LW

Lamb Weston is one of the largest global producers of frozen potato products (french fries) for restaurants and retailers, an industry with only a handful of major players. FY2025 (year ended May 2025) was a clear setback: revenue was essentially flat (-0.3%) at $6.45B, but profitability fell hard — gross margin compressed to 21.7%, operating income dropped 37.6% to $665M, and net income fell 50.8% to $357M, with EPS down 49.8% to $2.50. The decline reflects soft restaurant traffic/demand against industry capacity additions, pressuring volumes and pricing after the very strong post-pandemic FY2023 ($1.01B of net income).

The cash and capital-return story is more resilient. Operating cash flow actually rose 8.8% to $868M, and capex fell 31.3% to $638M (capacity expansion winding down), implying improving free cash flow. The company raised its dividend 18.9% to $207M and reduced shares outstanding 3.0%, while ROE remained a healthy 20.6%. Leverage is moderate — long-term debt of $3.77B (down 1.7%) against $1.74B of equity — though cash is thin at $70.7M.