Q2 2025 Tyson Foods Inc Earnings Call
Andrew Strelzik, David
Speaker Change: Good morning, and welcome to the Tyson Foods second quarter 2025 earnings conference call.
Speaker Change: Please note today's event is being recorded.
Speaker Change: I would now like to turn the conference over to Sean Cornett, Vice President Investor Relations. Please go ahead, good morning, and welcome to tighten up the second quarter of fiscal year 2025 earnings Conference call.
Speaker Change: On today's call is president and Chief Executive Officer, Donnie King Chief Financial Officer, Curt Callaway will provide prepared remarks, followed by Q&A.
Brady Stuart: Additionally, joining us today are Brady Stuart group, President prepared food beef and pork and chief supply chain officer.
Kevin Cole: Kevin Cole group President of poultry, a global business unit, and Christina Lambert Chief growth Officer.
Kevin Cole: We've also provided a supplemental presentation, which may be referenced in today's call and is available on tightened Investor Relations web site and via the link on our webcast.
Kevin Cole: During today's call, we will make forward looking statements regarding our expectations for the future.
Kevin Cole: Forward looking statements made during this call are provided pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Kevin Cole: 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.
Kevin Cole: These forward looking statements are subject to risks uncertainties and assumptions, which may cause actual results to differ materially from our current projections.
Kevin Cole: Please refer to our forward looking statements disclaimer on slide two as well as our SEC filings for additional information concerning risk factors that could cause our actual results to differ materially from our projections.
Kevin Cole: We assume no obligation to update any forward looking statements.
Kevin Cole: Yeah.
Kevin Cole: Please note that references to earnings per share operating income and operating margin in our remarks are on an adjusted basis unless otherwise noted.
Kevin Cole: For reconciliations 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 Don.
Don: Thanks, Sean you've heard me say before that operational excellence never gets old part goes out of style and this quarter is another proof point.
Speaker Change: Our strong results underscore the consistent execution of our strategic priorities. Our teams remain focused on execution and proactively navigate an evolving environment.
Speaker Change: This marks our fourth consecutive quarter of year over year growth Cross sales adjusted operating income and adjusted earnings per share.
Speaker Change: Second quarter, adjusted operating income is better by more than $100 million or 27% versus last year, and our margin expanded by 70 basis points.
Speaker Change: Our chicken pork and prepared foods segments, along with international and other all delivered year over year adjusted operating income growth.
Speaker Change: We achieved 48% growth in adjusted earnings per share, reflecting improved operating performance and strategic execution.
Speaker Change: We improved our net leverage ratio versus last year through deliberate actions and are maintaining a healthy balance sheet underpinned by our disciplined capital allocation.
Speaker Change: This reflects our resilience even as beef remains under pressure.
Speaker Change: Now, let's talk about demand as we mentioned last quarter, 71% of U S consumers sought to increase their protein consumption in 'twenty 'twenty four.
Speaker Change: 42 on International Food Information Council study.
Speaker Change: The latest power of meat report from the food industry Association shows that U S meat sales at retail hit an all time high in 2024.
Speaker Change: With consumers, making purchases more than once per week.
Speaker Change: According to the study meet had 98% household reach and was included in nearly 90% of home cooked dinners.
Speaker Change: It is the clear protein choice recognized for nutritional value convenience and versatility.
Speaker Change: Even with a dynamic backdrop it is evident that consumers continue to prioritize protein.
Speaker Change: Especially from animal sources.
Underscoring robust sustained demand across the category.
Speaker Change: As a world class food company and recognized leader in protein heightened is well positioned our multi protein multichannel portfolio allows us to serve a wide range of consumer protein needs across eating occasions and value tiers, our broad portfolio of strong brands Tyson.
Speaker Change: Jimmy Dean ballpark and he'll shower farm remain key differentiators in a competitive marketplace, allowing us to drive long term value.
Speaker Change: Now, let's walk through segment performance prepared foods.
Speaker Change: Parents foods continues to be a high performing and dependable driver of profitability in the second quarter, we delivered double digit margins expanding by 50 basis points versus the prior year. The team continues to execute with excellence on the factors within their control.
Speaker Change: We see meaningful runway to expand margins over time.
Speaker Change: Our multi year plan focused on optimizing operations launching winning innovations and expanding distribution is on track.
Speaker Change: As a tangible example of how we are driving operational improvement, we have developed and implemented new tools that provide line and process the level of visibility our performance versus equipment capabilities.
Speaker Change: We have achieved measurable gains over the past year with lie in labor efficiencies, increasing by 250 basis points and 280 basis points respectively.
Speaker Change: These tools, coupled with the improved sales and operations planning process.
Speaker Change: Smarter decisions around product scheduling and labor staffing, which in turn are improving productivity, reducing cost and supporting stronger service levels.
Speaker Change: As we continue to utilize these tools and improvements across the business will continue to reduce inefficiencies and drive out waste.
Speaker Change: Innovation also continues to be an area of focus where we are making progress.
Speaker Change: Our Jimmy Dean Chicken Biscuit recently won the 2020 for Sarcoma Pacesetter Award for new product of the year. We are continuing to build on that success with new line extensions like the chicken and egg and cheese biscuit that newly launched this spring.
Speaker Change: Right brand continues to resonate with consumers as a leading premium bacon break.
Speaker Change: We're now leveraging that equity to expand into smoked sausage, bringing the same trusted quality to a new category.
Speaker Change: We are also unlocking growth in our hill shower farm snacking portfolio as consumers, especially adult continue to seek convenient protein rich options.
Speaker Change: And chicken, we delivered our best second quarter adjusted operating income in nine years, and our second consecutive quarter of volume growth. This quarter adjusted operating income nearly doubled compared to the same quarter last year, driven by strong operational execution across the business.
Speaker Change: The best order fill rates, we've seen in many years and lower grain cost.
We continue to prioritize building long term winning relationships with our customers, allowing us to partner in growing the category, while stabilizing our earnings profile.
Speaker Change: And beef, we're navigating a challenging environment with discipline, we are managing costs and enhancing mix toward more value added offerings.
Speaker Change: While limited cattle availability is pressuring spreads consumer demand has remained resilient our.
Our teams are executing well across procurement production and distribution to meet customer needs and stay on track.
Speaker Change: Turning to Port we delivered our best second quarter adjusted operating income and three years. This reflects the strength of the improvements we have made in building a fundamentally better pork business.
Speaker Change: Operational advancements and momentum in value added mix contribute to our results offsetting tighter spreads and wild hog costs remain a factor we're encouraged by a healthy demand outlook.
Speaker Change: Across all segments, we're actively monitoring the evolving macro landscape and while we're not immune our experience navigating past cycles gives us confidence to respond effectively and proactively scenario play.
Speaker Change: Our strategic priorities operational excellence customer and consumer obsession data and digital delivery capital allocation and team member development remain unchanged and our teams are executing them with excellence.
Speaker Change: For the past several quarters, we have shared our actions to optimize our plant network and those efforts are continuing to generate efficiencies, while also reducing capex requirements.
Speaker Change: And this next phase of our optimization journey, we're taking deliberate measured steps to evolve our logistics and distribution infrastructure.
Speaker Change: These efforts are early stage, but are critically important as we work toward greater long term efficiency.
We will sell multiple smaller conventional cold storage warehouses unlocking gross proceeds in a range of $250 million to $300 million and then transition as a new anchor partner into several large scale fully automated next generation cold storage facilities.
Speaker Change: These facilities will reduce network complexity streamline inventory flow and simplify processes in ways that will better position us to serve our customers.
Speaker Change: Marter and faster now and into the future.
Speaker Change: This transition will be a multiyear journey, but we believe this will generate around $200 million of annual savings upon completion, which is currently anticipated in 2030.
Speaker Change: We are confident that these actions will lead to meaningful operational improvements greater agility allow future growth and reducing future capital requirements.
Speaker Change: Before I turn things over to Curt I'd like to take a moment to talk about the thoughtful steps, we're taking across our portfolio to align with evolving opportunities around product ingredients and quality standards.
Speaker Change: As a recognized leader in protein none of the products Tyson Foods offers through our school nutrition programs include petroleum base synthetic dyes as ingredients.
Speaker Change: Today, the vast majority of our retail branded Tyson products.
Speaker Change: Clothing, our Tyson Dino Nuggets, Tyson chicken Nuggets, Tyson chicken bites and Jimmy Dean Maple Brown, Okay do not contain any of these types of die and we have been proactively re formulate those few products that do.
Speaker Change: We expect that our work to eliminate use of petroleum based synthetic dyes and production will be completed by the end of may much sooner than the timeline provided by the U S Department of health and human services.
Speaker Change: With that I'll turn it over to Curt to walk through our financial results in more detail. Thanks.
Curt Callaway: Thanks, Donnie second quarter enterprise sales were $13 $1 billion, but that includes a reduction of $343 million or two 6% related to a legal contingency accrual primarily reflected in port <unk>.
Speaker Change: Excluding this sales would've grown as expected year over year.
Speaker Change: Adjusted operating income increased by 27% to $515 million driven by another strong quarter of performance in chicken and solid contributions from international and other pork and prepared foods, all of which helped offset the decline in beef.
Speaker Change: Adjusted earnings per share grew more than 48%.
Speaker Change: As Dani mentioned this is the fourth consecutive quarter of year over year growth across sales.
Speaker Change: And adjusted EPS are.
Speaker Change: Our multi protein multichannel portfolio combined with our team's continued execution and a changing macro environment is delivering results.
Speaker Change: Turning to second quarter segment performance in prepared foods sales were in line versus last year as higher pricing was offset by softer volume it.
Speaker Change: It's worth noting that pricing was up across retail and food away from home channels, a reflection of our effective brand portfolio and pass through pricing adjusted operating income increased nearly 5% and margin improved 50 basis points versus last year, we continue to be more efficient with our marketing advertising and promotional.
Speaker Change: Support cost as well as broader SG&A expenses, we also.
Speaker Change: We continue to make progress with our operational execution initiatives.
Speaker Change: These improvements along with pricing and lapping of startup costs last year more than offset the impact of the ongoing raw material cost increases.
Speaker Change: In chicken, we delivered our second consecutive quarter of year over year volume growth contributing to a 2% increase in sales.
Speaker Change: Adjusted operating income increased 95% versus last year, highlighting our best second quarter performance since fiscal 2016.
Speaker Change: Year over year profit growth was driven by ongoing operational improvements and the net benefit of lower grain cost.
Speaker Change: Sales in beef increased primarily due to a higher average price per pound, reflecting ongoing healthy demand.
Speaker Change: Adjusted operating income declined driven by spread compression emphasizing higher year over year cattle costs.
Speaker Change: And pork sales were roughly in line versus last year, excluding the impact of the legal contingency accrual.
Speaker Change: Adjusted operating income increased 67%, reflecting the strongest second quarter result in the past three years cost discipline and improvements in utilization and value added mix more than offset tighter spreads.
Speaker Change: Turning to our financial position our capital allocation strategy is consistent and deliberate we remain focused on maintaining financial strength investing in the business and returning cash to shareholders.
Speaker Change: Year to date operating cash flow was $846 million and capital expenditures came in at $464 million, resulting in free cash flow of $382 million year to date dividends were $349 million, we remain committed to the dividend as our primary way of REIT.
Speaker Change: Turning cash to shareholders.
Speaker Change: We ended the quarter with net leverage at two three times and $3 $2 billion in liquidity after paying off our $750 million term loan that was due in 'twenty 'twenty six.
Speaker Change: Our balance sheet remains healthy as we prioritize financial strength, our investment grade credit rating and cash management to drive long term shareholder value.
Speaker Change: Now, let's take a moment to review our outlook for fiscal 'twenty five.
Speaker Change: Our total company guidance is unchanged, we anticipate sales to be between flat to up 1% year over year. Adjusted operating income is expected to be between one nine and $2 $3 billion representing growth across the entire range, we still anticipate interest expense of approximately $375 million in it.
Speaker Change: Tax rate of around 25% we.
Speaker Change: We remain focused on disciplined cash management with Capex expected to be between one and $1 $2 billion and free cash flow in the range of one to $1 6 billion.
Speaker Change: The macro environment is dynamic affecting each of our businesses to varying degrees.
Dani: But as you can see from our supplemental materials and in our press release, our segment level adjusted operating income guidance remains unchanged as well with that I will turn the call over to Dani.
Dani: Thanks, Kurt in closing I am proud of the results our team delivered this quarter and encouraged by the momentum we're building.
Dani: Despite a complex and evolving macro environment, we are focused on what we can control and executing with excellence.
Dani: With sustained consumer demand for protein the strength of our iconic brands and our continued commitment to operational excellence. We believe we are well positioned to drive long term value for our shareholders.
Dani: You are 138000 team members from the Frontlines of our facilities to our offices around the world.
Dani: Thank you your hard work resilience and commitment are what make our success possible and our customers and suppliers. Thank you for your continued partnership and support.
Speaker Change: Before moving to Q&A I'd like to introduce Kristina Lampert, Tyson Foods', new Chief growth Officer.
Speaker Change: Cristina was named Executive Vice President of strategic initiatives and joined the Tyson Foods Enterprise leadership team earlier this year.
Speaker Change: Christina has more than 28 years of experience in the protein industry Cry.
Speaker Change: Prior to her most recent role Kristina, let our retail frozen value added business within the poultry organization, where she maintained full P&L responsibility expanded our innovation pipeline and manage the relaunch of the iconic Tyson brand.
Speaker Change: Mali, Bolton, our chief growth Officer, and former group President of prepared foods is retiring from Tyson foods I want to thank her for the result, she has delivered and the team. She has built we're sad to see ergo, but we wish her the best in the future.
Speaker Change: <unk> will remain a consultant for Tyson foods, ensuring a seamless transition with Christina with.
Speaker Change: That I will turn it over to Sean as we open the line for your questions.
Sean Cornett: Thanks, Tony we will now move forward to your questions. Please.
Sean Cornett: Please recall that our caution on forward looking statements and non-GAAP measures apply both to our prepared remarks and the following Q&A.
Sean Cornett: Operator, please provide the Q&A instructions.
Sean Cornett: Thank you we will now begin the question and answer session.
Sean Cornett: To ask a question you May Press Star then one on your Touchtone phone.
Sean Cornett: If youre using a speakerphone please pick up your handset before pressing the keys.
Sean Cornett: To withdraw your question. Please press Star then two.
Sean Cornett: Please limit yourself to one question and one follow up if you have further questions you may reenter the question queue.
Sean Cornett: At this time, we will pause momentarily to assemble our roster.
Speaker Change: And today's first question comes from Alexia Howard Bernstein. Please go ahead.
Speaker Change: Thank you good morning, everybody.
Speaker Change: So you you beat consensus expectations. This close out on the profit line, but you didn't raise guidance for the full year how.
How did the results come through versus your internal expectations.
Speaker Change: Cutting through better or worse than expected and then I have a follow up.
Donny: Thank you I'd like to this is Donny let me, let me before jumping into that let me share a couple of additional thoughts on Q2.
Speaker Change: I think this quarter clearly demonstrates the importance of our multi protein multichannel portfolio.
Speaker Change: We are best positioned intentionally to provide affordable accessible and nutritious protein that the consumer continues to demand in this very dynamic environment.
Speaker Change: Well, we've been experiencing the most challenging market conditions, we've ever seen we increased total adjusted operating income by 27% in every segment group other than B.
Speaker Change: Chicken had standout performance, our best Q2 <unk> in.
Speaker Change: Nine years.
Speaker Change: Prepared foods has continued steady margin performance.
Speaker Change: I am pleased with our efficiency improvements through better yields reducing waste and a continuing push for best in class execution in our plants.
Speaker Change: We've made significant strides in maximizing the efficiency of trade in map spending in our innovation pipeline is the largest that we've ever had.
Speaker Change: And we are committed to growing our prepared foods business, both volume and bottom line.
Speaker Change: We remain agile and work with pace to optimize our operations and distribution network.
Speaker Change: Cited about the next step on our journey as we transform our logistics network.
Speaker Change: This will unlock annual savings of approximately $200 million overtime and will support our growth into the future.
Speaker Change: A dynamic environment, we and others have referenced include uncertainty from tariff impacts and pressure on the consumer.
Speaker Change: But our guidance considers those risks and we're growing at the bottom line across the entire range.
Speaker Change: In terms of guidance I will add a little bit now.
Speaker Change: And power for that as well.
Speaker Change: Overall, we remain excited about our FY 'twenty five we expect to generate profitability growth over the last year last part of the year the entire range of our earnings guidance, while managing through the most challenging beef environment, we've ever seen so we feel good about that overall and our overall view of the business Hasnt.
Speaker Change: Materially changed since we spoke last.
Speaker Change: And we are reaffirming the $1 90 to two three.
Speaker Change: I would tell you that that considers we consider all of the things such as.
Speaker Change: The chicken business.
Speaker Change: What what that looks like for the balance of the year.
Speaker Change: Prepared foods to be more balanced across the year.
Speaker Change: As you see what happened in the first half of the year in beef and we lost $181 million and then you stack.
Speaker Change: You stack on tariffs.
Speaker Change: Consumer pressure and inflation that we're seeing in the marketplace.
Curt Callaway: We feel good about where we are at this point based on what we know at this point Curt.
Curt Callaway: Yes, just maybe a couple of comments I think overall your question included did it come in line with our expectations of what were the differences I think it came in line with our expectations.
Curt Callaway: Kind of reiterating our overall stance on the full year.
Curt Callaway: Certainly in the prepared comments, we made reference to.
Curt Callaway: Our guidance does it include.
Curt Callaway: The outlook for the remainder of the year with an assumption for tariffs and consumer dynamics, but I think we're pleased with where we are and very proud of the improvement we made on a year over year basis, and we are growing across all parts of the range that we've provided for the full year.
Speaker Change: And can I follow up on chicken, because I think the guidance, you've obviously come through very strongly in the first half of the year, but keeping the guidance. The same implies I think a fairly big decline year over year and operating income is there something changing there in terms of the industry dynamics, what should we be aware of thank you and I'll pass.
Curt Callaway: At all.
Curt Callaway: Thanks, Alex.
Curt Callaway: Yeah, we still we still.
Curt Callaway: Feel like we had a great. We obviously had a great first half of the year.
Curt Callaway: If you look at the numbers.
Curt Callaway: There is just some uncertainty as you look at the back half of the year, if we look and compare it against our annual are.
Curt Callaway: Our adjusted operating income.
Curt Callaway: It looks pretty good but we also look at what consensus looks like as it relates to chicken I think chicken will be a clear winner in this for.
Curt Callaway: For the balance of 2025.
Speaker Change: Let me start with that level of detail and I'll kick it over to Devin coal and Devin can give us more detail around the chicken business.
Thanks Dawn.
Curt Callaway: We did deliver very strong quarter.
Curt Callaway: I'd say largely due to the strength and execution of our team and I want to thank everyone for their focus and execution around those efforts.
Curt Callaway: Generally our strategy will remain unchanged.
Curt Callaway: We do need to stay flexible with our tactics in this environment.
Curt Callaway: Things that are that we delivered in the quarter that will continue to do.
Curt Callaway: To be a priority and continues to deliver excellent moving forward.
Curt Callaway: We have outperformed the industry and live we extended our improvements related to plant performance.
Curt Callaway: And then the intense focus on the customer continued as mentioned, we've now had two consecutive quarters with fill rates over 98%.
Curt Callaway: Our innovation pipeline is resonating very well.
Curt Callaway: If you look ahead.
We did reaffirm our guidance in the range of one to $1 3 billion and I think that takes into consideration when the confidence we have in the operating environment.
Curt Callaway: But also the sustainable progress we've made in the first half of the year, but I think we also have to layer in as a consideration investments that we'll be making.
Curt Callaway: In the back half of the year, primarily to strengthen and expand our number one share and value added retail foodservice.
Curt Callaway: We also have to consider our diversified crossing models, it's worth recalling that we utilize those models with our customers many of which are linked to great markets to.
Curt Callaway: To build stable margins over time.
Curt Callaway: Just factoring in the overall macroeconomic environment.
Speaker Change: Thank you and our next question today comes from Peter Galbo Bank of America. Please go ahead.
Peter Galbo: Hey, guys. Good morning, Thank you for taking the questions.
Peter Galbo: Donnie I actually wanted to start on the changes in the cold storage facilities that came out I think you mentioned $200 million of annual savings in there that's maybe over a five year period and as I dug through the 10-Q, it looks like that will mostly be split between between chicken and prepared foods. So maybe.
Speaker Change: Just two things one if we could get a little bit more detail on kind of that that breakout that you're anticipating again, realizing it's over the long term and be you know obviously this has been an ongoing discussion probably for for quite a bit of time, but just.
Speaker Change: You know what what kind of led finally to pulling the trigger on this is it is it part of the broader I got restructuring as we think about the margin profile and sustainability of higher margins for chicken and prepared going forward.
Speaker Change: Yeah. Thanks, Peter I think you largely answered the question.
Speaker Change: Some of your comments, but just let me reaffirm those things for you.
Speaker Change: Talk now for a couple of years about.
Speaker Change: Assessing every every facet of our business and I'll tell you we've been.
Speaker Change: When we looked at our logistics network.
Speaker Change: And we identified some things that we didn't like.
Speaker Change: We identified opportunities for improvement and.
Brady Stuart: Brady Stuart.
Brady Stuart: That team that works on this had been working on this for well over a year in terms of trying to get to this point.
Speaker Change: It's Brady and his team did all the work let me ask him to deliver some details behind.
Brady Stuart: The project.
Speaker Change: Thanks, Donnie and as you mentioned.
Speaker Change: I simply want to call out the team for laying out a really appropriate strategy. Today are our network is too complex and too costly and so we saw an opportunity to really right size. Our network that allows us to continue to grow into the future, but also bring cash into into the enterprise as well and so.
Speaker Change: We mentioned that the length of time associated with this transition and transformation and it's really important to understand that.
Speaker Change: There's new cold storage is that will be built that will get our products closer to customers, which reduces the total number of miles reduces our carbon footprint and delivering our products to our customers and ultimately we will deliver that over $200 million in annual savings as we move out.
Speaker Change: Three to five years from now.
Brady Stuart: And Brady just before I move onto my next question, just a rough split on that $200 million between the two.
Kurt: This is Kurt I don't know that we have that for today I think go back to the statement.
Speaker Change: Think about this network is principally for our poultry and prepared.
Speaker Change: Business has very little utilization of the network.
Brady Stuart: Brady speaking to for beef and pork. So it would follow kind of a normal or a relative share split. If you will based on the volumes that are moving through the poultry and prepared foods items.
Speaker Change: Got it Okay. That's helpful and maybe this one I don't know, it's probably a bit of a jump ball in terms of the question, but in prepared foods specifically.
Speaker Change: You know I think again in the Q you called out kind of a higher you know higher raw material costs and so maybe you kind of got to the to the margin you did beat based on SG&A.
Speaker Change: I'm just curious kind of how we should think about the go forward. There you know listening to some of your peers are obviously baking in high raw materials, but.
Speaker Change: You know like or are we getting to the numbers really just just kind of on on lower SG&A going forward.
Speaker Change: That obviously has implications for the top line. So just wanted to understand that thanks.
Brady Stuart: Sure and thanks for the question Peter This is Brady again.
Brady Stuart: Number one I think it's really important to understand that we're very excited about our prepared foods business and this comes in a multitude of different areas number one is that we're excited about the team we have in place and the true management operating system that that team is in place and we're excited about our brands, we have leading brands.
Brady Stuart: That will continue to play a part.
Brady Stuart: With our customers and our consumers as well.
Brady Stuart: And so when you really look out in front. It is important to understand I think really in three different buckets that create the excitement number one is from an innovation perspective.
Brady Stuart: Donnie and his prepared remarks commented on our innovation coming with Wright brand premium sausage. He commented on the amazing growth we've had from a hilscher snacking platform and he commented on the innovation, we brought forth with the success with our Jimmy Dean Chicken biscuit as well.
Brady Stuart: On top of that we have one of the most robust innovation pipelines and the history of Tyson foods and we're extremely excited that we have innovation coming within the next year and every single one of our core categories for prepared foods, and so that's going to drive us.
Brady Stuart: From a growth perspective into the future second is from a distribution perspective, we continue to see distribution gains and getting our products in the right place for our consumers to continue to have access to them and then lastly, we're really supporting innovation and distribution with core fundamentals and Donnie mentioned in his opening.
Brady Stuart: Remarks as well.
Brady Stuart: We have strengthened our foundation through operational improvements and that comes in the form of both distribution that comes in the future relative to our supply chain announcement and it also comes relative to.
Brady Stuart: The improvements we've seen from an operations perspective, and our manufacturing assets. So I think when you parlay all three of those items on top each other again, we're very excited about our prepared foods business. So if I could add just one thing to a couple of things to what Brady has set.
Brady Stuart: If you think about our prepared foods business since we made the major acquisition of Hill Shire and.
Brady Stuart: In 2014.
Brady Stuart: This business today, we're literally putting it together.
Brady Stuart: And from end to end from operations through supply chain to trade and map efficiency management.
Brady Stuart: Growing with strategic customers investing behind the brands, we're doing a lot of things. This is this has been a let's call it 9% to 10% business, we think it's better than that and.
Brady Stuart: And we believe they think the unlocks that we have before us will actually are proof points for the delivery of something north of a 10% return on return on sales as it relates to our prepared business. We're in I would just say we're in early innings, but maybe mid innings as it relates to prepared foods.
Brady Stuart: But.
There is going to be a better day in prepared foods and even what we see today.
Brady Stuart: Great. Thanks, very much guys.
Brady Stuart: Hmm.
Thank you and our next question today comes from Ken Goldman of Jpmorgan. Please go ahead.
Brady Stuart: Hi to follow up on that last question.
Brady Stuart: Really do appreciate all the efforts that are being made in prepared foods and certainly it seems just optically from an external angle that there's upside to margin I think what the question that I get sometimes and then I wanted to put to you a little bit is.
Brady Stuart: A when do we start to see a real uptick meaningful uptick right above 10% on a sustainable basis, obviously not perfectly above 10% every quarter.
Brady Stuart: So a little bit on the timing and then secondly sort of what's different this time I guess, that's one of the questions I get also right. It's it we've heard from Tyson a level of optimism for many years right now about prepared foods getting above 10% it hasn't really stuck at that level. So just kind of wanted to get a sense for those two if it makes sense.
Speaker Change: Sure Ken Good morning, and fair question as it relates to prepared foods.
Brady Stuart: If I look at prepared foods, and let's call it earlier days.
Brady Stuart: Prior days.
Brady Stuart: Prepared foods.
Brady Stuart: Depending on the quarter and the timing you would see one element of the business performing well.
Brady Stuart: And that was typically large enough to get us in the 9% to 10% what we're describing to you today.
Speaker Change: <unk> can speak in greater detail to this is is that we are we have process in place for every phase of the game from E&P and to improve the performance of this business. We believe there is tremendous upside to this prepared foods business and I would tell you.
Speaker Change: And I don't know how I don't know how to correct. The fact that we haven't done what you thought we would do in the past other than to be able to show you that we're going to deliver what we said we're going to do but this prepared foods business operationally supply chain from a trade and map perspective from a customer relationship growing across multiple channels.
Speaker Change: Panels is doing all the right things today and it's on purpose and.
Speaker Change: Led by Tom Aaron and Brady and that team. They are Brady you want to add anything to that that I haven't.
Speaker Change: Thanks, Donnie really really well said and.
Speaker Change: Number one is just to get back to the foundation. The team has really laid in a management operating system that is truly sustainable and so to be able to continue to improve on our manufacturing costs and supply chain costs are.
Really highlighting our line in labor efficiency, our yield improvements we've seen as well.
Speaker Change: And then benchmarking against engineered standards across our entire network really lays the foundation for us to continue to build on and then lastly is this innovation pipeline that we have I am extremely proud of the team to put this together with with our our growth team the R&D team and in our business.
Speaker Change: <unk> team is well this really provides us a huge platform to leapfrog into the future.
Speaker Change: Okay. Thank you and then I appreciate that and then just a quick question on chicken demand.
Speaker Change: It feels like.
Speaker Change: Within quick service more items are being added to menus every week, there's articles increasingly.
Speaker Change: About.
Speaker Change: On that topic, and so it's becoming I think the parents, who some of the servers that maybe chicken demand at <unk>, there will be a little bit better.
Speaker Change: And then what people had initially hoped at the same time the <unk> channel. Maybe you have some has some of its own challenges. So just kind of wanted to get a sense for what's in your guidance for Q S. Our chicken demand now as opposed to a few months ago in light of some of those puts and takes.
Speaker Change: Sure well I mean, I will give you my short answer to that and if you look at the macro environment.
Speaker Change: When food will be consumed away from home.
Speaker Change: Typically in an environment like this you would see <unk> growth and particularly <unk> within the <unk> business Youre going to see chicken performed I think it would be reasonable reasonable to think that that will occur again.
Speaker Change: I think that we see signs of that going on today and the demand. Therefore, our business even in foodservice is still quite strong. So let me flip it over to Devin and let him add some color around that yes, maybe just a couple of points. There I mean, I think relative to the U S. R Arena.
Speaker Change: We did see.
Speaker Change: Strong growth within the quarter.
Speaker Change: With double digit growth within that portfolio and we see the same thing you do with continued promotional activity.
Speaker Change: Throughout the spring and summer so we're encouraged by that but not but I'll also tell you that it's.
Speaker Change: Bigger than that for us we have a.
Speaker Change: <unk> portfolio across all of our foodservice categories as well as retail when we did see growth within retail.
At our value added and deli offerings.
Speaker Change: So I would just say that as we look across all of our customer base. We do continue to partner with them when we able we're able to provide options that.
Speaker Change: The consumers are going to be increasingly were looking for for convenience and value. So we feel good about our overall volume outlook.
Speaker Change: Great. Thank you.
Speaker Change: Thank you and our next question today comes from Ben Theurer with Barclays. Please go ahead.
Ben Theurer: Hi, Yeah good morning.
Just a first question maybe on beef and just the general environment. So it feels like you only had.
Ben Theurer: A small volume drop in the quarter that could almost be explained by just the leap year and some of the calendar effect. So just wanted to understand a little bit better what youre seeing in terms of supply.
Ben Theurer: Off capital and the cost of that into your operations and how you think about that.
Ben Theurer: Earlier science, maybe somewhat heifer retention is that building or not so how should we think about just ease throughout the cycle are we at the bottom or is it just still too early to tell that would be my first question.
Ben Theurer: Sure Ben Let me, let me add a little bit to the demand softness that you talked about in our <unk>.
Ben Theurer: No.
Ben Theurer: That happens every year with us it's not unusual to see a seasonal demand softness in Q2, and so we didn't see that as a.
Ben Theurer: Anything notable really other than the fact that it was that time of year.
Brady Stuart: But I'll give it to Brady to talk about the supply heifer retention and volumes.
Speaker Change: Thanks, Donnie and Ben I think it's important to note that.
Speaker Change: Cattle on feed from a weight perspective are extremely heavy were at a record weights.
Speaker Change: Throughout the business as well so we're seeing some weight that is offsetting.
Speaker Change: A volume perspective, some of the lower head counts. We are seeing is the supply has been obviously lower than than year ago.
Speaker Change: Relative to heifer retention and I would just say this.
Curt Callaway: And Curtis mentioned this before if we're not at the bottom relative to Cal inventories.
Curt Callaway: Can definitely see it from here as well and I think a couple of reference points behind that certainly would be we've seen an extreme drop almost 18% in beef cow harvest numbers and then second secondary to that is we have seen a drop relative to heifers on feed which means if the heifers youre not on feed.
Curt Callaway: They are being retained by by farmers and ranchers as well and we're seeing that 4% drop in heifers.
Curt Callaway: Year over year as well so.
Curt Callaway: I think the signs are really aligning too.
Curt Callaway: Rebuild to start to occur and from a liquidation standpoint really seen the bottom.
Curt Callaway: The bottom at this point as well.
Speaker Change: Okay perfect. Thank you very much for that and then my second question really is just about the international business.
Speaker Change: That was a pretty significant improvement on a year over year basis and more what we're looking at it on that.
Speaker Change: On a six months basis I mean.
Speaker Change: It's a massive difference versus last year.
Speaker Change: So help us maybe understand and I know in the past you've talked a lot about international being an important part of the growth journey, but what have you done different and actually executed on two.
Speaker Change: To start to see the fruits and the benefits of all these in this investments that you had in years past to drive international and what's the kind of the level you think about international could contribute on an annual basis beyond maybe what is your fiscal guidance for 2025.
Speaker Change: Yeah sure. This is Dave and I appreciate you, bringing that up and I'll make this perhaps sound simpler than it really is meaning that it's really about the work that our team has accomplished.
Speaker Change: It's one thing to have a strategy and it's a completely different thing to have execution against the strategy. We have both in this area.
Speaker Change: We have simply improved our operational fundamentals and we've also.
Speaker Change: We executed a very good commercial growth strategy.
Speaker Change: Can see that in our results in fact is our strongest quarter on record.
Speaker Change: There were looking ahead there were some overall benefit in the quarter related to one time impacts. However, we expect to continue on this path.
Speaker Change: That will be favorable certainly for the prior year and in line with our expectations.
Speaker Change: I do expect the performance in the back half year could be affected by the macro economic environment, certainly the consumer around the world.
Speaker Change: Is not immune to some of the economic challenges that we see but listen overall, we feel great about the team we feel great about the strategy.
Speaker Change: And in the future, our global business and our portfolio.
It's important to us.
Speaker Change: Thank you very much.
Speaker Change: Thank you and our next question today comes from Thomas Palmer at Citi. Please go ahead.
Speaker Change: Good morning, and thanks for the question.
Speaker Change: Maybe just start out any help as we think about third quarter expectations I mean, if I look at industry trends.
Speaker Change: And general seasonality it would seem like chicken typically is better in the third quarter than the second quarter from a profit standpoint.
Speaker Change: Maybe pork a little bit weaker just any help is kind of thinking through what we just saw this past quarter and kind of what youre anticipating as we roll into the the third quarter. Thank you.
Kurt: Hi, Thanks, This is Kurt maybe to start off with.
Kurt: How we're thinking about the year, obviously, we don't give.
Kurt: Individual quarter guidance.
Kurt: But I think the basis of your question was look from a from a chicken standpoint, the first half of the year.
Kurt: Generating about $680 million, obviously as Devin had said earlier is still a range of one to one three.
Kurt: But we acknowledge.
Kurt: It definitely is a constructive operating environment that we're in.
Kurt: But hurry on to repeat <unk> comment that we'll continue to make some investments, but a little heavier weight in the back half of the year, but for the overall.
Kurt: We would still expect to be.
Kurt: At or above the <unk>.
Kurt: Midpoint and the upper half of the range for chicken.
Kurt: Certainly port.
Kurt: Delivering well, so far $114 million on a year to date basis with a range of 100 to 200. So we'll leave it to you to kind of imply where that will be certainly it is a business that generally.
Kurt: Has a positive strong our Q1 and a strong first half of the year relative to normal historical cycles, but acknowledging at 114 over the low end of the range thus far.
Kurt: So maybe it maybe add a couple of comments.
Kurt: To the guidance. It just speaking very generally about the business. If you look at our beef business and I realize it's losing money today, then our beef business.
Kurt: Team and our lead our beef business are operating at a very very high level. The execution from what I've seen has never been better than what we see today from our beef business.
Kurt: From a port perspective, our pork business is performing very very well you saw it in the numbers.
Kurt: Just the management operating systems that we have in place in both beef and pork some.
Kurt: Some technology that we've deployed against those businesses is certainly helping with that.
Kurt: You saw in chicken very constructive Q1 got a lot of momentum and there'll be some investments in brands.
Kurt: Tyson brand in the back half of the year, that's that Canada.
Kurt: Canada.
Kurt: The one to one three kind of conversation and then if I think about prepared laid out earlier today.
Kurt: There's a lot of upside to prepare.
Kurt: And kind of mid innings, if you will in terms of performance and prepared but theres a lot of upside too.
Kurt: For us as a company and our international business.
Kurt: It's <unk>.
Kurt: It's a smaller business that we have but.
Kurt: But their strategy they have in place and their execution against that strategy is is really really good and then maybe finally as it relates.
Kurt: To consumers and customers were aligned with strategic customers and.
Kurt: Feel good about those relationships and we are growing their business and thereby growing our business.
Kurt: From a consumer perspective in this environment wherever the consumer is.
Kurt: We're intersecting with that consumer and we provide.
Kurt: High end value tiered propositions for those consumers. So we feel good about all of those and in the business in general.
Kurt: Okay.
Speaker Change: Thanks for that work through maybe I could just follow up quickly on international.
Has it been so strong the past couple of quarters and I guess, how persistent do you think.
Speaker Change: Drivers of that might be.
Speaker Change: Okay.
Speaker Change: Yes, so maybe just to repeat I mean, it really is as simple as we set out.
Speaker Change: Call it a year ago with a very defined strategy, knowing that we needed to.
Speaker Change: To be better at our operational fundamentals and I think the result of that is one.
Speaker Change: We've run more efficient operations more profitable operations, but what it's really gone has allowed us to.
Speaker Change: Go to our customers.
Speaker Change: With a case, that's equal to or better than what we see from our competitors, meaning we have innovation pipelines. We have competitive cost. We have we have talent, we have everybody aligned against that strategy. So we can't it is around the operational fundamentals.
Speaker Change: And getting our facilities where.
Speaker Change: Where they need to be from a commercial growth strategy.
Speaker Change: And I don't see that changing those things are very well defined we have a great leadership team in place and everybody used as working.
Speaker Change: Towards the same strategy.
Speaker Change: Alright, thank you.
Speaker Change: Thank you and our next question today comes from the history shows us at BMO. Please go ahead.
Speaker Change: Hey, good morning, Thanks for taking the questions.
Speaker Change: My first one is back on the outlook for Chicken you mentioned, some uncertainty and also the investments now.
Speaker Change: And I was just hoping you could elaborate a little bit on both of those factors. So.
Speaker Change: Can you maybe compare or quantify the investments in chicken in the back half of the year versus the front half of the year.
Speaker Change: And has that expectation changed at all over the last several months and then on the uncertainties are those really trade related or is there something else I guess I would've thought with some of your lags on pricing you'd have visibility through the third quarter at this point.
Yes, so maybe let me break that up just a little bit.
Speaker Change: The investment itself, we've talked about an incremental $100 million year over year in FY 'twenty, five and that's going to be weighted more towards the back half.
Speaker Change: Where you do have some new product launches.
Speaker Change: And we've also got some some work going on.
Our strategic customers, but I would say too that it's not just about trade and more and.
Speaker Change: And marketing spend necessary, whether you've also made some significant investments to make sure that we've got the rock quality, particularly with our retail products branded retail products and we've also made sure that we've got the right packaging in place.
Speaker Change: Make sure that we're meeting the needs of the shopper, including those that are increasingly utilizing deliveries pick up.
Speaker Change: I think to you about the innovation piece of our business will be.
Speaker Change: Not only critical in the quarter and the year, but beyond and.
Speaker Change: Everything that we're doing starts with the consumer insights.
Reaching our consumers through digital platforms and Thats part of an experiment we've talked about and then we use data to make sure that we're getting a return on those investments.
But across all of those things, that's really where that spend is occurring and we feel very good about what that will mean for the future of the business.
Speaker Change: You mentioned pricing just to touch on that overall pricing is very healthy.
Speaker Change: We did see a slight decline on average sales price in the quarter, primarily due to some cost plus pricing models that we have.
Speaker Change: Think about it this way we mentioned before we utilize a very diverse set of pricing models by design.
Speaker Change: And that's everything from negotiated to fixed price, we have grain based cost plus formulas and we've even got some market based pricing.
Speaker Change: And ultimately those are those are all designed to fill.
Speaker Change: To evolve our commercial relationships build these long term relationships and allow us to focus on growing the category and really stabilize our earnings.
Speaker Change: Maybe just add a couple of things really quick.
Speaker Change: I think your question touched on.
Speaker Change: Consumer customer.
Speaker Change: <unk> or the impact of trade flows I think what we intended to talk about there is the consumer will continue to move around and what they are choosing to buy and elements of the population will see value I think we're set up to be able to position.
Speaker Change: Our offerings to the customers and consumers to meet those needs.
Speaker Change: But in that investment in the back half that we've talked about will be a little more incremental in the back half than the front half, but reiterate what we said right, we're still expecting to be at or above the midpoint of the range that we gave which with a $680 million first half of the year, even at the high end of the range $1 3 billion.
Speaker Change: $620 million in the back half of the year.
Speaker Change: Context, we want to make sure you understand from them.
Speaker Change: Got it Okay. That's helpful. And then my other question was just on on more specifically on tariffs have you seen any changes in export trade flows related to that or any impacts on your business.
Speaker Change: So far either pull forward on demand shifts away from the U S to other countries I'm just curious how you're seeing that so far and how you're handicapping that in your outlook. Thanks sure. Let me let me give you the punch line first.
Speaker Change: We do not expect global protein consumption to change that.
Speaker Change: Our topline view as it relates to that.
Speaker Change: There could be temporary short term disruptions.
Speaker Change: As global trade flows adjust we anticipate that but as.
Speaker Change: As we talked about last quarter, and we've been contingency planning to minimize disruptions to both trade and supply chain.
Speaker Change: Frankly, we've been doing this for 90 years there've been there've been tariffs there have been non trade tariff barriers there have been all of those things and we are confident in our ability to adapt and succeed.
Speaker Change: We're certainly interested in working with the with the administration and Congress to try to resolve this sooner rather than later.
Speaker Change: But.
Speaker Change: We feel good about where we are and what we have done we have factor everything as it relates to tariffs.
Speaker Change: Consumer pressure and so forth into into our guidance.
Speaker Change: Great. Thank you very much.
Speaker Change: Thank you and our next question comes from Michael Lavery Piper.
Super Sandler: Super Sandler. Please go ahead.
Speaker Change: Yes.
Speaker Change: Thank you and good morning, good morning.
Speaker Change: I just wanted to come back to beef, obviously theres a lot of challenges there, but one thing.
And it's proven to be better than we expected or feared as is the consumer demand.
Speaker Change: Even as pricing has been sticky and gone.
Speaker Change: The revenues continue.
Speaker Change: Been growing nicely, so maybe any sense of just what youre seeing there is it.
Speaker Change: Driven by more of a higher end consumer.
Speaker Change: Help us maybe understand just what's what's helping keep that the sales growth momentum going.
Speaker Change: Yeah, that's a great question, Michael and obviously, the consumer has been extremely resilient relative to beef and.
Speaker Change: We've seen.
Speaker Change: Appropriate strength on middle meats, but I think what's really helped us cut out up at such a high level has been some of the values that are being drive through the grinder complex as well and regardless of format. If it's in the format of our Patty if it's in.
Speaker Change: Ground beef in chubb's, we've really seen a lot of resiliency in it that provides us some benefits all the way from the check to the round as well and so I would I would highlight the resiliency and an opportunity for a consumer to potentially move from middle meats down into ground beef and consumers are going.
Speaker Change: Continue to eat beef and I think that's really the highlight is they still have the opportunity to move.
Speaker Change: These guidance complex is from some of the middle meats as well.
Speaker Change: Okay, that's great that's helpful and.
Speaker Change: Just a follow up on the regulatory environment.
Speaker Change: Is there a sense for what your exposure is to snap recipient households, and if there is.
Speaker Change: Some some.
Speaker Change: Cut back or dial back in and what those benefits look like have you been able to quantify what if any risks you think that might give.
Speaker Change: Well I mean, it's.
This is donny this is a little bit across the board or all over the board I should say, but <unk>.
Speaker Change: Interestingly enough is hearing in Arkansas.
Speaker Change: About a month ago, our governors saw a waiver from USDA too.
Speaker Change: Substitute rotisserie chicken.
Speaker Change: Two the snap program as opposed to some candy.
Speaker Change: Candy and sweet goods, and so forth and so we see that catching own across the country.
Speaker Change: We see.
Speaker Change: Protein.
Speaker Change: As we talked about or I talked about in the.
Speaker Change: The earlier comments.
Speaker Change: We're seeing U S meat sales at all time high in 2024, 98% of household penetration. So protein is clearly a winner in the marketplace, whether thats chicken beef pork or Turkey.
Speaker Change: So we feel good about that I had no specifics as it relates to.
Speaker Change: But the economic value is in terms of snap and how that may trade and how the administration might do it but once we know we will.
Speaker Change: We will certainly.
Speaker Change: Make you aware of that.
Speaker Change: Okay. Thanks, so much.
Speaker Change: Thank you.
Sharma: Next question today comes from <unk> Sharma with Stephens, Inc. Please go ahead.
Speaker Change: Great. Thanks for the question just wanted to.
Sharma: Ask about operationally, we had a pretty cold winter.
Sharma: Across many parts of the U S. Just want to understand if you could help us qualitatively if you could quantify.
Sharma: Any cold weather impacts.
Sharma: I will say.
Sharma: I was impressed continue to be impressed by chicken, but I get the sense that maybe you were impacted with the cold weather and you could have done a little bit better but.
Sharma: I'll stop there and see if.
Speaker Change: What color you have to share.
Sharma: Sure.
Sharma: I would tell you that early Q2, we certainly had weather disruptions.
Sharma: Yes.
Sharma: A central part of the country up and down the East coast.
Sharma: We often see.
Sharma: No ice tornadoes hurricanes.
Sharma: Honestly, you get to see it all in.
Sharma: But.
Sharma: We manage our business to be able to deliver in spite of those things.
Sharma: We tried to keep our team members safe through those processes in our animal safety in those and alive and those processes and I think we fared very well early in the quarter, but it did cost us some money.
Sharma: Yes. This is Kurt I think I wouldn't I wouldn't call it anything where it was materially different than historical norms I think to add to what Don said right. The benefit of of our network and portfolio as we prepare for for winter storm, specifically as you referenced.
Sharma: Moving within the network and optimizing as best we can.
While it was certainly a challenging Q2 given the weather.
Sharma: We are accustomed to dealing with that.
Sharma: Yeah.
Sharma: Great great.
Sharma: The color there I guess my follow up will just be just pork related.
Sharma: Just hog supplies have been come in a little bit lighter than expected.
Sharma: Wanted to get a sense. If you think the industry is continuing to rationalize production or supplies or if this is just temporary disruptions I E.
Sharma: Whether disease related how do you expect supply availability to trend to.
Sharma: Through the back half of the year.
Sharma: Yeah, Great question I think.
Sharma: I think the.
Sharma: The real reference point is the fact that if you look at a lot of the models that are published the pork producer.
Sharma: <unk> two.
Sharma: Be profitable.
Speaker Change: Which is a great reversal from a couple of years ago as well so that certainly provide some financial continuity and stability to continue to keep these productive second part of that as we continue to see opportunity relative to genetic improvement in herd health.
Speaker Change: From a soft perspective, and so those productivity is in terms of pigs per later continue to be on an upward trajectory.
Speaker Change: Which is positive relative to supply as well and then lastly, as we come out of our fiscal Q2, I think it's important to note that kind of move out of <unk>.
Speaker Change: Disease season relative to pork production in and.
Speaker Change: And so you see some of those impacts that certainly flow through.
Speaker Change: But from a supply perspective, we don't see any large disruptions and.
Speaker Change: Our outlook for the rest of the year is really to continue to layer into our operational improvements that we've seen year to date, we have plenty of runway left that the team is executing to that.
Speaker Change: We would expect to offset any supply disruptions.
Speaker Change: Thank you for the color.
Speaker Change: Thank you and our next question today comes from Heather Jones with Heather Jones Research. Please go ahead.
Heather Jones: Good morning, Thanks for the question.
Heather Jones: I'll try to be quick my first one is on beef and then my follow up I won't be able chicken, but first one.
Heather Jones: Recent pork so if I remember correctly I don't think your initial guidance.
Heather Jones: <unk> and impact from tariffs now does so is it fair to assume that if those are resolved relatively quickly there is potential upside to guidance.
Curt Callaway: This is Curt I think I'll start out really quick we did.
Heather Jones: In the last quarter, we did reference that our ranges included.
Heather Jones: Our outlook and impact associated with tariffs.
Heather Jones: Certainly it was early days when we were on the call last quarter, but we did we did consider that in the prior quarter.
Okay.
Heather Jones: And then on the chicken Fry and I hate to belabor this but.
Heather Jones: It's obviously, a very constructive set up and you all are tend to be long dark meat, which has been on fire. So I was just wondering on you referenced the 100 million investment with shelf talked about all along.
Heather Jones: Wondering given your new to theater plants.
Heather Jones: And just the inherent advantage that gives you relative to your peers are you also planning on investing more in the.
Heather Jones: The pricing side.
Heather Jones: To protect and gain share.
Heather Jones: Still having trouble.
Heather Jones: Rectifying, you're reconciling your second half guidance implied guide with the backdrop we have.
Heather Jones: And it doesn't seem to suggest 100 mill again, so just trying to figure that out. Thank you.
Heather Jones: Sure.
Heather Jones: I'm not sure I am.
Speaker Change: Not sure I can help you, but let me give you some of the components of this.
Speaker Change: If you think about from a dark meat I'm not clear about what that what your what your remaining with that but I can tell you is.
Speaker Change: 95% of the dark meat, we produce.
Speaker Change: So domestically.
Speaker Change: No.
Speaker Change: One proof point.
Speaker Change: If you look at where what we've done relative to adding value to dark meat weather.
Speaker Change: The boneless skinless retail are more value added products as it relates to dark meat.
Speaker Change: We've been on a journey to convert more of the commodity into value added our premiums then.
Speaker Change: We haven't stopped that journey and so we feel good about that.
Speaker Change: And so we.
Speaker Change: We also said from a guidance standpoint that.
Speaker Change: That we thought we'd be.
Speaker Change: Middle range to upper range, it's the.
Speaker Change: The factors we considered there were really two one was the year to date momentum would push you to the top of the range and the investment back in.
Speaker Change: And the brand and plus any consumer pressure, our tariff unknowns or activity. We've built that into this model. So we're comfortable with the 1% to one three.
Speaker Change: But.
Kevin Cole: Kevin you want to.
Speaker Change: This is Kurt let me add just a.
Heather Jones: Just if I can I think just to go back Heather on the reference I made earlier on an earlier.
Speaker Change: Question right, we made $680 million in the front half of the year at the high end of our range that would imply a back half of 620 or down 60 versus the front half.
Speaker Change: We said we'd be at or above the upper half hopefully that gives you a little bit of context relative to the spend of the $100 million.
Speaker Change: And so to reiterate.
Speaker Change: The dark meat comment from an overall perspective overall chicken about 95% of the total revenue and chicken.
Speaker Change: Get sold domestically.
Speaker Change: Okay. Thank you so much.
Speaker Change: Yeah.
Thank you and our next question comes from Manav Gupta with UBS UBS. Please go ahead.
Thank you for squeezing me in a low cost two questions very quickly you'll continue to generate significant amount of free cash flow so what could be the odyssey.
Speaker Change: Policy far better shareholder returns given the amount of free cash flow generating and my my second question here is given the downtime. We are generally seeing in an economy and your strong balance sheet any opportunities for small bolt on acquisitions that you see out debt and which business segments could you target for small bolt on deals. Thank you.
Speaker Change: This is Kurt thanks for the question.
Speaker Change: From a free cash flow standpoint in the first half of the year. We were just a little shy of $400 million, we still provided a guidance range for.
Speaker Change: For the full year of free cash flow between one and $1 $6 billion.
Speaker Change: At our run rate of dividends, we spent about $700 million on dividends for the full year.
Speaker Change: Our leverage certainly acknowledging we've made significant improvement over the last six quarters going from four one times to two three times.
Speaker Change: Our long term goal is still at two times. So we have a little bit of ways to go before we get to our ultimate goal.
Speaker Change: And with respect to M&A are.
Speaker Change: Our stance remains the same.
Speaker Change: We look at opportunities, but we.
Speaker Change: We're very selective in what we choose to look at but overall context.
Speaker Change: Still looking at opportunities more in the value added parts of our portfolio.
Speaker Change: Thank you for that.
Speaker Change: It concludes our question and answer session I would like to turn the conference back over to Donnie King for any closing remarks.
Donnie King: Thank you for your time and continued interest in Tyson foods, we look forward to sharing our progress with you next quarter.
Donnie King: Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.
Donnie King: Yeah.
Donnie King: [music].