Investors were likely more cheered by news of a restructuring program than they were by first-quarter results.
Highly specialized food-supply company Lamb Weston (LW 2.57%) was tasty to some investors on Wednesday following the release of its latest set of quarterly results. It beat on both the top and bottom lines, if not necessarily by a wide margin, and it was rewarded for this feat. Investors also liked the company’s news about a fresh restructuring program. Market players bid Lamb Weston’s stock price up by nearly 3%, a figure that looked good compared to the flat trajectory of the S&P 500 index on the day.
Solid beat on the top line, narrow beat on profitability
For its fiscal-first quarter of 2025, Lamb Weston’s net sales dipped by 1% year over year to a shade over $1.65 billion. The decline in both generally accepted accounting principles (GAAP) and non-GAAP (adjusted) net income was far steeper; the latter fell by 56% to $105 million, or $0.73 per share.
Despite that precipitous drop, Lamb Weston edged past the consensus-analyst adjusted bottom-line estimate of $0.72 per share. It notched a more convincing beat with net sales, as prognosticators were collectively modeling only $1.55 billion for the line item.
The company specializes in potato products, and demand for frozen spuds relative to their supply continued to be weak. Management also cited softness in restaurant traffic as having an impact on the quarter’s results.
Restructuring plan unveiled
Lamb Weston’s new restructuring program was likely the news that brought investors into the stock on Hump Day. The company announced that it is permanently closing a relatively old processing facility that is comparatively expensive to operate. Additionally, it is temporarily curtailing a number of production lines and schedules, and seeking to lower operating expenses and capital expenditures (capex).
It quoted CEO Tom Werner as saying that “Together, we expect these actions will help us better manage our factory utilization rates and ease some of the current supply demand imbalance in North America.”
Management made a downward adjustment to its adjusted-net income, forecasting that it will be $600 million to $615 million ($4.15 to $4.35 per share). It reaffirmed its net-sales outlook of $6.6 billion to $6.8 billion.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
