modernos S.A., which it accounts for its ownership under the equity method of accounting. See Note 6, Investments in Joint Ventures, of the Notes to Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" in the Company's fiscal 2020 Form 10-K, for more information.
(3) See footnote (2) to the Consolidated Statements of Earnings above for a discussion of the item impacting comparability.