Q3 2024 Tyson Foods Inc Earnings Call
Sean Cornett: Good day, and welcome to the Tyson Foods third quarter 2024 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touchtone phone. To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Sean Cornett, VP, Investor Relations.
Sean Cornett: Good day and welcome to the Tyson Foods Third Quarter 2024 Earnings Conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on the touchtone phone; to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Sean Cornett, VP Investor Relations. Please go ahead. Good morning and welcome to Tyson Foods' physical third quarter 2024 Earnings Conference call. On today's call, Tyson's President and Chief Executive Officer Donnie King and Interim Chief Financial Officer Curt Calaway will provide some prepared remarks followed by Q&A. Additionally, joining us today are Brady Stewart, Group President, Beef, Fort and Chief Splatching Officer; Melanie Boulden, Group President, Prepared Foods and Chief Growth Officer; Wes Morris, Group President, Fold Free; and Devon Cole, President, International and Golden McDonald. We have also provided a supplemental presentation which may be referenced on today's call and is available on Tyson's Investor Relations website and via the link in our webcast. 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. 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. These forward-looking statements are subject to risks, uncertainties, and assumptions which may cause actual results to differ materially from our current projections. Please refer to our forward-looking statements displayed on slide 2 as well as our SEC filings for additional information concerning risk factors that could cause our actual results to differ materially from our projections. We assume no obligation to update any forward-looking statements. 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 reconciliation of these non-GAAP measures to their corresponding GAAP measures, please refer to our earnings press release. Now, I'll turn the call over to Donnie. Thanks, Sean, and thank you to everyone for joining us this morning. Q3 was another solid quarter as momentum continues to build. Compared to the third quarter of last year, AOI is up more than $300 million, growing nearly 175%, and adjusted EPS increased by more than 70 cents or almost 500%. Q3 not only dramatically improved versus last year, but also marked the highest profitability in the last seven quarters. But even more impressive is that we delivered these results despite well-known headwinds and the cattle cycle as we benefited from our diverse portfolio. I want to take this opportunity to thank all of our team members across every segment and function for their hard work in contributing to these results.
Good day and welcome to the Tyson Foods third quarter 2024 earnings Conference call.
All participants will be in a listen only mode.
Speaker Change: Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
Speaker Change: After todays presentation, there will be an opportunity to ask questions.
Speaker Change: To ask a question you May press Star then one on the Touchtone phone.
Speaker Change: To withdraw your question. Please press Star then two.
Speaker Change: Please note this event is being recorded.
Speaker Change: I would now like to turn the conference over to Sean Cornett VP Investor Relations. Please go ahead.
Sean Cornett: Good morning and welcome to Tyson Foods' fiscal third quarter 2024 earnings conference call. On today's call, Tyson's President and Chief Executive Officer Donnie King and Interim Chief Financial Officer Kurt Calloway will provide some prepared remarks, followed by Q&A. Additionally, joining us today are Brady Stewart, Group President, Beef and Pork, and Chief Supply Chain Officer; and Melanie Boulden, Group President, Prepared Foods, and Chief Growth Officer. Wes Morris, Group President, Poultry, and Devin Cole, President, International, and Golden McDonald's.
Sean Cornett: Good morning, and welcome to Tyson Foods fiscal third quarter of 2024 earnings Conference call.
Sean Cornett: On today's call.
Speaker Change: President and Chief Executive Officer, Darren King and interim Chief Financial Officer, Kirk Callaway will provide some prepared remarks, followed by Q&A.
Speaker Change: Additionally, joining us today are Bruce Stewart group, President beef pork and cheese supply chain officer.
Speaker Change: The only Bolton group, President prepared foods, and Chief growth Officer, with Morris Group, President of poultry and Devin called President International and Gulf of Mcdonald's.
Sean Cornett: We have also provided a supplemental presentation which may be referenced during today's call and is available on Tyson's Investor Relations website and via the link in our webcast. 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. 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.
Speaker Change: We have also provided a supplemental presentation, which may be referenced on today's call and is available on heightened investor Relations web site and via the link in our webcast.
Sean Cornett: These forward-looking statements are subject to risks, uncertainties, and assumptions, which may cause actual results to differ materially from our current projections. Please refer to our forward-looking statement disclaimers on slide 2, as well as our SEC filings, for additional information concerning risk factors that could cause our actual results to differ materially from our projections. We assume no obligation to update any forward-looking statements. 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 report to our Earnings Press Room. Now, I'll turn the call over to Donnie.
Speaker Change: During today's call, we will make forward looking statements regarding our expectations for the future.
Speaker Change: These forward looking statements made during this call are provided pursuant to the safe Harbor provision under <unk>.
Speaker Change: Securities Litigation Reform Act of 1995.
Speaker Change: 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.
Speaker Change: These forward looking statements are subject to risks uncertainties and assumptions, which may cause actual results to differ materially from our current projections.
Speaker Change: Please refer to our forward looking statements 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 Change: We assume no obligation to update any forward looking statements.
Speaker Change: Yeah.
Speaker Change: Please note that references to earnings per share operating income and operating margin in our remarks are on an adjusted basis unless otherwise noted.
Speaker Change: Reconciliations of these non-GAAP measures to their corresponding GAAP measures. Please refer to our earnings press release.
Speaker Change: Now I'll turn the call over to Dani.
Donnie King: Thanks, Sean, and thank you to everyone for joining us this morning. Q3 was another solid quarter as momentum continues to build. And compared to the third quarter of last year, AOI is up more than $300 million, growing nearly 175%. And adjusted EPS increased by more than 70 cents, or almost 500%.
Dani: Thanks, Sean and thank you to everyone for joining us this morning.
Dani: Q3 was another solid quarter as momentum continues to build compared to the third quarter of last year is up more than $300 million.
Dani: Growing nearly 175% and adjusted EPS increased by more than 70 cents for almost 500%.
Donnie King: Q3 not only dramatically improved versus last year but also marked the highest profitability in the last seven quarters. What's even more impressive is that we delivered these results despite well-known headwinds in the cattle cycle as we benefited from our diverse portfolio. I want to take this opportunity to thank all of our team members across every segment and function for their hard work in contributing to these results in Q3 and for their dedication to driving operational excellence, which, as you know, has been a priority for us. Let me highlight the performance and check.
Dani: Q3, not only dramatically improve versus last year, but also marked the highest profitability in the last seven quarters.
Dani: What's even more impressive is that we delivered these results despite well known headwind in the cattle cycle as we benefited from our diverse portfolio.
Speaker Change: I want to take this opportunity to thank all of our team members across every segment and function for their hard work and contributing to these results in Q3 and for their dedication to driving operational excellence, which as you know has been a priority for us.
Donnie King: In Q3 and for their dedication to driving operational excellence, which, as you know, has been a priority for us.
Donnie King: Let me highlight the performance in checking. We delivered segment ALI of more than $300 million. The best third quarter profit result in eight years.
Speaker Change: Let me highlight the performance in check.
Donnie King: We delivered segment AOI of more than $300 million, the best third quarter profit result in eight years. We are raising our guidance in chicken for the third consecutive quarter. The midpoint of our outlook is now $350 million better than our initial expectations coming into the fiscal year.
Speaker Change: We delivered segment.
Speaker Change: More than $300 million, the best third quarter profit results in eight years, we are raising our guidance and check in for the third consecutive quarter. The midpoint of our outlook is now $350 million better than our initial expectations coming into the fiscal year.
Donnie King: We are raising our guidance and checking for the third consecutive quarter. The midpoint of our outlook is now $350 million better than our initial expectations coming into the fiscal year. I want to emphasize that the operational improvements we've been driving are enabling us to benefit from the market tailwinds invested or value added portfolio, but also enhancing our results. In fact, all of our businesses are more agile, collaborative, and disciplined than they have been in some time. Beyond the strong results in checking in Q3, pork also came in better than we anticipated, while beef and prepared foods were in line with our expectations.
Donnie King: I want to emphasize that the operational improvements we've been driving are enabling us to benefit from the market tailwinds, invest in our value-added portfolio, while also enhancing our results. In fact, all of our businesses are more agile, collaborative, and disciplined than they have been in some time. Beyond the strong results in chicken in Q3, pork also came in better than we anticipated, while beef and prepared foods were in line with our expectations. Our disciplined approach to capital allocation continues to improve cash flow. Year-to-date free cash flow is better by more than $1.2 billion compared to last year.
Speaker Change: I want to emphasize that the operational improvements we've been driving are enabling us to benefit from the market tailwind and invest in our value added portfolio, while also enhancing our results.
In fact, all of our businesses are more agile collaborative and disciplined than they have been in some time.
Speaker Change: Beyond the strong results in chicken in Q3, <unk> also came in better than we anticipated while beef and prepared foods were in line with our expectations are.
Donnie King: Our disciplined approach to capital allocation continues to improve cash flow. Year-to-date free cash flow is better by more than $1.2 billion compared to last year. This growth was driven by improved profitability and our focus on managing working capital and controlling capital expenditures. While still investing for profitable growth, and again, we're delivering these results in the face of the challenging environment for beef. Better performance has helped us to reduce our net leverage ratio with third consecutive quarter.
Speaker Change: Our disciplined approach to capital allocation continues to improve cash flow.
Speaker Change: Year to date free cash flow is better by more than $1 2 billion compared to last year.
Donnie King: This growth was driven by improved profitability and our focus on managing working capital and controlling capital expenditures, while still investing for profitable growth. And again, we're delivering these results in the face of a challenging environment for beef. Better performance has helped us to reduce our net leverage ratio for the third consecutive quarter.
Speaker Change: This growth was driven by improved profitability and our focus on managing working capital and controlling capital expenditures.
Speaker Change: While still investing for profitable growth and again, we're delivering these results in the face of a challenging environment for beef.
Speaker Change: <unk> performance has helped us to reduce our net leverage ratio for the third consecutive quarter.
Donnie King: Before I talk more about the performance in the quarter by segment, let me remind you that we have some of the most iconic retail brands in all of food with top brands and protein. Behind Tyson, Jimmy Dean, Hill Shower Farm, and Ballpark, we have the number one or number two market share in eight of our core business lines and enjoy favorite brand status in key categories.
Donnie King: Before I talk more about the performance in the quarter by segment, let me remind you that we have some of the most iconic retail brands in all of food, with top brands in protein. Behind Tyson, Jimmy Dean, Hillshower Farm, and Ballpark, we have the number one or number two market share in eight of our core business lines and enjoy favorite brand status in key categories. I remain highly confident in our strategy and optimistic about our future and our ability to drive long-term value for shareholders.
Before I talk more about the performance in the quarter by segment, let me remind you that we have some of the most iconic retail brands and all of food with top brands in protein.
Speaker Change: Hi, Tyson, Jimmy Dean <unk> farm and ballpark, we have the number one or number two market share in eight of our core business lines.
Speaker Change: My favorite brand status in key categories.
Donnie King: I remain highly confident in our strategy and optimistic about our future and the ability to drive long-term value for shareholders.
Speaker Change: I remain highly confident in our strategy and optimistic about our future and the ability to drive long term value for shareholders.
Donnie King: Let's move to segment performance, starting with prepared foods. In food service, we continue to broaden our customer base, grow in margin accretive channels, and expand our presence in broad line distribution categories. This led to overall volume and sales growth in Q3. AOI for the quarter was right in line with our expectations. Operational execution, including supply chain improvements and more efficient and effective marketing support through digital, are delivering results. In addition, we are leaning into our top performing skews to capture opportunities to expand distribution. While our brands remain strong, we are continually focused on new innovations to expand the appeal and market opportunities for our products.
Donnie King: Let's move to segment performance, starting with prepared foods. In food service, we continue to broaden our customer base, grow in margin-accretive channels, and expand our presence in broad line distribution categories. This led to overall volume and sales growth in Q3. AOI for the quarter was right in line with our expectations.
Let's move to segment performance, starting with prepared foods.
Speaker Change: In foodservice, we continue to broaden our customer base grow and margin accretive channels and expand our presence in broad line distribution categories.
Speaker Change: This led to overall volume and sales growth in Q3.
Speaker Change: Fourth quarter was right in line with our expectations.
Donnie King: Operational execution, including supply chain improvements and more efficient and effective marketing support through digital, is delivering results. In addition, we are leaning into our top-performing SKUs to capture opportunities to expand distribution. While our brands remain strong, we are continually focused on new innovations to expand the appeal and market opportunities for our products. The Jimmy Dean Griddle Cakes platform is an innovation we're very proud of. We've launched two flavors, maple and blueberry, and we're seeing an exceptionally strong repeat rate in customer adoption, making it one of the most successful prepared foods innovations over the past five years.
Speaker Change: Operational execution, including supply chain improvements and more efficient and effective marketing support through digital are delivering results.
Speaker Change: In addition, we are leaning into our top performing skus to capture opportunities to expand distribution.
Speaker Change: Our brands remain strong we are continually focused on new innovations to expand the appeal and market opportunities for our products for instance, the Jimmy Dean Griddle cakes platform is an innovation. We're very proud of we've launched two players in April and Bluebird and were seeing an exceptionally strong repeat rate and customer adoption.
Donnie King: For instance, the Jimmy Dean Griddle Cakes platform is an innovation for very proud of. We've launched two flavors, maple and blueberry, and we're seeing an exceptionally strong repeat rate and customer adoption, making it one of the most successful prepared foods innovations over the past five years. Our focus on execution and innovation are keeping us on track to deliver another solid performance. for the year. As I mentioned, chicken had one of its best quarters in some time, but we are clearly benefiting from better market conditions, including lower grain costs. Our actions and focus on the fundamentals across all aspects of the value chain are also contributing to these strong results.
Speaker Change: And making it one of the most successful prepared foods innovation over the past five years, our focus on execution and innovation are keeping us on track to deliver another solid performance for the year.
Donnie King: Our focus on execution and innovation is keeping us on track to deliver another solid performance for the U.S. As I mentioned, chicken had one of its best quarters in some time. While we are clearly benefiting from better market conditions, including lower grain costs, our actions and focus on the fundamentals across all aspects of the value chain are also contributing to these strong results. Our live operations continue to improve, with hatch rate and livability increasing year over year. We generate efficiencies and improve utilization in our plants by optimizing our network.
Speaker Change: Yeah.
Donnie King: Our demand planning and customer service have also taken significant steps forward as we improve order fill rates and continue to build long-term partnerships with customers, all while reducing inventory. We've reinvested some of the proceeds from these improvements into the long-term growth of our value-added chicken business. For instance, we've accelerated the ramp-up of our Danville Fully Cooked Facility and launched new products like Honey Bites and Restaurant Quality Wings. In summary, our focus on the basics has built a fundamentally stronger chicken business with an eye on the future. Moving to B.
Speaker Change: As I mentioned chicken had one of its best quarters in some time.
Speaker Change: We are clearly benefiting from better market conditions, including lower grain costs, our actions and focus on the fundamentals across all aspects of the value chain are also contributing to these strong results.
Donnie King: Our live operations continue to improve, with hatch rate and livability up year over year. We generate efficiencies and improve utilization and our plants by optimizing our network. Our demand planning and customer service have also taken significant steps forward as we improve order fill rates and continue to build long-term partnerships with customers, all while we're reducing inventory. We've reinvested some of the proceeds from these improvements into the long-term growth of our value-added chicken business. For instance, we've accelerated the ramp up of our Danville fully cooked facility and lost new products like honey bites and restaurant-quality wings.
Speaker Change: Our live operations continued to improve with hatch rates and livability up year over year.
Speaker Change: We generate efficiencies and improved utilization in our plants by optimizing our network.
Speaker Change: Our demand planning and customer service have also taken significant steps forward as we improved order fill rates and continue to build long term partnerships with customers all while reducing inventory.
Speaker Change: We've reinvested some of the proceeds from these improvements into the long term growth of our value added chicken business for.
Speaker Change: For instance, we've accelerated the ramp up of our Danville fully cooked facility and launched new products like honey bikes and restaurant quality wings.
Donnie King: In summary, our focus on the basics has built a fundamentally stronger chicken business with an eye on the future. Moving to beef, as expected, elevated cattle costs continue to compress pressure in fiscal Q3. While pasture conditions have improved this year, clear signs of meaningful herd rebuilding have not emerged. We continue to be laser-focused on things we can control, such as labor utilization, yield, and mix management to meet consumer demand and customer needs as we manage through the challenges of the cattle cycle. Turning to port, the overall health of the herd and the productivity of soils remains strong, driving an ample supply of lean hogs, combined with solid demand and the benefits of our improved operational execution.
Speaker Change: In summary, our focus on the basics has built a fundamentally stronger chicken business with an eye on the future.
Speaker Change: Moving to be as.
Donnie King: As expected, elevated cattle costs continue to compress spreads in fiscal Q3. However, while pasture conditions have improved this year, clear signs of meaningful herd rebuilding have not emerged. We continue to be laser-focused on the things we can control, such as labor utilization, yield, and mix management, to meet consumer demand and customer needs as we manage through the challenges of the cattle industry. Turning to pork, the overall health of the herd and the productivity of sows remains strong, driving an ample supply of lean hogs, combined with solid demand and the benefits of our improved operational execution. AOI increased noticeably versus last year.
As expected elevated capital costs continue to compress spreads in fiscal Q3.
Speaker Change: Pasture conditions have improved this year clear signs of meaningful herd rebuilding has not emerged we continue to be laser focused on the things we can control such as labor utilization yields and mixed management to meet consumer demand and customer needs as we manage through the challenges of the cattle cycle.
Speaker Change: Turning to port the overall health of the her and the productivity of sales remained strong driving an ample supply of lean hog combined with solid demand and the benefits of our improved operational execution.
Donnie King: AOI increased noticeably versus last year.
Speaker Change: <unk> increased noticeably versus last year.
Donnie King: Now let me take a moment to reflect on who we are. Our purpose is to feed the world like family, where protein remains clearly at the center of the plate. In fact, protein is the largest category in the retail food and beverage sector, accounting for about one third of sales in the U.S. We believe protein plays a central role in any healthy diet. This is why we see consumption growth is up 1.3% across feed, chicken, and pork in fiscal Q3 per Nilson. And is also why we have protein as a foundational core. Our strategy encompasses our differentiated capabilities in scale and our diverse portfolio across channels, categories, and eating occasions.
Donnie King: Now, let me take a moment to reflect on who we are. Our purpose is to feed the world like a family, where protein remains clearly at the center of the plate. In fact, Protein is the largest category in the retail food and beverage sector, accounting for about one third of sales in the U.S. We believe protein plays a central role in any healthy diet. This is why we see consumption growth of 1.3% across beef, chicken, and pork in physical Q3 per meal and is also why we have protein as a foundational core.
Speaker Change: Now, let me take a moment to reflect on who we are.
Speaker Change: Our purpose is to feed the world like family.
Speaker Change: Protein remains clearly at the center of the plate.
Speaker Change: In fact protein is the largest category in the retail food and beverage sector accounting for about one third of sales in the U S.
Speaker Change: We believe protein plays a central role in any healthy diet.
Speaker Change: This is why we see consumption growth is up one 3% across beef chicken and pork in fiscal Q3 per Nielsen.
Speaker Change: <unk> is also why we have protein as a foundational core.
Donnie King: Our strategy encompasses our differentiated capabilities and our diverse portfolio across channels, categories, and eating experiences. Our strategic pillars are supported by key enablers of operational excellence, customer and consumer obsession, along with data and digital. One key goal is building on our iconic brands to value up our core protein. Today, Tyson, Jimmy Dean, and Hillshower Farm are three of the top ten protein brands, with room to expand household penetration.
Speaker Change: Our strategy encompasses our differentiated capabilities and scale and our diverse portfolio across channels categories and eating occasions. Our strategic pillars are supported by key enablers of operational excellence customer and consumer obsession along with data and digital.
Donnie King: Our strategic pillars are supported by key enablers of operational excellence, customer and consumer obsession, along with data and digital. One key goal is building on our iconic brands to value up our core proteins. Today, Tyson, Jimmy Dean, and Hillshaw Farm are three of the top 10 protein brands, with room to expand household penetration. Brands are our best opportunity to drive faster growth, higher margin, and stronger returns. And it's the most effective way to generate long-term shareholder value. As I've emphasized all year, our priorities are centered on controlling the controllables, including catchmen. Our cash flow performance this year demonstrates the success we've had on this front.
Speaker Change: One key goal is building on our iconic brands to value up our core proteins today's Tyson, Jimmy Dean and he'll shower far are three of the top 10 protein brands with room to expand household penetration.
Donnie King: Brands are our best opportunity to drive faster growth, higher margins, and stronger returns. And it's the most effective way to generate long-term shareholder value. As I've emphasized all year, our priorities are centered on controlling the controllables, including cash management. Our cash flow performance this year demonstrates the success we've had on this front. We're also focused on operational excellence by continuously improving chicken, strengthening prepared foods, navigating beef through a difficult cattle cycle, and driving efficiencies in pork.
Speaker Change: It is our best opportunity to drive faster growth higher margin and stronger returns and as most effective way to generate long term shareholder value.
Speaker Change: As Ive emphasized all year, our priorities are centered on controlling the controllable, including cash management, our cash flow performance. This year demonstrates the success we've had on this front.
Donnie King: We're also focused on operational excellence by continuously improving chicken, strengthening prepared foods, navigating beef through a difficult cattle cycle, and driving efficiencies in pork. We came into physical 24 with plans to deliver against these priorities. Our focus on being intentional and deliberate on executing those plans is delivering tangible results.
Speaker Change: We're also focused on operational excellence by continuously improving chicken strengthening prepared foods navigating through a difficult cattle cycle and driving efficiencies in pork.
Donnie King: We came into Fiscal 24 with plans to deliver against these priorities, and our focus on being intentional and deliberate in executing those plans is delivering tangible results. With that, I'll turn the call over to Kurt to review our financial performance in more detail.
Speaker Change: We came into fiscal 'twenty four with plans to deliver against these priorities are focused on being intentional and deliberate on executing those plans is delivering tangible results.
Curt Calaway: With that, I'll turn the call over to Curt to review our financial performance in more detail. Thanks, Donnie. Total company net sales of 13.35 billion and Q3 were up 1.6% year over year. The increase was led by beef, with contributions from pork and prepared foods, partially offset by declines in chicken and international. Adjusted operating income improved 312 million dollars to nearly 500 million dollars, driven primarily by another quarter of substantial increase in chicken profitability. Operational improvements and substantially higher AOI led to a 72 cent increase in adjusted EPS, which came in at 87 cents in Q3.
Speaker Change: With that I will turn the call over to Kurt to review, our financial performance in more detail.
Kurt Calloway: Thank you, Donnie. Total company net sales of $13.35 billion in Q3 were up 1.6% year-over-year. The increase was led by beef, with contributions from pork and prepared foods partially offset by declines in chicken and international. Adjusted operating income improved $312 million to nearly $500 million, driven primarily by another quarter of a substantial increase in chicken profitability. Operational improvements and substantially higher AOI led to a $0.72 increase in adjusted EPS, which came in at $0.87 in Q3. As Donnie mentioned earlier, this was our Best AOI, AOI Margin, and Adjusted EPS in the past seven quarters. Now, let's review our segment results, starting with prepared food.
Kurt: Thanks Donnie.
Kurt: Total company net sales of $13 $3 5 billion in Q3 were up one 6% year over year.
Kurt: The increase was led by beef with contributions from pork and prepared foods, partially offset by declines in chicken and international.
Kurt: Adjusted operating income improved $312 million to nearly $500 million driven primarily by another quarter of substantial increase in chicken profitability.
Operational improvements and substantially higher AOE led to a 72% increase in adjusted EPS, which came in at 87 in Q3.
Curt Calaway: As Donnie mentioned earlier, this is our best AOI, AOI margin, and adjusted EPS in the past 7 quarters.
Kurt: As Donnie mentioned earlier this is our best AOE.
Donnie: Margin and adjusted EPS in the past seven quarters.
Curt Calaway: Now let's review our segment results, starting with prepared foods. In prepared foods, Q3 revenue grew 2.1% versus last year driven by volume growth in food service. As we expected, AOI and Q3 was down modestly. Higher raw material costs were partially offset by lower MAP spend versus an elevated level last year and the benefits of operational efficiencies and top line growth. Moving to chicken, sales in Q3 declined 3.2% primarily due to the pass through of lower input cost and pricing. While volume is roughly flat year over year as we continue to better align supply with customer demand, it was up approximately 2% from Q3 of fiscal 22.
Donnie: Now, let's review our segment results starting with prepared foods.
Kurt Calloway: In prepared foods, Q3 revenue grew 2.1% versus last year driven by volume growth in food service. As we expected, AOI and Q3 were down modestly. Higher raw material costs were partially offset by lower map spend versus an elevated level last year and the benefits of operational efficiencies and top line growth. Moving to chicken.
Donnie: In prepared foods Q3 revenue grew two 1% versus last year, driven by volume growth in foodservice.
Speaker Change: As we expected in Q3 was down modestly higher raw material costs were partially offset by lower map spend versus an elevated level last year and the benefits of operational efficiencies and topline growth.
Donnie: Moving to chicken.
Kurt Calloway: Sales in Q3 declined 3.2% primarily due to the pass-through of lower input costs and prices. While volume is roughly flat year-over-year, as we continue to better align supply with customer demand, it was up approximately 2% from Q3 of fiscal 2020. AOI increased $370 million versus last year to $307 million. Lower input costs, net of pass-through pricing, along with the benefits of the strategic actions we have taken and the efficiencies the business has driven across our operations drove the growth in AOI.
Speaker Change: Sales in Q3 declined three 2% primarily due to the pass through of lower input costs and pricing, while volume was roughly flat year over year as we continue to better align supply with customer demand. It was up approximately 2% from Q3 of fiscal 'twenty two.
Curt Calaway: AOI increased $370 million versus last year to $307 million. Lower input cost, net of pass through pricing, along with the benefits of the strategic actions we have taken and the efficiencies the business has driven across our operations, drove the growth in AOI. We also experienced favorable year-over-year derivative impacts of $63 million, primarily related to a $65 million net derivative loss in Q3 last year. In beef, revenue was up 5.8% year over year in the quarter primarily due to the volume impact of higher average carcass weights, with pricing increasing 1.4%. While revenue increased, AOI decreased, primarily reflecting compressed spreads, as expected, which more than offset our continued progress on operational efficiencies.
Speaker Change: AOI increased $370 million versus last year to $307 million.
Speaker Change: Lower input costs net of pass through pricing along with the benefits of the strategic actions, we have taken and the efficiencies the business is driven across our operations drove the growth in NOI.
Kurt Calloway: We also experienced favorable year-over-year derivative impacts of $63 million, primarily related to a $65 million net derivative loss in Q3 last year. In beef, revenue is up 5.8% year over year in the quarter, primarily due to the volume impact of higher average carcass weights, with pricing increasing 1.4%. While revenue increased, AOI decreased primarily reflecting compressed spreads, as expected, which more than offset our continued progress on operational efficiency. Moving to pork, Q3 revenue increased a net 10.4% driven by higher prices per pound reflecting healthy global demand.
Speaker Change: We also experienced favorable year over year derivative impacts of $63 million, primarily related to a $65 million net derivative loss in Q3 last year.
Speaker Change: And beef revenue was up five 8% year over year in the quarter, primarily due to the volume impact of higher average carcass weights with pricing increasing one 4%.
Speaker Change: While revenue increased decreased primarily reflecting compressed spreads as expected, which more than offset our continued progress on operational efficiencies.
Curt Calaway: Moving to pork, Q3 revenue increased a net 10.4%, driven by higher price per pound, reflecting healthy global demand. AOI also increased $92 million year over year, benefiting from improved spreads and better operational risks.
Speaker Change: Moving to pork Q3 revenue increased a net 10, 4% driven by higher price per pound, reflecting healthy global demand.
Kurt Calloway: AOI also increased $92 million year-over-year, benefiting from improved spreads and better operational execution. Shifting to our financial position and capital, our commitment to disciplined capital allocation remains unchanged. Our priorities are to maintain financial strength, invest in the business, and return cash to shareholders, all while maintaining our investment grade credit. Cash Flow from Operations remains strong, with year-to-date approaching $2 billion, highlighting improved profitability and working capital management.
Speaker Change: <unk> also increased $92 million year over year benefiting from improved spreads and better operational execution.
Curt Calaway: Schifting to our financial position and capital allocation, our commitment to disciplined capital allocation remains unchanged. Our priorities are to maintain financial strength, invest in the business, and return cash to shareholders, all while maintaining our investment grade credit rating. Cash flow from operations remains strong, with year-to-date approaching $2 billion, highlighting improved profitability and working capital management. Operating cash flows was more than double our CapEx, which came in at $884 million a year-to-date. CapEx in Q3 of $263 million declined sequentially for the sixth consecutive quarter, reflecting our focus on controlling capital deployment while continuing to invest for capital allocation.
Speaker Change: Shifting to our financial position and capital allocation.
Speaker Change: Our commitment to disciplined capital allocation remains unchanged our priorities are to maintain financial strength invest in the business and return cash to shareholders, all while maintaining our investment grade credit rating.
Speaker Change: Cash flow from operations remained strong with year to date approaching $2 billion, highlighting improved profitability and working capital management.
Kurt Calloway: Operating cash flows was more than double our CapEx, which came in at $884 million year-to-date. CapEx in Q3 of $263 million declined sequentially for the sixth consecutive quarter, reflecting our focus on controlling capital deployment while continuing to invest for profitable growth. Year-to-date free cash flow of $1.1 billion is more than two and a half times better than the previous two fiscal years combined over the same period. We ended Q3 with $4.8 billion of liquidity.
Speaker Change: Operating cash flows was more than double our capex, which came in at $884 million year to date Capex in Q3 of $263 million decline sequentially for the sixth consecutive quarter, reflecting our focus on controlling capital deployment, while continuing to invest for profitable growth.
Curt Calaway: Year-to-date free cash flow of $1.1 billion is more than two-and-a-half times better than the previous two fiscal years combined over the same period. We ended Q3 with $4.8 billion of liquidity. Improving profits and strong cash management are also benefiting our net leverage, which declined sequentially again, coming in at three times in Q3, more than a full turn lower than where we exited fiscal 23. We continue focusing on returning net leverage to our long-term target of at or below two times net debt to adjusted EBITDA. We entered fiscal 24 with a plan of applying our controlling the controllables approach to enhance free cash flow generation.
Speaker Change: Year to date free cash flow of $1 $1 billion is more than two five times better than the previous two fiscal years combined over the same period.
Speaker Change: We ended Q3 with $4 $8 billion of liquidity.
Kurt Calloway: Improving profits and strong cash management are also benefiting our net leverage, which declined sequentially again, coming in at three times in Q3, more than a full turn lower than where we exited fiscal 2020. We continue focusing on returning net leverage to our long-term target of at or below two times net debt to balance it even. We entered fiscal 24 with a plan of applying our controlling the controllables approach to enhance free cash flow generation.
Speaker Change: Improving profits and strong cash management are also benefiting our net leverage which declined sequentially again coming in at three times in Q3 more than a full turn lower than where we exited fiscal 'twenty three.
Speaker Change: We continue focusing on returning net leverage to our long term target of at or below two times net debt to adjusted EBITDA.
Speaker Change: We entered fiscal 'twenty four with the plan of applying our controlling the controllable approach to enhance free cash flow generation. We've over delivered on that plan and remain committed to deploying resources to maximize long term shareholder value.
Curt Calaway: We've over-delivered on that plan and remained committed to deploying resources to maximize long-term shareholder value.
Kurt Calloway: We've over-delivered on that plan and remain committed to deploying resources to maximize long-term shareholders. Now, let's look at our updated outlook for fiscal. We are reiterating our overall sales guidance at roughly flat year over year.
Curt Calaway: Now let's look at our updated outlook for fiscal 24. We are reiterating our overall sales guidance that is roughly flat year-over-year. Based primarily on our improved outlook for chicken, we are raising our AOI guidance and tightening the range. For the total company, we now expect between $1.6 and $1.8 billion. Moving to the segments. In chicken, given the strong performance, we're raising our AOI guidance range to be between $850 and $950 million. For prepared foods, we are reiterating our AOI outlook of $850 to $950 million as we continue to perform in line with expectations. In beef, we are tightening our AOI guidance range to a loss between $400 million and $300 million, reflecting well-known challenges in the cattle cycle.
Speaker Change: Now, let's look at our updated outlook for fiscal 'twenty four.
Speaker Change: We are reiterating our overall sales guidance at roughly flat year over year.
Kurt Calloway: Based primarily on our improved outlook for chicken, we are raising our AOI guidance and tightening the reins. For the total company, we now expect between $1.6 and $1.8 billion. Moving to the, In chicken, given the strong performance, we're raising our AOI guidance range to be between $850 and $950 million. For Prepared Foods, we are reiterating our AOI outlook of $850 to $950 million as we continue to perform in line with expectations.
Speaker Change: Based primarily on our improved outlook for chicken, we are raising our guidance and tightening the range for the total company. We now expect between one six and $1 8 billion.
Speaker Change: Moving to the segments.
Speaker Change: And chicken given the strong performance, we're raising our <unk> guidance range to be between 850 and $950 million.
Speaker Change: For prepared foods, we are reiterating our outlook of $850 to $950 million as we continue to perform in line with expectations.
Kurt Calloway: In beef, we are tightening our AOI guidance range to a loss between $400 million and $300 million, reflecting well-known challenges in the cattle industry. In port, we are raising our AOI outlook to be between $100 and $200 million, highlighting improved year-to-date results versus expectations. To round out the key P&L items, we continue to anticipate interest expense to be roughly $395 million and our tax rate to be between 23% and 24%. Turning to CapEx, we are maintaining our tight controls on spending in line with profitability and cash flows and are narrowing our CapEx range to be between $1.2 and $1.3 billion.
Speaker Change: In beef, we are tightening our guidance range to a loss between $400 million and $300 million, reflecting well known challenges in the cattle cycle.
Curt Calaway: In port, we are raising our AOI outlook to be between $100 and $200 million, highlighted improved year-to-date results versus expectations. To round out the key P&L items, we continue to anticipate interest expense to be roughly $395 million and our tax rate to be between 23 and 24%. Turning to CAPEX, we are maintaining our tight controls on spending in line with profitability and cash flows, and are narrowing our CAPEX range to be between $1.2 and $1.3 billion this year. Before I turn the call back over to Donnie, I want to emphasize that our multi-protein multi-channel strategy is enabling us to raise the midpoint of our full-year AOI guidance by $100 million.
Speaker Change: In Port we are raising our outlook to be between 100 and $200 million.
Speaker Change: Highlighted improved year to date results versus expectations.
Speaker Change: To round out the key P&L items, we continue to anticipate interest expense to be roughly $395 million and our tax rate to be between 23 and 24%.
Speaker Change: Turning to Capex, we are maintaining our tight controls on spending in line with profitability and cash flows and are narrowing our capex range to be between one two and $1 $3 billion. This year.
Kurt Calloway: Before I turn the call back over to Donnie, I want to emphasize that our multi-protein, multi-channel strategy is enabling us to raise the midpoint of our full-year AOI guidance by $100 million. Now, I'll hand it over to Donnie to wrap up before we move on.
Speaker Change: Before I turn the call back over to Donnie I want to emphasize that our multi protein multichannel strategy.
Donnie: Is enabling us to raise the midpoint of our full year guidance by $100 million.
Donnie King: Now, I'll hand it over to Donnie to wrap up before we move to Q&A.
Donnie: Now I'll hand, it over to Donnie to wrap up before we move to Q&A.
Donnie King: Thanks, Curt.
Donnie King: Thanks, Kurt. Before we get to your questions, I want to express my deep gratitude to our incredible team. Your dedication and hard work are the driving forces behind our mission to feed the world like a family and bring high-quality food to every table in the world. Together, we have achieved a remarkable turnaround, and our momentum continues. Finally, I am grateful to our customers and consumers for their trust, loyalty, and partnership. I couldn't be more excited for the opportunities ahead of us and remain confident that our strategy will enable us to deliver long-term shareholder value. Now, I'll turn the call back over to Sean for Q&A instructions.
Donnie: Thanks, Kurt before we get to your questions I want to express my deep gratitude to our incredible team members your dedication and hard work are the driving forces behind our mission to feed the world like family and bring high quality food to every table in the world.
Donnie King: Before we get to your questions, I want to express my deep gratitude to our incredible team members. Your dedication and hard work are the driving forces behind our mission to feed the world like family and bring high quality food to every table in the world. Together we have achieved a remarkable turnaround, and our momentum continues.
Donnie: Together, we have achieved a remarkable turnaround and our momentum continues.
Donnie King: Finally, I am grateful to our customers and consumers for their trust, loyalty, and partnership. I couldn't be more excited for the opportunities ahead of us and remain confident that our strategy will enable us to deliver long-term shareholder value.
Donnie: Finally, I am grateful to our customers and consumers for their trust and loyalty and partnerships.
Donnie: I couldnt be more excited for the opportunities ahead of us and remain confident that our strategy will enable us to deliver long term shareholder value now I will turn the call back over to Sean for Q&A instructions.
Sean Cornett: Now, I'll turn the call back over to Sean for Q&A instructions. Thanks, Donnie. We will now move to your question. Please recall that our cautions on forward-looking statements and non-GAAP measures apply to both our prepared remarks and the following Q&A.
Sean Cornett: Thank you, Donnie. We will 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. We will now begin the questions.
Sean Cornett: Thanks, Tony.
Sean Cornett: 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.
Operator: Operator, please provide the Q&A instructions. We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. We ask that you please limit yourself to one question and one follow-up. If you have additional questions, please recue. At this time, we will pause momentarily to assemble our roster.
Operator: Operator, please provide the Q&A instructions.
Operator: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.
Speaker Change: We will now begin the question and answer session.
Operator: To ask a question you May Press Star then one on your Touchtone phone.
Operator: If you are using a speakerphone please pick up your handset before pressing the keys.
Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. We ask that you please limit yourself to one question and one follow-up. If you have additional questions, please re-queue. At this time, we will pause momentarily to assemble our roster. The first question comes from Ken Goldman with J.P. Morgan. Please go ahead.
Operator: Is it any time your question has been addressed and you would like to withdraw your question. Please press Star then two.
Operator: We ask that you please limit yourself to one question and one follow up.
Operator: If you have additional questions. Please re queue.
Operator: At this time, we will pause momentarily to assemble our roster.
Operator: Yes.
Kenneth Goldman: The first question comes from Ken Goldman with JP Morgan. Please go ahead. Hi, good morning, and thank you. I wanted to ask; I appreciate a lot of the information you gave about each segment. Thank you for that. Donnie, as you think about taking a step back, looking at kind of the underlying fundamentals, especially in your two biggest segments, chicken and beef, but across the company, what were the more important puts and takes in the quarter versus your expectations? What are the terms of how fundamentals came in against what you were initially anticipating?
Operator: The first question comes from Ken Goldman with Jpmorgan. Please go ahead Sir.
Kenneth Goldman: Hi, good morning, and thank you. I wanted to ask. I appreciate a lot the information you gave about each segment. Thank you for that. Donnie, as you think about, you know, taking a step back, looking at kind of the underlying fundamentals, you know, especially in your two biggest segments, chicken and beef, but across the company, kind of what were the more important puts and takes in the quarter versus your expectations, just in terms of how the fundamentals came in, you know, against what you were initially anticipating? Good morning, Ken and
Ken Goldman: Hi, good morning, and thank you.
I wanted to ask.
Speaker Change: I appreciate a lot of the information you gave about.
Speaker Change: Each segment. Thank you for that Donnie as you think about it.
Speaker Change: Taking a step back looking at kind of the underlying fundamentals, especially in your two biggest segments chicken and beef but across the.
Donnie: The company kind of what were the more important puts and takes in the quarter.
Speaker Change: Versus your expectations just in terms of how fundamentals came in.
Speaker Change: Against what you were initially anticipating.
Donnie King: Good morning, Ken, and thank you for the question. You know, let me start by saying we're pleased with our Q3 results, which is the best quarter in the last seven. We're seeing the benefits of our multi-protein portfolio for Chicken, Prepared, and Pork offsetting the headwinds in beef. In Q3, momentum continues to strengthen, and all of our businesses are executing better than they have in quite some time. We're executing against the priorities we laid out for fiscal year 24. In short, we are controlling the controls.
Donnie King: Good morning, Ken, and thank you for the question.
Good morning, Ken and thank you for the question.
Donnie King: Let me start with, we are pleased with our Q3 results, which is the best quarter in the last seven. We are seeing the benefits of our multi-protein portfolio. For chicken, prepared, and pork are offsetting the headwinds and beef. In Q3, momentum continues to strengthen, and all of our businesses are executing better than they have in quite some time. We're executing against the priorities we laid out for Fiscal Year 24. In short, we are controlling the controls; we are optimizing our network, and we remain focused on operational excellence. We have taken decisive action to drive performance and to build financial strength.
Speaker Change: Let me start with we are pleased with our Q3 results.
Speaker Change: Which is the best quarter in the last seven.
Speaker Change: We're seeing the benefits of our multi protein portfolio.
Speaker Change: Our chicken prepared port are offsetting the headwinds in beef.
Speaker Change: In Q3 momentum continues to strengthen and all of our businesses are executing better than they have in quite some time.
Speaker Change: We're executing against the priorities, we laid out for fiscal year 'twenty four.
Speaker Change: In short we are controlling the controllable.
Donnie King: We're optimizing our network, and we remain focused on operational excellence. We have taken decisive action to drive performance and to build financial strength. Our performance has given us confidence to raise our guidance. Let me step into the segments, and I'll start with chicken.
Speaker Change: We are optimizing our network.
Speaker Change: And we remain focused on operational excellence.
Speaker Change: We have taken decisive action to drive performance and to build financial strength.
Donnie King: Our performance has given us confidence to raise our guidance again.
Speaker Change: Our performance has given us confidence to raise our guidance again.
Donnie King: Let me step into the segments, and I'll start with chicken. Our focus on the fundamentals behind the number one brand is delivering results. Chicken had a strong Q3. We had the best adjusted operating income since fiscal year 16 of the eight years ago. Best capacity utilization since Q4 of 2018, six years ago. The best livability since Fiscal Year 20. Supply chain and SNOP processes allowing us to improve order field rate while simultaneously lowering our inventory and working capital. Indeed, we're managing through volatility and spread tightening. We continue to focus on operational excellence. In pork, better spreads and ongoing operational execution lets better profitability.
Speaker Change: Now, let me step into the segments and I'll start with chicken.
Donnie King: Our focus on the fundamentals behind the number one brand is delivering results. Chicken had a strong Q3. We had the best adjusted operating income since fiscal year 16. That was eight years ago.
Speaker Change: Our focus on the fundamentals behind the number one brand is delivering results.
Speaker Change: Chicken had a strong Q3.
Speaker Change: We had the best adjusted operating income since fiscal year 16, it was eight years ago.
Donnie King: Best capacity utilization since Q4 of 2018, six years ago. The best livability since fiscal year 20. Supply chain and SNOP processes, allowing us to improve order fill rates while simultaneously lowering our inventory and working capacity. In beef, we're managing through volatility and spread type. We continue to focus on operations, and Pork, Better Spreads, and Ongoing Operational Execution Led to Better Profitability, and Prepared Foods, our results were in line with our expectations. Our brands are strong, and our share remains healthy.
Speaker Change: Burst capacity utilization since Q4 of 2018 six years ago.
Speaker Change: The best <unk> ability.
Speaker Change: Since fiscal year 'twenty.
Speaker Change: Supply chain and <unk> processes.
Speaker Change: Showing us to improved order fill rate, while simultaneously lowering our inventory and working capital.
Speaker Change: And beef were managing through volatility in spread tightening we continue to focus on operational excellence.
Speaker Change: And pork better spreads and ongoing operational execution led to better profitability.
Donnie King: In prepared foods, our results were in line with our expectations. Our brands are strong, and our share remains healthy.
Speaker Change: In prepared foods, our results were in line with our expectations are.
Speaker Change: Our brands are strong and our share remains healthy.
Kenneth Goldman: Okay, thank you for that, Donnie. And then I had a quick follow-up. You know, as a company, you have a unique view into how restaurants are performing, particularly quick service. And I'm just wondering, you know, we've heard from some quick service restaurants lately, you know, that they're not necessarily seeing real improvements in traffic yet, but maybe there are some green shoots. Just as we, as they experience, you know, some of the initial early benefits as the companies lean harder into promotions and actions that appeal to maybe some lower income consumers. So I'm just curious what you are seeing from your perspective, from the restaurant industry in general, how it affects you.
Kenneth Goldman: Okay, thank you for that, Donnie. And then I had a quick follow-up. You know, as a company, you have a unique view into how restaurants are performing, particularly quick service. And I'm just wondering, you know, we've heard from some quick service restaurants lately that they're not necessarily seeing, you know, real improvements in traffic yet, but maybe there are some green shoots, just as we experience, you know, some of the initial early benefits, as the companies lean harder into promotions and actions that appeal to maybe some So I'm just curious what you're seeing from your perspective, from the restaurant industry in general, how it affects you, and if there are any real changes to your outlook on QSRs or fast food restaurants. Thank you.
Speaker Change: Okay. Thank you for that Donnie and then I had a quick follow up.
You know as a company you have a unique view.
Speaker Change: Two how restaurants are performing particularly quick service and I'm just wondering we've heard from some quick service restaurants lately.
Speaker Change: That they are not necessarily seeing.
Real improvements in traffic, yet, but maybe there are some green shoots.
Speaker Change: Just as we as they experience some of the initial early benefits.
Speaker Change: The company's lean harder into promotions and actions that appeal to and maybe some lower income consumers. So I'm just curious what you're seeing from your perspective from the restaurant industry in general how it affects you.
Donnie King: And if there's any real changes to your outlook in QSRs or QSRs in particular, thank you. So thanks, Ken. You know, I just, as a reminder, you know, in the protein space, there're typically lower levels of elasticity, and protein is a consumer staple. And I'd also remind you, Ken, and then I'll pass this over to Mellie to add a little more color on food service. But in retail, we hold leadership positions in eight of 10 categories in three of the top 10 brands and protein.
Speaker Change: And if theres any real changes to your outlook in <unk> or <unk> in particular, thank you.
Donnie King: So thanks, Ken. You know, just as a reminder, in the protein space, there typically are lower levels of elasticity, and protein is a consumer safe. And I'd also remind you, Ken, and then I'll pass this over to Melanie to add a little more color on food service. But, in retail, we hold leadership positions in eight of the ten categories and three of the top 10 brands in protein. So with that, Melanie, why don't you speak a little bit to me? Thank you, Donnie. I'm happy to do so.
Ken Goldman: So thanks Ken.
Speaker Change: Just as a reminder.
Speaker Change: In the protein space. They are typically are lower lower levels of elasticity.
Speaker Change: Protein is.
Consumer staples.
Melanie: And I'd also remind you Ken and then I'll pass this over to Melanie to add a little more color on foodservice.
Melanie: In retail we hold leadership positions in eight of 10 categories.
Melanie: And three of the top 10 brands in protein so with that why don't you speak a little bit too.
Melanie Boulden: So, with that, Mellie, why don't you speak a little bit to. Thank you, Donnie. Happy to do so. And Ken, I'm going to talk to you with my enterprise CGO hat on. So, first of all, the food service industry, as you know, it's large and demand for protein is strong as consumers see protein as an essential staple in their diets and meal routine. And Tyson Foods, a Tyson Foods, were advantaged because Tyson's diverse food server portfolio spans major proteins: chicken, beef, and pork. And this year, we've also seen a particular interest in our poultry offering as quick serve restaurants have been emphasizing value menu offerings.
Melanie Boulden: And Ken, I'm going to talk to you with my Enterprise CGO hat on. So, first of all, the food service industry, as you know, is large, and demand for protein is strong, as consumers see protein as an essential staple in their diets and meal routines. And Tyson Foods, at Tyson Foods, we're advantaged because Tyson's diverse food service portfolio spans major proteins, chicken, beef, and pork. And this year, we've also seen a particular interest in our poultry offerings as quick serve restaurants have been emphasizing value menu offerings.
Melanie Boulden: Thank you, Donnie. I'm happy to do so.
Melanie: Thank you Tani happy to do so and Ken I'm going to talk to you with my enterprise EG VGL had on.
Speaker Change: So first of all the food service industry as you know, it's large and demand for protein is strong as consumers see protein as an essential staple in their diets and be held routine and Tyson foods at Tyson foods, we're advantage because tyson diverse food sabra portfolio.
Speaker Change: Dan major proteins chicken beef and pork and this year. We've also seen a particular interest in our poultry offerings as quick serve restaurants have been emphasizing value menu offerings. These factors combined with our barge and flexible manufacturing infrastructure.
Melanie Boulden: These factors, combined with our large and flexible manufacturing infrastructure, have been instrumental in driving our performance. For example, our ability to quickly partner with customers on LTOs or limited time offerings to meet their business objectives, you know, we're operating at its best in class. At the same time, that flexibility is also helping us to better partner with our customers to quickly develop innovation. Now, our commercial scale is also a strategic advantage. On any given day, you'll find our products in school lunch programs, quick serve restaurants, fine dining establishments, and hospitals. You'll also find us in travel and entertainment venues such as airports, cruise ships, movie theaters, amusement parks, and concert venues.
Melanie Boulden: These factors, combined with our large and flexible manufacturing infrastructure, have been instrumental in driving our performance. For example, our ability to quickly partner with customers on LTOs or limited-time offerings to meet their business objectives is, you know, we're operating; it's best in class. At the same time, that flexibility is also helping us to better partner with our customers to quickly develop innovation. Now, our commercial scale is also a strategic advantage. On any given day, you'll find our products in school lunch programs, quick-serve restaurants, fine dining establishments, and hospitals. You'll also find us in travel and entertainment venues, such as airports, cruise ships, movie theaters, amusement parks, and concert venues.
Speaker Change: Have been instrumental in driving our performance for example, our ability to quickly partner with customers on <unk> or limited time offerings to meet their business objectives.
Speaker Change: Operating best in class at the same time that flexibility is also helping us to better partner with our customers to quickly develop innovation.
Speaker Change: Now our commercial scale is also a strategic advantage on any given day youll find our products and school lunch programs quick serve restaurants fine dining establishment and hospitals Youll also find us and travel and entertainment venues such as airports cruise ships.
Speaker Change: Movie theaters amusement parks and concert venues.
Melanie Boulden: This allows us to meet consumers where they are. Look, we remain focused on what we can control into the service, including improving our product pipeline with innovation to drive operator value and new customer acquisition. We're also focused on leveraging the diversity and flexibility of our broad manufacturing base to better serve our partners. And finally, we're focused on shifting the mix to advanced channels. So because of these actions, we're building momentum going into fiscal year 2025 and our physician well for continued growth.
Melanie Boulden: This allows us to meet consumers where they are. Look, we remain focused on what we can control in food service. Including improving our product pipeline with innovation to drive operator value and new customer acquisition. We're also focused on leveraging the diversity and flexibility of our broad manufacturing base to better serve our partners. And finally, we're focused on shifting the mix to advantage channels. Because of these actions, we're building momentum going into fiscal year 2025 and are positioned well for continued growth.
Speaker Change: This allows us to meet consumers where they are.
Speaker Change: We remain focused on what we can control in foodservice.
Including improving our product pipeline with innovation to drive operator value and new customer acquisition. We're also focused on leveraging the diversity and flexibility of our manufacturing base to better serve our partners and finally, we're focused on shifting the mix to advantaged channels. So because of these <unk>.
Speaker Change: Actions, we are building momentum going into fiscal year, 2025, and are positioned well for continued growth.
Speaker Change: Okay.
Adam Samuelson: The next question comes from Adam Samuelson with Goldman Sachs. Please go ahead. Yes, thank you. Good morning, everyone. Good morning, Adam. Good morning.
Operator: The next question comes from Adam Samuelson with Goldman Sachs. Please go ahead.
Speaker Change: The next question comes from Adam Samuelson with Goldman Sachs. Please go ahead.
Adam Samuelson: Yes, thank you. Good morning, everyone. Morning, Adam. Good morning. I was hoping to dig into the results in chicken a bit more and really parse some of the drivers of operating margin improvement between the lower grain costs, which I believe, at least on a gross basis in the Q, were quantified at $305 million versus some of the underlying, cost, and mixed actions that you've been undertaking, and how should we think about that? Progressing There's obvious implication in the guidance for 4Q, but Help Thank you. So
Adam Samuelson: Yes. Thank you good morning, everyone.
Adam Samuelson: Adam Good morning.
Adam Samuelson: I'm hoping to dig into the result in chicken a bit more and really parse some of the drivers of operating margin improvement between the lower grain costs, which I believe at least on a growth basis and the queue were quantified at 305 million versus some of the underlying cost and mix actions that you've been undertaking. And how should we think about that progressing? There's obviously an implication in the guidance for 4Q, but we'll help us think about what's embedded in the fourth quarter guidance from a net grain cost tailwind would be helpful. Thank you.
Adam Samuelson: I was hoping to dig into the results and chicken a bit more and really parse.
Speaker Change: Some of the drivers of operating margin improvement between.
The lower grain costs, which I believe at least on a gross basis in the Q or quantified at $305 million versus some of the underlying.
Speaker Change: Cost and mix actions that you've been undertaking and how should we think about that.
Speaker Change: Progressing there'll be some implications in the guidance for <unk>, but.
Speaker Change: So help us think about what's embedded in the fourth quarter guidance from our from under that grain cost tailwind would be would be helpful. Thank you.
Donnie King: So, Ken, thank you for the question. Let me start by saying I'm going to take this opportunity to pass this question over to our chief architect in poultry, Wes Morris. He's been the person responsible, with his team, for the chicken turnaround that we have seen. So, Wes?
Wes Morris: So, Kim, thank you for the question. Let me start by saying, I'm going to take this opportunity to pass this question over to our Chief Architect in Poultry at Westmore. He's been the person responsible. He and his team for the chicken turnaround that we have seen. So, West, yeah, thanks. Thanks, Connie. Overall, I'd say I'm very pleased with the improvement in our cost fundamentals, and we're well poised for growth. Nothing's really changed. The big three areas that we've talked about the last few quarters around our live plant, that's an OP. Our live results continue to improve.
Speaker Change: So Ken Thank you for the question.
Speaker Change: Let me start by saying.
West Morris: And we will take this opportunity to pass this question over to our chief architect and poultry at West Morris.
He has been the person responsible he and his team.
Wes: Or the chicken turnaround that we had seen so wes yes. Thanks, Donnie overall, I'd say I'm very pleased with the improvement in our cost fundamentals and we're well poised for growth.
Wes Morris: Yeah, thanks. Thanks, Donnie. Overall, I'd say I'm very pleased with the improvement in our cost fundamentals, and we're well-positioned for growth. But nothing's really changed. The big three areas that we've talked about in the last few quarters around our live plant and S&OP. Our live results continue to improve. Our HAT was up 360 basis points versus a year ago, just short of 83. Our livability improved 50 points to 93.71 in a pretty tough grow-out environment.
Speaker Change: Nothing has really changed the big three areas that we've talked about the last few quarters around our plant in <unk>.
Speaker Change: Okay.
Speaker Change: <unk> results continue to improve our hedge was up 360 basis points versus a year ago, just short of 83.
Wes Morris: Our hatch was up 360 basis points versus a year ago, just short of 83. Our livability, our livability improved 50 points to 9371 and a pretty tough grow-out environment. And then our cost 500 on the impacts of mail and then a very deliberate focus on our live fundamentals are paying big dividends. The network changes that are paying off our capacity utilization, as Donnie said, continues to improve sequentially. And we still have room to grow. And then our S&O P process continues to add value. Service was up 100 basis points on a water fill while reducing the working capital around 260 million.
Speaker Change: <unk> ability <unk> ability improved 50 points to $93 71 in a pretty tough grow out environment and then our cop 500 on the index Mail and then a very deliberate focus on.
Wes Morris: And then our COD 500 on the index mail and then a very deliberate focus on our live fundamentals are paying big dividends. The network changes that are paying off, capacity utilization, as Donnie said, continues to improve sequentially, and we still have room to grow, and then our S&OP process continues to add value. Service was up 100 basis points on order fill while reducing our working capital around $260 million. We have a really highly functioning demand planning and supply planning team, and our total poultry group is engaged in that area.
Our fundamentals are paying big dividends.
The network changes.
Speaker Change: Capacity.
Speaker Change: Utilization as Donnie said continues to improve sequentially and.
And we still have room to grow.
Donnie: And then our <unk> process continues to add value.
Donnie: Service was up 100 basis points on order fill while reducing our working capital of around $260 million.
Wes Morris: We have a really highly functioning demand planning and supply planning team, and our total poultry group is engaged in that area.
Speaker Change: We haven't really highly functioning demand planning and supply planning team and.
Speaker Change: And our total poultry group has engaged in that area.
Wes Morris: Now, we invested some of that operational improvement back into the business. As you know, we have the number one share in retail and food service, and we're focused on investing there. So, our Danville fully cooked plant is well started up. That location is about a year ahead of schedule from what we originally anticipated. We've got a strong innovation pipeline, we've invested in quality and consumer promotions, and so I think our range is good. We've raised our guidance to 850 to 950. Historically, Q1 and Q3 are our best quarters, with Q2 and Q4 being a little softer, and then the ongoing investments, so I feel well-balanced at the midpoint.
Wes Morris: Now, we invested some of that operational improvements back into the business. As you know, we have the number one chair in retail and food service, and we're focused on investing there. So our Danville fully cooked plant is as well started up. That location is about a year ahead of schedule from what we originally anticipated. We've got a strong innovation pipeline; we've invested in quality and consumer promotions, and so I think our range is good. We've raised our guidance state 50 to 950. Historically, Q1 and 3 are our best quarters, with 2 and 4 being a little softer, and then the ongoing investments.
Speaker Change: Invested some of that.
Speaker Change: Operational improvements back into the business as you know we have the number one share in retail and foodservice.
Speaker Change: And we're focused on investing there.
Speaker Change: Our Danville fully coke plants as well started up that location is about a year ahead of schedule from what we originally anticipated.
Speaker Change: We've got a strong innovation pipeline.
Speaker Change: We've invested in quality and consumer promotions and so.
I think our range is good.
Speaker Change: We've raised our guidance state 50 to non 50.
Speaker Change: Historically Q1, and three is our best quarters with two and for being a little softer.
Speaker Change: And then the ongoing investments.
Wes Morris: I feel well balanced at the midpoint.
Phil: Phil Phil well balanced at the midpoint.
Adam Samuelson: Okay, that's helpful. And then, as you alluded to in the prepared remarks, no obvious signs of herd rebuilding. Just as we think about the implication of that over the next couple of years with just pure cattle that are still going to be not coming to market, how do we think about your own capacity utilization and industry capacity utilization in the sector and kind of if you reach a breaking point there, we might have to see some capacity rationalization?
Phil: Okay.
Adam Samuelson: Okay, that's helpful, and then if I get a follow-up on beef and Donnie you alluded to in the prepared remarks, no obvious signs of herd rebuilding. Just as we think about the implication of that over the next couple of years with just fewer catalysts that are still going to be not coming to market.
That's helpful. And then if I could just ask a follow up on beef and Johnny you alluded to in the prepared remarks, no obvious signs of hard rebuilding.
Speaker Change: Just as we think about the implication of that over the next couple of years with just fewer.
Phil: Fewer catalyst for our company.
Speaker Change: We're still going to be coming not coming to market.
Donnie King: How do we think about in your own capacity utilization and industry capacity utilization of the sector and kind of a major breaking point there that we might have to see some capacity rationalization. Well, thanks Adam for the question, and I'll just start with saying this: it's going to be very challenging to continue to really forecast the outcomes relative to this beef cycle. Every beef cycle has some differences embedded within it, and one of the key indicators relative to the cycle is drought and monitoring drought and specific areas. So, as you alluded to, we haven't seen really any notable retention to date.
How do we think about your own capacity utilization of industry cash utilization in the sector and kind of as you reach a breaking point there that.
Speaker Change: We might have to see some capacity rationalization.
Brady Stewart: Well, thanks, Adam, for the question. And I'll just start by saying this: it's going to be very challenging to continue to really forecast the outcomes relative to this beef cycle. Every beef cycle has some differences embedded within it, and one of the key indicators relative to the cycle is drought and monitoring drought in specific areas. So, as you alluded to, we haven't really seen any notable retention to date. We've seen some differences relative to specific regions. And I would say that correlates really well relative to what those specific regions have from a climate and drought perspective. So when you definitely really evaluate it.
Speaker Change: Well, thanks, Adam for the question.
Speaker Change: I'll just start with saying this is going to be very challenging to continue to.
Speaker Change: Really forecast the outcomes relative to this beef cycle every beef cycle has some differences embedded within it and one of the key indicators relative to the cycle is.
Speaker Change: Droughts and monitoring drought in specific areas. So as you alluded to we havent seen.
Speaker Change: Really any notable retention to date, we've seen some differences relative to specific regions and I would say that tech correlates really well relative to what those specific regions have from.
Brady Stewart: We've seen some differences relative to specific regions, and I would say that that correlates really well relative to what those specific regions have from a climate and drought perspective. So when you definitely really evaluate, as we move forward, what we do know is we're not expecting any incremental supply here in the short term, which is consistent with. These beef cycles, however, we're really focused on what we can control, and the highlights for our beef team have been decreased cost year over year relative to our manufacturing, and our efficiencies have improved in our assets. We continue to see improvements in our yields and our plants.
Speaker Change: From a climate and drought perspective.
Speaker Change: So when you.
Speaker Change: Definitely really evaluates.
Brady Stewart: As we move forward, what we do know is we're not expecting any incremental supply here in the short term, which is consistent with these B cycles. However, we're really focused on what we can control. And the highlights for our beef team have been decreased cost year over year relative to our manufacturing, and our efficiencies have improved in our assets. We continue to see improvements in our yields in our plants. We're doing a better job of balancing our supply and demand of cattle for beef and what our consumers and customers are demanding as well. So when you parlay all of those things together, we'll continue to manage what we can control and focus on really indications in the future on this rebuild. So if I could add one thing,
Speaker Change: As we move forward what we do know is we're not expecting any incremental supply here in the short term.
Speaker Change: Which is consistent with.
Speaker Change: These <unk> cycles.
Speaker Change: However.
Speaker Change: We're really focused on what we can control.
Speaker Change: The highlights for our beef team has been decreased cost year over year relative to our manufacturing and our efficiencies have improved in our assets. We continue to see improvements in our yields in our plants.
Brady Stewart: We're doing a better job of balancing our supply and demand of cattle to beef and what our consumers and customers are demanding as well. So when you parlay all of those things together, I will continue to manage what we can control and focus on really indications in the future on this rebuild.
Speaker Change: We're doing a better job of balancing our supply and demand of cattle to beef and what our consumers and customers are demanding as well. So when you parlay all of those things together I will continue to manage what we can control and focus on really indications in the future on this.
Speaker Change: Rebuild.
Donnie King: So I could add one thing to that. Thank you, Brady.
Brady Stewart: So if I could add one thing to that.
Speaker Change: If I could add one thing to that.
Brady Stewart: Thank you, Brady. Our asset base is we're well invested and we are capable of running with the very best in the industry. I remind you, Adam and others, that the benefits of our multi protein portfolio, which is driving our momentum with the strength in chicken and prepared foods and pork, and we see that all setting challenges in beef. We see that continuing for a balance of the.
Brady: Thank you Brady.
Donnie King: Our asset base is we're well invested, and we are capable of running with the very best in the industry. I remind you, Adam, and others, of the benefits of our multi-protein portfolio, which is driving our momentum. With the strength in chicken and prepared foods and pork, and we see that all setting challenges for beef. We see that continuing for the balance of the earth.
Brady: Our asset bases, we're well invested in.
Brady: We are capable of running with the very best in the industry.
Brady: Ill remind you Adam and others that the.
Speaker Change: The benefits of our multi protein portfolio, which is driving our momentum.
Speaker Change: The strength in chicken and prepared foods and port and we see that offsetting challenges in pes, we see that continuing for the balance of the year.
Heather Jones: The next question comes from Andrew Trelzik with BMO. Please go ahead. Hey, good morning. Thanks for taking the questions. Hey, so my first question, you know, on the chicken business, you're certainly seeing very strong improvements. But my question is about opportunities for, I guess, further improvement from here, and where I'm coming from is. The margins were in the lower end of, you know, what typically is your normal range, despite those internal improvements, the seasonality benefits in the quarter, and the strong external environment.
Operator: The next question comes from Andrew Strelzik with BMO. Please go ahead.
Andrew <unk>: Alright. The next question comes from Andrew <unk> with BMO. Please go ahead.
Speaker Change: Yes.
Andrew Strelzik: Hey, good morning. Thanks for taking the questions. Hey, so my first question, you know, in the chicken business, you're certainly seeing very strong improvements. But my question is about opportunities for, I guess, further improvement from here. And where I'm coming from is that margins were in the lower end of, you know, what typically is your normal range, despite those internal improvements, seasonal benefits in the quarter, and the strong external environment. So can you maybe reflect on where the business is versus where it needs to be longer term and the path to more sustainably getting into that kind of normal chicken margin range?
Andrew <unk>: Hey, good morning, Thanks for taking the questions.
Andrew <unk>: Hey.
Andrew <unk>: My first question on.
Speaker Change: On the chicken business Youre certainly seeing.
Speaker Change: Very strong improvements.
Speaker Change: But my question is about opportunities for further improvement from here and where I'm coming from is the margins were in the lower end of <unk>.
Speaker Change: Would typically use your normal range. Despite those internal improvements the seasonality benefit in the quarter strong external environment. So can you maybe reflect on where the business is versus where it needs to be longer term in the past some more sustainably getting into that kind of normal chicken margin rich.
Heather Jones: So can you maybe reflect on where the business is versus where it needs to be longer term and the past some more sustainably getting into that kind of normal chicken margin range. Yeah, this is where, you know, I would say that we continue to focus on the fundamentals. We got a little different business mix and business volatility, and some of the commodity players, as we don't sell a lot outside raw materials, where prices immediate. We've got several pricing models; some are grain-based, and so as grain has come off, we pass that on to the customers, and that's fair.
Wes Morris: Yeah, this is Wes. You know, I would say that we should continue to focus on the fundamentals. We have a little different business mix and business volatility than some of the commodity players as we don't sell a lot of outside raw materials, where the price is immediate. We've got several pricing models. Some are grain-based, and so as the grain has come off, we pass that on to the customers, and that's fair. And then we have a high percentage of packaged goods, and so we're going to stay focused on stabilization of earnings over time, strong relationships with key customers, and sustainable value creation. So, regardless of what the markets are doing, I expect us to deliver best-in-class results over time and stay focused on the controllables.
Wes: Yes. This is Wes.
Wes: I would say that we continued to focus on the fundamentals.
Speaker Change: We got a little different business mix and business volatility and that some of the commodity players as we don't sell a lot of outside raw materials.
Wes: Or are prices.
Wes: Media.
Wes: We've got several pricing models, some are grain based and so as grain has come off.
Speaker Change: Pass that on to the to the customers and Thats fair.
Donnie King: And then we have a high percentage of package goods, and so we're going to stay focused on stabilization of earnings over time, strong relationships with key customers, and sustainable value creation. So, regardless of what markets are doing, I expect us to deliver best-in-class results over time and stay focused on the controllables.
And then we have a high percentage of packaged goods and so we're going to stay focused on stabilization of earnings over time strong relationships.
With key customers and sustainable value creation, so regardless of what markets are doing and I expect us to deliver best in class results over time and stay focused on the controllable.
Andrew Trelzik: Okay, that's helpful. And then on beef, I guess the guidance implies for the fourth quarter, you know, bigger losses. And so I guess just directionally, and I appreciate your comments on the difficulties with forecasting this part of the beef cycle here. I guess is there any way that you want us to think about directionally 25 versus 24 what the implications are for the fourth quarter into next year and then when you talk about controlling the controllables in beef, you know, what are some of those, you know, key controllables that you're most focused on or the levers that you can pull from here.
Andrew Strelzik: Okay, that's helpful. And then on beef, I guess the guidance implies bigger losses for the fourth quarter. And so I guess just directionally, and I appreciate your comments on the difficulties with forecasting this part of the beef cycle here. I guess, is there any way that you want us to think about directionally 25 versus 24, what the implications are for the fourth quarter into next year. And then when you talk about controlling the controllables in beef, you know, what are some of those key controllables that you're most focused on are the levers that you can pull from here? Thank you.
Speaker Change: Okay. That's helpful and then on beef I guess the guidance implies for the fourth quarter.
Speaker Change: The bigger losses, So I guess, just directionally and I appreciate your comments on the difficulties with with forecasting this part of the beef cycle here I guess is there any way that you want us to think about Directionally 25 versus 24, what the implications are for the fourth quarter into next year and then.
Speaker Change: When you talk about controlling the controllable zombies.
Speaker Change: What are some of those.
Speaker Change: Key controllable that you're most focused on are the levers that you pull from here. Thank you.
Andrew Trelzik: Thank you.
Donnie King: Sure. Andrew, let me just say this: you know, in terms of 25 outlook, it's a little bit early for us. We'll be happy to discuss that link in Q4. So look forward to that, you know, just a reminder, you know, there is no data doesn't support her rebuild at this point. And, but on a positive, no pastor conditions and feed costs are supported of a herdery bill. You know, interest rates, for example, might be a headwind, but there's no clear sign of half for retention.
Donnie King: Thank you for joining us today. There is no...data doesn't support herd rebuild at this point, but... On a positive note, pasture conditions and feed costs are supportive of a herd rebuild. Interest rates, for example, might be a headwind, but there's no clear sign ahead for retention. Brady, why don't you go deeper into that? Sure, and thanks for the question.
Speaker Change: Sure.
Speaker Change: Andrew Let me, let me just say this.
In terms of 25 outlook, it's a little bit early for us will be happy.
Speaker Change: To discuss it links in Q4, so look forward to that.
Speaker Change: Just a reminder.
Speaker Change: No there is no data doesn't.
Speaker Change: To support.
Speaker Change: Herd rebuild at this point.
Speaker Change: And.
Speaker Change: But.
Speaker Change: On a positive note pasture conditions and feed costs are supportive of the herd rebuild.
Speaker Change: Interest rates.
Speaker Change: For example might be a headwind.
Speaker Change: But there is no clear sign of Heifer retention, Randy why don't you go deeper into that.
Brady Stewart: Brady, why don't you go deeper into that? Sure, and thanks for the question, Andrew, and specifically on our beef performance, we are completely dialed in to making sure that we have cost-effective operations. And so everything from our harvest efficiencies and our assets to our yields to making sure that we are dialed in with our customers and consumers and balancing that to the type and kind of cattle that we're procuring. And making sure that we understand those value equations is where we've seen improvements in our operations. And the real call for us again is the significant year-over-year decrease in our manufacturing cost and our assets.
Brady Stewart: Sure, and thanks for the question Andrew, and specifically on our beef performance, we are completely dialed in to making sure that we have cost-effective operations, and so everything from our harvest efficiencies and our assets to our yields to making sure that we are dialed in with our customers and consumers and balancing that to the type and kind of cattle that we're procuring and making sure that we understand those value equations is where we've seen improvements in We're running a much better operation today than we were a year ago, and we're certainly proud of that and thank the team for their continued improvements in these areas.
Randy: Sure and thanks for the question, Andrew and specifically on.
Randy: Our beef performance.
Operator: The next question comes from Heather Jones with Vertical Group. Please go ahead.
Randy: We are completely dialed in to making sure that we have cost effective operations and so everything from our harvest efficiencies in our assets to our yields to making sure that we are dialed in with our customers and consumers and balancing that to the tightened kind of cattle that we're procuring and.
Randy: Making sure that we understand those value equations is where we've seen improvements in our operations and the real callout for US again is the significant year over year decrease in our manufacturing costs in our assets our running a much better operation today than we were a year ago, and we're certainly proud of that and thank the team for their continued improvements in.
Brady Stewart: We're running a much better operation today than we were a year ago, and we're certainly proud of that and thank the team for their continued improvements in these areas.
Randy: These areas.
Heather Jones: The next question comes from Heather Jones with Vertical Group. Please go ahead. Good morning. Congratulations on the quarter. I want to start with chicken and specifically the strong improvement shelf made there. And Wes, I think you said Hatch was up 360 bips year-on-year, nearly 83%, which is far better than the industry is doing. And since it's wondering if you could help us understand how much of that is sustainable improvements in the breed or in husbandry versus I would assume there's been some early liquidation from flocks related to plant closures. And so just trying to figure out how the model that going forward.
Randy: The next question comes from Heather Jones with vertical group. Please go ahead.
Heather Jones: Good morning. Congratulations on the quarter.
Heather Jones: Good morning, congratulations on the quarter.
Heather Jones: I want to start with chicken and specifically the strong improvement y'all have made there. And Wes, I think you said Hatch was up 360 bps year-on-year to nearly 83%, which is far better than the industry is doing. And so I was just wondering... If you could help us understand how much of that it is... Sustainable improvements in the breed or in husbandry versus, I would assume there's been some early liquidation of some flocks related to plant closures, and so just trying to figure out how to model that going forward.
Heather Jones: I wanted to start with chicken.
Heather Jones: Specifically the strong improvements you've made there.
Wassa: And Wassa. Thank you said hatch was up 360 bps year on year to nearly 83%, which is far better than the industry is doing as I was just wondering.
Speaker Change: If you could help us understand how much of that is <unk>.
Speaker Change: Stable improvements in the breed husbandry versus.
Speaker Change: I would assume there's been some.
Speaker Change: Early liquidation from swaps related to plant closures and so I'm just trying to figure out how to model that going forward.
Wes Morris: Yes, sure, Heather. Thank you for the question. You know, we see the USDA data, and no question the industry egg sets and weights are well up, but the birds simply aren't making it to the plant. And so our genetics and strategic focus are just the opposite. I did say our hatch is up 360 bases points.
Wes Morris: Yeah, sure, Heather. Thank you for the question. You know, we see the USDA data, and no question in the industry exists, and waits are well up, but the birds simply aren't making it to the plant. And so our genetics and strategic focus are just the opposite. I did say our hatch is up 360 basis points. I do believe it is sustainable. I think we've got the right programs in place. We're seeing intense focus on the execution. Our grower partners are buying into the performance. And our liability is up 50 points, even in a tough growout environment.
Heather Jones: Sure Heather. Thank you for the question, we say the USDA data and no question the industry exits and weights are well up.
Speaker Change: The bird simply arent, making making it to the plant.
Speaker Change: So our genetics and strategic focus are just the opposite.
Speaker Change: They are hatched is up 360 basis points.
Wes Morris: I do believe it is sustainable. I think we've got the right programs in place. We're seeing intense focus on the execution. Our grower partners are buying into the performance. And our livability is up 50 points, even in a tough grow-out environment. So we're obviously outperforming in life. And yes, I believe that to be not only sustainable when we hit the fall cooler weather, but I expect it to improve.
Speaker Change: I do believe it is sustainable.
Speaker Change: Got it.
Speaker Change: The right programs in place we're seeing.
Speaker Change: Intense focus on the execution of our grower partners are buying into the performance.
Speaker Change: And our liability is up 50 points, even in a tough grow out environment. So, we're obviously outperforming and live and yes, I believe that.
Heather Jones: So we're obviously outperforming in life. And yes, I believe it to be not only sustainable when we hit the fall cooler weather; I expect it to improve. Okay, thank you for that.
Speaker Change: So to be not always sustainable when we hit the.
Speaker Change: Paul cooler weather I expect it to improve.
Heather Jones: Thank you for that. And then my follow-up is on beef, and I just... I hate to be a dead horse, but just.
Speaker Change: Okay. Thank you for that and then my follow up is on.
Heather Jones: One of my follow up is on beef, and I just hate to be at a dead horse, but just there's some big differences between the last cycle. So the rebuild has been very slow in coming, and it's likely to be more extended. You've got plants being added this time; your imports are far larger than they were last time.
Speaker Change: And I just.
Speaker Change: Hate to beat a dead horse, but just.
Brady Stewart: There are some big differences between the last cycle and this one, so the rebuild has been. Very slow in coming, and it's likely to be more extended. You've got plants being added this time. Your imports are far larger than they were last time, so I'm just wondering if you have a sense of how long this downturn could last and if Tyson needs to maybe permanently reduce days of slaughter at certain plants, or just how are y'all planning on tackling that?
Speaker Change: There are some big differences between the last cycle. So the rebuild has been.
Speaker Change: Very slow in coming and is likely to be more extended.
Speaker Change: Got plans to be an added this time you're <unk>.
Speaker Change: Imports are far larger than they were last time.
Heather Jones: So I'm just wondering if you have a sense of how long you think this down could turn could last. And if Tyson needs to maybe permanently reduce days of slaughter at certain plants or just how are y'all plan on tackling and tackling that? Thanks for the question, Heather. And again, I just go back to that drought monitor, the USDA and NOAA, a publishing produce and so through the last cycle. Obviously, we saw drought in that 2012, 2013. And then relatively good rebound in 14, 15, and 16, and then really, from a growth perspective in beef cow country, really, really low persistence relative to drought in the 19 that led into some really good numbers here within the last three to five years.
I'm just wondering if you have a sense of how long you think this downturn darn can last and.
Speaker Change: If tyson niche Kip.
Speaker Change: Maybe permanently reduce days of slaughter at certain plants I guess, how are you all planning on tackling tackling that.
Brady Stewart: Thanks for the question, Heather. And again, I just go back to that drought monitor that the USDA and NOAA publish and produce, and so through the last cycle, obviously, we saw drought in 2012, 2013, and then relatively good rebound in 14, 15, and 16, and then, really, really low persistence relative to drought in 19 that led into some really good numbers here within the last three to five years. And so we'll continue to evaluate and understand and focus on that.
Speaker Change: Thanks for the question Heather again, I'd just go back to that drought monitor the USDA.
Speaker Change: In OE pump.
Speaker Change: Publish in produce and.
Speaker Change: So to the last cycle, obviously, we saw drought net 2012 2013, and then relatively good rebound in 14, 15, and 16 and then really.
Speaker Change: From a growth perspective.
Speaker Change: Beef cow country.
Speaker Change: Really really low <unk>.
Speaker Change: Persistence relative to droughts in the 19 that led into some really good numbers here.
Donnie: Within the last three years to five years, and so we'll continue to evaluate and understand and focus on that that's really a prerequisite to this rebuild donnie.
Brady Stewart: And so we'll continue to evaluate and understand folks on that. That's really a prerequisite to this rebuild. Donnie outlined some of the other factors that are in play relative to the rebuild as well, but just to reiterate what Donnie said as well. We've made really good investments in our beef operations, and we like our asset back base. We like our team. We like to supply partnerships we have both on the cattle supply and the partnerships we have with our customers as well. And really have laid out a variety of range of outcomes and understanding where this where the cycle will really go and when, most importantly, and I'll continue to evaluate that as we move.
Brady Stewart: That's really a prerequisite to this rebuild. Donnie outlined some of the other factors that are in play relative to the rebuild as well, but just to reiterate what Donnie said as well, we've made really good investments in our beef operations, and we like our asset base. We like our team. We like the supply partnerships we have, both on the cattle supply. And the partnerships we have with our customers as well, and we really have laid out a variety of range of outcomes and understanding where this cycle will really go and when. Most importantly, and I'll continue to evaluate that as we move forward, and if I could, I would
Donnie: Outlines some of the other factors that are in play relative to the rebuild as well but.
Donnie: Just to reiterate with Donny said as well.
Donny: We've made really good investments in our beef operations and we like our asset base.
Donny: Like our team.
Donny: We liked the supply partnerships, we have both on the cattle supply.
Speaker Change: And the partnerships, we have with our customers as well and really are laid out.
Speaker Change #100: Variety of range of outcomes and understanding where this where the cycle really go and win most.
Brady: Most importantly, and I will continue to evaluate that as we move forward and if I could I would add this too to brady's comments once again Heather.
Donnie King: forward.
Donnie King: And if I could, I would add this to Brady's comments. Once again, Heather, the benefits of our multi-protein portfolio and the momentum and the strength which we have there, with chicken prepared foods, pork, and even our international business, all setting this cattle cycle that we're in. So we've been able to do that, did that well in Q3, and I would expect that for the balance of the year. And we think we will have a good overall fiscal 25. It's too early to talk about that in great detail, but we're very optimistic about 25.
Donnie King: And if I could, I would add this to Brady's comments once again, Heather, the benefits of our multi-protein portfolio and the momentum and the strength which we have there. We're checking prepared foods, pork, and even our international business, all setting those, you know, this cattle cycle that we're in. So we've been able to do that, did that well in Q3, and I would expect that for the balance of the year, and we think we will have a good overall physical 25. It's too early to talk about that in great detail, but we're very optimistic about 25.
Speaker Change #101: The benefits of our multi protein portfolio.
Speaker Change #102: The momentum and the strength, which we have there where chicken and prepared foods pork and even our international business.
Speaker Change #102: Offsetting those.
This catalyst cycle that we're in so we.
Speaker Change #102: We've been able to do that did that well in Q3.
Speaker Change #102: I would expect that for the balance of the year end and we think we will have a good overall fiscal 'twenty, it's too early to talk about that in great detail, but.
Speaker Change #102: We're very optimistic about 25 million.
Michael Lavery: The next question comes from Michael Lavery with Piper Sandler. Please go ahead. Thank you. Good morning. Just wanted to come back to prepared foods. You said the volume growth was driven by food service, but overall price was pretty flat. I'm just trying to get a sense of the promotional environment, and maybe if you could give us a little split between food service and retail, how they looked, and just what it's sort of price expectations you have going forward. Are you seeing, you know, we're hearing from a lot of companies that consumers are kind of blocking at some of the prices.
Operator: The next question comes from Michael Lavery with Piper Sandler. Please go ahead.
Speaker Change #102: The next question comes from Michael Lavery with Piper Sandler. Please go ahead.
Michael Lavery: Thank you good morning.
Michael Lavery: Morning. I just wanted to come back to Prepared Foods. You said the volume growth was driven by food service, but overall price was pretty flat. I'm just trying to get a sense of the promotional environment, and maybe if you could give us a little split between food service and retail, how they looked, and just what...
Michael Lavery: Just wanted to come back to prepared foods, you had said the volume growth was driven by foodservice, but <unk>.
Michael Lavery: Overall price.
Speaker Change #104: <unk> was pretty flat.
Speaker Change #105: I'm, just trying to get a sense of the promotional environment.
Speaker Change #106: Maybe if you could give us a little split between foodservice and retail how they looked in and just what.
Speaker Change #106: Sort of.
Speaker Change #106: Price expectations, you have going forward are you seeing we're hearing from a lot of companies that consumers are kind of bulking. It at some of the prices are you having to promote a little bit more can you can you just give us.
Michael Lavery: Are you having to promote a little bit more? Can you just give us, you know, kind of a finger on the pulse and where the consumer is these days?
Speaker Change #106: Kind of a finger on the pulse of where the consumer is these days.
Melanie Boulden: Yes, so thanks, Michael. Let me give you first an overview of our Q3 performance, and then I'll dive a little bit deeper into kind of the promotional environment that we're seeing. So overall, the prepared foods third quarter performance, as you know, was in line with our expectations, and we're pleased with the results as we delivered both volume and sales growth. But, as you know, we made a number of investments in our plans to add new capacity and capabilities. That's important to remember as our profit was roughly flat to year ago, when you adjust for the incremental expenses associated with the ramp-up those additions.
Speaker Change #108: Yeah. Thanks, Michael Let me give you first an overview.
Melanie Boulden: Transcribed by https://otter.ai
Speaker Change #109: Our Q3 performance and then I'll dive a little bit deeper into kind of the promotional environment that we're seeing.
Melanie Boulden: Yeah, so thanks, Michael. Let me give you an overview of our Q3 performance, and then I'll dive a little bit deeper into kind of the promotional environment that we're seeing. So overall, our Prepared Foods third-quarter performance, as you know, was in line with our expectations, and we're pleased with the results as we delivered both volume and sales growth. But, as you know, we made a number of investments in our plan to add new capacity and capabilities.
Speaker Change #109: So overall, our prepared foods third quarter performance.
Speaker Change #110: As you know was in line with our expectations and we're pleased with the results as we delivered both volume and sales growth.
Speaker Change #110: But as you know we made a number of investments in our plan to add new capacity and capability.
Melanie Boulden: That's important to remember as our profit was roughly flat a year ago when you adjust for the incremental expenses associated with the ramp-up of those additions. Also important to note is that our results were achieved despite lacking a period of higher merchandising levels and lower input costs.
Speaker Change #110: Thats important to remember as our profit was roughly flat to year ago. When you adjust for the incremental expenses associated with the ramp up of those additions.
Melanie Boulden: Also important to note is that our results were accomplished despite laughing a period of higher merchandising levels and lower input costs. And there's really three key factors that drove our performance in the quarter. First, our operational excellence has improved dramatically. We've had tremendous commercial success, and then, as you noted, our food service volume growth was strong. Now, as I think about our promotional environment, please know that, you know, our teams closely monitor in-market pricing dynamics, elasticity, and proposal and promotional performance at a granular level. We have a disciplined approach to pricing and promotions, and we make changes to our strategies as the consumer landscape evolves.
Speaker Change #110: Also important to note is that our results were accomplished despite lapping a period of higher merchandising levels and lower input costs and there's really three key factors that drove our performance in the quarter first our operational excellence.
Melanie Boulden: And there are really 3 key factors that drove our performance in the quarter. First, our operational excellence has improved dramatically. We've had tremendous commercial success. And then, as you noted, our food service volume growth was strong.
Speaker Change #111: Dramatically, we had tremendous commercial success and then as you noted are.
Foodservice volume growth.
Speaker Change #111: What's strong now as I think about our promotional environment. Please note that our team closely monitor end market pricing dynamic elasticities and propose and promotional performed at a granular level.
Melanie Boulden: Now, as I think about our promotional environment, please know that our team closely monitors in-market pricing dynamics, elasticities, and promotional performance at a granular level. We have a disciplined approach to pricing and promotions, and we make changes to our strategies as the consumer landscape evolves. But this doesn't mean that we're just reactive.
Speaker Change #111: We have a disciplined approach to pricing and promotions and we made changes to our strategy as the consumer landscape evolve now this doesn't mean that we're just reactive at the strength of our brands our customer relationships are data driven consumer insights.
Melanie Boulden: Now, this doesn't mean that we're just reactive. The strength of our brands, our customer relationships, our data driven consumer insights, you know, and our leadership position across multiple categories affords us the opportunity to act fast when the marketplace changes. And now pricing and promotion, there are a couple of the key levers, but we're also focused on ensuring that our items are in the right package and in the right channel to meet consumers' needs. I would say it's also important, you know, to remember what Donnie highlighted: that protein, which consumers see as an essential staple, enjoy lower elasticity than other food categories.
Melanie Boulden: The strength of our brands, our customer relationships, our data-driven consumer insights, and our leadership position across multiple categories affords us the opportunity to act fast when the marketplace changes. And now, pricing and promotion are a couple of the key levers, but we're also focused on ensuring that our items are in the right package and in the right channel to meet consumers' needs. I would say it's also important to remember what Donnie highlighted, that protein, which consumers see as an essential staple, enjoys lower elasticities than other food categories. I point to all these factors as the reason that Tyson's retail volume grew in the quarter. Okay.
Speaker Change #111: Our leadership position across multiple categories.
Speaker Change #112: <unk> the opportunity to act that when the marketplace changes.
Dr. <unk>: And now pricing and promotion there are couple of the key levers. We're also focused on ensuring that our items are in the right package and in the right channel to meet consumers' needs I would say, it's also important to remember what Dr. <unk> highlighted that protein, which consumers see as in.
Dr. <unk>: The essential staple enjoy lower elasticities and other food categories. Therefore, we believe consumers will continue to prioritize protein.
Melanie Boulden: Therefore, we believe consumers will continue to prioritize protein. I point to all these factors as the reason that Tyson's retail volume grew in the quarter. Okay, great.
Dr. <unk>:
Dr. <unk>: I would point to all of these factors is the reason.
Speaker Change #114: Tightens retail volume grew in the quarter.
Michael Lavery: Okay, great. Thank you so much.
Speaker Change #115: Okay, great. Thank you so much.
Michael Lavery: Thank you so much. The next question comes from Benzer with Barclays. Please go ahead. Yeah, good morning, Donnie, Curt. Thanks for taking a question. So we just wanted to dig a little bit into like the cadence 3, Q and 2, 4, Q because if I remember right, roughly three months ago, you've talked about potential downside risks to the first fiscal quarter. A typical seasonality, it seems like that didn't turn out. So maybe can you help us understand what was different than the quarter versus would you initially expect it to come out to that? Close to 500 million operating income and how that then relates and to call it maybe the higher end versus the lower end of that remaining guidance for 4, Q.
Speaker Change #115: Yes.
Operator: The next question comes from Ben Theurer with Barclays. Please go ahead.
Speaker Change #115: The next question comes from Ben Theurer with Barclays. Please go ahead.
Benjamin Theurer: Yeah, good morning, Donnie, and Kurt. Thanks for taking the question. So we just wanted to dig a little bit into the cadence 3Q into 4Q because, if I remember correctly, roughly three months ago, you talked about potential downside risks to the first fiscal quarter, atypical seasonality, and it seems like that didn't turn out. So maybe can you help us understand what was different in the quarter versus what you initially expected to come out to that close to $500 million in operating income and how that then relates and That would be my first question. Thank you.
Ben Theurer: Yes, good morning.
Johnny Kurt Thanks, Thanks for taking my question.
Ben Theurer: So just wanted to dig a little bit into the cadence of <unk> to <unk>, because if I remember right roughly three months ago, you've talked about potential downside risks to the third fiscal quarter.
Speaker Change #117: A typical seasonality it seems like that didn't turn out. So maybe can you help us understand what was different in the quarter versus what you initially expected to come out to that close to $500 million of operating income and how that relates to call. It maybe the higher end versus lower end of that remaining guidance.
Benzer: That will be my first question. Thank you. Yeah, thanks. Thanks, Ben. This occurred.
Speaker Change #118: <unk> that would be my first question. Thank you.
Kurt Calloway: Yeah, thanks. Thanks, Ben. This is Kurt. I'll kick it over to Wes in just a minute, but principally speaking, right, we, we talked about the back half of the year and a little bit of seasonality challenges that we perhaps could have, but to be specific in your question before turning over to Wes, it was, it was really, you know, some stronger chicken performance than we had anticipated when we talked three months ago, but overall, kind of the construct that we thought about the back half of the year, you know, relatively in line, but certainly as, as we said earlier, increase the overall midpoint of our guidance by a hundred million dollars, really with the strength of Q3 and I'll, I'll turn over to Wes to talk a little bit about chickens performance. Yeah, I'll take.
Speaker Change #118: Yeah. Thanks. Thanks, Ben this is Kurt I'll kick it over to Wes in just a minute, but principally speaking right. We talked about the back half of the year and a little bit of seasonality challenges that we perhaps could add but.
Curt Calaway: I'll take it over to West in just a minute, but principally speaking, right? We talked about the back half of the year and a little bit of seasonality challenges that we perhaps could have out to be specific, and your question before turn over to West. It was it was really, you know, some stronger chicken performance than we had anticipated when we talked three months ago. But overall, kind of the construct that we thought about the back half of the year, you know, relatively in line, but certainly, as we said earlier, increase the overall midpoint of our guidance by $100 million, really with the strength of Q3.
Wes: To be specific to your question before I turn it over to Wes It was really.
Wes: Some stronger chicken performance than we had anticipated when we talked three months ago, but overall kind of the construct that we thought about the back half of the year.
Wes: Relatively in line, but certainly as we said earlier increased the overall mid point of our guidance by $100 million really with the strength of Q3.
Wes Morris: And I'll turn over to West to talk a little bit about seconds' performance. Yeah, I'll take I'll take a big part of that change and it's pretty simple. Our poultry teams improving faster than I expected or that we models in a lot of different areas. Like live, for instance, that we just talked about, or supply the man planning group. And so we haven't called a different play. We've just executed faster than I expected. Okay, and then my follow up, I know it tends to not get that much of attention, but it feels like it's coming together a little bit better on the international side.
West Morris: I will turn over to west to talk a little bit about chickens performance.
Wes Morris: Yeah, I'll take a big part of that change, and it's pretty simple. Our poultry team is improving faster than I expected or that we modeled in a lot of different areas, like live, for instance, that we just talked about, or our supply-demand planning group. And so we haven't called a different play. We've just executed it faster than I expected.
West Morris: I'll take a big part of that.
West Morris: Change and it's pretty simple, our poultry teams improving faster than I expected or that we've modeled.
West Morris: And a lot of different areas like <unk> for instance, that we just talked about our supply demand planning group and so.
Speaker Change #119: We haven't called the different play.
Speaker Change #119: Just execute it faster than I expected.
Benjamin Theurer: Okay. And then my follow-up, I know it tends to not get that much attention, but it feels like it's coming together a little bit better on the international side. Could you share some of the initiatives you're currently doing and how the international business, how you think about this in the medium term? Because I know, Donnie, you always talk about growth and demand in the international market. So just to understand how you think of investing and positioning yourself to even further accelerate growth in the international segment. Sure.
Speaker Change #120: Okay, and then my follow up I know it gets to that.
Speaker Change #121: I get that much of attention, but it feels like it's coming together a little bit better is only on the international side.
Donnie King: Could you share some of the initiatives you're currently doing and how that international business, how you think about this and the medium term? Because I know Donnie, you always talk about the growth demand growth as an international market, so just to understand how you think of investing and positioning yourself to even further accelerate the growth in the international segment. Sure. You know, our international business does continue to grow. And if you'll recall, over the last couple of years, we've invested heavily behind a number of assets in China and Southeast Asia. Now, I would tell you that in those marketplaces, there are a number of macroeconomic and geopolitical headwinds.
Speaker Change #122: Could you share some of the initiatives, you're currently doing and how that international business. How you think about this.
Speaker Change #122: The medium term because I know Don you always talk about.
Don: The growth demand growth in international markets. So just to understand how you think of investing and positioning yourself to even further accelerate the growth in the international segment.
Donnie King: Sure. You know, our international business does continue to grow. And if you'll recall, over the last couple of years, we've invested heavily in a number of assets in China and in Southeast Asia. I would tell you in those marketplaces, there are a number of macroeconomic and geopolitical headwinds. But we have seen a little better. improvement in Raw Materials.
Don: Sure.
Speaker Change #124: Our international business does continue to grow and if youll recall over.
Speaker Change #124: Over the last couple of years, we've invested heavily behind a number of assets.
Speaker Change #124: And in China and.
Speaker Change #124: Southeast Asia I would tell you in those marketplaces, there are a number of macroeconomic and geopolitical headwinds.
Devon Cole: We have seen a little better improvement in raw materials.
Speaker Change #124: We have seen a little better.
Donnie King: But to go any deeper into that, let me introduce Devin Cole, who is new to this call but not new to Tyson. And he's just returned to our company in March as the head of our global McDonald's business. And now we've added the international business to him. And so with that, Devin, welcome and
Speaker Change #124: Improvement in raw materials.
Devon Cole: But to go any deeper into that, let me introduce Devon Cole, who is new to this call but not new to Tyson, and he's just returned to our company in March. He's been the head of our global McDonald's business, and now we've added the international business onto him. And so with that, Devon, welcome. Thank you, Donnie. Of course, it's pretty early in the process of evaluating this business from my standpoint, but I would tell you that I'm encouraged by the quality of our team assets that I've had the chance to see around the world. We're really focused on some very key metrics, and that's just keep our team members safe, make sure we've got the best food safety.
Devin Cole: But to go any deeper into that let me introduce Devin Cole who is new to this call, but not new to Tyson.
Devin Cole: He has just returned to our company in March he has been the head of our global Mcdonalds business and now we've added the international business.
On to him and so with that Devon welcome Ed.
Devin Cole: Thank you Dani.
It's pretty early in the process for valuation of this business from my standpoint, but I would tell you that I'm encouraged by the quality of our team assets that I've had the chance to see around the world.
Devin Cole: We're really focused on some very key metrics, and that's just to keep our team members safe, make sure we've got the best food safety, the best product quality innovation for all of our customers around the world, and also highly focused on operational excellence as we bring these new facilities up to speed. I'm convinced that we have the assets and the team to deliver a portfolio of products to meet both customer and consumer needs around the world, and really, what this will allow us to do is to provide the growth and results that we expect and that we need to drive the operational efficiencies and capacity utilization of these assets. So, if I may,
Devin Cole: We're really focused on some very key metrics, let's just keep our team members safe.
Devin Cole: We've got the best food safety, the breath of product quality innovation for all of our customers around the world, but also focused on operational excellence as we bring these new facilities up to speed.
Devon Cole: The best product quality innovation for all of our customers around the world. It also focused highly on operational excellence as we bring these new facilities up to speed. A young convince that we have the assets and the team to deliver the portfolio products to meet both customer consumer needs around the world. And really what this will allow us to do is to provide the growth and results that we expect and that we need to drive the operational efficiencies and capacity utilization in these assets.
Devin Cole: I'm convinced that we have the assets and the team to deliver the portfolio of products to.
Devin Cole: To meet both customer and consumer needs.
Devin Cole: Around the world.
Devin Cole: What this will allow us to do is provide the growth in results that we expect and that we need to drive the operational efficiencies.
Capacity utilization in these assets.
Donnie King: So if I may just add one other thing to that, Devin, and thank you. As many of you will recall, Amy Tu was the leader of our international business. Since we were together last, Amy has decided to retire, and I know she is probably listening today, and I just want to say that we miss her and thank her for her many contributions to the company. We wish Amy and her husband, Christian, well. But we have Devin in the seat now, and I look forward to many, many conversations and exceptional things as it relates to international affairs.
Donnie King: So if I may just add one other thing to that, Devon, and thank you. Many of you will recall Amy too, but was the leader of our international business. Since we were together last, Amy has decided to retire, and I know she is probably listening today, and I just want to say that we miss her and thank her for many contributions to the company. We wish Amy and her husband Christian well, but we have Devon in the seat now and look forward to many, many exceptional things as it relates to international.
Speaker Change #126: So let me just add one other thing to that Devin and acute.
Speaker Change #127: Many of you will recall Amy too was the leader of our international business. Since we were together last Amy has decided to retire and I know she is probably listening today in that.
Speaker Change #128: Just wanted to say that we miss her and thank her for her many contributions to the company, we wish Amy and her hesitant Christian well.
Speaker Change #128: But we have a we have devin in the seat now and look forward to many many.
Speaker Change #128: Sure.
Speaker Change #128: Exceptional things as it relates to international.
Peter Galbo: The next question comes from Peter Galvo with Bank of America.
Operator: The next question comes from Peter Galbo with Bank of America. Please go ahead.
Speaker Change #129: The next question comes from Peter Galbo with Bank of America. Please go ahead.
Peter Galbo: Please go ahead.
Peter Galbo: Hey guys, good morning. Thanks for taking the time to answer the question.
Peter Galbo: Hey guys, good morning. Thanks for taking the question. Donnie and Wes, maybe just a quick one on chicken, because I know we've spent quite a bit of time on it on the call. Just help us parse out maybe as we think about sustainability of chicken profitability into 25. How much in the quarter kind of you attribute to market factors relative kind of to the underlying and not a game for specific numbers, but if it's percentages or however you kind of think about what throws the Q3 over delivery. Again, as we try and project that forward into 4Q and 25.
Peter Galbo: Hey, guys. Good morning, Thanks for taking the questions.
Speaker Change #129: Okay.
Peter Galbo: Donnie and Wes, maybe just a quick one on chicken because I know we've spent quite a bit of time on it on the call. Just, Unknown Speaker, help us parse out maybe as we think about the sustainability of, you know, chicken profitability into 25, how much in the quarter kind of you attribute to market factors relative kind of to the underlying and not looking even for specific numbers, but if it's percentages. However, you kind of think about what drove the Q3 overdelivery again as we try and, you know, project that forward into 4Q and 25.
Speaker Change #129: Dani.
Speaker Change #129: Donny and what maybe just a quick one on chicken because I know we've spent quite a bit as highlighted on the call just.
Speaker Change #131: Help us parse out maybe as we think about sustainability.
Speaker Change #132: Chicken profitability into 25, how much in the quarter kind of you attribute to market factors relative to the underlying in the game and for specific numbers, but if it's percentages are.
Speaker Change #133: However, you kind of think about what drove the Q3 over delivery again, as we try and project that forward into <unk> and 'twenty five.
Wes Morris: Yeah, thanks for the question, Peter. You know, as I've said, we had solid improvement in our fundamentals, and we partially offset those by investments. If I had to call the year today, I'd call it 40% performance-based, 60% market-based. But if I adjust for the investments, I'd call it around 50, 50. But it's important that my team stay focused on sustainable performance and driving value over time, regardless of what those market conditions are.
Wes Morris: Yeah, thanks for the question, Peter. You know, as I've said, we had solid improvement in our fundamentals, and we partially offset those by investing. If I had to call the year today, I'd call it 40% performance-based and 60% market-based. But if I adjusted for the investments, I'd call it around 50-50. But it's important that my team stays focused on sustainable performance and driving value over time, regardless of what those market conditions are.
Speaker Change #134: Yes, thanks for the question Peter.
Speaker Change #135: As I've said, we had solid improvement in our fundamentals the way, partially offset those by investments if.
Speaker Change #136: If I had the call of the year to day I'd call. It 40% performance based 60% market based but if I adjust for the investments I would call. It around 50 50.
Speaker Change #136: But it's important that my team stay focused on sustainable performance and driving value over time.
Speaker Change #136: Carlos about those market conditions are.
Wes Morris: Great, no, that's very helpful. Thanks, Wes.
Peter Galbo: Great. No, that's very helpful.
Carlos: Great No. That's very helpful. Thanks, Thanks, a lot and Kurt maybe.
Curt Calaway: And Kurt, maybe, you know, welcome to the call or nice to hear you on the call. Kurt, I think there's a pretty big volatility come and do in the fourth quarters. Maybe you can just talk a bit about, you know, how you're thinking about approaching that. I saw the lower interest expense guidance, but how should we think about that particular large debiturty. Thanks very much. Thanks, Peter. Yeah, you're right. Maybe best way to handle that is think about our liquidity. And we finished the quarter with about 4.8 billion dollars of liquidity. And that was partially driven by bond offering that we did earlier this year to effectively pre fund that, if you will.
Kurt: Welcome to the call are nice to hear you on the call.
Kurt Calloway: Thanks. Thanks, Wes. And Kurt, maybe, you know, welcome to the call, or nice to hear you on the call. Kurt, I think there's a pretty big bond maturity coming due in the fourth quarter. So maybe you can just talk a bit about, you know, how you're thinking about approaching that. I saw the lowered interest expense guidance, but how we should think about that particularly large debt maturity. Thanks very much. Thanks
Kurt: Kurt I think it's a pretty big bond maturity coming due in the fourth quarter. So maybe you can just talk a bit a bit about how you're thinking about approaching that I saw that lowered interest expense guidance, but how we should think about that particularly large debt maturity. Thanks very much.
Peter Galbo: Thanks, Peter. Yeah, you're right.
Kurt: Thanks, Peter Yeah, you're right, maybe best way to handle that and think about our or our liquidity.
Kurt Calloway: Maybe the best way to handle that is to think about our liquidity. And we finished the quarter with about $4.8 billion of liquidity. And that was partially driven by a bond offering that we did earlier this year to effectively pre-fund that, if you will. So yeah, the bond maturity is coming up here in August of $1.25 billion, and we'll look to pay that off this
Speaker Change #138: And we finished the quarter with about $4 $8 billion of liquidity and that was partially driven by bond offering that we did earlier this year to effectively pre fund that if you will.
Curt Calaway: So, yeah, the bond maturity is coming up here in August of 1.25 billion dollars. And we'll look to pay that off.
Speaker Change #139: Yes, the bond maturities coming up here in August of $1 billion to $5 billion.
Speaker Change #139: And we will look to pay that off this one.
Alexia Howard: The next question comes from Alexia Howard from Bernstein. Please go ahead. Good morning, everyone. Morning. So a couple of quick ones. Can you talk me about chicken again? One of the key risks from here is it as simple as if grain prices go up again. That could put pressure on the business.
Operator: The next question comes from Alexia Howard of Bernstein. Please go ahead.
Speaker Change #139: The next question comes from Alexia Howard from Bernstein. Please go ahead.
Alexia Howard: Good morning, everyone.
Alexia Howard: Morning.
Alexia Howard: So a couple of quick ones. Can you, talking about chicken again, what are the key risks from here? Is it as simple as if grain prices go up again, that could put pressure on the business? I'm just wondering where the growth from here comes from or whether we're kind of approaching a peak at this point. And then I have a follow-up.
Alexia Howard: So a couple of quick ones.
Alexia Howard: Can you talking about chicken again.
Speaker Change #141: What are the key risks from here is it as simple as if grain prices go up again that could put pressure on the business I'm. Just wondering why the growth from here comes a wide array of kind of approaching peak at this point and then I have a follow up.
Alexia Howard: I'm just wondering where the growth from here comes or why the way of kind of approaching peak at this point. And then I have a follow up.
Donnie King: Yeah, so again, we're going to Alexia. Thank you for the question. You know, we're lies are focused on on the fundamentals of our business. Certainly, grains have an impact. You know, commercial relationships, we continue to work with some key customers to help stabilize earnings and create win-win solutions with those key customers. So it's for me, it's about staying focused on what we do and getting better at it every day.
Wes Morris: Yeah, so again, we're good. Alexia, thank you for the question.
Alexia Howard: Yes, so so again alexia. Thank you for the question.
Wes Morris: Yeah, you know, we're laser focused on the fundamentals of our business. Certainly grains have an impact. In our commercial relationships, we continue to work with some key customers to help stabilize earnings and create win-win solutions with those key customers. So for me, it's about staying focused on what we do and getting better at it every day. So if I could add one thing to that that Wes has mentioned two or three times, but just to make sure it's clear. From a mix perspective, Wes and his team are continuing to value up the mix from, you know, let's call it more commodity-oriented products to more value-added branded across retail.
Speaker Change #142: Laser focused on on on the fundamentals of our business certainly grains have an impact.
Speaker Change #143: Our commercial relationships, we continue to work with some key customers helped stabilize the earnings and create win win solutions with those key customers.
Speaker Change #143: So for me, it's about staying focused on what we do and getting better at it every day.
Donnie King: So if I could add one thing to that, that West has mentioned two or three times, but just to make sure it's clear that from a mixed perspective, West and his team are continuing to value up the mix from, let's call it more commodity-oriented products to more value-added branded across retail and food service. Great. Thank you very much.
Speaker Change #144: So if I could add one thing to that that Wes has mentioned two to three times, but just to make sure it's clear.
Speaker Change #145: That from a mix perspective.
Wes: Wes and his team.
Wes: We are continuing to value up the mix from.
Speaker Change #146: Let's call it more commodity oriented products to more value added branded across retail and foodservice.
Speaker Change #147: Great. Thank you very much and can I just pick up on one was early in the prepared remarks, you talked about collaboration across the business days improving all thing.
Donnie King: Great, thank you very much. And can I just pick up on one word that you used early in the prepared remarks. You talked about collaboration across the businesses improving or being as good as you've seen it. Can you be more specific about what has improved on the collaboration side and how that's manifesting itself in the organization? Thank you, and I'll pass it on.
Donnie King: And can I just pick up on one word that you used early in the prepared remarks: you talked about collaboration across the businesses, improving or being as good as you've seen it. Can you be more specific about what has improved on the collaboration side and how that's manifesting itself in the organization.
Speaker Change #148: As you've seen it can you be more specific about what.
Speaker Change #149: Have improved on the collaboration side and how that's manifesting itself in the organization. Thank you and I'll pass it on.
Donnie King: Thank you, and I'll pass it on. Sure, if I look at the team that's sitting around the table here this morning, we have some of the best people in the industry and their specific discipline. They have a great deal of experience, and they are very passionate and competitive in everything they do. But the mantra that we have here at Tyson is "one team, one Tyson," all behind our mission, beating the world like family and, at the same time, making sure that there's high quality protein on every table in the world. But the collaboration component of that is a team coming together and really being united around this one Tyson approach.
Donnie King: Sure. If I look at the team that's sitting around the table here this morning, you know, we have some of the best people in the industry in their specific disciplines. They have a great deal of experience, and they are very passionate and competitive in everything they do. But the mantra that we have here at Tyson is one team, one Tyson, all behind our mission of feeding the world like family and, at the same time, making sure that there's high-quality protein on every table in the world. But the collaboration component of that is a team coming together and really being united around this one Tyson approach.
Speaker Change #149: Sure.
Speaker Change #150: If I look at the team that's sitting around the table here.
Speaker Change #150: Here this morning.
Speaker Change #151: We have some of the best people.
Speaker Change #151: In the industry and their specific.
Speaker Change #152: Specific discipline.
Speaker Change #152: Have a great deal of experience.
Speaker Change #152: And they are very passionate and competitive in everything they do but the mantra that we have.
Speaker Change #152: Here at Tyson as one team one Tyson all behind our mission.
Speaker Change #152: Eating the world like family and at the same time, making sure that there's high quality protein on every table in the world, but the collaboration component of that as a team coming together and really being United around this one Tyson approach.
Thomas Palmer: The next question comes from Thomas Palmer with city. Please go ahead. Good morning, and thanks for the question. Maybe start out on the prepared food side. The midpoint of guidance implies profit and work you might not have as big of a seasonal pullback relative to three Q as it might in a typical year. I know you mentioned this possibility a quarter ago. Could you just give us a reminder as to why this seasonality might not be as pronounced as normal. Thanks.
Operator: The next question comes from Thomas Palmer with Citi. Please go ahead.
Speaker Change #152: The next question comes from Thomas Palmer with Citi. Please go ahead.
Thomas Palmer: Good morning, and thanks for the question. Maybe start out on the prepared food side.
Speaker Change #153: Good morning, and thanks for the question.
Thomas Palmer: Start out on the prepared food side, the midpoint of guidance implies profit in <unk> might not have as big of a seasonal pullback relative to <unk> as it might in a typical year I know you mentioned this possibility of quarter ago could you just give US a reminder, as to why this seasonality.
Speaker Change #155: Might not be as pronounced as normal.
Thomas Palmer: Yes.
Curt Calaway: Hey, it's on. This is Kurt. I'll add a couple things, and then let Melanie add to it. But we were hopefully very clear last quarter where we talked about a midpoint of the guidance of 900 million. And an implying obviously 400 million in the back half, and it would be split relatively even. I'll add to that, right? We, while we've tightened the guidance ranged about the year, right? Our midpoint has been consistent across the whole year. And specifically as well, you know, our thoughts around Q4 in the profit of the outlook also were very unchanged and consistent as we thought about it, but all that Melanie added a couple of elements.
Thomas Palmer: The midpoint of guidance implies profit in 4Q might not have as big of a seasonal pullback relative to 3Q as it might in a typical year. I know you mentioned this possibility a quarter ago. Could you just give us a reminder as to why this seasonality might not be as pronounced as normal?
Thomas Palmer: Hey, John This is Kurt I'll add a couple of things and then let me.
Kurt: Let me add to it but.
Kurt: But we're hopefully very clear last quarter, where we talked about in our midpoint of the guidance of $900 million.
Brian: And then Brian obviously $400 million in the back half and it would be split relatively evenly I'll add to that rate, we while we've tightened the guidance range throughout the year.
Speaker Change #157: Our midpoint is been consistent across the whole year, and specifically as well our thoughts around Q4.
Kurt Calloway: Hey, Tom, this is Kurt. I'll add a couple of things and then let Melanie add to it. But we were hopefully very clear last quarter where we talked about a midpoint of the guidance of $900 million and implied obviously $400 million in the back half, and it would be split relatively evenly. I'll add to that, right, while we've tightened the guidance range throughout the year, right, our midpoint has been consistent across the whole year, and specifically as well, you know, our thoughts around Q4, and the profitability outlook also were very unchanged and consistent as But I'll let Melanie add a couple of elements from her perspective.
<unk>: And the profit outlook also were very unchanged and consistent as we've thought about it but I'll, let <unk> add a couple of elements from her perspective.
Melanie Boulden: Yeah, so thanks for the question. And you know, as I think about the future seasonality and Q4, we expect to have a strong Q4 compared to prior years. First, the cost associated with the new capacity and capabilities I touched on earlier will be significantly reduced as those assets ramp up. This is true both sequentially and versus year ago. Second, the operational excellent initiatives we're driving are creative and are additive, I should say, meaning the total dollar impact will grow each quarter as we reduce cost and drive out inefficient seed. We also expect to continue a strong commercial performance behind our food service business.
Melanie Boulden: Yeah, so thanks for the question and, you know, as I think about future seasonality and Q4, we expect to have a strong Q4 compared to prior years. First, the cost associated with the new capacity and capabilities I touched on earlier will be significantly reduced as those assets ramp up. This is true both sequentially and versus a year ago.
Speaker Change #159: Yes, so thanks for the question.
Speaker Change #160: As I think about the future seasonality and Q4, we expect to have a strong Q4 compared to prior years.
Speaker Change #161: First the <unk>.
<unk> with the new capacity and capability by touched on earlier will be significantly reduced.
Speaker Change #162: As assets ramp up this is true both sequentially and versus year ago.
Melanie Boulden: Second, the operational excellence initiatives we're driving are accretive or additive, I should say, meaning the total dollar impact will grow each quarter as we reduce costs and drive out inefficiencies. We also expect to continue strong commercial performance behind our food service business. And then finally, I'd also point to our growth in bacon, which is enabled by the successful startup of our Bowling Green facility. And because of the new capacity and capabilities that we brought online, we're growing and gaining share in bacon.
Speaker Change #162: Second the operational excellence initiatives, we're driving are accretive.
And our additive I should say, meaning the total dollar impact will grow each quarter as we reduce cost and drive out inefficiencies.
Speaker Change #162: We also expect to continue our strong commercial performance behind our foodservice business.
Melanie Boulden: And then finally, I'd also point to our growth in bacon, which is enabled by the successful start-up of our Bowling Green facility. And because of the new capacity and capabilities that we brought online, we're growing and gaining share in bacon. So, you know, as I think about Q4 as well as the momentum going into 2025, we're confident in our past forward. And a lot of this is obviously driven by our team that has been working really, really hard and is focused on delivering our goals.
Speaker Change #162: And then finally I'd also point to our growth and Bacon, which.
Speaker Change #162: Is enabled by the successful startup of our bowling green facility and because of that new.
Speaker Change #162: <unk> and capabilities that we brought online were growing and gaining share and bacon. So as I think about Q4 as well as the momentum going into 2025.
Melanie Boulden: So, you know, as I think about Q4, as well as the momentum going into 2025, we're confident in our path forward. And a lot of this is obviously driven by our team, who have been working really, really hard and are focused on delivering our goals.
Speaker Change #162: We're confident in our path forward and a lot of this is obviously driven by our team that has been working really really hard and it's focused on delivering our goal.
Curt Calaway: Thanks for that.
Thomas Palmer: Thanks for that. And then, just on an income statement item, FG&A has been trending sequentially lower throughout the year. What's driving this? And is there a segment where we would see these reductions being most apparent?
Speaker Change #163: Thanks for that.
Curt Calaway: And then on an income statement item, FGNA has been trending sequentially lower throughout the year. What's driving this, and is there a segment where we would see these reductions being most apparent? Just a couple of comments from the, I think, you know, we've had a fairly disciplined approach over this last year relative to our SG&A management. No, it will feel a little lumpy in a couple of quarters because we've got some higher performance-based compensation impacting each of the quarters. But overall, you know, a very disciplined, disciplined focus on our cost control spending this year.
Speaker Change #164: And then on the income statement item SG&A has been trending sequentially lower throughout the year, what's driving this and is there a segment, where we would see these reductions being most apparent.
Kurt Calloway: I'm just
Kurt Calloway: Just a couple of comments from me. I think, you know, we've had a fairly disciplined approach over this last year relative to our SG&A management. Now, it will feel a little lumpy in a couple of quarters because we've got some higher performance-based compensation impacting each of the quarters. But overall, you know, a very disciplined focus on our cost control spending.
Speaker Change #165: Just a couple of comments from me I think.
Speaker Change #165: We've had a fairly disciplined approach over this last year relative to.
Speaker Change #165: Our SG&A management, though it will be a little lumpy in a couple of quarters, because we've got some higher performance based compensation.
Speaker Change #165: Impacting each of the quarters, but overall.
Very disciplined disciplined focus on our cost controls spending this year.
Operator: This concludes our question and answer session.
Donnie King: This concludes our question and answer session. I would like to turn the conference back over to Donnie King for any closing remarks.
Speaker Change #165: This concludes our question and answer session I would like to turn the conference back over to Donnie King for any closing remarks.
Donnie King: I would like to turn the conference back over to Donnie King for any closing remarks. Thank you for your continued interest in ties and foods, and we look forward to speaking with you again soon.
Donnie King: Thank you for your continued interest in Tyson Foods, and we look forward to speaking with you again soon.
Donnie King: Thank you for your continued interest in Tyson foods, and we look forward to speaking with you again soon.
Operator: The conference is now concluded. Thank you for attending today's presentation.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker Change #167: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
You may now disconnect.
Speaker Change #167: Yes.