Q2 2024 Tyson Foods Inc Earnings Call
Good day and welcome to <unk>.
Tyson Foods second quarter, 'twenty 'twenty four earnings conference call.
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I would now like to turn the conference over to Sean Cornett Investor Relations. Please go ahead.
Sean T. Cornett: Good morning, and welcome to Tyson Foods fiscal second quarter 2024 earnings Conference call.
Sean T. Cornett: On today's call.
Sean T. Cornett: President and Chief Executive Officer, Donnie King Chief Financial Officer, John Our Tyson will provide some prepared remarks, followed by Q&A.
Additionally, joining us today are Brady Stuart group, President beef, pork and chief supply chain officer.
Sean T. Cornett: Not only Baldwin President prepared food Chief growth Officer.
Sean T. Cornett: Morris group, President in poultry and Amy to President International.
Sean T. Cornett: We also provided a supplemental presentation, which may be referenced on today's call and is available on Titans Investor Relations website via the link on our webcast.
Sean T. Cornett: During today's call, we will make forward looking statements regarding our expectations for the future.
These forward looking statements made during this call are provided pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Sean T. Cornett: Forward looking statements include all comments, reflecting our expectations assumptions or beliefs about future events or performance that do not relate solely to historical periods.
Sean T. Cornett: These forward looking statements are subject to risks uncertainties and assumptions, which may cause actual results to differ materially from our current projection.
Sean T. Cornett: Please refer to our forward looking statements disclaimer 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.
Sean T. Cornett: We assume no obligation to update any forward looking statements.
Sean T. Cornett: Please note that references to earnings per share operating income and operating margin. Our remarks are on an adjusted basis unless otherwise noted.
Sean T. Cornett: A reconciliation of these non-GAAP measures to the corresponding GAAP measures. Please refer to our earnings press release.
Sean T. Cornett: Now I'll turn the call over to Dominic.
Dominic: Thanks, Sean and thank you to everyone for joining us this morning.
Dominic: I am pleased with our performance in Q2, and I want to thank our team members for their ongoing commitment to driving operational excellence, we certainly come a long way from where we were a year ago and wouldn't be where we are today without their hard work.
Dominic: Our momentum continues to strengthen and all of our businesses are running better today than they were last year.
Dominic: Our results this quarter are part of our solid performance in the first half of fiscal 'twenty 'twenty four compared to the first half of last year adjust.
Dominic: Adjusted EPS and adjusted operating income are both up nearly 60%, while operating cash flow increased by more than 50% and capex decreased by more than 40%.
Dominic: This performance gives us confidence in our improved outlook for the fiscal year and then our long term future.
Dominic: As you saw in our results tailwind in chicken again, offset headwinds would be as we benefit from our multi protein portfolio.
Dominic: While we're not immune to the macro environment, we are taking steps to reduce our exposure to commodity markets.
Dominic: We are expanding our offerings in season, and marinated meats to value up our portfolio across beef pork and chicken to provide consumers convenient and new flavor options.
Across our brands, we're focusing on meeting the consumers, where they are offering convenient restaurant quality food options at home.
Dominic: We are a leader in protein with some of the most iconic brands in food.
With offerings that span the value spectrum. This is why our share remains healthy despite a more challenging environment for consumers.
We continue to support our brands through efficient marketing effective innovation and strong partnerships with our customers.
Dominic: We continue to build financial strength by being disciplined in our capital deployment to improve cash flow and position us well to tackle challenges and capture opportunities.
Dominic: We also continued to take bold actions to improve performance and drive long term value for shareholders and I remain highly confident in our strategy and optimistic about our future.
Dominic: Now, let's delve into an update on market share at Tyson foods, we have a broad portfolio of offerings across foodservice and retail at a range of price points to meet consumers where they are.
Dominic: Even as they manage through a challenging macro environment.
Dominic: We also had some of the strongest and most iconic brands across food and beverage behind the Tyson, Jimmy Dean and he'll sharp arm names, which allows us to make efficient choices to maintain margin, while strengthening our shelf position.
Dominic: We see this in the strength of our dollar share in our core business lines, which we believe reflects the quality of our share position.
Q2 fiscal 2019, we've added 400 basis points of dollar share in our core business what.
Dominic: While our shares down modestly versus last year as we lap some record performance. We have gained dollar share over each of the past three quarters.
Dominic: Our core Bacon brands right and Jimmy Dean have contributed to this recent growth in fact, our dollar share and Bacon for Q2 was at a record high level over the past five years.
Dominic: And we were the fastest growing in the category during the quarter I'm excited about our opportunities in Bacon and expect our share to continue improving as our new Bacon facility that opened in January ramps up.
Dominic: The value proposition of our iconic brands resonate strongly with our consumers and our market share in household penetration rates remained healthy.
Dominic: We continue to have opportunity to expand the household penetration of our great brands, leaving room for continued share growth over the long run.
Dominic: Moving on to the segment performance, starting with prepared foods consumers focus on value continues to impact our retail volumes. However, our share remains healthy and as I mentioned, we are gaining dollar share in baking our volumes outside of retail continue gaining traction as we strive to grow this business with a fee.
Dominic: <unk> on customer diversification and margin accretive channels opt.
Dominic: Operational efficiencies and lower raw material costs drove solid profitability, both in Q2, and the first half of fiscal 'twenty four.
Dominic: And chicken the momentum established in the second half of fiscal 'twenty. Three continued in Q2 in fact versus the second quarter of last year increased more than $325 million.
While we are benefiting from better market conditions, including lower grain costs are bold actions and focus on the fundamentals are also evident in our results.
Dominic: We have made progress across the value chain. Our live operations are substantially better we've improved yield labor efficiencies and utilization in our plants, our demand planning and customer service have also taken significant steps forward.
Dominic: When our live operations are running well and our demand plan. It's more accurate we can operate more efficiently and better service our customers in summary, our focus on getting back to the basics and chicken is working.
Dominic: As you all know and be limited cattle supplies led to spread compression. Despite some quarterly volatility reflecting market conditions. Our results for the first half of fiscal year have come in as we expected.
Dominic: Our goal remains to offset some of the challenges of a tight cattle supply environment by focusing on the controllable such as labor utilization and managing mix to meet customer and consumer demand.
Dominic: Turning to port better spreads and ongoing operational execution led to improved profitability in the quarter and the first half of the year. As you may have seen we made the difficult decision to close one of our port facilities.
Dominic: This is part of our efforts to optimize our footprint and improved performance by reallocating resources to nearby more efficient plant, while improving mix and better serving our customers.
Dominic: Now, let me take a step back and talk about our recent corporate rebranding initiative, we launched a new corporate logo earlier this year that captures our one team one tied to spirit. It encompasses our differentiated capabilities and scale and our diverse portfolio across channels categories and eating occasions.
Dominic: Our Tyson Foods' corporate logo represents our company's legacy and our team's purpose, which is to feed the world by families.
Dominic: Our approach to driving long term value hasn't changed and is built on a core of three key pillars. First we are fortifying our foundation of core proteins, we strive to be best in class operators, while continuing to look for ways to value up our portfolio.
Dominic: Second we are building our brands by delivering innovation for new occasions categories and channels to better serve consumers.
Dominic: We have three of the top 10 protein brand with room to expand our household penetration.
Dominic: Brands are our best opportunity to drive faster growth higher margin and stronger returns.
Dominic: Third.
Dominic: We're growing globally, our international business grew revenue eight Boe to $2 5 billion over the five years through fiscal 'twenty three.
Dominic: We expect to drive profitable growth over time by capture expanding consumer markets, particularly in Asia, and we believe we are well positioned to win.
Dominic: These strategic pillars are supported by key enablers of operational excellence customer consumer obsession, along with data and digital.
A key element of operational excellence is to gain enterprise scale and unlock savings in our controllable by modernizing our operations and driving performance standards.
Dominic: We win with our customers by building long term partnerships and delivering top tier experiences.
Dominic: We enrich consumers lives by creating best in class marketing and innovation.
Dominic: Finally, we continued to build our digital capabilities utilizing the data automation and AI tech for better decision, making and outcomes.
Speaker Change: Before I hand, it over to John to review, our financial performance, Let me remind you of our priorities. This year are we focused on controlling the controllable.
John: Our results for the first half of the year clearly show that we're controlling our capex and working capital to drive strong cash flow.
John: Another priority is to optimize our footprint and network. We've closed the last of the six chicken facilities that we announced in 2023, along with the two case ready beef facilities and as mentioned earlier, we're closing one of our pork plants.
John: We're also focused on operational excellence by restoring performance in chicken strengthening prepared foods managing base through a difficult cattle cycle and driving efficiencies in port.
John: As you have seen in our results. So far this year, we're making tangible progress in all these areas.
John: With that I'll turn the call over to John.
John: Thanks, Tony I'll start with an overview of our total company results before moving onto our individuals' segment sale.
John: In Q2 were essentially in line year over year at $13 1 billion as a decrease in chicken was nearly offset by an increase in beef.
John: Adjusted operating income increased $341 million year over year to $406 million, driven primarily by a significant improvement in chicken profitability.
John: Operational performance and substantially higher alloy led to a 66% increase in adjusted EPS, which came in at 62 cents in Q2 now.
John: Now, let's review our segment results starting with prepared foods.
In prepared foods Q2 revenue was down slightly year over year volume growth was led by benefits from the Williams acquisition. The pricing decline reflects the mix impact of the lower contribution from retail.
Ally in Q2 was down modestly versus last year.
John: Lower raw material cost and operational efficiencies were more than offset by startup cost and mix.
Despite the decline in our margin for the first half of the fiscal year remained in the low double digits.
John: Moving to chicken.
John: Sales in Q2 declined eight 2% year over year, primarily due to lower volume.
John: Volume declined six 1% driven by lower production as we better aligned our supply to customer demand, while the two 1% reduction in pricing was due in part to the pass through of lower input costs.
John: Despite the decline in sales.
John: <unk> increased $326 million year over year to $160 million.
John: Benefits of our strategic actions and the substantial operational improvements we've executed since last year are clear.
John: Market conditions, including lower input costs net of pass through pricing and a better supply demand balance were also key contributors to improved profitability.
John: The current quarter results include a 55 million derivative loss compared to a $35 million loss in the year ago quarter. As a reminder, our grain hedging program as part of an overarching risk management strategy and not speculative tool.
John: And our beef segment revenue was up seven 3% year over year in Q2, with both volume and pricing increases.
John: The two 8% increase in volume was primarily driven by higher average carcass weights, while pricing increased four 5%.
John: While revenue increased AOR decreased versus last year, primarily reflecting compressed spreads as expected.
John: This more than offset continued progress on our operational efficiencies, including better labor utilization and better management of product mix to meet customer and consumer demand.
John: Moving to Port Q2 revenue increased four 6% driven by volume growth and higher pricing.
John: Volume growth of two 9% was led by more plentiful hog supply.
John: Pricing improved due to healthy global demand.
John: <unk> also increased year over year going from a loss of $31 million last year to a profit of $33 million. This year in Q2.
John: Benefiting primarily from improved spread and better operational execution.
John: Year to date pork AOR has improved $151 million.
John: Finally, our international business continues to make progress towards stronger profitability AOR increased versus last year as we begin to lap some of the startup cost of our newer facilities and continue to focus on operational execution.
John: Shifting to our financial position and capital allocation.
John: Year to date showcase strong operating cash flow of approximately $1 2 billion as.
John: As we continue to manage working capital.
John: We remain very discipline with Capex, which came in at $621 million for the first half.
John: The $267 million in Capex for Q2 was the lowest quarterly spend in several years and represents the fifth quarter in a row of sequential decline as we lap our elevated capex from the previous two fiscal years and focused on controlling where and when we deploy capital.
John: Year to date free cash flow of $556 million increased nearly $900 million versus the first half of last year. It was more than $200 million ahead of our year to date dividend payments.
John: Our balance sheet management approach remains unchanged, we're committed to building financial strength investing in our business and returning cash to shareholders, while maintaining our investment grade credit rating and returning net leverage to at or below two times net debt to EBITDA.
John: Our net leverage again declined sequentially coming in at three six times in Q2, driven by improving last 12 months EBITDA and we expect it to continue to improve for the balance of the year.
John: We ended Q2 with $4 4 billion of liquidity.
John: As you may have seen from our press release in March we successfully raised one $5 billion in new senior notes and we paid down a portion of our term loans we.
John: We plan to use the remaining proceeds to retire our outstanding notes coming due this August.
John: We remain committed to maintaining a disciplined yet opportunistic capital allocation strategy, ensuring that we deploy resources to maximize long term shareholder value.
John: Now, let's take a look at our updated outlook for fiscal 2024.
John: We are reiterating our overall sales guidance to be roughly flat year over year.
John: However, given our strong year to date results, we are raising our guidance driven primarily by an improved outlook for chicken.
For the total company, we now expect between $1 4 billion and $1 8 billion of operating income.
John: Moving to the segments.
John: And chicken given the strong start in the first half of the year. We continue to believe that there are more tailwind than headwind, we are raising our <unk> guidance range to be between $700 million and $900 million.
John: Prepared foods also had a solid first half.
John: In this segment, we are tightening our outlook to be between $850 million and $950 million.
John: Indicating a weaker second half of the year, which reflects typical seasonality.
John: And beef the first half of fiscal 2024 has progressed in line with our expectations. However, uncertainties remain including the progression of the cattle cycle and we now expect our full year to be between a loss of $400 million and a loss of $100 million.
And pork, we've seen solid first half performance and are raising our guidance to be between $50 million and $150 million.
John: To add some color to the shape of the rest of the year uncertainties remain around consumer strengthen behavior the progression of the cattle cycle in key commodity costs. When we factor in these variables with pork and prepared foods seasonality. There are reasons to believe that Q3 could be weaker than Q4.
John: To round out the key P&L items, we anticipate interest expense to be roughly $400 million and our tax rate to now be approximately 24%.
John: Turning to Capex, we are maintaining tight controls on spending in line with profitability and cash flow and we are narrowing our capex range to be between $1 2 billion and $1 $4 billion. This year.
John: And finally on free cash flow, we're committed to managing working capital and Capex and we're even more confident now that we can fully fund our dividend this year through our free cash flow generation.
Now I'll turn the call back over to Don to wrap up before we move to Q&A.
Don: Thanks, John before we get to your questions I'd like to thank our 139000 team members, who work tirelessly to feed the world like family and fulfill our mission to bring high quality food to every table in the world. It is the strength of our team that secures our position as a world class food company and a recognize.
Don: As the leader in protein together, we delivered a solid first half we still have more work to do and believe we have the strategy in place to continue our progress and deliver long term shareholder value.
Don: Now I'll turn the call back over to Sean for Q&A instructions.
Sean: Thanks Tommy.
Sean: We 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.
Sean: Operator, please provide the Q&A instruction.
Sean: We will now begin the question and answer session.
Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.
Speaker Change: If youre using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: Is it any time your question has been addressed and you would like to withdraw your question. Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: The first question today comes from Peter Galbo with Bank of America. Please go ahead.
Hey, guys good morning.
Peter Thomas Galbo: Good morning, Peter.
Peter Thomas Galbo: Yeah.
Peter Thomas Galbo: Maybe just to start you know you you.
You typically gave I think kind of an update on the state of the business and things have improved here sequentially at least pretty pretty dramatically.
Peter Thomas Galbo: I guess, just curious a little bit on two things one kind of or are you happy now with where kind of the state of the portfolio in the state of play.
Peter Thomas Galbo: Plant closures and asset rationalization, and then secondly, just trying to understand the commentary around Q3 weaker than Q4 seasonally and in light of what you've been saying that that would run kind of counter to what has been the case seasonally for the past I don't know five or six years. So maybe if you can just unpack those.
Those two areas would be helpful.
Speaker Change: Thanks Peter.
Speaker Change: I appreciate everyone for being on this morning.
Speaker Change: First part of your question is essentially <unk> satisfied.
Speaker Change: I'm encouraged.
I'd stop short of saying satisfied in terms of the results I am proud of the results that we delivered.
Speaker Change: In Q2, and we're seeing the benefits of our diverse portfolio across protein channels categories and eating occasions.
Speaker Change: And where we saw chicken and pork.
Speaker Change: Chicken and pork are offsetting the headwinds in beef.
Speaker Change: In our Q2, our momentum continues to strengthen on all of our businesses and Theyre running better today than they were last year.
We've come a long way from where we were a year ago.
Speaker Change: Thanks to all of our team members for continued improvement and execution.
Speaker Change: We're executing against the priorities, we laid out for fiscal 'twenty four we're controlling the controllable we are optimizing our network. We remain focused on operational excellence, we've taken bold actions to drive performance and to build financial strength.
Speaker Change: We are delivering meaningful results compared to the first half of last year and profitability cash flow Capex in line with historical rates.
Speaker Change: Our performance has given us confidence to raise our guidance, while acknowledging uncertainties remain and we have much work to do.
Speaker Change: But in terms of your specific question around prepared let me make a few comments and then I'll pass it over to Melanie to add some detail.
Melanie: Our results were in line with our expectations.
Melanie: Our brands are strong and our share remains healthy.
Melanie: Persistent inflation is weighing on our bifurcated consumer.
Melanie: Our strategy is to meet consumers, where they are with offerings at various price points in terms of more details. So let me flip it over to Mel will need to add a little color to your question.
Mel: So Peter I think you were.
Mel: We're asking specifically about our projections for Q3 as well as the.
Mel: Rest of the full year and so I'll just talk specifically about prepared foods and let any of the other.
Mel: Leaders in China.
Mel: So you know the first half of the year prepared food delivered $500 million in our.
Mel: And align and.
Mel: You also note that profit delivery in the second half of the year has historically been lower than the first half and we expect this year to be the same.
Mel: Therefore, the midpoint of our second half guidance is $400 million.
Mel: And I also want to point out that historically Q3 has performed better than Q4, but we're seeing higher commodity costs in Q3 should we expect a pretty even split between the two quarters.
Mel: Great melody.
That's very helpful. Yeah, we've gotten it certainly a number of questions on that so thank you for that context.
Speaker Change: And then Johnny maybe just as a follow up look we've had a number of companies this quarter, both bolt in the CPG industry and in restaurants, just just kind of comment on the state of the consumer and low income consumer I know that was in some of your prepared remarks, but.
Speaker Change: Just curious if you could dive a little bit deeper on just your view on foodservice and some of the channels that you service. There just any commentary around you know quick service casual dining and noncommercial would be helpful. Thanks very much.
Why don't you answer that yeah happy to so.
Speaker Change: Peter in both retail and foodservice as you know the consumer is under pressure, especially the lower income households.
Speaker Change: In retail, we're seeing roughly 20% cumulative inflation over the last three years now the inflation impact coupled with historically low savings rate has created a more cautious price sensitive consumer and.
Speaker Change: And we're also seeing a cautious consumer prioritize essential staple over discretionary categories. Now that said, we're advantaged in that our protein categories enjoy lower levels of elasticity compared to the broader consumer landscape.
Speaker Change: And in retail, we're experiencing well I should say that in retail we are experiencing a little slippage to private label with lower income households.
Speaker Change: However, our share remains strong with growth in Bacon snacking and sausage now in foodservice way, specifically noted we continued to deliver solid performance, but we are seeing shifts from fine dining into <unk>. We're also seeing <unk> slippage can more meals.
Speaker Change: Being consumed at home.
Speaker Change: But for Tyson, we're advantaged, we serve both in home and away from home consumers.
Speaker Change: Key point I guess I'd like you to take away from all of this is that we have intentionally built the portfolio diversified across strong brands spanning multiple protein offerings and value tiers and our scale allows consumers to find our products in multiple places throughout retail and foodservice channels.
Speaker Change: And this allows us to deliver on our goal of meeting our consumers where they are at a cross.
Speaker Change: Uh huh.
Speaker Change: A variety of value spectrum.
Speaker Change: Okay.
Speaker Change: The next question comes from Ben <unk> with Barclays. Please go ahead.
Ben: Hi, Yes, good morning, and thank you very much for taking my question. Congrats on those very outstanding results just wanted to dig a little bit into the dynamics of chicken that you've seen and kind of unpack a little bit the volume performance on the production side could you help us.
Ben: Kind of explain it a little bit more is it lower head lower wages of the combination of it what have you done differently in terms of like just sticking your operations kind.
Ben: How about with sales down about the same time, it's very nice profit shake and.
Speaker Change: That would be my first question I have a quick follow up thank you.
Speaker Change: I think I think I caught all of the question, let me start out and then it was if I heard correctly.
Speaker Change: Kind of a supply question.
Speaker Change: And then let me talk about that will flip.
Speaker Change: Flipped at the west to add some.
Speaker Change: Specific details, but in terms of chicken supply if you look at the publicly available data usda's projected.
Speaker Change: Chicken supplies increased about 1% in.
Speaker Change: In 2024.
Speaker Change: But if you look at.
The data underneath it there are some things that you need to get from this this is a live ability in hatch ability story for the industry.
Speaker Change: If you look pull it in hand mortality continues to be elevated.
Speaker Change: Broader mortality continues to be elevated.
Speaker Change: Patch ability continues to be 3% to 5% below historical rates.
The net of all that is this there'll be fewer live plant fewer live pounds delivered to the processing plants and forecast.
Speaker Change: So if I look at that.
Speaker Change: I believe the supply will be lower than 1% projected bad USDA.
Speaker Change: The other thing I would say with that is this is not a short term fix.
Speaker Change: If you remember we have the genetics company as well.
Speaker Change: We've seen some of this activity as well so this is.
Speaker Change: Can be a little bit longer term issue. So you ask.
You didn't ask but I would tell you at least from our perspective.
Speaker Change: Why.
Speaker Change: Genetic selection over the last several years have been skewed towards.
Speaker Change: Broiler characteristics like yield and feed conversion.
Speaker Change: There has been some impact there a cumulative impact from no antibiotics ever across the supply chain and there is some I'll say new disease, but disease persist.
Creating mortality in the broader theres, a new in our new to me AVN meta pneumonia virus, that's out there laryngotracheal our LT.
Speaker Change: Is out there today and there are other things but.
Speaker Change: I think the supply could be will be less than 1% based on the data points I am looking at.
Speaker Change: And.
Speaker Change: From flat to half a percent or something along that order, let me flip it to Wes and let him talk about our supply chain.
Wes: If that answers your question, yes, Ben we certainly say the USDA numbers projecting up 1%.
Wes: And the egg sets.
Wes: But slaughter pounds relatively flat now the good news is I'm very proud of our performance, we had $82 34 in the quarter, a little abilities up 50 points year over year.
Wes: And so looking at our lab performance and then our <unk> process, our supply demand group. We're in a good position for the back half of the year to stay balanced.
Wes: Take care of our customers and I'm very pleased with our live in it and supply demand planning group.
Wes: Specifically to Q2 volume.
Wes: Volume is solid it is consistent with Q1.
Wes: And our expectations just as a reminder, 2023 is a challenging comparison period.
Our pricing solid.
Wes: Just as a reminder, we lag a quarter to quarter plus and then.
The other dynamic.
Wes: Since we have quite a few grain based models that pulp pricing down, but it does stabilize or margin.
Speaker Change: Okay, Perfect and then just a quick follow up more.
Speaker Change: In terms of like what Youre seeing on the industry have you seen any signs of heifer retention. So just.
Speaker Change: What do you like getting on the ground to get a better feel on how.
Speaker Change: And it is still going to get until it might get better.
Speaker Change: Albeit with a preview of maybe into 'twenty five.
Speaker Change: Sure Ben This is Barry and thanks for the question.
Barry: And first of all I guess really at a high level, we haven't seen anything relative to any of the industry numbers that have been published.
Barry: Really indicate that true meaningful heifer retention has begun.
Barry: So at this point, we could potentially anticipate retention beginning.
Barry: In the fall, but there are some caveats to that and certainly as we shift from.
Barry: And El Nino weather pattern to allow anemia.
Barry: The pasture conditions are extremely important to heifer retention and there is a potential we could see some drier conditions as well persist we'll continue to monitor that along with.
Additional metrics around heifer retention and the percentage of heifers that move into slaughter and then lastly.
Barry: One of the promising signs would be we have seen a meaningful decline.
Barry: Number of cows that are going to slaughter down double digits from 'twenty, two and 'twenty three boats.
Barry: And so really we find ourselves what looks like in the midst of a transition pattern.
Barry: We'll continue to monitor to understand the timing of that as we move forward.
Speaker Change: Okay perfect. Thank you very much.
Speaker Change: The next question comes from Tom Palmer with Citi. Please go ahead.
Thomas Hinsdale Palmer: Good morning, Thanks for the question.
Thomas Hinsdale Palmer: Maybe start off I'll.
Thomas Hinsdale Palmer: Start off on the chicken side at least relative to consensus estimates the guidance boost would seem to indicate.
Thomas Hinsdale Palmer: More than just upside in the quarter. So maybe talk on the components that are driving that increased outlook for the second half of the year I mean, it does seem obviously like beat as favorable seems like the pricing environment is getting better and then you've had positive commentary on productivity just any help I kind of how much those items are helping if there are other item.
Thomas Hinsdale Palmer: Is to consider and any quantification of course, it would be appreciated. Thanks.
Thomas Hinsdale Palmer: Sure.
Let me start off.
Speaker Change: Wes handle color to this as well, but one of the things that got to point out is that the focus on the fundamentals at west and our chicken team have had.
Speaker Change: Over the past over the past year actually is quite impressive and that's a result of some of this I would point out this debt.
Speaker Change: There had been some market tailwind that.
As far as chicken is concerned but over the $325 million that.
Speaker Change: Were better year over year.
Speaker Change: More than half of that came from execution type things such as the footprint.
Speaker Change: The network as well as.
Speaker Change: Some of the other tougher decisions that we made.
Speaker Change: And with that West why don't you cover some of the more specifics around the program. Yes, sure. We're certainly focused on controlling the controllable and Donna talked about lot of operational performance, which includes our network changes and they are probably the biggest change is making sure that we match our supply and demand.
West: We've talked about being better plant performance and network optimization is right on target capacity utilization continues to improve sequentially.
We've improved our order fill rate, while actually lowering our working capital over $400 million.
West: Driven almost exclusively by inventory.
West: Demand is solid.
Speaker Change: And 23 is not a very good comp.
Let me add a little more color to valuing up and our path forward and so we.
Our new startup plant in <unk>.
Speaker Change: Danville.
Speaker Change: It is currently single shifted and I expect due to demand will be double shifted at the beginning of 'twenty five and so we are we are running a fundamentally stronger chicken business. We got strong be used leadership in place.
Speaker Change: And strong future growth plans. So specific to your question Q1, and Q3 are typically our strongest quarters. So good balance front half and back half grains had moderated but are still higher than pre COVID-19 levels.
We continue to watch the total protein availability, obviously spring and summer better growing conditions, so that should increase some volumes in the industry.
Speaker Change: We're also paying real close attention to the consumer behavior, and how that may shift our mix.
Speaker Change: But we will be doing quite a bit of investing in the back half of the year.
Speaker Change: Our value added business, where we have a number one share in both retail and foodservice.
Speaker Change: As I've said earlier, we're ramping up Danville, well ahead of schedule.
Speaker Change: If I could I'd like to just to just to reiterate something that.
Speaker Change: To make it really clear in our chicken business our strategy is very simple.
Speaker Change: It's live performance excellence in life performance, it's operational execution and matching supply and demand.
That's simple.
Speaker Change: Yeah.
Speaker Change: Alright, Thanks for that and then maybe a quick one on tour with feed costs falling are you seeing any signs that the industry in <unk>.
Terms of hog supply base, making better profit than might start ramping up.
Speaker Change: Supply at all or still a bit too early.
Speaker Change: Thanks for the question Tom.
Speaker Change: Certainly the.
The compression we've seen on some of the Feedstuffs has helped move some.
Speaker Change: Some numbers back to profitability within the industry from a pork production standpoint, which is certainly good news for our producer partners as well.
Speaker Change: <unk> seen consistently for the last year, which is of importance is we've seen genetic improvement across the entire industry, leading to additional pigs per litter and when you compound that with the fact that we've seen.
Speaker Change: Over the last 10 years, probably the best year.
Relative to true industry herd health, we're seeing <unk>.
Speaker Change: <unk> supply as we move forward as well so.
Speaker Change: I'd be speculating if we commented on any potential expansion.
Speaker Change: But certainly the environment is set up in a much better position versus last year, but let me be clear when we look at our business, we really focus on the controls.
Speaker Change: Seen good improvements from our <unk> business.
Speaker Change: Through the first half of the year relative to operational excellence relative.
Speaker Change: Relative to yields within our assets.
Speaker Change: Relative to our mix management and conversions as well.
Speaker Change: It's really coupled with the fact that we have plenty of runway ahead of us to continue to improve and get better and thats the expectation as we move forward.
Speaker Change: Thank you.
Speaker Change: The next question comes from Adam Samuelson with Goldman Sachs. Please go ahead.
Adam L. Samuelson: Oh, yes. Thank you good morning, everyone.
Adam L. Samuelson: Maybe continue on the discussion on controlling the controllable.
Adam L. Samuelson: Johnny in response to the last question you talked about kind of improvements in live operations operational efficiency kind of matching supply and demand I would just love to get your view on <unk>.
Adam L. Samuelson: Where the company is today, and certainly notably improve versus where you were 12 to 18 months ago, but where how much where can you get it to and how much.
Adam L. Samuelson: Kind of cost reduction on a per pound or <unk>.
<unk> of EBIT dollars do you think is still kind of attainable.
Excluding.
Adam L. Samuelson: Changes in the external market environment in the chicken business.
Speaker Change: Sure let me.
Speaker Change: Chicken, specifically, but let me start with the across the portfolio.
Speaker Change: Just managing.
Speaker Change: Managing working capital and Capex.
Speaker Change: Driving cash flow.
Yes.
Speaker Change: Really and support the dividend.
Speaker Change: It is still a priority for us in that part of the controlling the controllable optum.
Speaker Change: Optimizing the footprint and network.
Huge priority for us.
Speaker Change: Restoring chicken performance is right there at the top and also strengthening our prepared foods business really important to us.
Speaker Change: And then managing bead through the the cattle cycle. The unknown around that is once we do see heifer retention obviously.
Speaker Change: Obviously, you were not going to be processing those animals. So what does that do and we still got that.
Speaker Change: Coming our way and then continue to drive efficiencies in Port as you stated.
Speaker Change: <unk>.
Speaker Change: Versus last year every business is performing better.
Speaker Change: We hit we raised the guidance primarily this quarter.
Speaker Change: Just on strong chicken performance.
Speaker Change: But let me acknowledge that there are still some uncertainties out there relative to the consumer and their strength and behavior.
Speaker Change: That's still out there I mentioned the cattle cycle already key commodity markets what is there.
Speaker Change: They are a tailwind today, but what do they look like.
Speaker Change: Beyond our horizon.
Speaker Change: Pork and prepared foods seasonally.
Speaker Change: Could be seasonally weaker will be seasonally weaker.
Speaker Change: And then Q3 could be as they could be weaker than Q4, driven by prepared an import chicken.
Speaker Change: Chicken is.
Speaker Change: We're seeing better execution in our chicken business and we've seen some time better capacity utilization than we've seen in some time.
Speaker Change: Very optimistic in terms of.
Speaker Change: Where we are and we've gone slow in our chicken business.
Speaker Change: Built this thing from the ground up and we're excited about the momentum that we're seeing relative to that west do you think about chicken specifically that I Havent said, yes, I think I'd say it this way Adam and the long term Tyson is the market leader in the industry and I would fully expect us to deliver best in class.
Speaker Change: Results.
Speaker Change: Over time, regardless of the market conditions, but we've still got work to do.
Yes.
Speaker Change: And Adam I think this is John just with one final clarifying point you had a specific question around can you quantify the operational performance opportunity I would just say that.
Speaker Change: We've got a range of guidance out there.
John: It reflects a balanced take in the mid pointed out is probably a reasonable place to be for the total company but.
John: We've left things open a little bit on the top side and the high end of all of the estimates of the various segments would reflect at least what we believed to be achievable.
John: Our fiscal 'twenty four from an operational improvement opportunity. So I think thats about as much detail as we're intending to provide here.
John: But safe to say I think we see a lot of opportunity throughout the portfolio. Our guidance reflects what we can get in 'twenty four and we're optimistic about 25 and beyond too.
Speaker Change: Okay, well, that's all very helpful color and if I could just ask a follow up on beef.
Speaker Change: Taking some of your comments about kind of.
Speaker Change: Uncertainty on if heifer retention has actually begun in earnest across the industry, but if it did that would further.
Speaker Change: Reduce slaughter utilization for.
Speaker Change: For a period, while those cattle don't come to market.
Speaker Change: Again under the spirit of controlling the controllable if we actually are entering a heifer retention cycle and herd rebuild cycle.
Speaker Change: Can you help quantify the magnitude of controllable and beef that you actually have to mitigate kind of what would be a further drop in volume and throughput that I mean, the business is already operating at a loss today.
Speaker Change: Presumably that would be a means.
Speaker Change: Meaningful incremental challenge so.
Speaker Change: Is there a path for the <unk> business to make money.
Speaker Change: Through the through the worst of that for retention period.
Speaker Change: Thanks for the follow up question there and.
Speaker Change: We've been pretty consistent with our message over the last few quarters, whereas there is absolutely a variety of expected outcomes here and how we move through relative to supply and in pounds.
Speaker Change: The good good signs we've seen as we have seen additional weight per charcas and so.
Speaker Change: That has provided some dilutive effect relative to cost structure, which is one of the concerns as you move through lower supplies, how that translates itself into potentially higher grading cattle is of interest as well and we will be monitoring that.
Speaker Change: But as we looked at the cycle and the potential outcomes of the cycle we.
Speaker Change: We created a strategy that was completely focused on understanding our range of outcomes.
Speaker Change: And how we can.
Speaker Change: Provide delay.
Speaker Change: To deliver bowls within those options as well and I would just say, we really appreciate and we like the strategy that we have developed.
Speaker Change: Regardless of the range of outcomes on the supply side, we like the progress we have made year to date relative to <unk>.
Speaker Change: Controlling the controllable, which for US is operational excellence and efficiency within our assets Manny.
Speaker Change: Managing our mix and delivering to our customer and we like the runway in front of us relative to improvements that we can continue to make as we move through.
Speaker Change: It is going to be a range of outcomes through the cycle as well.
Speaker Change: Okay I appreciate the I appreciate the color I'll pass it on thank you.
Speaker Change: Okay.
Speaker Change: The next question comes from Heather Jones with Heather Jones Research. Please go ahead.
Heather Jones: Good morning, congratulations on the quarter.
Heather.
Heather Jones: I have a couple of questions one on chicken and one on beef and I just wanted to start on chicken I wanted to go back to the volume.
Heather Jones: Question. So I understand that Q2 was a more difficult compare than Q1, but it was a pretty substantial volume decline and the only closed a facility, but I think I remember that as we're gonna be consolidated into other plants.
Heather Jones: Just wondering is this production decline going to continue going forward and was it lower outside meat purchases are more internal production just.
Heather Jones: I Wonder if you could help us how to think about the rest of the year going into 'twenty five.
Speaker Change: Sure Heather let me, let me start out and just maybe remind us.
Speaker Change: Of last year and 23.
At least the first half of 'twenty three is not a real good comparator. If you look at Q1 of last year, we absolutely Miss the demand signal in Q1 of last year and that carried on into Q2 of last year and so if you look at volume in.
Speaker Change: In Q2 of last year.
Speaker Change: Versus Q2, this year youre going to see that it is down.
Speaker Change: But last year was really overstated volume growth was in fact, there but.
Speaker Change: But there was also issues with.
Profitable sales as it relates to Q1 and Q2 last year. So we're beyond that we've cleaned all of that up and we're moving forward, we're running a much better business today in our chicken business and Wes you want to speak to the volumes yes.
Wes: For your question and asking for clarity our volume is in line with our expectations.
Wes: We're well positioned in supply demand balance and we have strong growth plans put in place and youll start to see that in the second half.
Speaker Change: Okay and then my follow up is on beef.
Speaker Change: More recently beef demand seems to have been.
More challenge than I don't know, if it's related to the H b AI or what but anyway. Just wondering if you could give us a sense of how your margins are tracking.
Speaker Change: Relative to where they were in Q2.
Speaker Change: Yeah, Hi, there thanks.
Speaker Change: For the question I would say relative to demand we've seen fantastic.
Speaker Change: Demand on both the chicken side, and the pork side relative to retail promotional activity as well.
Speaker Change: While we've seen fantastic demand being driven by that retail and promotional activity beef really has not received much promotional activity at all and so.
Speaker Change: Where in the past as we move into the summer months, you have seen that activity will be watching for that as we move into Q3 to see if we see additional promos or where retail specifically going to drive the consumer relative to any of the proteins Luckily for us.
Speaker Change: We're in good shape on imports.
Speaker Change: On the chicken side in terms of meeting that customer in those channels as well.
Speaker Change: So just to just maybe a cleanup for clarity I think you may have misspoken, it as pork and chicken.
Speaker Change: We are seeing the future productivity right now that's correct.
Speaker Change: And so have you seen any and I know you've narrowed your guidance and you took down the high end for beef and just wondering has there been any deterioration in margins relative to Q2.
Speaker Change: Given that you haven't gotten the feature activity normally would've gotten at this time of year for beach.
Speaker Change: The beef.
Speaker Change: Beef promotion that's been that's really been a calendar 'twenty four story and again, we'll continue to monitor that as we move through the remainder of the quarter, but we won't provide any additional guidance on Q3 other than what we've provided already.
Speaker Change: Okay, alright, thank you so much.
Thank you.
Speaker Change: Right.
Speaker Change: The next question comes from Ben <unk> with Stephens. Please go ahead.
Ben: Hey, good morning.
Ben: Yes.
Ben: Good morning, So you noted in the.
Ben: The chicken business fares.
Ben: Fairly equal contribution in the first half of the fiscal year of the improvement to what we saw last year.
Ben: Operational improvements and market improvements as you look to the balance of the year <unk> <unk> is it similarly equally split or should we see a diminished operational improvement contribution and more of the improvement is predicated on the.
Speaker Change: The market having strengthened.
Well, let me say this in short Ben and Wes can give you the details.
As I mentioned in my opening statements.
Speaker Change: Yeah.
Speaker Change: We have made great progress, but I would be.
Speaker Change: I would also make sure that you understand that.
We believe there is still a lot of work to do.
Speaker Change: Good progress, but much work to do and so you can define that financially if you'd like but.
Speaker Change: We're not we're not where we need to be yet.
Speaker Change: In our chicken business.
Speaker Change: Yes.
Speaker Change: Yes, Ben I would tell you, we certainly got more tailwind than headwind.
Speaker Change: It's really a function of the volatility of the grain market.
Ultimately happens in the supply and chicken markets and then.
Speaker Change: The consumer mindset.
Speaker Change: And then as I've said a couple of times, we do have some go forward investments in our value added business in the back half of the year.
Speaker Change: Okay very good my second question is related to total company.
And in particular.
Speaker Change: In years past you all have.
Speaker Change: <unk> gone through the exercise of articulating what you think kind of normalized earnings power is for the business and you've provided some clarity.
Speaker Change: By segment.
Speaker Change: Not asking today, what that earnings power is but maybe when you think you all might be at a place where you can provide that level of clarity at the total enterprise and across the segments given all the changes that you've made and the operational improvements that you've made progress against.
Speaker Change: Hey, Ben This is John Randall, let me try to answer that question. So.
John H. Tyson: Sure version, Yeah, we're not making any adjustments to our long term outlook on normalized ranges today.
John H. Tyson: We plan to do that.
John H. Tyson: Maybe as we go through the balance of this year and start to look to 'twenty five and.
Speaker Change: And kind of give some color around and potentially.
John H. Tyson: But let me take the opportunity just to talk about the shape.
John H. Tyson: Of the total of the rest of the year for the total company.
John H. Tyson: And.
John H. Tyson: And build on some things that have already been said today. So I just want to point out that from a total range standpoint guidance has come about from midpoint to midpoint $350 million. We think that is reflective of the results year to date and some of our optimism for the balance of the year.
John H. Tyson: There's also a range of outcomes.
John H. Tyson: In there and I think that we've despite some of the the potential signals we see.
John H. Tyson: And chicken around supply and demand I think.
John H. Tyson: Theres more tailwind and headwinds there I think go into our prepared segment, although we are experiencing some of the consumer.
John H. Tyson: Behaviors that we've heard so many other companies talked about I think we feel really good about our portfolio.
We've gotten questions about food away from home food at home.
John H. Tyson: We're in a pretty good position to win.
John H. Tyson: No matter, where consumers are shopping.
John H. Tyson: And I think that you kind of heard us say, hey, Q3 could be.
John H. Tyson: Softer than Q4, I think I want to just put a point on that that we see the rest of the year as being fairly balanced but.
John H. Tyson: With all of the various factors at play and some seasonality in pork, especially that there could be a tweak there, but don't don't want anyone to overeat into then we don't mean to get so so overly precise theres a lot of factors at play and I would just.
John H. Tyson: Emphasized it.
John H. Tyson: We're confident about the balance of the year.
John H. Tyson: And the midpoint to the guidance we've given.
Speaker Change: Okay. Thanks very much.
Speaker Change: The next question comes from Alexia Howard with Bernstein. Please go ahead.
Alexia Jane Burland Howard: Good morning, everyone.
Alexia Jane Burland Howard: Hello.
Alexia Jane Burland Howard: Hi, there so can I start with chicken.
Alexia Jane Burland Howard: I seem to remember that the cold snap in January.
Alexia Jane Burland Howard: Hits production operations.
Alexia Jane Burland Howard: Somewhat this quarter are you able to quantify any of that how much of a hit volumes and profitability for the segment overall.
Speaker Change: Hey, Alexia this is a this.
This is John again, I would say that we typically plan for a little bit of that weather in the quarter.
John H. Tyson: When we talked to you in February we were pretty early on and have experienced some.
John H. Tyson: Significant event, just at that point kind of one month and I would say overall, though the impacts in the quarter were not.
John H. Tyson: So significant that it had a disproportionate impact on earnings so I think nothing to read into there.
Okay, and then two quick things.
John H. Tyson: How much longer do you expect the startup costs in prepared foods to remain a headwind when does that go away and then finally do you have a forecast for why you expect your leverage went up by <unk> by fiscal year end.
John H. Tyson: Yeah.
John H. Tyson: Hi, Alex this is Melanie and in terms of our startup costs, we may experience a little bit bleeding over into Q3, but we think the majority of them has hit in Q2.
Melanie: And to your second question Alexia on leverage.
Melanie: Not placing the specific number of where we expect to exit the year, but safe to say, we are we're definitely trending towards lower leverage and.
Melanie: Two times or below is the long term target.
Speaker Change: That's as much as we can give right now.
Speaker Change: Okay. Thank you very much I'll pass it on.
Speaker Change: The next question comes from Andrew <unk> with BMO. Please go ahead.
Speaker Change: Okay.
Andrew: Hey, good morning, Thanks for taking the questions.
I wanted to go back to the beef segment outlook and you've mentioned some uncertainty and ranges of outcomes I guess I'm just curious.
Andrew: What is the environment that would get you to the top end of the beef profit range versus the bottom end is it primarily around whether or not we get <unk> attention and herd rebuilding efforts in the fall and that's kind of the biggest piece of it or the demand side I guess.
Andrew: What are the range of outcomes that would get you to the top or bottom end of the range.
Speaker Change: Thanks for the question Andrew and.
Andrew: Specifically, we talk a lot about beef demand, we talked a lot about beef cut out pricing as well.
Andrew: But also we need to factor in the fact that.
Andrew: Drop is a significant amount of value that falls within the supply chain and also our largest cost is relative to our live cattle costs as well and so when you really balance the two revenue streams that cut off pricing and the drop pricing and you take that into account with live cattle and.
Andrew: Where potentially we could see some live cattle pricing going that really creates the range of outcomes is trying to balance.
Andrew: Three the two revenue and the one supply cost perspective, when we look at particular guidance in the range of outcomes.
Andrew: But again.
We still have plenty to control within within Tyson.
Andrew: We really focus on making sure that we balance.
Andrew: The greatest cattle with the demands of the consumer as we move through the cycle as well, we're continuing to see improvements relative to efficiencies and yields.
Andrew: And really.
Andrew: Really well just continue to look at value streams that we can continue to generate to help offset some of these headwinds we have from a margin perspective.
Speaker Change: Okay. Okay. That's helpful. And then my second question is on the Capex outlook and I know last quarter. When it was reduced you were kind of matching capex and the operating profit outlook and so I guess I'm curious just how we should think about capex.
Speaker Change: On a go forward basis.
Speaker Change: As the profit environment is is better.
Speaker Change: Since that hasn't really kept up and maybe theres timing dynamics and you've already mentioned controlling that tightly but just.
Speaker Change: As the profit dynamics get better you know how should we think about the rate at which you might add back to Capex, where the priorities at where you might want to add back just any color around that on a go forward it would be great. Thank you.
Speaker Change: Hey, This is John let me let me take that question. So you are right in that we had talked in the past about being responsive to the operating environment and managing cash flows I would tell you that first off.
John H. Tyson: We feel good about our free cash flow projections for the year in terms of being in excess of covering our dividend. So just pointing that out but I would also tell you that.
The tighter range on our Capex today, one two to one four that's really reflective of us determining.
John H. Tyson: What are the needs for the business and where are there opportunities for good investment what I want you to take away from that is we're not turning on and off the spigot is kind of based on our outlook on profitability, but rather trying to return to a normalized level of spin.
John H. Tyson: And you asked where would be the.
Where would be the best opportunities for investment I think.
John H. Tyson: The short answer is that our prepared portfolio and components of our chicken portfolio, where we see the best opportunity for the growing our value added businesses, where we want to continue to invest in.
John H. Tyson: Then of course, we have our ongoing maintenance and repair that's needed so I think.
John H. Tyson: That will probably paint the picture for you on how we think about capital allocation.
Speaker Change: Great. Thank you very much.
Speaker Change: Okay.
Speaker Change: The next question comes from Michael Lavery with Piper Sandler. Please go ahead.
Michael Scott Lavery: Thank you and good morning.
Michael Scott Lavery: Good morning.
Michael Scott Lavery: You had mentioned.
You still have some work to do in chicken and then you've touched on that a few ways, but can you just.
Michael Scott Lavery: Be clear how that does or doesn't apply to your footprint. There is the supply demand balance pretty well set or is that another piece of the equation that could evolve as well.
Speaker Change: Yes, thanks for this.
Speaker Change: Thanks for this question. So let me let me answer it two ways I think.
Speaker Change: First off on the network moves that we've made up until this point.
Speaker Change: We anticipate that we have either recovered all or should recover nearly all of that while all of the volume in chicken in nearly all of the volume.
Speaker Change: Related to our port moves and the other moves so I think I just wanted to be clear that when we talk about that rationalization, we're talking about being more efficient taking cost out and losing none of the business. So I think that that is a point worth emphasizing.
Speaker Change: The other part of your question was about chicken, specifically and I think we even talked last year or a couple of quarters ago about the overall.
Speaker Change: Capacity utilization safe to say, we still got some headroom in our current footprint and would expect to grow with demand in the more profitable parts of our business and so I think have a positive outlook based on the all of the network moves if I might add one more thing relative to chicken.
Speaker Change: The back half of the year for chicken.
Speaker Change: Grains have moderated.
Speaker Change: The demand for chicken is very strong and we built a fundamentally stronger chicken business. So we're excited about that we're executing better in <unk>.
Demand is certainly working in our favor.
Speaker Change: Okay. That's helpful.
Speaker Change: Just on the international.
Speaker Change: Yes.
Speaker Change: Touched on it a couple of times earlier in the prepared remarks, just how should we think about its margin runway and what does it take for that too.
Get a ramp up in profitability.
Well thanks for the question on international and.
Speaker Change: I think it's important to remind this came up a little bit into Capex question, but I think we should remember over the last two plus years.
Speaker Change: We've built 12 processing plants around the world that was part of the driver as it relates to the capital spend and where we are beyond that and we're moving into.
Speaker Change: Filling up those capacities, but we're also lapping if you look at the international we're lapping a ramp up cost for the seven facilities outside of the United States.
Speaker Change: And our execution should continue to improve.
Speaker Change: Our focus short term is operational excellence and capacity utilization as it relates to our international business, Amy would you like to speak.
Speaker Change: Anything.
Amy: Thanks for the question Michael.
Amy: Instead, we are absolutely focused on delivering the results that is expected of us.
Amy: Guessing on driving operational efficiencies across our plants, we are focused on improving our conversion costs were identifying available in the open available capacity.
Our skus and de lever and a more profitable mix of products that were out there.
Our spending so all of these actions are beginning to we're beginning to see the results and improved gross margins.
Amy: Yeah.
Okay, great. Thanks, so much.
Speaker Change: Thank you.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to the company for any closing remarks.
Speaker Change: Thanks for your continued interest in Tyson foods, we look forward to speaking with you again soon.
Speaker Change: The conference has now concluded.
Speaker Change: You for attending today's presentation you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].