Q3 2025 Tyson Foods Inc Earnings Call

Curt Calaway: Good morning, everyone, and welcome to the Tyson Foods Third Quarter 2025 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 and then one using a touch-tone telephone. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the conference over to Sean Cornett, Vice President, Investor Relations. Sir, please go ahead.

Good morning everyone and welcome to the Tyson Foods, third quarter 2025 earnings conference call.

All participants will be in a listen-only mode. Should you need assistance? Please sing to 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 and then 1 using a touchtone telephone

to withdraw your questions. You may press star and 2

We also note, today's event is being recorded.

At this time, I'd like to turn the conference over to you. Sean, cornet BP, investor relations sir, please go ahead.

Sean Cornett: Good morning and welcome to Tyson Foods' Third Quarter Fiscal Year 2025 earnings conference call. On today's call, Tyson's President and Chief Executive Officer, Donnie King, and Chief Financial Officer, Curt Calaway, will provide prepared remarks followed by Q&A. Additionally, joining us today are Brady Stewart, Group President, Prepared Foods, Beef and Pork, and Chief Supply Chain Officer; Devin Cole, Group President, Poultry and Global Business Unit; and Christina Lambert, Chief Growth Officer. 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.

Good morning and welcome to Tyson Foods. Third quarter fiscal year 2025 earnings conference call.

On today's call Tyson's president, and chief executive officer Donnie King.

The Chief Financial Officer for Callaway will provide prepared remarks, followed by Q&A.

additionally, joining us today are Brady Stewart, group president prepared foods,

Beef and pork and chief supply chain officer.

Kevin Cole group president poultry and Global business units and Christina Lambert Chief growth officer.

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 website.

Sean Cornett: Forward-looking statements include all comments reflecting our expectations, assumptions, or beliefs about future events or performance that do not relate solely to historical periods. These forward-looking statements are subject to risk, uncertainties, and assumptions, which may cause actual results to differ materially from our current projections. 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. 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 for our fiscal period unless otherwise noted. 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 Donnie.

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 risk, uncertainties and assumptions, which may cause actual results to differ materially, from our current projections.

The different materially from our projection.

We assume no obligation to update any forward-looking states.

Please note that references to earnings per share operating income and operating margin in our remarks are on an adjusted basis for our fiscal periods. Unless otherwise notice

Or reconciliations of these non-gaap measures to their corresponding Gap measures. Please refer to our earnings press release.

Now, I'll turn the call over to time.

Donnie King: Thanks, Sean, and thank you to those joining us on the call. Let me begin by saying that I am pleased with our performance this quarter, and we have driven results in line with my expectations. Sales, adjusted operating income, and adjusted earnings per share all grew year over year, marking our fifth consecutive quarter of year-over-year growth across each of these key metrics. This was no accident. We are driving efficiencies across all businesses while delivering growth with world-class service and value for our customers and with innovation for our consumers. Our total volume was roughly flat to last year, while Nielsen data shows that we grew retail branded volumes across prepared foods and chicken. We also grew volume and dollar share in aggregate across our top 10 categories, including Tyson branded frozen chicken, Hillshire Farm snacking and lunch meat, as well as Jimmy Dean breakfast product.

Thanks, Sean. And thank you to those joining us on the call.

Let me Begin by saying that I'm pleased with our performance, this quarter, and we've driven results in line with my expectations.

Sales adjusted operating income and adjusted earnings per share all grew year-over-year.

Growth across each of these key metrics. This was no accident. We're driving efficiencies across all businesses, while delivering growth with world-class service and value for our customers and with Innovation for our consumers,

Our total volume was roughly flat to last year. While Nielson data shows that we grew retail branded volumes across prepared foods and check it.

Donnie King: Growth in profitability versus last year was driven by our prepared foods, chicken, and pork segments, each delivering double-digit growth in adjusted operating income. The only soft spot in our business is the beef segment. With cattle availability at record lows, we continue to experience industry market headwinds. But even in this difficult environment, we are improving our fundamentals with increased prioritization on efficiencies, reducing costs, and bringing innovative new products to market. We are poised to capitalize on tremendous opportunity ahead of us, as we believe heifer retention has likely now begun and cattle availability should improve in coming years. We continue to take meaningful steps forward in building our financial strength, with net leverage improving year over year and sequentially, a direct result of deliberate actions and disciplined capital allocation. Simply put, our strategy is working, and we are finding ways to win in today's market.

We also grew volume and dollar share in aggregate across. Our top 10 categories, including Tyson, branded, frozen chicken, Hillshire Farms snacking and lunch meat as well as Jimmy Dean Breakfast products.

Growth and profitability versus last year was driven by our prepared foods. Chicken and pork segments, each delivering double digit growth in adjusted operating income.

The only soft spot in our business is the beef segment with cattle. Availability at record lows, we continue to experience industry Market headwinds

But even in this difficult environment, we are improving our fundamentals with increased prioritization on efficiencies reducing costs and bringing Innovative new products to markets. We're poised to capitalize on tremendous opportunity ahead of us as we believe. Heer retention is likely now begun and cattle availability should improve in coming years.

Donnie King: As you know, consumers generally remain cautious and more selective in how they spend. Nielsen data shows food and beverage retail volume remains steady versus last year during the 13 weeks ending in June. However, protein continues to be the right place to play, and beef, pork, and chicken are all clear winners with consumers. Now let us take a closer look at our branded retail performance in Q3. Volume across these products grew 1.5%, far outpacing total food and beverage. Dollar sales grew 2%. This growth was led primarily by Tyson branded frozen value-added chicken, which saw a 10% increase in volume sales driven by our brand relaunch and strong performance.

We continue to take meaningful steps forward in building our financial strength, with net leverage improving year-over-year and sequentially. This is a direct result of deliberate actions and disciplined capital allocation. Simply put, our strategy is working, and we are finding ways to win in today's market.

As you know, consumers generally remain cautious and more selective in how they spend. Nielsen data shows that food and beverage retail volume remains steady versus last year during the 13th ending in June; however, protein continues to be the right place to play. Pork and chicken are both clear winners with consumers.

Now, let's take a closer look at our branded retail performance in Q3.

Volume across these products, grew 1.5%.

Far outpacing, total food and beverage dollar sales, grew to 2%.

Donnie King: We are meeting consumers where they are, and you can see that in new innovations like our Tyson Simple Ingredient Nuggets, developed for those seeking high protein and simple ingredients with chicken, cheese, and seasoning, a great taste without compromise. We also launched fun, family-friendly products like Mega Dino Nuggets that are driving engagement and incremental eating occasions. Our volume share increased 130 basis points, and we are growing off a base where we are the market share leader. We are especially pleased with the momentum in our snacking portfolio, where volume grew 20% and share increased 110 basis points, led by strong performance from Hillshire brand snacks. Our Jimmy Dean breakfast lines and Hillshire Farm lunch meats also delivered solid volume growth in the 13-week period ending in June. Innovations, distribution gains, and efficient marketing and promotional support are strengthening our brand and keeping us competitive in the marketplace.

This growth was led primarily by Tyson-branded frozen, value-added chicken, which saw a 10% increase in volume sales driven by our brand relaunch and strong performance.

We are meeting consumers where they are.

And you can see that in new innovations, like our Tyson Simple Ingredient Nuggets, developed for those seeking high protein and simple ingredients, with chicken, cheese, and seasoning—a great taste without compromise.

We also launched fun, family-friendly products like Mega Dino Nuggets that are driving engagement and incremental eating occasions.

Our volume share increased 130 basis points, and we're growing Alpha base, where we are the market share leader.

We're especially pleased with the momentum in our snacking portfolio, where volume grew 20% and share increased by 110 basis points. Led by strong performance from Hillshire brand snacks, our Jimmy Dean breakfast lines, and Hillshire Farm lunch meats also delivered solid volume growth in the 13-week period ending in June.

Donnie King: Importantly, as consumers look to the perimeter of the store, we are also offering high-quality fresh options, where our Tyson branded fresh chicken volume grew 2.3%. As a world-class food company and recognized leader in protein, Tyson Foods is well-positioned to meet the robust consumer demand for protein. Now let us walk through segment performance. Prepared Foods delivered a strong third quarter with adjusted operating income up more than 21% and margins expanding by 150 basis points, reflecting continued progress on our multi-year plan to enhance profitability in this business. The segment returned to top-line growth in the quarter, successfully navigating higher raw material costs and improved product mix within and across channels. Innovation and expanded distribution remain key pillars of our strategy, driving both top and bottom-line growth.

Innovation, this distribution gains and efficient marketing, and promotional support are strengthening our brand and keeping us competitive in the marketplace. And importantly, as consumers look to the perimeter of the store, we are also offering high-quality fresh options, where our Tyson branded press check-in, volume group 2.3%,

As a world-class food company and recognized leader in protein, Tyson Foods is well-positioned to meet the robust consumer demand for protein.

Now, let's walk through segment performance.

That's profitability in this business importantly, the segment returned to Topline growth in the quarter successfully navigating higher raw material cost and improved product mix within and across channels.

Donnie King: As mentioned earlier, our Hillshire snacking dips and spreads are contributing to volume and share gains at retail. We are also leveraging our brand equity to thoughtfully expand into new spaces. We are launching new Hillshire Farm handhelds featuring ham and cheese, buffalo-style chicken, and Philly cheese steak, all designed to meet growing consumer demand for convenient, high-protein options. This marks an exciting step into a new platform for the Hewlett-Shaw brand and reinforces that we have our most robust innovation pipeline ever, as well as our commitment to innovation across the company. Our operational execution initiatives contributed to profit growth in Q3 and helped offset continued cost pressure from raw material inflation. We have strengthened our S&OP process and unlocked efficiencies in our plants, driving fill rates above 98% in the third quarter, the highest since 2019.

Innovation and expanded distribution remain key pillars of our strategy, driving both top and bottom line growth. As mentioned earlier, our Hillar snacking dips and spreads are contributing to volume and share gains at retail.

We're also leveraging our brand equity to thoughtfully expand into new spaces.

We're launching new Hill, shower, farm handhelds featuring ham and cheese, buffalo-style chicken, and Philly cheese steak, all designed to meet growing consumer demand for convenient, high-protein options.

This marks an exciting step into a new platform for the heel shower brand and reinforces that. We have our most robust innovation pipeline ever, as well as our commitment to innovation across the company.

Our operational execution and initiatives contributed to profit growth in Q3 and helped offset continued cost pressure from raw material inflation.

Donnie King: This has enabled us to better serve our customers with greater consistency and reliability. These improvements have also helped by ensuring that we have the right product in the right place at the right time. We are working to pulverize within Prepared Foods the operational discipline that is critical in our other businesses while adding new tools and analytics to eliminate inefficiencies and reduce waste. There is still more work to do, but we are encouraged by the progress and excited about the long runway for growth and profit improvement in Prepared Foods. Chicken delivered another quarter of solid top and bottom-line growth, including our third consecutive quarter of year-over-year volume growth. Value-added volume grew at more than three and a half times the rate of total segment volume, driving a favorable mix shift that is positively impacting both sales and earnings.

We have strengthened our SNAP process and unlocked efficiencies at our plants, driving fill rates above 98% in the third quarter, the highest since 2019. This has enabled us to better serve our customers with greater consistency and reliability. These improvements have also helped by ensuring that we have the right product in the right place.

Place at the right time.

We are working to purify within prepared foods. The operational discipline that’s critical in our other businesses is being applied while adding new tools and analytics to eliminate inefficiencies and reduce waste.

There's still more work to do, but we are encouraged by the progress and excited about the long runway for growth and profit improvement in prepared foods.

Chicken delivered another quarter of solid top- and bottom-line growth, including our third consecutive quarter of year-over-year volume growth.

Donnie King: Adjusted operating income rose more than 12%, building on a very strong base from Q3 last year. With grain costs roughly in line with last year, profit growth this quarter came mainly from incremental efficiencies we have unlocked across our plant network. We have made significant strides in transforming our chicken business over the past two years and have not taken our eye off the ball in driving operational excellence. In beef, as you know, we continue to navigate the cattle cycle. Cattle supply is noticeably tighter than a year ago, which significantly compressed spreads in the quarter despite resilient consumer demand. We are managing this market environment with discipline, controlling what we can across the supply chain to meet customer needs. We are also seeing benefits from the network optimization efforts that shifted further processing volumes back into our harvest facilities.

Value-added volume grew at more than 3.5 times the rate of total segment volume, driving a favorable mix shift that is positively impacting both sales and earnings.

Adjusted operating income rose more than 12%, building on a very strong base from Q3 last year.

With Green Cross roughly in line, last year's profit growth this quarter came mainly from incremental efficiencies we've unlocked across our plant network.

We have made significant strides in transforming our chicken business over the past two years and haven't taken our eye off the ball in driving operational excellence.

Donnie King: At the same time, we are enhancing our value-added mix with the help of new data and analytics capabilities that support smarter, faster decision-making. These steps are helping to fortify the foundation for a more resilient and agile beef business, both today and over the long term. In pork, we delivered our strongest Q3 adjusted operating income in four years, reflecting the purposeful actions we've taken to improve our operations. Like beef, we increased our capacity utilization by optimizing our network and enhancing our value-added mix. We have improved labor and asset efficiency through operational excellence. We have built a fundamentally better pork business, and this quarter's results reflect that progress. In closing, we are executing our strategy, controlling the controllable, and finding ways to win in today's market. With that, I'll turn it over to Curt Calaway to walk through our financial results in more detail.

As you know, we continue to navigate the cattle cycle. Cattle supply is noticeably tighter than a year ago, which has significantly compressed spreads in the quarter, despite resilient consumer demand. We are managing this market environment with discipline, controlling what we can across the supply chain to meet customer needs. We're also seeing benefits from the network optimization efforts that shifted further processing volumes back into our harvest facilities.

At the same time, we're enhancing our value-added mix with the help of new data and analytics capabilities that support smarter, faster decision-making. These steps are helping to fortify the foundation for a more resilient and agile beef business, both today and over the long term.

In pork, we delivered our strongest third-quarter adjusted operating income in four years, reflecting the purposeful actions we've taken to improve our operations.

Like beef, we increase our capacity utilization by optimizing our network and enhancing our value-added mix. We have improved labor and asset efficiency through operational excellence. We have built a fundamentally better port business, and this quarter's results reflect that progress.

Curt Calaway: Thanks, Donnie. Third-quarter enterprise sales grew 4% to $13.9 billion, led by beef, with solid contributions from chicken and prepared foods, reflecting the healthy demand environment for protein. Adjusted operating income was $505 million, up 2.9%, driven by strong growth in chicken, prepared foods, and pork, all of which helped offset the decline in beef. Adjusted earnings per share grew 4.6% to $0.91. As Donnie mentioned, this is the fifth consecutive quarter of year-over-year growth across sales, adjusted operating income, and adjusted earnings per share. Our multi-protein, multi-channel portfolio, combined with our team's attention on operational execution in a dynamic macro environment, continues to deliver results. Turning to the third quarter segment performance. In prepared foods, sales were up 3.4% versus last year, primarily driven by progress on raw material cost recovery while continuing to enhance our product mix.

In closing, we are executing our strategy, controlling the controllables, and finding ways to win. In today's market, with that, I'll turn it over to Kurt to walk through our financial results in more detail.

Thanks, Donnie. Third quarter, Enterprise sales grew 4% to $13.9 billion, led by beef, with solid contributions from chicken and prepared foods, reflecting the healthy demand environment for protein.

Adjusted operating income was $505 million, up 2.9%, driven by strong growth in chicken, prepared foods, and pork, all of which helped offset the decline in beef.

Adjusted earnings per share increased 4.6% to $0.91. As Donnie mentioned, this marks the fifth consecutive quarter of year-over-year growth across sales, adjusted operating income, and adjusted earnings per share.

In a dynamic macro environment, we continue to deliver results.

Curt Calaway: Adjusted operating income increased 21%, and margin improved by 150 basis points versus last year. Benefits from mix as well as continued progress on our operational execution initiatives drove the increase in profitability and more than offset ongoing net raw material cost increases. In chicken, we delivered another quarter of solid top-line performance with sales up 3.5% year over year. Volume contributed two-thirds of the increase, including a notable contribution from value-added product sales, which also drove a favorable mix reflected in price. Adjusted operating income increased 12% as we continue to drive efficiencies in our plants and capture the benefits of top-line growth. As we discussed last quarter, we increased our brand support investment both year over year and sequentially to continue growing our value-added product sales. Sales in beef increased primarily due to a higher average price per pound, reflecting ongoing healthy demand.

Turning to the third quarter segment performance in Prepared Foods, sales were up 3.4% versus last year, primarily driven by progress on raw material cost recovery while continuing to enhance our product mix.

Adjusted operating income increased 21%, and margin improved by 150 basis points versus last year.

Benefits from mix, as well as continued progress on our operational execution initiatives, drove the increase in profitability and more than offset ongoing net raw material cost increases.

In chicken, we delivered another quarter of solid topline performance, with sales up 3.5% year-over-year.

To two-thirds of the increase, including a notable contribution from value-added product sales, which also drove a favorable mix reflected in price.

Adjusted operating income increased 12% as we continue to drive efficiencies in our plants and capture the benefits of topline growth.

As we discussed last quarter, we increased our brand support investment, both year-over-year and sequentially, to continue growing our value-added product sales.

Curt Calaway: This offset lower harvest volume from an increasingly tight cattle supply. Adjusted operating income declined as spreads compressed noticeably versus last year, driven primarily by higher cattle costs. In pork, sales were roughly flat, excluding the impact of a legal contingency accrual taken in the third quarter last year. Adjusted operating income increased 64%, highlighting the benefits from network optimization and operational efficiencies leading to the strongest third-quarter results since 2021. Turning to our financial position, our approach to capital allocation remains disciplined and deliberate. We are focused on maintaining financial strength, investing in the business, and returning cash to shareholders. Year-to-date operating cash flow was $1.6 billion, and capital expenditures were $691 million, resulting in free cash flow of $929 million, well ahead of year-to-date dividends, which were $524 million. We ended the quarter with $4 billion in liquidity and net leverage at 2.1 times.

Sales and beef increased primarily due to a higher average price per pound reflecting ongoing. Healthy demand. This offset lower Harvest volume from an increasingly tight cattle Supply.

Adjusted operating income declined as spreads compressed noticeably versus last year, driven primarily by higher cattle costs.

In pork sales were roughly flat, excluding the impact of illegal contingency accrual taken in the third quarter last year.

Adjusted operating income increased 64%, highlighting the benefits from network optimization and operational efficiencies, leading to the strongest third quarter results since 2021.

Turning to our financial position, our approach to capital allocation remains disciplined and deliberate. We are focused on maintaining financial strength, investing in the business, and returning cash to shareholders. Year-to-date operating cash flow was $1.6 billion and capital expenditures were $691 million, resulting in free cash flow of $929 million—well ahead of year-to-date dividends, which were $524 million.

Curt Calaway: We have successfully reduced net leverage by nearly a full turn over the past year. With leverage continuing to decline and cash flows remaining strong, we restarted open market share repurchases under our share repurchase program late in the quarter, the first since Q1 of 2023. In fact, we returned $201 million to shareholders through dividends and repurchases this quarter. While dividends remain our primary way of returning cash to shareholders, at current valuation, we believe share repurchases represent a very attractive opportunity. Our balance sheet remains healthy as we prioritize financial strength, our investment-grade credit rating, and cash management to drive long-term shareholder value. Now let's take a moment to review our updated outlook for 2025. We are raising our overall guidance based on our year-to-date performance and a solid outlook for the fourth quarter. We now anticipate full-year sales to be up 2% to 3% year over year.

We ended the quarter with $4 billion in liquidity and net leverage at 2.1 times. We have successfully reduced net leverage by nearly a full turn over the past year, with leverage continuing to decline and cash flows remaining strong. We restarted open market share repurchases under our share repurchase program late in the quarter, the first since Q1 of 2023. In fact, we returned $201 million to shareholders through dividends and repurchases this quarter.

While dividends remain our primary way of returning cash to shareholders at current valuations, we believe share repurchases represent a very attractive opportunity.

Our balance sheet remains healthy as we prioritize financial strength. Our investment-grade credit rating and cash management drive long-term shareholder value.

Now, let's take a moment to review our updated outlook for 2025.

We are raising our overall guidance based on our year-to-date performance and a solid outlook for the fourth quarter.

Curt Calaway: We are raising the midpoint and narrowing the range for total company adjusted operating income, which we expect to be between $2.1 to $2.3 billion, delivering significant growth versus last year across the entire range. We still anticipate interest expense of approximately $375 million and a tax rate of around 25%. We remain disciplined in managing cash, with CapEx expected to be at or below $1 billion and free cash flow in the range of $1 to $1.3 billion. Now to provide more color on our segment outlook. In prepared foods, we expect adjusted operating income in the range of $925 million to $1 billion. Our improvement plan is delivering results and offsetting significantly higher raw material costs. We are raising our adjusted operating income guidance for chicken to $1.3 to $1.4 billion, highlighting significant year-over-year growth of 33% at the midpoint.

We now anticipate full year sales to be up 2 to 3% year-over-year. We are raising the midpoint and narrowing the range for total company adjusted operating income which we expect to be between 2.1 to 2.3 billion dollars, delivering significant growth versus last year across the entire range.

We still anticipate interest expense of approximately $375 million and a tax rate of around 25%.

We remain disciplined in managing cash with capex expected to be at or below 1 billion and free cash flow in the range of 1 to 1.3 billion.

Now, to provide more color on our segment Outlook.

In prepared foods, we expect adjusted operating income in the range of $925 million to $1 billion. Our improvement plan is delivering results in offsetting significantly higher raw material costs.

Curt Calaway: Based on year-to-date performance and the tight cattle supply conditions, we now expect adjusted operating income in beef to be between a loss of $475 and $375 million. We are tightening the guidance for pork to the high end of the range, anticipating $175 to $200 million. Our international business has performed well this year, driven by effectively managing controllable costs, maximizing efficiencies, and lowering conversion costs. We now expect adjusted operating income in international other to be roughly $125 million. That covers our segment performance and financial highlights. Now I will turn the call over to Donnie King.

We are raising our adjusted operating income guidance for chicken to $1.3 to $1.4 billion, highlighting significant year-over-year growth of 33% at the midpoint.

Billion dollars.

We are tightening the guidance for Port to the high end of the range, anticipating $175 to $200 million.

Donnie King: Thanks, Curt. I'm pleased with what we have accomplished, driven by the dedication of our team and encouraged about our future. Our diverse protein portfolio, commitment to innovation, focus on operational excellence, and a healthy balance sheet continue to position us as a leader, meeting the growing market demand for protein while delivering value to our customers, consumers, and shareholders. Thank you to our team members for all you do, and of course, to those on the call for your ongoing support of Tyson Foods. Now I'll hand things back to Sean as we move to Q&A.

Our international business has performed well this year, driven by effectively managing controllable costs, maximizing efficiencies, and lowering conversion costs. We now expect adjusted operating income in International Other to be roughly $125 million. That covers our segment performance and financial highlights. Now I'll turn the call over to Donnie.

Thanks, Kurt. I'm pleased with what we have accomplished, driven by the dedication of our team, and encouraged about our future. Our diverse protein portfolio, commitment to innovation, focus on operational excellence, and a healthy balance sheet continue to position us as a leader meeting the growing market demand for protein while delivering value to our customers, consumers, and shareholders.

Sean Cornett: Thanks, Donnie. We will now move forward 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. Operator, please provide the Q&A instructions.

Thank you to our team members for all you do, and of course to those on the call for your ongoing support of Tyson Foods. Now, I'll hand things back to Sean as we move to Q&A.

Thanks, Donnie. We will now move forward 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.

Curt Calaway: Ladies and gentlemen, at this time, we will begin that question and answer session. To ask a question, you may press star then one on your touchstone phones. If you are using a speaker phone, we do ask that you please pick up your handset before pressing the keys. To withdraw your questions, you may press star and two. Again, we please ask that you do limit yourselves to one question and one follow-up. If you do have additional questions, you may re-enter the question queue. At this time, we will pause momentarily to assemble the roster. Our first question today comes from Leah Jordan from Goldman Sachs. Please go ahead with your question.

Ladies and gentlemen, at this time, we will begin the question-and-answer session.

To ask a question, you may press star and then 1 on your touchtone phones. If you are using a speakerphone, we do ask that you please pick up your handset before pressing the keys.

So, withdraw your questions. You may press star and 2.

Again, we please ask that you do limit yourselves to one question and one follow-up. If you do have additional questions, you may re-enter the question queue.

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

And our first question today comes from Leah Jordan from Goldman Sachs. Please go ahead with your question.

Christina Lambert: Thank you. Good morning and great job on the quarter. Given the lowered AOI guidance for beef and your comments earlier on the call indicating that heifer retention has begun, seeing if you could provide more detail on how you're thinking about cattle supply and cost for that segment in the near term and as we move through this herd rebuilding phase.

Thank you, good morning and great job on the quarter. Um, given the lowered aoi, guidance for beef and your comments earlier, on the call indicating that he had for retention has begun. Seeing if you could provide more detail on how you're thinking about cattle Supply and cost for that segment in the near term, and as we build through move through this herd rebuilding phase.

Donnie King: Good morning and thank you, Leah, for the question. I will start out and make a few comments, and then I will let Brady add a little color to it as well. Cattle supplies are tightening, creating a compression spread, as was noted in the remarks earlier. We anticipate that. We think that heifer retention has begun. For example, if you look at beef cow slaughter, it was down 16% from January to June. That is an early indicator of heifer retention beginning. In terms of beyond that, we think herd rebuilding will begin in earnest in 2026. We think that through the next couple of years after that, that is when we will get back. Let us call it 2028. That is when we see herd rebuild and seeing the benefit from that and holding back heifers for breeding purposes. Brady, anything you want to add to that?

Well, good morning, and thank you live for the question. Um, I will I'll start out and make a few comments and then I'll, I'll let Brady. Add a little color to it as well. Uh, but you know cattle, uh, supplies are tightening and creating a compression spread as was noted in the uh, in the remarks earlier. Uh, we anticipate that, uh, we think that

Brady Stewart: Thanks, Donnie. I would just indicate that we're confident in our ability to manage through competitively through this challenging economic time. The beef business continues to manage through this tightened supply with the record high cutout values as well. Teams really dialed into a strategy where we continue to use data and digital to make the best decisions, understanding the market dynamics that are in place today. We made some pivots here the last several months relative to how we manage our business. We've reduced some of our lighting speeds to allow us to capitalize on the highest possible yield performance in our plants. We like that strategy moving forward. We'll continue to add value to our products and go to market where we see consumers going in the future, which is convenience and protein.

That, uh, have a retention, uh, has begun. Uh, for example, uh, if you look at U.S. beef, cow slaughter was down 16% from January to June, and so that's an early indicator of herd retention. Uh, beginning, uh, in terms of, um, beyond that, we think, uh, herd rebuilding will begin in earnest in 2026, and uh, we think that will, uh, you know, through the next couple of years after that. So that's when we will get back. Let's call it 2028 is when we see, um, herd rebuild and seeing the benefit from that and holding back heifers for breeding purposes. Brady, anything you want to add to that? Thanks, Donnie. And, and I would just, uh, uh, just indicate that we're confident in our ability to manage through competitively, uh, through this, uh, challenging economic time.

Uh, the beef business continues to manage through this Titan Supply with the record height cutout values as well.

Uh, teams are really dialed into a strategy where we, uh, continue to use data and digital to make the best decisions. Understanding the market dynamics that are in place today,

Brady Stewart: By using those three strategic pillars, we remain confident that we'll continue to manage through this cycle in a very competitive structure.

Uh, we made some pivots here in the last, uh, several months relative to how we manage our business. Uh, We've reduced some of our lighting speeds to allow us to capitalize on the highest possible yield performance in our plants. And we like that strategy, moving forward. And then we'll continue to add value to our products and go to market, where we see consumers going in the future, which is convenience and protein. And so by using those streets, strategic pillars, uh, we we remain confident that we'll continue to manage through this cycle in a very calm, uh, competitive, uh,

structure.

Christina Lambert: That's very helpful. Thank you. For my follow-up, I wanted to switch to prepared foods. You had a nice profit improvement in the quarter, but you did narrow your AOI guidance for that segment, and the midpoint's now kind of slightly lower than it was before. Just seeing if you could provide more detail on the input cost pressure you're seeing in that business and how we should think about the flow through of further pricing from here.

About the flow through a further pricing from here.

Donnie King: Yeah, let me start with that. We have seen a significant increase in raw material. In fact, it has been going on all year. We talked about some of the recapturing of the raw material increase as those contracts where there is a lag to the market. We are starting to see some of the benefit of that, but we are managing that very well. I think there was roughly $60 million of unplanned raw material increase in the quarter, and the team was able to offset that by several things. Let us talk about from an operational execution perspective, our prepared foods business is performing better than, in my opinion, and I have been around here a long time, than it has ever performed. The fundamentals of the business, innovation pipeline is extremely robust, and we are being successful with that innovation that we are bringing to market.

Yeah, let me uh, let me start with that. Uh, you know, we have seen um significant uh, increase in raw material. In fact it's been going on all year. And in fact, we talked about, we talked about some of the recapturing of the raw material increase as as those um, contracts where there's a lag to the market. We're starting seeing some of the benefit of that. But uh, uh, we're managing that, uh, that very well. Uh, I think there was roughly 60 million dollars of unplanned, uh, raw material increase in the quarter, and um, the team was able to uh, to offset that uh, by, you know, really several things. But, uh, uh, let's talk about our from an operational, execution perspective. Uh, our prepared foods business is performing better than, uh, than, uh, in my opinion. And I've been around here a long time that, and it's ever

Donnie King: We think, or we talked about in the last quarter, I believe, or maybe two quarters ago, that we were on a multi-year journey to improve the profitability of our prepared foods business. We are on that road. We had the best Q3 that we have ever had. I think at midpoint, if you look at our 2025, I think it will be the best prepared foods year that we have had as a company. A lot of good things relative to prepared foods. Brady, any adders to that?

Performed, uh, you know, just the fundamentals of the business. The innovation pipeline is extremely robust, and we're being successful with that innovation that we're bringing to market. Um, we think, uh, or we talked about in the last quarter, I believe, or maybe two quarters ago, that we were on a multi-year journey to improve the profitability of our prepared foods business, and we're on that road.

Brady Stewart: No, I think you covered it really well, Donnie. I would just reiterate what you said. We're extremely excited about prepared foods within the quarter with having our best quarter ever. We're really excited about the future as well and the foundation we're setting. Just relative to maybe adding some context to your question specifically, Leah, I would just assert that at the end of our fiscal Q3 is when typically we will see seasonally high raw material costs. When you think about pork trimmings, beef trim that goes into some of our prepared foods products, hams and bellies is really where we peak from a year. So that rolls into our COGS from an inventory build perspective, and it certainly is part of how we guide into Q4 as well.

We had the best Q3 that uh, that we've ever had. Uh, I think, uh, at midpoint if you look at our 2025, I think it will be the best prepared foods year that we've had as a company. And so a lot of good things relative to prepared foods, Brady, any adders to that. No, I think you covered it really well Donnie. Um, I would just reiterate, what you said. We're extremely excited about prepared foods, uh, within the quarter with having our best quarter ever. We're really excited about the future as well, and the foundation we're setting, um, just relative to maybe adding some context to your question. Specifically Leah I would just, uh, uh, uh,

Assert that. At the end of our fiscal Q3 is when typically, we will see, uh, seasonally High raw material costs. When you think about pork trimmings beef trim that goes into some of our prepared foods products, hams, and bellies is rarely where we peek from a year so that rolls into uh our cogs uh, from an inventory, build perspective. And uh, it certainly is part of how we, uh, guide into Q4 as well.

Curt Calaway: Leah, just to add really quick, I think at the midpoint of what we shared for prepared foods, that would indicate a very nice performance in Q4 versus prior year. As Donnie King said on the year, a very attractive improvement on year over year for all the reasons that Donnie King and Brady both pointed out.

Uh Leo just to add really quick. I think at the at the midpoint of what we shared for prepared foods, um, you know, that would indicate a very nice performance in Q4 uh, versus prior year and as Donnie said on the year, um, a very attractive, uh, Improvement on year-over-year for all the reasons that uh, Donnie and Brady both pointed out.

Christina Lambert: Great. Thank you.

Great. Thank you.

Curt Calaway: Our next question today comes from Peter Gelbo from Bank of America. Please go ahead with your question.

And our next question today comes from Peter Galbo from Bank of America. Please go ahead with your question.

Devin Cole: Hey, guys. Good morning. Thanks for the question. Brady, I wanted to actually touch back on beef. Look, in the context of heifer retention beginning, that is obviously a positive, but it was pretty notable, I think, the relatively large impairment taken in the quarter on the beef business, and potentially that is a push out, relative to prior expectations on recovery. So maybe you can just compare and contrast what you are seeing, again, in the market today on retention relative to the elongation of recovery that kind of triggered the impairment on the business.

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

Brady, I I I wanted to actually touch back on beef. Um, look in the context of, of heer, retention beginning. That's obviously a a positive, but, you know, was pretty notable. I think the, the relatively large impairment taken in the quarter on the beef business and, and potentially, that's a push out, you know, relative to Prior expectations on on recovery. So maybe you can just compare and contrast what you're seeing again, in in the market today, on on retention relative to

The elongation of the recovery that kind of triggered the impairment on the business.

Brady Stewart: Sure. Thanks for the question, Peter. First and foremost, I think it is important to understand that this cycle has been different than cycles of the past and has created some dynamics that have been more challenging to forecast as we roll through it. So, obviously, relative to the fact that we had a prolonged drought period at the midst of the beef cycle, we have moved into a period that has been more prolonged than the previous cycles over the last several decades as well. Relative to what we are seeing from a data perspective that supports, Donnie referenced the beef cow harvest being down year over year significantly as well, which provides stability from a cow production perspective.

Sure, thanks for the question, Peter. Uh, first and foremost, I think it's important to understand that this cycle has been different from cycles of the past and has created some dynamics that have been um,

More challenging to to forecast as we roll through it. So obviously relative to the fact that we had a prolonged drought period at the, uh, at the midst of the, of the beef cycle. We have uh, moved into a period that has been more prolonged than, uh, the previous Cycles, uh, over the last several decades, as well.

Brady Stewart: The other real data point that we are looking at is feeder calf receipts into feed yards as well and seeing some change and some pivot relative to the amount of heifers versus steers that are going into those feed yards as well. So that certainly sets the base for us to move forward and have increased supplies into the future as well. I will kick it over to Curt here to reference the impairment.

All.

Curt Calaway: Yeah, thanks, Pete. Maybe just a couple of other things to think about relative to taking the beef impairment this quarter. We had shared in previous 10-Ks and 10-Qs that our cushion for the fair value exceeding carrying value was less than 10% for that business. We also detailed, in addition to what you talked about in our 10-Q this quarter, we detailed that as cattle costs have continued to rise, that also caused the carrying value of the beef reporting unit to increase as well. All those were contributing factors in the ultimate recognition of impairment this quarter.

I’d like to kick it over to Kurt here to reference the impairment.

Yeah, thanks Pete. Maybe just a couple other things to think about uh relative to uh, taking the beef impairment. Um, this quarter we had shared in in previous, um, 10ks and 10 cues that are are cushion, um, for the fair value exceeding, fair value. Exceeding carry value was, was less than 10% for that business. And we also detailed in addition to what you talked about in our 10 Q this quarter. We detailed, um, that as cattle cost of continued to rise, uh, that also caused the carrying value of the beef, reporting unit to increase as well. And all those were contributing factors, uh, in the ultimate recognition of the impairments this quarter,

Devin Cole: Great. Thank you for that. As a follow-up as well on prepared, I am not sure if Curt Calaway is on as well. Maybe it would be helpful to hear from him. Two questions. One, just the elasticity that you are seeing so far as you put through some of the pricing on some of those items. Secondly, it is a category that sometimes has odd competitive behavior. Just what are you seeing out of the competitive set across prepared foods and are folks behaving rationally? Thanks very much.

Great, thank. Thank you for that. Um, and maybe as a follow-up as well, on on prepared. Uh, and I'm not sure if if Kyle is on as well, maybe would be helpful to hear from him. But but 2 questions, 1, just just the elasticity that you're seeing so far. As you put through some of the pricing, um, you know, on on some of those items and maybe, secondly, just it's a category that sometimes has odd, you know, competitive Behavior. So, just, what are you seeing out of the competitive set? Um, across kind of prepared foods and, and our folks kind of all, you know, behaving rationally. Thanks very much.

Brady Stewart: You bet. Thanks for the question, Peter. I would just say this. Number one is our ability to manage through these cost pressures that we see from a raw material. We're highly confident in our ability to do that. We're leveraging our strong brands. We have a fantastic innovation pipeline that continues to deliver for us. Everything from Jimmy Dean grill cakes to our Jimmy Dean chicken biscuit. Our Hillshire Farm snacking portfolio continues to see significant growth. Then on bacon, we're seeing growth as well. Our ability to manage through, we have an extreme amount of confidence on it. From an elasticity perspective, we continue to track closely. We have a significant amount of data and great expertise sitting behind our ability to understand how consumers are behaving with any price increases that they certainly see at the point of sale. No real material changes in 2025 so far.

Brady Stewart: We do see consumers continuing to prioritize protein, which we believe is ProTyson. Protein typically has lower elasticity than other categories within the food space as well. We'll continue to leverage that multi-protein and multi-value added portfolio and believe it's advantageous as we roll forward.

You bet, thanks for the question Peter. And I, I would just say this number 1 is um, our ability to manage through. Um, these cost pressures that we see from our raw material. Uh, we're highly confident in our ability to do that. We're leveraging our strong Brands. Uh, we have a fantastic Innovation pipeline uh that continues to deliver for us. Everything from Jimmy Dean Grill cakes to our Jimmy Dean chicken biscuit, our Hillshire Farm snacking. Uh, portfolio continues to see significant growth. Uh and then on bacon, uh, we're seeing growth as well. Um, so our ability to manage through. Uh, we have an extreme amount of confidence uh, on it from the elasticity perspective. We continue to track closely. We have a significant amount of of data and great expertise sitting behind, uh, our ability to understand, uh, how consumers are behaving with any price increases that they certainly see at point of sale and so no real material changes in 25m continue.

Continuing to prioritize protein, which we believe is pro-Tyson, protein typically has, um,

has lower elasticity than other categories within the food space as well.

So we'll continue to leverage that multi-protein and multi-value added portfolio, and believe it's advantageous as we roll forward.

Curt Calaway: Our next question comes from Ben Thier from Barclays. Please go ahead with your question.

Q1: Yeah, good morning, and thank you very much for taking my question. One quick on the chicken segment. So clearly, you have called out in the last call that you are doing a couple of investments into the business, and that is why you were initially, I would say, hesitant on raising the guidance despite already as of the first six months having had a very strong performance. Now, looking into what you have been able to accomplish in the third quarter and what the implied guidance for the fourth quarter, it really looks solid here. So I just wanted to understand, of these investments, are they still coming together as expected? Are you basically able to offset these costs right away? Just if you could share a little bit more thoughts and ideas around the investments and what you expect from them as we move into 2026.

Our next question comes from Ben Theor from Barkley's. Please go ahead with your question.

Yeah, good morning, and thank you very much for taking my question. Um,

1 quick on um the chicken segment. So so clearly you've you've called out in the last call that you're doing um a couple of Investments uh into the business and that's why you were initially I would say hesitant on on raising the guidance despite already as as of the the first 6 months having had a very strong performance. Now, looking into what you've been uh, able to accomplish in the third quarter and what the implied guidance for the fourth quarter. It it really looks, looks solid here. So I just wanted to understand of these Investments. Are they still coming together as expected? Um, are you basically able to offset these costs right away? Just if you could share a little bit more thoughts and ideas around, uh, the Investments and what you expect from them. Then as we move into 2026,

Donnie King: Good morning, Ben. Let me start off, then I will flip it to Devin, and he can add some finer points to it. The chicken business is running efficiently and consistently, delivering solid growth across the top and bottom line. In terms of the inputs, let's thank grain. Grain is relatively stable year over year. That is a bit of how we see it going forward. In terms of the $100 million, we have talked about that investment, and we will wrap up that investment here in the balance of the year in our Q4. This business, we are driving operational efficiencies and winning innovation. We talked earlier about the success and the relaunch of the Tyson brand. We have also talked about the new product on the script, the cheesy nugget, the simple ingredients with cheese and chicken and seasoning. That is doing very well for us.

Good morning been uh, let me start off and then I will flip it to Devon and he can add some finer points to it, but the chicken business is running efficiently and consistently delivering, solid growth across, uh, the top and bottom line in terms of the, um, in terms of the inputs. And let's, let's think grain grain is relatively stable year-over-year. That's a bit of how we see it, uh, you know, going forward. Um, but uh, but in terms of the hundred million dollars, we we talked about that investment. Uh, and uh, we will wrap up that investment here in the balance of the year in our Q4. But this business, we're driving a operational efficiencies and and, uh, winning Innovation. Uh, we talked earlier about

Uh, uh, the success and the relaunch of the Tyson brand. Um,

Donnie King: Strategic partnerships are critical to us, and that is a decision we have taken, and we are seeing the benefit of that. Our business is running better than perhaps I have ever seen it run. Certainly, it would be in the top one or two kind of performance as I have seen in this business. I have been around, as you know, many, many years watching this. Our chicken business, let's just say it this way, we are back in the chicken business and executing at a very high level. We have momentum. We see that momentum. We saw the momentum in Q3. We are seeing it in Q4, and we think it continues from this point forward. With that, Devin, do you want to add too?

Devin Cole: Yeah, thanks. Maybe just a couple of comments. We are continuing to reinvest in this business, and we will continue to do so. I think we're seeing that we're doing a better job of managing, making sure that that investment is driving the volume and the sort of returns that we want across the business. Just maybe recap a couple of points that prove that. Branded chicken did grow 10%. But in total, value added grew 8.8% for us in the quarter. That's really across all of our channels and categories. So going forward, I think you see very similar strategies from us relative to innovation and how we support that in the marketplace. But maybe I'll just ask Christina to talk a little bit about the innovation pipeline and how we're thinking about that.

You know, strategic Partnerships, uh, are critical to us. And and that is a decision. We have taken and we're seeing the benefit of that. Now, our business is running uh better uh than you know perhaps I've ever seen it run. Certainly would be in you know, the top 1 or 2 kind of uh performance as I've seen in this business and I've been around as you know many, many years watching this, but but our chicken business. Let's just say this way. We are back in the chicken business and executing at a, at a very high level, and we have momentum, we see that momentum. We saw the momentum in Q3 we're seeing it in Q4, and, and we think it continues from this point forward. So with that, uh, Devon, you want to add to

Yeah, thanks maybe just a couple of comments. Um, you know, we are continuing to, to reinvest in this business and we will continue to do so. Um, you know, I think we're we're seeing that we're doing a better job of managing making sure that that investment is, uh, is driving the volume and the sort of returns that we want, um, across the business. You know, just maybe recap a couple points that that, that prove that branded chicken did grow 10%. Um, but in total value added grew 8.8% for us in the quarter. Um, and that's really across all of our, our channels and categories.

Christina Lambert: Yeah, thanks, Devin. I am really thrilled with how the Tyson retail value-added poultry business is performing under the Tyson brand. That double-digit volume growth is really coming from increased household penetration, which was led by our innovation. We had over 20 new items that we have been launching over the past year, a lot of those coming into marketplace now. So we will start seeing that expanded distribution and velocity continue our momentum along with the product quality improvements and renovations that we have already made in our products and our packaging. The innovation and the marketing support behind that will help us continue to grow. Really proud of the business.

And so, you know, going forward, I think you see, uh, very similar strategy from us relative to, uh, innovation and how we support that in the marketplace. But maybe, I'll just ask Christina to talk a little bit about the innovation pipeline and how we're thinking about that? Yeah, thanks, Devon. I'm really thrilled with how the Tyson retail value-added poultry business is performing under the Tyson brand, right? That double-digit volume growth is really coming from increased household penetration, which was led by our innovation. We had over 20 new items that we have been launching over the past year, a lot of those coming into marketplace now, so we'll start seeing that expanded distribution and velocity continue. Our momentum, along with the product quality improvements and renovations that we've already made in our products and our packaging, the innovation in the marketing support behind that will help us continue to grow. Really proud of the business.

Q1: Perfect. Then one real quick one for Curt Calaway, I guess. As we look into other parts of the guidance, you've significantly lowered the CapEx number versus what was previous out there. But at the same time, you also brought down the free cash flow guidance. Can you help us reconcile how, despite lower CapEx, free cash flow got kind of like narrowed at the lower end? Also considering you're already at almost $1 billion anyway as a nine-month period. So what are your expectations here for the last quarter? Thank you.

Perfect. And then uh 1 uh real quick 1 on on for current. I guess um as we look into the other parts of the guidance you've significantly lower the capex number uh versus what was previous out there, but at the same time you also brought down the free cash flow guidance. Can you help us reconcile how despite lower capex free cash flow? Got like kind of like narrowed at the lower end um also considering you're already at almost a billion anyway as the 9 months, period. So what are your expectations here for the last quarter? Thank you.

Curt Calaway: Yeah, thanks. So I would start off by the run rate that we are on for CapEx is a little under $700 million. That is really on a pace of where we were through the first half of the year. So while we had a range of 1 to 1.2, I think we shared as well with you that we were probably at the lower end of the range for a CapEx perspective. So I would characterize that as not really much of a change in expectations of where we were supposed to be. Recognizing on a year-to-date basis, we are a little over $900 million in free cash flow, and we narrowed the range from 1 to 1.3.

Yeah thanks. Um so I would start off by the um run rate that we're on for for capex is is a little under 700 million. That's really on a pace of where we were. We were through the first half of the year. So while we had a range of 1 to 1 to, I think we shared as well with you, we were probably at the lower end of the range for capex perspective.

Curt Calaway: The real delta in that, I think, is the level of working capital investment as we continue to see top-line growth, as well as some investments in working capital for things such as higher cattle costs running through.

Um, so I I would I would characterize that as not really much of a change in expectations of where we were supposed to be um, recognizing on a year to date basis, we're a little over 900 million in free, cash flow. And we, we narrowed the range from 1 to 1 3.

The real delta that I think is the level of working capital investment as we continue to see topline growth, as well as some investments in working capital for things such as higher cattle costs running through.

Curt Calaway: Okay. Thank you very much. Our next question comes from Heather Jones from Heather Jones Research. Please go ahead with your question.

Okay, thank you very much.

Our next question comes from Heather Jones from Heather Jones Research. Please go ahead with your question.

Christina Lambert: Good morning. Congratulations on the quarter. I want to just start on the beef segment. In the last couple of quarters, I have noticed a pretty sizable step up in the amount of cattle that you have hedged. I am wondering if I assume that was because your guidance was better than I was expecting given the backdrop. I am wondering how much of that is a factor that did you have a significant chunk of your Q4 covered? Is this a new strategy? If this is a new strategy going forward to just consistently have a large proportion of your needs hedged on the forward look?

Good morning. Congratulations on the quarter.

um,

I want to start on the beef segment. So, in the last couple of quarters, I have noticed a pretty sizable step up in the amount of cattle that you have hedged.

Um, I was wondering if I assumed that was because your guidance was better than I was expecting, given the backdrop. So, I am wondering how much of that is a factor of that. Did you have a significant chunk of your Q4 covered? Is this a new strategy? And if this is a new strategy going forward to just...

Consistently have a large proportion of your knees hedged on the forward. Look,

Brady Stewart: Thanks for the question, Heather. I would just say this. We continue to manage our entire supply chain, whether it be hedging or whether it be live cattle purchases along with forward pricing, export sales, and in aligning with our strategic customers in an integrated fashion. None of these pieces work independent of the other, and it is part of a holistic strategy that we have deployed.

Fashion. So none of these pieces work independently of the other, and it's part of a holistic strategy that we have deployed.

Christina Lambert: Okay. My follow-up is on beef too. Given the tariffs that have been imposed on Brazilian beef, and those flows slowed in anticipation of this, I have been a little surprised that we have not seen more of a reaction in pricing because it is a pretty significant piece of the beef market. Just wondering your thoughts on that and how you expect that impact to evolve in the markets going forward.

Um,

And then my follow-up is on um it's with on beef too. Um, so given the tariffs has been posed on Brazilian beef and those

Flows slowed in anticipation of this.

I've been a little surprised that we haven't seen more of a, um,

Um, reaction in pricing, um, because it's a pretty significant piece of the beef market. So, just wondering your thoughts on that and how you expect that impact to evolve in the markets going forward?

Brady Stewart: That's a great question, Heather, and I appreciate you giving us the opportunity to talk to it. Tariff impacts both on the export side and the import side obviously have a significant amount of timing associated with it. So when the tariffs actually are imposed relative to the time the product actually hits shelf, there is a significant delay, especially with supply chain challenges from some of our imports on lean beef coming from the Southern Hemisphere as well. I'm not sure we've actually seen the opportunity for that to hit retail yet. We are in a dynamic market where we've seen significant inflation in trim prices, specifically on fat trim within beef as well, that's creating some changes in the dynamics from that beef complex as well. We'll continue to monitor that and watch that as timing really hits the point where we'll hit really POS.

That's a great. That's a great question, Heather and and appreciate you giving us the opportunity to talk to it. Um, tariff, uh, tariff impacts both on the export side and the import side, obviously have a significant amount of timing uh associated with it. So when the tariffs actually,

Are imposed relative to the time. That product actually hits shelf, there's a significant delay especially with supply chain challenges, uh, from some of our Imports on lean beef coming from, uh, the southern hemisphere as well. So I'm not sure we've actually seen, uh, the opportunity for that to hit retail yet. And then we are in a dynamic Market, where we've seen, uh, significant inflation in, um, in trim, prices, uh, specifically on fat trim within beef as well. That's creating some changes in the Dynamics, uh, from the

Beef complex, as well. So we'll continue to monitor that and watch that as timing really hits the point where we'll hit really POS.

Christina Lambert: Okay. Thank you so much.

Thank you so much.

Curt Calaway: Our next question comes from Alexia Howard from Bernstein. Please go ahead with your question.

Christina Lambert: Good morning, everyone.

Our next question comes from Alexia Howard from Bernstein. Please go ahead with your question.

Q1: Morning.

Good morning, everyone.

Morning.

Christina Lambert: So two questions. Can I start with the beef side of things and how significant the threat from New World Screw Worm is? I know that the border has been shut down with Mexico, but could this deter farmers from wanting to rebuild the herd? And maybe what happens practically? I mean, if dehorning and castration cannot happen in certain regions, does that mean we reduce productivity? Is it just infected animals that have to be culled? I am just curious about how you are thinking about what that could mean if it continues to progress northwards.

Um, so two questions. Can I start with, um, the beast side of things? Um, how significant is the threat from New World screw worm? I know that the border has been shut down with Mexico, but could this deter farmers from wanting to rebuild the herd? And maybe what happens practically? Um, did I mean if dehorning and castration can't happen in certain regions, does that meaningfully reduce productivity? Is it just infected animals that have to be culled? And I'm just curious about how you're thinking about what that could mean if it continues to progress northwards.

Brady Stewart: Sure. That is a great question, Alexia, and one that we continue to monitor. First and foremost, I think it is really important to indicate our support of the USDA and the actions that have been taken to protect livestock in the United States from New World Screw Worms. So I appreciate all of the efforts and forward-looking thoughts that the USDA has taken to protect the U.S. herd. Impacts to our business in general, and I am referring to the U.S. industry from a beef business perspective. We have had around 500,000 less head imported from Mexico this year so far. So there has been a supply impact that has been caused by the border closure. I expect some of that tightening to occur based on those feeder calf placement losses here into the quarter as well.

Sure. And that's a great question Alexei and 1 that we continue to Monitor. And and first and foremost, I think it's really important to indicate our support of the USDA and the actions that have been taken to protect protect Livestock in the United States from New World screwworm. So appreciate all of the efforts and forward-looking thoughts that the USDA has taken to protect the us or uh, impacts to our business. Uh,

Brady Stewart: From an actual producer decision-making standpoint, we certainly have not heard any decisions that have been made from a U.S. producer standpoint that indicates they are making a decision to retain heifers or retain cows relative to a threat of New World Screw Worm. I think there is good confidence that the actions that are being taken by the USDA and working with Mexico will curtail any additional northern movement.

In general, I'm referring to the US industry from a beef business perspective. Uh, we've had around 500,000 less hit imported from Mexico, this year so far. And so there has been a supply impact. It's been caused by, uh, the Border closure, uh, and I expect some of that tightening to occur, uh, basis, those feeder cap placement. Uh, losses here into the quarter as well. Um,

from a, uh, actual producer decision-making standpoint. Uh, we certainly have not heard any decisions that have been made from a US producer standpoint that indicates, they're making a decision to retain heers uh, or retain cows relative to a threat of new world, screwworm. I think there is um good confidence that the actions that are being taken by the USDA and working with Mexico. Uh will will curtail uh any additional Northern movement.

Christina Lambert: Thank you. As a follow-up, can I move on to the proposed renewable fuel standard that I think is due to be voted on at the end of October? It is around biodiesel and sustainable aviation fuel. It could be fairly meaningful if that is approved and it leads to increased corn prices, but fairly a decrease in soybean meal prices. On the chicken side of the business, are you able to significantly shift the mix of feed into soybean meal to take advantage of that over the next couple of years, or is it a fairly fixed ratio? Thank you, and I will pass it on.

Thank you. And then as a follow-up, can I move on to the proposed Renewable Fuel Standard that I think is due to be voted on at the end of October? It's around biodiesel and sustainable aviation fuel and could be fairly meaningful. If that is approved and it leads to increased home prices, but a fairly significant decrease in soybean meal prices, on the chicken side of the business, are you able to significantly shift the mix of feed into soybean meal to take advantage of that over the next couple of years? Or is it a fairly fixed ratio?

Thank you, and I'll pass it on.

Donnie King: It is a fairly fixed ratio in terms of trying to get the, you know, the carbs and the protein in. Between corn and soybean meal, there are other, it is primarily all that is in the formulation and chicken feed, a few vitamins, but it is fairly fixed. I mean, you can have, depending on where you are, we have used different carb sources at times, but we are looking at the entire caloric intake and per ton. I do not see any significant change in that. You know, I would also say, at least based on what we see right now, the grain prices, we think we see them as being very steady. We have a potentially really high U.S. corn crop coming in. All the thought processes around why you might make a substitution, I do not think will come into play at this point.

Uh, different carb sources at times, but, uh, uh, we're looking at the entire, uh,

Uh, caloric intake and, uh, per

Per ton, and uh, so

I don't see any significant change in that, but you know, I would also say, at least based on what we see right now.

Uh grain prices. Uh uh we think we see them as being very steady uh uh we have a a potentially really high us uh corn crop coming in. So you know the all the thought processes around why you might make a substitution? I don't think will come into play at this point.

Christina Lambert: Great. Thank you very much. I will pass it on.

Great, thank you very much. I'll pass it on.

Donnie King: Thank you.

Thank you.

Curt Calaway: Our next question comes from Puron Sharma from Stevens Inc. Please go ahead with your question.

Our next question comes from Puran Sharma from Stevens Inc. Please go ahead with your question.

Brady Stewart: Good morning, and thanks for the question. Just wanted to ask about pork here. Noted strong performance, but just wanted to get a better understanding of the backdrop. I think if you look at the last couple of hogs and pigs reports, a little bit disappointing when it comes to the forward look on supply, except for the most recent one. I think we've got a little bit of green shoots. Just wanted to get your thoughts on when you expect to kind of see a supply recovery. I think in the past, we had said that we expected to see something in the back half of the year, but I think this has just gotten shifted out a tad bit. So, love to hear your thoughts on pork.

Um, good morning and thanks for the question. Um, just wanted to ask about pork here.

Um, noted, uh, strong performance. Um, but just wanted to get, uh, um, a better understanding of the backdrop. I think, if you look at the last couple of Hogs and Pigs reports, uh, a little bit disappointing when it comes to the forward look on supply. Except for the most recent one, I think we've got a little bit of green shoots.

Donnie King: Let me remind you of this. If you look at our performance in Q3, and it is largely true throughout the year, it is the strong execution that is driving the profitability. In fact, in Q3, you will see, based on, excuse me, you will see some tightening of spreads in there. But we were able to offset that based on operational efficiencies, mix improvement. There were some higher carcass weights, and we also had fewer intercompany sales. From a USDA perspective, for 2025, we are projecting 0.9% increase in pork production. Then for 2026, we are seeing from USDA 1.6% in 2026. Brady, anything to add to that?

And so I just wanted to get your thoughts on when you expect to kind of see a supply recovery. I think in the past we had said that we expected to see something in the back half of the year, but I think this has just gotten shifted out a tad bit. So I would love to hear your thoughts on pork.

Yeah, this let me, uh, let me remind you of this. And, and if you look at our performance, uh, in Q3 and it's largely true throughout the year. It's the, uh, strong execution. That's driving the profitability. In fact, in Q3, you will see based on

Excuse me. You'll see some tightening of spreads in there, but we were able to offset that based on operational efficiencies and mix improvement. There were some higher carcass weights, and we also had fewer inter-company sales. But from a USDA perspective for 2025, we are projecting a 0.9% increase in pork production, and then for 2026, we're seeing from USDA a 1.6% increase in 2026.

Brady Stewart: No, I am just thankful we got a question on pork because we are really excited about all of the progress that has been made in that business over the last two and a half years. I really want to thank the team for all of their work in moving that business forward in a very sustainable manner. Just relative to the supply question, I think there are a few points that are really important. Number one is if you use the Iowa State University profitability model, we have reached a point here where the last 13 months have been positive, and the expectation basis from futures and applied pricing would indicate the next year is also profitable. That really sets the foundation for some expansion.

Brady Stewart: Now, the opportunity relative to a headwind for pork expansion just rides simply in the fact that to build additional pork housing in the future or live production housing, there has been some inflationary cost. I think the producers were really looking for plenty of sunshine ahead before they make those investments, but continue to feel very comfortable with adequate supply with continued improvements from a genetics and productivity standpoint we see from the industry.

So Brady, any anything to add to that? No, I'm just thankful. We got a question on ports because, uh, we're really excited about all of the progress that has been made, uh, in that business over the last 2 and a half years. Uh, really want to thank the team for all of their work and moving that business forward in a very sustainable manner. Just relative to the supply question, I think there's a few points that are really important. Number 1 is, uh, if you use the Iowa, State University, uh, profitability model, um, we we've, we've reached a a point here with the last 13 months. Um, has been positive and the expectation basis, some Futures and provide pricing, would indicate the next year is also profitable and so that really sets the foundation for some expansion.

Now the opportunity relative to a headwind uh for pork expansion. Just rides simply in the fact that uh to build additional pork housing in the future for live production housing. Uh there's been some inflationary costs and so I think the producers are really looking for plenty of sunshine and ahead before they make those Investments. But uh continue to feel very comfortable uh with adequate Supply with continued improvements uh from a genetics and productivity standpoint we see from the industry.

Curt Calaway: Appreciate the color there. I guess my follow-up would just kind of be on chicken. Obviously, you have made a ton of improvement over the past couple of years in the business. As we look ahead, how should investors view kind of what a normalized operating margin should be? Do you think we have reached somewhat near a peak, or do you think there is a lot of room to go further in terms of operating margin improvement?

Appreciate the the color there. Um I guess my follow-up was just kind of be on chicken. Um obviously you've made uh ton of improvement over over the past couple years in the business. Um you know a as we look ahead um how how should investors View kind of what a normalized operating margin should be do, do you think we've reached somewhat near a peak or do you think there's there's a lot of room to go further in terms of operating margin Improvement?

Donnie King: What I would mention to you this morning is that from a, and I will get to the chicken profitability peak, if you look at the results that we saw in Q3, it was strongly driven by execution with better fill rates, yield improvements, labor management, and S&OP process. We had strategic alignments. We have made some conscious decisions to align with strategic customers and partnerships in a more meaningful way than we have in the past. That has been a two-year process for us. Our chicken business is running well. Execution is well. We have capacity to add to produce more value-added branded products within our portfolio, and it is setting up very well.

So, uh, what I would mention to you this morning is that from a

Donnie King: I would tell you that the improvements that are made, and let me add that if you look at the supply picture we have had for 2025 thus far, I think it is about the right size. I think you have to remember that meat is essential as viewed by the customer and the consumer. High protein is a priority for them. It is a nutrient-dense option for them. They are choosing protein more often than they have before. Back to chicken, I do not think we have peaked in chicken as a matter of fact. We have had a generally positive operating environment this year. There are things that are cyclical in nature.

Management and snahp process. Um, we had strategic alignments, we've made some conscious decisions to align with strategic customers in a and Partnerships in a more meaningful way that we have in the past that's been a 2-year process for us. Um, but our chicken business is running well, execution, as well. We have capacity uh, to add to produce more value added to a branded products, uh, within our portfolio, uh, and it's setting up very well. Uh, I would tell you that uh, that uh, the improvements that are made and uh and let me add that if you look at the supply picture we've had for 25 thus far I think it is about the right size. I think you have to remember that meat is essential as viewed by the customer and and the consumer. So high protein um you know it's a priority for them. It's a nutrient-dense.

Donnie King: For example, you see higher priced breast and lower priced wings, but in total, they are fine. We are executing and will continue to execute against our manufacturing efficiencies, growing our business, continue with innovation that our customers and our consumers prefer. We will continue to grow these strategic partnerships that I have talked about. We will continue to shift our mix to value added and branded within the poultry complex and have higher value offerings. We are excited about where we are. Our foundation is in good shape as it relates to chicken. We look at the balance of 2025 even into 2026 and feel very comfortable with our business and the ability of this business to not only perform through the balance of 2025, but even through 2026 and beyond.

Uh, option for them, and they're choosing protein more often than they have before, but back to check in, you know, I don't think we peaked in chicken as, as a matter of fact, uh, you know, we've had a generally positive, uh, operating environment, uh, uh, this year, um, there are things that are cyclical in nature, for example, you see higher price, breast meat, and at lower price, uh, wings. But in in the total, they're fine. Um,

We're executing and will continue to execute against our manufacturing, efficiencies growing our business continue with Innovation that our customers and our consumers, uh, prefer will continue to grow these strategic Partnerships that I talked about, will continue to shift our mix to, uh, to value added and Brandon with branded within the poultry complex and, uh, and have higher value offerings. Uh, we're excited about where we are. Our foundation is, is in good shape, as it relates to chicken. And, uh, you know, we look at the balance of 25, even into 26 and feel very comfortable, uh, with our business and the ability for this business, to not only perform through the balance of 25. But even through 26 and Beyond

Curt Calaway: Appreciate the caller.

Appreciate the call.

Curt Calaway: Our next question comes from Michael Laverry from Piper Sandler. Please go ahead with your question.

Our next question comes from Michael Levry from Piper Sandler. Please go ahead with your question.

Devin Cole: Thank you. Good morning.

Thank you. Good morning.

Curt Calaway: Morning.

Devin Cole: I just wanted to come back to prepared foods. You got a strong price lift or I guess price mix. It is just a lot more robust than what we are seeing with a lot of other packaged food companies having to give back on price in many cases. Can you just maybe talk to how much is mix driven and what is behind it? Is it really just the protein demand? Is there just a mix lift that is a big part of that? How do we think about the momentum there?

Um good morning morning to just wanted to come back to prepared foods. You um got a strong uh, price lift or I guess price mix maybe, you know, it's um, just a lot more robust than what we're seeing with. A lot of other uh, packaged food companies having to, to give back on price in many cases. Can you just maybe talk to, you know, how much is mixed driven? And what's behind it, is it really just the

The protein demand is there. You know, just a mix lift. That's a big part of that. How do we think about the momentum there?

Brady Stewart: Yeah, Michael, thanks for the question. Again, we're really excited about our progress in prepared foods. We laid out a strategy last year relative to how we were going to move forward and make sure that we were focused and executed on our value-added platforms within prepared foods as well, which tailors very, very nicely into your question on mix. You're exactly right. The price lift was really a combination of a favorable channel mix. It was also driven by the strength of our retail business and the strength of the brands that we have within these specific categories in the portfolio as well. Now, compounding on top of that is the fact that we have seen some raw material inflation, and we have formulas with a lot of our customers and customer base. That certainly flows through from a pricing perspective as well.

Brady Stewart: Last point is we do continue to lag pricing. As I mentioned, we walked out of Q3 with really the highest raw material pricing of the year. We'll continue to operate the business in a very rational manner and understand where those elasticities are and use data to drive the right decision for the business, but continue to expect to grow both top line and bottom line as we move forward well into the future on prepared foods.

Yeah, Michael. Thanks for the question again. We're really excited about our progress and prepared foods, um, and we laid out a strategy, uh, last year relative to how we're going to move forward and make sure that we were focused and executed on, uh, uh, our value added platforms within prepared foods as well, which Taylor's uh, very, very nicely into your question on mix. And so, uh, you're exactly right. Um, the, the price lift is really a combination of a, a favorable Channel mix. And there's also driven by the strength of our retail business and the strength of the brands that we have Within These specific categories and the portfolio as well. Uh, now compounding on top of that is the fact that we have seen, uh, some raw material inflation. And we have formulas with, uh, a lot of our customers and customer base and so that certain flows through from a pricing perspective as well. Um, last point is we do continue to like, uh, pricing as I mentioned.

Donnie King: So, maybe a couple of things to add to that, Brady. I mentioned this earlier that meat is viewed as essential, being a nutrient-rich option. Consumers are continuing to prioritize protein. For example, the way that manifests itself when a consumer goes to a grocery store, they are not looking for the non-essential.

And we walked out of Q3 with really the highest raw material pricing of the year, uh, but we'll continue to, uh, operate, uh, the business in a very rational Manner and understand, uh, where those elasticities are and use data to drive the right decision for the business, but continue to expect to grow both Topline and bottom line, as we move forward. Uh uh, well into the future, I'm prepared foods.

Sure. They're not looking, they're not looking for the, uh,

Curt Calaway: stuff. They are looking for protein and food, and you know we happen to offer chicken, beef, pork, and prepared. So we believe protein is the right place to play, and we are certainly doing that. One thing I need to point out as it relates to our prepared foods business, I could not be prouder of our prepared foods team. They have been on this journey that Brady just referenced and I referenced earlier today, but they are absolutely performing across every phase of the game, from innovation and successful innovation, and also in terms of shifting their mix to more valuable products. You talked about the pricing. The benefit from an AOI perspective, yes, there was some price recovery that we had already incurred, but the operational execution across this business, I have not seen that at this level in our business.

Non-essential stuff. They're looking for protein and food. And, uh, you know, we happen to offer chicken, beef, pork, and prepared. So we believe protein is the right place to play, and we're certainly doing that. One thing I need to point out as it relates to our prepared foods business: I could not be prouder of our prepared foods team. They've been on this journey that Brady just referenced and I referenced earlier today, uh, but they are absolutely performing across every phase of the game, uh, from innovation and successful innovation. And, uh, also in terms of, in terms of.

Uh, shifting their mix to more valuable products, you talked about the pricing. Well,

Curt Calaway: There is so much more that we can go do and are going to do in this multi-year journey. So a lot of upside to prepared foods, not only for the balance of the year, but as we continue to move further.

The benefit from an aoi perspective. Yes. There was some price recovery that we had already incurred uh but the operational execution across this business. Uh, I've not seen that at this level in our business and there's so much more that we can go do and are going to do in this multi-year journey. So a lot of upside to prepared foods, not only for the balance of the year, but as we as we continue to move further,

Sean Cornett: OK, thank you. I will pass it on.

Okay, thank you. I'll pass it on.

Operator: Our next question comes from Samaya Jane from UBS. Please go ahead with your question.

Our next question comes from.

Somaya Jane from UBS. Please go ahead with your question.

Sean Cornett: Hey, good morning. Your leverage continues to drop now at around 2.1. Could you elaborate on how we should expect to see that going forward? Should we expect more excess cash going to shareholders, or how is management thinking about capital allocation going ahead?

Hey, good morning. So, your leverage continues to drop, now at around $2.1 billion. I said, could you elaborate on how we should expect to see that going forward? Should we expect more excess cash going to shareholders, or how is management thinking about capital allocation going ahead?

Donnie King: Thanks for the question. I think you should continue to expect us to follow our capital allocation priorities. I think a significant, just call out, right, the significant improvement we made from where we were not only a year ago, but two years ago, as leverage had peaked at 4.1 times. So tremendous execution by the team, absolutely disciplined in following our capital allocation priorities, and they would remain unchanged. We will look to continue to maintain our financial strength, invest in the business, and return cash to shareholders. I would note, as I made comment earlier at the opening, that we did restart our share repurchase program, although at a very small pace. The first time we restarted that since Q1 of 2023.

Thanks for the question. Um, I think you should continue to expect us to follow our capital allocation priorities. Um, I think, um, uh, significant just call out, right? The significant improvement we made from where we were not only a year ago, um, but two years ago, as well as leverage had, uh, peaked at 4.1 times. And so tremendous, um, execution by the team, um, absolutely disciplined in following our capital allocation priorities, and they would remain unchanged. We'll look to continue to maintain our financial strength, um, invest in the business, and return cash to shareholders. Um, I would note as I made comment earlier, uh, at the opening that we did restart our share repurchase program, although at a very small, uh, pace, the first time we restarted that since Q1 of '23.

Sean Cornett: Got it. Thank you. International margins continue to be strong. What are the key factors driving that, and do you see those drivers continuing over the rest of the year, or what are the key risks to that segment in the near term?

Got it. Thank you. And then, international margins continue to be strong. What are the key factors driving that, and do you see those drivers continuing over the rest of the year? Or what are the key risks to that segment in the near term?

Christina Lambert: This is Devin. Thank you for that question. I was just mentioning at the very onset that much of the strategy that we have talked about in other parts of our business domestically, we have employed with our international business over the last year or so. I think the results that you are seeing are certainly from things that we control primarily. Operational excellence has been one of the key tenets for us. We have got very specific initiatives that have achieved better efficiencies, lowered our conversion costs, and also we are actively managing the controllable costs within that business. Certainly, it is a dynamic situation, both geopolitically and some of the economies that we operate in around the globe. That team is working very well together.

Yeah, this is Devon. Thank you. Um, you know, for that question, I would just mention at the very onset that.

Much of the strategy that that we've talked about in other parts of our business domestically. Um, we have employed with our international business over the last year or so, um, and I think the the, you know, the results that you're seeing are certainly um from things that we control primarily. So operational excellence has been 1 of the key tenants for us. Um, we've got very specific initiatives, um, that have achieved uh better efficiencies lowered our conversion costs.

Christina Lambert: We expect to have a very good year, and quite frankly, all of the things that we have put in place and the momentum that we are seeing should translate into going into FY 2026 as well.

And also also uh, you know, we're act actively managing the controllable cost within that business, you know, certainly it's a dynamic situation. Um, both geopolitically and some of the economies that we that we operate in around the globe but uh that team is working very well together. We expect uh to have a very good year and quite frankly all the things that we put in place and the momentum that we're seeing should uh should translate into going into FY, 26 as well.

Sean Cornett: Great. Thank you.

All right. Thank you.

Operator: Once again, if you would like to ask a question, please press star and one. If you remove yourself from the question queue, you may press star and two. Our next question comes from Andrew Strelzyk from BMO. Please go ahead with your question.

Once again, if you would like to ask a question, please press star and 1 to remove yourself from the question queue. You may press star and 2.

Our next question comes from Andrew Stroik from BMO. Please go ahead with your question.

Sean Cornett: Hey, good morning. Thanks for taking the question. I wanted to go back to the beef side to start. Now that we are seeing the start of the heifer retention and maybe have a timeline to think about on profit recovery, can you talk about your expectations for the magnitude of the herd recovery, or maybe compare what your expectations are for this herd recovery versus prior cycles? How does that inform your view of the beef profit potential in 2028 and beyond?

Hey, good morning. Thanks for taking the question. Um, I wanted to to go back to the beef side to start. Now that we are, uh, seeing the start of the heer attention and and maybe have a timeline to think about on on proper recovery. Can you talk about your expectations for the magnitude of the herd recovery? Or maybe compare what your expectations are for? For this herd recovery versus prior cycles and how, how does that inform your view of the beef profit potential and 2028 and Beyond?

Brady Stewart: Yeah, thanks for the question, Andrew. I think you probably highlighted when we really see that turnaround into the future as well. It has been challenging to really get a forecasted read here as we have moved through the last two years, just because what we have seen from a supply perspective has not necessarily matched what we have seen from a demand perspective on the packer side as well. So we have moved into more of a prolonged period of time. The good part is, as we move forward, we definitely have a tailwind relative to drought that we probably have not focused enough on relative to some of the commentary as well. That has certainly provided a great opportunity for us to get some rebuild momentum across the industry as well.

Get a forecasted read here as we've moved, uh, through the last two years. Uh, just because, uh, what we've seen from a supply perspective, uh, has not necessarily managed what we've seen from a demand perspective on the packer side as well. So, uh, we've moved into more of a prolonged period of time. Uh, the good part is, uh, as we move forward, we definitely have a tailwind relative to drought that we probably haven't focused enough on, uh, relative to some of the commentary as well. And so that has certainly provided a great opportunity for us to, uh, get some rebuild moments across the industry as well.

Brady Stewart: Outside of that, again, it has been a very dynamic environment. We are seeing historic highs relative to beef and beef demand. The consumer has been extremely resilient in their demand for beef. How we rationalize the entire supply chain of beef from feeding and cow production into feeding into packers, we will continue to monitor that as we move through the next couple of years as well.

Um outside of that. Uh, again, it's been a very Dynamic uh environment. Uh we're seeing um historic highs relative to beef and beef demand. The consumer has been extremely resilient uh in their demand for beef. Um, and how we rationalize. Um um the entire supply chain of beef, from feeding, uh, and cow production, into feeding into Packers will continue to monitor that uh, as we move through the next couple of years as well.

Donnie King: So, maybe, I guess, what I'm sure. Go ahead. Go ahead.

Curt Calaway: I just wanted to add one comment on there, just to call out to our beef team. This has been very challenging, as you well know. We talk about this in terms of controlling what we can, and we have done that. I would tell you that our beef assets are running better than they ever have before. That is not just my assessment, though. That is the assessment from the people who are in our organization, who have been in our beef business for a long time. In fact, they removed over $100 million of controllable costs out of our beef segment this year. We are obviously very proud of that. We are trying to do what we can with what we have right now. We look forward to herd rebuild and to a better day in our beef business.

So maybe I guess what? I'm sure. Go ahead. Go ahead. Yeah, I just want to add 1 comment on there and, uh, just to call out to our beef team. This is is, is, um, you know, this is, uh, this has been very challenging as you as you, well, know. And we talked about this in terms of controlling, what we can. And we've done that, I would tell you that,

We're our our beef assets are running, better than they ever have before. And uh, that's not just my assessment though. That's the assessment from the people who are in our organization who've been in our beef business for a long time. In fact, they removed over a hundred million dollars of controllable cost out of our beef segment uh this year. And so we're obviously very proud of that. We're trying to do what we can with what we have right now. And uh we look forward to to uh her rebuild and to a better day in our beef business.

Sean Cornett: I guess what I'm trying to get at there, and I appreciate those comments very much, but is there anything that you're seeing that would lead you to believe your normalized or mid-cycle or what have you beef profits are different in this cycle than in prior cycles?

I, I guess, what I'm trying to, uh, get out there—and I appreciate those comments very much—but, um, is there anything that you're seeing that would lead you to believe you're normalized or in a mid-cycle? Or what have you? Beef profits are different in this cycle than in prior cycles?

Brady Stewart: would just say that we continue to analyze where we walk out of the cycle and gauge where we will end up from a mid-cycle profitability perspective. So if you looked at the last six beef cycles, inclusive of this current cycle, there are some differences in it. Again, the prolonged drought that we saw right at the bottom of the cycle created this elongated bottom of the cycle. That has created some challenges just relative to forecasting a very dynamic environment relative to the supply of cattle. Traditionally, we have seen more changes or pivots from a demand perspective than we have this cycle as well. So those two pieces will come together and really shape where we end up as we move into the midpoint in the years to come.

I, I just say that we continue to, uh, analyze where we walk out of, uh, walk out of the cycle and, and, uh, um, gauge where we'll end up from a mid-cycle profitability perspective. So, okay, um, if you looked at the last 6 B cycles, uh, inclusive of this current cycle, there are some differences in it. Again, the prolonged droughts um that we saw right at the bottom of the cycle, uh, created this elongated, uh, bottom of the cycle. And, um, that has created some.

Sean Cornett: Got it. Okay. If I could just squeeze one other quick one in. In the past couple of quarters, I think you've quantified the efficiencies that you've gotten in prepared foods. So I was hoping you could maybe give us an update there. Then maybe if we could think about the size, or you could help us think about the size of some of the incremental efficiencies you're talking about in chicken, that would be helpful as well. Thank you.

Some challenges just relative to forecasting a very Dynamic environment, relative to the supply of cattle. Uh traditionally we've seen more uh, changes or pivots from a demand perspective than we have the cycle as well. So those 2 pieces, will will come together and really shape, uh, where we end up as as we move, uh, into the midpoint, uh, in the years to come.

Got it, okay. If I could just squeeze one other quick one in from the past couple of quarters. I think you've quantified the efficiencies that you've gotten in prepared foods, so I was hoping you could maybe give us an update there. And then, you know, maybe if we could think about the size, or you could help us think about the size of some of the incremental efficiencies you're talking about in chicken, that would be helpful as well. Thank you.

Brady Stewart: Yeah, thanks for the question. Just relative to prepared, Donnie did a great job earlier framing up all of the advancements we've made from a prepared operations perspective. There are certainly a number of dynamics that go into these calculations: raw material increase, packaging and ingredient increases as well, labor inflation, how you monetize that with and without these particular inflationary factors. Here's what I'll tell you today is there's a sustained process with audits in place to make sure that the advancements we're making from a manufacturing efficiency perspective in prepared foods are here to stay. We're seeing those advancements really hit the bottom line significantly from a prepared food standpoint.

Yeah, thanks for the question. Just relatively prepared. Donnie did a great job earlier of, uh, framing up all of the advancements we've made, uh, from a prepared operations perspective. And, uh, there are certainly a number of dynamics that go into these calculations: raw material increase, packaging and ingredient increases as well, labor inflation, uh, how you monetize that with and without these particular inflationary factors. Here's what I'll tell you today: there's a sustained process with audits in place to make sure that the advancements we're making from a manufacturing efficiency perspective in prepared foods is here to stay, and we're seeing those advancements really hit the bottom line, uh, significantly for.

Curt Calaway: Yes. Andrew, let me add this. If you think about this, what I'm about to say, this applies to chicken, beef, pork, and our international business. Every function and activity we have at TYSON FOODS, we are focused on operational excellence. What does that mean? It's scaling the enterprise, leveraging all the assets and capability of this multi-protein behemoth that we have, driving cost savings across the enterprise, addressing inefficiencies and eliminating that where they exist, but also being aligned with customers in terms of those relationships and what we've characterized as partnerships. We've got more of that today than we've ever had. Then from a consumer perspective, just the constant innovation, and we've got the most robust pipeline we've ever had. Then you can layer underneath all of that or on top of all of that things like data and digital delivery.

From a prepared food standpoint.

Curt Calaway: Our tools are such today that we're able to make better, smarter decisions across this enterprise. Of course, the discipline, capital allocation, and prioritizing cash flow, which is made up the CapEx and working capital specifically. So that discipline we have exercised across this entire enterprise. I'll leave you with that.

Ability of this multi-protein, the Hemo that we have driving cost savings across the Enterprise addressing inefficiencies and eliminating that where they exist, but also being aligned with customers. And, uh, in terms of those relationships and what we've characterized as Partnerships, and we've got more of that today than than we've ever had. Uh, and and uh, then from a consumer perspective, just, uh, the constant Innovation, and we got the most robust pipeline we've ever had. And then, you can layer underneath all of that or on top of all that, uh, things like data and digital delivery. Our tools are such today that we're able to make better smarter uh decisions uh across this Enterprise. And of course the uh the discipline Capital, allocation and prioritizing cash flow. Uh which uh you know, it's made up the capex and working capital uh specifically so that does

A we have exercised across this entire Enterprise and and so I I'll just I'll leave you with that.

Sean Cornett: Great. Thank you very much.

Great, thank you very much.

Operator: Ladies and gentlemen, with that, we will be concluding today's question and answer session. I would like to turn the floor back over to Donnie King for any closing remarks.

Thank you. And ladies and gentlemen, with that will be concluding. Today's question and answer session. I'd like to turn the floor back over to Donnie King for any closing remarks.

Curt Calaway: Thank you for your time and continued interest in TYSON FOODS. We look forward to sharing our progress with you next quarter.

Thank you for your time and continued interest in Tyson Foods. We look forward to sharing our progress with you next quarter.

Operator: Ladies and gentlemen, with that, we will conclude today's conference call and presentation. We do thank you for attending. You may now disconnect your lines.

And ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We do. Thank you for attending.

You may now disconnect your lines.