Shares of Lamb Weston Holdings Inc. powered higher Thursday, after the frozen-potato seller’s fiscal first-quarter profit more than doubled and beat expectations by a wide margin, as a big jump in prices boosted the bottom line.
The stock
LW,
soared 11.7% in premarket trading, enough to make it the S&P 500 index’s
SPX
best performer ahead of the open. That puts the stock on track for the biggest one-day gain since it ran up 14.3% on Nov. 20, 2020.
Net income for the quarter to Aug. 27 came in at $234.8 million, or $1.60 a share, compared with $231.9 million, or $1.60 a share, in the same period a year ago.
Excluding nonrecurring items, such as unrealized gains from derivatives last year, adjusted earnings per share rose 109%, to $1.63 from 78 cents, well above the FactSet consensus of $1.08.
Sales grew 47.9% to $1.67 billion, above the FactSet consensus of $1.62 billion, as a 23% spike in price and mix offset an 8% decline in volume.
The company said the increase in price/mix reflected “the benefit of pricing actions across both of the company’s business segments to counter input and manufacturing cost inflation, the timing of trade spending in North America, and favorable mix, partially offset by lower customer transportation charges.”
Geographically, North America sales increased 19% to $1.14 billion, as a 24% jump in price/mix offset a 5% volume decline, while international sales more than tripled (up 212%) to $529.9 million, as price/mix rose 18% and volume soared 194%.
Gross margin improved to 30.0% from 24.2%, as the cost of sales rose less than sales, up 36.8% to $1.17 billion.
For fiscal 2024, the company raised its guidance ranges for adjusted EPS to $5.50 to $5.95 from $4.95 to $5.40, and for sales to $6.8 billion to $7.0 billion from $6.7 billion to $6.9 billion.
The stock has tumbled 20.8% over the past three months through Wednesday, while the S&P 500 has lost 4.1%.
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