Lamb Weston Holdings, Inc. (NYSE:LW) Q2 2018 Earnings Conference Call - Final Transcript
Jan 04, 2018 • 10:00 am ET
Good day, everyone, and welcome to the Lamb Weston's Second Quarter Earnings Call. Today's conference is being recorded. And at this time, I would like to turn the conference over to Dexter Congbalay, Vice President, investor relations of Lamb Weston. Please go ahead, sir.
These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our filings with the SEC for more details on our forward-looking statements. In addition, some of today's prepared remarks include non-GAAP financial measures.
These non-GAAP financial measures should not be considered a replacement for and should be read together with our GAAP results. You can find the GAAP to non-GAAP reconciliations in our earnings release. With me today are Tom Werner, our president and chief executive officer, and Rob McNutt, our chief financial officer. During this call, Tom will provide an overview of our overall performance as well as a summary of our strategic and capital allocation priorities.
Rob will then provide the details on the second-quarter results, our debt and cash flow, and our updated fiscal 2018 outlook. Tom will wrap up with some closing remarks before opening up the call for questions. With that, let me now turn the call over to Tom.
Thank you, Dexter. Good morning, everyone, and thank you for joining us. I'm pleased to say that we delivered another solid quarter of sales and earnings growth, specifically, sales increased 4% driven by price/mix improvements, while volume declined slightly versus the tough prior-year comparable as well as decisions we made to exit some lower-margin business. Adjusted EBITDA, including unconsolidated joint ventures, increased 12% to about $190 million.
Our performance in the quarter reflects strong execution across the organization and our continued focus on delivering the right product at the right time, every time, for our customers. For example, our global team completed customer contract negotiations and agreed on terms, which are in aggregate in line with our expectations. The foodservice team grew volume across its customer base while continuing to improve pricing and mix. The retail team expanded distribution of Grown In Idaho-branded product, delivering nearly 60% ACV in supermarkets in just six months.
And in Europe, our Lamb Weston/Meijer joint venture delivered another solid quarter behind disciplined pricing. The supply chain team started up our new 300 million pound french fries line in Richland, Washington, on time and on budget. We are now ramping up production on the state-of-the-art line and expect to have it operating near full capacity by the end of this fiscal year. The supply chain team has also had the opportunity to more fully assess this year's potato crop.
We consider the overall quality and storeability to be in line with our planned expectations. So with our solid first half performance, the commercial and supply chain teams executing against our priorities, customer contract negotiations now behind us, the start-up of our new french fries line on