Lamb Weston Holdings, Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations, which we refer to as “MD&A,” should be read in conjunction with our condensed consolidated financial statements and related notes included in “Financial Information” of this Quarterly Report on Form 10-Q (this “Form 10-Q”) and in “Financial Statements and Supplementary Data” of the Company’s Annual Report on Form 10-K for the fiscal year ended May 25, 2025 (the “Form 10-K”), which we filed with the United States (“U.S.”) Securities and Exchange Commission (the “SEC”) on July 23, 2025. Forward-Looking Statements This report, including the MD&A, contains forward-looking statements within the meaning of the federal securities laws. 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. Readers of this report should understand that these statements are not guarantees of performance or results. Many factors could affect these forward-looking statements and our actual financial results and cause them to vary materially from the expectations contained in the forward-looking statements, including those set forth in this report. 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 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; operational challenges; 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, including our Focus to Win plan; our ability to execute on large capital projects, including construction of new production lines or facilities; the competitive environment and related conditions in the markets in which we operate; political and economic conditions in the countries in which we conduct business and other factors related to our international operations; disruptions in the global economy caused by conflicts such as the war in Ukraine and conflicts in the Middle East and the possible related heightening of our other known risks; the ultimate outcome of litigation or any product recalls or withdrawals; changes in our relationships with our growers or significant customers; impacts on our business due to health pandemics or other contagious outbreaks, such as the COVID-19 pandemic, including impacts on demand for our products, increased costs, disruption of supply, other constraints in the availability of key commodities and other necessary services or restrictions imposed by public health authorities or governments; disruption of our access to export mechanisms; risks associated with integrating acquired businesses; risks associated with other possible acquisitions; our debt levels; actions of governments and regulatory factors affecting our businesses; our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends; and other risks described in our reports filed from time to time with the SEC. We caution readers not to place undue reliance on any forward-looking statements included in this report, which speak only as of the date of this report. We undertake no responsibility for updating these statements, except as required by law. Overview Lamb Weston Holdings, Inc. (“we,” “us,” “our,” the “Company,” or “Lamb Weston”) is a leading global producer, distributor, and marketer of value-added frozen potato products. We are the number one supplier of value-added frozen potato products in North America and a leading supplier of value-added frozen potato products internationally, with a strong and growing presence in high-growth emerging markets. We offer a broad product portfolio to a diverse channel and customer base in over 100 countries. French fries represent the majority of our value-added frozen potato product portfolio. 19 Table of Contents This MD&A is provided as a supplement to the consolidated financial statements and related condensed notes included elsewhere herein to help provide an understanding of our financial condition, changes in financial condition and results of our operations. Our MD&A is based on financial data derived from the financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). 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 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. Results of Operations 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) November 23, 2025 November 24, 2024 % Increase (Decrease) % Increase (Decrease) at Constant Currency Segment net sales North America $ 1,069.5 $ 1,072.1 —% —% International 548.6 528.8 4% (1)% $ 1,618.1 $ 1,600.9 1% —% Segment Adjusted EBITDA North America $ 287.8 $ 269.2 7% International 27.2 48.6 (44)% Net Sales 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, 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. 20 Table of Contents 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 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. 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 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 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 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 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. 21 Table of Contents 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, 2024 % 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 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 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 22 Table of Contents 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 23 Table of Contents 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 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. 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, working capital requirements, and shareholder returns, including cash dividends and repurchases under our share repurchase program. Cash Flows 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: Twenty-Six Weeks Ended (in millions) November 23, 2025 November 24, 2024 Net cash flows provided by (used for): Operating activities $ 530.4 $ 429.3 Investing activities (137.3) (484.9) Financing activities (381.8) 63.3 11.3 7.7 Effect of exchange rate changes on cash and cash equivalents 0.7 (0.1) Net increase in cash and cash equivalents 12.0 7.6 Cash and cash equivalents, beginning of period 70.7 71.4 Cash and cash equivalents, end of period $ 82.7 $ 79.0 Operating Activities 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 $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 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. 24 Table of Contents 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. 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 November 23, 2025, we were in compliance with the financial covenant ratios and other covenants contained in our debt agreements. Obligations and Commitments 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. Financial Statements” of this report for more information. 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 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 performance. 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, 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. 25 Table of Contents The following table reconciles net income to Adjusted EBITDA: Thirteen Weeks Ended Twenty-Six Weeks Ended (in millions) November 23, 2025 November 24, 2024 November 23, 2025 November 24, 2024 Net income (a) $ 62.1 $ (36.1) $ 126.4 $ 91.3 Interest expense, net 44.3 43.3 88.0 88.5 Income tax expense 36.0 13.4 83.9 64.2 Income from operations including equity method investment earnings 142.4 20.6 298.3 244.0 Depreciation and amortization (b) 99.7 92.5 195.9 183.9 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) Stock-based compensation 9.5 12.3 20.1 21.8 Items impacting comparability: Cost Savings Program, Restructuring Plan, and other expenses (d) 14.1 159.1 46.0 159.1 Shareholder activism expense (e) — 0.4 4.0 0.4 Pension settlement (f) 1.1 — 14.2 — Adjusted EBITDA $ 285.7 $ 294.2 $ 587.8 $ 593.6 ___________________________________________ (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. 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 $2.0 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; (c) We entered into blue chip swap transactions to transfer U.S. 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) 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. (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. 26 Table of Contents 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 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 Unrealized derivative gains 3.6 (9.8) (8.5) (12.8) 3.0 0.8 — — Foreign currency exchange gains and losses — — (6.8) (9.6) 0.9 2.4 — — Blue chip swap transaction gains — — — 3.3 — (0.6) — — Stock-based compensation — — (9.5) (12.3) 1.6 1.9 — — Items impacting comparability: Cost Savings Program, Restructuring Plan, and other expenses — 75.5 — — 3.3 35.5 — 9.0 Shareholder activism expense — — — (0.4) — 0.1 — — Pension settlement — — (1.1) — 0.2 — — — Total adjustments 3.6 65.7 (25.9) (31.8) 9.0 40.1 — 9.0 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 for the thirteen weeks ended November 23, 2025. (in millions) Net Sales Currency Net Sales at Constant Currency Thirteen Weeks Ended November 23, 2025 North America $ 1,069.5 $ (1.8) $ 1,067.7 International 548.6 (22.6) 526.0 $ 1,618.1 $ (24.4) $ 1,593.7 27 Table of Contents 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 There have been no material changes to the off-balance sheet arrangements disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Form 10-K. Critical Accounting Policies and Estimates 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 second quarter of fiscal 2026. New and Recently Adopted Accounting Pronouncements For a list of our new and recently adopted accounting pronouncements, see Note 1, Nature of Operations and Summary of Significant Accounting Policies, of the Condensed Notes to Consolidated Financial Statements in “Part I, Item I. Financial Statements” of this report.