Lamb Weston Holdings, Inc. (NYSE:LW) Q1 2021 Earnings Conference Call - Final Transcript
Oct 07, 2020 • 10:00 am ET
half of the first quarter, although we remain cautious about the effect of the onset of colder weather on outdoor dining as well as a continuing spread of the virus in the U.S. and its resurgence in some key international markets.
In addition, when estimating sales for the quarter, recall that our second quarter results last year benefited from strong sales of customized products including limited time offerings, as well as from additional shipping days related to the timing of the Thanksgiving holiday.
With respect to costs, as we've previously discussed, we plan to process potatoes from the 2019 crop through early September, which is couple of months longer than usual. We stretched out the old crop in order to manage inventories in light of the pandemics impact on fry demand. Processing older crop results in higher cost as a result of higher raw potato storage fees and lower recovery rates.
Since we typically carry upwards of 60 days of finished goods inventory, we'll realize the impact of these higher costs in our second quarter income statement as we sell that inventory over the coming months.
Now, here's Tom for some closing comments.
Thanks, Rob. Let me just quickly sum up by saying it was a solid quarter in the context of the current operating environment. And I'm proud of how our manufacturing, commercial and support teams have continued to focus on the right strategic and operating priorities to serve our customers.
We are optimistic about the steady improvement in restaurant traffic and fry demand in most of our markets, as well as our ability to control costs, and manage through the pandemics impact on our operations. However, we do expect some choppiness in demand as the world continues to manage through the crisis.
We remain confident that Lamb Weston is well positioned to emerge as a strong company once we get to the other side of the pandemic and create value for our stakeholders over the long-term.
Thank you for joining us today and we're now ready to take your questions.