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Item 2. Management’s Discussion and Analysis

2025-09-30 compared with 2025-04-03 · 124 added, 248 removed, 107 unchanged (78% of the section changed)

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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,” “believe,” “reduce,” “estimate,” “deliver,” “remain,” “drive,” “increase,” “improve,” “generate,” “evaluate,” “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 and strategies and anticipated benefits therefrom, including with respect to the Restructuring Plan (as defined below) and other cost-savings or efficiency initiatives, capital expenditures and investments, pricing actions, operational costs, cash flows, liquidity, dividends, conditions in our operating environment and industry, and prevailing economic conditions in our markets.

Words such as “will,” “continue,” “may,” “expect,” “anticipate,” “believe,” “strengthen,” “innovate,” “reduce,” “estimate,” “deliver,” “remain,” “drive,” “increase,” “expand,” “focus,” “decline,” “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 and strategies and anticipated benefits therefrom, including with respect to the Cost Savings Program and Restructuring Plan, capital expenditures and investments, costs, cash flows, liquidity, dividends, and anticipated 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.

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operational challenges;

our ability to successfully implement the Restructuring Plan or other cost-saving or efficiency initiatives, including achieving the benefits of those activities and possible changes in the size and timing of related charges;

shareholder activism;

including costs and expenses incurred to address activism matters and distraction of management from business operations;

our ability to successfully implement the Cost Savings Program, the Restructuring Plan or other cost savings or efficiency initiatives, including achieving the benefits of those activities and possible changes in the size and timing of related charges;

difficulties, disruptions or delays in implementing new technology;

levels of labor and people-related expenses;

our ability to successfully execute our long-term value creation strategies;

our ability to successfully execute our long-term value creation strategies, including our Focus to Win plan;

our ability to execute on large capital projects, including construction of new production lines or facilities;

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disruption of our access to export mechanisms;

risks associated with integrating acquired businesses, including our former European joint venture, Lamb-Weston/Meijer v.o.f.

risks associated with integrating acquired businesses;

risks associated with other possible acquisitions;

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generally accepted accounting principles (“GAAP”).

We have also presented Adjusted EBITDA, Adjusted Gross Profit, Adjusted Selling, General and Administrative expenses (“SG&A”), Adjusted Restructuring Expense, and Adjusted Equity Method Investment Earnings, each of 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 definitions of Adjusted EBITDA, Adjusted Gross Profit, Adjusted SG&A, Adjusted Restructuring Expense, and Adjusted Equity Method Investment Earnings, and a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, net income, gross profit, SG&A, restructuring expense, or equity method investment earnings, as applicable.

We have also presented Adjusted EBITDA, Adjusted Gross Profit, Adjusted Selling, General and Administrative expenses (“SG&A”), and Adjusted Income Tax Expense, each of 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 definitions of Adjusted EBITDA, Adjusted Gross Profit, Adjusted SG&A, and Adjusted Income Tax Expense and a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, net income, gross profit, SG&A, or income tax expense, as applicable.

For more information, refer to the “Results of Operations” and “Non-GAAP Financial Measures” sections below.

Executive Summary

As a result of the actions we took in early fiscal 2025 to drive operational and cost efficiencies, volume trends sequentially improved in the third quarter and we are delivering the cost savings and reduced capital spending outlined in our October 1, 2024 announced restructuring plan (the “Restructuring Plan”).

We continue to be affected by soft restaurant traffic trends as consumer buying power is stretched due to rising prices and economic uncertainty.

According to industry publications, global quick service restaurant (QSR) traffic worsened in our fiscal third quarter.

QSR hamburger trends declined further with traffic worsening sequentially each month during the quarter.

QSR restaurant traffic was down with declines in our larger markets, the U.S.

and the United Kingdom, as well as declines in France, Germany and Italy.

During our second fiscal quarter, we took steps to rationalize capacity, permanently closing a manufacturing facility and temporarily curtailing additional lines.

Since our second fiscal quarter, industry participants have announced additional capacity, primarily outside of the U.S.

Against a backdrop of lower restaurant traffic and increasing manufacturing capacity, we have undertaken a thorough end-to-end review, including an engagement with AlixPartners, a leading global business advisory firm, to assist us in evaluating opportunities for near- and long-term value creation and cost savings, further building on our Restructuring Plan.

Looking forward to the fourth quarter of fiscal 2025, we expect sales volumes to be slightly higher than in the third quarter, primarily due to growth in our International segment.

We expect costs per pound to increase in the fourth quarter.

This reflects seasonal trends, particularly the third quarter benefit from seasonally lower costs as we transport and process direct from the field.

We expect input and transportation and warehousing costs to remain high.

In addition, we expect an increase in planned maintenance and curtailment-related downtime associated with our previously revised demand outlook will more than offset benefits from continued improvement in our global manufacturing operations.

On April 2, 2025, the U.S.

announced a new universal baseline tariff of 10%, plus an additional country-specific tariff for select trading partners, on all U.S.

We are a global business that allows us to provide most of our customers with local/regional supply.

The recently announced tariffs exempt imports that are compliant with the United States-Mexico-Canada trading agreement (“USMCA”), which includes french fries imported from Canada.

As such, the products we manufacture at our one production facility in Canada and import to the U.S.

are exempt from these tariffs.

We source approximately 5 percent of our inputs from Canada, primarily edible oils and natural gas, which are also USMCA compliant and therefore, exempt from the recently announced tariffs.

We are evaluating our other expenditures to assess the impact of the recent tariff announcements, but do not currently expect them to have a significant impact on our fiscal 2025 financial results.

In addition, our U.S.

manufacturing operations export in the mid- to high-teens as a percent of total volume and net sales, which could be subject to future retaliatory tariffs, if any.

Given the timing and uncertainty of tariffs, including potential retaliatory tariffs, we have not included any impact from potential tariffs in our outlook above.

Restructuring Plan

Our Restructuring Plan is designed to drive operational and cost efficiencies and improve cash flows.

The Restructuring Plan includes the permanent closure of a manufacturing facility, 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.

Any changes to estimates or timing will be reflected in our results of operations in future periods.

We expect actions in connection with the Restructuring Plan will be substantially complete by the end of the fourth quarter of fiscal 2025 or early fiscal 2026.

We estimate that the Restructuring Plan will generate approximately $55 million in pre-tax cost savings and reduce working capital in fiscal 2025.

Net income for the thirteen weeks ended February 23, 2025 included:

• $10.3 million ($7.7 million after-tax, or $0.05 per share) of pre-tax charges;

◦ $0.7 million ($0.5 million after-tax, or zero per share) was included in Cost of sales;

◦ $9.6 million ($7.2 million after-tax, or $0.05 per share) was included in Restructuring expense

Net income for the thirty-nine weeks ended February 23, 2025 included:

• $169.4 million ($131.3 million after-tax, or $0.91 per share) of pre-tax charges, of which $120.2 million are cash expenses and $49.2 million of non-cash expenses;

◦ $76.2 million ($57.9 million after-tax, or $0.40 per share) was included in Cost of sales;

◦ $84.2 million ($66.5 million after-tax, or $0.46 per share) was included in Restructuring expense;

◦ $9.0 million ($6.9 million after-tax, or $0.05 per share) was included in Equity method investment earnings.

For more information related to the Restructuring Plan, see Note 4, Restructuring Plan, of the Condensed Notes to Consolidated Financial Statements in “Part I, Item 1.

Financial Statements” in this report.

During the quarter, we saw volume growth and positive customer momentum.

While the operating environment remains competitive, we believe our disciplined execution and strategic plans are better enabling us to expand our customer base and drive long-term growth.

We are focused on executional excellence, including delivering our Cost Savings Program.

Actions taken over the past two fiscal years have improved our manufacturing costs per pound and lowered SG&A.

We are focused on strengthening customer partnerships and innovating across our business.

Our operational improvements also drove favorable working capital changes, primarily from lower inventories.

Operating cash flow and cash on hand increased at the end of the period, and capital expenditures declined as we near completion of our growth-related investments in our production facilities, with the startup of a new production facility in Argentina during the first quarter.

In fiscal 2026, we anticipate that global consumers will continue to face macroeconomic and geopolitical pressures, alongside a competitive environment, particularly in our international markets.

We expect global restaurant traffic to remain roughly in line with fiscal 2025 levels.

We believe customers and consumers will continue to prioritize french fries both on menus and at home.

Momentum from customer wins in the second half of fiscal 2025 and the contribution of a 53rd week in fiscal 2026, with the additional week falling in the fourth quarter, is expected to drive increased sales volumes.

We expect earnings will decline as they are pressured by the impact of pricing and mix, higher overall input costs, net of the benefit of lower raw potato costs, incremental depreciation and start-up costs from the capacity expansions in the Netherlands and Argentina, and increased compensation and benefits as incentive programs normalize.

These factors will only be partially offset by benefits from the Restructuring Plan and Cost Savings Program.

Our outlook includes our current view of the anticipated impact of enacted tariffs by the U.S.

and other governments but does not include the potential effects of evolving trade policies, including future changes in tariffs or retaliatory countermeasures.

Results of Operations

Thirteen Weeks Ended February 23, 2025 compared to Thirteen Weeks Ended February 25, 2024

Thirteen Weeks Ended August 24, 2025 compared to Thirteen Weeks Ended August 25, 2024

Net Sales and Segment Adjusted EBITDA

Thirteen Weeks Ended

(in millions, except percentages) February 23,

2025 February 25,

Increase (Decrease)

(in millions, except percentages) August 24,

2025 August 25,

Increase (Decrease) % Increase (Decrease) at Constant Currency

Segment net sales

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International 57.2 51.4 11% 4%

Compared to the prior year quarter, net sales for the third quarter of fiscal 2025 increased $62.2 million, or 4%, to $1,520.5 million.

Volume increased 9% compared to the prior year quarter as we fully replaced the combined regional, small, and retail customer volume lost in the prior year, during our transition to a new ERP system, in addition to recent customer contract wins across each of our channels and geographic regions, net of volume losses.

These benefits were partially offset by soft global restaurant traffic trends.

Price/mix declined 5%, reflecting the impact of planned investments in price to compete in the increasingly competitive environment in both the North America and International segments.

North America segment net sales, which includes all sales to customers in the U.S., Canada, and Mexico, increased $38.8 million, or 4%, to $986.3 million.

Volume increased 8% compared to the prior year quarter as we fully replaced the combined regional, small, and retail customer volume lost in the prior year during our transition to a new ERP system.

We also had recent customer contract wins across each of our channels, net of volume losses primarily in our quick service channel, which were partially offset by soft restaurant traffic trends.

Price/mix declined 4%, due to planned investments in price and trade, which was only partially offset by favorable channel and product mix.

The favorable mix was attributable to fully replacing the combined volume of regional, small and retail customers that was harder to fill in the prior year quarter due to the ERP transition.

International segment net sales, which includes all sales to customers outside of North America, increased $23.4 million, or 5%, to $534.2 million.

Despite soft restaurant traffic, volume increased 12%, led primarily by chain customer contract wins in key international markets and to a lesser extent, lapping unfilled orders due to the prior year ERP transition.

These volume increases were partially offset by the carryover effect of our decision in the prior year to exit certain lower-priced and lower-margin business in Europe to strategically manage customer and product mix.

Price/mix declined 7% related to pricing actions in key international markets in response to the competitive environment along with unfavorable changes in foreign currencies.

Gross profit increased $18.8 million versus the prior year quarter to $422.5 million, and included $2.8 million ($2.2 million after-tax, or $0.02 per share) of unrealized gains related to mark-to-market adjustments associated with commodity hedging contracts and $0.7 million of charges ($0.5 million after-tax, or zero per share) related to the Restructuring Plan.

The prior year quarter included $23.3 million ($17.3 million after-tax, or $0.12 per share) of unrealized losses related to mark-to-market adjustments associated with commodity hedging contracts.

Adjusted Gross Profit declined $6.6 million versus the prior year quarter to $420.4 million due primarily to unfavorable price/mix, higher transportation and warehousing costs primarily driven by higher warehouse inventories, and $16.2 million of higher depreciation expense largely associated with our recent capacity expansions in the Netherlands and the U.S.

This decline was partially offset by higher sales volumes and lower manufacturing costs per pound, which included lapping $53.5 million of pre-tax charges in the prior year (including an estimated $33 million of incremental costs associated with the ERP transition and a $20.5 million charge for the write-off of excess raw potatoes), and a current year reduction in North America raw potato prices.

Net sales for the first quarter of fiscal 2026 increased $5.2 million to $1,659.3 million compared to the prior year quarter, including a favorable foreign currency impact of $23.7 million.

Net sales at constant currency declined 1% over the prior year quarter, as a 6% increase in volume was more than offset by a 7% decline in price/mix.

Net sales and price/mix at constant currency are calculated by translating financial data for the current year period at prior year average exchange rates.

Volume growth was driven by customer wins and retention, particularly in North America and Asia, as well as lapping an approximately $15 million charge in the prior year quarter related to a voluntary product withdrawal.

Price/mix reflects the carryover impact of fiscal 2025 price and trade investments to support customers, ongoing price and trade support, and unfavorable channel product mix within our segments.

North America segment net sales, which includes all sales to customers in the U.S., Canada, and Mexico, declined $19.1 million, or 2%, to $1,084.6 million.

Volume increased 5% compared to the prior year quarter supported by recent customer contract wins and growth across channels.

Price/mix declined 7%, driven by the carryover impact from fiscal 2025 price investments, the ongoing support of customers through price and trade and an unfavorable channel mix.

International segment net sales, which includes all sales to customers outside of North America, increased $24.3 million, or 4%, to $574.7 million year-over-year, including a favorable $24.5 million from foreign currency translation.

Net sales at constant currency was flat.

Volume increased 6%, led primarily by growth in Asia and with multinational chain customers.

Price/mix at constant currency declined 6%, driven by investments to support customers as well as ongoing price and trade support.

Gross profit declined $13.6 million versus the prior year quarter to $342.4 million.

Adjusted Gross Profit declined $14.2 million versus the prior year quarter to $338.9 million due primarily to unfavorable price/mix.

Unfavorable price/mix was partially offset by higher sales volumes, lower manufacturing costs per pound driven by cost savings initiatives, and the benefit of lapping an approximately $39 million charge in the prior year related to a voluntary product withdrawal.

Selling, General and Administrative Expenses

SG&A declined $15.6 million versus the prior year quarter to $164.2 million including $3.1 million ($2.4 million after-tax, or $0.02 per share) of unrealized gains related to mark-to-market adjustments associated with currency hedging contracts, $7.0 million ($5.0 million after-tax, or $0.04 per share) of foreign currency exchange losses, a gain of $0.6 million ($0.4 million after-tax, or zero per share) related to blue chip swap transactions in Argentina, and $3.7 million ($2.9 million after-tax, $0.02 per share) of expenses related to ongoing shareholder activism matters.

The prior year quarter included $4.0 million ($3.0 million after-tax, or $0.02 per share) of unrealized losses related to mark-to-market adjustments associated with currency hedging contracts, $16.4 million ($12.4 million after-tax, or $0.08 per share) of foreign currency exchange losses, a gain of $7.4 million ($5.6 million after-tax, or $0.04 per share) related to blue chip swap transactions in Argentina, and $2.4 million ($1.8 million after-tax, or $0.01 per share) of integration and acquisition-related expenses associated with the completion of our acquisition of the remaining interest in LW EMEA.

Adjusted SG&A declined $7.2 million versus the prior year quarter to $157.2 million, primarily related to lapping higher expenses associated with the ERP implementation in the third quarter of fiscal 2024 and cost savings associated with the Restructuring Plan and other management initiatives to reduce costs, partially offset by the timing of compensation and benefit accruals.

SG&A increased $9.7 million versus the prior year quarter to $153.6 million.

Adjusted SG&A declined $24.0 million versus the prior year quarter to $132.4 million, reflecting the benefits of ongoing cost savings initiatives and $7.3 million of miscellaneous income primarily from an insurance recovery and property tax refunds.

Net Income, Adjusted EBITDA and Segment Adjusted EBITDA

Net income declined $63.1 million from the prior year quarter to $64.3 million.

Net income in the current quarter included a total net loss of $10.6 million ($14.5 million before tax, or $0.07 per share) resulting from unrealized mark-to-market derivative gains, foreign currency exchange losses, gains on blue chip swap transactions in Argentina, and other items impacting comparability.

Net income in the prior year quarter included an estimated $72 million negative impact associated with the ERP transition.

In addition, the prior year quarter included a total net loss of $28.9 million ($38.7 million before tax, or $0.19 per share) resulting from unrealized mark-to-market derivative gains, foreign currency exchange losses, gains on blue chip swap transactions in Argentina, and other items impacting comparability.

Adjusted EBITDA increased $20.2 million versus the prior year quarter to $363.8 million, primarily due to higher net sales and lower Adjusted SG&A, which were partially offset by lower Adjusted Gross Profit.

Adjusted EBITDA in the prior year quarter included an approximately $95 million negative impact from the ERP transition and a $25.0 million charge for the write-off of excess raw potatoes, of which $4.5 million was recorded in equity method investment earnings.

North America Segment Adjusted EBITDA increased $14.8 million versus the prior year quarter to $300.7 million.

The increase was driven by higher sales volume and lower manufacturing costs per pound, which included lapping the impact of the ERP transition, a pre-tax charge of $22.7 million for the write-off of excess raw potatoes, and lower raw potato prices in the current year.

The benefits of these items were partially offset by planned investments in price and trade.

North America Segment Adjusted EBITDA in the prior year quarter included an approximately $83 million negative impact of the ERP transition related to lower order fulfillment rates and incremental costs and expenses.

International Segment Adjusted EBITDA declined $8.5 million versus the prior year quarter to $93.2 million, including approximately $5 million of losses in the prior year related to lower order fulfillment rates associated with the ERP transition and a $2.3 million allocated charge for the write-off of excess raw potatoes.

Unfavorable price/mix was partially offset by increased sales volume and lower manufacturing costs per pound.

Interest Expense, Net

Interest expense, net increased $11.6 million, versus the prior year quarter, to $47.3 million, reflecting the impact of higher total debt outstanding and lower capitalized interest related to our manufacturing expansion projects.

Income Tax Expense

Income tax expense for the third quarter of fiscal 2025 and 2024 was $57.5 million and $43.1 million, respectively.

Our effective tax rate in the third quarter of 2025 was 28.3%, versus 22.8% in the third quarter of fiscal 2024.

The increase is largely due to foreign losses without tax benefits and a higher proportion of overall earnings in our International segment.

Equity Method Investment Earnings

Equity method investment earnings from unconsolidated joint ventures were $2.1 million and $1.0 million for the third quarter of fiscal 2025 and 2024, respectively.

Equity method investment earnings in the prior year quarter included a $4.5 million charge for the write-off of excess raw potatoes.

The results for the current and prior year quarters reflect earnings associated with our 50% interest in Lamb Weston/RDO Frozen, an unconsolidated potato processing joint venture in Minnesota (“Lamb Weston RDO”).

Thirty-Nine Weeks Ended February 23, 2025 compared to Thirty-Nine Weeks Ended February 25, 2024

Net Sales and Segment Adjusted EBITDA

Thirty-Nine Weeks Ended

(in millions, except percentages) February 23,

2025 February 25,

Increase (Decrease)

Segment net sales

North America $ 3,162.1 $ 3,250.0 (3)%

International 1,613.4 1,605.7 —%

$ 4,775.5 $ 4,855.7 (2)%

Segment Adjusted EBITDA

North America $ 843.5 $ 986.6 (15)%

International 191.1 291.5 (34)%

Compared to the first three quarters of fiscal 2024, net sales declined $80.2 million, or 2%, to $4,775.5 million.

Despite soft global restaurant traffic trends, volume was flat compared to the prior year period as we fully replaced the combined regional, small, and retail customer volume lost in the prior year during our transition to a new ERP system and gained incremental volume from recent customer contract wins across each of our channels and geographic regions, net of volume losses.

These factors were offset by the impact of soft global restaurant traffic trends, the carryover effect of our decision in the prior year to exit certain lower-priced and lower-margin business in Europe, and the impact of a previously announced voluntary product withdrawal initiated in late fiscal 2024.

Price/mix declined 2% compared to the prior year period, reflecting planned investments in price to compete in the increasingly competitive environment in both the North America and International segments and unfavorable channel and product mix.

North America segment net sales declined $87.9 million, or 3%, to $3,162.1 million.

Volume declined 1%, largely reflecting the impact of customer volume losses, net of gains and softening restaurant traffic in the U.S., largely offset by lapping unfilled customer orders during the ERP transition in the third quarter of fiscal 2024.

Price/mix declined 2%, reflecting planned investments in price and trade support across all sales channels, more than offsetting the carryover benefit of inflation-driven pricing actions taken in fiscal 2024 for contracts with large and regional chain restaurant customers.

International segment net sales increased $7.7 million to $1,613.4 million.

Volume was slightly up, reflecting volume growth in key international markets outside of Europe, mostly offset by customer volume losses, net of gains and the carryover effect of our decision in the prior year to exit certain lower-priced and lower-margin business in Europe.

Price/mix was flat reflecting the benefit of inflation-driven pricing actions in Europe in fiscal 2024, offset by pricing actions in key international markets in response to a more competitive environment in fiscal 2025.

Compared to the first three quarters of fiscal 2024, gross profit declined $322.5 million to $1,056.3 million, and included $15.5 million ($11.6 million after-tax, or $0.08 per share) of unrealized gains related to mark-to-market adjustments associated with commodity hedging contracts and a $76.2 million pre-tax charge ($57.9 million after-tax, or $0.40 per share) related to the Restructuring Plan.

The prior year period included $3.8 million ($2.9 million after-tax, or $0.02 per share) of unrealized gains related to mark-to-market adjustments associated with commodity hedging contracts, and $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 following the completion of our acquisition of the remaining interest in LW EMEA.

Adjusted Gross Profit declined $278.7 million versus the first three quarters of fiscal 2024 to $1,117.0 million.

• The current year period included $78.5 million of pre-tax charges including $47.5 million of higher depreciation expense largely associated with our recent capacity expansions in the Netherlands, China, and the U.S.

and an approximately $31 million charge associated with the voluntary product withdrawal initiated in the fourth quarter of the prior year.

• The prior year period included $118.1 million of pre-tax charges, including an $85.1 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 higher-than-expected impact on customer shipments associated with the transition to a new ERP system, and an estimated $33 million of pre-tax costs associated with the ERP transition.

• After the pre-tax charges described above, Adjusted Gross Profit declined primarily related to higher manufacturing and transportation and warehousing costs per pound and unfavorable price/mix.

The higher manufacturing costs per pound largely reflected input cost inflation, primarily driven by higher raw potato costs in the first half of the year, utilization-related production costs and inefficiencies, and higher transportation and warehouse costs due primarily to higher finished goods inventory levels during the current year.

Selling, General and Administrative Expenses

Compared to the first three quarters of fiscal 2024, SG&A declined $33.2 million to $492.8 million, including $3.7 million ($2.7 million after-tax, or $0.02 per share) of unrealized losses related to mark-to-market adjustments associated with currency hedging contracts, $17.2 million ($12.6 million after-tax, or $0.09 per share) of foreign currency exchange losses, a gain of $20.5 million ($19.7 million after-tax, or $0.14 per share) related to blue chip swap transactions in Argentina, and $4.1 million ($3.2 million after-tax, or $0.02 per share) of expenses related to ongoing shareholder activism matters.

The prior year period included $5.4 million ($4.0 million after-tax, or $0.03 per share) of unrealized losses related to mark-to-market adjustments associated with currency hedging contracts, $21.8 million ($16.4 million

after-tax, or $0.11 per share) of foreign currency exchange losses, a gain of $14.5 million ($10.9 million after-tax, or $0.08 per share) related to blue chip swap transactions in Argentina, and $11.2 million ($8.4 million after-tax, or $0.05 per share) of LW EMEA integration and acquisition-related expenses.

Adjusted SG&A declined $13.8 million to $488.3 million, primarily related to lapping higher external costs associated with the ERP transition in the prior year, net of increased non cash amortization and expenses related to the ERP transition, cost savings associated with the Restructuring Plan, and other management initiatives to reduce costs.

Net Income, Adjusted EBITDA and Segment Adjusted EBITDA

Compared to the first three quarters of 2024, net income declined $358.5 million to $237.3 million.

Net income in the current period included a total net loss of $118.5 million ($158.4 million before tax, or $0.82 per share) including unrealized mark-to-market derivative gains and losses, foreign currency exchange losses, gains resulting from blue chip swap transactions in Argentina, and other items impacting comparability.

Net income in the prior period included a total net loss of $30.4 million ($40.8 million before tax, or $0.20 per share) including unrealized mark-to-market derivative gains and losses, foreign currency exchange losses, gains resulting from blue chip swap transactions in Argentina, and other items impacting comparability.

Compared to the first three quarters of fiscal 2024, Adjusted EBITDA declined $197.8 million to $935.6 million, primarily due to higher costs per pound (as discussed above under Adjusted Gross Profit), unfavorable price/mix, and an approximately $31 million charge for the voluntary product withdrawal initiated in the fourth quarter of fiscal 2024.

Adjusted EBITDA in the prior year period included a $95.9 million pre-tax charge for the write-off of excess raw potatoes, of which $10.8 million was recorded in equity method investment earnings, and an estimated $95 million negative impact from the ERP transition in the third quarter of fiscal 2024.

North America Segment Adjusted EBITDA declined $143.1 million to $843.5 million, primarily due to higher manufacturing costs per pound, mostly driven by higher transportation and warehousing costs and higher raw potato prices during the first half of the year, lower net sales driven by unfavorable price/mix and lower sales volume, and an approximately $19 million charge for the voluntary product withdrawal, initiated in the fourth quarter of fiscal 2024, for products manufactured in North America.

North America Adjusted EBITDA in the prior year period included a $86.0 million charge for the write-off of excess raw potatoes and an estimated $83 million negative impact from the ERP transition in the third quarter of fiscal 2024.

International Segment Adjusted EBITDA declined $100.4 million to $191.1 million.

International Segment Adjusted EBITDA in the current year period included an approximately $12 million allocated charge for the impact of the voluntary product withdrawal initiated in the fourth quarter of fiscal 2024.

The prior year period included $14.9 million of pre-tax losses including a $9.9 million allocated charge for the write-off of excess raw potatoes and an estimated $5 million negative impact from the ERP transition in the third quarter of fiscal 2024.

After these pre-tax charges, the decline in International Segment Adjusted EBITDA primarily related to higher manufacturing costs per pound, primarily due to higher raw potato costs and higher transportation and warehousing costs driven mostly by an increase in freight expense related to U.S.

Adjusted EBITDA increased $2.8 million versus the prior year quarter to $302.2 million.

Lower Adjusted SG&A was partially offset by lower Adjusted Gross Profit and Equity Method Investment Earnings (Loss).

North America Segment Adjusted EBITDA decreased $18.0 million to $260.0 million.

The decline primarily reflects price and trade investments in support of customers, partially offset by higher sales volumes, lower manufacturing costs per pound and Adjusted SG&A, which included the benefit of cost savings initiatives.

Results also benefited from lapping an approximately $21 million charge related to a voluntary product withdrawal in the prior year.

International Segment Adjusted EBITDA increased $5.8 million to $57.2 million.

For the quarter ended August 24, 2025, the effects of foreign currency translation to the International Segment Adjusted EBITDA were favorable by approximately $4 million.

The increase was driven by higher sales volumes and lower manufacturing costs per pound.

The improvement primarily reflects lapping an approximately $18 million charge related to the prior year’s voluntary product withdrawal, lower potato prices and benefits from ongoing cost savings initiatives.

These benefits were partially offset by $3.5 million in start-up costs associated with the new production facility in Argentina, which is expected to support future growth.

Interest Expense, Net

Compared with the first three quarters of fiscal 2024, interest expense, net increased $40.3 million to $135.8 million, reflecting the impact of higher total debt outstanding and lower capitalized interest related to our manufacturing expansion projects.

Interest expense, net declined $1.5 million, versus the prior year quarter, to $43.7 million, reflecting the impact of lower total debt outstanding primarily driven by lower borrowings under our revolving credit facility.

Income Tax Expense

Income tax expense for the first three quarters of fiscal 2025 and 2024 was $121.7 million and $179.3 million, respectively.

During the first three quarters of fiscal 2025, we recorded a $39.9 million tax benefit, which primarily reflects a $38.1 million tax benefit related to charges associated with the Restructuring Plan.

The remaining portion of the income tax benefit for the fiscal 2025 period is attributable to gains resulting from blue chip swap transactions in Argentina, foreign currency exchange losses, unrealized mark-to-market derivative gains and losses, and other items impacting comparability.

Additionally, we recorded an $18.2 million discrete tax expense in fiscal 2025, primarily related to the establishment of a non-cash full valuation allowance against certain international deferred tax assets.

Our effective tax rate for the first three quarters of fiscal 2025 was 33.9%, versus 23.1% for the same period of fiscal 2024.

Excluding the impact of the items above, our effective tax rate in the first three quarters of fiscal 2025 was 27.7% versus 23.3% in the first three

quarters of fiscal 2024, with the increase largely due to foreign losses without tax benefits and a higher proportion of overall earnings in our International segment.

Equity Method Investment Earnings

Equity method investment earnings from unconsolidated joint ventures were $15.5 million and $17.8 million for the first three quarters of fiscal 2025 and 2024, respectively.

The results in the current period include $9.0 million ($6.9 million after-tax, or $0.05 per share) of costs related to the Restructuring Plan.

Excluding this item, Adjusted Equity Method Investment Earnings increased $6.7 million to $24.5 million.

Equity method investment earnings in the prior year period included a pre-tax charge of $10.8 million for the write-off of excess raw potatoes.

The results for the first three quarters of fiscal 2025 and 2024 reflect earnings associated with our 50% interest in Lamb Weston RDO.

Income tax expense for the first quarter of fiscal 2026 and 2025 was $47.9 million and $50.8 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 42.7% and 28.5% in the first quarter of fiscal 2026 and 2025, respectively.

The results in both periods reflect the impact of items outlined in “Reconciliations of Non-GAAP Financial Measures” below.

In the first quarter of fiscal 2026, we also recorded $10.2 million of discrete tax expense, primarily related to the establishment of a non-cash full valuation allowance against certain international deferred tax assets.

Excluding the impact of these items, the Company’s effective tax rate was 30.2% in the first quarter of fiscal 2026, versus 30.8% in the prior year quarter.

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OBBBA”).

Accounting Standards Codification 740, Income Taxes , requires the effects of changes in tax rates and laws to be recognized in the period in which the legislation is enacted.

We currently anticipate a favorable cash tax timing benefit of approximately $35 million to $45 million in fiscal 2026 as of result of OBBBA;

it is not expected to have a significant impact on our effective tax rate.

Equity Method Investment Earnings (Loss)

Equity method investment earnings (loss) from unconsolidated joint ventures were a loss of $0.6 million and earnings of $11.3 million for the first quarter of fiscal 2026 and 2025, respectively.

The decline in earnings was primarily the result of lower net sales and an unfavorable product mix.

The results for the current and prior year quarters reflect earnings associated with our 50% interest in Lamb Weston/RDO Frozen, an unconsolidated potato processing joint venture in Minnesota.

Liquidity and Capital Resources

Sources and Uses of Cash

As of February 23, 2025, we had $67.5 million of cash and cash equivalents, with $1,052.5 million available for borrowing under our revolving credit facility.

As of August 24, 2025, we had $98.6 million of cash and cash equivalents, with $1,318.4 million available for borrowing under our 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 revolving credit facility , are our primary sources of liquidity for funding our business requirements.

Our funding requirements include capital expenditures for our manufacturing capacity expansion in Argentina and our recently completed manufacturing capacity expansion in the Netherlands, working capital requirements, and shareholder returns, including cash dividends and repurchases under our share repurchase program.

Our funding requirements include capital expenditures, working capital requirements, and shareholder returns, including cash dividends and repurchases under our share repurchase program.

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:

Thirty-Nine Weeks Ended

(in millions) February 23,

2025 February 25,

Thirteen Weeks Ended

(in millions) August 24,

2025 August 25,

Net cash flows provided by (used for):

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Financing activities (248.5) 52.2

(4.3) (243.2)

Effect of exchange rate changes on cash and cash equivalents 0.7 2.6

Net decrease in cash and cash equivalents (3.9) (242.5)

Net increase in cash and cash equivalents 27.9 49.4

Cash and cash equivalents, beginning of period 70.7 71.4

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Operating Activities

In the first three quarters of fiscal 2025, cash provided by operating activities increased $3.8 million to $485.3 million.

The increase largely relates to $274.0 million of favorable changes in working capital, mostly attributable to a greater build of inventory in the third quarter of the prior year related to the ERP transition.

This was mostly offset by $270.2 million of lower income after adjustments for non-cash operating activities.

See “Results of Operations” in this MD&A for more information related to the decrease in income from operations.

In the first quarter of fiscal 2026, cash provided by operating activities increased $21.8 million to $352.0 million.

The increase largely relates to $18.7 million of favorable changes in working capital, led by lower North America finished goods inventories, compared to the last day of the first quarter of fiscal 2025.

Investing Activities

Investing activities used $559.0 million of cash in the first three quarters of fiscal 2025, compared with $824.8 million in the same period in the prior year.

Expenditures in both periods primarily related to our investments to expand our french fry capacity and other facility modernization efforts in China, the Netherlands, the U.S., and Argentina.

The projects in China and the U.S.

were completed during the second and fourth quarters of fiscal 2024, respectively.

The project in the Netherlands was completed during the second quarter of fiscal 2025, while the project in Argentina is on track to be completed by mid-calendar year 2025.

In connection with the Restructuring Plan, we decreased our estimate of capital

expenditures in fiscal 2025 by $100 million to $750 million excluding acquisitions, which included pausing the next phase of our ERP build and implementation.

Depending on the timing of cash paid for the Argentina expansion, our cash investments may result in 2025 spending below $750 million and push into fiscal 2026.

Investing activities used $76.3 million of cash in the first quarter of fiscal 2026, compared with $335.6 million in the first quarter of fiscal 2025.

Expenditures in the first quarter of fiscal 2026 primarily related to our investments to expand our french fry capacity in Argentina and other production facility modernization efforts.

Expenditures in the first quarter of fiscal 2025 primarily related to our investments to expand our french fry capacity in the Netherlands, the U.S., and Argentina.

The expansion in the U.S.

was completed during the fourth quarter of fiscal 2024, the expansion in the Netherlands was completed during the second quarter of fiscal 2025, and the expansion in Argentina was completed in the first quarter of fiscal 2026.

Financing Activities

During the first three quarters of fiscal 2025, we borrowed $162.2 million under our revolving credit facility and $525.3 million under new long-term debt facilities, which primarily included our new $500 million Term A-5 loan facility.

The funds from the new term loan facility were used primarily to repay the Term A-1 loan facility and outstanding borrowings under our revolving credit facility.

In the aggregate, we used $193.8 million of cash to repurchase 2,972,221 shares of our common stock at an average price of $61.23 per share and withheld 202,190 shares from employees to cover income and payroll taxes on equity awards that vested during the period.

In addition, we paid $154.7 million in cash dividends to common stockholders during the first three quarters of fiscal 2025.

During the first three quarters of fiscal 2024 , proceeds from short-term borrowings and debt issuances were $429.2 million , of which $379.1 million were short-term.

The increase in short-term borrowings related to continued investments to expand french fry capacity and unfavorable third quarter cash receipts for products shipped due to lower customer order fulfillment rates as we transitioned to our new ERP system.

W e used $165.1 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 144,260 shares from employees to cover income and payroll taxes on equity awards that vested during the period.

In addition, we paid $122.0 million in cash dividends to our common stockholders and repaid $42.0 million of other debt and financing obligations.

For more information about our debt, interest rates, maturity dates, and covenants, see Note 10, Debt and Financing Obligations, of the Condensed Notes to Consolidated Financial Statements in “Part I, Item 1.

During the first quarter of fiscal 2026, we made net payments of $161.9 million under our revolving credit facilities.

We used $18.7 million of cash to repurchase 187,259 shares of our common stock at an average price of $55.34 per share and to withhold 157,665 shares from employees to cover income and payroll taxes on equity awards that vested during the period.

In addition, we paid $51.7 million in cash dividends to common stockholders during the first quarter of fiscal 2026 and repaid $16.2 million of debt and financing obligations.

During the first quarter of fiscal 2025, we had net proceeds of $203.6 million under our revolving credit facility which were primarily used for general corporate purposes, including, but not limited to, funding capital expenditures and working capital requirements.

We used $92.2 million of cash to repurchase 1,412,852 shares of our common stock at an average price of $58.04 per share and withheld 178,941 shares from employees to cover income and payroll taxes on equity awards that vested during the period.

In addition, we paid $51.7 million in cash dividends to common stockholders and repaid $10.2 million of debt and financing obligations.

For more information about our debt, see Note 10, 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 February 23, 2025, we were in compliance with the financial covenant ratios and other covenants contained in our debt agreements.

At August 24, 2025, we were in compliance with the financial covenant ratios and other covenants contained in our debt agreements.

Obligations and Commitments

On September 27, 2024, we entered into a new $500 million term loan facility, the proceeds of which were used to repay the remaining $225 million balance of our Term A-1 loan facility and $275 million of outstanding borrowings under our revolving credit facility.

Except for these transactions, there have been no other 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.

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.

See Note 10, Debt and Financing Obligations, of the Condensed Notes to Consolidated Financial Statements in “Part I, Item 1.

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Non-GAAP Financial Measures

To supplement the financial information included in this report, we have presented Adjusted EBITDA, Adjusted Gross Profit, Adjusted SG&A, Adjusted Restructuring Expense, and Adjusted Equity Method Investment Earnings, each of which is considered a non-GAAP financial measure.

To supplement the financial information included in this report, we have presented Adjusted EBITDA, Adjusted Gross Profit, Adjusted SG&A, Adjusted Income Tax Expense, and net sales, price/mix and Segment Adjusted EBITDA at constant currency, each of which is considered a non-GAAP financial measure.

Net sales, price/mix and Segment Adjusted EBITDA growth at constant currency provide information on the percentage change in net sales, price/mix and Segment Adjusted EBITDA growth, respectively, as if foreign currency exchange rates had remained constant between the prior and current periods.

Management uses these non-GAAP financial measures to assist in analyzing what management views as our core operating performance for purposes of business decision making.

Management believes that presenting these non-GAAP financial measures provides investors with useful supplemental information because they (i) provide meaningful supplemental information regarding financial performance by excluding impacts of foreign currency exchange rates and unrealized mark-to-market derivative gains and losses and other items affecting comparability between periods, (ii) permit investors to view performance using the same tools that management uses to budget, make operating and strategic decisions, and evaluate our core operating performance across periods, and (iii) otherwise provide supplemental information that may be useful to investors in evaluating our financial results.

Management believes that presenting these non-GAAP financial measures provides investors with useful supplemental information because they (i) provide meaningful supplemental information regarding financial performance by excluding impacts of foreign currency exchange translation and unrealized mark-to-market derivative gains and losses and other items affecting comparability between periods, (ii) permit investors to view performance using the same tools that management uses to budget, make operating and strategic decisions, and evaluate our core operating performance across periods, and (iii) otherwise provide supplemental information that may be useful to investors in evaluating our financial results.

In addition, we believe that the presentation of these non-GAAP financial measures, when considered together with their most directly comparable GAAP financial measure and the reconciliations to those GAAP financial measures, 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 measures presented in this report should be viewed in addition to, and not as alternatives for, financial measures prepared in accordance with GAAP that are also presented in this report.

These measures are not substitutes for their comparable GAAP financial measures, such as net income, gross profit, SG&A, restructuring expense, equity method investment earnings, or other measures prescribed by GAAP, and there are limitations to using non-GAAP financial measures.

These measures are not substitutes for their comparable GAAP financial measures, such as net income, gross profit, SG&A, income tax expense, net sales, or other measures prescribed by GAAP, and there are limitations to using non-GAAP financial measures.

For example, the non-GAAP financial measures presented in this report may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define these non-GAAP financial measures the same way we do.

The following table reconciles net income to Adjusted EBITDA:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(in millions) February 23,

2025 February 25,

2024 February 23,

2025 February 25,

Thirteen Weeks Ended

(in millions) August 24,

2025 August 25,

Net income (a) $ 64.3 $ 127.4

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Depreciation and amortization (b) 96.3 91.4

Unrealized derivative (gains) losses (5.9) 27.3 (11.8) 1.6

Foreign currency exchange losses 7.0 16.4 17.2 21.8

Unrealized derivative gains (4.9) (8.9)

Foreign currency exchange (gains) losses (4.7) 0.6

Blue chip swap transaction gains (c) — (16.6)

Stock-based compensation 10.6 9.5

Items impacting comparability:

Restructuring Plan expenses (d) 10.3 — 169.4 —

Cost Savings Program, Restructuring Plan, and other expenses (d) 31.9 —

Shareholder activism expense (e) 4.0 —

Inventory step-up from acquisition — — — 20.7

Integration and acquisition-related items, net — 2.4 — 11.2

Pension settlement (f) 13.1 —

Adjusted EBITDA $ 302.2 $ 299.4

___________________________________________

(a) Net income reflects the following:

During the thirteen and thirty-nine weeks ended February 23, 2025, we recorded an approximately $9 million ($7 million after-tax, or $0.05 per share) benefit and $31 million ($24 million after-tax, or $0.17 per share) charge related to the voluntary product withdrawal that was initiated in the fourth quarter of fiscal 2024.

We recorded a $25.0 million charge ($19.0 million after-tax, or $0.13 per share) and $95.9 million charge ($72.9 million after-tax, or $0.50 per share) for the write-off of excess raw potatoes in North America for the thirteen and thirty-nine weeks ended February 25, 2024, respectively, largely reflecting a reduction in our initial sales estimate that was developed in January 2023 for the following year, as well as a higher-than-expected impact on customer shipments associated with the transition to a new ERP system.

• For the thirteen weeks ended February 25, 2024, we recorded a $20.5 million charge ($15.6 million after-tax, or $0.11 per share) in cost of sales, and a $4.5 million charge ($3.4 million after-tax, or $0.02 per share) in equity method investment earnings.

The total charge to the reporting segments was as follows:

$22.7 million to the North America segment;

and $2.3 million to the International segment.

• For the thirty-nine weeks ended February 25, 2024, we recorded a $85.1 million charge ($64.7 million after-tax, or $0.44 per share) in cost of sales, and a $10.8 million charge ($8.2 million after-tax, or $0.06 per share) in equity method investment earnings.

The total charge to the reporting segments was as follows:

$86.0 million to the North America segment and $9.9 million to the international segment.

For both the thirteen and thirty-nine weeks ended February 25, 2024, our results were negatively impacted by the ERP transition, which we estimate impacted net sales by approximately $135 million, with $123 million and $12 million in our North America and International segments, respectively.

We estimate net income was impacted by approximately $95 million ($72 million after taxes), including approximately $55 million ($42 million after taxes) related to lower order fulfillment rates and approximately $40 million ($30 million after taxes) of incremental costs and expenses, of which approximately $7 million ($5 million after taxes) was a reduction in gross sales, and included accrued fees and charges for delayed or unfilled customer orders;

approximately $26 million ($20 million after taxes) was recorded in cost of sales, and included reduced fixed cost coverage and inefficiencies resulting from planned downtime at our processing facilities, as well as additional freight charges;

and approximately $7 million ($5 million after taxes) was recorded in SG&A, and

largely included consulting expenses to restore order fulfillment rates.

We estimate that approximately $83 million impacted the North America segment, approximately $5 million impacted the International segment, and approximately $7 million impacted unallocated corporate costs.

(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 February 23, 2025 and February 25, 2024, respectively;

and $6.1 million and $6.4 million for the thirty-nine weeks ended February 23, 2025 and February 25, 2024, respectively.

Depreciation expense does not include $4.5 million and $33.4 million of accelerated depreciation related to the closure of our manufacturing facility in Connell, Washington for the thirteen and thirty-nine weeks ended February 23, 2025, respectively.

dollars into Argentina primarily related to funding our previously announced capacity expansion project in Argentina.

(a) Net income during the thirteen weeks ended August 25, 2024, reflects an approximately $39 million ($30 million after-tax, or $0.21 per share) charge related to a voluntary product withdrawal initiated in the fourth quarter of fiscal 2024.

This includes an approximately $15 million charge ($11 million after-tax, or $0.08 per share) in net sales and an approximately $24 million charge ($18 million after-tax, or $0.13 per share) in cost of sales.

The total charge was allocated to the reporting segments as follows:

$21 million to North America and $18 million to International.

(b) Depreciation and amortization includes interest expense, income tax expense, and depreciation and amortization from equity method investments of $2.2 million and $2.1 million for the thirteen weeks ended August 24, 2025 and August 25, 2024, respectively;

dollars into Argentina primarily in connection with funding our capacity expansion in Argentina.

The blue chip swap rate can diverge significantly from Argentina's official exchange rate.

(d) Restructuring plan expenses relate to the Restructuring Plan.

Refer to Footnote 4 in the Condensed Notes to Consolidated Financial Statements (unaudited), within “ Part I, Item I.

(d) For more information about the Cost Savings Program and Restructuring Plan, see Footnote 4, Restructuring, in the Condensed Notes to Consolidated Financial Statements (unaudited), within “ Part I, Item I.

Financial Statements of this Form 10-Q.

(e) Represents advisory fees related to shareholder activism matters.

The following tables reconcile gross profit to Adjusted Gross Profit, SG&A to Adjusted SG&A, restructuring expense to Adjusted Restructuring Expense and equity method investment earnings to Adjusted Equity Method Investment Earnings.

(f) Pension settlement charge of $13.1 million ($10.1 million after-tax, or $0.07 per share) for the thirteen weeks ended August 24, 2025 to fully fund the Company’s defined benefit pension plan, enabling lump sum payments to participants and transferring the remaining obligations and related plan assets to an insurer through a group annuity contract.

The following tables reconcile gross profit to Adjusted Gross Profit, SG&A to Adjusted SG&A, and income tax expense to Adjusted Income Tax Expense.

For the Thirteen Weeks Ended

February 23, 2025 February 25, 2024 February 23, 2025 February 25, 2024 February 23, 2025 February 25, 2024 February 23, 2025 February 25, 2024

(in millions) Gross Profit Selling, General and Administrative Restructuring Expense Equity Method Investment Earnings

August 24, 2025 August 25, 2024 August 24, 2025 August 25, 2024 August 24, 2025 August 25, 2024

(in millions) Gross Profit Selling, General and Administrative Income Tax Expense (Benefit)

As reported $ 342.4 $ 356.0 $ 153.6 $ 143.9 $ 47.9 $ 50.8

Unrealized derivative gains and losses (2.8) 23.3 3.1 (4.0) — — — —

Unrealized derivative gains (3.1) (2.9) 1.8 6.0 (1.1) (2.3)

Foreign currency exchange gains and losses — — 4.7 (0.6) (0.8) 0.1

Blue chip swap transaction gains — — — 16.6 — —

Items impacting comparability:

Restructuring Plan expenses 0.7 — — — (9.6) — — —

Shareholder activism expense — — (3.7) — — — — —

Integration and acquisition-related items, net — — — (2.4) — — — —

Total adjustments (2.1) 23.3 (7.0) (15.4) (9.6) — — —

Adjusted $ 420.4 $ 427.0 $ 157.2 $ 164.4 $ — $ — $ 2.1 $ 1.0

For the Thirty-Nine Weeks Ended

February 23, 2025 February 25, 2024 February 23, 2025 February 25, 2024 February 23, 2025 February 25, 2024 February 23, 2025 February 25, 2024

(in millions) Gross Profit Selling, General and Administrative Restructuring Expense Equity Method Investment Earnings

As reported $ 1,056.3 $ 1,378.8 $ 492.8 $ 526.0 $ 84.2 $ — $ 15.5 $ 17.8

Unrealized derivative gains and losses (15.5) (3.8) (3.7) (5.4) — — — —

Foreign currency exchange losses — — (17.2) (21.8) — — — —

Blue chip swap transaction gains — — 20.5 14.5 — — — —

Stock-based compensation — — (10.6) (9.5) 1.6 1.5

Items impacting comparability:

Restructuring Plan expenses 76.2 — — — (84.2) — 9.0 —

Cost Savings Program, Restructuring Plan, and other expenses (0.4) — — — 7.7 —

Shareholder activism expense — — (4.0) — 0.9 —

Inventory step-up from acquisition — 20.7 — — — — — —

Integration and acquisition-related items, net — — — (11.2) — — —

Pension settlement — — (13.1) — 3.0 —

Total adjustments (3.5) (2.9) (21.2) 12.5 11.3 (0.7)

Adjusted $ 338.9 $ 353.1 $ 132.4 $ 156.4 $ 59.2 $ 50.1

The following table reconciles net sales to net sales at constant currency.

(in millions) Net Sales Currency Net Sales at Constant Currency

Thirteen Weeks Ended August 24, 2025

North America $ 1,084.6 $ 0.8 $ 1,085.4

International 574.7 (24.5) 550.2

$ 1,659.3 $ (23.7) $ 1,635.6

Off-Balance Sheet Arrangements

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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 third quarter of fiscal 2025.

There were no material changes to these critical accounting policies and estimates during the first quarter of fiscal 2026.

New and Recently Adopted Accounting Pronouncements

2 unchanged sentences

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-Q

Item 2. Management’s Discussion and Analysis