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Item 2. Management’s Discussion and Analysis

2026-10-06 compared with 2026-04-01 · 102 added, 210 removed, 116 unchanged (73% 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 “expect,” “improve,” “intend,” “continue,” “execute,” “strengthen,” “drive,” “support,” “grow,” “reduce,” “advance,” “impact,” “focus,” “manage,” “mitigate,” “believe,” “anticipate,” “will,” “may,” “estimate,” 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.

Words such as “expect,” “intend,” “continue,” “advance,” “deliver,” “enable,” “optimize,” “remain,” “support,” “grow,” “reduce,” “focus,” “manage,” “believe,” “anticipate,” “will,” “may,” “estimate,” “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 other cost savings or efficiency initiatives, anticipated capital expenditures and investments, input 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.

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operational challenges;

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

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

our dependence on information technology and systems, including service interruptions, misappropriation of data, or breaches of security, as well as 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;

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

our ability to execute on large capital projects;

political and economic conditions in the countries in which we conduct business and other factors related to our international operations;

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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.

French fries represent most of our value-added frozen potato product portfolio.

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.

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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 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.

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.

We also present net sales excluding FX.

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, income tax expense, or net sales, as applicable.

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

Executive Summary

Our results for the third quarter of fiscal 2026 reflect continued momentum in our North America segment and ongoing execution of our strategic priorities, partially offset by volume declines in our International segment.

Total Company volume increased 7% in the quarter and 6% through the first three quarters of fiscal 2026, supported by share gains and strong customer retention.

In the U.S., quick service restaurant (“QSR”) traffic turned positive for the first time since late fiscal 2024, increasing 1% during the quarter.

Within the quarter, QSR burger traffic returned to growth in February, although it declined 1% for the full period.

QSR chicken continued to be a strong contributor with sustained growth.

These trends, coupled with execution across sales, operations, and supply chain, contributed to solid performance within the North America segment.

During the quarter, we continued to advance our cost savings and productivity initiatives and expect to exceed our cost reduction target of at least $250 million by fiscal year-end 2028.

This program has provided us greater flexibility to strategically support customers through price and trade investments while continuing to strengthen our cost structure.

Segment Adjusted EBITDA declined compared to the prior year quarter, primarily driven by unfavorable price/mix, a net $32.5 million write-off of excess raw potatoes within our International segment, and higher fixed-cost absorption associated with lower utilization of international production facilities.

To improve asset utilization and reduce operating costs, we closed our Munro, Argentina facility in the third quarter and consolidated production into our modern Mar del Plata facility.

We also began the temporary curtailment of a production line in the Netherlands early in the fourth quarter of fiscal 2026.

The external operating environment remains dynamic.

The escalating conflict in the Middle East has contributed to volatility in sales volumes in the region, as well as increased variability in certain commodity and transportation markets.

While these impacts were small in the third quarter, we expect the conflict to have a more meaningful impact on our fourth‑quarter results, particularly in our International segment.

We continue to focus on operational execution and on managing the factors within our control to mitigate the effects of these disruptions.

We ended the quarter with a strong balance sheet.

Although we did not repurchase shares during the third quarter due to trading restrictions, we implemented a Rule 10b5‑1 trading plan following the end of the restrictions to facilitate future purchases.

As of March 30, 2026, we have repurchased 1,053,429 shares of common stock under our share repurchase program for an aggregate purchase price of approximately $44 million.

Our first quarter results reflect continued momentum in North America and our ongoing progress advancing our Focus to Win strategy.

In our North America segment, we delivered a 7% increase in sales volume resulting in a 5% increase in net sales and an 11% increase in Segment Adjusted EBITDA.

In our International segment, EMEA continues to face challenging market conditions.

Segment Adjusted EBITDA improved sequentially versus the fiscal fourth quarter 2026 as we worked through prior year crop carry in costs.

We have taken action to balance our network utilization as demonstrated by ending production at our Broekhuizenvorst, the Netherlands facility and successfully transitioning customer fulfillment within our network.

These actions have enabled further cost optimization.

We believe that our cash generation remains strong as we generated $235 million in cash provided by operating activities during the quarter.

During the quarter, we returned $52 million to shareholders through our quarterly dividend.

Our updated full-year 2027 fiscal outlook, on a 52-week comparable basis, includes net sales growth of low single-digits and earnings growth of mid single-digits.

We expect low single-digit sales volume growth and price/mix to be flat to up slightly for the year.

Fiscal year 2027 is a 52-week period versus a 53-week period in fiscal year 2026.

We are experiencing inflationary pressure across key cost inputs and freight.

Our teams are managing this cost inflation through disciplined actions, including proactive cost savings and review of contract price escalation terms.

We are on track to deliver additional cost savings in fiscal 2027 under our Cost Savings Program.

Results of Operations

Thirteen Weeks Ended February 22, 2026 compared to Thirteen Weeks Ended February 23, 2025

Thirteen Weeks Ended August 30, 2026 compared to Thirteen Weeks Ended August 24, 2025

Net Sales and Segment Adjusted EBITDA

Thirteen Weeks Ended

(in millions, except percentages) February 22,

2026 February 23,

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

(in millions, except percentages) August 30,

2026 August 24,

Increase (Decrease) % Increase (Decrease) excl.

Segment net sales

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International 26.5 57.2 (54)%

(1) Foreign currency translation had a minimal impact on overall Segment Adjusted EBITDA for the periods presented, as we mitigate exposure by purchasing goods and services in local currency where practical.

Net sales for the third quarter of fiscal 2026 increased $44.3 million to $1,564.8 million compared to the prior year quarter, including a favorable foreign currency impact of $47.4 million.

Net sales at constant currency was essentially flat over the prior year quarter, as a 7% increase in volume was 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 North America customer wins, share gains and strong retention.

The decline in price/mix reflects continued price and trade support for customers and consumer shifts toward value-oriented channels and brands, including increased sales to chain customers, which generally carry lower pricing.

The International segment also experienced softer demand in key international markets given competitive industry dynamics, notably in EMEA.

Net sales for the first quarter of fiscal 2027 increased $11.0 million to $1,670.3 million compared to the prior year quarter, including an immaterial favorable foreign currency (“FX”) impact.

Net sales excluding FX was essentially flat over the prior year quarter, as a 2% increase in sales volume was offset by a 2% decline in price/mix.

North America segment net sales, which includes all sales to customers in the U.S., Canada, and Mexico, increased $56.8 million, or 5%, to $1,141.4 million.

Volume increased 12% compared to the prior year quarter driven by customer contract wins, share gains and growth.

Price/mix declined 7%, reflecting continued price and trade support for customers and a mix shift toward faster-growing chain customers and private-label products, which generally carry lower margins than other channels.

International segment net sales, which includes all sales to customers outside of North America, declined $4.4 million, or 1%, to $529.8 million over the prior year quarter, including a favorable foreign currency impact of $43.7 million.

Net sales at constant currency declined 9%, or $48.1 million compared to the prior year quarter.

Volume declined 2%, driven by softer demand in key international markets, notably in EMEA.

Price/mix at constant currency declined 7%, primarily reflecting ongoing price and trade to support customers and, to a lesser extent, an unfavorable mix that favors lower margin geographies and products.

Sales volume increased 7% compared to the prior year quarter driven by customer wins and higher demand from existing customers.

Price/mix declined 2%, resulting from price and trade support for customers and continued mix shift toward faster-growing chain customers and private-label products, which generally carry lower margins than other channels.

International segment net sales, which includes all sales to customers outside of North America, declined $45.8 million, or 8%, to $528.9 million over the prior year quarter.

Sales volume declined 6% and price/mix declined 2%.

Gross profit declined $75.9 million versus the prior year quarter to $266.5 million.

Adjusted Gross Profit declined $92.9 million versus the prior year quarter to $327.5 million, primarily reflecting unfavorable global price/mix, as well as a net $32.5 million pre-tax charge related to the write-off of excess raw potatoes in the International segment due to lower than planned sales volumes in a competitive market environment.

Total manufacturing cost per pound increased, which reflected the raw potato write-off, increased fixed factory burden costs associated with underutilized international production facilities and inflationary pressures across key input categories globally.

These higher costs were partially offset by benefits from cost savings initiatives as well as improved operating efficiencies in our North America segment.

Adjusted Gross Profit declined $22.1 million versus the prior year quarter to $316.8 million, primarily reflecting unfavorable global price/mix and increased manufacturing costs per pound, mostly in the International segment.

Total manufacturing cost per pound increased due to the carry in of prior year costs, underutilized international production facilities and inflationary pressures across key input categories globally, including fuel and freight costs.

These higher costs were partially offset by benefits from cost savings initiatives, lapping of Argentina start-up costs, and approximately $5 million in tariff refunds.

Selling, General and Administrative Expenses

SG&A declined $7.4 million versus the prior year quarter to $156.8 million.

Adjusted SG&A increased $9.4 million versus the prior year quarter to $157.4 million, primarily driven by higher compensation and benefit accruals and $12.7 million write-off of capitalized costs associated with certain projects no longer under development.

These costs were partially offset by the benefit of ongoing cost savings initiatives.

SG&A increased $16.6 million versus the prior year quarter to $170.2 million.

Adjusted SG&A increased $6.8 million versus the prior year quarter to $139.2 million, primarily the result of lapping $7.3 million of non-recurring miscellaneous income in the first quarter fiscal 2026.

Cost savings mostly offset increases in outside services and fixed expense.

Net Income, Adjusted EBITDA and Segment Adjusted EBITDA

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Adjusted EBITDA declined $16.6 million versus the prior year quarter to $285.6 million, reflecting lower Adjusted Gross Profit and higher Adjusted SG&A.

North America Segment Adjusted EBITDA declined $12.8 million to $289.8 million compared to the prior year quarter.

Higher volumes, lower manufacturing costs per pound, and lower Adjusted SG&A, reflecting cost savings initiatives and improved operating efficiencies, were more than offset by continued price and trade support for customers and an unfavorable mix.

North America Segment Adjusted EBITDA increased $27.3 million to $287.3 million compared to the prior year quarter.

Higher sales volumes, cost savings initiatives, and approximately $5 million in tariff refunds, as well as an increase in equity method investment earnings, more than offset price and trade support for customers, customer and product mix and inflation in key input cost categories.

International Segment Adjusted EBITDA declined $30.7 million to $26.5 million compared to the prior year quarter.

The decrease was primarily attributable to lower sales, higher manufacturing costs per pound, including a net $32.5 million pre-tax charge for the write-off of excess raw potatoes due to lower than planned sales volumes, and increased fixed factory burden costs associated with underutilization of international production facilities.

The higher manufacturing costs were partially offset by benefits from cost savings initiatives.

To improve utilization and respond to the challenging operating environment in the International segment, we closed our Munro, Argentina plant during the third quarter and consolidated Latin America production into our new, modern facility in Mar del Plata, Argentina.

As previously announced, we also temporarily curtailed a production line in the Netherlands beginning early in the fourth fiscal quarter of 2026.

The decrease was primarily attributable to lower sales volume and lower net sales mostly in Europe and higher manufacturing costs per pound including the impact of the carry in of prior year higher costs, factory underutilization and inflation, including higher fuel costs.

Interest Expense, Net

Interest expense, net declined $2.3 million, versus the prior year quarter, to $45.0 million, driven by lower borrowings on our revolving credit facility, partially offset by a reduced benefit from capitalized interest.

Interest expense, net declined $1.3 million, versus the prior year quarter, to $42.4 million, driven by lower outstanding debt balances.

Income Tax Expense

Income tax expense for the third quarter of fiscal 2026 and 2025 was $30.3 million and $57.5 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 35.9% and 28.3% in the third quarter of fiscal 2026 and 2025, respectively.

Income tax expense for the first quarter of fiscal 2027 and 2026 was $16.9 million and $47.9 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 42.7% in the first quarter of fiscal 2027 and 2026, respectively.

The effective tax rate for our current quarter reflects the impacts of comparability items, most notably the expenses related to our Cost Savings Program and Restructuring Plan, as discussed in more detail in the Reconciliations of Non-GAAP Financial Measures.

Excluding the impact of these items, the Company’s effective tax rate was 21.8% for the third quarter of fiscal 2026, versus 28.1% for the prior year quarter.

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

Equity Method Investment Earnings

Equity method investment earnings from unconsolidated joint ventures were $2.7 million and $2.1 million for the third quarter of fiscal 2026 and 2025, respectively.

The increase of $0.6 million in earnings was primarily the result of higher volumes and gross margin, partially offset by an unfavorable mix of sales.

In addition, we recorded $10.2 million of discrete tax expense in the first quarter of fiscal 2026, 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 27.2% for the first quarter of fiscal 2027, versus 30.2% for the prior year quarter.

Compared to the first quarter of fiscal 2026, the effective tax rate excluding the impact of these items is lower primarily due to having a smaller proportion of losses with no expected tax benefits in certain jurisdictions.

Equity Method Investment Earnings (Loss)

Equity method investment earnings (loss) from unconsolidated joint ventures were earnings of $6.2 million and losses of $0.6 million for the first quarter of fiscal 2027 and 2026, respectively.

The increase of $6.8 million in earnings was primarily the result of higher sales volumes and gross margin, including a more favorable 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.

Thirty-Nine Weeks Ended February 22, 2026 compared to Thirty-Nine Weeks Ended February 23, 2025

Net Sales and Segment Adjusted EBITDA

Thirty-Nine Weeks Ended

(in millions, except percentages) February 22,

2026 February 23,

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

Segment net sales

North America $ 3,189.1 $ 3,162.1 1% 1%

International 1,653.1 1,613.4 2% (3)%

$ 4,842.2 $ 4,775.5 1% (1)%

Segment Adjusted EBITDA (1)

North America $ 837.6 $ 849.8 (1)%

International 102.9 194.1 (47)%

Net sales for the first three quarters of fiscal 2026 increased $66.7 million to $4,842.2 million compared to the prior year, including a favorable foreign currency impact of $95.4 million.

Net sales at constant currency declined 1% over the first three quarters of fiscal 2025, as a 6% increase in volume was more than offset by a 7% decline in price/mix.

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

Price/mix reflects continued price and trade support for our customers and consumer shifts toward value-oriented channels and brands, including increased sales to chain customers, which generally carry lower pricing.

North America segment net sales for the first three quarters of fiscal 2026, which includes all sales to customers in the U.S., Canada, and Mexico, increased $27.0 million, or 1%, to $3,189.1 million.

Volume increased 8% compared to the first three quarters of the prior year supported by recent customer contract wins, share gains and growth.

In response, we restarted curtailed North American production lines.

International segment net sales for the first three quarters of fiscal 2026, which includes all sales to customers outside of North America, increased $39.7 million, or 2%, to $1,653.1 million year-over-year, including a favorable $90.7 million from foreign currency translation.

Net sales at constant currency declined 3%, or $51.0 million.

Volume increased 4%, driven by growth in China, Asia Pacific, and Latin America.

Price/mix at constant currency declined 7%, reflecting ongoing price and trade to support customers and an unfavorable mix that favors lowered priced geographies and products.

Gross profit declined $58.0 million versus the first three quarters of fiscal 2025 to $998.3 million.

Adjusted Gross Profit declined $122.7 million versus the prior year to $994.3 million primarily reflecting unfavorable global price/mix, as well as a net $45.6 million pre-tax charge related to the write-offs of excess raw potatoes in our International segment due to lower than planned sales volumes.

Total manufacturing costs per pound were relatively flat despite higher input costs and fixed factory burden.

Results also include costs associated with the start-up of our new production facility in Argentina.

These impacts were mostly offset by higher volumes, lower raw potato prices, and savings from our cost reduction initiatives, which delivered improved operational efficiencies.

Selling, General and Administrative Expenses

SG&A declined $11.4 million versus the first three quarters of fiscal 2025 to $481.4 million.

Adjusted SG&A declined $22.4 million versus the prior year to $434.9 million, reflecting benefits of ongoing cost savings initiatives, partially offset by higher compensation and benefit accruals and $18.6 million for write-offs of capitalized costs associated with certain projects no longer under development.

Net Income, Adjusted EBITDA and Segment Adjusted EBITDA

Net income declined $56.9 million from the first three quarters of fiscal 2025 to $180.4 million.

Adjusted EBITDA declined $107.1 million versus the first three quarters of fiscal 2025 to $859.5 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 declined $12.2 million to $837.6 million in the first three quarters of fiscal 2026 compared to the same period in fiscal 2025.

Higher sales volumes, along with lower manufacturing costs per pound and reduced Adjusted SG&A, both supported by cost savings initiatives, were more than offset by price and trade support provided to customers and unfavorable mix.

International Segment Adjusted EBITDA declined $91.2 million to $102.9 million.

The decrease primarily reflects unfavorable price/mix and higher manufacturing costs per pound, driven by a net $45.6 million charge related to the write-offs of excess raw potatoes, 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 benefits from cost savings initiatives.

Interest Expense, Net

Interest expense, net declined $2.8 million, versus the first three quarters of fiscal 2025, to $133.0 million, reflecting the impact of lower total debt outstanding primarily driven by lower borrowings under our revolving credit facility, partially offset by a decline in the benefit from capitalized interest as our capacity expansion projects were completed in the first half of fiscal 2026.

Income Tax Expense

Income tax expense for the first three quarters of fiscal 2026 was $114.2 million compared to $121.7 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 38.8% and 33.9% for the first three quarters 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 three quarters of fiscal 2026 and 2025, we recorded $7.1 million and $18.2 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 28.9% in the first three quarters of fiscal 2026, versus 27.0% in the prior year period.

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.

In the first three quarters 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 $5.3 million and $15.5 million for the first three quarters of fiscal 2026 and 2025, respectively.

Adjusted Equity Method Investment Earnings was $5.3 million and $24.5 million for the first three quarters of fiscal 2026 and 2025, respectively.

The decline of $19.2 million in earnings was primarily the result of lower gross profit, due primarily to lower 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 February 22, 2026, we had $57.5 million of cash and cash equivalents, with $1,263.6 million additional amounts 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.

As of August 30, 2026, we had $166.3 million of cash and cash equivalents, with $1,239.3 million additional amounts available for borrowing under our revolving credit facility.

We believe we have sufficient liquidity to meet our business requirements for the next 12 months and the foreseeable future thereafter.

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.

Our funding requirements include capital expenditures, changes in working capital, and returning cash to shareholders in the form of cash dividends and share repurchases.

These expenditures could increase or decrease as a result of our financial results, future economic conditions, supply chain constraints for equipment, our regulatory compliance requirements, and other factors.

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 22,

2026 February 23,

Thirteen Weeks Ended

(in millions) August 30,

2026 August 24,

Net cash flows provided by (used for):

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Effect of exchange rate changes on cash and cash equivalents 0.5 0.7

Net decrease in cash and cash equivalents (13.2) (3.9)

Net increase in cash and cash equivalents 98.1 27.9

Cash and cash equivalents, beginning of period 68.2 70.7

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Operating Activities

Compared with the first three quarters of fiscal 2025, cash provided by operating activities increased $110.3 million to $595.6 million.

The increase largely relates to $130.0 million of favorable changes in working capital, led by lower inventories in North America and timing of collections for trade receivables, partially offset by a $19.7 million decrease in net income, adjusted for non-cash items.

Compared with the first quarter of fiscal 2026, cash provided by operating activities decreased $117.2 million to $234.8 million in the first quarter of fiscal 2027.

Cash provided by operating activities in the prior-year quarter benefited from a $136.3 million improvement in inventories as we were beginning our Cost Savings Program.

Current cash provided by operating activities benefited by $59.2 million from an increase in accounts payable as we work with supplier partners to improve terms.

Other changes to working capital items were attributed to normal course of business.

Furthermore, reported net income declined by $35.2 million.

Investing Activities

Investing activities used $238.0 million of cash in the first three quarters of fiscal 2026, compared with $559.0 million in the first three quarters of fiscal 2025.

Expenditures in the first three quarters 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 three quarters 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 $14.9 million of proceeds from the sale of property, plant and equipment in the first three quarters of fiscal 2026, an increase of $13.1 million over the first three quarters of fiscal 2025.

The prior year also included $20.5 million of gains from Argentina blue chip swap transactions.

Investing activities used $90.9 million of cash in the first quarter of fiscal 2027, compared with $76.3 million in the first quarter of fiscal 2026.

Expenditures in the first quarter of fiscal 2027 primarily related to production facility modernization efforts.

Expenditures in the first quarter of fiscal 2026 primarily related to our investments to expand our french fry capacity in Argentina.

Financing Activities

During the first three quarters of fiscal 2026, we made net payments of $108.8 million, reflecting amounts outstanding under our revolving credit facilities.

We paid $154.7 million in cash dividends to stockholders, used $59.2 million of cash to repurchase 804,882 shares of our common stock at an average purchase price of $62.12 per share, and withheld 172,019 shares from employees to cover income and payroll taxes on vested equity awards.

We also repaid $54.9 million of debt and financing obligations.

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

The funds from the Term A-5 loan facility were used primarily to repay all amounts outstanding under our then existing Term A-1 loan facility and outstanding borrowings under our revolving credit facility.

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 vested equity awards.

In addition, we paid $154.7 million in cash dividends to common stockholders.

During the first quarter of fiscal 2027, we had net proceeds of $30.1 million, reflecting amounts outstanding under our revolving credit facilities.

We paid $52.2 million in cash dividends to common stockholders and repaid $16.5 million of debt and financing obligations.

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 withheld 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.

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.

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

At February 22, 2026, we were in compliance with the financial covenant ratios and other covenants contained in our debt agreements.

At August 30, 2026, we were in compliance with the covenants contained in our debt agreements.

Obligations and Commitments

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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 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 current and prior year periods.

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

We also present net sales excluding FX, which provides information on net sales as if foreign currency exchange rates had remained constant between the current and prior-year 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.

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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.

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 22,

2026 February 23,

2025 February 22,

2026 February 23,

Net income (a) $ 54.0 $ 146.0 $ 180.4 $ 237.3

Thirteen Weeks Ended

(in millions) August 30,

2026 August 24,

Net income $ 29.1 $ 64.3

Interest expense, net 42.4 43.7

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Income from operations including equity method investment earnings 88.4 155.9

Depreciation and amortization (b) 98.9 98.5 294.8 282.4

Unrealized derivative gains (11.0) (5.9) (3.8) (11.8)

Depreciation and amortization 101.8 96.3

Unrealized derivative (gains) losses 0.7 (4.9)

Foreign currency exchange (gains) losses 12.4 (4.7)

Blue chip swap transaction gains (c) — (0.6) — (20.5)

Stock-based compensation 15.1 10.6

Items impacting comparability:

Cost Savings Program, Restructuring Plan, and other expenses (d) 55.5 10.3 101.5 169.4

Shareholder activism expense (e) — 3.7 4.0 4.1

Pension settlement (f) — — 14.2 —

Adjusted EBITDA (g) $ 271.7 $ 373.0 $ 859.5 $ 966.6

Cost Savings Program, Restructuring Plan, and other expenses (a) 34.2 31.9

Legal proceedings and other claims (b) 33.0 —

Shareholder activism expense (c) — 4.0

Pension settlement (d) — 13.1

Adjusted EBITDA $ 285.6 $ 302.2

___________________________________________

(a) Net income during the thirteen weeks ended February 23, 2025, included an approximately $9 million ($7 million after-tax, or $0.05 per share) benefit related to the previously announced voluntary product withdrawal initiated in the fourth quarter of fiscal 2024.

This includes an approximately $6 million benefit ($5 million after-tax, or $0.03 per share) in net sales and an approximately $3 million benefit ($2 million after-tax, or $0.02 per share) in cost of sales.

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

$3 million to North America and $6 million to International.

Net income during the thirty-nine weeks ended February 23, 2025, included an approximately $31 million charge ($23 million after-tax, or $0.16 per share) related to the previously announced voluntary product withdrawal.

This includes an approximately $9 million loss ($7 million after-tax, or $0.05 per share) in net sales and an approximately $22 million charge ($17 million after-tax, or $0.12 per share) in cost of sales.

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

$19 million to North America and $12 million to International.

(b) Depreciation and amortization includes interest expense, income tax expense, and depreciation and amortization from equity method investments of $2.1 million and $2.0 million for the thirteen weeks ended February 22, 2026 and February 23, 2025, respectively, and $6.5 million and $6.1 million for the thirty-nine weeks ended February 22, 2026 and February 23, 2025, 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) For more information about the Cost Savings Program and Restructuring Plan, see Footnote 4, Cost Savings Program and Restructuring, in the Condensed Notes to Consolidated Financial Statements (unaudited), within “ Part I, Item I.

(a) For more information about the Cost Savings Program and Restructuring Plan, see Note 4, Cost Savings Program and 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 $14.2 million ($11.0 million after-tax, or $0.08 per share) for the thirty-nine weeks ended February 22, 2026.

These charges were used 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.

(g) Adjusted EBITDA included a net $32.5 million and $45.6 million charge for the write-off of excess raw potatoes for the thirteen and thirty-nine weeks ended February 22, 2026, respectively.

The following tables reconcile gross profit to Adjusted Gross Profit, SG&A to Adjusted SG&A, and Income Tax Expense (Benefit) to Adjusted Income Tax Expense for the thirteen weeks ended February 22, 2026 and February 23, 2025.

For the Thirteen Weeks Ended

February 22, 2026 February 23, 2025 February 22, 2026 February 23, 2025 February 22, 2026 February 23, 2025

(b) Represents accruals for legal proceedings and other claims.

See Note 14, Commitments, Contingencies, Guarantees and Legal Proceedings, in the Condensed Notes to Consolidated Financial Statements (unaudited), within “Part I, Item I.

Financial Statements” of this Form 10-Q.

(d) Represents costs associated with fully funding 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.

Thirteen Weeks Ended

August 30, 2026 August 24, 2025 August 30, 2026 August 24, 2025 August 30, 2026 August 24, 2025

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

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Unrealized derivative gains and losses (0.6) (3.1) (1.3) 1.8 0.1 (1.1)

Foreign currency exchange gains (losses) — — 11.5 (7.0) (2.9) 2.0

Blue chip swap transaction gains — — — 0.6 — (0.2)

Stock-based compensation — — (10.5) (9.2) 1.8 1.4

Items impacting comparability:

Cost Savings Program, Restructuring Plan, and other expenses 7.3 0.7 — — 1.3 2.6

Shareholder activism expense — — — (3.7) — 0.8

Total adjustments (4.1) (2.1) 0.6 (16.2) (2.5) 5.3

Adjusted $ 327.5 $ 420.4 $ 157.4 $ 148.0 $ 27.8 $ 62.8

The following table reconciles net sales to net sales at constant currency for the thirteen weeks ended February 22, 2026.

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

Thirteen Weeks Ended February 22, 2026

North America $ 1,035.0 $ (3.7) $ 1,031.3

International 529.8 (43.7) 486.1

$ 1,564.8 $ (47.4) $ 1,517.4

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 thirty-nine weeks ended February 22, 2026 and February 23, 2025.

For the Thirty-Nine Weeks Ended

February 22, 2026 February 23, 2025 February 22, 2026 February 23, 2025 February 22, 2026 February 23, 2025 February 22, 2026 February 23, 2025

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

As reported $ 998.3 $ 1,056.3 $ 481.4 $ 492.8 $ 114.2 $ 121.7 $ 5.3 $ 15.5

Unrealized derivative gains and losses (10.9) (15.5) (7.1) (3.7) (0.8) (2.9) — —

Foreign currency exchange gains (losses) — — 9.4 (17.2) (2.8) 4.6 — —

Blue chip swap transaction gains — — — 20.5 — (0.8) — —

Foreign currency exchange gains and losses — — (12.4) 4.7 2.2 (0.8)

Stock-based compensation — — (15.1) (10.6) 2.5 1.6

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Cost Savings Program, Restructuring Plan, and other expenses 20.1 (0.4) — — 8.9 7.7

Legal proceedings and other claims 30.8 — (2.2) — 7.9 —

Shareholder activism expense — — — (4.0) — 0.9

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Adjusted $ 316.8 $ 338.9 $ 139.2 $ 132.4 $ 38.5 $ 59.2

The following table reconciles net sales to net sales at constant currency for the thirty-nine weeks ended February 22, 2026.

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

Thirty-Nine Weeks Ended February 22, 2026

The following table reconciles net sales to net sales excluding FX for the thirteen weeks ended August 30, 2026.

(in millions) Net Sales FX Net Sales excl.

Thirteen Weeks Ended August 30, 2026

North America $ 1,141.4 $ (2.4) $ 1,139.0

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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 2026.

There were no material changes to these critical accounting policies and estimates during the first quarter of fiscal 2027.

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