Q1 2022 Tyson Foods Inc Earnings Call

Speaker 1: Good morning and welcome to the Tyson Foods first quarter 2022 earnings conference call. All participants will be in

Good morning, and welcome to the Tyson Foods first quarter 2022 earnings conference call.

All participants will be in listen only mode.

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Speaker 1: I would now like to turn the conference over to Megan Britt, Vice President of Investor Relations. Please go ahead.

I would now like to turn the conference over to Megan Britt Vice President of Investor Relations. Please go ahead.

Speaker 2: Hello and welcome to the first quarter fiscal 2022 earnings conference call for Tyson Foods.

Hello, and welcome to the first quarter fiscal 2022 earnings conference call for Tyson Foods.

Speaker 2: Prepare remarks today will be provided by Dodding King, President and Chief Executive Officer, and Stuart Glendonning, EVP and Chief Financial Officer. Additionally, David Bray, Group President Poultry, Noel Omara, Group President Prepared Foods, Shane Miller, Group President Freshmeats, and Chris Langholz, Group President International, will join the live Q&A session.

Prepared remarks today will be provided by Donnie King President and Chief Executive Officer, and Stewart, Glendinning, EVP and Chief Financial Officer.

Additionally, David Bray Group, President Poultry Noelle Omara group President prepared foods, Shane Miller group, President fresh meats, and Chris Wang hold scrip President International will join the live Q&A session.

Speaker 2: We have prepared presentation slides to supplement our remarks, and these are available on the Investor Relations section of the Tyson website and through the link to our webcast.

We have prepared presentation slides to supplement our remarks and these are available on the Investor Relations section of the Tyson website and through the link to our webcast.

Speaker 2: During this call, we'll make forward-looking statements regarding our expectations for the future. These statements are subject to risks, uncertainties, and assumptions which may cause actual results to differ materially from our current projection.

During this call we will make forward looking statements regarding our expectations for the future. These statements are subject to risks uncertainties and assumptions, which may cause actual results to differ materially from our current projections.

Speaker 2: Please refer to our four looking statement disclaimers on slide two, as well as our SEC filings for additional information concerning risk factors that could cause our actual results to differ materially from our projections.

Please refer to our forward looking statement disclaimers on slide two as well as our SEC filings for additional information concerning risk factors that could cause our actual results to differ materially from our projections.

Speaker 2: Please note that references to earnings per share, operating income, and operating margin in our remarks are on an adjusted basis unless otherwise noted. For reconciliations of these non-GAAP measures to their corresponding GAAP measures, please refer to our earnings press release. I'll now turn the call

Please note that references to earnings per share operating income and operating margin in our remarks are on an adjusted basis unless otherwise noted.

For reconciliations of these non-GAAP measures to their corresponding GAAP measures. Please refer to our earnings press release, I'll now turn the call over to Dani.

Speaker 3: Thank you, Megan, and thank you to everyone for joining us for the call today. Earlier today, we announced our first quarter physical 2022 results. Tyson Foods once again delivered strong financial results.

Thank you Megan and thank you to everyone for joining us for the call today earlier today, we announced our first quarter physical 2022 results Tyson foods once again delivered strong financial results.

Speaker 3: I would like to start by thanking our team members for their dedication, herculant effort fifth quarter as we manage the complex and dynamic operating environment.

I would like to start by thanking our team members for their dedication herculean efforts this quarter as we managed a complex and dynamic operating environment.

Speaker 3: At our investor day, I shared our plan to grow our top and bottom lines aggressively over the next three years. This meant EPS growth of high single digits relative to a 2019 baseline and volume growth ahead of the market.

At our Investor Day, I shared our plan to grow our top and bottom lines aggressively over the next three years. This meant EPS growth of high single digits relative to a 2019 baseline and volume growth ahead of the market.

Speaker 3: Our results this quarter put us firmly on that path. We achieved double-digit sales and earnings growth, both of which were driven by ongoing demand strength, productivity savings, and improving execution across our segments.

Our results this quarter put us firmly on that path, we achieved double digit sales and earnings growth both of which were driven by ongoing demand strength productivity savings and improving execution across our segments.

Speaker 3: Our diverse protein portfolio, omni-channel capabilities, leading brands, and value-added products contributed to our results.

Our diverse protein portfolio omnichannel capabilities, leading brands and value added products contributed to our results.

Speaker 3: Strong performance in our beef segment, earlier than expected recovery in prepared foods, and improvement in chicken and pork, all supported strong earning results.

<unk> performance in our beef segment earlier than expected recovery in prepared foods and improvement in chicken and pork all supported strong earning results.

Speaker 3: Our retail core business lines, which include our iconic brands, Tyson, Jimmy Dean, Hillshire Farm, and Ballpark, maintain their volume-share position, even as we work through price increases to address inflationary pressure.

Our retail core business lines, which include our iconic brands Tyson, Jimmy Dean he'll shower farm and ballpark maintain their volume share position, even as we work through price increases to address inflationary pressure.

Speaker 3: And our food service focus six product lines grew share year over year in broad line distribution. This growth was driven in large part by value-added chicken, which outperformed industry recovery, and breakfast sausage, where we were seeing improved fill rates. Importantly, and despite the continued impact of COVID-19, our volumes improved slightly across the company relative to the same quarter last year.

And our foodservice focused six product lines grew share year over year and broad line distribution. This growth was driven in large part by value added chicken, which outperform industry recovery and breakfast sausage, where we were seeing improved fill rates importantly, and despite the continued impact of COVID-19.

<unk>, our volumes improved slightly across the company relative to the same quarter last year.

Speaker 3: Chicken was a bright spot where we saw our volumes improve 3.6%.

Chicken was a bright spot, where we saw our volumes improved three 6%.

Speaker 3: While this is a good start, we are not where we want to be on volume. So we're taking actions, segment by segment, to improve our volume performance.

While this is a good start we are not where we want to be on volume. So we're taking actions segment by segment to improve our volume performance.

Speaker 3: These actions include investing in our team members, in additional capacity, and in brands and product innovation.

These actions include investing in our team members and additional capacity and in brands and product innovation.

Speaker 3: As discussed at Investor Day, we're also in the process of building 12 new plants. Each of these is progressing, and each will enable Tyson to address capacity constraints and meet the growing global demand for protein.

As discussed at Investor Day, we're also in the process of building 12, new plants. Each of these is progressing and each will enable tyson to address capacity constraints and meet the growing global demand for protein.

Speaker 3: Bottom line, we're committed to improving our total company volumes during the year.

Bottom line, we're committed to improving our total company volumes during the year.

Speaker 3: We're also making sure that our pricing incorporates inflationary cost pressures on our business. In the quarter, our cost of goods sold was up 18% relative to the same period last year. We're seeing higher costs across our supply chain, including higher input costs such as feed and ingredients. We're also managing higher costs of labor, transportation due to strong demand and limited availability.

We're also making sure that our pricing incorporates inflationary cost pressures on our business in the quarter our cost of goods sold was up 18% relative to the same period last year, we're seeing higher costs across our supply chain, including higher input costs such as feed ingredients.

We're also managing higher cost of labor transportation due to strong demand and limited availability.

Speaker 3: With these higher costs, we work closely with our customers to achieve a fair value for our products. As a result, our average sales price for the quarter increased 19.6% relative to the same period last year. This helped us capture some of the unrecovered costs due to the timing lag between inflation and price.

These higher costs, we worked closely with our customers to achieve a fair value for our products as a result, our average sales price for the quarter increased 19, 6% relative to the same period last year.

This helped us capture some of the unrecovered costs due to the timing lag between inflation and price.

Speaker 3: Finally, our balance sheet and overall liquidity position are strong, providing optionality to pursue strategic growth priorities and invest in growth across our portfolio.

Finally, our balance sheet and overall liquidity position, our strong providing optionality to pursue strategic growth priorities and invest in growth across our portfolio.

Speaker 3: We have a disciplined approach to deploying capital to support capacity expansion while achieving improved returns on invested capital.

We have a disciplined approach to deploying capital to support capacity expansion, while achieving improved returns on invested capital.

Speaker 3: Our first quarter results clearly demonstrate that we are making progress on our growth objectives, that we remain focused on outpacing the overall market, improving operating margins, and driving stronger returns for our shareholders.

Our first quarter results clearly demonstrate that we are making progress on our growth objectives that we remained focused on outpacing the overall market improving operating margins and driving stronger returns for our shareholders.

Speaker 3: While we're growing our business, we are mindful of our corporate responsibilities around environment, social, and governance goals. For example, we committed to investing in and supporting our communities in rural America and around the world. Last year, Tyson Foods donated more than 16 million pounds of protein, the equivalent of 64 million meals, to fight hunger. We're incredibly proud of this work and the people that make it possible.

While we're growing our business, we are mindful of our corporate responsibilities around environment, social and governance goals. For example, we committed to investing in and supporting our communities in Rural America and around the World last year Tyson foods donated more than 16 million pounds of protein the.

Ah 64 million meals to fight hunger, we're incredibly proud of this work and the people that make it possible.

Speaker 3: Tyson is a great company with a great team doing great things. And I'm pleased that this was recognized just last week by Fortune magazine who announced that for the sixth year in a row, Tyson Foods was number one in our sector in their rankings of the world's most admired companies.

Tyson is a great company with a great team doing great things and I'm pleased that this was recognized just last week by Fortune magazine, who announced that for the sixth year in a row Tyson foods was number one in our sector in their rankings of the world's most admired companies.

Speaker 3: Now let's look at a few financial highlights from the first quarter. Our results included double-digit top and bottom line growth. We delivered solid operating income performance up 40% for the quarter. This performance was broad-based across segments where continued strong consumer demand and effective pricing to mitigate the impact of inflation drove higher earnings.

Now, let's look at a few financial highlights from the first quarter. Our results included double digit top and bottom line growth.

We delivered solid operating income performance up 40% for the quarter. This performance was broad based across segments, where continued strong consumer demand and effective pricing to mitigate the impact of inflation drove higher earnings.

Speaker 3: On volume, we are up slightly and while we're working to achieve optimal throughput across our segments, labor challenges are still impacting our volumes and the ability to achieve optimal mix across our network.

On volume, we are up slightly and while we're working to achieve optimal throughput across our segments labor challenges are still impacting our volumes and the ability to achieve optimal mix across our network.

Speaker 3: Compared to pre-pandemic levels, our volume performance is outpacing our peer set. In retail, despite substantial market pressures, core business lines held share in the first quarter, led by strong performance in lunch meat, hot dogs, snacking, and baking.

Compared to pre pandemic levels, our volume performance is outpacing our peer set in retail despite substantial market pressures core business lines he'll share in the first quarter.

Led by strong performance in Lunchmeat, Hotdogs snacking and Bacon.

Speaker 3: We also realized strong e-commerce results with Tyson Foods outpacing total food and beverage growth and our core lines gaining share in the quarter.

We also realized strong e-commerce results with Tyson foods, outpacing total food and beverage growth in our core lines gaining share in the quarter Steve.

Speaker 3: Still, customer demand continues to outpace our ability to supply products, so we have targeted actions in each segment to improve volumes. This is key to delivering on our commitment.

Still customer demand continues to outpace our ability to supply products. So we have targeted actions in each segment to improve volumes. This is key to delivering on our commitments.

Speaker 3: To realize our volume goes, we must be able to foolishstaff our plants across the company.

To realize our volume goals, we must be able to fully staff our plants across the company. We continue to take meaningful action toward becoming the most sought after place to work. For example, we provided our hourly team members with more than $50 million in bonuses. During the first quarter, we are piloting subsidize and onsite.

Speaker 3: We continue to take meaningful action toward becoming the most sought-after place to work. For example, we provided our hourly team members with more than $50 million in bonuses during the first quarter.

Speaker 3: We are piloting subsidized and on-site childcare, and we're adjusting schedules to flex with workforce needs. These actions are bearing fruit, as we see some improvement on the labor front. And while we have seen some labor challenges during the Omicron surge, we are generally seeing lower turnover and absenteeism.

<unk> care and we're adjusting schedules to flex with workforce needs. These actions are bearing fruit as we see some improvement on the labor front and while we have seen some labor challenges during the omicron surge, we are generally seeing lower turnover and absenteeism.

Speaker 3: We saw chicken volumes grow 3.6% in the quarter, driven by strong fundamental demand and improved live production.

We saw chicken volumes grow three 6% in the quarter driven by strong fundamental demand and improved live production.

Speaker 3: What is important to note is that we grew ahead of the market and gained market share.

What is important to note is that we grew ahead of the market and gain market share.

Speaker 3: In prepared foods, volumes were down 2.6% in the first quarter. About half of the decline was related to pet treats, divestible foods, and dairy products.

In prepared foods volumes were down two 6% in the first quarter about half of the decline was related to pet treats divestiture, we expect to sequentially improve these results over the remainder of fiscal year 'twenty two as we take actions to expand and improve capacity utilization.

Speaker 3: We expect to sequentially improve these results over the remainder of fiscal year 22 as we take actions to expand and improve capacity utilization.

Speaker 3: In beef, volumes were down 6.2% driven by labor shortages previously mentioned. In addition, pork congestion has also dampened export volumes in the segment. We expect these headwinds on volume to normalize over the course of fiscal 2022.

And beef volumes were down six 2% driven by labor shortages. Previously mentioned in addition, port congestion has also dep and export volumes in the segment.

We expect these headwinds on volume to normalize over the course of physical 2022.

Speaker 3: and pork, we have sequentially improved our capacity utilization. We are still working to optimize the mix.

And pork, we have sequentially improved our capacity utilization, we are still working to optimize the mix.

Speaker 3: In International Other, while we are starting from a relatively small base, our investment in capacity, innovation, and brands are supporting our market share growth objectives.

And international other well, we're starting from a relatively small base our investment in capacity innovation and brands are supporting our market share growth objective.

Speaker 3: Overall, we expect to grow our total company volumes by 2-3% in FY22, outpacing protein consumption growth.

Overall, we expect to grow our total company volumes by 2% to 3% in FY 'twenty, two outpacing protein consumption growth.

Speaker 3: Chicken remains a top priority, and we continue to execute against our roadmap to achieve an operating income margin of 5 to 7 percent on a run rate basis by mid-physical 2022. I remain confident we will meet this goal. In the first quarter, we have started to see profitability improvement resulting from our action.

Chicken remains a top priority and we continue to execute against our roadmap to achieve an operating income margin of 5% to 7% on a run rate basis by mid fiscal 'twenty. Two I remain confident we will meet this goal.

In the first quarter, we've started to see profitability improvement, resulting from our actions. For example, we're investing aggressively in automation and technology to help us address some of the most hard to fill roles.

Speaker 3: For example, we're investing aggressively in automation and technology to help us address some of the most hard-to-fill roles. This is not a series of projects, but is a well-planned program of automation designed to use common designs and equipment across our plants to optimize cost, maintenance, and asset utilization.

This is not a series of projects, but it is a well planned program with automation designed to use common designs and equipment across our plants to optimize cost maintenance and asset utilization.

Speaker 3: The second imperative is to improve operational performance, and critical to improving performance is maximizing our fixed cost leverage, which means having enough birds to run our plants full.

The second imperative is to improve operational performance and critical to improving performance is maximizing our fixed cost leverage which means having enough for us to run our plants Paul.

Speaker 3: Since September , we've seen an improvement in our hatch rate ahead of our expectations. We continue to expect full recovery in this year.

Since September we've seen an improvement in our hatch rate ahead of our expectations. We continue to expect full recovery in this year.

Speaker 3: We were pleased with our volume growth in the quarter and expect further improvements as we grow our harvest capacity utilization from an average of 37 million head per week in FY21 to 40 million head per week by year end.

We were pleased with our volume growth in the quarter and expect further improvements as we grow our harvest capacity utilization from an average of 37 million head per week in FY 'twenty, one to 40 million head per week by year end.

Speaker 3: We've noted previously that strength in spot prices for commodity chicken products put our buy versus grow program at a relative disadvantage. We have reduced our reliance on outside meat accordingly.

We have noted previously that strength in spot prices for commodity chicken products put our buy versus grow program at a relative disadvantage, we have reduced our reliance on outside meat accordingly.

Speaker 3: We will staff our plants, service our customers, grow our volumes, and be the best in the business. The plan we have continues to be the right plan, and our commitment to winning with our team members, winning with our customers and consumers, and winning with operational excellence is delivering results.

We will staff our plants service, our customers grow our volumes and be the best in the business. The plan. We have continues to be the right plan and our commitment to winning with our team members, winning with our customers and consumers and winning with operational excellence is delivering results.

Speaker 3: Last year, we announced the launch of a new productivity program designed to drive a better, faster, and more agile organization that is supported by a culture of continuous improvement and faster decision-making.

Last year, we announced the launch of a new productivity program designed to drive a better faster and more agile organization that is supported by a culture of continuous improvement and faster decision making.

Speaker 3: The program aims to deliver $1 billion in recurring productivity savings by the end of fiscal 2024 relative to a fiscal 2021 cost baseline and has three critical focus areas, which are operational and functional excellence, digital solutions, and automation.

Program aims to deliver $1 billion in recurring productivity savings by the end of fiscal 'twenty four relative to fiscal 2021 cost baseline and has three critical focus areas, which are operational and functional excellence digital solutions and automation were.

Speaker 3: We're making some good progress on this front. I spoke just a minute ago about our investments in automation, but we've also attacked other issues.

We're making some good progress on this front I spoke just a minute ago about our investments in automation, but we've also attacked other issues.

Speaker 3: In Prepared Foods, we're making use of supply chain digitization and advanced analytics. Our digital manufacturing platform allows us to analyze real-time data to take actions to optimize process conditions that drive better yields, lower costs, consistent quality, and increase

In prepared foods, we're making use of supply chain Digitization and advanced analytics, our digital manufacturing platform allows us to analyze real time data to take actions to optimize process conditions that drive better yields and lower costs consistent quality and increased output.

Speaker 3: In transportation and logistics, we have established ongoing optimization of the mix and allocation of our private fleet, dedicated fleet, and third-party fleet, mitigating inflationary pressures and supporting better on-time deliveries to our customers.

In transportation and logistics, we have established one going optimization of the mix and allocation of our private fleet dedicated fleet and third party fleet mitigating inflationary pressures and supporting better on time deliveries to our customers. In addition, we continued the expansion of our direct shipment program.

Speaker 3: In addition, we continue the expansion of our direct shipment program, reducing miles driven and product touches in our supply chain.

Reducing miles driven and product touches in our supply chain.

Speaker 3: As a result of projects like these, we're on track to deliver $300 to $400 million of savings in fiscal 2022.

As a result of projects like these we're on track to deliver $300 million to $400 million of savings in fiscal 2022 .

Speaker 3: We shared at our Investor Day that we are taking actions to accelerate our growth and drive disciplined return on invested capital.

We shared at our Investor day that we're taking actions to accelerate our growth and drive disciplined return on invested capital.

Speaker 3: The five imperatives on this slide show how we will achieve our commitments and drive value creation.

Five imperatives on this slide show, how we will achieve our commitments and drive value creation.

Speaker 3: This starts first with our commitment to our team members, with a focus on ensuring their health, safety, and well-being, as well as ensuring an inclusive and equitable work environment. We are proud of our COVID-19 vaccine policy implemented last year in the U.S., and of the broader investments that we have made to keep our team members, their families, and our communities safe.

This starts first with our commitment to our team members with a focus on ensuring their health safety and wellbeing as well as ensuring an inclusive and equitable work environment.

We are proud of our COVID-19 vaccine policy implemented last year in the U S.

And of the broader investments we have made to keep our team members their families and our communities safe.

Speaker 3: Because of our policy, our team members are better protected and the cases we do see have been mild or asymptomatic, resulting in an extremely low number of hospitalizations. We are strongly encouraging boosters and are hosting clinics to make it easier for our team members and their families to get boosters.

Because of our policy our team members are better protected and the cases, we do see have been mild or asymptomatic, resulting in an extremely low number of hospitalizations, we're strongly encouraging boosters and our hosting clinics to make it easier for our team members and their families to get boosted.

Speaker 3: Second, we're working to enhance our portfolio and capacity to better address demand. This includes increasing the contribution of branded and value-added sales. As a result, we expect our volume to outpace this growing market. Third, we are aggressively restoring competitiveness in our chicken segment. This starts by returning our operating margin to the five to 7% level by the middle of fiscal 2022.

Second we are working to enhance our portfolio and capacity to better address demand. This includes increasing the contribution of branded and value added sales as a result, we expect our volume to outpace this growing market.

Third we are aggressively restoring competitiveness in our chicken segment. This starts by returning our operating margin to the 5% to 7% level by the middle of fiscal 2022 .

Speaker 3: Fourth, we're driving operational and functional excellence and investing in digital and automation initiatives. This is at the heart of our new productivity program. We're working diligently to drive out waste, minimize bureaucracy, and enhance decision-making speed across the organization.

Fourth we're driving operational and functional excellence in investing in digital and automation initiatives. This is at the heart of our new productivity program, we're working diligently to drive out waste minimize bureaucracy and enhanced decision, making speed across the organization.

Speaker 3: Fifth, to address projected demand growth over the next decade, we are using our financial strength to invest in our business.

Yeah to address projected demand growth over the next decade, we are using our financial strength to invest in our business.

Speaker 3: On capital alone, we're expected to invest $2 billion in fiscal year 22 with a disproportionate share focused on new capacity and automation objectives.

On capital alone, we're expected to invest $2 billion in fiscal year 'twenty, two with a disproportionate share focused on new capacity and automation objectives.

Speaker 3: and we continue to return cash to shareholders. During the quarter, we returned over $500 million in dividends and share repurchases.

And we continue return cash to shareholders during the quarter, we returned over $500 million in dividends and share repurchases.

Speaker 3: To wrap it up, we are committed to winning with our team members, customers, and consumers, as well as winning with operational excellence.

To wrap it up we are committed to winning with our team members customers and consumers as well as winning with operational excellence I'm more excited about the future Tyson foods with each passing day.

Speaker 3: I am more excited about the future of Tyson Foods with each passing day, and I will now turn the call over to Stuart to walk us through our financial results in detail.

And I will now turn the call over to Stuart to walk us through our financial results in detail.

Speaker 4: Thank you, Donny. Let me turn first to a summary of our total company financial results. We're pleased to report a strong overall start to the year. Our sales were up approximately 24% in the first quarter, largely a function of our pricing initiatives to offset inflation repression.

Thank you Donnie let me turn first to a summary of our total company financial results. We're pleased to report a strong overall start to the year.

Our sales were up approximately 24% in the first quarter, largely a function of our pricing initiatives to offset any inflationary pressures.

Speaker 4: Volumes were also up slightly, although impacted by continued labor challenges.

Williams will also up slightly.

Although impacted by continued labor challenges.

Speaker 4: Looking at our sales results by channel, retail drove almost $350 million of top-line improvements versus last year.

Looking at our sales results by channel retail drove almost $350 million topline improvements versus last year.

Speaker 4: Improvements in sales through the food service channel drove an increase of $1 billion, and our export sales were nearly $333 million stronger than the prior year period as we leveraged our global scale to grow our business.

Improvements in sales through the foodservice channel drove an increase of $1 billion in our export sales were nearly $333 million stronger than the prior year period, as we leveraged our global scale to club.

Business.

Speaker 4: First quarter operating income of $1.4 billion was up 40% relative to the same quarter last year due to increased earnings in beef, pork, and chicken.

First quarter operating income of $1 4 billion was up 40% relative to the same quarter last year due to increased earnings in beef pork and chicken.

Speaker 4: Driven by the strength in operating income, first quarter earnings per share grew 48% to $2.87.

Driven by the strength in operating income first quarter earnings per share grew 48% to $2 87.

Speaker 4: Higher operating income led to higher adjusted earnings per share compared to the same period last year.

Higher operating income led to higher adjusted earnings per share compared to the same period last year.

Speaker 4: First quarter EPS also benefited from lower net interest expense in taxes.

First quarter EPS also benefited from lower net interest expense and taxes.

Slide 10 bridges year to date operating income, which was $407 million higher than fiscal 2021.

Speaker 4: Volumes were up slightly during the year, primarily a result of improvement in chicken, pork, and international other, offset by declines in beef and prepared food.

Volumes were up slightly during the year, primarily a result of improvement in chicken pork and international other offset by declines in beef and prepared foods.

Speaker 4: Climbs in decent prepared foods were largely due to continued labor challenges in those segments.

Declines in beef and prepared foods are largely due to continued labor challenges in those segments.

Speaker 4: Our pricing actions led to approximately $2.1 billion in sales and price-mix benefits during the quarter, which offset the higher cost of goods sold of $1.6 billion.

Our pricing actions led to approximately $2 $1 billion in sales and price mix benefit during the quarter, which offset the higher cost of goods sold of $1 6 billion.

Speaker 4: We saw continued inflation across the business, in some instances up 20 to 30 percent.

We saw continued inflation across the business in some instances up 20% to 30%.

Speaker 4: Notable examples were labor, grain costs, live cattle and hog costs, and freight costs.

Notable examples where labor grain costs live cattle and hog costs and freight costs.

Speaker 4: And finally, SG&A was $88 million unfavorable to the same period last year, which was largely a result of cycling a $55 million benefit recorded last year for the recovery of cattle.

And finally, SG&A was $88 million unfavorable to the same period last year, which was largely a result of cycling a $55 million benefit recorded last year for the recovery of capital.

Moving to the beef segment.

Speaker 4: Segment sales were more than $5 billion for the quarter, up 25% versus the same period last year.

Segment sales were more than $5 billion for the quarter up 25% versus the same period last year.

Speaker 4: Sales growth was driven by continued strong demand for beef products, which has supported higher average sales price.

Sales growth was driven by continued strong demand for beef products, which has supported higher average sales price.

Speaker 4: Partially offsetting higher sales prices were higher capital costs during the first quarter versus the comparable prior year period.

Partially offsetting higher sales prices were higher capital costs during the first quarter versus the comparable prior year period.

Speaker 4: We had sufficient livestock available in the quarter, driven by strong front-end supply.

We had sufficient livestock available in the quarter driven by strong front end supplies, we have good visibility into cattle availability through fiscal year 2022, and continue to expect it will also be sufficient to support our customer needs.

Speaker 4: We have good visibility into cattle availability through fiscal year 2022, and continue to expect it will also be sufficient to support our customer needs.

Speaker 4: It delivered segment operating income of $956 million, up 81% versus the prior comparable period.

We delivered segment operating income of $956 million up 81% versus the prior comparable period.

Speaker 4: This improvement was driven by strong global demand for beef products and a higher cutout, which were partially offset by higher operating.

The improvement was driven by strong global demand for beef products and a higher cut out.

Which were partially offset by higher operating costs.

Speaker 4: Our operating margin of 19.1% was notably higher than the same quarter last year, but was down on a sequential basis versus the last two quarters as cost increases led to a narrowing of the spread. Now let's move on to the

Our operating margin of 19, 1% and was notably higher than the same quarter last year, but was down on a sequential basis. That's just the last two quarters as cost increases led to a narrowing of the spread.

Now, let's move on to the pork segment on slide 12.

Speaker 4: Fragment sales were over $1.6 billion for the quarter, up 13% versus the same period last year.

Segment sales were about $1 $6 billion for the quarter up 13% versus the same period last year.

Speaker 4: Key sales drivers for the segment included higher average sales price due to strong demand and increased hog costs, partially offset by a challenge

Key sales drivers for the segment included higher average sales price due to strong demand and increased hog costs.

Partially offset by a challenging labor environment.

Speaker 4: Average sales price increased 12.8% and volumes were slightly higher relative to the same period last year.

Average sales price increased 12, 8% and volumes were slightly higher relative to the same period last year.

Speaker 4: Segment operating income was $164 million for the quarter, up 41% versus the comparable period.

Segment operating income was $164 million for the quarter up 41% versus the comparable period of the.

Speaker 4: Overall, operating margins for the segment improved to 10.1% for the course.

They're all operating margins for the segment improved to 10, 1% for the quarter.

Speaker 4: The operating income improvement was driven by higher spreads in the business.

Operating income improvement was driven by higher spreads in the business.

Speaker 4: Moving now to prepared foods. Sales were $2.3 billion for the quarter, up 10% relative to the same period last year.

Moving now to prepared foods sales with $2 3 billion for the quarter up 10% relative to the same period last year.

Speaker 4: Total volume was down in the quarter, which strengthened the retail channel and continued recovery in food service, more than offset by labor and supply chain challenges.

Total volume was down in the quarter with strength in the retail channel and continued recovery in foodservice more than offset by labor and supply chain challenges.

Speaker 4: sales growth outpaced volume growth driven by inflation justified price

Sales growth outpaced volume growth driven by inflation justified pricing.

Speaker 4: During the quarter, Retail Corp business minds maintained shares driven by consumer demand for our brands and continued strong execution by our peers.

During the quarter retail core business lines maintained share driven by consumer demand for our brands and continued strong execution by our team.

Speaker 4: Operating margins for the segment were 8% or $186 million for the first quarter.

Operating margins for the segment were 8% or $186 million for the first quarter.

Speaker 4: The decline in segment operating margins versus the same quarter last year was driven by significant increases in raw material and other input costs that we were not able to fully recover through price during the quarter.

The decline in segment operating margins versus the same quarter last year was driven by significant increases in raw material and other input costs that we were not able to fully recover through price during the quarter.

Speaker 4: Raw material costs, logistics, ingredients, packaging, and labor have increased our cost of production.

Raw material costs logistics ingredients packaging and labor have increased our cost of production.

Speaker 4: Our pricing lagged inflation, but we expect to recover cost increases during fiscal 2022.

Our pricing lagged inflation, but we expect to recover cost increases during fiscal 2022.

Speaker 4: In addition to pricing, we've executed productivity, revenue management, and commercial spend optimization initiatives.

In addition to pricing, we've executed productivity revenue management and commercial spend optimization initiatives, while ensuring the continued development of brand equity through marketing and trade support.

Speaker 4: while ensuring the continued development of brand equity through marketing and trade support.

Speaker 4: Moving into the chicken segment results, sales were $3.9 billion for the quarter, up 37%.

Moving into the chicken segment's results sales were $3 9 billion for the quarter up 77%.

Speaker 4: volumes improved 3.6% in the quarter due to strong consumer demand and increased live production.

Volumes improved three 6% in the quarter due to strong consumer demand and increased <unk> production.

Speaker 4: Our teams have been focused on streamlining our plants to deliver higher volumes, and we expect to deliver substantial volume improvements in fiscal 2022 as hatch recovers, and we continue to look for ways to operate our plant more efficiently.

Our teams have been focused on streamlining our plants to deliver higher volumes and we expect to deliver substantial volume improvements in fiscal 2020 to attach recovers and we continue to look for ways to operate more efficiently.

Speaker 4: Average sales price improved around 20% in the first quarter compared to the same period last year.

Average sales price improved around 20% in the first quarter compared to the same period last year.

Speaker 4: This increase is due to favorable product mix and price recovery to offset cost inflation.

This increase is due to favorable product mix and price recovery to offset cost inflation.

Speaker 4: With pricing, we made tremendous progress toward driving our pricing mechanisms toward more variable structures.

On pricing, we made tremendous progress toward driving our pricing mechanisms towards more variable structures and are now seeing those benefits.

Speaker 4: restructured our pricing strategy given our experience in fiscal 2021 to ensure that we have the flexibility to better respond to market and inflationary conditions.

We restructured our pricing strategy given our experience in fiscal 2021 to ensure that we have the flexibility to better respond to market an inflationary conditions.

Speaker 4: Chicken delivered adjusted operating income of $117 million in the first quarter of fiscal 2022. We are presenting an operating margin of $117 million.

Chicken delivered adjusted operating income of $117 million in the first quarter of fiscal 2022.

Presenting an operating margin of 3%.

Speaker 4: Operating income in the quarter was negatively impacted by $185 million of higher feed ingredient costs.

Operating income in the quarter was negatively impacted by a $185 million of higher feed ingredient costs.

Now turning to slide 15.

Speaker 4: As part of our capital allocation approach, we focus on building financial strength, investing in our business, and returning to business.

As part of our capital allocation approach, we focused on building financial strength investing in our business and returning cash to shareholders.

Speaker 4: In pursuit of our priority to build financial strength and flexibility, we used improved earnings to retire debt in fiscal year 2021 and expect to do the same this year.

Shoot about priority to build financial strength and flexibility we used improved earnings to retire debt in fiscal year 2021, and expect to do the same this year.

Speaker 4: Continued strength in our earnings this quarter have further improved our leverage ratio to 1.1 times net debt to adjusted EBITDA.

Continued strength in our earnings this quarter has further improved our leverage ratio to one one times net debt to adjusted EBITDA.

Speaker 4: Investing in our business for both organic and inorganic growth will continue to be an important priority and will help Tyson increase production capacity and market capability.

Investing in our business for both organic and inorganic growth will continue to be an important priority and will help Tyson increased production capacity and market capabilities.

Speaker 4: This will support strong return generation for our shareholders.

This will support strong return generation for our shareholders.

Speaker 4: Finally, as our track record has demonstrated, we are committed to returning cash to shareholders through both dividends and share buybacks.

Finally, as our track record has demonstrated we are committed to returning cash to shareholders through both dividends and share buybacks.

Speaker 4: We finished the quarter with a powerful balance sheet and continued capital allocation optionality.

We finished the quarter with a powerful balance sheet and continued capital allocation optionality.

Let's now discuss the fiscal 'twenty two financial outlook.

Speaker 4: We are maintaining our total company sales guidance of $49 to $51 billion, although we expect to perform at the upper end of the range.

Maintaining our total company sales guidance of $49 billion to $51 billion, although we expect to perform at the upper end of the range.

Speaker 4: In support of our sales growth, we still expect a 2% to 3% volume growth on a year-over-year basis as we work to optimize our existing footprint and run our plants full.

In support of our sales growth, we still expect a 2% to 3% volume growth on a year over year basis, as we work to optimize our existing footprint and run our plants full.

Speaker 4: Looking at AOI margin target ranges for our segments, in chicken, our operational turnaround is working and we still expect to achieve a run rate profitability of 5% to 7% by the middle of the year.

Looking at NOI margin target ranges for our segments.

Chicken our operational turnaround is working and we still expect to achieve run rate profitability of 5% to 7% by the middle of the year.

Speaker 4: We expect foliar margins that also fall between 5 to 7%.

We expect full year margins that also fall between 5% to 7%.

Speaker 4: Prepared foods is expected to deliver margins during fiscal 22 of between 7 and 9 percent.

Okay Foods is expected to deliver margins during fiscal 'twenty two of between seven and 9%.

Speaker 4: Based on our first quarter performance, we now expect the full year margin performance in prepared foods to be at the upper end of the range.

Based on our first quarter performance, we now expect the full year margin performance in prepared foods to be at the upper end of the range.

Speaker 4: In beef, we're maintaining our AOI margin at 9% to 11%, though we expect to perform at the upper end of the range.

Indeed, we're maintaining our margin at 9% to 11% that.

We expect to perform at the upper end of the range.

Speaker 4: Also, we expect the front half of the year to be meaningfully stronger than the back half as industry and labor conditions are expected to normalize partway through the year.

Also we expect the front half of the year to be meaningfully stronger than the back half as industry and labor conditions are expected to normalize partway through the year.

Speaker 4: In pork, we expect similar performance during fiscal 22 to what we accomplished during fiscal 21, equating to a margin of between 5 and 7 percent.

And Paul can we expect similar performance during fiscal 'twenty two to what we accomplished during fiscal 'twenty one.

To a margin of between five and 7%.

Speaker 4: As is normal seasonality for pork, we expect the first quarter to be the strongest.

As is normal seasonality for pork, we expect the first quarter to be the strongest.

Speaker 4: In international other, we expect margins of 2% to 3% as capacity expansions and strong global demands support volume growth and improved profitability.

And international although we expect margins of 2% to 3% is capacity expansions and strong global demand supported by.

<unk> growth and improved profitability.

Speaker 4: Consistent with our expectation for a meaningful increase in CapEx spending to pursue a healthy pipeline of projects with strong return profiles, we anticipate CapEx spending of approximately $2 billion during fiscal 2022.

Consistent with our expectation for a meaningful increase in capex spending to pursue a healthy pipeline of projects with strong return profiles, we anticipate capex spending of approximately $2 billion during fiscal 2022.

Speaker 4: We now expect lower net interest expense due to lower anticipated average debt balances during the fiscal year.

We now expect lower net interest expense due to lower anticipated average debt balances during the fiscal year.

Speaker 4: Our expectations for productivity savings and tax rate changes remain unchanged.

Our expectations for productivity savings and tax rate changes remain unchanged.

Speaker 4: Net leverage is expected to remain well below two times net debt to adjusted EBITDA, providing optionality for inorganic investment and additional return of cash to shareholders over the course of the year.

Our net leverage is expected to remain well below two times net debt to adjusted EBITDA, providing optionality for inorganic investment and additional return of cash to shareholders over the course of yet.

In summary, we've had a strong start to the fiscal year.

Speaker 4: We have a great team, growing demand for our products, strong portfolio diversity, and the differentiated asset footprint needed to win in the market.

We have a great team growing demand for our products strong portfolio diversity, and the differentiated asset footprint needed to win in the marketplace.

Speaker 5: We set out ambitious goals that are invest today, and we expect to achieve them.

We set out ambitious goals at our Investor day, and we expect to achieve them.

Speaker 5: I'll now turn the call back over to Megan for Q&A instructions. Megan?

I'll now turn the call back over to Meghan for Q&A instructions again.

Speaker 2: Thanks, Stuart. We'll now move to your questions. Please recall that our cautions on forward-looking statements and non- GAAP measures apply to both our prepared remarks and the following Q&A. Operator, please provide the Q&A instructions.

Thanks, Stuart will now move to your question. Please recall that our caution on forward looking statements and non-GAAP measures apply to both our prepared remarks and the following Q&A operator, please provide the Q&A instruction.

Speaker 1: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone.

We will now begin the question and answer session.

To ask a question you May Press Star then one on your Touchtone phone.

Speaker 1: If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press the button.

If youre using a speakerphone please pick up your handset before pressing the key.

To withdraw your question. Please press Star then two.

Speaker 2: Please limit yourself to one question and one follow-up. If you have further questions, you may re-enter the question queue.

Please limit yourself to one question and one follow up.

You have further questions you may reenter the question queue.

Speaker 1: At this time, we will pause momentarily to assemble the roster.

At this time, we will pause momentarily to assemble the roster.

There's no question.

Speaker 1: And our first question will come from Adam Samuelson of Goldman Sachs. Please go ahead. Yes, thanks.

And our first question will come from Adam Samuelson of Goldman Sachs. Please go ahead.

Yes, Thank you and good morning, everyone.

Okay.

Speaker 6: Good morning, Adam. Good morning, Anne. Hi. So, I guess my first question is maybe taking...

Good morning, Good morning, Jim.

Hi, So I guess my first question, just maybe taking the quarter any kind of updated kind of view of fiscal 'twenty to kind of broadly can you help us frame kind of the areas, where the margin expectations for the year have maybe incrementally each inched up on a point estimate basis and some of the <unk>.

Speaker 6: the quarter and the kind of updated kind of view of fiscal 22 kind of broadly, can you help us frame kind of the areas?

Speaker 7: where the margin expectations for the year have maybe incrementally inched up on a point estimate basis and some of the drivers. Is that really reflecting the strong fiscal first quarter? Is that a more constructive view of pricing and price-cost balance over the balance of the year? Just help us think about how your outlook has evolved relative to when you gave it an issue.

<unk> is that really reflecting a strong fiscal first quarter or is that a more constructive view of pricing and price cost balance over the balance of the year just help us think about how your outlook has evolved relative to when you gave.

David initially in November .

Speaker 3: Okay. Good morning and welcome, Adam and everyone. Well, let me start off with and tell you that we really got off to a good start in Q1. And there are a number of factors with Q1 and what we saw in Q1 and our optimism as we look to the balance of the year.

Okay. Good morning, and welcome Adam and everyone well, let me start off with I would tell you that we really got off to a good start in Q1.

And there are a number of factors.

With Q1, and what we saw in Q1.

Our optimism as we look through the balance of the year.

Speaker 3: We've adjusted a number of pricing mechanisms to be more variable in nature. We've seen price elasticity, for example, in prepared foods be less or lower than what they have historically been, which is exciting there. We've been able to maintain volume in this inflationary environment. Inflation, as we see it, will continue, is continuing to move up.

We've adjusted a number of pricing mechanisms to be more variable in nature. We've seen price elasticity is for example in prepared foods.

Less or lower than what they have historically been.

Which is exciting there we've been able to maintain volume in this inflationary environment.

Inflation as we see it we will continue is continuing to move up.

Speaker 3: We're really excited about our productivity program relative to, you know, to the whole company. We're anticipating 3, 400M dollars and we're on track through Q1 relative to that.

We're really excited about our productivity program relative.

To the whole company, we're anticipating $3 million to $400 million and.

We're on track through Q1 relative to that.

Speaker 3: You know, just doing what we do better, and we talk about becoming a more agile, faster decision-making organization.

Just doing what we do better and we talk about becoming a more agile faster decision making organization.

Speaker 3: Essentially, that's all about process and being better, faster, and making decisions that with greater speed and at lower levels within the organization. But because of our vaccination position, we've now moved past the surge of the Omicron spike, as we call it, which.

Essentially thats all about process and.

Being better faster and making decisions that with greater speed and at lower levels within the organization, but because of our.

Our vaccination position.

We've now moved past the surge of.

The omicron Spike as we call it which.

Speaker 3: occurred predominantly in the first three weeks of January and we're back to normal levels.

Occurred predominantly in the first three weeks of January and we're back to normal levels. We think our vaccine mandate served us well and in making that commitment.

Speaker 3: We think our vaccine mandate served us well and making that commitment and.

Speaker 3: Really, making our team members health and safety and their families and communities are highest priority has served us through the new variant. We've seen better absenteeism and turnover throughout the.

Really making our team members health and safety and their families and communities. Our highest priority has served us through the new variant.

We've seen better absenteeism and turnover throughout.

Speaker 3: the organization. We think labor will be.

The organization.

Thank labor will be.

Speaker 3: Availability much greater in the balance of the year, and we certainly have capacities coming online with head and harvest and check in and further processing capabilities value added capabilities and prepared and chicken.

Available will be much greater in the balance of the year and we certainly have capacity coming online with head and harvest in chicken and further processing capabilities value added capabilities and prepared and chicken and.

Speaker 3: And we've got labor going back into beef and pork plants. And we'll be able to improve those mixes as well as increase the harvest capacity.

We've got labor going back into beef and pork plants, and we will be able to improve those mixes.

Well as as well as increased harvest capacity.

Speaker 6: All right, all right, that color is really helpful. And if I could just do a quick follow-up.

Alright, alright that color is really helpful and I guess, just as a quick follow up.

Speaker 7: On capital allocation, you stepped up the buyback in the fiscal first quarter. It was something that was notably absent from the kind of multi-year view at the Analyst Day in December , and I was wondering if you could just help us think, Stuart, maybe just cadence on buyback going forward. Should we think about it being more routable, more opportunistic? You certainly have the balance sheet capacity to make it more routable, but I'm just trying to think about how to bring that expectation going.

On capital allocation, you stepped up the buyback in the fiscal first quarter.

It's something that was notably absent from that kind of multiyear view at the analyst day in December and I was wondering if you can just help us think Stuart maybe just cadence on buybacks going forward is it should we think about it being more ratable more opportunistic just you guys certainly have the balance sheet capacity to make it more ratable, but I'm just trying to think about how to frame that.

Expectation going forward.

Speaker 5: Yeah, look, thanks for that, Adam. You know, when you go back to investor day, we were really focused on being able to point to the strong growth story that sits in front of our Tyson future. And part of that was a pretty significant allocation of increased capital to CapEx spending and various capacity expansion. So it wasn't intentional to leave, you know, to leave

Yeah look thanks for that Adam.

If you go back to Investor Day, we were really focused on being able to point to the strong growth story that sits in front of our types in the future.

And part of that was a pretty significant allocation of increased capital to capex spending in various capacity expansions so wasn't intentionally leave.

To leave.

Speaker 5: stock buyback to the end. But stock buybacks have been prioritized in history and they will be in the future. The one thing we've said is that we do look each year to try to buy back the dilution. And after that, it'll be more opportunistic.

Stock buyback to the in stock buybacks have been tyson's history, and they will be in the future. The one thing. We've said is that we do look each year to try to buyback.

Dilution and after that.

It'll be more opportunistic.

But growth has been a focus for our company.

Speaker 6: All right. That's all very helpful. I'll pass it on.

Okay, Alright, that's all that's all very helpful. I'll pass it on thank you.

Thank you.

Speaker 7: The next question comes from Peter Galbo of Bank of America. Please go ahead. Hey, guys. Good morning.

The next question comes from Peter Galbo of Bank of America. Please go ahead.

Hey, guys. Good morning, Thanks for taking the question.

Peter Good morning.

Speaker 8: I guess, first question for Donnie, and I believe David's on the line as well. You know, Donnie, you've spoken in the past, and it's been helpful, just on how, you know, buy versus grow gets put at a disadvantage, particularly when spot prices move. You know, you've made some strides to lower kind of outside meat purchases here on a sequential basis. But just, you know, in the month of January , with where spot prices kind of moved, how should we think about that impact on chicken and on the overall turnaround, maybe just in the short term here?

I guess first question for Dhani and I believe David on the line as well Johnny you've spoken in the past and it's been helpful. Just on how.

Buy versus grow gets put at a disadvantage, particularly when spot prices move.

You've made some strides to lower kind of that type meat purchases here on a sequential basis, but just.

The month of January with where spot prices kind of moves how should we think about that impact on chicken and on the overall turnaround maybe just in the in the short term here.

Speaker 3: Okay, Peter, I'll tell you, I'll start and then I will let David make a few comments. But, you know, over the last year or so, you know, we've been.

Okay, Peter I'll tell you I'll start and then I will.

David It's Mike.

A few comments, but yes.

Over the last year or so.

Ben.

Speaker 3: You know, the recovery for our chicken business has been a priority, specifically as it relates to buy versus grow.

The recovery.

For our chicken business has been a priority specifically as it relates to buy versus grow.

Speaker 3: The fact of the matter is, we became too dependent on the buy portion of the model. And we forgot to grow chickens, which hurt us from a capacity utilization perspective. And those additional pounds flowing through our business.

Facts of the matter is we became too dependent on the bi portion of the of the model and and we forgot to grow chickens, which hurt us from a capacity utilization perspective, and those additional pounds flowing through our business really impact impacted our fixed cost leverage so we tilted.

Speaker 3: really impact impacted our fixed cost leverage. So we tilted too far on the buy portion of this and over the last year as we have

Too far on the bi portion of this and over the last year as we are.

Speaker 3: I've been building the braiding stock and getting past the hatch issue that we talked about so much last year.

Then building the breeding stock and getting past the hatch issue that we've talked about so much last year.

Speaker 3: We're now in a better position to get more head through our processing and harvest facilities and which will give us more breast meat at a much more attractive

We're now in a better position to get more head through our processing and harvest facilities, and which will give us more breast meat at a much more attractive.

Price point.

Speaker 9: Versus the buy in the marketplace right now. We have not totally abandoned the buy portion and do not anticipate Totally abandon that but there's a smaller percentage of our overall needs that we will go to the market to secure But we're on plan with what we intended to do And with that David why don't you add? Yeah, I think I think Peter again. Thank you for the question I think one way to also look at this is we will buy outside me to the extent that it's the right financial decision

Versus the buy in the marketplace right now we have not totally abandon the bi portion and do not anticipate totally abandoned that but.

There is a smaller percentage of our overall needs that we will go to the market to secure but we're on plan with what we intended to do.

And with that David why don't you answer yes.

I think Peter again, thank you for the question I think one way to also look at this is we will buy outside of meat to the extent that it's the right financial decision from our standpoint, we will continue to manage against what is right is whether buy versus grow generally outside meat purchases are going to be used to supplement what we're doing when it's the right financial decision.

Speaker 9: From our standpoint, we will continue to manage against what is right is whether buy versus grow, but generally outside meat purchases are going to be used to supplement what we're doing when it's the right.

Speaker 9: And as Donny stated, volume is critical and it's one of the big levers of what we are going to accomplish in FY22 to grow the animals ourselves and to process it, and that will make us much more...

And as well as Don stated volume is critical and it's one of the big levers of what we are going to accomplish in FY 'twenty two.

To grow the animals ourselves into process, it and that will make us much more efficient.

Speaker 8: got it. Okay. And, and, you know, in both your comments, prepare remarks and stewards, you know, you both commented on restructuring the pricing strategy to be more variable in nature, particularly in chicken. I'm just curious, you know, what percentage of that business now is tied to, you know, more of the spot market versus kind of where you would have been historically? I think that would be just helpful for us as we think about, you know, how to think about the new business going not just by workshop's ASC in terms of going forward. Thanks.

Got it okay.

In both your comments prepared remarks, and stewards you both commented on restructuring the pricing strategy to be more variable in nature, particularly in chicken.

Just curious.

What percentage of that business now is tied to <unk>.

More of the spot market versus kind of where you had been historically I think that would be.

Just helpful for us as we think about how do they put the new business going forward. Thanks.

Speaker 9: Yeah, so I would say within chicken specifically, I would tell you we have restructured our pricing approach and that's really in large part thanks to our commercial organization as well as the great customer relationships that we have across both our retail food service network.

So I would tell you within chicken, specifically I would tell you we have restructured our pricing approach and that's really in large part thanks to our commercial organization as well as the great customer relationships that we have across both our retail foodservice networks I would tell you today, we are significantly more variable pricing versus fixed and again, we're not even.

Speaker 9: I would tell you today we are significantly more variable pricing versus fixed, and again, we're not even utilizing fixed within our conversations. Every contractor program that we have is either tied to grain, tied to market value, and we will continue to use that. Pricing was up significantly in chicken in the Q1 time frame of over 20%, and a large part of that was because of the variable pricing.

Fixed within our within our conversations every contractor program that we have is either tied to grain tied to market value and we will continue to use that pricing was up significantly in chicken in the Q1 timeframe of over 20% and a large part of that was because of the variable programs that we put in place.

Yes.

Speaker 10: The next question comes from Ken Goldman of J.P. Morgan. Please go ahead. Hi. Thank you.

Our next question comes from Ken Goldman of Jpmorgan. Please go ahead.

Hi, Thank you so much.

Speaker 11: I wanted to ask, you know, it's obviously extremely early and this could lead to nothing, but there have been a couple cases of avian influenza, obviously not in the poultry industry. I'm just curious, are you seeing anything, are you doing anything on your part to take extra precautions against this? You know, I think you're probably one of the most...

I wanted to ask you know, it's obviously extremely early and this could lead to nothing but theres been a couple cases of avian influenza obviously not in the in the poultry industry. I'm. Just curious are you seeing anything are you doing anything on your part.

To take extra precautions against those I think you probably one of the most.

Speaker 11: you know, up to speed companies in the world in terms of already taking those precautions. So maybe you're already there. Just trying to get a sense of, you know, what you see the industry doing and if there's been a lot of changes since the last time bird flu came around.

Well up to speed companies in the world in terms of already taken those precautions. So maybe you're already there I'm just trying to get a sense of what you see the industry doing on if theres been a lot of changes since the last home hopefully came around.

Speaker 9: Yeah, absolutely. King. Good morning. Thank you. And yes, the USDA has reported that this high path variant has only been found in the wild bird population. And it's really been within the East Coast of the United States. I would tell you more specifically to what Tyson is doing versus what industry doing is, but we have a very robust biosecurity measures in place across all of our.

Yes, absolutely Ken good morning, Thank you and yes. The USDA has reported that this high Pat variant has only been found in the wild bird population and it's really been within the east coast of the United States I would tell you more specifically to what Tyson is doing versus what industry doing this but we have a very robust bio security measures in place across all of our facilities and that <unk>.

Speaker 9: And that includes testing every flock for avian influenza. In addition, at Tyson, we have heightened our biosecurity measures in all of our facilities on the East Coast. Some of those things that we've done are we're reducing the number of trips that we're taking to farms. We're actually taking extra time and doing more cleaning of our vehicles that do go to the farms. But we are ahead of this and have been watching it very closely.

<unk> testing every flock avian influenza. In addition had Tyson we have ink heightened our bio security measures in all of our facilities on the east coast. Some of those things that we've done or we're reducing number of trips that were taking to farms were actually taking extra time in doing more cleaning of our vehicles.

Do you go to the farms, but we are ahead of this and have been watching it very closely.

Speaker 3: I would add this, that we are, we have in our biosecurity programs, we have green, which is just normal business, yellow, orange and red, which are progressive on the East Coast. As David mentioned, we are in the orange category at this point. So a lot of attention and a lot of watching. I saw the case over the weekend in Florida, which I think now is five states, which we have seen.

I would add this that we are we have in our bio security programs.

Have green, which is just normal business yellow orange and Red which are progressing on the east coast as David mentioned, we are in the Orange.

Category at this point so.

A lot of attention and a lot of watching us all the case over the weekend in Florida, which I think now has five states, which we have.

I've seen.

Influenza.

Speaker 11: Okay, thank you for that. That is helpful. And then I wanted to also ask, you had

Okay. Thank you for that.

Is helpful and then.

I wanted to also ask you had.

Speaker 11: You obviously still have a plant-based alternative business, not obviously the biggest part of your business at this point, but it was a little bit of an initiative for you a couple of years ago and still mentioned from time to time.

You, obviously still have a plant based alternative business, obviously, the biggest part of your business at this point, but it was a little bit of a new initiative for you a couple of years ago, and still mentioned from time to time.

Speaker 11: We've heard some of your competitors and peers out there talk about how demand has slowed.

We've heard some of your competitors and peers out there talk about how demand has slowed.

Speaker 11: for that part of the business. And I'm just curious what your take is on the industry in general. How much of, you know, has your optimism waned at all for that? Just want to get a sense for how you see that current balance between animal-based and alternative-based meat.

That part of the business and I'm just curious what your take is on on the industry in general how much has your optimism waned at all for that I just wanted to get a sense for how you see that current balance between animal based and alternative based meat.

Speaker 3: Sure. Well, I mean, we're still in the plant-based protein business. We still like it. The consumer demand continues to be good. We've seen a lot more growth on the, domestically, in food service than retail of late. But across retail and food service, we continue to see growth.

Sure.

I mean, we're still in the plant based protein business.

We still like it the consumer demand continues to be good.

Seeing a lot more growth on the <unk>.

Domestically in Foodservice then.

And retail of late but.

Across retail and foodservice, we continue to see growth now that's off a very small base as you might imagine, but we're continuing to see growth but for us.

Speaker 3: Now that's off a very small base, as you might imagine, but we're continuing to see growth. But for us, you know, with our presence outside the United States, in Europe and China,

With our presence outside the United States, and Europe and China.

Speaker 3: And also, in Southeast Asia, we also have plant-based products in those markets that are doing really, really well also.

And also in Southeast Asia.

We also have plant based products in those markets that are doing really really well also so we're still excited about the plant based business and.

Speaker 3: So, we're still excited about the plant based business and.

Speaker 3: And when consumers prefer that, you know, we want to have the opportunity to be able to provide that for them and are currently and are growing. And let me ask Noelle if there's anything she'd like.

When consumers prefer that.

We want to have the opportunity to be able to provide that for them and are currently and are growing.

Noel if there's anything that you'd like to add to that.

Speaker 2: Sure, just as a build, we want to be leaders across all the proteins that consumers seek, and we know that consumer interest in adoption is growing in this space, and we'll continue to be guided by the consumer needs and the opportunities. And you see the recent Rooted products that we've launched domestically, we continue to have opportunities internationally, and we'll continue to ensure that we are participating with consumer interest in adoption growth.

Sure and just as a builder, we want to be leaders across all of the fifteens that consumers seek and we know that consumer interest and adoption is currently in this space and we will continue to be guided by the consumer needs and the opportunities.

The recent really products that we've launched domestically we continue to have opportunities internationally.

And we will continue to ensure that we are participating with consumer interest and adoption growth.

Thank you so much.

Thank you.

Speaker 10: The next question comes from Ben Therer of Barclays. Please go ahead.

Our next question comes from Ben Theurer of Barclays. Please go ahead.

Speaker 12: Hi, good morning. This is Antonio Hernández on behalf of the Ecuador. My question is your guidance prepares food and you basically performed in line with guidance during this last quarter. But it remains below the long-term target of 10 to 12%. How do you see the potential and the purpose to further pass on pricing to recover margins within this year and also next fiscal year?

Hi, good morning, producing something to her language probably be helpful going forward.

A question for Joe.

You then should keep performing in line with guidance.

Last quarter, but each remains below the long term target of authentic person.

How do you see a potential of the peripheral stool, who will close on pricing to recover margins.

These year next fiscal year. Thanks.

Speaker 1: Hi, so I can give you a bit of context to what we're currently seeing. So demand continues to be strong across both retail and food service, driven by our strong equities in our diverse portfolio. And as you said, we're pleased with the market performance that we're seeing, despite the price increases, which is really due to the strength of our brands and the strong partnership and relationships that we've built with our customers.

Hi.

I can I can give you a bit.

Context to what we're currently seeing as the demand continues to be strong across both retail and foodservice driven by our strong equities and our diverse portfolio and as you said, we're pleased with the market performance that were seeing despite the price increases which is really due to the strength of our brands and a strong partnership and relationships that we've built with our customers.

Speaker 1: Elasticity has been less than the historical models that, you know, Donnie has mentioned, but it's clearly something that we're watching closely. And so we're constantly reviewing our pricing and revenue management strategies as the landscape changes. We'll continue to take thoughtful approaches.

Elasticity has been less than the historical models that Danny has mentioned, but it is clearly something that we're watching closely and so we're constantly.

We've been reviewing our pricing and revenue management strategies as the landscape changes continue to take thoughtful approaches on those critical levers as you also heard in the comments, we're taking significant actions to transform our cost base and are creating good momentum there.

Speaker 1: on those critical lovers. As you also heard in the comments, we're taking significant actions to transform our cost base.

Speaker 13: And we're creating good momentum there, and so you know, on the year we continue to feel good about the 7 to 9% range that we've given, and we believe we have the right building blocks in place on our path to deliver sustainable double digit margin.

So on the year, we continue to feel good about the 7% to 9% range that we've given and we believe we have the right building blocks in place on our path to deliver sustainable double digit margins.

Okay perfect. Thanks, a lot.

Thank you.

Okay.

Speaker 14: The next question comes from Tenzazlo of Bank of Montreal. Please go ahead. Thank you, morning guys.

The next question comes from Ken Zaslow of Bank of Montreal. Please go ahead.

Hey, good morning, guys good.

Good morning.

Speaker 15: Just two questions. One is automation. Can you talk about the progress and what anecdotal evidence you've seen, how much has been actually done, and is it changing your yields? Just some framework to the automation story would be helpful.

Just two questions. One is automation can you talk about the progress in what.

Anecdotal evidence you've seen how much has been done and is it changing your yields just some framework to the automation story would be helpful.

Speaker 3: Well, automation is, I've talked about it in a great deal. In our productivity program, I talked about at investor day that we anticipate over the next three years that that be worth about $450 million.

While automation automation as I've talked about it.

Right deal over in our productivity program I talked about at Investor day that we anticipate over the next three years that would be worth about $450 million.

Speaker 3: So we're spending significant amounts of capital on that. Stuart talked about in his opening remarks about the $2 billion of CapEx for capacity, but a great deal of the money is being spent is on automation and technology.

So we are spending significant amounts of capital on that Stuart talked about in his opening remarks about the $2 billion of capex for capacity, but.

A great deal of the money is being spent is on automation and technology.

Speaker 3: we are deploying. I would tell you in our Q1, we are on track. We had a number of different projects and and we've moved from a

We are deploying.

I'd tell you in our Q1, we are on track.

Had a number of different projects.

And we've moved from.

Speaker 3: have really moved from a project to project to more of a programmatic approach where we attack common themes across.

They've really moved from a project the project to more of a programmatic approach.

We attacked common things across.

Speaker 3: our production footprints, for example. Could be deboning across all chicken, could be like palletizing, for example, and automation that's available there across the entire enterprise, material handling type things, but all of these are, in terms of priority, are the more difficult, harder to staff.

Our production footprint for example, it could be demoing across all chicken could be.

Like Palletize Ing for example in automation that's available there across the entire enterprise.

Material handling type things, but.

All of these are.

In terms of priority are the more difficult harder to staff.

Speaker 3: jobs. And so I would tell you in short, we are on track. We will deliver $300 to $400 million in productivity savings. And some of that is coming from the automation piece.

Jobs, and so I would tell you in short we are on track, we will deliver $3 million to $400 million in productivity savings.

And some of that is.

It is coming from the automation piece.

Speaker 3: To the best of my knowledge, we've not disclosed how much is coming from each sector, but we're moving as quickly as humanly possible, as quickly as the supply chain will allow us to get new pieces of equipment and so forth.

The best of my knowledge, we've not disclosed how much is coming from each sector, but we're moving as quickly as humanly possible. It quickly.

As the supply chain will allow us to get new pieces of equipment.

And so forth.

Great Mike.

Speaker 15: My second question is on hatchability. We haven't really seen it in the data, on the publicly data, but you're saying that you're moving faster than you've expected on the hatchability. Can you talk about what...

Question is on hatch ability, we haven't really seen it in the data on the publicly stated, but youre, saying that you are moving faster than you expected on the house your ability can you talk about what.

Speaker 15: you're actually seeing in your operation and when you think it'll actually translate to the numbers and the publicly available data and just kind of give us a little bit of what you've actually done to move that hatchability up to where you are actually ahead of schedule. And I appreciate it.

Youre actually seeing in your operation and when do you think it will actually.

Translate to the numbers in the publicly available data.

Just kind of given us a little bit of what you've actually done to move that helps your ability up to where you are actually ahead of schedule.

Yes.

Speaker 9: Absolutely, Ken, thank you. And I think first and foremost, we do need to state that we are ahead of what we had expected from a Q1 standpoint related to our overall hatch. I also share with you that, and again, this is everything specific to Tyson, and I really I won't speak to and cannot speak to what's happening.

Absolutely Ken Thank you and I think first and foremost we do need to state that we are ahead of what we had expected from it from a Q1 standpoint related to our overall hedge I will also share with you that and again. This is everything specific to Tyson and I can't really I wont speak to and cannot speak to what's happening within the industry well understand we entered FY 'twenty two with a growth mindset and we really.

Speaker 9: But we understand we entered FY22 with a growth mindset. We really demonstrated that within Q1 where we were our vines.

That was in Q1, where we grew our volumes three 6% as we enter 'twenty. One I can tell you we are up and exits we are up in both chicks placed as well as overall breeder production. Our plan is to continue to grow like we did for the balance in Q1 for the balance of 'twenty two.

Speaker 9: As we enter 21, I can tell you we are up in egg sets, we are up in both chicks placed, as well as overall breeder production. Our plan is to continue to grow like we did in Q1 for the balance.

Speaker 3: I would add this piece of context to that, Ken, that in 22, we have this, we've, where we intersect in publicly.

<unk> is a critical component to that I would add this piece of.

Context to that Tim that in 'twenty, two we have.

<unk>.

We've.

Where we intersect and publicly.

Speaker 3: benchmark data. We have crossed that line with competitors, the industry at large with our hatch.

Benchmark data, we have cross that line with competitors the industry at large with our hedge.

That's great. Thank you very much.

Speaker 16: The next question comes from Ben, the Anvenue of Stevens. Please go ahead. Hey, thanks and good morning everybody.

The next question comes from Ben <unk> of.

Steven Please go ahead.

Hey, Thanks, and good morning, everybody.

Good morning.

Speaker 16: So I want to ask, in your presentation that you issued concurrent with the results this morning, you noted on the pork business that there's a continued opportunity around mix. I'd hope that you could elaborate a little bit on that, and then also, the extent that you think about that as a component of your chicken business, I know, you know, repricing contract.

I wanted to ask in your.

The presentation that you issued concurrent with the results. This morning, you noted on the pork business that there's continued opportunity around mix I would hope that you can elaborate a little bit on that and then also to the extent that.

You think about that as a component of your chicken business I know repricing contracts.

Speaker 16: Hatchability and plant productivity are all kind of the highlight items associated with improving that...

<unk> ability and plant productivity are all kind of the.

The highlight items associated with improving that business.

Speaker 16: Where does Mix stand in the opportunity to margin up?

Or does mix stand and the opportunity to margin up the chicken business.

Speaker 3: Okay, let me start broadly and then I will let Shane speak a few details around pork and there are similarities with that. But for example, in the pork business, labor availability in pork and chicken, it's been the single biggest challenge that we've had over the last two years in the pandemic. Capacity utilization has been better in pork than it has been in chicken.

Okay. Let me, let me start broadly and then I will let Shane speak.

Few details around pork and there are similarities with the butt.

But for example in the Port business.

Labor availability in pork and chicken has been the single biggest challenge that we've had over the last two years and depends Amy.

Capacity utilization has been better.

In pork than it has been in chicken.

Speaker 3: Labor and capacity utilization is continuing. It has been good in pork and continues to get better. The thing that has hurt us to some degree on both pork and chicken is mixed or capturing some things like jib harvest in the.

Labor and capacity utilization is.

Continuing has been good and working continues to get better the thing that has hurt us to some degree.

On both pork and chicken is.

Is mix are capturing some things like <unk>.

<unk> harvest in.

Speaker 3: in chicken or paws or similar specialty products in pork. We've just not been able to fully optimize that. For example, in pork, maybe the inability to debone a ham versus selling, you know, a whole ham, and those are the type things. But as we enter 22 in both businesses,

In chicken paws are similar specialty.

Products in <unk>.

We've just not been able to fully optimize that for example in <unk>.

Pork, maybe the inability to debone at ham versus selling.

Whole Ham.

And those are the type things, but.

As we enter 2002 in both businesses.

Speaker 17: You know, we're in a much better position in terms of labor improving, and we still have some ways to go, but we see improving mix and capacity utilization across all businesses. And I'll let Shane speak to some, maybe do a few more things in court. Yeah, thanks, Donnie. And you hit on most of it there, but I think the other thing to add to this too is.

We are in much better position in terms of labor, improving and we still have some ways to go but we see improving mix and capacity utilization across all businesses and then I'll, let Shane speak maybe do a few more things.

Yes.

Thanks, Donnie and.

You hit on most of it there, but I think the other thing to add to this too is as we think globally here.

Speaker 17: As we think globally here, you know, Typhoon is a global company.

Tyson is a global global company in.

Speaker 17: We're servicing a lot of companies and countries across the globe, and the key to this is being able to balance that with our domestic business.

We're servicing a lot of.

Companies and countries across across the globe and the key is to this is being able to balance that with our domestic business and looking at what we have from a throughput and labor perspective, So labor has been a challenge.

Speaker 17: and looking at what we have from a throughput and labor perspective. So labor has been a challenge, but we're getting the animals through the facility, but it's the further processing we're doing on the back end of the plant that's been a bit of a challenge.

The animals, who the facility, but the further processing, we're doing on the backend of the plant that's been a bit of a challenge so staying focused on optimizing our labor usage maximizing throughput and contribution when we look at it on a labor per man hour basis has been the key.

Speaker 17: Staying focused on optimizing our labor usage and maximizing throughput and contribution.

Speaker 17: When we look at it on a labor per man our basis has been the key.

Speaker 16: And then my second question is related to export demand. You called out in the presentation as well around beef that Port congestion and labor shortages impacted the business.

Okay. That's great. Thanks, and then my second question is related to export demand you called out in the presentation as well around beef that port congestion and labor shortages.

Impacted the business.

Speaker 16: export demand has been exceptionally strong for beef in particular. I'm curious your outlook for this year for continued export demand and then for chicken.

Export demand has been exceptionally strong for beef in particular.

Im curious.

The outlook for this year for continued export demand and then for chicken.

Speaker 16: You know, I know that there's a mix challenges that perhaps lay weight on leg quarters domestically, but with this very strong crude backdrop, I would think that would also benefit export demand for domestic leg quarters. So can you talk a little bit about exports and your outlook for that across all the businesses?

I know that there is a mix challenges that perhaps late weighed on leg quarters.

Particularly but with this very strong crude backdrop I would think that would also benefit export demand for domestic light quarter. So can you talk a little bit about exports and your outlook for that across all the businesses for the balance of the year.

Speaker 17: Yeah, so I'll take the beef question. So the U.S. is a leader in global beef production, and it's centered around our superior taste and quality.

Yes, so I'll take the beef question. So the U S. As a leader in global beef production and it's centered around our superior taste and quality.

Speaker 17: And the producers that we're partnering with in this country are doing a phenomenal job of bringing quality to the marketplace.

And the producers that we're partnering with in this country are doing a phenomenal job of bringing quality to the marketplace.

Speaker 17: So global consumers are increasingly preferring U.S. produced beef and we're seeing stronger global demand as a result of that.

So global consumers are increasingly preferring us produce beef and we're seeing stronger global demand as a result of that.

Speaker 17: Port congestion on the West Coast, as you mentioned, has been an issue, and it's impacting not only the short-term international demand, but also fulfillment on orders that have taken prior to this. And that's really what we've been focused on, is implementing strategies and options to not only diversify shipping ports, but also to mitigate our risk as we go forward. But we continue to see very good interest coming out of Asia, especially for our high-quality yielding beef.

Port congestion on the West Coast as you mentioned has been an issue and it's impacting not only the short term international demand, but also fulfillment on orders that are taken prior to this and that's really what we've been focused on is implementing strategies and options to not only diversify shipping ports, but also to mitigate our risk as we go forward, but we.

Continuing to see very good interest coming out of Asia, especially for our high quality yield and beef.

Speaker 17: And a good example around that is China. China has become the number three destination for U.S. beef. And Tyson has a competitive advantage with not only our direct business, but our international business unit that we have in country there in China. So significant resources in country, a lot of customers demanding beef, and we feel real good about 2022 and going forward.

And that's a good example around that is China, China has become the number three destination for USB and Tyson has a competitive advantage with not only our direct business, but our international business unit that we have in.

In country, there in China, So significant resources in country, a lot of customers demanding base and we feel real good about 2022 and going forward.

Speaker 9: Then I have your question, Relic, if it's what we're seeing within poultry. I'm very similar to this comments that Shane was making with the demand remains extremely strong. And I would say that it's really not a demand and price are really not the issue. We're dealing with the same poor congestion in the poultry organization, but that really underscores the need for us as an organization to make sure that we are upgrading our mix and to utilize those in the mess.

Did I answer your question relative to what we're seeing within poultry and very similar to the comments that Shane was making that the demand remains extremely strong and I would tell you that it's really not a demand and price are really not the issue we're.

We're dealing with the same port.

Congestion.

In the poultry organization, but that really underscores the need for us as an organization to make sure that we are upgrading our mix and to utilize those in domestic use.

Speaker 9: A lot of work being done right now relative to leg quarters and cutting those into drums and thighs and using them within alternate channels so that the mass...

Other work being done right now relative to linked quarters, and kindness and addresses the dyes and using them within alternate channels domestically, we are targeting both deli and foodservice for some of those opportunities.

Speaker 9: We are targeting both Delhi and Food Service for some of those up.

Speaker 3: Let me add one comment to this that I try to remind everyone. In addition to all the things that both Shane and David have said, I would remind us of the One Tyson approach, which is our international business unit that we have.

Let me add one comment to this.

I try to remind everyone.

In addition to all the things that both chain and David have set I would remind us of the one Tyson approach, which is our international business unit that we have.

Speaker 3: in China, and with leg quarters and pork and beef products and prepared foods products as well. When we export those commodity-based products outside the United States, in many cases today, or in most cases today, we take them in and further process them.

In China, and with select quarters in pork and beef products and prepared foods product as well when we export those commodity based products outside the United States. In many cases today are in most cases today, we take them in and further process.

Speaker 3: chicken leg quarters and like into value added branded products into China in an approach we call one Tyson and then we're able to sell it and capture an additional margin on top of all that, eliminating a number of...

Chicken leg quarters.

And the like into value added branded products into China, and an approach we call one Tyson and then we're able to sell it and capturing additional margin on top of all of that eliminating a number of.

Speaker 3: of activities and hands touched in the middle of the process.

The activities in hands touched in the middle of the process. So I'll leave it at that.

Speaker 16: Thanks so much for taking my questions and congratulations on a great start to the year.

Awesome. Thanks, so much for taking my questions and congratulations on a great start to the year.

Alright. Thank you thanks, Ben Thanks.

Speaker 10: The next question comes from Rob Moskow of Credit Suisse. Please go ahead.

Our next question comes from Rob Moskow of Credit Suisse. Please go ahead.

Speaker 17: I have a couple of questions, one I think easy to answer and maybe one that's not so easy. So I'll start with the first. You talked about being able to get fair value for transportation surcharges.

Hi.

A couple of questions.

One I think easy to answer and maybe one that's not so easy so I'll start with the first.

You talked about being able to get fair value for transportation surcharges.

Speaker 17: uh... a lot of your branded food peers can't seem to recoup those charges so why is yours different is it easier in fresh meat than it is in branded foods to charge the customer for that uh... for that surcharge and then I'll I'll wait and ask another question

Out of your branded food peers can't seem to recoup those charges. So why is your is different is it easier in fresh meat than it is in branded foods to charge the customer for that.

That surcharge and then I'll I'll wait to ask another one.

Speaker 3: Okay, let me start with that one. Let me start with simply saying that break costs are up 32% for us.

Okay, Let me, let me start with that one.

Let me start with simply saying that freight costs were up 32% for <unk>.

Speaker 3: I talked about some of the technology we use to in my opening remarks, where we would intersect between our privately, contract, flea, outside carriers, and try to optimize how we do that. And we've seen a lot of success. It took a lot of the inflation having so rapidly, it took a bit to get on top of that. But thus far, we have been successful in being able to get the...

I talked about some of the technology, we use to in my opening remarks.

Where we would intersect between our private fleet contract fleet outside carriers.

Try to.

To optimize.

How we do that and we've seen a lot. We've had a lot of success. It took a lot of the inflation happened. So rapidly it took a bit to get on top of that but.

But thus far we have been successful in.

Being able to get the.

Speaker 3: transportation and we've asked our customers to pay us for that and pay us for freight and we've been successful in doing so.

The transportation and.

We've asked our customers to pay us for that and pay us for freight.

We've been successful in doing so.

Speaker 3: I show it to you. Go ahead.

So is it.

Go ahead.

<unk> is not able to do that.

Speaker 17: Is it easier in one part of the business than it is in another part of the business? Like easier and easier and fresh and not too easy and branded?

Is it easier in one part of the business than it is in that other part of the business like easier and.

Easier infraction, not so easy and branded.

Speaker 3: Not, you know, as I look around the room and, you know, from all those leading the businesses, I don't think if you're a branded portfolio versus a more commodity-oriented business, I don't think that really matters. What we've tried to do with our customers is say freight is freight. And the price of the product is the price of the product. And we don't, we try not to blend the two.

Not.

As I look around the room.

From.

All of those leading the businesses I don't think.

Your branded portfolio versus a more commodity oriented business I don't think that really matters. What we've tried to do with our customers. It's a great that's great.

The price of the product is priced product and we don't we try not to blend the two.

Speaker 3: And so I don't, I wouldn't say one is any easier than the other, but I think the fact matter is what are, despite being up 32%, that's what it costs to get the product moved and delivered to a customer and we're asking our customers to pay.

And so I don't I wouldn't say one is any easier than the other.

But I think the fact the matter is what that is.

Freight being up 32%, that's what it cost to get the product moves and delivered to a customer and we're asking our customers to pay for that.

Speaker 17: Okay, yeah, I was gonna say, this is Shane. The only thing I'd add on to that is.

Yes, okay.

Yes, I was going to say this is Shane and the only thing I'd add on to that is.

Speaker 17: If you think of it regionally, to there's certain markets that are a little more difficult to shift into versus others. So you have to think about fat calls and what your cost mechanisms going to be to recover that, too. So that would be the only other component I'd add on to what Donnie's.

If you think of it regionally to there are certain markets that are little more difficult to shift into versus others. So you've got to think about backhaul and <unk>, which are cost mechanism is going to be to recover that too. So that would be the only only other component I'd add onto what Donny said.

Okay, great Here's a second question.

Speaker 7: Okay, great. Here's the second question. The industry has been dealing with a labor shortage for a long time. It's unclear when it's gonna get better. In the past, I remember hearing that Tyson and others have found pockets of international immigrants, communities to source, to improve their labor utilization in certain facilities.

The industry has been dealing with a labor shortage for a long time, it's unclear when it's going to get better in the past I remember hearing that Tyson and others have found pockets of international immigrants.

Our communities to two source too.

Improved their labor utilization in certain facilities.

Speaker 17: Is your access to international immigrants compromised in the current environment more so than it has in the past?

Is that is your access to international immigrants compromised in the current environment more so than it has in the past.

Speaker 17: And is there something that the industry can do to gain access to more people from international locations in a legal fashion?

And is there something that the industry can do to gain access to more people from international locations and our legal fashion.

Speaker 3: But you're right, labor has been a challenge for a bit now. You know, we, uh,

Well Youre right Labor has has been a challenge for a bit now.

We are.

Speaker 3: You know, we looked at this in terms of trying to solve for Tyson.

We looked at this in terms of.

Trying to solve for Tyson.

Speaker 3: And our approach has been to try to create a better place for people to work, a better work experience with less turnover and less absenteeism with, you know, just keeping team members safe. You know, in our first quarter, you know, we paid $50 million in bonuses to our team members for no reason other than to say, thank you for choosing Tyson, thank you for being

And our approach has been to try to create.

Better place for people to work a better work experience with less turnover in <unk>.

Yes absenteeism.

Just keeping team members safe.

And our first quarter.

We paid $50 million in bonuses to our team members for no reason other than to say thank you for choosing Tyson. Thank you for being on our team.

Speaker 3: And, you know, we've had to do a number of things, like piloting child care and subsidized child care, on-site clinics. And we've also are investing with our strong balance sheet heavily in terms of automation.

And we've had to do a number of things like piloting childcare.

Today's childcare onsite clinics.

And we've also are investing with our strong balance sheet heavily in terms of automation.

Speaker 3: to take away some of those more difficult jobs. Now, our workforce to be.

Take away some of those more difficult jobs now our workforce to be to be.

Speaker 3: Clear is made up of a number of different immigrants and people from all over the world and different nationalities. And so we've benefited through the years like many others have of having such a diverse work.

Clear.

<unk> is made up of a new.

Number of different.

Immigrants and people from all over the world in different Nash.

Nationalities.

And so we've been.

We benefited through the years like many others have having such a diverse workforce and so we continue to pursue those things like Afghan refugees.

Speaker 3: And so, you know, we continue to pursue those things like Afghan refugees, you know, we tried to be available with and working with the government in terms of

We've tried to be available with and working with the government in terms of.

Speaker 3: having a bailability and we've worked with communities in terms of trying to build or to find housing to support that to make it easier. I mean we're doing all kinds of things along that line to be able to make it easy to do business with Tyson. Easy to go to work for Tyson and do it all the right way.

Having availability and we've worked with communities in terms of trying to build our defined housing to <unk>.

Support that to make it easier.

We're doing all kinds of things along that line to be able to make it easy to do business with Tyson easy to go to work for Tyson and do it all of the right way.

And.

Speaker 3: And so that's been our approach. I know of no magic or no pool of people anywhere that we are targeting to try to take care of the labor situation. We're trying to solve it by doing a number of things to make this a better place to work.

And so that's been our approach.

No magic.

No pool of people anywhere that.

We are targeting to try to take care of the labor situation, we're trying to solve it.

Doing a number of things to make this a better place to work.

Got it hey, thank you very much.

Speaker 10: The next question comes from Michael Lavery of Piper Sandler. Please go ahead.

The next question comes from Michael Lavery Piper Sandler. Please go ahead.

Good morning, Thank you.

Good morning, Michael.

Speaker 18: You touched on elasticity a little bit, and I realize they've held up quite well. We've heard that from a lot of companies.

You touched on elasticity is a little bit and I realize they've held up.

Quite well, we've heard from a lot of companies but.

Speaker 18: Just curious how you think about some of your assumptions for that going forward, and especially just with pricing up as strongly as it is. That's a few multiples of what wage growth looks like. So just curious what your planning assumptions are for how that unfolds over the rest of the year, and maybe a little bit color by segment if you can.

Just curious how you think about some of your assumptions for that going forward, and especially just with pricing up as strongly as it is.

That's a few multiples of what wage growth looks like so just curious what your planning assumptions are for how that unfolds over the rest of the year, maybe a little bit color by segment. If you can.

Would you like to start with that.

Speaker 13: Sure. So, you know, as I mentioned, we're constantly reviewing pricing in revenue management strategies and

Sure.

As I mentioned, we're constantly reviewing pricing and revenue management strategies.

Speaker 13: You know, it is a dynamic environment, and as the environment continues to evolve, we'll be very thoughtful.

It is a dynamic environment and as the environment continues to evolve we'll be very thoughtful about our approach is.

Speaker 13: about our approaches. Pricing is just one of the levers in our toolkit. We look at productivity and cost opportunities and other levers to ensure that we have all the pieces coming together to best grow our brands and business continuity and profitability. Maybe the other aspects that I would point to is that we have a broad and diverse portfolio with a range of prices.

Pricing is just one of the levers in our spill kit.

We look at productivity and cost opportunities in other elaborate to ensure that.

We have all the pieces coming together to best to grow our brands and business continuity and profitability and so maybe the other aspects that I would point to is that we have a broad and diverse portfolio with a range of price points to ensure that we have offerings that meet a variety of consumer needs and price pack architecture.

Speaker 13: to ensure that we have offerings that meet a variety of consumer needs and price tech architecture also becomes critical in these inflationary times and you see that focus for us across the business.

Also becomes critical in these inflationary times and you see that focus for us across the business.

Speaker 3: Yeah, I would add this to what Noelle said. We have seen a lot of inflation, but I would remind you the cost of food in the U.S., while it is higher, is still very attractive relative to the balance of the.

Yes, I would add this.

What Noel said, we have seen a lot of inflation, but I would remind you the cost of food in the U S. While it is higher is still very attractive relative to the balance of the of the world.

Speaker 3: You know, labor costs have been up 20%, cattle costs have been up 22%, grain's been up 29% this year, and freight, I mentioned earlier, is up 32%. We're not asking customers or the consumer ultimately to pay for our inefficiencies.

Labor costs have been up 20% cattle costs had been or up 22% grain has been up 29%. This year and freight I mentioned earlier is up 32%.

Not asking customers or the consumer ultimately to pay for our inefficiencies.

Speaker 3: We're asking them to pay for inflation and the rest of what we do is we try to find ways to be more productive, to lower cost and increase throughput.

We're asking them to pay for inflation.

The rest of what we do is we try to find ways to be more productive to lower costs and increased throughput.

Speaker 3: and so forth, and we feel good about our ability to do a lot of that while serving our country.

And so forth and we feel good about our ability to do a lot of that well serving our customers.

Speaker 18: The inflation headwinds are obviously clear and certainly a driver of the pricing, but just maybe back to some of your assumptions on the elasticities. Maybe at a very high level, do you assume they revert to more normal levels or that they can hold at sort of what we're seeing currently?

The inflation headwinds are obviously clear and then certainly a driver of the pricing, but just maybe just back to some of your assumptions on elasticities, maybe at a very high level do you assume they revert to more normal levels or that they can hold at sort of what we're seeing currently.

Speaker 3: You know, they are where they are right now. And I know that's not a very good answer. I mean, there's a, there's a price point where, where it could be an impact.

Yes.

They are where they are right now and I know thats not a very a very good answer I mean, there is a there is a price point where.

Where it could be impactful, but at Tyson.

Speaker 3: But at Tyson, we play across the spectrum from the most value added, of value added products to the most commodity products. And...

We play across the spectrum from the most value added or value added products to the most commodity of commodity products.

Speaker 3: We meet the consumer wherever they are on the value chain. And so we intend to continue to grow our business and serve those consumers wherever they are.

We meet the consumer wherever they are on the value chain.

So we intend to continue to grow our business and serve those consumers.

Wherever they are.

Speaker 18: Okay, great. And I just want to follow up on the chicken pricing and understand some of the flexibility that you've implemented, and maybe just understand if it's meant to allow for more upside or if it drives more volatility. Is it flexible in both directions, or does it have any sort of floors that just mostly allow for easier entry?

Okay, Great and I just wanted to follow up on the chicken pricing.

And I understand some of the flexibility that you've implemented and maybe just understand if it's meant to allow for more upside or if it drives more volatility as it.

<unk> in both directions or does it have any sort of floors.

Just mostly allow for easier increases.

Speaker 19: Absolutely, thank you very much. And again, there's flexibility both going up and there's flexibility going down. Our partners in both retail and food service understand what those metrics are. And we will go up and we will go down. Based off of that, we put our programs together. But the biggest piece of it is the fact that it is much more variable today than it has been at any point in time.

Absolutely and thank you very much and again.

There is flexibility both going up and there is flexibility going down our partners in both retail and foodservice understand what those metrics are.

And we will we will go up and we will go down based off of how we put our programs together, but the biggest piece of it is the fact that it is much more variable today than it has been at any point in time.

Okay, great. Thanks, so much.

Thank you.

Speaker 14: This concludes our question and answer session. I would like to turn the conference back over to Mr. Donnie King, President and CEO , for any closing remarks.

This concludes our question and answer session I would like to turn the conference back over to Mr. Donnie King President and CEO for any closing remarks.

Speaker 3: Thank you, Andrew, and thanks again for your interest in tights and foods. We look forward to speaking in things.

Thank you Andrea and thanks again for your interest in Tyson Foods, we look forward to speaking again soon.

Yeah.

The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.

Speaker 10: conference is now concluded. Thank you for attending today's presentation and you may now disconnect.

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