What changed in this filing

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Item 1. Business

2023-07-25 compared with 2022-07-27 · 92 added, 70 removed, 187 unchanged (46% of the section changed)

Lamb Weston Holdings, Inc.

(“we,” “us,” “our,” “the Company,” or “Lamb Weston”), along with our joint ventures, is a leading global producer, distributor, and marketer of value-added frozen potato products and is headquartered in Eagle, Idaho.

We, along with our joint ventures, are the number one supplier of value-added frozen potato products in North America.

We, along with our joint ventures, are also a leading supplier of value-added frozen potato products internationally, with a strong presence in high-growth emerging markets.

Together with our joint ventures, 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.

We were organized as a Delaware corporation in July 2016, as a wholly owned subsidiary of Conagra Brands, Inc.

(formerly, ConAgra Foods, Inc., “Conagra”).

On November 9, 2016, we separated from Conagra and became an independent publicly traded company through the pro rata distribution by Conagra of 100% of our outstanding common stock to Conagra stockholders.

(“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.

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 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 most of our value-added frozen potato product portfolio.

We were organized as a Delaware corporation in July 2016.

Our common stock trades under the ticker symbol “LW” on the New York Stock Exchange.

Our consolidated financial statements include the accounts of Lamb Weston Holdings, Inc.

and its wholly owned subsidiaries.

We have four reportable segments:

In July 2022, we acquired an additional 40 percent interest in Lamb Weston Alimentos Modernos S.A.

(“LWAMSA”), our joint venture in Argentina, and, in February 2023, we acquired the remaining equity interest in LW EMEA, our joint venture in Europe.

With the completion of the transactions, we own 90 percent and 100 percent of the equity interests in LWAMSA and LW EMEA, respectively.

Accordingly, we consolidated LWAMSA’s and LW EMEA’s financial results in our consolidated financial statements beginning in our fiscal first and fourth quarters, respectively.

The results are included in our Global segment.

During fiscal 2023, we had four reportable segments:

Global, Foodservice, Retail, and Other.

For segment financial information see Note 13, Segments, of the Notes to Consolidated Financial Statements in “Part II, Item 8.

For further segment and financial information, see “Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 13, Segments, of the Notes to Consolidated Financial Statements in “Part II, Item 8.

Financial Statements and Supplementary Data” of this Form 10-K.

Effective May 29, 2023, in connection with our recent acquisitions and to align with our expanded global footprint, our management, including our chief executive officer, who is our chief operating decision maker, began managing our operations as two business segments based on management’s change to the way it monitors performance, aligns strategies, and allocates resources.

This resulted in a change from four reportable segments to two (North America and International), effective the beginning of fiscal 2024.

Our Global segment includes frozen potato products sold in North America and international markets generally to the top 100 North American based restaurant chains and international customers comprised of global and regional quick service and full-service restaurant chains, foodservice distributors, and retailers.

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Joint Venture Relationships

We conduct some of our business through three unconsolidated joint ventures and include our share of the earnings of these affiliates as equity method investment earnings in our consolidated financial statements based on our economic ownership interest in each of these joint ventures.

These joint ventures produce and market value-added frozen potato products for our customers:

● We hold a fifty percent ownership interest in Lamb-Weston/Meijer v.o.f.

(“LWM”), a joint venture with Meijer Frozen Foods B.V., that is headquartered in the Netherlands and manufactures and sells frozen potato products principally in Europe and the Middle East.

● We hold a fifty percent ownership interest in Lamb-Weston/RDO Frozen (“Lamb Weston RDO”), a joint venture with RDO Frozen Co., that operates a single potato processing facility in the U.S.

We hold a 50 percent ownership interest in Lamb-Weston/RDO Frozen (“Lamb Weston RDO”), a joint venture with RDO Frozen Co., that operates a single potato processing facility in the U.S.

We provide all sales and marketing services to Lamb Weston RDO and receive a fee for these services based on a percentage of the net sales of the venture.

● During fiscal 2022, we held a fifty percent ownership interest in Lamb Weston Alimentos Modernos S.A.

(“LWAMSA”), a joint venture with Selprey S.A., a wholly owned subsidiary of Sociedad Comercial del Plata S.A., that is headquartered in Argentina.

LWAMSA manufactures and sells frozen potato products

principally in South America.

We included our share of the earnings of this unconsolidated joint venture as equity method investment earnings in our consolidated financial statements based on our economic ownership interest in LWAMSA.

In July 2022, we acquired an additional forty percent interest in LWAMSA, increasing our total ownership of LWAMSA from fifty percent to ninety percent.

Following this acquisition, we will consolidate LWAMSA’s results in our consolidated financial statements.

For more information, see Note 4, Equity Method Investments, of the Notes to Consolidated Financial Statements in “Part II, Item 8.

We account for our investment in Lamb Weston RDO under the equity method of accounting.

We accounted for our investments in LW EMEA and LWAMSA under the equity method of accounting until February 2023 and July 2022, respectively, when we acquired the majority ownership of these entities and began consolidating their respective financial results in our consolidated financial statements.

In addition, LW EMEA owns a 75 percent interest in a joint venture in Austria.

This joint venture’s financial results are consolidated in our financial statements.

For more information, see Note 4, Joint Venture Investments, of the Notes to Consolidated Financial Statements in “Part II, Item 8.

Financial Statements and Supplementary Data” of this Form 10-K.

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We have long-tenured relationships with leading quick service and fast casual restaurant chains, global foodservice distributors, large grocery retailers, and mass merchants.

Our largest customer, McDonald’s Corporation, accounted for approximately 10% of our consolidated net sales in fiscal 2022, 11% of our consolidated net sales in fiscal 2021, and 10% of our consolidated net sales in fiscal 2020.

Our largest customer, McDonald’s Corporation, accounted for approximately 13%, 10%, and 11% of our consolidated net sales in fiscal 2023, 2022, and 2021, respectively.

Sales to McDonald’s Corporation are included in our Global segment.

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Our significant trademarks include:

Lamb Weston, Lamb Weston Supreme, Lamb Weston Seeing Possibilities in Potatoes (and design), Lamb Weston Seasoned, Lamb Weston Private Reserve, Lamb Weston Stealth Fries, Lamb Weston Colossal Crisp, Lamb Weston Crispy on Delivery, and Sweet Things.

We also sell certain products, such as Grown in Idaho and Alexia , which we license from third parties.

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Patents, issued or applied for, cover inventions, including packaging, manufacturing processes, equipment, formulations, and designs.

Our issued patents extend for varying periods according to the date of the patent application filing or grant and the legal term of patents in the various countries where patent protection is obtained.

Our issued patents extend for varying periods according to the date of the patent application filing or grant, the legal term of patents in the various countries where patent protection is obtained, and, in most countries, the payment of fees to maintain the patents.

The actual protection afforded by a patent, which can vary from country to country, depends upon the type of patent, the scope of its coverage as determined by the patent office or courts in the country, and the availability of legal remedies in the country.

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In the U.S., most of the potato crop used in our products is grown in Washington, Idaho, and Oregon.

European growing regions for the necessary potatoes are concentrated in the Netherlands, Austria, Belgium, Germany, France, and the United Kingdom.

In Europe, growing regions for the necessary potatoes are concentrated in the Netherlands, Austria, Belgium, Germany, France, and the United Kingdom.

We also have potato growing regions in Canada, China, Australia, and Argentina that support our processing facilities in those countries.

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The prices of raw materials can fluctuate as a result of these factors.

During fiscal 2022, we faced increased costs for our primary raw materials, including potatoes, edible oils, packaging, grains, starches, and energy inputs.

During fiscal 2023, we continued to face increased costs for our primary raw materials, including potatoes, edible oils, packaging, grains, starches, and energy inputs.

We seek to mitigate higher input costs through long-term relationships, contract strategies, and hedging activities where an active market for an input exists, as well as through our pricing and productivity initiatives.

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for more information about our production facilities.

Our joint ventures operate a total of eight production facilities.

In addition to our own production facilities, we source a portion of our products under “co-packing” agreements, a common industry practice in which manufacturing is outsourced to other companies.

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International Operations

At May 29, 2022, we had operations in seventeen countries, with sales support in each of these countries and production and processing facilities in four countries.

At May 28, 2023, we had operations in 31 countries, with sales support in each of these countries and production and processing facilities in 8 countries.

See Note 13, Segments, of the Notes to Consolidated Financial Statements in “Part II, Item 8.

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Significant competitors include Agristo NV, Aviko B.V., Cavendish Farms Corporation, Clarebout Potatoes NV, Farm Frites International B.V., J.R.

Simplot Company, The Kraft Heinz Company, McCain Foods Limited, and Mydibel S.A.

Some of our competitors are larger and have substantially more financial, sales and marketing, and other resources.

Simplot Company, The Kraft Heinz Company, and McCain Foods Limited.

Some of our competitors are larger and have substantially more financial, sales and marketing, and other resources than us.

We compete with producers of similar products on the basis of, among other things, customer service, value, product innovation, product quality, brand recognition and loyalty, price, and the ability to identify and satisfy customer preferences.

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We typically harvest potatoes in the Pacific Northwest of the U.S.

in July through October, which is primarily in our fiscal second quarter.

While the quality of potatoes affects production

efficiency, overall, freshly-harvested potatoes process more efficiently in our production lines and are not subject to storage or secondary transport costs.

and Europe in July through October, which is primarily in our fiscal second quarter.

While the quality of potatoes affects production efficiency, overall, freshly-harvested potatoes process more efficiently in our production lines and are not subject to storage or secondary transport costs.

We typically hold 50 to 90 days of finished goods inventory on a first-in-first-out basis, so the costs incurred from our fiscal second quarter harvest, which are generally favorable, will flow through our income statement in our fiscal third quarter.

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In general, net sales and cash flows tend to be higher in our fiscal fourth quarter, reflecting customer and consumer buying patterns.

Due to severe impacts of the government mandated shutdowns in response to COVID-19, seasonal variation in the demand for our products in the fourth quarter of fiscal 2020 and 2021, differed from prior years.

Due to severe impacts of the government mandated shutdowns in response to COVID-19, seasonal variation in the demand for our products in fiscal 2021 differed from prior and subsequent years.

Human Capital Resources

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Of the hourly employees who are represented by these contracts, 51% are party to a collective bargaining agreement scheduled to expire over the course of the next twelve months.

As the agreement expires, we believe it will be renegotiated on terms satisfactory to the parties.

As the agreements expire, we believe they will be renegotiated on terms satisfactory to the parties.

Health and Safety

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We are committed to equal pay for equal work, regardless of gender, race, ethnicity, or other personal characteristics.

To deliver on that commitment, we benchmark and set pay ranges based on market data and consider various factors such as an employee’s role and experience, job location, and performance.

We also regularly review our compensation practices to promote fair and equitable pay, and in fiscal 2022, applied a mid-year base salary increase for certain employees in response to the current competitive labor market.

As part of this commitment, we benchmark and set pay ranges based on market data and consider various factors such as an employee’s role and experience, job location, and performance.

We also regularly review our compensation practices to promote fair and equitable pay.

In addition to base salaries, many employees also participate in an annual short-term incentive program and may also receive long-term equity awards.

Benefits for employees include an employee savings 401(k) plan and company matching contributions, health insurance, disability insurance, life insurance, health savings and flexible spending accounts, wellness incentives, annual on-site health screenings, paid time-off, family leave, parental leave, employee assistance programs, and tuition reimbursement opportunities.

In fiscal 2022, we also adopted a flexible work policy for office-based employees intended to allow employees flexibility in work location while maintaining productivity and performance expectations, as well as enhanced our vacation policy to add additional days of paid time-off for certain employee groups to better align with competitive market practice.

Benefits for U.S.

employees include an employee savings 401(k) plan and company matching contributions, health insurance, disability insurance, life insurance, health savings and flexible spending accounts, wellness incentives, annual on-site health screenings, paid time-off, family leave, parental leave, employee assistance programs, and tuition reimbursement opportunities.

Benefits for employees outside of the U.S.

vary by country but are generally market competitive and representative of prevalent local company sponsored benefit programs.

We have also adopted a hybrid work policy for office-based employees intended to allow employees flexibility in work location while maintaining productivity and performance expectations.

Eligibility for, and the level of, compensation and benefits vary depending on an employee’s full-time or part-time status, work location, job and career level, and tenure with the Company.

We regularly review our compensation and benefit programs with the aim of keeping them competitive and designed to meet our employees’ health and wellness needs, which we believe is important to attract and retain the best available talent.

Diversity, Equity, and Inclusion.

As a global company, we honor and celebrate the diversity in our team, which we believe enriches our work lives and drives diversity of perspectives in our decision-making.

Diversity, Equity, and Inclusion (“DEI”)

As a global company, we strive to honor and celebrate diversity in our team, which we believe enriches our work lives and drives diversity of perspectives in our decision-making as a company.

We define diversity as the unique abilities, experiences, and cultural backgrounds our employees bring to our Company’s workplace.

We are committed to providing a work environment that fosters respect, inclusion, fairness, and dignity, and is free of harassment, discrimination, or fear of retaliation.

In fiscal 2023, we launched our first business resource groups, which are voluntary, team member-led groups that bring employees together aligned around affinity areas.

We believe these groups help create community and build inclusion.

We have three business resource groups centered on women, multiculture and young professionals.

In addition, in fiscal 2023, we introduced a DEI learning and development platform to our global workforce to support team members’ DEI learning.

Recruitment, Training, and Development

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For example, in our production facilities, we provide multiple training sessions focused on quality and safety.

We also hold multi-day courses focused on leadership development for managers throughout our organization.

In addition, with our e-learning resources, employees can also focus on timely and topical development areas, including leadership, management excellence, functional capabilities, and diversity, equity, and inclusion.

We also hold courses focused on leadership development for employees and people leaders across our global organization.

In addition, with both in-person and our e-learning resources, employees can also focus on timely and topical development areas, including leadership capabilities, management excellence, functional skill building, and DEI.

Employee Engagement

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This survey was completed in fiscal 2022 and was administered and analyzed by an independent third-party.

The survey results are then reviewed by our executive leadership team and our Compensation and Human Capital Committee of the Board of Directors.

Department leaders are also given the engagement survey results and are tasked with taking action based on their employees’ anonymous feedback (both quantitative and qualitative).

By paying close attention to the results, both at an aggregate enterprise level as well as at department, business, and work group levels, we believe that we have been able to enhance our workplace culture and improve overall employee engagement levels.

The survey results were then reviewed by our executive leadership team and our Compensation and Human Capital Committee of the Board of Directors.

Department leaders were also given the engagement survey results and tasked with taking action based on their employees’ anonymous feedback (both quantitative and qualitative).

In addition, following our acquisition of the remaining equity interest in LW EMEA, we conducted a global employee culture survey to help assess employees’ reactions to the acquisition and plans for the full integration of LW EMEA with our other operations.

Similar to our fiscal 2022 engagement survey, our executive leadership team reviewed the results of the survey and shared those results with our Compensation and Human Capital Committee.

By paying close attention to the results of both surveys and implementing actions based on our findings, both at an aggregate enterprise level as well as at department, business, and work group levels, we believe that we have been able to enhance our workplace culture and improve overall employee engagement levels.

We are also committed to creating and building a culture of giving.

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In addition, we offer a matching gifts program to employees, paid volunteer time off, non-profit board service grants, and an employee dependent scholarship program.

Further, in fiscal 2023, we adopted a volunteer reward program that allows employees to provide monetary donations to organizations where they volunteer and established the Team Member Relief Fund to provide financial support to employees experiencing hardships such as catastrophic events, illness, domestic violence, and other unforeseen circumstances.

Information About Our Executive Officers

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Bernadette M.

Senior Vice President and Chief Financial Officer

Senior Vice President and General Manager, Global Business Unit

Chief Financial Officer

President, North America

Sukshma Rajagopalan

Chief Information and Digital Officer

Gerardo Scheufler

Senior Vice President and Chief Supply Chain Officer

Senior Vice President and General Manager of Foodservice, Retail, Marketing and Innovation

Senior Vice President, General Counsel, and Chief Compliance Officer

Senior Vice President and Chief Human Resources Officer

Chief Supply Chain Officer

Marc Schroeder

President, International

Chief Operating Officer

General Counsel and Chief Compliance Officer

Chief Human Resources Officer

Werner has served as our President and Chief Executive Officer and a member of our board of directors since November 2016.

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Werner also served as interim President of Conagra’s Private Brands from June 2015 through its divestiture in February 2016.

Before his appointment as President, Commercial

Before his appointment as President, Commercial Foods, Mr.

Werner served as Senior Vice President of Finance for Conagra’s Private Brands and Commercial Foods operating segments from June 2013 to April 2015, and Senior Vice President of Finance for Lamb Weston from May 2011 until June 2013.

Bernadette M.

Madarieta has served as our Senior Vice President and Chief Financial Officer since August 2021.

She joined Lamb Weston in October 2016 as our Vice President and Controller and Principal Accounting Officer.

Madarieta has served as our Chief Financial Officer since August 2021.

She also served as Senior Vice President from August 2021 to May 2023.

Madarieta joined Lamb Weston in October 2016 as our Vice President and Controller and Principal Accounting Officer.

Before that, Ms.

Madarieta served as Vice President and Controller of Packaging Corporation of America, a containerboard and corrugated packaging manufacturer, from October 2013 to March 2016, and Vice President and Controller at Boise Inc., a packaging and paper products manufacturer, from February 2011 to October 2013.

Madarieta has 25 years of finance management and leadership experience spanning public and privately held companies and Big 4 public accounting firms.

Miller has served as our Senior Vice President and General Manager, Global Business Unit since September 2016.

Before that, she served as Conagra’s Vice President and General Manager, Lamb Weston Global Business Unit since 2015.

Madarieta has more than 25 years of finance management and leadership experience spanning public and privately held companies and Big 4 public accounting firms.

Miller has served as our President, North America since May 29, 2023.

Before that, she served as our Senior Vice President and General Manager, Global Business Unit since September 2016 and Conagra’s Vice President and General Manager, Lamb Weston Global Business Unit from 2015 to August 2016.

Since joining Conagra in 1999, Ms.

Miller has held various leadership positions, including Vice President of Sales for LWM.

Miller has held various leadership positions, including Vice President of Sales for LW EMEA.

Prior to that, Ms.

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She also has held various sales positions with North American food manufacturers and foodservice distributors.

Gerardo Scheufler has served as our Senior Vice President and Chief Supply Chain Officer since August 2019.

Sukshma Rajagopalan has served as our Chief Information and Digital Officer since June 2023.

Rajagopalan has more than 25 years of experience leading digital and information technology teams, most recently as Senior Vice President and Chief Digital Officer at Avantor, Inc., a life sciences company, from March 2020 to May 2023.

At Avantor, Ms.

Rajagopalan led the company’s global enterprise digital roadmap, including finance, supply chain and commercial solutions, as well as data and analytics including automation and artificial intelligence.

Prior to joining Avantor, she spent 15 years at PepsiCo, Inc., a food and beverage company, and held various information technology and digital leadership roles, most recently as Vice President, Global Applications from March 2018 to March 2020.

Gerardo Scheufler has served as our Chief Supply Chain Officer since August 2019.

He also served as Senior Vice President from August 2019 to May 2023.

Prior to joining Lamb Weston, Mr.

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Scheufler spent more than 20 years at The Procter & Gamble Company, a consumer goods corporation, in a variety of roles of increasing responsibility after starting his career in manufacturing operations in 1990.

Smith has served as our Senior Vice President and General Manager of Foodservice, Retail, Marketing and Innovation since April 2018.

Prior to that, he served as Senior Vice President, Growth and Strategy beginning in September 2016.

Marc Schroeder has served as our President, International since May 29, 2023.

Schroeder is a Dutch national and joined Lamb Weston in February 2023 following the completion of our acquisition of the remaining equity interest in LW EMEA, having previously served as Chief Executive Officer of our former European joint venture since January 2021.

Before joining LW EMEA, Mr.

Schroeder served as Chief Executive Officer of Pepsi Lipton, a joint venture between PepsiCo, Inc.

and Unilever for tea branded products, from February 2016 to November 2020.

Prior to that, he spent more than 14 years at PepsiCo, Inc., a food and beverage company, and held various operating, commercial and corporate leadership roles, including Senior Vice President Global Nutrition Group from August 2014 to January 2016, Vice President Global Grains (Quaker) from September 2012 to July 2014 and General Manager of Frito-Lay in Russia from October 2009 to August 2012.

Smith has served as our Chief Operating Officer since May 29, 2023.

Prior to that, he served as Senior Vice President and General Manager of Foodservice, Retail, Marketing and Innovation since April 2018 and Senior Vice President, Growth and Strategy from September 2016 until March 2018.

Smith also served as Vice President and General Manager of Lamb Weston Retail from May 2011 to September 2016, Vice President and General Manager of Conagra’s Private Brands from March 2014 to February 2016, and Vice President of Global Marketing of Lamb Weston from July 2012 to March 2014.

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Smith held various brand management roles at Dean Foods Company, a food and beverage company, and its WhiteWave division from May 2003 until December 2007.

Spytek has served as our Senior Vice President, General Counsel, and Chief Compliance Officer since October 2016.

He also served as our Corporate Secretary from October 2016 to November 2020.

Spytek has served as our General Counsel and Chief Compliance Officer since October 2016.

He also served as Senior Vice President from October 2016 to May 2023 and Corporate Secretary from October 2016 to November 2020.

From June 2015 until October 2016, Mr.

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Spytek was a partner at Winston & Strawn LLP, which he joined as an associate in 1996.

Younes has served as our Senior Vice President and Chief Human Resources Officer since January 2022.

He joined Lamb Weston from Loews Hotels & Co., a hospitality company, where he served as Executive Vice President and Chief Human Resources Officer from April 2019 through December 2021.

Younes has served as our Chief Human Resources Officer since January 2022.

He also served as Senior Vice President from January 2022 to May 2023.

Younes joined Lamb Weston from Loews Hotels & Co., a hospitality company, where he served as Executive Vice President and Chief Human Resources Officer from April 2019 through December 2021.

Prior to that, Mr.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business