TYSON FOODS, INC. Q1 FY2025 earnings call

• Fiscal 2025 started solid with strong first quarter results, driving confidence for the year ahead.
• Third consecutive quarter of year-over-year increases in sales, adjusted operating income, and adjusted earnings per share.
• Net leverage ratio improved to 2.3 times from 4.1 times.
• Protein remains a consumer preference, with 71% of U.S. consumers wanting to increase protein consumption.
• Focus on cash flow, operational execution, innovation, customer partnerships, digital transformation, and talent development.
• Disciplined capital allocation with focus on financial strength, shareholder returns, and operational excellence.

Prepared Foods: Volume in food away from home channels flat; retail volumes impacted, adjusted operating income decreased due to higher raw material costs. Chicken: Sales increased due to higher volumes in foodservice; adjusted operating income almost doubled, best first quarter performance in eight years, driven by lower input costs, strong live and plant operations. Beef: Revenue increased from higher volume and carcass weights; adjusted operating income improved due to value-added mix and inventory adjustment. Pork: Revenue grew from higher cutout; adjusted operating income declined due to compressed spreads, offset by operational improvements. International and other: Delivered record quarterly adjusted operating income, supported by strong Asia results and favorable raw material costs.

• Raised full-year sales guidance to flat to up 1% driven by volume.
• Total company adjusted operating income raised to $1.9 billion to $2.3 billion.
• Prepared Foods adjusted operating income guidance maintained at $900 million to $1.1 billion.
• Chicken adjusted operating income guidance raised to $1 billion to $1.3 billion.
• Beef guidance unchanged at loss of $400 million to $200 million.
• Pork guidance unchanged at $100 million to $200 million.
• International and other expected to be $50 million to $100 million.

• Trade dynamics, including potential tariffs on U.S. pork and chicken, which could impact product distribution and require contingency planning to find alternative markets.
• Ongoing challenges in the cattle cycle affecting beef segment performance.
• Dynamic consumer environment impacting retail volumes in Prepared Foods.

Q: Outline key takeaways from the call.

A: Strong Q1 results, multi-protein portfolio benefits, reduced leverage, growing profitably, controlling controllables, adapting to trade and market dynamics.

Q: Impact of tariffs on Tyson's operations.

A: Contingency planning to find alternative markets for affected products like pork and chicken if tariffs are implemented.

Q: Seasonality and segment performance.

A: Prepared Foods has counter-seasonal performance, chicken strong in Q1 and Q3, beef and pork have typical seasonality, with second half expected to be more balanced.

Q: Chicken margin sustainability.

A: Strong order fill rates, market share leadership, value-added growth, and alignment with consumer demand contribute to sustainability.

Q: Leverage and capital allocation.

A: Leverage improved to 2.3 times, focus on maintaining financial strength, investing in business, and returning cash to shareholders, with plans to reduce debt further.