You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. 
Text: These statements are based on how we see things today.
Actual results may differ materially due to risks and uncertainties.
Some of today's 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.
Tom will provide some comments on our performance as well as an overview of the current operating environment.
Bernadette will then provide details on our second quarter results and updated fiscal 2022 outlook.
We're pleased with the improvement in our manufacturing and supply chain operations as well as the progress in our financial performance in the quarter and I'm proud of how Lamb Weston team has been able to navigate through this difficult macro environment.
We generated strong sales and solid demand across our food away-from-home channels drove volume growth and the initial benefits of our recent pricing actions began to offset inflationary pressures.
In addition, our efforts to stabilize our manufacturing operations are on track, including increasing staffing in our processing plants to improve production run rates and throughput.
Together, our sales and operating momentum drove sequential gross margin improvement in the quarter and have us well positioned to better manage the upcoming cost pressures from this year's exceptionally poor potato crop in the Pacific Northwest.
While our operations and financial results are not yet where we want them to be, we're on track to deliver our financial targets for the year and our investments in capacity and productivity will get us well positioned to deliver higher margins and sustainable growth over the long term.
Before Bernadette gets into some of the specifics of our second quarter results and outlook, let's briefly review the current operating environment, starting with demand.
In the U.S., overall fry demand and restaurant traffic in the quarter remained solid, especially at quick service restaurants where demand has continued to be strong and above pre-pandemic levels.
Traffic at full-service restaurants during the quarter was also solid but remained below pre-pandemic levels.
Restaurant traffic, though, has softened recently as the spread of COVID variants have tempered consumer demand for on-premise dining and as restaurants closed temporarily due to staff shortages.
While we expect that COVID wave will continue to temper demand for on-premise dining in the near term, we do not anticipate that it will have a meaningful effect on traffic or demand at QSRs.
Demand at noncommercial outlets also improved during the quarter but continued to be below pre-pandemic levels.
As with on-premise dining, we expect the spread of COVID variants will affect near-term demand.
The fry attachment rate in the U.S., which is the rate at which consumers order fries when visiting a restaurant or other food service outlets, continue to be above pre-pandemic levels.
This served to support our out-of-home fry demand in the quarter.
The increase in the fry attachment rate has been fairly consistent since the beginning of the pandemic and we do not see that changing in the near term.
Fry demand in U.S. retail channels in the quarter was up mid-teens from pre-pandemic levels and we anticipate it will remain strong in the near term as the pandemic continues to affect demand in out-of-home channels.
Now, outside the U.S., demand in Asia and Oceania has been solid, although the lack of shipping containers and disruptions to ocean freight networks continues to hinder our ability to fully serve our customers in these markets.
Demand in Europe, which is served by our Lamb Weston/Meijer joint venture, has also been solid, although consumer reaction and the effect of recently imposed government lockdowns may reverse some of the recovery in restaurant traffic and fry demand in the near term.
So overall, we're encouraged by the resiliency of demand and the long-term trends for the category but expect that there will be some near-term softness with another COVID wave in the U.S. and our key international markets.
With respect to pricing, we're making good progress in implementing recent pricing actions to manage input cost inflation.
In the second quarter, we began to see the initial benefits of the price increases that took effect in the summer in our foodservice and retail segments as well as in some of our international businesses.
We expect the benefit of these prices will continue to build as the year progresses.
In December, we began implementing another round of pricing actions in our foodservice and retail segments.
While these actions did not affect our second quarter results, we'll see a gradual benefit from them over the next six months.
In our global segment, we saw some benefit of pricing actions in the second quarter but expect to see a greater impact during the back half of the year.
This reflects price increases related to contract renewals as well as the benefit of price escalators for most of the global contracts that are not up for renewal this year.
We expect these price increases across our business segments will in aggregate mitigate much but not all of our cost inflation pressures.
We will continue to assess the pace and scope of further cost inflation and we may take further price actions as the year progresses.
With respect to costs, input cost inflation remains the primary driver to the increase in our cost per pound in the quarter.
Commodity and transportation costs were each up double digits and we expect that trend will continue through fiscal 2022, especially as our raw potato costs significantly increased in the second half of the year.
Outside of cost inflation, we're making good progress to stabilize our supply chain in order to improve cost, production run rates and throughput.
We've taken actions to simplify our manufacturing processes and drive savings through a series of productivity initiatives, eliminating underperforming SKUs and increasing potato utilization rates.
Importantly, after making changes to how we staff production crews, compensation and other incentives, we steadily reduced our staffing shortfall.
We're working to continue this positive trend but realize it's difficult in a very challenging labor environment.
The pending implementation of government-mandated COVID testing and vaccine regulations may also slow our progress and that of our suppliers in attracting and retaining workers in the near term.
Now, turning to the crop.
The yields and quality of the potato crops in our primary growing regions in the Columbia Basin, Idaho and Alberta are well below average due to the extreme heat over the summer.
Similar to prior years, we had contracted with farmers to purchase potatoes to meet our production needs, assuming an average crop year.
But because of the extreme heat, the contracted acres yielded fewer potatoes and the quality is also poor.
As a result, we're purchasing our remaining potato needs in the open market to meet our production forecast.
We were able to reduce the number of potatoes we'd otherwise have been required to purchase in the open market by successfully partnering with our customers to secure changes product specifications.
Given that raw potato supply is tight and that fry demand has largely recovered, we've been purchasing open potatoes at a premium to contracted potato prices.
When possible, we've been securing them from our nearby growing regions, but we have also transported potatoes from the Midwest and Eastern North America which results in increased transportation costs.
We included an estimate of these additional costs in our updated earnings outlook.
We'll begin to see more of the financial impact of this year's poor crop, including the high cost of open market potatoes in our third quarter results.
So in summary, we feel good about our financial and operating progress in the quarter.
The overall demand environment is solid but may soften in the near term due to another COVID wave and we're pulling the right pricing and operating levers to manage through this challenging environment.
As Tom discussed, we're pleased with our progress in the quarter.
We generated strong sales and solid demand across our restaurant and foodservice channels in North America, drove volume growth and we implemented pricing actions.
We believe our pricing and cost-mitigation actions have us positioned to navigate through this difficult operating environment and to support sustainable profitable growth over the long term.
Specifically, in the quarter, sales increased 12% to a little over $1 billion.
This is only the fourth time in Lamb Weston's history that we topped $1 billion of sales in a quarter.
Sales volumes were up 6%.
Volume growth was driven by our foodservice segment, which reflects the continued year-over-year recovery in on-premise dining and by strong shipments to our large chain restaurant customers in North America that is served by our global segment.
Sales volumes of branded products in our retail segment were also up in the quarter, but the segment's overall volume declined due primarily to lower shipments of private label products.
While our overall volume growth in the quarter was strong, it was tempered by industrywide upstream and downstream supply chain constraints, including delays in the availability of spare parts, edible oils and other key materials to our factories as well labor shortages, which impacted production run rates and throughput at our processing plant.
In our global segment, volume growth was also tempered by the limited availability of shipping containers and disruptions at ports and in ocean freight networks.
We expect these production and logistics challenges as well as the near-term impact of COVID variants to limit our volume growth through at least the end of fiscal 2022.
Price mix was up 6% as we realized benefits from our previously announced pricing actions in each of our four segments.
As a reminder, we began implementing product pricing actions in the first quarter as the primary lever to offset inflationary cost pressures and it generally takes a couple of quarters before these actions are fully realized in the marketplace.
We've also taken actions to more frequently change the freight rates that we charge to customers, so they better reflect market rates.
Historically, we only adjusted these rates once or twice a year.
Most of the increase in price mix in the quarter reflects these product and freight pricing actions with favorable mix providing only a modest benefit.
Gross profit in the quarter declined $18 million as the benefit of increased sales was more than offset by higher manufacturing and transportation costs on a per pound basis.
Double-digit inflation for commodities and transportation costs accounted for almost 90% of the increase in cost per pound.
Of the two, commodities played a bigger role and were again led by edible oils, including canola oil, which nearly doubled versus the prior-year quarter, ingredients such as wheat and starches used to make batter, and other coatings and containerboard and plastic film for packaging.
Freight costs rose, especially for ocean freight and trucking, as global logistics networks continued to struggle.
Our costs also increased due to an unfavorable mix of higher cost trucking versus rail in order to meet service obligations for certain customers.
As Tom mentioned, we also incurred higher cost per pound versus the prior year due to incremental costs and inefficiencies driven by lower production run rates and throughput at our factories which resulted in fewer pounds to cover fixed overhead.
Lost production days and unplanned downtimes were primarily due to labor shortages across our manufacturing network, including COVID-related absenteeism.
While the cost drivers in the first two quarters of the year have been largely consistent, in the second quarter, we began to realize the initial benefits of the pricing and cost-mitigation actions that we discussed during our last earnings call.
As a result of these efforts, gross margin increased sequentially versus the first quarter by 500 basis points to more than 20%.
While pricing actions provided the larger lift to the sequential improvement to gross margins, our production run rates and throughput improved sequentially, primarily due to our efforts to stabilize factory labor.
While still lower than average, labor retention rates improved modestly versus the first quarter and the number of new applicants has been steady.
With more stability, we in turn drove more factory throughput.
Finally, our actions to optimize our portfolio are also providing benefit.
We've eliminated underperforming SKUs to simplify our portfolio and increase throughput in our factories.
We've also successfully partnered with our large customers to secure changes to product specifications to mitigate a portion of the operating impact of the poor quality of this year's potato crop.
In short, while our run rate and cost structure are not yet where we want them to be, we look forward to building on the notable sequential progress that we made in quarter and believe that we've positioned ourselves to manage through this challenging near-term increased cost and poor potato crop environment.
Moving on from cost of sales.
Our SG&A increased $7 million in the quarter, largely due to a couple of factors.
First, it reflects higher labor and benefit costs and higher sales commissions associated with increased sales volumes.
Second, it includes a $2.5 million increase in advertising and promotional expenses as we stepped up support for our retail products.
While these expenses are up compared with the prior year, they are still below pre-pandemic levels.
The increase in SG&A was partially offset by a reduction in consulting expenses associated with improving our commercial and supply chain operations as those consulting projects ended as well fewer expenses in the current quarter related to the design of a new enterprise resource planning system.
We had approximately $2 million of ERP-related expenses in the quarter, which consisted primarily of consulting expenses.
That's down from about $5 million of similar-type expenses in the prior-year quarter.
We're resuming our efforts in the second half of fiscal 2022 to design the next phase of our new ERP system.
Diluted earnings per share in the quarter was $0.22, down $0.44.
About $0.28 of the decline was related to costs associated with the redemption and write-off of previously unamortized debt issuance costs related to the senior notes that were originally issued in connection with our spin-off from ConAgra in November 2016.
We identified these costs as items impacting comparability in our non-GAAP results.
Excluding the impact of these items, adjusted diluted earnings per share was $0.50, which is down $0.16 due to lower income from operations and equity method earnings.
Moving to our segments.
Sales for our global segment were up 9% in the quarter.
price mix was up 5%, reflecting a balance of higher prices charged for freight, pricing actions associated with customer contract renewals and inflation-driven price escalators.
Volume was up 4%.
Higher shipments to large chain restaurant customers in North America drove the volume increase, while logistics constraints temper our international shipments.
Overall, the global segment's total shipments continued to trend above pre-pandemic levels.
Global's product contribution margin, which is gross profit less A&P expenses, declined 13% to $81 million.
Higher manufacturing and distribution cost per pound more than offset the benefit of favorable price mix and higher sales volumes.
Moving to our foodservice segment.
Sales increased 30% with volume up 22% and price mix up 8%.
The ongoing recovery in demand from small and regional restaurant chains and independently owned restaurants as well as from noncommercial customers drove the increase in sales volumes.
The initial benefits of product and freight pricing actions that we began implementing earlier this fiscal year as well favorable mix drove the increase in price mix.
Foodservice's product contribution margin rose 19% to $104 million as favorable price mix and higher sales volumes more than offset higher manufacturing and distribution cost per pound.
Moving to our retail segment.
price mix increased 5%, reflecting the initial benefits of pricing actions in our branded portfolio, higher prices charged for freight and improved mix.
Sales volume declined 4% as an increase in branded product volume was more than offset by lower shipments of private label products, resulting from incremental losses of certain low-margin business.
Retail shipments in the quarter were also tempered by the industrywide supply chain constraints and production disruptions that I discussed earlier.
Retail's product contribution margin declined 29% to $21 million.
Higher manufacturing and distribution cost per pound, a $2 million increase in A&P expenses and lower sales volumes drove the decline.
Moving to our liquidity position and cash flow.
Our liquidity position remained strong.
We ended the first half of fiscal 2022 with almost $625 million of cash and $1 billion of availability on our undrawn revolver.
In the first half, we generated more than $205 million of cash from operations.
That's down about $110 million versus the first half of the prior year due primarily to lower earnings.
During the first half of the year, we spent nearly $150 million in capital expenditures as we continued construction of our chopped and formed expansion in American Falls, Idaho and our new processing lines in American Falls in China.
We continue to put significant effort into managing certain material equipment and labor availability issues to keep our capital projects on track.
In the first half of the year, we returned $145 million to shareholders, including nearly $70 million in dividends and $76 million of share repurchases.
This includes $50 million of share repurchases in the second quarter alone.
Last month, we announced a 4% increase in our quarterly dividend rate, which equates to approximately $144 million annually and a $250 million increase to our current share repurchase plan, reflecting our confidence in the long-term potential of our business.
As a result, we have about $344 million authorized for share repurchases under the updated plan.
As I referenced earlier, during the quarter, we redeemed and issued nearly $1.7 billion of senior notes.
In doing so, our average debt maturity increased from four years to more than seven years and we reduced our annual interest expense by approximately $8.5 million.
We remain committed to our capital allocation priorities.
First, to reinvest in our business both organically and with M&A.
And then to return free cash flow to shareholders through a combination of dividends and share repurchases over time.
Now, turning to our updated outlook.
We continue to expect our full year sales growth in fiscal 2022 to be above our long-term target of low to mid-single digits.
In the third quarter, we anticipate price mix will be up sequentially versus the 6% increase that we delivered in the second quarter as the benefit of previously announced product pricing actions in each of our core segments continues to build.
We expect volume growth in the third quarter will decelerate sequentially versus the 6% we delivered in second quarter as a result of the near-term impact of COVID variants on restaurant traffic and demand, the macro industry supply chain constraints and labor challenges that will continue to affect production run rates and throughput in our factories and global logistics disruptions and container shortages that affect both domestic and export shipments.
We expect further deceleration in the fourth quarter as we begin to lap some of the higher-volume comparisons from the prior year.
With respect to earnings, we continue to expect net income and adjusted EBITDA including joint ventures will be pressured through fiscal 2022 reflecting significantly higher potato costs in the second half of the year, resulting from the poor crop, double-digit inflation for key production inputs and freight and higher SG&A expenses.
For the full year, we expect our gross margin will be 600 to 700 basis points below our pre-pandemic margin rate of 25% to 26%, implying a target range of 18% to 20%.
That's a change from the 17% to 21% range that we provided in our previous outlook.
We narrowed the range for a number of reasons.
First, we're confident about the pace and execution of the product and freight price increases that we are implementing in the market.
Second, we expect to build upon the incremental progress that we made in the second quarter to stabilize our supply chain operations and drive savings behind our cost-mitigation initiatives.
However, we expect that the improvement in our run rate, throughput and costs will continue to be gradual, reflecting the broader macro challenges facing the labor market that will likely persist through fiscal 2022.
And third, we have greater clarity on the net cost impact from this year's exceptionally poor potato crop.
As a reminder, we'll begin to realize the full financial impact of this year's poor potato crop in the third quarter and will continue to realize its effect through most of the second quarter of fiscal 2023.
Below gross margin, we expect our SG&A expenses to step up $100 million to $110 million in the third and fourth quarters as we begin to design the second phase of our new ERP project.
Equity earnings will likely remain pressured due to input cost inflation and higher manufacturing costs, both in Europe and the U.S.
We expect our interest expense to be approximately $110 million, excluding the $53 million of costs associated with the redemption of the senior notes in the second quarter.
We previously estimated interest expense to be approximately $115 million.
Our estimates for total depreciation and amortization expense of approximately $190 million and effective tax rate of approximately 22% and capital expenditures of approximately $450 million remains unchanged.
So in sum, we're seeing the benefit of our pricing actions which drove the sequential improvement in our top line and gross margin in the quarter.
Along with our pricing actions, we're on track with our other cost-mitigation initiatives, positioning us to manage through the impact of the very poor crop.
And finally, for fiscal 2022, we continue to expect net sales growth will be above our long-term target of low to mid-single digits and we have enough clarity in our sales and cost outlook to narrow our previous target gross margin rate.
Now, here's Tom for some closing comments.
Let me just quickly reiterate our thoughts on the quarter by saying we are pleased with our progress in the quarter and we're taking the right steps on pricing actions and in our supply chain operations to navigate through this difficult operating environment.
We are on track to deliver on our targets for the year and we believe we're on a path to get back to pre-pandemic profit levels after we get past the impact of the poor crop in the first half of fiscal 2023 and remain committed to investing support growth and create value for our stakeholders over the long term.

user
q2 adjusted earnings per share $0.50.
q2 earnings per share $0.22.
q2 sales rose 12 percent to $1.007 billion.
sees fy 2022 net sales growth above long-term target range of low-to-mid single digits.

assistant