Q4 2025 Tyson Foods Inc Earnings Call

Good day and welcome to the Tyson Foods. Fourth quarter 2025 earnings conference call. All participants will be in listen-only mode. Should you need assistance? Please signal conference specialist by pressing the star key followed by zero. After today's presentation there will be an opportunity to ask questions to ask a question. You may press star then 1 on a touchtone phone,

To withdraw your question, please press star then 2. Please note this event is being recorded.

I would now like to turn the conference over to John caudal, vice president of investor relations. Please go ahead.

Good morning and welcome to Tyson Foods' fourth quarter fiscal 2025 earnings conference call. On today's call, Tyson's President and Chief Executive Officer, Donnie King; Chief Financial Officer, Curt Callaway; and Chief Operating Officer, Devin Cole, will provide prepared remarks.

Following the prepared remarks, we will have a Q&A session with the participants, who will be joined by our Chief Growth Officer, Kristina Lambert.

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.

These forward-looking statements made during the 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 the historical periods.

These forward-looking statements are subject to risks, uncertainties and assumptions, which may cause actual results to differ materially, from our current projections.

Please refer to our forward-looking statement disclaimers on Slide 2, as well as our SEC filings for any 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 periods. Unless otherwise noted

For reconciliations of these non-GAAP measures to their corresponding GAAP measures, please refer to our earnings press release.

Now, I will turn the call over to Donnie.

Thank you, John, and thanks to everyone joining us today.

I'm pleased to report that our business delivered solid progress and performance this quarter. And throughout the year looking ahead we see even more opportunities for growth across all our business units.

This quarter, we achieved increases in sales, adjusted operating income, and adjusted earnings per share, continuing our upward trajectory for the full year.

Our annual growth and adjusted operating income was driven by the checking pork and prepared food segment along with notable contributions from our international business.

In the fourth quarter, our team executed well across our portfolio. With momentum in value, added protein offerings, the chicken segment, stood out, delivering 457 million in adjusted operating income. Thanks to higher volumes better, operational execution and lower feed costs,

These gains were partially offset by increased marketing and promotional expenses.

We believe there's still untapped potential in areas we can control within this business.

Prepared foods saw growth in both sales and adjusted operating income.

Our production facilities made significant performance improvements through discipline operational efficiency.

Meanwhile, our Innovation pipeline is evolving to better match consumer preferences and emerging Trends. As a result, our prepared foods business is capturing more market share by volume and dollars driven by Innovation and targeted. Mass spending that is showing measurable returns.

In our beef and pork segments, we are increasing yield and revenue by the developing more value added products such as seasoned marinated and Specialty trimmed Cuts, using portions that were previously undervalued, these offerings are reaching more consumers through our branded portfolio. And we're also enhancing operational efficiencies in these areas.

As anticipated, the Beast, segment remains our only soft spot. Cattle supplies are at record lows due to Drought potential herd rebuilding and the impact of New World screwworm. In Mexico, these factors created market, headwinds, during the quarter,

Despite these challenges, we're strengthening our fundamentals by prioritizing efficiency, reducing costs, and introducing innovative products. This positions us to emerge stronger and better when market conditions improve.

Looking forward. We expect cattle supplies to remain tight as we move into 2026 during this period. Chicken is likely to benefit most from changing consumer preferences, both at retail and in food service,

2026 presents further opportunities for our chicken business. Chicken is an affordable. High-quality protein, and our Innovative value added offerings position us uniquely to serve both retail and Food Service, customers amid High beef, prices.

While we are not satisfied with our current beef results. Our Diversified business model continues to build resilience and drive profitability across the company.

Overall, our financial position is strong with net leverage maintained at 2.1 times a direct result of deliberate actions and disciplined Capital allocation to fortify our balance sheet.

While consumers, remain cautious and selective with their spending, we continue to expand our market share in both volume and dollars.

As an essential purchase and continuing to buy meat.

According to Nielsen data food and beverage retail volume declined, 1.5% over the 13th ending in September. In contrast, our retail branded products grew by 2.4% in volume significantly outperforming the broader sector

This growth was broad-based highlighted by strong performances across several key brands.

Hill. Shower Farm. Lunch meats. Increase by 10.3%.

Hillshire snacking grew by 12.5%.

Tyson branded, Frozen value, added chicken, Rose, by 8.7%, and Jimmy Dean breakfast, sausage Advanced by 1.6%.

Our ongoing investments in Innovation, wider distribution and effective. Marketing are driving growth and keeping us competitive, providing substantial opportunities for further progress.

As more Shoppers turn to the perimeter of the store. We're meeting their demand for fresh, high-quality options with Tyson branded fresh chicken volume growing 7.8% during this period.

Our retail branded products now, reached nearly 72% of us households, a rate that exceeds both private label and other branded competitors.

Although private label sales are rising. Their growth comes at the expense of other brands. Not Tyson as we continue to outpace the category of those volume and performance.

We are committed to engaging consumers wherever they are leveraging our brand strength to thoughtfully expand into new markets and opportunities.

Our recent launch of Tyson high protein, chicken cuts each offering at least 30 grams of protein per serving has achieved Nationwide distribution. This success confirms strong consumer demand for convenient, protein-packed options

Excitement for these products is evident across social media and at retail reinforcing our strategy to connect our brands with consumers and deliver innovative ways to enjoy our protein-rich Foods.

Gosh, our farm long trusted for lunch meat is now entered the freezer section with stuffed croissants and chibata deli sandwiches. These new additions offer consumers even more convenient. Delicious and protein-rich meal Solutions.

We're also seeing growing interest from Gen Z shoppers in the frozen aisle. Our latest offerings are designed to meet their demand for convenience, bold flavors, and high quality.

Sales from our Innovation pipeline has steadily increased over the past 3 years, our Innovation spans, All Brands and segments, ensuring we address both current and future consumer needs.

Tyson Foods is proud to lead the industry by developing products with simpler, recognizable ingredients just like those found in your own kitchen pantry.

We recently entered our simpler product line, now available in stores nationwide.

The preference for healthier options is clear. Last quarter, we announced that by year end. We will remove high fructose corn syrup

Sucralose BHA BHT and titanium dioxide from our branded products produced in the United States.

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

In the fourth quarter, we welcome Devin Cole as our new Chief Operating Officer debit has over 30 years of experience. In food industry leadership, across both retail and Food Service. He has a proven track record working with our largest strategic customers worldwide, and most recently, LED our chicken and international businesses to significant Improvement last year.

Now, I would like to invite Devon to share more about our segment performance.

Thank you, Donnie. I'm excited to step into the role of Chief Operating Officer.

Over the past two months, I have taken a deep dive into our operations across the entire portfolio. My promise to you, our shareholders, is clear: we will streamline our business by reducing complexity in bureaucracy, challenging the status quo every step of the way.

Our team is committed to delivering best-in-class, performance and holding ourselves accountable to our customers expectations.

Now, let's review our fourth-quarter segment performance.

Prepared foods delivered a strong quarter with sales up 3% versus last year. We're up 5.7%, excluding the effect of the product recall.

Primarily driven by higher pricing because of higher raw material cost recovery while continuing to enhance our product mix.

And achieved a margin of 7.4% in the quarter, despite the higher raw material cost. The full year adjusted operating income was up. 1% reflecting continued progress on our multi-year plan to enhance profitability in this business.

Our fill rates and prepared foods were the highest since 2013.

This progress is a testament to the improved snahp process and unlocked efficiencies in our plants and Distribution Systems.

As Donnie noted, our retail businesses delivered the strongest volume in dollar sales growth of the year in Q4, according to Nielsen. Syndicated data outpaced category performance in both measures.

This is enabled us to better serve our strategic customers with greater consistency and reliability.

This momentum in 2025, lays the groundwork for an exciting 2026.

We see significant opportunities ahead to drive growth and improve profits.

Our conviction in the multi-year opportunity, to expand profitability in prepared foods remains strong.

In chicken, we delivered another quarter of solid Topline performance, with sales at 3.8% year-over-year.

Volume contributed nearly all of the increase, including a notable contribution from value-added product sales, which also drove a favorable mix reflected in price.

This is our fourth consecutive quarter of year-over-year volume growth, demonstrating continued demand for chicken.

Quarterly adjusted operating income for the chicken segment, was 457 million and increase of 28% building on a strong base in Q4 last year.

Our improved performance and chicken is a reflection of executing our strategy of operational excellence, combined with a focus on innovation and customer satisfaction.

We recognize that continued Improvement is necessary and expected.

Over the last year, we grew volume, net sales, and adjusted operating income.

We have taken the necessary steps to stabilize the margins of a substantial portion of our portfolio by providing a high level of service during the periods of Market challenges for our strategic customers.

chicken is positioned to be the best value protein for consumers as overall food inflation, remains High

In our beef segment, we continue to focus on the controllable aspects of a challenging and dynamic Market.

Sales and beef increased primarily due to a higher average price per pound reflecting ongoing healthy demand.

We continue to believe, we may be seeing the initial stages of pepper retention.

Any retention is likely to further restrict cattle supply in the short run before seeing more supply as we work our way further through the cattle cycle, a few years out.

Adjusted operating income decline versus the year ago. Period as higher cattle cost outpace the higher sales from a strong cut out in resilient demand

Despite continued headwinds, we are focused on the pieces. We can control like shifting further processing volumes back into our Harvest facilities and tools to increase our ability to adapt to changing market dynamics.

Import adjusted operating income increased 70 basis points, or 63%.

Fuelled by network optimization and operational efficiencies, we achieved the strongest fourth quarter results since 2021.

Sales were down, 1.7% driven by a lower number of hogs harvested, during the year, the lower volume was offset by higher prices.

The access to raw material supply for our Prepared Foods division is a key part of our end-to-end pork strategy.

We have made substantial progress in utilizing raw materials like pork bellies to support our branded bacon, hams to supply lunch meat, and trimmings to supply sausage.

We will continue to push for higher utilization as it will improve access quality and landed cost of our raw materials.

Overall I am encouraged by the incremental steps, we have taken through the year, but I'm confident that we have room to grow and improve across the operational and controllable aspects of our business in 2026.

The spot challenging market conditions. We are driven to focus on our strategic customers and consumers, while delivering value to our shareholders.

With protein remaining a clear winner in the minds of consumers, the diversity of our portfolio enables us to make investments by partnering with our strategic customers to drive category expansion.

With that, I will turn it over to Kurt to walk through our financial results and outlook in more detail.

Compared to the prior year, led by beef with solid contributions from pork, chicken, and prepared foods, reflecting the healthy demand environment for protein for comparative purposes. The sales increase was calculated excluding the effect of a $355 million legal contingency reserve that was recognized in the quarter.

Full year 2025 sales were $54.4 billion, an increase of 3.3% compared to the prior year, excluding the effect of legal contingency reserves recognized during the year.

U4 adjusted operating income was $608 million, up 19% compared to the prior year, driven by growth in Chicken International and pork, which more than offset the decline in beef and prepared foods.

For the full year adjusted operating income was 2.3 billion, an increase of 26%.

Once again, the increase was driven by the record performance in chicken.

Adjusted earnings per share for the quarter or 1.15 up 25% versus last year in full year. Adjusted EPS was 4.12 up 33% from the prior year.

Our multi-protein, multi-channel portfolio, combined with our team's focus on operational execution and a dynamic macro environment, continues to deliver results.

Turning to our financial position, our approach to capital allocation remains disciplined, deliberate, and forward-looking.

We are focused on maintaining financial strength, investing in the business, and returning cash to shareholders freely. Cash flow is critical to us, and I'm pleased with how cash has trended.

Year. Operating cash flow is 2.2 billion and capital expenditures were. 978 million. Resulting in free, cash flow of 1.2 billion dollars. Well, ahead of dividends, which were 697 million,

We ended the year with $3.7 billion in liquidity and net leverage at 2.1 times, an improvement of half a turn compared to last year.

If you step back and look at our balance sheet and leverage over the last few years, we’ve made immense progress in strengthening our foundation.

With leverage continuing to decline and cash flow. Remaining strong, we continue to share repurchases of 154 million during the quarter and we return 327 million to shareholders to accommodation of dividends and repurchases

And for the year, we returned a total of 893 million.

while dividends remain, our primary way of returning, cash to shareholders at current Tyson stock valuations, We Believe share repurchases represent and 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.

Let's take a moment to review our outlook for 2026.

As our accounting cycle results in a 53-week year in fiscal 2026, compared to a 52-week year in 2025.

The 2026 outlook is based on a comparative 52-week year.

We anticipate full year sales to be up to 4% year-over-year.

We expect the range for total company adjusted operating income to be between 2.1 to 2.3 billion dollars.

We anticipate interest expense of approximately $390 million and a tax rate of around 25%.

We remain disciplined in managing cash, with capex expected to be $700 million to $1 billion and free cash flow in the range of $800 million to $1.3 billion.

Now, to provide more color on our segment Outlook.

In prepared foods, we expect adjusted operating income between 950 million and 1.05 billion.

we expect an improved level of performance next year, as a result of improved operational, discipline and Strategic investment in our categories,

We anticipate our adjusted operating income for chicken to be between $1.25 billion and $1.5 billion. We believe chicken will be the primary beneficiary of higher beef costs in the upcoming year.

We also expect our operational execution to continue to perform at a high level.

Based on the continuation of current variables of tight cattle, Supply conditions and the potential for heer retention. We expect that adjusted operating income in beef, to be a loss between 600 million and 400 million dollars.

We anticipate adjusted operating come for pork to be 150 to 250 million dollars based on our ample supply of hogs. And with continued emphasis on the operational metrics of our business,

Has performed well in 2025 by managing controllable, cost-maximizing efficiencies and lowering conversion costs.

We expect adjusted operating income in international other to be 100 million to 150 million.

Overall, I'm confident that 2026 will be another strong year for our company. That covers our segment, performance, financial highlights, and outlook for 2026. Now, I will turn the call over to Donnie.

Kurt in 2025, our team delivered strong results, despite navigating a dynamic and challenging Market landscape. These achievements are a direct result of our Collective dedication and we look forward to building on this momentum as we move into 2026.

Our diverse portfolio, commitment to Innovation, operational excellence and robust balance sheet and power us to allocate Capital strategically and reinforce our leadership. In the industry. We remain focused on meeting growing Global demand for protein while delivering value to our customers consumers and shareholders. I would especially like to thank our team members for all you do your unwavering dedication and hard. Work are the driving force behind our progress, propelling us toward even greater success and solidifying, our reputation as a world-class food company, and a leader in protein with that. I'll turn things back over to John as we begin the Q&A session,

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.

Using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star. At this time, we will pause momentarily to assemble our roster.

The first question comes from Ben Tovar with Barclays. Please go ahead.

Yeah, good morning, and uh, thanks for taking my question. Donnie, Dylan, Kurt, congrats on a good finish for Q4 2025. Um, picking up on the guidance on my first question, really on Chicken Q4, you had probably a better year than even expected at the beginning. And now, looking at the outlook...

Very strong, the 1.25 to 1.5 billion. Um, can you give us maybe your assumptions for that piece of the guidance as to the high and the low end? That would be great. Thank you.

Good morning, Ben, and thank you for the question. In 2025, we did have a great year in chicken.

Uh, let me digress a little bit and tell you that. You know what, we saw in 25 is a result of what I would call setting the table over the past 3 years in our chicken business. Uh, you know, you may remember and I'm certain others will that we had our share of issues with genetics and hatch and, and uh, capacity issues as we worked over the past 3 years. But we're now starting to see the fruit of our labor.

But if I think about 2026 and some of the assumptions, uh, that, that we made in putting our guidance out there, uh, we expect the operating conditions, uh, in 26, to be similar to those. In fy2, in short, we expected to be a constructive environment for us.

Uh, USDA projects chicken production to increase, approximately 1% in FY, 26.

we don't see a runaway chicken Supply, uh, in fact, uh, you know, I would caution against using September's numbers and the

the obviously the commodity price impacts of that and as as you do your model but uh, the 6% was the result of perfect growing conditions and uh, and environment and uh, that is now, you know, that is now returned to normal. And and so we see a constructive environment from that standpoint. In terms of grain we see stable grains. Uh, you know, if you

Can we, uh, we're in line with forward futures markets.

And then the confidence that we have in our chicken business is based on execution.

And for us, execution across every one of our businesses is critical to us. And, uh,

And so, if you look at those individual components of execution, in our supply chain, we believe they are sustainable. For example, better yield.

Is kind of a standout for us. Uh, it has been all year but, uh, it was particularly in in the Q4 and, uh, we're seeing some performance out of the live that we've not seen in, in many years.

And so we've made tremendous strides in operational improvements from live operations, through the plants with room to continue to improve our performance. We're all aligned against there is more to go do

Uh, we've seen commodity chicken prices move downward, just like you have, mostly because of the bird weight corrections that I mentioned in September of this year. You know, we're somewhat insulated in our business, but we're not immune to commodity markets.

Uh, and we also continue to evolve our commercial relationships with our strategic customers to build a long-term win-win Partnerships.

This allows us to focus on jointly, growing the categories and stabilizing our earnings and the collective earnings of us and our customers.

Further evidence of that is in the, in our Q4, our branded fresh chicken business. In retail was up 7.8% and our pros and value added chicken was up, 8.7%. These are volume numbers.

And uh, so we had higher volume and a Better Mix. We finished 25 with momentum in checking and we've seen that performance carry through in the start of 26 and we expect 26 to be another great year in chicken.

Camp, perfect. Very clear. Thanks for that Donnie. And then second real quick on, uh, prepared foods. Um, looks like the Finish was a little bit softer than expected. Uh, it's the first what drove that, um, was it input cost, maybe pork beef pricing, and how should we really think as we move into 26 and the midpoint, uh, give or take billion dollar Outlook and the expected growth here? Thank you.

Yeah, thanks been, good morning. Um, you know, let me first say that, that the fundament fundamentals of our prepared foods. Business are very good. We, we did have a much better overall performance in FY, 25. And that was really driven by growing distribution um optimizing our operations and and winning Innovation with strategic customers.

You know, in fact, we are, um, you know, winning with consumers, and we did grow both net sales and operating income.

By about 1% and that's why 25. Um, the volume Gap. The last year has continued to narrow each quarter so we're seeing good momentum there and uh, you know, as as mentioned our our volume and dollar share did grow retail for the first time in 2 and a half years, you know, the myth that you referenced it. It was in fact driven um by rapid Rising commodity costs

And our processing lags just didn't fully um, have time for those to flow through in the quarter, you know, for for the, for the quarter, we had 135 million in uh, in commodity cost pressure. And, you know, we had 344, I would point out for the whole year. So, um, so not in insignificant. Um, the operational excellence that I mentioned, you know, it is occurring inside of all of our plants and it did, uh, really Drive substantial volume values this year. Um, and so some of that was partially covered up by those those higher raw material cost. We continue to have very good fuel rates, um, the best since 2013 and so you know, a lot of good things to talk about in this business is we go into FY 26 um as we see those raw materials stabilized, we do expect to see volume growth market, share growth and that's really driven by our world-class Innovation pipeline. Um, continuing work with the operational excellence that I mentioned and our customer.

Partnerships, um, you know, we will drive top and bottom line growth with our strategic customers. Um, I would point out that's not just in retail. With much of the brand work that we've talked about, we’re also seeing strength and increased distribution with food service.

So you know what we're doing is working. Um, you know, we're pleased with the resilience of this business this past year, but we also acknowledge that there's more work to be done. Um, you know, I am confident that we have the right products, the right team, and the right customer relationships to achieve the metrics that we've laid out.

Perfect. Thank you very much, Dylan.

Thank you.

The next question.

Supply and costs as we move throughout the year to frame that view and then I know you've made a lot of improvements on yields and the like but what other opportunities do you have to mitigate the cost pressures in this business?

Sure. Uh, thanks for the question. Um so let me get let me get into that. Um,

You know, in terms of half a retention, this is is obviously something we've talked about, uh, for a while. But there are potential signs that there is heer retention. You know, what is a little bit different as we have a little bit better. Picture is is we see Regional disparity, for example, out west, we're not seeing meaningful, uh, anything meaningful in the South, um, you know, nothing there. But uh in the north, the Upper Midwest. Uh, you know we're seeing some uh retention.

so,

You know, if I look at what data, or what we see, it's a lower percentage of peppers. These are being harvested in feed yards, and then fewer feeder calves.

Uh, heer numbers at Harvest will need to remain lower uh for us to be able to to say that heper retention is sustainable.

And remember, um, more here. Attention implies less beef in the near term. But to the second part of your question: So what are we doing about that?

Um, so with herd rebuilding, which we're all looking for, means supply of market-ready cattle will fall before it increases in future years.

Uh, we continue at Tyson to focus on the controllable and optimizing our business.

And how the macro question on the table is this.

The continuing challenge of inadequate, cattle availability that has been further impacted by cattle inflows from Mexico associated with border closure related to New World screwworm.

Uh, our volume was down 8.4% for the quarter and 1.

At 9% for the full year. So, um, certainly having an impact even heavier animals. Uh, you know, they've helped but they've only partially offset, the lack of cattle availability in our guidance. Uh, the negative -600 to to -400 is what we see relative to uh, to the market, uh, presently.

It's very helpful. Thank you for all the details. Um for my follow-up, I wanted to ask about the capex guidance. Um, the range for next year seems somewhat wide and and is notably lower than the typical level you guys do. So just maybe you could talk about the main buckets of what projects you're planning for next year. What are the variables driving? That range? Is it anything timing related or has anything changed in? How you're thinking about Capital allocation overall?

Um, thanks Leah. Maybe start with just a reminder on our our Capital allocation, uh, approach. And I I made a comment this morning, um, around that it remains very disciplined, deliberate. But also, you know, forward-looking we're focused on maintaining our financial strength, certainly investing in the business. Uh, as you as you asked the question on, but also returning cash to shareholders and acknowledge, you know, the range that we provided this morning for capex for 26, is is 700 million to a billion dollars. I'll hurry on to to remind everyone that, you know, cross the last 5 years, we've spent just over 7 billion dollars. Um, in capex, we've invested heavily across our Network, um, and that included a lot of capacity expansion, uh, during that time period. And where we sit today we have the capacity to grow inside, um, our existing Network, um, our range that we share today, um, you know, acknowledging, its 3001.

It's really not that different than than what we shared over the last few years relative to a range as we start the year. Um, but that range is really going to um is is reflective of, you know, the pacing of of the spend of our, our current projects, but also the timing of new projects, uh, that will launch in 2026. Uh, but the range does include both our our maintenance, uh, spend as well as profit Improvement projects that will, uh, will execute across the year.

Great. Thank you.

The next question comes from, Tom Palmer, with JP Morgan. Please go ahead.

Versus, maybe there's some timing considerations and maybe more of a call out to start out the year. Thanks.

Good, thanks for the question. Um, you know, I will tell you that I mean we obviously uh considered commodity markets and and giving our guidance but uh the 1.25 billion to 15, I think is a good starting point for us. Right now. We've said, uh, that we think 26 will be very similar to 2025. I think that's still still true. I think that what you're seeing in terms of pricing, uh that is created the concern. I referenced earlier the the uh the 6% increase in Supply in September. I think it's skewing a lot of information and some of the pricing. You're seeing are very simply is just spot Market or excess that was taking place. At that point I would remind you that demand is still strong and I believe that will continue in 26.

Uh, this is, uh, a data point for you. Breast meat pricing is the third highest in the last decade and we have stable grains. So it's a pretty good environment to be in 2026 is looking to be another good year for us. Uh, and then if you uh, look at in terms of the insulated and not immune, if you look at where we're growing in the value added, and that retail and Food Service, uh, that value added mix, uh, gives us the

Opportunity to put our the number 1, brand of chicken on the product. And so it provides some insulation. The fact that it's value added provides some insulation from commodity markets. So we believe our mix and our portfolio positions us well to be very successful in 2026.

Okay, thank you for that.

In in prepared foods last year at the start of the year, you noted maybe a little bit less seasonal than than you might see in a typical year. Um, in terms of first half for a second half.

Maybe an update just on how you're thinking about uh, 2026. Thanks.

Yeah I think thank, thank you. Um yeah, you're right, you know, fy2 I would tell you was a bit out of balance from historical norms and that really was due to to the raw material pressure and and somewhat unseasonal that we saw there. Um you know, as we think about what we can, what we can determine from FY 26, currently with the forecast look like we do see FY 26 being more balanced. In that regard.

And and so we might expect a pretty big bounce back here just to start out the year to clarify.

First, what we saw in 4 q.

We don't, uh, think so obviously we don't we don't give quarterly guidance um, but uh, you know, I think we we've talked historically, you know, maybe slightly better performance in the first half, we we shared the message last year. Being 25, that it would be more balanced, given the operational improvements, um, as they built throughout the year and I go back to Devon's comments. I think this will revert, you know, closer to a normal Cadence and but certainly acknowledging, you know, we we did have the run up in raw material. Um, as we shared earlier that impacted Q4, um, and that uh, you know, there are some level of that that was still an inventory as we finished here as well.

Okay, thank you.

Thank you.

The next question comes from Alexia Howard with Bernstein. Please, go ahead. Good morning everyone.

Good morning. Good morning. Can I, um, start with just a broader, uh, question on the key uncertainties for fiscal 2026? Um, we know the consumer is...

Struggling a bit in the U.S. Commodities are all over the place. Tariffs, I think, are less of an issue for you, but if you had to sort of prioritize the top two or three things that could go positively or negatively versus your forecast, what would those be?

Christina, what did you take that? Yeah. Hi Alexia. Thank you for the question. Um, if we think about the

Customer.

In comes with higher incomes, continuing to drive growth and others. Reallocating some of their non-food dollars to food categories. So we do anticipate demand for protein um, to continue. And we are really excited about the opportunity for consumers, with our chicken being, a preferred choice for value and for convenience.

We look at our extensive product portfolio. We have products that cater to everyone, whether they're shopping in retail or our food service channels, ensuring that we can meet those consumer needs wherever they may be.

We remain positive. 1 of those reasons would be over the past year. 72% of households have purchased a Tyson Foods branded product, which helps demonstrate our strong Market presence and our consumer Trust

Additionally, we've increased our household penetration with younger consumers, under the age of 35, which is a testament, really to our ability, to resonate with those new demographics. As Donnie talked about, we grew market share, in our Tyson retail value. I did poultry in our fresh businesses. We also grew our market share with our prepared on a volume basis with our lunch meat, really? Being a standout with a 10% volume growth. So I'm confident that Tyson Foods is excellently, excellently positioned for growth today, and into the future.

Thank you, and there's a follow-up. Um, it sounds as though you're fairly confident, um, that the first quarter results in prepared foods will come through reasonably. Well, are you seeing any impact from the delay and disruption in the SNAP benefit payouts uh as a result of the government shutdown? Um, or is it too early to tell on that front? Thank you and I'll pass it on.

Yeah. Thanks Alex. Yeah I'll continue on on that. I think it's an evolving situation on the funding for the supplemental nutrition assistance program. So we are closely monitoring it. We do see consumer spending patterns again, you know, changing from non-food to more food categories, but we feel resilient and well, positioned to navigate those challenges probably for 3 real reasons.

Season 1 being our diverse product portfolio. We have a wide range of product offerings at different budget levels. And this allows us to meet the consumer needs, whether they're price sensitive or whether they're looking for premium offerings. And really do believe that our chicken and are prepared products are both going to be able to provide affordable and nutritious options for families. The second reason is our brand trust and loyalty. We have 3 of the top 10 brands in packaged protein, with our Tyson, Jimmy, Dean, and Hillshire Farm.

And then third really our Market adaptability. We're really committed to driving volume growth. And so watching the challenging, uh, or changing market conditions, is 1 of our core strengths. And so, we actively watch what consumers are buying their behaviors and adjusting our marketing and promotional strategies in order to continue to drive our volume growth. So again, I feel really optimistic um, with our strategic or prose, our diverse product portfolio and our strong brand loyalty that will help us continue to grow.

Great. Thank you. I'll pass it on.

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

Good morning. Congratulations on the quarter, and thanks for taking my question. I wanted to start out with beef, and I understand the normal seasonality of the business, but given...

The volatility that we've I mean, pretty extreme volatility that we've seen in the uh cattle futures recently was wondering if we should think about the seasonality of q1.

Any differently than normal. Because I think it was

Q1 of 24.

Had some impact because there was volatility in the curve so I just curious if you help us think about that.

Sure, and thanks. Uh, thanks for the question. Um, you know, we're seeing, uh, we're seeing good retail demand here in the q1 of 26. Uh, you know, I think that, uh, from an operational perspective, uh, we continue to to perform well, uh, we're uh, you know, if you look at, uh, things like yield, if you look at how we're diversifying the mix into more value, added, uh, and, and we have a pretty good Supply right now, uh, in in, in regions, uh, from, uh, from a cattle perspective. Uh, but, uh, you know, we think, uh, 26. Uh, it's it's shaping up for us very much in line with what we built into our guidance. Um, you know, we don't know. Um, I mean, there's obviously, uh, we should expect volatility. I think that's going to be the, uh, the order of the day. Uh,

As it relates to, uh, to be, uh, but um, you know, we have considered the current future cattle cost and the estimated pricing while expecting that volatility and, uh, you know, could it be worse? I don't know if we could, Mexico and...

Border closure and new world screwworm and the impact of that. Uh, I mean, that's pretty significant for us, particularly in 1 of our plants in the region. And uh, so we're just we're giving you the best guidance. That we know how to give you relative to those dynamics that we're dealing with president.

Professional chicken. So, Donnie, it sounds like based on your comments that your guidance assumes.

More than normal seasonal improvement in pricing. You found September to be an aberration. So, as we're thinking about 2026,

Um, You're Expecting price. Appreciation from current levels.

Higher than just normal seasonal. And I am, I understanding your commentary correctly.

But there's really about 3 or 4 Points relative to that, but your assumptions are generally, correct. I think the first 1 is that chicken will be very much in favor of, in terms of protein. It's, it's the most affordable protein on the market and, uh, consumers are favoring that and, and, uh, so that's 1, that's 1 Thing. The aberration, as we've talked about it in September that is I think a point in time. I think there are physical limitations to, uh, from an industry perspective. In terms of uh uh in terms of increasing Supply, you know, I've seen some headlines that talk about runaway Supply. I don't see that at all. In fact uh my biggest concern today is with the supply of chicken that we have, um, is the demand that we're going to have for chicken, you know, are we going to be tied? And could we see a little bit better marketing but overall, uh, what gives me confidence is our level of

Execution, from 1 end of the chicken supply chain to the other. Uh, I've been doing this a long long time. I've not seen us, uh, um,

but a few times B operate at this level as as 1, Team 1 Tyson across our chicken business and a lot of people deserve credit for that and uh, uh so think of my confidence, uh, you know, being from the execution of the business

And never gets old.

Thank you so much.

Thank you.

The next question comes from Puron Sharma with Stevens Inc. Please go ahead.

Uh, good morning. Thanks for the question, and congrats on on posting strong results there. Um, Donnie, I, I wanted to start out by asking, uh, about something you said on the call. You said you, you know, you you've taken steps to stabilize the margin, uh, stabilized margins on a substantial portion of the portfolio. Um, Donnie I think in in the past, you've mentioned just for chicken alone, we've seen somewhere upwards of a 500 to a 700 million. Uh, dollars self-improvement was just wondering if you could give us an updated view on chicken and also, if you're able to, would you be able to provide a view across the rest of the businesses? We just because of the work you've done in prepared foods and

In pork as well.

Sure, I think uh, let me let me start with u.

With a with a few things here.

Uh, you know, when we were sitting here a year ago, um,

Talking about 25, uh, you know, we said or made a few commitments, uh, and, uh, you know, I would point this out: we did exactly what we said we were going to do in the year. We said we would continue to ship our mix, uh, from core protein to more branded and value-added; we did that. We said we were going to increase household penetration in branded and value-added, and we were going to engage uh, with younger consumers. We have done that. We told you protein would be viewed as essential by consumers, and it is.

Uh, we improved our Returns on invested capital and creating shareholder value. We've done that, we told you we would execute in Excel with excellence in all that we do and we continue to do that. And you will see more and more of that coming. Uh, as we move through 26 in q1, we're off to a great start, um, across all the businesses. They're very much in line with the with our expectations and Outlook. So we feel very good about that in terms of some program. Um,

I would tell you that the expectation, whether it's chicken, beef, pork, or prepared foods, or international.

Uh, the expectation is you be the very best.

Uh, regardless of the protein, at everything you do from one end of that supply chain to the other, and also that makes us, from a corporate perspective, manage our costs. So that what gets allocated to a business is more in line and realistic.

Side of the business. Uh, with a lot of work done, relative to to um, determining whether every activity, whether it adds value or it creates waste and uh, If it creates waste, uh we stop it. If it's something that a shareholder a customer or consumer isn't willing to pay for we're stopping uh we're stopping doing that and so that's kind of my view. I don't have a number to give you but I would tell you using chicken which was is a little bit of what you talked about, but it could apply to the rest of the proteins is is we believe there to be significant upside and Improvement uh, across across the landscape.

Yeah. Maybe I'll just make a couple comments realistic uh to your your part of your question with prepared foods and and pork. Um you know I I would just add on to what Donnie said, what what he's talking about is really, you know, a multi-year cultural shift that we've we've been on the Journey of and it's not just in the facility. So it's in everything that we do, whether that be in our, you know, in our investments, uh, regarding our marketing, spend, whether that be, you know, our sales, sales support or even things that we do here at the corporate office. It's about finding efficiency and everything. Um, but, you know, to the point of of prepared, we talked a good bit about that. Um, those plants do operate on a system of standards and and not only does it help offset the inflationary factors. Um, but it also provides us with

Capacity, without having to spend uh cap capex. Um, we did see achievements in that area that exceeded our goals and fy2 and and certainly see, um, you know, a pathway to to have that progress continue and FY 26, and maybe just touching on pork because we don't talk a lot about that. There has been exceptional Improvement in that business in this year and see that continuing. They did improve their margins by 70 basis points. And they did that through improved efficiency and yield. Um, they are capturing more Revenue per animal, um, and a lot of that has to do with the work that they're doing around, special, trimming marinating, just typically adding value, uh, you know, for, for our customers. But you know, a data point here is their cost per head and FY. 25 was basically the same as fy24 on fewer head. So very proud of the work. Um, that has has been accomplished in the port group and and do continue to see that momentum and FY 26.

Go ahead, appreciate the, the color there. Um,

Devon and Donnie. Um just for my follow-up. Wanted to maybe understand, heifer retention a little bit better. You gave us some great commentary on the call Donnie. I think you mentioned uh retention happening in the in the North and the Midwest uh versus uh kind of in the in the West, in the South not quite seeing it. There I was wondering if if you could maybe share

Uh, some of the reasons as to, as to hear and why is, is it like drought conditions better in those regions or are are the economics better, uh, in those regions? Um, any, any color there would would be appreciated.

Well, thanks for the question, you know. I think I would say that, you know, the situation we're in was largely created because of drought conditions and there were areas that, uh, were more

More harmed than others. And, uh, so in in, in terms of this, we want to talk about heer retention. It sounds like, you know, all the, all the different components that are required to, to, to, to, to to, to actually start rebuilding the herd and the impacts of that. But, you know, that lower percent of heers being harvested feed yards and fewer feeder cattle. I mean, the Cavs we, I mean, we're looking at all that and, um, you know, constantly and uh, so, but um, I think, um,

what makes this challenging to do is the data we get to see relative to what's actually going on, because somebody could hold a, a heer back for a short period of time, they may be taking advantage for example of Cheaper, uh, cheaper corn. And they're going to feed that and put some weight on the animal. And then they may ultimately, uh, take it to harvest. So, you know, it's not, uh, it's not, there's a little bit of flexibility around that. And, and uh, right,

Rightfully so that cattle rancher, uh, you know, they're trying to, they're trying to maximize their earnings through this uh, through this this time period and these market conditions and and certainly understand and appreciate that. Uh, but uh, they're making those business decisions based on what's best for them. And

We're just trying to react to, uh, what that looks like.

Great. Thanks again for the caller.

Thank you.

The next question comes from Peter, Galvo with Bank of America.

Hey, good morning. Uh, Donnie, Kurt, Devin, and John. Um, it feels like an Eagles reunion tour out here. So excited to have you guys all back together. Um,

Wanted to, um, wanted to ask, um, on chicken. And I know there's been a lot of discussion, but Curt, maybe you could just help us a little bit with the facing of profitability over the course of the year. Um, I know you don't want to give specific quarterly guidance. I am asking for it, but I'll leave it to your discretion in terms of how you want to kind of help us adjust the profit expectations for the year.

Yeah, thanks Pete. Uh, certainly as I said earlier, uh, don't don't provide quarterly guidance. I think, um, you know, certainly as as Donnie had Illustrated earlier that, there'll be a little bit of volatility as we work our way through through beef. Um, but otherwise, I, I think kind of normal, uh, normal seasonality uh would play its way through uh, each of the individual segments.

Um, and then I wanted to ask on on prepared foods and maybe this is a bit too granular, but, but on lunch meet specifically, um, there's there's been a like, I guess a lot of different signals. Um,

Out of, you know, the, the different Market participants. So I'm on taking price, someone being more competitive, uh, on pricing, um, in in terms of promotion, it, it seems like there's a, I guess a lot of different strategies that are, that are going on. And, and again, it seems to be impacting a little bit that the profitability. Um, so I just, I wanted to understand what you're, what you're seeing in in the market. Specifically, I I know your results kind of speak for themselves, but whether the, the competitive activity out there, um, in in Delhi specifically has been, I guess rationale is probably the word I would use in in your view or if there's, um, some some other, you know, strategies that are going on that that maybe are are upsetting Dynamics in the category. Thanks very much.

Yeah, thanks for that. This is Devon. Um, you know, listen all this. It's worth repeating. And I know you saw it and I know we we've said it. But you know, we did see strong lunch meet growth. Uh, in the quarter 10.3%. In fact, we saw you know, some pretty healthy indications across. Um, you know, several of our categories that would tell you that that we're you know. We we have what today is is a winning combination both with with the price that we have in the marketplace but also with the targeted map spending with our strategic customers. Um you know I would say today we have more visibility from from data that we, you know, that we have in software Investments that we've made in terms of what's working in real time, um, and adjustments that we need to make, you know, if if we do see changes with with the, uh,

With the consumer, but we are very focused on, uh, increasing our distribution. Um, and also making sure that we not only have the, you know, the right value for the consumer, but also the right products. And and that's what makes our our Innovation pipeline so important. Um, you know, 10% share, uh, increases is not insignificant in this Dynamic, uh, area. But, you know, I would just point out too, is you, you've heard us talk a lot about this. But, you know, a large portion of our businesses pass through its got lags, um, you know, relative to our portfolio. That's on a price list. You know, when we do face sustained Market, based input cost pressure, we will, um, you know, we will take take price action as needed, and that's really, just to make sure that we can continue to do those investments in our business.

So sorry, Devin can. Can you just expand a little bit though on competitive dynamics in the category? I think it would be helpful. Thank you.

Hi, this is Christina. I'll, I'll speak up. Just

Growth, as Devin was talking about in Q4, almost every one of our categories saw distribution increases. We also had an increase in our MAP spending from the first half to the second half, really getting to those targeted promotional spends and reaching the consumer where they are, whether they're shopping online or if they're shopping within the store. So, we feel pretty confident about our continued success. We've been able to leverage platforms to get those insights in real time and adjust and pivot. And so,

Our commitment to Growing is demonstrated by that continued investment.

The next question comes from Herm. Paul Harris with Santander. Please go ahead.

Chapter of the details on the free cash, uh, guidance for the next year. So it seems that you guys have, uh, some cashable expected. So, if you could just get some color, uh, to us in terms of, uh, what are the lines that are impacting, the most, and how are you thinking about the 2026 when it comes to working capital? Thank you.

Thanks. Um, so our our free cash flow for the year 25, uh, very proud of of finishing at 1.2 billion dollars and uh, I think part of your question, there was around the free cash, flow expectations and and working capital and a couple other elements. We did guide this morning to a free cash, flow range of 800 to 1 800 million to 1.3 billion, for, for 26. That's recognizing. Certainly, the range of operating income, uh, that we shared this morning, uh, in in addition to the range of of capacity, we we don't share a specific working capital um, expectation throughout the year. Uh, but we did provide uh, expectation relative to sales growth. So they're, they're likely as some, you know, inflationary move on working capital as we work our way through the year. Um, but uh, you know, with with certainly indicate uh, a free cash flow, uh, that exceeds our dividend.

And, um, up to nearly a 2X, our, our dividend rate uh, for for 26.

Right? And I just want to follow up here on the chicken business. If you could just remember, as in terms of the exposure to the commodity Market, or uh, if you could provide any color in terms of is more chicken, uh, versus big uh,

Everything that you could give us in terms of color to the exposure that spot market would be appreciated.

So, if I understand your question, right? It's uh, our Market exposure to small bird versus Big Bird. Right? Well, I would, I would start with, um, you know. We, we, obviously participate, uh, in in both the small bird and big bird program, uh, we have, you know, that value added products in both, uh, both big and small bird. Uh, but, uh, in both cases, uh, what we tried to do is, um, is to create, um, to align with strategic customers and, uh, create these win-win relationships that grow our business and grow our customers business. And um, you know, we spend time doing that as opposed to arguing about what the price is or what the volume is going to be. Um both of us collectively uh spend our time on growing the collective business for both. Um,

but uh,

Uh, you know, in terms of big birds, small bird. I don't, I don't think I, I would want to tell you what percentage of our share of that, uh, is uh, presently, but, uh, I would point out that, uh, our value added business. And when I say value added not just talking about, uh, checking that as breading on it, or that could be fully cooked. There could be value, added fresh chicken, and uh, we participate in all that. But in this, uh, in in the year, we grew our value added business, 2 times what we did commodity or the average of the commodity uh, or the average of the segment, I should say. And uh, so we feel very good about that. We told you, we were going to do that in 24 and that we were going to do it in 25. I'm telling you in 26, we'll continue to do that.

Thank you.

Thank you.

The next question comes from Andrew Strazik with BMO. Please go ahead.

Hey, good morning, thanks for taking the questions. Um, I wanted to go back to specifically to the fourth quarter, check and performance and you, you talked about the growth on on a strong quarter last year. If I look at relative performance to the industry, even adjusted for your price lags. You know, it seems like that took a step up as well and I was trying to kind of decipher, exactly or more precisely what drove that you talked about live Ops. But you've been talking about that all year.

Um, you talked about lower feed costs as well and some of the value add components. So I I guess how do you

How do you uh, think about what was the biggest driver there? Did you see a step function in in your um operational performance internally in the quarter, any color around, that would be great.

Doing what is necessary, uh, to improve the performance. Uh, we have 1 goal here. It's very simple in our checking business is to be the best checking company in America.

Period. Anything that doesn't deliver that um, is or doesn't work uh, toward that end. Uh, we obviously look at and see whether we need to be doing that, but it's better yields. Its better live performance, uh, and in that live performance, uh, you'll remember we had our share of issues, uh, with genetics as well. Uh, even our old genetics, we have new genetics, but we have older genetics that, uh, uh, that are actually performing at, uh, what I would call historical.

Uh, top-end performance. Uh, and then we have an answer for Big Bird genetics that is flowing through the pipeline today, and we feel good about that as well. Capacity utilization continues to improve.

Um uh for us as a company and we made some really, really difficult decisions. Uh, you know, uh, 2 years ago, 18 months ago around that and then, you know, from a cost Improvement. Uh, you know, we uh, we're attacking every element of this from a cost from a spin from a non-value, added activity perspective, and, and then even to looking at what the allocation from corporate is into a individual business and addressing those things. So we're leaving no stone unturned, uh, with a

Clear objective, Andrew have been the best chicken company in America.

Okay, that's that's helpful. And if I could just squeeze 1 more in on beef, you talked about a lot of the moving pieces for 26 uh, screwworm and and and heer, attention and demand, and all the other things, the 1 thing I didn't hear you talk about was um, Imports and and that's been obviously topical in the news. How how have you factored potential beef Imports into the us into your outlook and how would you think about that impact to your business? Thanks.

Well, we've obviously had Imports into our beef business and that looks more like a box lean. Uh, but those numbers, as you think about that, uh, um, is uh, exports are down about 10% for us, Andrew Imports. Are up about 20%. Uh, Australia is a big, a big market for that. Uh, and we're talking boneless beef, uh, and uh, Mo most of which ends up in in our grinds. And uh, so you know, in this, in this environment, uh, you know, the consumer, yes, they're trading around in proteins a little bit. But uh, even within beef, uh, you're seeing a, you're seeing some trade in trade from muscle cuts into grinds and, and the grind demand is very strong.

Great, thank you very much.

Thank you.

This concludes your question and answer session. I would like to turn the conference back over to Johnny King for any closing remarks.

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

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.