Item 1. Financial Statements
ITEM 1. FINANCIAL STATEMENTS (Unaudited)
Lamb Weston Holdings, Inc.
Consolidated Statements of Earnings
(unaudited, dollars in millions, except per share amounts)
Thirteen Weeks Ended Twenty-Six Weeks Ended
November 24,
2024 November 26,
2023 November 24,
2024 November 26,
2023
Net sales $ 1,600.9 $ 1,732.1 $ 3,255.0 $ 3,397.4
Cost of sales 1,323.1 1,256.5 2,621.2 2,422.3
Gross profit 277.8 475.6 633.8 975.1
Selling, general and administrative expenses 184.7 170.0 328.6 346.2
Restructuring expense 74.6 — 74.6 —
Income from operations 18.5 305.6 230.6 628.9
Interest expense, net 43.3 29.1 88.5 59.8
Income (loss) before income taxes and equity method earnings ( 24.8 ) 276.5 142.1 569.1
Income tax expense 13.4 66.2 64.2 136.1
Equity method investment earnings 2.1 4.7 13.4 16.8
Net income (loss) $ ( 36.1 ) $ 215.0 $ 91.3 $ 449.8
Earnings (loss) per share:
Basic $ ( 0.25 ) $ 1.48 $ 0.64 $ 3.10
Diluted $ ( 0.25 ) $ 1.48 $ 0.64 $ 3.08
Weighted average common shares outstanding:
Basic 142.8 144.9 143.2 145.3
Diluted 143.2 145.5 143.7 146.0
See Condensed Notes to Consolidated Financial Statements.
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Lamb Weston Holdings, Inc.
Consolidated Statements of Comprehensive Income
(unaudited, dollars in millions)
Thirteen weeks ended
November 24, 2024 Thirteen weeks ended
November 26, 2023
Pre-Tax
Amount Tax
(Expense)
Benefit After-Tax
Amount Pre-Tax
Amount Tax
(Expense)
Benefit After-Tax
Amount
Net income (loss) $ ( 22.7 ) $ ( 13.4 ) $ ( 36.1 ) $ 281.2 $ ( 66.2 ) $ 215.0
Other comprehensive income (loss):
Unrealized pension and post-retirement benefit obligations loss — — — ( 0.2 ) 0.1 ( 0.1 )
Unrealized currency translation (losses) gains ( 117.8 ) 1.1 ( 116.7 ) 30.5 ( 0.7 ) 29.8
Other ( 0.1 ) — ( 0.1 ) ( 0.2 ) — ( 0.2 )
Comprehensive income (loss) $ ( 140.6 ) $ ( 12.3 ) $ ( 152.9 ) $ 311.3 $ ( 66.8 ) $ 244.5
Twenty-Six Weeks Ended
November 24, 2024 Twenty-Six Weeks Ended
November 26, 2023
Pre-Tax
Amount Tax
(Expense)
Benefit After-Tax
Amount Pre-Tax
Amount Tax
(Expense)
Benefit After-Tax
Amount
Net income $ 155.5 $ ( 64.2 ) $ 91.3 $ 585.9 $ ( 136.1 ) $ 449.8
Other comprehensive income (loss):
Unrealized pension and post-retirement benefit obligations loss ( 0.2 ) — ( 0.2 ) ( 0.4 ) 0.1 ( 0.3 )
Unrealized currency translation (losses) gains ( 61.2 ) 0.5 ( 60.7 ) 31.3 ( 0.3 ) 31.0
Other ( 0.3 ) 0.1 ( 0.2 ) ( 0.2 ) — ( 0.2 )
Comprehensive income $ 93.8 $ ( 63.6 ) $ 30.2 $ 616.6 $ ( 136.3 ) $ 480.3
See Condensed Notes to Consolidated Financial Statements.
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Lamb Weston Holdings, Inc.
Consolidated Balance Sheets
(unaudited, dollars in millions, except share data)
November 24,
2024 May 26,
2024
ASSETS
Current assets:
Cash and cash equivalents $ 79.0 $ 71.4
Receivables, net of allowances of $ 0.9 and $ 0.9
695.0 743.6
Inventories 1,327.2 1,138.6
Prepaid expenses and other current assets 89.7 136.4
Total current assets 2,190.9 2,090.0
Property, plant and equipment, net 3,609.6 3,582.8
Operating lease assets 119.7 133.0
Goodwill 1,028.3 1,059.9
Intangible assets, net 101.0 104.9
Other assets 402.6 396.4
Total assets $ 7,452.1 $ 7,367.0
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings $ 320.5 $ 326.3
Current portion of long-term debt and financing obligations 69.7 56.4
Accounts payable 846.0 833.8
Accrued liabilities 390.8 407.6
Total current liabilities 1,627.0 1,624.1
Long-term liabilities:
Long-term debt and financing obligations, excluding current portion 3,693.6 3,440.7
Deferred income taxes 247.3 256.2
Other noncurrent liabilities 251.4 258.2
Total long-term liabilities 4,192.3 3,955.1
Commitments and contingencies
Stockholders’ equity:
Common stock of $ 1.00 par value, 600,000,000 shares authorized; 151,309,961 and 150,735,397 shares issued
151.3 150.7
Treasury stock, at cost, 8,669,325 and 7,068,741 common shares
( 634.4 ) ( 540.9 )
Additional distributed capital ( 497.3 ) ( 508.9 )
Retained earnings 2,687.2 2,699.8
Accumulated other comprehensive loss ( 74.0 ) ( 12.9 )
Total stockholders’ equity 1,632.8 1,787.8
Total liabilities and stockholders’ equity $ 7,452.1 $ 7,367.0
See Condensed Notes to Consolidated Financial Statements.
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Lamb Weston Holdings, Inc.
Consolidated Statements of Stockholders’ Equity
(unaudited, dollars in millions, except share and per share data )
Thirteen Weeks Ended November 24, 2024 and November 26, 2023
Common Stock,
net of Treasury
Shares Common
Stock
Amount Treasury
Stock
Amount Additional
Paid-in
(Distributed)
Capital Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Total
Stockholders’
Equity
Balance at August 25, 2024 142,595,357 $ 151.3 $ ( 633.7 ) $ ( 499.0 ) $ 2,775.3 $ 42.8 $ 1,836.7
Dividends declared, $ 0.36 per share
— — — — ( 51.3 ) — ( 51.3 )
Common stock issued 54,070 — — — — — —
Stock-settled, stock-based compensation expense — — — 12.3 — — 12.3
Repurchase of common stock and common stock withheld to cover taxes ( 8,791 ) — ( 0.7 ) — — — ( 0.7 )
Other — — — ( 10.6 ) ( 0.7 ) — ( 11.3 )
Comprehensive loss — — — — ( 36.1 ) ( 116.8 ) ( 152.9 )
Balance at November 24, 2024 142,640,636 $ 151.3 $ ( 634.4 ) $ ( 497.3 ) $ 2,687.2 $ ( 74.0 ) $ 1,632.8
Balance at August 27, 2023 144,926,900 $ 150.7 $ ( 427.8 ) $ ( 548.7 ) $ 2,354.6 $ ( 25.8 ) $ 1,503.0
Dividends declared, $ 0.28 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
Twenty-Six weeks ended November 24, 2024 and November 26, 2023
Common Stock,
net of Treasury
Shares Common
Stock
Amount Treasury
Stock
Amount Additional
Paid-in
(Distributed)
Capital Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Total
Stockholders’
Equity
Balance at May 26, 2024 143,666,656 150.7 ( 540.9 ) ( 508.9 ) 2,699.8 ( 12.9 ) $ 1,787.8
Dividends declared, $ 0.72 per share
— — — — ( 102.9 ) — ( 102.9 )
Common stock issued 574,564 0.6 — ( 0.6 ) — — —
Stock-settled, stock-based compensation expense — — — 21.8 — — 21.8
Repurchase of common stock and common stock withheld to cover taxes ( 1,600,584 ) — ( 92.9 ) — — — ( 92.9 )
Other — — ( 0.6 ) ( 9.6 ) ( 1.0 ) — ( 11.2 )
Comprehensive income (loss) — — — — 91.3 ( 61.1 ) 30.2
Balance at November 24, 2024 142,640,636 $ 151.3 $ ( 634.4 ) $ ( 497.3 ) $ 2,687.2 $ ( 74.0 ) $ 1,632.8
Balance at May 28, 2023 145,665,683 $ 150.3 $ ( 314.3 ) $ ( 558.6 ) $ 2,160.7 $ ( 26.8 ) $ 1,411.3
Dividends declared, $ 0.56 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
See Condensed Notes to Consolidated Financial Statements.
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Lamb Weston Holdings, Inc.
Consolidated Statements of Cash Flows
(unaudited, dollars in millions)
Twenty-Six Weeks Ended
November 24,
2024 November 26,
2023
Cash flows from operating activities
Net income $ 91.3 $ 449.8
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangibles and debt issuance costs 211.0 140.7
Stock-settled, stock-based compensation expense 21.9 22.2
Equity method investment (earnings) loss, net of distributions 11.5 ( 11.3 )
Deferred income taxes 1.4 5.8
Blue chip swap transaction gains ( 19.9 ) ( 7.1 )
Other 15.6 5.7
Changes in operating assets and liabilities:
Receivables 39.0 ( 35.2 )
Inventories ( 198.2 ) ( 216.0 )
Income taxes payable/receivable, net ( 25.1 ) 27.6
Prepaid expenses and other current assets 75.2 68.8
Accounts payable 216.8 96.1
Accrued liabilities ( 11.2 ) ( 91.9 )
Net cash provided by operating activities $ 429.3 $ 455.2
Cash flows from investing activities
Additions to property, plant and equipment ( 474.6 ) ( 507.6 )
Additions to other long-term assets ( 31.7 ) ( 58.9 )
Acquisition of business, net of cash acquired — ( 11.2 )
Proceeds from blue chip swap transactions, net of purchases 19.9 7.1
Other 1.5 ( 0.2 )
Net cash used for investing activities $ ( 484.9 ) $ ( 570.8 )
Cash flows from financing activities
Proceeds from short-term borrowings 811.6 194.3
Repayments of short-term borrowings ( 813.8 ) ( 60.6 )
Proceeds from issuance of debt 520.2 28.4
Repayments of debt and financing obligations ( 245.4 ) ( 27.7 )
Dividends paid ( 103.3 ) ( 81.6 )
Repurchase of common stock and common stock withheld to cover taxes ( 92.8 ) ( 164.3 )
Other ( 13.2 ) ( 0.5 )
Net cash provided by (used for) financing activities $ 63.3 $ ( 112.0 )
Effect of exchange rate changes on cash and cash equivalents ( 0.1 ) 1.1
Net increase (decrease) in cash and cash equivalents 7.6 ( 226.5 )
Cash and cash equivalents, beginning of period 71.4 304.8
Cash and cash equivalents, end of period $ 79.0 $ 78.3
See Condensed Notes to Consolidated Financial Statements.
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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. We have two reportable segments: North America and International. See Note 13, 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 24, 2024 and November 26, 2023, 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 26, 2024 (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 (the “SEC”) on July 24, 2024.
Certain amounts from prior period consolidated financial statements have been reclassified to conform with current period presentation. These reclassifications had no financial impact on previously reported net income (loss), cash flows, or stockholders' equity.
Accounting Pronouncements Not Yet Adopted
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . ASU 2023-07 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. ASU 2023-07 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 reportable segment 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, particularly around rate reconciliations and income taxes paid information. ASU 2023-09 is effective for our Annual Report on Form 10-K for the fiscal year ending May 31, 2026, 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.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) , which requires disaggregated disclosure of income statement expenses in public business entities. ASU 2024-03 is effective for our Annual Report on Form 10-K for the fiscal year ending May 28, 2028, 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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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
(in millions, except per share amounts) November 24,
2024 November 26,
2023 November 24,
2024 November 26,
2023
Numerator:
Net income (loss) $ ( 36.1 ) $ 215.0 $ 91.3 $ 449.8
Denominator:
Basic weighted average common shares outstanding 142.8 144.9 143.2 145.3
Add: Dilutive effect of employee incentive plans (a) 0.4 0.6 0.5 0.7
Diluted weighted average common shares outstanding 143.2 145.5 143.7 146.0
Earnings (loss) per share:
Basic $ ( 0.25 ) $ 1.48 $ 0.64 $ 3.10
Diluted $ ( 0.25 ) $ 1.48 $ 0.64 $ 3.08
___________________________________________
(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 24, 2024, 0.6 million shares of stock-based awards were excluded from the computation of diluted earnings per share because they would be antidilutive. 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.
3. INCOME TAXES
Income tax expense for the periods presented were as follows:
Thirteen Weeks Ended Twenty-Six Weeks Ended
(in millions) November 24,
2024 November 26,
2023 November 24,
2024 November 26,
2023
Income (loss) before income taxes and equity method earnings $ ( 24.8 ) $ 276.5 $ 142.1 $ 569.1
Equity method investment earnings 2.1 4.7 13.4 16.8
Income tax expense 13.4 66.2 64.2 136.1
Effective tax rate (a) ( 59.0 )% 23.5 % 41.3 % 23.2 %
___________________________________________
(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.
During the thirteen and twenty-six weeks ended November 24, 2024, we recorded a $ 35.5 million tax benefit related to charges in connection with our previously announced restructuring plan (the “Restructuring Plan”) and a discrete tax expense of $ 14.4 million and $ 19.2 million, respectively, primarily related to the establishment of a non-cash full valuation allowance against certain international deferred tax assets. See Note 4, Restructuring Plan, of these Condensed Notes to Consolidated Financial Statements for more information about the Restructuring Plan.
Income Taxes Paid
Income taxes paid, net of refunds, were $ 86.4 million and $ 101.1 million during the twenty-six weeks ended November 24, 2024 and November 26, 2023, respectively.
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4. RESTRUCTURING PLAN
On October 1, 2024, we announced the Restructuring Plan, which is designed to drive operational and cost efficiencies and improve cash flows. The Restructuring Plan includes the permanent closure of our manufacturing facility in Connell, Washington, the temporary curtailment of certain production lines and schedules across our manufacturing network in North America, and reductions in employee headcount, other operating expenses, and capital expenditures.
In connection with the Restructuring Plan, we expect to recognize total pre-tax charges of $ 190 million to $ 210 million. We expect actions in connection with the Restructuring Plan will be substantially complete by the end of the fourth quarter of fiscal 2025, and that the majority of the remaining charges will relate to facility closure and employee-related costs. Any changes to these estimates or timing will be reflected in our results of operations in future periods.
For the thirteen and twenty-six weeks ended November 24, 2024, we recorded $ 159.1 million of pre-tax charges, of which $ 114.5 million were cash and $ 44.6 million were non-cash.
(in millions) Thirteen and Twenty-Six Weeks Ended November 24, 2024
Restructuring Plan expenses related to (a):
Accelerated depreciation, retirement of assets, and other plant charges (b) $ 45.8
Potato contract terminations (c) 64.7
Inventory write-off (c) 19.8
Employee-related costs (d) 16.2
Other restructuring charges 12.6
$ 159.1
___________________________________________
(a) These charges were included as “ unallocated corporate costs ” before being reconciled in the Segment Adjusted EBITDA to Net income (loss) table in Note 13, Segments, of these Condensed Notes to the Consolidated Financial Statements.
(b) Includes charges related to accelerating depreciation of the manufacturing facility permanently closed under the Restructuring Plan, other asset retirements, and plant charges.
(c) Includes the cost of contracted raw potatoes that will not be used due to curtailed production and the write-off of inventories, including spare parts, related to the production curtailment under the Restructuring Plan.
(d) Includes employee severance and other one-time termination benefits related to the reduction in headcount under the Restructuring Plan.
The following amounts related to the Restructuring Plan are included in the Company’s Consolidated Statements of Earnings:
(in millions) Thirteen and Twenty-Six Weeks Ended November 24, 2024
Restructuring Plan expenses included in:
Cost of sales $ 75.5
Restructuring expense 74.6
Equity method investment earnings 9.0
$ 159.1
Liabilities related to the Restructuring Plan of $ 65.3 million are recorded as current liabilities within “Accounts payable” and “Accrued liabilities” in the accompanying Consolidated Balance Sheet at November 24, 2024.
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5. 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:
(in millions) November 24,
2024 May 26,
2024
Raw materials and packaging $ 344.8 $ 178.7
Finished goods 880.2 867.9
Supplies and other 102.2 92.0
Inventories $ 1,327.2 $ 1,138.6
6. PROPERTY, PLANT AND EQUIPMENT
The components of property, plant and equipment were as follows:
(in millions) November 24,
2024 May 26,
2024
Land and land improvements $ 186.9 $ 186.2
Buildings, machinery and equipment 4,916.8 4,708.8
Furniture, fixtures, office equipment and other 157.9 127.7
Construction in progress 535.1 688.2
Property, plant and equipment, at cost 5,796.7 5,710.9
Less accumulated depreciation ( 2,187.1 ) ( 2,128.1 )
Property, plant and equipment, net $ 3,609.6 $ 3,582.8
At November 24, 2024 and May 26, 2024, purchases of property, plant and equipment included in accounts payable were $ 115.4 million and $ 292.0 million, respectively.
Below is a breakdown of depreciation and amortization between cost of sales (“COS”) and selling, general and administrative expenses (“SG&A”) for the thirteen and twenty-six weeks ended November 24, 2024 and November 26, 2023.
Thirteen Weeks Ended Twenty-Six Weeks Ended
(in millions) November 24,
2024 November 26,
2023 November 24,
2024 November 26,
2023
Depreciation - COS $ 79.6 $ 63.8 $ 158.1 $ 126.7
Depreciation - SG&A 3.7 2.7 7.0 5.7
Depreciation - Restructuring expense (a) 28.9 — 28.9 —
$ 112.2 $ 66.5 $ 194.0 $ 132.4
Amortization - SG&A $ 7.2 $ 2.7 $ 14.7 $ 5.3
___________________________________________
(a) See Note 4, Restructuring Plan, of these Condensed Notes to Consolidated Financial Statements for additional information.
Interest capitalized within construction in progress for the thirteen weeks ended November 24, 2024 and November 26, 2023, was $ 8.2 million and $ 13.0 million, respectively; and $ 14.9 million and $ 23.5 million for the twenty-six weeks ended November 24, 2024 and November 26, 2023, respectively.
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7. GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS
The following table presents changes in goodwill balances, by segment, for the twenty-six weeks ended November 24, 2024:
(in millions) North America International Total
Balance at May 26, 2024 $ 728.8 $ 331.1 $ 1,059.9
Foreign currency translation adjustment ( 21.8 ) ( 9.8 ) ( 31.6 )
Balance at November 24, 2024 $ 707.0 $ 321.3 $ 1,028.3
Other identifiable intangible assets were as follows:
November 24, 2024 May 26, 2024
(in millions, except useful lives) Weighted
Average
Useful Life
(in years) Gross
Carrying
Amount Accumulated
Amortization Intangible
Assets, Net Weighted
Average
Useful Life
(in years) Gross
Carrying
Amount Accumulated
Amortization Intangible
Assets, Net
Non-amortizing intangible assets (a) n/a $ 18.0 $ — $ 18.0 n/a $ 18.0 $ — $ 18.0
Amortizing intangible assets (b) 14 123.0 ( 40.0 ) 83.0 13 123.6 ( 36.7 ) 86.9
$ 141.0 $ ( 40.0 ) $ 101.0 $ 141.6 $ ( 36.7 ) $ 104.9
___________________________________________
(a) Non-amortizing intangible assets represent brands and trademarks.
(b) Amortizing intangible assets are principally composed of licensing agreements, brands, and customer relationships. Foreign intangible assets are affected by foreign currency translation.
8. OTHER ASSETS
The components of other assets were as follows:
(in millions) November 24,
2024 May 26,
2024
Capitalized software costs $ 219.7 $ 227.9
Property, plant and equipment deposits 72.5 52.6
Equity method investments 47.8 59.2
Other 62.6 56.7
Other assets $ 402.6 $ 396.4
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9. ACCRUED LIABILITIES
The components of accrued liabilities were as follows:
(in millions) November 24,
2024 May 26,
2024
Compensation and benefits $ 97.2 $ 72.8
Accrued trade promotions 62.9 90.0
Dividends payable to shareholders 51.3 51.7
Accrued interest 43.0 31.7
Taxes payable 28.4 24.8
Current portion of operating lease obligations 26.3 29.3
Plant utilities and accruals 25.8 23.9
Derivative liabilities and payables 19.5 24.6
Other 36.4 58.8
Accrued liabilities $ 390.8 $ 407.6
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10. DEBT AND FINANCING OBLIGATIONS
The components of our debt, including financing obligations, were as follows:
(in millions) November 24, 2024 May 26, 2024
Amount Interest Rate Amount Interest Rate
Short-term borrowings:
Revolving credit facility $ 288.1 6.450 % $ 291.3 6.580 %
Other credit facilities (a) 32.4 35.0
320.5 326.3
Long-term debt:
Term A-1 loan facility, due June 2026 (b) (c) — — 228.8 7.240
Term A-3 loan facility, due January 2030 (b) 416.3 7.300 427.5 7.390
Term A-4 loan facility, due May 2029 (b) 320.9 6.580 325.0 6.540
Term A-5 loan facility, due September 2031 (b) (c) 500.0 5.620 — —
RMB loan facility, due February 2027 145.1 4.190 142.2 4.450
RMB loan facility, due September 2029 16.5 4.150 — —
Euro term loan facility, due May 2029 208.4 4.930 216.9 5.080
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
3,777.2 3,510.4
Financing obligations:
Lease financing obligations due on various dates through 2040 4.7 5.7
Total debt and financing obligations 4,102.4 3,842.4
Debt issuance costs (d) ( 18.6 ) ( 19.0 )
Short-term borrowings ( 320.5 ) ( 326.3 )
Current portion of long-term debt and financing obligations ( 69.7 ) ( 56.4 )
Long-term debt and financing obligations, excluding current portion $ 3,693.6 $ 3,440.7
___________________________________________
(a) Other credit facilities consist of short-term facilities at our subsidiaries used for working capital purposes. Borrowings under these facilities bear interest at various rates.
(b) The interest rates applicable to the Term A-1, A-3, A-4, and A-5 loans do not include anticipated patronage dividends. We have received and expect to continue receiving patronage dividends under these term loan facilities.
(c) On September 27, 2024, we established a new $ 500 million Term A-5 loan facility with a maturity date of September 2031. We used the proceeds of this Term A-5 loan to repay the Term A-1 loan facility in full and a portion of outstanding borrowings under our revolving credit facility.
(d) Excludes debt issuance costs of $ 4.3 million and $ 4.9 million as of November 24, 2024 and May 26, 2024, respectively, related to our Revolving credit facility, which are recorded in “Other assets” on our Consolidated Balance Sheets.
As of November 24, 2024, we had $ 1,211.9 million of available liquidity under our committed revolving credit facility.
For the twenty-six weeks ended November 24, 2024 and November 26, 2023, we paid $ 97.1 million and $ 89.4 million of interest on debt, respectively.
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For more information about our debt and financing obligations, interest rates, and debt covenants, see Note 6, 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, and Note 9, Debt and Financing Obligations, in “Part I, Item 1. Financial Statements (Unaudited)” of our Quarterly Report on Form 10-Q for the quarter ended August 25, 2024 filed with the SEC on October 2, 2024 .
11. 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 24, 2024
(in millions) Level 1 Level 2 Level 3 Fair Value
of Assets
(Liabilities)
Derivative assets (a) $ — $ 0.4 $ — $ 0.4
Derivative liabilities (a) — ( 15.2 ) — ( 15.2 )
Deferred compensation liabilities (b) — ( 29.7 ) — ( 29.7 )
Fair value, net $ — $ ( 44.5 ) $ — $ ( 44.5 )
As of May 26, 2024
(in millions) Level 1 Level 2 Level 3 Fair Value
of Assets
(Liabilities)
Derivative assets (a) $ — $ 1.4 $ — $ 1.4
Derivative liabilities (a) — ( 21.7 ) — ( 21.7 )
Deferred compensation liabilities (b) — ( 27.6 ) — ( 27.6 )
Fair value, net $ — $ ( 47.9 ) $ — $ ( 47.9 )
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(a) Derivative assets and liabilities included in Level 2 primarily represent commodity swaps, option contracts, interest rate swap and currency contracts. The fair value of these derivatives were determined using valuation models that use market observable inputs including both forward and spot prices. 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 24, 2024, we had $ 2,990.9 million of fixed-rate and $ 1,106.8 million of variable-rate debt outstanding. Based on current market rates, the fair value of our fixed-rate debt was estimated to be $ 2,848 million as of November 24, 2024. 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 and approximates current market prices.
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12. STOCKHOLDERS’ EQUITY
Share Repurchase Program
During the thirteen weeks ended November 24, 2024, we did not repurchase any shares under our share repurchase program. During the twenty-six weeks ended November 24, 2024, we repurchased 1,412,852 shares of our common stock for an aggregate purchase price of $ 82.0 million, or a weighted-average price of $ 58.04 per share. As of November 24, 2024, approximately $ 308 million remained authorized for repurchase under our share repurchase program. On December 19, 2024, we announced that our Board of Directors (the “Board”) increased our share repurchase authorization $ 250 million to an aggregate amount of $ 750 million. After giving effect to this increase, approximately $ 558 million remains authorized and available for repurchase under the program. The program has no expiration date.
Dividends
During the twenty-six weeks ended November 24, 2024, we paid $ 103.3 million of cash dividends to our common stockholders. In addition, on November 29, 2024, we paid $ 51.3 million of cash dividends to common stockholders of record as of the close of business on November 1, 2024. On December 18, 2024, the Board declared a cash dividend of $ 0.37 per share of our common stock. This dividend will be paid on February 28, 2025, to common stockholders of record as of the close of business on January 31, 2025.
Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss), net of taxes, as of November 24, 2024 were as follows:
(in millions) Foreign
Currency
Translation
Gain (Loss) Pension and
Post-Retirement
Benefits Other Accumulated
Other
Comprehensive
Income (Loss)
Balance as of May 26, 2024 $ ( 8.2 ) $ ( 5.3 ) $ 0.6 $ ( 12.9 )
Other comprehensive income before reclassifications, net of tax ( 60.7 ) ( 0.2 ) ( 0.2 ) ( 61.1 )
Net current-period other comprehensive income ( 60.7 ) ( 0.2 ) ( 0.2 ) ( 61.1 )
Balance as of November 24, 2024 $ ( 68.9 ) $ ( 5.5 ) $ 0.4 $ ( 74.0 )
13. SEGMENTS
We 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 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
(in millions) November 24,
2024 November 26,
2023 November 24,
2024 November 26,
2023
Segment net sales
North America $ 1,072.1 $ 1,167.1 $ 2,175.8 $ 2,302.5
International 528.8 565.0 1,079.2 1,094.9
$ 1,600.9 $ 1,732.1 $ 3,255.0 $ 3,397.4
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Thirteen Weeks Ended Twenty-Six Weeks Ended
(in millions) November 24,
2024 November 26, 2023 November 24,
2024 November 26,
2023
Segment Adjusted EBITDA
North America $ 266.7 $ 321.3 $ 542.8 $ 700.7
International 47.4 100.2 97.9 189.8
Total Reportable Segments Adjusted EBITDA 314.1 421.5 640.7 890.5
Unallocated corporate costs (a) ( 32.2 ) ( 44.6 ) ( 68.9 ) ( 100.8 )
Depreciation and amortization (b) 92.5 71.2 183.9 142.0
Unrealized derivative (gains)/losses 3.0 1.6 ( 5.9 ) ( 25.7 )
Foreign currency exchange (gains)/losses 9.6 ( 2.1 ) 10.2 5.3
Blue chip swap transaction gains (c) ( 3.3 ) ( 7.1 ) ( 19.9 ) ( 7.1 )
Items impacting comparability:
Restructuring Plan expenses 159.1 — 159.1 —
Shareholder activism expense (d) 0.4 — 0.4 —
Inventory step-up from acquisition — ( 1.8 ) — 20.7
Integration and acquisition-related items, net — 4.8 — 8.8
Interest expense, net 43.3 29.1 88.5 59.8
Income (loss) before income taxes ( 22.7 ) 281.2 155.5 585.9
Income tax expense 13.4 66.2 64.2 136.1
Net income (loss) $ ( 36.1 ) $ 215.0 $ 91.3 $ 449.8
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(a) Unallocated corporate costs include costs related to corporate support staff and support service, which include, but are not limited to, our administrative, information technology, human resources, finance, and accounting functions that are not specifically allocated to the segments. In the table, Unallocated corporate costs exclude unrealized derivative gains and losses, foreign currency exchange gains and losses, blue chip swap transaction gains, and items impacting comparability. These items are added back to reconcile Segment Adjusted EBITDA to Net income (loss).
(b) Depreciation and amortization includes interest expense, income tax expense, and depreciation and amortization from equity method investments of $ 2.0 million and $ 2.1 million for the thirteen weeks ended November 24, 2024 and November 26, 2023, respectively; and $ 4.1 million and $ 4.3 million for the twenty-six weeks ended November 24, 2024 and November 26, 2023, respectively. Depreciation expense does not include $ 28.9 million of accelerated depreciation related to the closure of our manufacturing facility in Connell, Washington.
(c) We enter into blue chip swap transactions to transfer U.S. dollars into Argentina primarily related to funding our capacity expansion in Argentina. The blue chip swap rate can diverge significantly from Argentina's official exchange rate.
(d) Represents advisory fees related to shareholder activism matters.
14. 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, and purchase commitments for goods and services. There have been no material changes to the commitments, contingencies, and guarantees 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.
In June 2024, an alleged purchaser of the Company's common stock filed a lawsuit against the Company and certain of our executive officers in the U.S. District Court for the District of Idaho on behalf of a putative class of stock purchasers for alleged violations of the federal securities laws. A similar lawsuit was filed in the same court in August 2024 and, in November 2024, the two lawsuits were consolidated. Plaintiffs allege that the defendants made misrepresentations and omissions regarding the design and implementation of our enterprise resource planning system. We believe the lawsuits lack merit and intend to vigorously defend against the allegations. In addition, in August 2024, an alleged shareholder filed a derivative lawsuit purportedly on behalf of the Company against certain of our executive officers and directors, alleging breaches of fiduciary and other duties owed to the Company, based on the same matters alleged in the securities lawsuits. A similar derivative lawsuit was filed in September 2024 and the two lawsuits were consolidated. The consolidated derivative lawsuits were dismissed without prejudice in November 2024.
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In November 2024, a class action complaint was filed in the U.S. District Court for the Northern District of Illinois against the Company, certain of our subsidiaries and a number of other producers of frozen potato products alleging violations of antitrust laws. Additional class action complaints were later filed in the same court, based on similar allegations, bringing antitrust claims on behalf of putative classes of direct purchasers, commercial and institutional indirect purchasers, and end-consumer indirect purchasers. Some complaints name a data provider and a trade association as defendants, in addition to producers of frozen potato products. The complaints allege, among other things, that beginning at least as early as January 1, 2021, the defendants conspired to raise the price of frozen potato products above competitive levels in violation of U.S. antitrust laws by coordinating prices of frozen potato products and imposing lockstep price increases, allegedly facilitated by the exchange of non-public information about prices and production. The complaints on behalf of the putative classes of indirect purchasers also assert claims under various state laws, including state antitrust laws, unfair competition laws, consumer protection statutes, and common law unjust enrichment. The relief sought in the complaints includes treble damages, injunctive relief, pre- and post-judgment interest, costs and attorneys’ fees. Class actions based on similar allegations have also been filed in Canada, in the Supreme Court of British Columbia and the Superior Court of Quebec. We believe these complaints lack merit and intend to vigorously defend against the allegations. Given the preliminary stage of the proceedings, we are currently unable to predict the outcome of this matter or estimate the range of potential loss, if any, that may result.
We are also a party to various other legal actions arising in the ordinary course of our business. These claims, legal proceedings and litigation principally arise from alleged casualty, product liability, employment, and other disputes. In determining loss contingencies, we consider the likelihood of loss as well as the ability to reasonably estimate the amount of such loss or liability. An estimated loss is recognized when it is considered probable that a liability has been incurred and when the amount of loss can be reasonably estimated. While any claim, proceeding or litigation has an element of uncertainty, we believe the outcome of any of these that are pending or threatened will not have a material adverse effect on our financial condition, results of operations, or cash flows.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.