What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-12-19 compared with 2025-09-30 · 174 added, 94 removed, 137 unchanged (66% of the section changed)

3 unchanged sentences

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,” “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.

Words such as “believe,” “enable,” “expand,” “drive,” “execute,” “strengthen,” “deliver,” “anticipate,” “will,” “continue,” “expect,” “may,” “reduce,” “estimate,” “remain,” “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, anticipated capital expenditures, investments, and other costs, cash flows, liquidity, dividends, 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.

2 unchanged sentences

These risks and uncertainties include, among other things:

consumer preferences, including restaurant traffic in North America and our international markets, and an uncertain general economic environment, including tariffs, inflationary pressures and recessionary concerns, any of which could adversely impact our business, financial condition or results of operations, including the demand and prices for our products;

consumer preferences, including restaurant traffic in North America and our international markets, and an uncertain general economic environment, including as a result of tariffs and other trade policies, inflationary pressures and recessionary concerns, any of which could adversely impact our business, financial condition or results of operations, including as a result of impacts on the demand and prices for our products;

the availability and prices of raw materials and other commodities;

28 unchanged sentences

generally accepted accounting principles (“GAAP”).

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.

We have also presented Adjusted EBITDA, Adjusted Gross Profit, Adjusted Selling, General and Administrative expenses (“SG&A”), Adjusted Income Tax 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 Income Tax 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, income tax expense, or equity method investment earnings, as applicable.

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

Executive Summary

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.

Our second quarter results reflect continued momentum and share gains, notably in North America and Asia.

Volume increased 8% in the second quarter and 7% for the first half of the year.

In response, we have restarted curtailed North American production lines.

However, the global operating environment remains competitive and restaurant traffic remains down in key markets and channels.

In fiscal 2026, we anticipate that global consumers will continue to face macroeconomic and geopolitical pressures, and we will be operating in a competitive environment.

We believe our disciplined execution and strategic plans are better enabling us to expand our customer base and position us to drive long-term growth.

Lamb Weston’s global teams are executing our strategy, strengthening our customer relationships, driving cost savings and delivering strong cash flow.

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

Thirteen Weeks Ended November 23, 2025 compared to Thirteen Weeks Ended November 24, 2024

Net Sales and Segment Adjusted EBITDA

Thirteen Weeks Ended

(in millions, except percentages) August 24,

2025 August 25,

(in millions, except percentages) November 23,

2025 November 24,

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

6 unchanged sentences

International 27.2 48.6 (44)%

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 for the second quarter of fiscal 2026 increased $17.2 million to $1,618.1 million compared to the prior year quarter, and included a favorable foreign currency impact of $24.4 million.

Net sales at constant currency was essentially flat over the prior year quarter, as an 8% increase in volume was offset by an 8% 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.

Volume growth was driven by customer wins, share gains and retention, particularly in North America and Asia.

The decline in price/mix reflects ongoing support of customers through price and trade, including the carryover impact of fiscal 2025 pricing, in a competitive global market environment.

North America segment net sales, which includes all sales to customers in the U.S., Canada, and Mexico, was essentially flat, declining $2.6 million to $1,069.5 million.

Volume increased 8% compared to the prior year quarter driven by recent customer contract wins, share gains and growth across channels.

In response, we have restarted curtailed North American production lines.

Price/mix declined 8%, driven by the ongoing support of customers through price and trade, including the carryover impact from fiscal 2025 pricing, and an unfavorable mix.

International segment net sales, which includes all sales to customers outside of North America, increased $19.8 million, or 4%, to $548.6 million over the prior year quarter, including a favorable $22.6 million from foreign currency translation.

Net sales at constant currency declined 1%, or $2.8 million compared to the prior year quarter.

Volume increased 7%, driven by growth in Asia and with multinational chain customers.

Price/mix at constant currency declined 8%, reflecting ongoing price and trade to support customers in a continued competitive environment, as well as an unfavorable mix.

Gross profit increased $46.5 million versus the prior year quarter to $324.3 million.

Adjusted Gross Profit declined $15.6 million versus the prior year quarter to $327.9 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.

Total manufacturing cost per pound was lower, reflecting the benefits from cost savings initiatives and improved operating efficiencies in our North America segment.

These initiatives more than offset inflationary pressures in key input categories other than raw product and higher manufacturing costs per pound in our International segment, due to less favorable operating conditions and elevated production expenses.

Selling, General and Administrative Expenses

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.

SG&A declined $13.7 million versus the prior year quarter to $171.0 million.

Adjusted SG&A declined $7.8 million versus the prior year quarter to $145.1 million, primarily driven by the benefits of ongoing cost savings initiatives, partially offset by compensation and benefits accruals.

Net Income, Adjusted EBITDA and Segment Adjusted EBITDA

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

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.

Net income increased $98.2 million from the prior year quarter to $62.1 million.

Adjusted EBITDA declined $8.5 million versus the prior year quarter to $285.7 million.

Lower Adjusted Gross Profit and Adjusted Equity Method Investment Earnings were partially offset by lower Adjusted SG&A.

North America Segment Adjusted EBITDA increased $18.6 million to $287.8 million.

The increase was driven by higher volume, lower manufacturing costs per pound, and lower Adjusted SG&A, reflecting the benefit of cost savings initiatives, including operational efficiencies.

These gains were partially offset by continued price and trade support for our customers.

International Segment Adjusted EBITDA declined $21.4 million to $27.2 million.

The decrease was primarily attributable to higher manufacturing costs per pound, including increased fixed factory burden costs resulting from lower utilization of international production facilities and start-up expenses associated with the new production facility in Argentina.

These higher manufacturing costs were partially offset by the benefit of cost savings initiatives and higher sales volume.

Interest Expense, Net

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.

Interest expense, net increased $1.0 million, versus the prior year quarter, to $44.3 million, driven by a decline in the benefit from capitalized interest as our capacity expansion projects were all finalized prior to the second quarter of fiscal 2026.

The decline in benefit from capitalized interest was partially offset by lower borrowings on our revolving credit facility.

Income Tax Expense

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.

Income tax expense for the second quarter of fiscal 2026 and 2025 was $36.0 million and $13.4 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 36.7% and (59.0)% in the second quarter of fiscal 2026 and 2025, respectively.

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

In addition, we recorded $14.4 million of discrete tax expense in the second quarter of fiscal 2025, primarily related to the establishment of a full valuation allowance against certain international deferred tax assets.

Excluding the impact of these items, the Company’s effective tax rate was 31.8% in the second quarter of fiscal 2026, versus 24.7% in the prior year quarter.

Compared to the second quarter of fiscal 2025, the effective tax rate excluding the impact of these items is higher primarily due to having a larger proportion of losses in certain jurisdictions with no expected tax benefits.

Equity Method Investment Earnings

Equity method investment earnings from unconsolidated joint ventures were $3.2 million and $2.1 million for the second quarter of fiscal 2026 and 2025, respectively.

Adjusted Equity Method Investment Earnings was $3.2 million and $11.1 million for the second quarter of fiscal 2026 and 2025, respectively.

The decline of $7.9 million in earnings was primarily the result of lower production volume and an unfavorable mix of sales.

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.

Twenty-Six Weeks Ended November 23, 2025 compared to Twenty-Six Weeks Ended November 24, 2024

Net Sales and Segment Adjusted EBITDA

Twenty-Six Weeks Ended

(in millions, except percentages) November 23,

2025 November 24,

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

Segment net sales

North America $ 2,154.0 $ 2,175.8 (1)% (1)%

International 1,123.3 1,079.2 4% —%

$ 3,277.3 $ 3,255.0 1% (1)%

Segment Adjusted EBITDA

North America $ 547.8 $ 547.2 —%

International 84.4 100.0 (16)%

Net sales for the first half of fiscal 2026 increased $22.3 million to $3,277.3 million compared to the prior year, including a favorable foreign currency impact of $48.0 million.

Net sales at constant currency declined 1% over the first half of fiscal 2025, as a 7% increase in volume was more than offset by an 8% decline in price/mix.

Volume growth was driven by customer wins, share gains, and retention, particularly in North America and Asia.

Price/mix reflects continued price and trade support for our customers in the current competitive environment.

North America segment net sales for the first half of fiscal 2026, which includes all sales to customers in the U.S., Canada, and Mexico, declined $21.8 million, or 1%, to $2,154.0 million.

Volume increased 7% compared to the first half of the prior year supported by recent customer contract wins, share gains and growth across channels.

In response, we have restarted curtailed North American production lines.

Price/mix declined 8%, driven by competitive market dynamics and an increase in price and trade to support our customers.

International segment net sales for the first half of fiscal 2026, which includes all sales to customers outside of North America, increased $44.1 million, or 4%, to $1,123.3 million year-over-year, including a favorable $47.1 million from foreign currency translation.

Net sales at constant currency was flat.

Volume increased 7%, driven by growth in Asia and with multinational chain customers.

Price/mix at constant currency declined 7%, reflecting pricing actions in response to an increasingly competitive environment.

Gross profit increased $32.9 million versus the first half of fiscal 2025 to $666.7 million.

Adjusted Gross Profit declined $29.8 million versus the prior year to $666.8 million due primarily to unfavorable price/mix, increased factory burden, and costs associated with the start-up of our new production facility in Argentina.

This impact was partially offset

by higher volumes and benefits from cost savings initiatives.

These initiatives delivered improved operational efficiencies and lower manufacturing costs per pound.

Selling, General and Administrative Expenses

SG&A declined $4.0 million versus the first half of fiscal 2025 to $324.6 million.

Adjusted SG&A declined $31.8 million versus the prior year to $277.5 million, reflecting the benefits of ongoing cost savings initiatives, partially offset by compensation and benefit accruals.

Net Income, Adjusted EBITDA and Segment Adjusted EBITDA

Net income increased $35.1 million from the first half of fiscal 2025 to $126.4 million.

Adjusted EBITDA declined $5.8 million versus the first half of fiscal 2025 to $285.7 million.

Lower Adjusted SG&A was more than offset by lower Adjusted Gross Profit and lower Adjusted Equity Method Investment Earnings.

North America Segment Adjusted EBITDA was essentially flat at $547.8 million in the first half of fiscal 2026 compared to the first half of fiscal 2025.

Higher sales volumes, as well as lower manufacturing costs per pound and lower Adjusted SG&A, both of which benefited from cost savings initiatives, were offset by price and trade support for our customers.

International Segment Adjusted EBITDA declined $15.6 million to $84.4 million.

The decrease primarily reflects unfavorable price/mix and higher manufacturing costs per pound, driven by lower utilization of our international production facilities and start-up expenses for our new plant in Argentina.

These higher manufacturing costs were partially offset by increased sales volumes and benefits from cost savings initiatives.

Interest Expense, Net

Interest expense, net declined $0.5 million, versus the first half of fiscal 2025, to $88.0 million, reflecting the impact of lower total debt outstanding primarily driven by lower borrowings under our revolving credit facility, primarily offset by a decline in the benefit from capitalized interest as our capacity expansion projects were all finalized prior to the second quarter of fiscal 2026.

Income Tax Expense

Income tax expense for the first half of fiscal 2026 was $83.9 million compared to $64.2 million in the prior year period.

The effective income tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was 39.9% and 41.3% for the first half of fiscal 2026 and 2025, respectively.

Both periods reflect the impact of items outlined in the Reconciliations of Non-GAAP Financial Measures.

In the first half of fiscal 2026 and 2025, we recorded $9.8 million and $19.2 million of discrete tax expense, respectively, primarily related to the establishment of a full valuation allowance against certain international deferred tax assets.

Excluding these items, the effective tax rate was 31.1% in the first half of fiscal 2026, versus 26.3% in the prior year period.

The higher rate compared to the second half of fiscal 2025 primarily reflects a larger proportion of losses in certain jurisdictions with no expected tax benefits.

The enactment of the One Big Beautiful Bill Act (“OBBBA”) in July 2025 introduced a wide range of tax policy changes.

Key provisions include the extension of select elements of the Tax Cuts and Jobs Act, updates to the international tax framework, and the reinstatement of favorable treatment for certain business-related deductions.

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 are actively evaluating the potential implications on our consolidated financial statements.

In the first half of fiscal 2026, the impacts did not have a material effect on the tax rate.

For the full year, we do anticipate a favorable cash tax timing benefit related to OBBBA.

Equity Method Investment Earnings

Equity method investment earnings from unconsolidated joint ventures were earnings of $2.6 million and $13.4 million for the first half of fiscal 2026 and 2025, respectively.

Adjusted Equity Method Investment Earnings was $2.6 million and $22.4 million for the first half of fiscal 2026 and 2025, respectively.

The decline of $19.8 million in earnings

was primarily the result of lower gross profit, due primarily to sales volume and unfavorable price/mix.

The results for the current and prior year reflect earnings associated with our 50% interest in Lamb Weston/RDO Frozen.

Liquidity and Capital Resources

Sources and Uses of Cash

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.

As of November 23, 2025, we had $82.7 million of cash and cash equivalents, with $1,350.3 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.

2 unchanged sentences

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:

Thirteen Weeks Ended

(in millions) August 24,

2025 August 25,

Twenty-Six Weeks Ended

(in millions) November 23,

2025 November 24,

Net cash flows provided by (used for):

7 unchanged sentences

Operating Activities

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.

In the first half of fiscal 2026, cash provided by operating activities increased $101.1 million to $530.4 million.

The increase largely relates to $53.7 million of favorable changes in working capital, led by lower inventories in North America, and a $47.4 million increase in net income, adjusted for non-cash items.

Investing Activities

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.

Investing activities used $137.3 million of cash in the first half of fiscal 2026, compared with $484.9 million in the first half of fiscal 2025.

Expenditures in the first half 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 half 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.

In addition, we had $14.7 million of proceeds from the sale of property, plant and equipment in the first half of fiscal 2026, an increase of $13.2 million over the first half of fiscal 2025.

Financing Activities

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.

During the first half of fiscal 2026, we made net payments of $187.6 million under our revolving credit facilities.

We used $59.1 million of cash to repurchase 804,882 shares of our common stock at an average purchase price of $62.12 per share and withheld 169,310 shares from employees to cover income and payroll taxes on vested equity awards.

In addition, we paid $103.3 million in cash dividends to common stockholders and repaid $35.7 million of debt and financing obligations.

During the first half of fiscal 2025, we had net payments of $2.2 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 $92.8 million of cash to repurchase 1,412,852 shares of our common stock at an average price of $58.04 per share and withheld 187,735 shares from employees to cover income and payroll taxes on vested equity awards.

In addition, we paid $103.3 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.

1 unchanged sentence

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

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

At November 23, 2025, we were in compliance with the financial covenant ratios and other covenants contained in our debt agreements.

Obligations and Commitments

3 unchanged sentences

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 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.

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 Adjusted Equity Method Investment Earnings, each of which is considered a non-GAAP financial measure.

We also present net sales and price/mix growth at constant currency, which provide information on the percentage change in net sales and price/mix 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 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, income tax expense, net sales, 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, and 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

(in millions) August 24,

2025 August 25,

Thirteen Weeks Ended Twenty-Six Weeks Ended

(in millions) November 23,

2025 November 24,

2024 November 23,

2025 November 24,

Net income (a) $ 62.1 $ (36.1) $ 126.4 $ 91.3

3 unchanged sentences

Depreciation and amortization (b) 99.7 92.5 195.9 183.9

Unrealized derivative gains (4.9) (8.9)

Foreign currency exchange (gains) losses (4.7) 0.6

Unrealized derivative (gains) losses 12.1 3.0 7.2 (5.9)

Foreign currency exchange losses 6.8 9.6 2.1 10.2

Blue chip swap transaction gains (c) — (3.3) — (19.9)

6 unchanged sentences

___________________________________________

(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.

(a) Net income during the twenty-six weeks ended November 24, 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.

1 unchanged sentence

$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;

(b) Depreciation and amortization includes interest expense, income tax expense, and depreciation and amortization from equity method investments of $2.2 million and $2.0 million for the thirteen weeks ended November 23, 2025 and November 24, 2024, respectively, and $4.4 million and $4.1 million for the twenty-six weeks ended November 23, 2025 and November 24, 2024, respectively;

4 unchanged sentences

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

(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.

(f) Pension settlement charges of $1.1 million ($0.9 million after-tax, or $0.01 per share) for the thirteen weeks ended November 23, 2025, and pension settlement charges of $14.2 million ($11.0 million after-tax, or $0.08 per share) for the twenty-six weeks ended November 23, 2025.

These charges were used to fully fund the Company’s defined benefit pension plan, enabling lump sum payments to participants, transferring the remaining obligations and related plan assets to an insurer through a group annuity contract, and transferring remaining, unelected, assets to the Pension Benefit Guaranty Corporation.

The following tables reconcile gross profit to Adjusted Gross Profit, SG&A to Adjusted SG&A, Income Tax Expense (Benefit) to Adjusted Income Tax Expense, and Equity Method Investment Earnings to Adjusted Equity Method Investment Earnings for the thirteen weeks ended November 23, 2025 and November 24, 2024.

For the Thirteen Weeks Ended

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)

November 23, 2025 November 24, 2024 November 23, 2025 November 24, 2024 November 23, 2025 November 24, 2024 November 23, 2025 November 24, 2024

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

As reported $ 324.3 $ 277.8 $ 171.0 $ 184.7 $ 36.0 $ 13.4 $ 3.2 $ 2.1

9 unchanged sentences

Adjusted $ 327.9 $ 343.5 $ 145.1 $ 152.9 $ 45.0 $ 53.5 $ 3.2 $ 11.1

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

The following table reconciles net sales to net sales at constant currency for the thirteen weeks ended November 23, 2025.

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

Thirteen Weeks Ended August 24, 2025

Thirteen Weeks Ended November 23, 2025

North America $ 1,069.5 $ (1.8) $ 1,067.7

1 unchanged sentence

$ 1,618.1 $ (24.4) $ 1,593.7

The following tables reconcile gross profit to Adjusted Gross Profit, SG&A to Adjusted SG&A, Income Tax Expense (Benefit) to Adjusted Income Tax Expense and Equity Method Investment Earnings to Adjusted Equity Method Investment Earnings for the twenty-six weeks ended November 23, 2025 and November 24, 2024.

For the Twenty-Six Weeks Ended

November 23, 2025 November 24, 2024 November 23, 2025 November 24, 2024 November 23, 2025 November 24, 2024 November 23, 2025 November 24, 2024

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

As reported $ 666.7 $ 633.8 $ 324.6 $ 328.6 $ 83.9 $ 64.2 $ 2.6 $ 13.4

Unrealized derivative gains 0.5 (12.7) (6.7) (6.8) 1.9 (1.6) — —

Foreign currency exchange losses — — (2.1) (10.2) 0.1 2.6 — —

Blue chip swap transaction gains — — — 19.9 — (0.6) — —

Stock-based compensation — — (20.1) (21.8) 3.2 3.4 — —

Items impacting comparability:

Cost Savings Program, Restructuring Plan, and other expenses (0.4) 75.5 — — 11.0 35.5 — 9.0

Shareholder activism expense — — (4.0) (0.4) 0.9 0.1 — —

Pension settlement — — (14.2) — 3.2 — — —

Total adjustments 0.1 62.8 (47.1) (19.3) 20.3 39.4 — 9.0

Adjusted $ 666.8 $ 696.6 $ 277.5 $ 309.3 $ 104.2 $ 103.6 $ 2.6 $ 22.4

The following table reconciles net sales to net sales at constant currency for the twenty-six weeks ended November 23, 2025.

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

Twenty-Six Weeks Ended November 23, 2025

North America $ 2,154.0 $ (0.9) $ 2,153.1

International 1,123.3 (47.1) 1,076.2

$ 3,277.3 $ (48.0) $ 3,229.3

Off-Balance Sheet Arrangements

2 unchanged sentences

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 first quarter of fiscal 2026.

There were no material changes to these critical accounting policies and estimates during the second 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