Lamb Weston Holdings, Inc. (NYSE:LW) Q3 2023 Earnings Call Transcript

Tom Werner: Yes. So, the intent and part of our strategic playbook is we’re always going to be evaluating potential acquisitions within the potato category, that’s the number one focus. Category strong, it’s good returns, great investment, it’s growing and we have not only invested in expanding our current manufacturing footprint around the globe as we’re doing with the four projects we have going on. But to the point Bernadette made earlier, it’s important for me and the company to make sure we have a strong balance sheet, so if an opportunity comes up, we’ll be able to execute it. And so that’s always going to be on the table. And I’ve been consistent in that over the past six years. So, I feel good about where our capital — our balance sheet is. We’re investing to expand our footprint, it’s right on strategy. We’re positioning ourselves in the industry to support our customers in all the markets around the world. I feel good about where we’re at.

William Reuter: Okay. And then my second question, is there any way for you to provide some additional colour around what the impact of open market purchases were this year? Just trying to think about in the event that you’re able to fill that with contracted purchases next year, what that tailwind could be?

Bernadette Madarieta: Yes, we haven’t quantified the impact of those open market purchases. A little bit different this year in that we were short on yield versus last year there was an impact for yield and quality. While we are needing to bring in fewer open market purchases, the cost this year is significantly higher. So we have not quantified that, but there is a meaningful impact this year similar to last year.

William Reuter: Great. Okay. That’s all for me. Thank you.

Tom Werner: Hey, Bill, one other thing. I mean, the reason that we had to go to the open market is because crop yields weren’t good this year. And typically, we have an average crop and you really don’t have to go into the open market that much at all.

William Reuter: Great. Thank you.

Operator: We do have a follow-up from Andrew Lazar from Barclays. Please go ahead.

Andrew Lazar: Thanks so much. Just a super quick one. Tom, when you announced the joint venture acquisition, with Meijer. I think one of the things you’d mentioned was that you also hope that or intended that this action would, kind of, send a message right to the broader, sort of, European, sort of, competitive environment there that you were certainly looking for there to be over time the potential for further consolidation in what is a much more fragmented, right operating theatre in Europe? And I’m just curious if this transaction now that you’ve closed it in a couple of months or since announcing it, whether the — I don’t know, the dialogue or pace of conversations maybe with others has picked up more generally. We saw another one outside of you, right, the transaction that happened, whatever it was a couple of months ago in Belgium.

I’m just curious if your expectation would be that we’re likely to see more somewhat sooner or not and if you’re hearing more chatter and dialogue? Thanks.