TSN - Earnings call transcript Q1 2018

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Operator

Good morning, and welcome to the Tyson Foods First Quarter Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Jon Kathol, Vice President of Investor Relations. sir. ahead, go Please

Jon Kathol

Officer; an welcome Financial Call Tyson year. for Tom officially Chief call and and outgoing Quarter Glendinning, on morning, website as report on supplemental has Slides Stewart On today's at Tyson Incorporated to Earnings on Saturday. ir.tyson.com. quarterly are who the accompanying Executive and President this Conference our the our Hayes, prepared is Leatherby, to morning, Form our a remarks Foods at earnings Foods CFO; furnished been Chief X-K issued Investor the becomes ir.tyson.com. First today's Dennis which Officer available Good are Relations XXXX fiscal release website available SEC the on and

can I read issued this the I is AM recorded would the X:XX Eastern and everyone this approximately call you and statements remind Litigation aspects various Tyson's morning, this that to shareholders the Foods This earlier meeting that to our Foods, Private consent in you risks forward-looking in moving performance annual for as the cause of the with statements encourage could now Tyson are subject in will I remarks after takes written on of meeting discussion on one the call this operator's future our to respect These call while website of XXXX. available at call of outlook today's SEC margin, many today We the Reform and business. of of actual question, we'll being we differ on any our need is hour affect re-transmission of release get re-distribution, answering filings possible, broadcast as call of to of current and time. to be such a earnings Q&A as Securities and to ask if fully on the other to hour views Because our so have X, I'll that we reflect with uncertainties strictly time. limit business. you quickly Tyson is future of or expectations morning for without through Thursday, risks results from the form statements you possible. sales, events expressed place its call. to get materially the one projections. additional include an the rebroadcast conclusion want get These can defined the as to one instructions, to follow-up over A questions. and that back replay Tyson's any Act so property this prohibited. questions queue turn honor Tom as like Our February growth your the as Hayes. to be

Thomas P. Hayes

performance Building provide retail we're start fiscal Prepared Thanks, the food morning, diverse strong in and creating good across results solid this and sales channels and Beef, you from year brands. segments: everybody. to I'll Pork, a on for We Foods. At XXXX, we're It's off Okay, context great company with awesome. segments all of outpacing a more in time on first Chicken our portfolio to in minute. our are fiscal And a XXXX. of industry. the line record our delivered and our foodservice our Jon, today year. Foods, momentum a modern a the with protein in Tyson be on

year. period So picture, only looking second this our was behind at bigger same of company of strongest quarter operating in history, the income last the

been per a without it, would've high. tax at But legislation. $X.XX benefit adjusted the delivered share. $X.XX record EPS recent earnings also still That includes We an even from all-time of

X% constant to Tyson the recent modern food integrate volume off the X%, acquisitions. quarter. our our Foods mind grew we're growing we encouraged We're the What's areas of scale, into as into the driven we're our Philly. in a transforming growth. and sales and for by In set the Original position is volume start unmatched quarter, and AdvancePierre we of reach notably, new by is addition, company second capabilities the seasonality expanding value-added we with year, and organic by in as typical experience even

opportunity. As demand for take we're protein this to advantage grows, well-positioned of

savings also $XXX become as net through business for in realized fitness. QX, we're the process. we'll cost and faster growth excess the We're achieve a In million positioning confident shared So for ourselves we of million we savings. last ongoing $XX and more in year, a financial in year agile

of each references of be $XXX segments. million to QX, about with and will operating operating adjusted my income basis. note segment income talk let's In X.X% Beef So our an on Please generated the operating margin. margin operating a

was X% income this continue year, Volume strong the expanding Pork While ever. X.X% FY revenue to the strong compared margin. the cattle up our best herd beef, in in fiscal which and first XX.X% delivered solid, $XXX quarter An was through these an driven providing segment's expect is XXXX. demand. with U.S. to was with over of we domestic the Beef plants of operating margin With are international in XX%, exports segment's last robust supply should segment, U.S. numbers QX XXXX. million we demand and and and up quarter approach In of by down domestic ample

manage Revenue margin costs. ran While on increased record and X.X% our those hog as declined results, was last up the income of are compared to results QX very was we Volume year. margin. X.X% strong to down

highs. to industry margins and our normal, compressed As That said, still the are XXXX X%. has above our the margins from in expect capacity around recent we fiscal new expected, record be

some drive XX%. X.X% labor, income revenue volume segment financial operating Notably, million Chicken faced and the up with operating $XXX business incremental increased in and from we AdvancePierre generated related demand our also nearly challenging $XX base about Although helped margin. the freight million benefited bird a small and fitness a to segment in environment savings. of from pricing, X.X% Strong volume

in segment. fresh Green Forest, grow major retail invested line Humboldt, Tennessee, this fresh a add continue $XXX processing customers. in million invest heavily chicken. protein, million further capacity with commercial We our desires consumer with we announced plant to produce for chain We in grow complex Arkansas, to new In new trade pack we as to will that a $XXX

position year, and also XX.X%, up labor-intensive sales our about Chicken with our have the segment, business. and from believe will also with this a we about due volume financial Food advantage We Prepared expect are actions in automation and moved our or strategy, was XX.X%, and or AdvancePierre, scale. bottom build the up XXXX. turnover. million $XX and by fitness exploring start income our incremental In $XXX opportunities this growth sales the early and primarily in We XX%. whose return technology return XX%. segment We're Prepared respectively. and a cost full-year positions AdvancePierre, sales benefited to Notably, mix this The in on unmatched around new record X% earlier product operating million company and to Foods in top aligned should than a more unlock by food first potential to Volume people organic that more XXXX both of line higher as quarter delivered savings. late of at on segment talked modern will Foods grow in improve on plant driven from volume revenue higher I Prepared

sharing forward work to We XX. Prepared Foods it and with we exciting have a look in CAGNY February on happening lot you at of

have will cost savings, expect tightened a the As for quarter-to-quarter nationwide. we continue segments, fitness variability, there integrating Due full-year, strong escalated as we seasonality trucking freight operating to has financial our achieving usual but Foods of the expect the segment to sales, Prepared all Across the capacity around AdvancePierre margin XX%. and the of we an year. be have costs

expect included driving We than this same are federal pushing dynamics will play. These At more labor carriers continue rise our higher, as come are in year. our additional and this to into marketplace our We regulations time, to costs add million for $XXX outlook. costs wages estimate compete cost. new the these drivers costs up to

we'll through recover we're the majority However, pricing. assuming

our to performance, CPG top strong results XX manufacturers. deliver outpacing other retail Turning from continue to channels, we segment food all sales

rate Our was of that growth three times food dollar sales total and beverage.

Our our X and And volume grew X.X%. significantly X.X%, Core beverage outpacing total while declined food grew X.X%, total volume and bev. food

our Fiscal year-to-date, which the customer-branded acting retail categories, is or Tyson rate. Within growth. X X% dollars Core category growth XX% brand on volume, three chicken. and drove fresh also times in demand grew label the consumer We're in the business for private

quarter, foodservice year quarter very X% dollar although strong channel, & line doubled our broadline grew Our With categories sales sales our is Ready growth grew. that the in the the distribution In tracked volume Tyson broadline most last over size in and for grew the recent in XX in premium dipped Trimmed increase to-date. foodservice traffic our negative the area the restaurant XX% Tyson check X.X% months. business, rate industry. in sales of a fiscal dollar

X with point significant menu Focus of Philly major more than our QX to the growth our as foodservice brought our Focus our over lines X that a broadline our poultry new versus that ago out twice categories the product offers Our are as following in promoted well added chains I new channel, with limited-time a XX% Focus in as both items. up steak AdvancePierre But we've Original increase showed acquisitions Philly, Focus chicken should and year. X. and In sales dollars chains past to year product X% growth in to sales permanent

So to touch reform. finally, on I want tax

be our year, XX% to this last rate from adjusted effective year. expect tax XX% We down about

us. is So significant obviously this for

investing returning same, share grow that making buybacks for and to capital remain strategy support priorities cash our dividends. allocation debt, Our our acquisitions and sustainably repaying the shareholders to businesses, through

More That front-line deliver uses members we'll bonus priorities be will to than CapEx sustainability advancing Other XXXX, projects capital, be be additional the cash a our faster in than and will receive the innovation team able deploying one-time the means and our cash incremental XXX,XXX flow planned, faster. few of development, in around excess we million. originally employee weeks. qualified of fiscal million next will With In major paid expect these projects. employees. training $XXX to of $XXX on agenda

much dedication. the Dennis's is get respect know morning. this speaking has we for of time behalf year. us Stewart CFO, the of as position where of at decades you we'd in This a of enjoying you, three providing many We'll strength the rest earlier, extraordinarily both without and it's us turn we're you and you'll as Tyson, Dennis, do. to financial going This life. earnings financial we're And thank in leadership will everyone and be imagine because though, said you Jon miss your As nearly last with report. the as to service with the but first be to next already I'm that it can't His of and call. I of be on for over us the he'll Stewart's knowing for you'll that incoming and be I put happy Dennis outlook I'm for now, him have confident him. bittersweet today, chapter

Dennis Leatherby

good and morning, Tom, Thanks, Great. everyone.

want year. prepared to get I overcame but not my a as from with another had my great focus team been highlighted adversity I a say let's Tyson said, remarks, experience to I'd and past quarter, that by the food over privilege Before record at on many as my here our and XX members with With team. our biggest the stable company. performance. grow, for work like We rewarding XX the segment. especially results was privilege to to to QX serve that to I've businesses experience have years years, straight an record provide in only in sixth growth Prepared It as started are amazing we investments Tyson to our on transformed the record ongoing consistent, thank our thrive. a we was The CFO. Foods U.S. continue chicken track company

up grew volume XX% X.X%. over billion $XX.X revenues quarter were by we as to First sales

value-added Philly a record performed strong was Adjusted million Original solid segments and X.X%, operating with sales return with Prepared in in our Chicken and incremental volume earnings X.X% base from of compared more was shifting normalized adjusted income each volume Excluding in Foods our profile year. AdvancePierre the first environment. above their to prior difficult ranges. or company grew segments our transactions, results the to solid quarter, in Total at within on performance as a $XXX

compared from adjusted adjusted year. EPS includes $X.XX is record of to Our tax EPS in increase reform of $X.XX a a XX% the last benefit $X.XX and impact

first the $XXX delivering continue was capital depreciation a pro with XX on by as debt X.X spent AdvancePierre basis, outpaced projects million, for high invest for to focus on was Our results This times billion, million operating cash quarter including Net full flow in months. we $XXX $X.X to EBITDA and our we a ROIC. expenditures. forma a adjusted on

million We reach strong ratings. lower to organically, divestiture generate Total liquidity this the And quarter, X additional Net additional million, cash expense $XXX adjusted flows $X.X expect repurchases cash down with and a business, year was this to $XXX $X.X to as the our $XX of are we million billion grade end of cash QX proceeds of interest during non-protein proceeds used EBITDA of strong around debt the to net at net debt consider with was expect committed million. we our by goal. from tax of times was QX, rates, to investment a the including $XXX along share from nearly Net QX. and pay we when sale debt. ratio we to cash during along billion, reduction with flows we'll bring

the XXX shares million. quarter, For outstanding diluted were

U.S. positive the deferred corporate moment. fiscal the a rate additional will and tax impacted cash about Our in reflect quarter XX% be tax significantly approximately in rate. currently XX.X%. excited we on on have million the tax tax some non-cash the quarter, reform rate our reduction tax in expect In company, as GAAP the Stewart our will fiscal impacted. was the benefit rate first EPS will incremental re-measurement $XXX tax details a effective impact first be XXXX. the This one-time in adjusted related a significantly. effective both adjusted We tax to effective XXXX liabilities flow of the flows of in had and to XX% provide cash We're to

is due by our in first increase by tax benefited an As impact EPS adjusted from the previously EPS mentioned, expected tax fiscal our our of $X.XX guidance. The reform year adjusted reform. quarter to full $X.XX incremental to previously-stated

over is And it take team. Stewart? know addition want I'm Stewart, our the us turn potential to XXXX capital that walk priorities as I a you a application I will level confident to fiscal us Before great of to who'll through to and outlook, the our next Stewart company. he

Stewart F. Glendinning

we to in work about excited the for to you. and an enviable happy words, as here have of in be kind food to Dennis, is the with. position best speaks branded not thank expect U.S. portfolio whose I'm It product luck and itself. you the company for Tyson we fundamentals largest cash of and has our million record a an capital result priorities increasingly a changed. reform, as $XXX tax while team, flows allocation have incremental over And strong the of

and to with investment-grade our long-term strategic We shareholder as have focus with grow organically businesses cash plenty flexibility to along still efficiency our our objectives, building. will and while and share be along sustainable to in projects, dividends, capital shareholders innovation value, Also, to and our reduce we in through repurchases continue the on returning disciplined plan driving expansion businesses credit debt continue operational acquire use that maintaining to brand cash support investing liquidity of will and through ratings. we to

Now, here thoughts XXXX. on are additional fiscal some

and growth $XX line expense is We interest increase $XXX growth million. X% expect attributed to of approximately billion. base to Net sales sales incremental of X% approximately billion. to The approximate volume $X.X expected top around should AdvancePierre

$X.X CapEx incremental from As a on improvement be quarter, tax effective to as guidance segments, expect reform Foods. and up approximate our unlock than impact with tax we further $X.X Prepared $XXX Based Overall, focus XX%, rate we reflects our And consistent of share impact viewed positive share our Chicken $X.XX, operational to average due incremental on now coming to price additional sustainability raising with be range improvements in into fiscal more million is is billion shares how XX% remainder around pressure And diluted around growth capital we not about The related be adjusted million a expected we is currently the investments, previous XX% approximately value-added of great XX%. X-year compounded accelerate the of with annual million which our average to impact has estimate was is margin guidance Dennis spending range on tax to with fiscal are to adjusted and we projects repurchases. $X.XX mentioned, adjusted the XXX a described, tax to QX, $XXX innovation. new as billion, which our is it QX before closing, QX other previous QX the reform. to our XXXX approximately of to accounting tax freight of XXXX and year. EPS reform labor, for be annual this increased of our choppy. to To $X.XX. this This guidance historically EPS clear, reform. represents than our different. changed with rate In and will no Tom of and a added in

However, both to QX Q&A. drive strategy our prior begin to our expect ready shareholder a post-tax pre-and year we're focused prepared value. remarks. as despite the challenges, these earnings Operator, long-term do compared This growth executing concludes reform we to remain on on basis we

Operator

question go ahead. gentlemen, the Mr. will Mizuho. Glendinning. question-and-answer session. your from we of you, Ladies will Jeremy and Scott first Thank begin come And Please

Jeremy Scott

thank everything, you, the Thank you, for future. and good and in luck you of best And Dennis, morning. to

Dennis Leatherby

Thanks, Jeremy.

Jeremy Scott

called a of can quarter year, $XXX but year, us the target Is are million you you And out? down to that'd nudged Foods, much brunt help primarily have sense to quarter XQ, guidance wanted how maybe the XX% XX.X% you the quarter ask the to be move to that at it you a of like to and freight just you back give going the you'd and us XX%. this to it. you much of $XXX clearly, passed I million much that have – through half and issue synergy strong for Prepared of helpful. how year, It through can you're on going your that be quarter? the as if eat sounds next and upped But with the the frame how

Thomas P. Hayes

able and Yes, the performance We're It's about Tom. excited great proud extraordinarily sure. they've first do. what Absolutely. been extraordinarily quarter. It's and team Jeremy. in it. We're Hey, pleased the of to

you all so, to it's tough one. not is clear, business be called Prepared affecting of a freight I our As mean, out, just Foods.

plan at it's middle are the to QX and how it's early. got we to still It's as we some to do to it's easy And that for feel to is know. hit So, actually you I do us, to quarter, have – consumer it pay you it's to something say, But can't in say QX. business. point, because It's to for ultimately, is a going cost. We and it not it it, the do it's pricing pass challenging of that for Foods that. bit always But Prepared through. about great little specificity. suffice we but give every going Typically,

of think XX%, the with guiding we fantastic. freight. of forth. around have to the We're so and overcome season But products schools we that we So, is year base, mix that being to going consumption different, challenges will be the would and be

Jeremy Scott

the the out impact in each you just – a Can it of across your segment. sense maybe give you quarter of the called issue, every that on same Great. And segments? impacted on us

Thomas P. Hayes

it's Not quarter. million, We for specific the not quarter. $XXX for year, but the We the can't. told, about

Sorry.

Jeremy Scott

in. back jump I'll you. Thank Okay.

Operator

go from Group. come will Jones Please of Vertical question the Heather next The ahead.

Heather Jones

Dennis. you congratulations, retirement. hope your and morning, Good I enjoy

Dennis Leatherby

you. Thank

Heather Jones

breast QX. On mentioned margins, of wings. you the during saw clearly, But dynamics welcome. breast buyer guys net and Yes, a in meat difficult you're we a And are you meat. Chicken environment

I was you essentially you XXXX, so, QX just – away And comp Chicken was flat from because if costs Chicken take the wondering could – if year-on-year. non-recurring of

you environment. about difficult talking could what us a a give I it of you're was So, wondering sense when if say you was

Thomas P. Hayes

Yes.

But There So, now. some freight that the We're we believe it were increased And freight earlier around Jeremy, talked I'll and say certainly, the that weather. for it's we year. between – what with issues, recover be the about pretty these right is will what tight It's it's costs. we XX% us. affected critical Heather.

are full. We very

and hand. We a lot for thing that's have us, a one good on going

hand, segment We're on do. even so top mean, full back we about has to the on work bumps the on other cause , look road, that. margins to potentially excited of whatever refocus our our the it's labor. We're we efficiently getting The the overcoming year it inefficiency But what us at right, got On of little been the I'll expectations. just compared We're growth. And any to nothing, to that. not as creates. that in not that does freight really Chicken that as extent o of I growth maybe could extraordinarily for you able have competitors have. XX%. then, the am proud phenomenal, own you team to – is I and

Heather Jones

margin in No, taking a difficult you're able it's It's in. maintain be to your face to impressive environment of freight the issues. the price that

And of mean, so, wondering, to recover your and the guidance? of the able based confidence be far, the majority you're able level this upon be what's I just was that going you've thus to make discussions had I to

Thomas P. Hayes

high. do well what team the and great is What value we Yes. we tell the pretty I'll provide. It's sales at is that you really representing

clear our that. increase We be growth nobody on on sure, are a so focused for that price to take customer's wants to

partners, – growing have overall the their which is private business. play like it's we label growth, want They they that to crazy whether grow which talked Tyson we branded the value about, However, I and or understand products. in –

after team sales our that covered. an ball feel prospects not I it. absolutely. very is easy about the getting discussion, of bullish And So, But

Heather Jones

so you Thank Awesome. much.

Thomas P. Hayes

Yes.

You're welcome.

Operator

JPMorgan. go from will The Goldman ahead. next of Ken Please come question

Tom Palmer, CFA

Tom Good on Palmer actually Ken. morning. for It's

a couple Just quick ones. had of

remainder of EPS decision slightly progresses. as guess how rate I quarter, through the flowed First, tax wanted from for and looks employee kind the in – But adjusted ask of your for about it to first the the the to higher this year year exclude ask like actually bonuses some accounting. of guiding you're a (XX:XX:XX) relates the tax to the rate

So, of kind were just quarter? first in there non-recurring that certain items wondering,

Thomas P. Hayes

going Tom. I'm in Goldman. Ken Please to minute, over or Stewart to to Ken. I a something. to have for congratulations But the me. pass on fan, for But for he's I'm that it turn a victory. sure at the terrible here congratulations Eagles' Ken parade it you're for do was in Pats say today to us. hey, Being

Tom Palmer, CFA

will. I He was very excited.

Stewart F. Glendinning

I've only been here a month, Tom. statement but coming that's a from big

listen, So, anyway, back to business.

So, two points here.

your why pay choose all, we of did as question expense $XXX we is that million. look, on the not to First adjust, coming out

giving put rate rates, we that exists into how take to the decide in up quarters timing four this say. and reform, next is models. out fiscal to I production tax adjust You're you it, down, which commit you transparency, is in amount and I so oddity there an of we the going domestic to to credit us, XXXX. year. up get for whilst that three is Relative simply is rate better that not that, there to a do pick you of quarters bit $XXX XXXX next because coming We'll tax know which your to can of as the because for of have don't a full a year in benefit whether the goes year. going There transparency can it, million the adjust you're huge tax for is of

at in company. But takes few there by I for available rate points the a just a back percentage dramatically look lot be in that total, XXXX. the, resources so, will more us would and our tax down back goes And

So, net-net, result. good

Kenneth B. Goldman

jump called Eagles, fly, fly. heard I had just to is say and so I got just This out, Ken. I in

Thomas P. Hayes

Oh, man. man. Congratulations,

Kenneth B. Goldman

I'm taking Thanks. it. is Take the call. care. Tom couldn't sorry be on it care of

Tom Palmer, CFA

just a I environment Foods. the Just including Prepared pricing second segments, had across general different on follow-up

seeing a or bit You issues pricing. offset end that cover a on pass of rising seeing? pricing. to What have compression their pricing? that's on that labor costs of little are Are It bit we the offset seen able retailers challenges? and the will labor a differentiated lot mentioned terms by little and – on of still Anything pushback of you in will – be be product you

Thomas P. Hayes

I'll reiterating just Tom, Heather question. I said the start Yes. just when asked what

If the than For value is. we strategic relationships, be tougher. feel to matter are price to bullish we we our about our going us, are others, I'll say, ability because most it's ones some of to have it's going we I'd relationship transactional a get our the that customers depending it. yes, The provide. that be But reiterate, upon very And products overall, challenging value provide. certainly, of just more what for

Tom Palmer, CFA

All you. right. Thank

Thomas P. Hayes

You're welcome.

Operator

The next question of ahead. Aslam will be Stephens, Inc. go Please from Farha

Farha Aslam

Hi. Good morning.

Thomas P. Hayes

Farha. morning, Good

Farha Aslam

Question AdvancePierre. about

wanted guidance million? versus to Just SKU about to understand, million $XX of sales your down that And is kind is an $XX guidance? rationalization program your prior

Thomas P. Hayes

No. down. We're not

in all Remember, right? with perform is I about are our as talking extraordinarily They to now. the be line gone split, our about probably not right with between Foods a Prepared integration they're well. and this the team. overall strong, We're lot It's we're business of expectations the all continue the providing areas And in the think in is to up. going well. part say I has business. AdvancePierre excited Poultry. really future, parsing the on potential out They're all would channels. growth of the AdvancePierre base results

anything, the and underperforming. a the grow. having the Poultry the members of Foods If Prepared away just now are think positive it's So, business I team I is lines are impact, wouldn't also business that the but part helping product us not that real take on that a

Farha Aslam

had strong helpful. guidance for quarter That's and the And then, in a you've beef, a had very full particularly strong you year.

questions on report, the last on business do long it to how kind we some had few we over years? about latest How Feed the expect Given thinking Cattle beef Beef your you're the of and next cycle.

Thomas P. Hayes

choppy, up the we business, the quarter. company. thing We the to result. year. to number have structural said, part are right? year-over-year It's proud the X% mean, of it of I first is I on are we hurry for the that there. of same the But happens out results we little is for Yes, Like at will say history X.X% where with point. as certainly, see in about this of are full the an pretty with excellent And been since QX be XXXX really fiscal the nature revenue cattle in sure. market. Yes, cycle, into relates a the the and sort of animals major stream, I've XXXX Exports, visibility industry. going the the to good XX% our a exhibiting I we projected

As on we regions every the most very business, not It's and say we're a call. like calls, in. it's we regional

Beef premium our foodservice programs say And as work We our the of continued perspective, We've we to it I'm changed progress with is making to even a margin up business. doing outlook pun continue the our the there. operators that bullish, team overall to excellent this what no we're an and retailers we're for out from as proud of part But to intended. really I'd the our profitability. nice had opportunity week, expanding over programs. done job past premium producer talk correlates long-term the about revenue in So, cycle we're structurally, getting

Farha Aslam

That's helpful. Thank you.

Thomas P. Hayes

welcome. You're

Operator

of Moskow next The from Please Suisse. will Robert go be ahead. Credit question

Robert Moskow

to you. over you. Thank wishes the sell-siders. Dennis, for patience your And, with Thank years Hi. best us you

Dennis Leatherby

you. Thank

Robert Moskow

the I for Chicken, full And months. billion. million. follow Farha's have was the now, $XX AdvancePierre Foods, billion lowered about $X.XX And for because, for full it's sales question was about XX it Prepared up for then, also the guidance to specifically, $X.X by on guidance year

Can are you the understand why? think I us help So, numbers lower.

Thomas P. Hayes

with after come going could say maybe that connecting the might take will the you to that. Yes. The there to to on on not some back only Jon dots that I deflation is in that Rob, we're the you be call thing thing same because you accounted. we're there's that have are.

Robert Moskow

of Pork think coming the Is hog complex? with on the fewer quite can And affects the outlook Okay. operations specifically hog and supplies the bit. it lowered your a give you pork segment, for to all saying it the is what USDA behind through how us And you your the a just market? I sense supply what in drivers about that line

Thomas P. Hayes

Sure. Yes.

We call it when had that. knew saw margin last coming, compression. see our it we do or going we quarter. about talked was So, to We come

as about So, expected. out it's playing we

The pie supply enter of compressed players is hogs differently. margin bit New and They a in the find short gets cut the to up market. try run.

of outlook, say some our long It which how all are into point. knows? range. that out who built levels I'll our of X%, annual lasts, our normalized above at Now, assumptions is sort is that which

not it We're We're more trouble number as not stellar of. was But proud as coming. hogs. it's certainly, X% having that with seeing a yes, last year. we're getting is hogs So,

capacity. The hog true. the think will I is thing harvest same the meet always supply

the comment business going team We'll back established As new with great a It's I'm it. to that happens like decades a they come we're processor, it same way. is in, the while not but to This on ago. we entrants in have. as especially continues assimilate. own. through say going our We're anybody take we spot. good way But build, I'll it else's work a our that to feel something

Robert Moskow

going to though, clear, X% I'm to hog only farmers so you're Just are X%. increase supply saying

Before, it was X%.

there something are farrowings? is going on for hog with what farmer intentions So,

Thomas P. Hayes

a concerned, closely, something as We can't there's there's numbers hogs Look, to going don't we're Rob. that not we have that the continuing as I to going like that's Yes, But to that it's need. I parse we – – far increase. we're be feel the know. feel that

Stewart F. Glendinning

those the There about would opened. have here industry. marketplace have the driver opened, new the dynamic, about I in and in less supply of that say, the as least, just in new the hog that's short look, is are Rob, more the the run processing some plants plants And Yes. at changed capability.

Jon processing say less the more would up supply pick capacity on in and industry. detail but focus the happy more So, on I the hog the in to on supply, for

Robert Moskow

like seems cocktail. But higher It capacity just supply the and thank keeps if you. keeps going going dangerous a lower, it's hog the

Thomas P. Hayes

imagine We happening. don't that

be capacity. I the there hog are will supply be We're continuing think at Rob. the strong. that, Exports worried about for to not extraordinarily all

Robert Moskow

Okay. Thank you.

Thomas P. Hayes

worries. no Yes,

Operator

Goldman of go The Sachs. next Samuelson question ahead. from will Please come Adam

Adam Samuelson

morning, And to, your Thanks. Good Yes. congratulations Dennis, and add me wishes. everyone. best just let on

Dennis Leatherby

you. Thank

Adam Samuelson

to to back little Obviously, the first that of a Just want in mean, we're side, year. the margin Chicken about bit about the drivers thinking going the year. you the the pricing, but understand really I for outlook go think cost XX% get layout some acceleration expectation productivity matters, get the much with on costs? I is XX% the and to me the talked guidance help the of fiscal half And in increased enormous the that in an to that. trying acceleration to growth growout which nice the in the the that? the Chicken business a $XX million quarter, trying of to not and about think fairly an year. of delta. a kind balance below nice back help mix, Can starting actually forecast of to increase I'm drivers freight, profit to profit Q and from modest you're me point significant better inflation, of year-over-year, the volume acceleration over was you to think about and meat of feed just outside it's points purchase

Thomas P. Hayes

Yes. Sure.

been financial our But in improving that may So, are to is consistently talked as mix we small, $XX not Chicken billion contribute. will and procurement-related the we $XX other adds, are million. in entire bit I'm that and That's the the thereabouts, million, FY extraordinarily then, TPS successful. a sure. there Tyson are just deliver working your not probably is beyond we roll terms maybe objectives going smaller. system XXXX so that that maybe we've cost came structures. in you that discounted a cost $X.X improved on margins, have forth This out about that And overall element been It's out, But in throughout bit, volume model, be call not an million $XXX productivity the business. about detail. something as structure have of much as it's APF fitness

those XX% that margin. all for So, confident reasons, we're about

Adam Samuelson

Okay. just kind I to follow up. want of And

you the mix in just healthy On I expand see quarter. volume your leverage the remarks, the pricing fiscal quite to And in the allusion in Maybe on being and didn't Tom, that. challenging. you made think, an bird quarter, small first prepared the quarter was

Just to understand why. trying

Thomas P. Hayes

Yes.

So, we're in bird production good lot of in bird a feel similar come dynamic be past. margins challenged. that's We A we've like spot the what can small to Small on. the create rotisserie, to pricing more dynamic, those see a rotisserie business adds value, as becomes, – deli also supply business we that that but challenging – against that is bird seen it.

issue us So, an And other with to back you But on both the was bird overcome yes, our it's big cause nothing retail that my value-added experience extraordinary. it, to comments of bit said, areas. which I add a for the going – going point to would that been we're of not – I it's has us. to to business, the predominately foodservice, and side as been

of be time sort will about. time But up advantage year, see be question about But right plant And that So, came we we capacity be we tough overall and that not we're would that something parts yes, of of in time there. business the time It that running support to $XXX Forest is will margin moving no are variability be is the to There's should million, growth you should you say our from to it. Green areas some have over build will fully prepared direction. be should because I concerned what last going there to well. that on that the But, be to new time. to spent be difficult. need from taking our going

Adam Samuelson

Thanks. the I'll appreciate color. I it Okay. pass on.

Operator

come next Research. Piken Michael Cleveland go will of Please The question ahead. from

Michael Leith Piken

and congratulations, Dennis. morning, Good Yes.

little Just in margins took in obviously, you up some further your like the might here looking a seasonality some have there beef. any you kind is And evolving. your how idle of come down. chance bit if online? of guidance the sounds you for sort wanted on there's of terms The that about could come of see supply year. it to And the back the that. talk terms And outlook, just touch cattle previously cadence, maybe to of But capacity out even

Thomas P. Hayes

Yes.

We market, the space So, have The is so they relates looks business, are earlier, report And into good. that certainly causes capacity. we we can you the the I see number have, cattle like what which Feed know. for on to so good that's it come profile, to is is to previously I X%, the that's talk be good I as visibility our idle said of there. margin that's on good as What animals, about can't us. Cattle that in to out Michael, say, us

that get growth certainty. to of I'd can't that just level Now, it's with in as predict a it food area. business as U.S. our back past company how overall. that is the into something almost we're you relates to because describing mean, industry the for grow engine largest quarter-to-quarter cadence, I been I to you take can't any we've What the powerful continuing

about second have And in going at what feel choppy be in cycle, good because first the quarter-to-quarter. it's You we're to cattle like always. need spot. movement business to will QX, we is the But the great a and we look our as half a balance in half we the the year. feel But of

Michael Leith Piken

demand, you over the for maybe follow-up, for little of three the expectations if proteins a remainder export any And bit as Great. your maybe could talk about NAFTA. concerns really, a Thanks. over and Okay. all year

Thomas P. Hayes

say, NAFTA for our all concern. about don't be about, environment just export will excited environment we we product, our how strong not demands, customers built to exports digits. let's particular, the of tremendous only but, but But continuing – have that about We're talk in our performs really because capability our our team And overall double has feel Export in service. I enjoy there. enjoy Tyson very

to no And as areas relates relates there's elements to want left the it agreement, that. we certainly secret, absolutely, modernized be we the it support we sort that of – is. it need be to to need fully as NAFTA, As of and

well. maybe as large a fourth us, is or largest. Mexico large trading Canada for partner However, is fifth

continue, get we with I've as support as no a talked got a to And for win-win so we been are. to as to we place to around that have making team that members to – we can agriculture, want hold agriculture as to that about and That's the people hopeful keeping a certainly is And many of it, do been world where it that through it's no harm. that we're NAFTA, everybody. relates we talking I've are. about matter talking message we've been where get we'll

Operator

RBC. from Palmer be The of next David go Please ahead. question will

Kevin Lehmann

Kevin Good morning. and, Dennis, welcome. and good congratulations Welcome Dave. Hi. I Lehmann to just say, Stewart, luck, in for want aboard.

Thomas P. Hayes

Kevin. you, Thank

Kevin Lehmann

I particularly branded think I to excluding noise numbers in business down around about data want lately, showing which, because that's frozen from the be quarter, of the retail is to core the in there, the backside. ask X% the going an SD trade some

thunder So already Thanks. consider can maybe pipeline for a maybe introducing run innovation from true resale? retail any stealing understand rate you now some launched maybe winds and early U.S. CAGNY, the better at without from help us

Thomas P. Hayes

in our the last of Yes, data up. by was you large UPC of set. way. just but month, innovation, so picked analysts it just talking the hit The attend, about at IRI just data and customer good providers there most coding the CAGNY. stuff, Nielsen in the has we're A call not But nail changed hadn't error excited head. codes a data really We've the if to you probably got happened on presentation, on this will, to a CAGNY lot you

was a, It it affected business. our a sort one-time prepackaged ground of beef glitch. So say,

of So some the error some year a the losses relatively year, for about we you told rate about occurring total categories. sales in a was retail I last pricing. did flat. year of quarter, Got few at in volume, the our volume not pick volume the and volume without XX% took there up last runs

So now a effect. sort from to took comps we have lapping that's an pricing importantly, going but the huge ago, we're as of year

to going Dean. Our to actually areas data data and we've the to and talked track, And we got comps the same – continue we as see were this Core to month I've the But expect on on Tyson the did, be we to were next point we've up looked price March. areas we by to through or And X, some be growth all Jimmy exceeded share, Again, back and met year-over-year where affected. have. volumes tough. where the wanted cleaned all we Core not X providers took going the were to

to drive total If you category. unbelievable. you'll new has breakfast, there class things there are, continue started, we best excited growth been protein The with as that to as look because for Dean see helping business that finish some on the I frozen you'll be as CAGNY frozen at is Jimmy And hopefully fire. in

Kevin Lehmann

Great. Thank you.

Thomas P. Hayes

welcome. You're

Operator

Akshay question The be go Jefferies. Jagdale next from Please will ahead. of

Akshay Jagdale

you to you've Good outlook Chicken. done. what's and help for morning. your Thanks question relates for as everything understand the question the congratulations, is on in thanks first and My and, Dennis, you embedded Can it supply us demand was very Just in nicely. in to equally outperformed you an a it are in high quarter tough industry? to the of tough level trying get because operate expecting and view saw environment this a that the industry environment, you

industry So or just it stays same? wanted your to the does the get a better, assume plan gets sense of,

Thomas P. Hayes

Akshay. with demand It's line growth. The about consumer Thanks, X% growth. USDA Yes. estimates in

in positioned. strong more said, we're the that be this not demand. strength, Because is Our extraordinarily that's the we like What I'd our long will has what focused in where been, building versus certainly supply year. love run. short for run, our of Tennessee, is, plant but we're we're We new on the demand say demand

If rises, economics buy with know. and grow the it demand good. Our will very is production versus you help which program,

You called we in performed the out how industry.

– for people flock used excited extraordinarily I than it but looks seems balanced. probably us, good breeder be environment are of and some for about The be it. the less looked to We relatively leading indicator a that, at have to think

Akshay Jagdale

The Okay. a on more then the just lower longer-term of it it's relates tax. question. And the tax rate, spend as to increased Great. one CapEx

in there give what where I times unlocking mentioned in necessarily in and more Can incremental the but of than spending sense us you you've not announced? remarks. give savings out might your couple this of mean, can us of how even release technology what you So capital? technology Thanks. a you're they seeing be meaningful a sense enablers of terms press you're you your here $XXX and a million

Thomas P. Hayes

our question trying is to going too. first back to Sure. they with weather and answer QX ask to to all and your I'm plants come get to certainly businesses, be. tough doesn't to have people that. Remember, I'm going it to that choppy of QX help had Stewart not and just that needs bit, on are what we've our a is production

just footnote So is make certainly And you do capital the to Stewart, to there. challenge, then, question? QX take a want a

Stewart F. Glendinning

Yes. going adding This relates Look, reform. of flows When tax pull deploying at it's being wide and it let's of cash as Akshay, has cash the nothing but step has very a another levers to yes. we're By year, scenario. we benefit – allocation very, do first look range million, and company all, to strong to where the back. help of you that $XXX-plus this capital able

spend to what the talked that of money is capital one-time high-return The projects. we we about $XXX call million You additional around point we've to bonuses. expect that

our ROIC been a that and Some to is powerful, what included of that's you're are to the little in house long strong into But our project. those big right. extra makes back-house of greater very this bit allow I've for whether systems involve backlog plants that the both I've company cash is Technology a excited just drive and difference or automation technology, in of those really harder in see us business; efficiency, whether that's come in of that and returns, capital this this back allowing the faster. about as

Operator

Morgan of Please go Matthew Grainger will Stanley. The from next question come ahead.

John Colantuoni

doesn't planned dynamics in on you're originally just second non-protein thinking remaining with trying benefit you're $XXX for Guidance the sell about the bonuses Morgan to This of for understand guidance the line expecting just time, here. Thanks you question is how John the the you're businesses Can the two sounds My cash and whether I'm explain expected, being went but it for the to later Colantuoni at include taxes, same million guidance. like in Stanley. Hi. quarter. guidance? lower question. of up than conservative is all

Stewart F. Glendinning

John.

adjusted part do we're set $XXX let's around Okay. be that take following you consistently. we've a Because the we give that? $XXX will got of earnings Well, million rules earnings. million our do we've as that of used The first. Why adjustments adjusted we

$XXX in around benefit of As the the have million. answered call, I full the the transparency you'll earlier

you So know not is in there. it's that the point. It so included guidance, adjusted first

that Second our Frozen be But question happens was Foods, parts Sarah Lee cost. look total material the guidance our at when it's transaction – for around Yes, second of what embedded will in the point, to the in such that your Actually, part And longer. not numbers with you costs as the range. your reason, business. holding moving really that number's for outlook.

John Colantuoni

Okay.

be So just as businesses the to included included that there those in is And portion confirm, right? this sales them quarter? sales a from well, for the two for the will quarters upcoming sales were reported of in

Stewart F. Glendinning

I'm expect our the around We any businesses. holding to dramatic guidance these related on What of yes. saying EPS influence don't see is, to

John Colantuoni

hog even September. prices. year they on with just for expectation Great. discuss the Okay. about quick remain increase, this this We as that prices significantly year-on-year whether your expectations? up hog were I And had initial hog then below the observed up, XX-year question and averages. are far a the thus year prices X XX% Can price since And progresses and your consistent you are movements despite

Thomas P. Hayes

talk No, we let about is that say can the me what just spread.

coming. continue us. more in hogs. are like not to just out we to getting having move, that I'm spread business prices hogs and repeat, a we're we trouble for seeing how We're plays As going And

when good in supply have business you for results us. good and spread equals a you're So

John Colantuoni

you Thank for the questions. Okay.

Thomas P. Hayes

Yeah.

Stewart F. Glendinning

the expectations I that's currently give I we why would guidance just in embedded our that add by mean are and saying that.

Operator

Brett Piper Jaffray. be will The next question of Wong from Please go ahead.

Brett W. S. Wong

question my for you Thank gentlemen. taking Hey, here.

top do Thanks. what can a we to of talked specifically when think now. and it you spoke Prepared And for around seems Pork. you've will margins thoughts seeing we're margins here, longer-term, you get right get aspect normal then reset think that impact needs your And there to to about, wanted as some like. will the obviously, look But just As that? drive costs XX% XX% Beef what I of to be margins on and just that, you look Foods you higher about

Thomas P. Hayes

Sure.

certainly the and of we'll is we what we're XXXX. that longer-term those So, we with happy quarter Brett, margin margins QX, I see given we about come the expect we last say to And ranges Beef share businesses. back be Pork. guided after are, should probably where the think would close And had talked we what and on where we for

to expect go As it relates it's to going I margins, to Prepared north. continue Foods

So with we're team are spectacular. Grimes that is it the business, Sally that and innovation fueling capital the and driving

excited integrating about. in the done fresh the right more feels right. Being right quarter if that this assets, extraordinarily So our in process. have we're to in When I XX% fiscal in the But bolt AdvancePierre categories, well competing going kicking to perimeter, or efforts are happen commit those this range to to Philly. innovation I'd we is the the store, paying should and be year. back, in extraordinarily Original on for of say part your which integrating assets is, thought really this be XX% like we're looking can't exactly to in that and Certainly,

continuous work. well has certainly team in matter. that team make in synergy and Chappelle even and brands fitness all great the got consumer diversified. operations improvement, private business, foodservice business, does in customer our the and the We've to and The but we're we financial Foods, George businesses operations great extraordinary label. group better has capture our no a plays on continued mindset have small out Prepared that's Now, in of

said, should that we in like you around XXXX longer-term, thinking to XX% of the range. So business XX% but be be will XX%,

Brett W. S. Wong

on That's very want helpful. quick a just that. Thank I you. follow-up

stuff break integrating about kind talked I that? in cost synergies know forward to just the AdvancePierre, as you're but be synergies going you've not as some you're synergies as integrated and much, this talked revenue the the going Obviously, going of seeing you're past. of kind out of you've what kind wondering of to You about really

Thomas P. Hayes

Yes.

are weren't didn't in have some are didn't private We some categories, capacity. We retailers that now we So products. say have maybe been with we label I have working we that in. would the there which the

offering one. the and valuable, Foods, number before is, as were taste, about a tailwinds. eating the two like even protein extraordinarily Philly certainly, way, People more We which, so we got oh, And point a of is are always matters. number business, that's collective the Tyson product. foodservice excited supplier that we steak are Point now play. on They It's huge the They like valuable. by tremendous the it. value. now breadth

customer I and And foodservice say store. brands so foodservice in the retail, also the perimeter the of come would we're to the see form convenience. revenue of starting and synergies retail

nice earnings we to channel single continue have. hits So business it breadth helps what's really with we portfolio. about is it our almost power every do us which allows It the that that in, that

Brett W. S. Wong

Thanks Great. much. so

Thomas P. Hayes

Welcome.

Operator

Please be David will Carlson ahead. KeyBanc from question next Markets. of The go Capital

David Carlson

guidance, substantially taking than the were question. we Hey. anticipating nudged you first. for full-year. Thank you also Hey, were the better fiscal higher operating a And for little during segment Beef my Tom, the the results then

And of in still XX%, you profits mentioned seeing export in then are Tyson accounting Beef sense a quarter? is believe, overall I related Thank which, to reality, the have volume segment? You early relatively I for you. beef And any and the higher mix growth you during might exports, guess, up but of the can give for exports stage. all you sales commentary a China us

Thomas P. Hayes

start part Yeah, so exports that stream. overall but still with of bigger, China. I'll China hoping it's certainly is up We're small. something for and revenue are

I I import so specific it to another growth. give relates as we maybe to I XX% for the think It's necessarily go year-over-year thing let I me But don't mentioned said. industry, up didn't. this, but guidance back our

them There brand take we the retailers a products sell we. Prairie, do and focused to that team or how As continue is foodservice has higher and margin, you business that's helpful. be a the going in progress And so into work attributes, on that beef so were attributes, either advantage so an beef We'll in to is in really to are the Open move happy margins, have like with continue great the certainly, strong we on look marketplace, cuts, that hit much continue what growth give export at our to more take probably branded our basis, of I quarter-to-quarter, you look export about position specialty specific us volume. and rates what to on those our would area. customers,

David Carlson

Thank you.

Thomas P. Hayes

Welcome.

Operator

Capital from Zaslow question Ken of final morning the be will Please BMO Markets. And this go ahead.

Kenneth Zaslow

Hey. Good morning, everyone.

Thomas P. Hayes

Ken. Hey,

Stewart F. Glendinning

Good morning.

Dennis Leatherby

Morning.

Kenneth Zaslow

from lot So you what the from you're you've of gone a all your that, and but structure, better? in so cost guidance what's yet largely issues fuel keeping with actually through going increased line previous is,

Thomas P. Hayes

just accelerate months. in say XX is Well, business last areas on but we put our to we what have everything is of going in the the what XX continue that or place I'd well, based

to but thing, point volume just You've Those Ken, I They we partnering heard with consistently building, efforts of innovation right? are interacting the us. look so, us one if them. for are also customers they're brand off talk with off to growth to paying say us I'd not and And paying and those products, and were that. how about with are

And to point for cost relationships thing, then so, those deal things coming for sort but yes, I'd in when if us us, just thing, to those overcome would customers. easier costs, two not ability that one it's it we good back the innovation. work The us to on that. I question, And were with industry-wide tandem. the And to be point of have us to hit

Kenneth Zaslow

follow-on because anecdotal you of some give AdvancePierre? And us is can my changes just happening that's

Thomas P. Hayes

think I like talking about Anecdotal just... changes? you're

Kenneth Zaslow

about out? what how changing is actually some affecting talked changing the Are you of that Jimmy what what's that's outlook – throughout, cost are changing? your What is of going the on changing? you like savings AdvancePierre, is sandwiches changing? how coming What are – – the how How costs what is anecdotes addition is made? are Dean but were been Are you –

Thomas P. Hayes

Okay. Yes.

Kenneth Zaslow

to? relate On we a that more level can realistic

Thomas P. Hayes

Okay. Procurement.

it's better, sandwich-making, well much and were There things that done have really are particularly procurement us. with and so we a on were The customer We been are our they did of some has what historically AdvancePierre the brands, contracts do Jimmy stronger and some we in for sandwich-making, big with doing suppliers allowed doing much Dean. certainly that what have area well focus what is us to things better. bringing there

So, taking we're the specific forward, design sure of example, the best those. we're making as going we that and as network executing both a

the us way. had. it talk about APF AdvancePierre They heard approach call the You've operational to that excellence

on the I'd Chappelle, the business by out We focus is Foods it, costs. have now the entire is and agility. in The say APF take that's non-value-added we two. mind. number the that making number team And running taken lean, any way, George that sure accountability, and embraced so with the Prepared led and three

we I faster, had being So be, that's the more think the AdvancePierre as They're customer-focused doing agile us we while, but and for They part make more making things that were, are table, but and are to constantly we on be the of center already customers' the to is team sure that strong impact. different it's customer, business. haven't a at brings. I this. running in decisions an the so focused as talked think that's agility of growth a about this the pushing can Sally that

Kenneth Zaslow

Thank it. you. Appreciate Great.

Thomas P. Hayes

Hey, you're welcome.

Operator

like And, ladies and for conference session. Mr. Tom closing Hayes to hand to gentlemen, over this will his conclude our the would I back question-and-answer remarks.

Thomas P. Hayes

Okay. Well, we happier I your great are. where continued in be thanks and for with interest appreciate Tyson the couldn't questions.

thank say the that I for also you our headquarters locations. team to thank and around of are our much So you members in at will very that. plants listening all

have We we team work start. it. say the I to got we've We've got will year. know the fantastic do do. and a off I to Very had a start to to best excited are great

fastest-growing Another record the feed protein great And year. ability that, world We're as of confident our brands. have day. sustainably to a with in the

Operator

disconnect Ladies you for concluded. you, At Thank Thank now your presentation. you and has time, may lines. today's this sir. attending conference the gentlemen,

Tyson Foods (TSN) 8 Feb 182018 Q1 Earnings call transcript