Lamb Weston Holdings, Inc. (LW) FY 2026 MD&A

Management’s discussion and analysis of financial condition and results of operations are based upon the Company’s Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to our trade promotions, income taxes, and impairment, among others. We base our estimates on historical experiences combined with management’s understanding of current facts and circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Critical accounting estimates are those that are most important to the portrayal of our financial condition and operating results. These estimates require management’s most difficult, subjective, or complex judgments. We review the development, selection, and disclosure of our critical accounting estimates with the Audit Committee of our Board.

We have made appropriate accounting estimates based on the facts and circumstances available as of the reporting date. To the extent there are differences between these estimates and actual results, our Consolidated Financial Statements may be affected.

Sales Incentives and Trade Promotion Allowances

We promote our products with advertising, consumer incentives, and trade promotions. Sales incentives include, but are not limited to, discounts, coupons, rebates, and volume-based incentives. The estimates for sales incentives are based principally on historical sales and redemption rates, influenced by judgments about current market conditions such as competitive activity in specific product categories.

Trade promotion programs include introductory marketing funds such as slotting fees, cooperative marketing programs, temporary price reductions, and other activities conducted by our customers to promote our products. The costs of these programs are recognized as a reduction to revenue with a corresponding accrued liability. The estimate of trade promotions is inherently difficult due to information limitations as the products move beyond distributors and through the supply chain to operators. Estimates made by management in accounting for these costs are based primarily on our historical experience with marketing programs, with consideration given to current circumstances and industry trends and include the following: quantity of customer sales, timing of promotional activities, current and past trade-promotion spending patterns, the interpretation of historical spending trends by customer and category, and forecasted costs for activities within the promotional programs.

The determination of sales incentive and trade promotion costs requires judgment and may change in the future as a result of changes in customer demand for our products and promotion participation, particularly for new programs related to the introduction of new products. Final determination of the total cost of promotion is dependent upon customers providing information about proof of performance and other information related to the promotional event. Because of the complexity of some of these trade promotions, the ultimate resolution may result in payments that are different from our estimates. As additional information becomes known, we may change our estimates. At May 31, 2026 and May 25, 2025, we had $100.3 million and $88.2 million, respectively, of accrued trade promotions payable recorded in “Accrued liabilities” on our Consolidated Balance Sheets.

Income Taxes

We compute the provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards. We measure deferred tax assets and liabilities using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled.

Inherent in determining the annual tax rate are judgments regarding business plans, planning opportunities, and expectations about future outcomes. Management judgments are required for the following items:

•Management reviews deferred tax assets for realizability. Valuation allowances are established when management believes that it is more likely than not that some portion of the deferred tax assets will not be realized. Changes in valuation allowances from period to period are included in the tax provision.

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•We establish accruals for unrecognized tax benefits when, despite the belief that our tax return positions are fully supported, we believe that an uncertain tax position does not meet the more-likely-than-not recognition threshold of Accounting Standards Codification (“ASC”) 740, Income Taxes. These contingency accruals are adjusted in light of changing facts and circumstances, such as the progress of tax audits, the expiration of the statute of limitations for the relevant taxing authority to examine a tax return, case law and emerging legislation. While it is difficult to predict the final outcome or timing of resolution for any particular matter, we believe that the accruals for unrecognized tax benefits at May 31, 2026, reflect the estimated outcome of known tax contingencies as of such date in accordance with accounting for uncertainty in income taxes under ASC 740.

•We recognize the tax impact of including certain foreign earnings in U.S. taxable income as a period cost. We have not recognized deferred income taxes for local country income and withholding taxes that could be incurred on distributions of certain non-U.S. earnings or for outside basis differences in our subsidiaries, because we plan to indefinitely reinvest such earnings and basis differences. Remittances of non-U.S. earnings are based on estimates and judgments of projected cash flow needs, as well as the working capital and investment requirements of our non-U.S. and U.S. operations. Material changes in our estimates of cash, working capital, and investment needs in various jurisdictions could require repatriation of indefinitely reinvested non-U.S. earnings, which could be subject to applicable non-U.S. income and withholding taxes. While we believe the judgments and estimates discussed above and made by management are appropriate and reasonable under the circumstances, actual resolution of these matters may differ from recorded estimated amounts. Further information on income taxes is provided in Note 3, Income Taxes, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K.

Goodwill

As of May 31, 2026, we had $1,130.1 million of goodwill recorded on our consolidated balance sheet. Goodwill is not amortized but is tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Our annual impairment test is typically performed in the fourth quarter of each fiscal year.

We perform goodwill impairment tests at the reporting unit level, which represents an operating segment or a component of an operating segment. Our reporting units align with our operating segments. The impairment test may involve either a qualitative assessment or a quantitative assessment. In a qualitative assessment, we evaluate various factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If the qualitative assessment indicates a potential impairment, or if we elect to bypass the qualitative assessment, we proceed to a quantitative test.

For quantitative goodwill impairment tests, we determine the fair value of our reporting units using an income approach. Under the income approach, we calculate the fair value of each reporting unit based on the present value of estimated future cash flows. Considerable management judgment is necessary to evaluate the impact of operating and macroeconomic changes to estimate the future cash flows used to determine the fair value of each reporting unit. Management’s estimates rely on various assumptions, including: future cash flows, projections of revenue growth rates, operating margins, capital expenditures, and working capital requirements. These are based on historical performance, current market conditions, our internal operating plans and strategies, discount rates, and a weighted-average cost of capital (WACC) that reflects the risk inherent in the projected cash flows. This rate is derived from market data for comparable companies and adjusted for specific reporting unit risk, country risk, or asset risks.

The key assumptions used in our impairment tests are inherently uncertain and require a high degree of estimation. Changes in economic and operating conditions, industry trends, competitive pressures, or our ability to execute strategic initiatives could materially impact these assumptions and, consequently, the estimated fair values. Variations between actual operating results and our forecasts, or unfavorable changes in market factors such as interest rates or comparable company earnings multiples, could lead to future impairment charges.

As of May 31, 2026, we performed a quantitative impairment test for the International reporting unit and a qualitative assessment for the North America reporting unit. The International reporting unit’s estimated fair value exceeded its carrying value; however, its fair value is more sensitive to changes in projected operating results and key assumptions, including discount rates. In a future period, lower-than-expected sales or profitability and/or an increase in the WACC could reduce the International reporting unit’s estimated fair value and result in a goodwill impairment. Our qualitative assessment indicated that it is more likely than not that the North America reporting unit’s fair value exceeded its carrying value as of May 31, 2026.

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New and Recently Issued Accounting Standards

For a listing of new and recently issued accounting standards, see Note 1, Nature of Operations and Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K.

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 (Benefit), and Adjusted Equity Method Investment Earnings, each of which is considered a non-GAAP financial measure. We also present net sales excluding FX and net sales excluding FX and extra week, which provide information on net sales as if foreign currency exchange rates had remained constant between the current and prior-year periods, and as if there were only fifty-two weeks in the current fiscal year. 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 our operating and financial performance using the same tools that management uses to evaluate performance across periods and to make budgeting, operating and strategic decisions, and (iii) otherwise provide supplemental information that may be useful to investors in evaluating our operating and 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 corresponding 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, equity method investment earnings, 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.

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The following table reconciles net income to Adjusted EBITDA.

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(a)Net income included the following:

i.Fiscal 2026 included Cost Savings Program, Restructuring Plan, and other expenses of $111.6 million ($98.1 million after-tax, or $0.71 per share) related to the Cost Savings Program announced on July 23, 2025 and the Restructuring Plan announced on October 1, 2024. Fiscal 2025 included $185.8 million ($143.7 million after-tax, or $1.01 per share) of expenses related to the Cost Savings Program, Restructuring Plan, and other expenses;

ii.Unrealized gains of $20.1 million ($15.2 million after-tax, or $0.11 per share) and $23.1 million ($17.2 million after-tax, or $0.12 per share) related to mark-to-market adjustments associated with commodity and currency hedging contracts for fiscal 2026 and 2025, respectively;

iii.Foreign currency exchange losses of $8.2 million ($5.7 million after-tax, or $0.05 per share) and gains of $15.2 million ($10.9 million after-tax, or $0.07 per share) for fiscal 2026 and 2025, respectively;

iv.Fiscal 2025 included blue chip swap transaction gains of $21.1 million ($20.0 million after-tax or $0.14 per share);

v.Stock-based compensation expense of $46.2 million ($38.5 million after-tax, or $0.28 per share) and $39.5 million ($33.4 million after-tax, or $0.23 per share) for fiscal 2026 and 2025, respectively;

vi.Advisory fees related to shareholder activism matters of $4.0 million ($3.1 million after-tax, or $0.02 per share) and $5.2 million ($4.0 million after-tax, or $0.03 per share) for for fiscal 2026 and 2025, respectively;

vii.Fiscal 2026 included pension settlement charges of $14.2 million ($11.0 million after-tax, or $0.08 per share) 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; and

viii.Fiscal 2025 included an estimated $31 million loss related to the voluntary product withdrawal that occurred in the fourth quarter of fiscal 2024. The total charge to reporting segments was approximately $19 million to the North America segment and approximately $12 million to the International segment.

(b)Depreciation and amortization included interest expense, income tax expense, and depreciation and amortization from equity method investments of $8.8 million and $8.2 million for fiscal 2026 and 2025, respectively.

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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 (Benefit), and equity method investment earnings to Adjusted Equity Method Investment Earnings:

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(a)Items are tax effected at the marginal rate based on the applicable tax jurisdiction.

(b)See footnotes in the reconciliation of net income to Adjusted EBITDA above for further discussion.

The following table reconciles net sales to net sales excluding FX and net sales excluding FX and extra week.

The following table reconciles Segment Adjusted EBITDA to Segment Adjusted EBITDA excluding extra week.

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(a)Foreign currency impact on Segment Adjusted EBITDA is immaterial as favorable net sales impact is offset by unfavorable operating expense impact.

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