The operator welcomes participants to the Tyson Foods First Quarter 2024 Earnings Conference Call and introduces the company's President, CEO, and other executives. A supplemental presentation is available on the company's website. Forward-looking statements will be made during the call, and participants are directed to refer to the company's SEC filings for more information.

In the second paragraph, the speaker mentions that the company's remarks will focus on adjusted measures and provides a reference for reconciliations. The speaker then thanks everyone for joining the call and shares that the company's fiscal year has started off well with solid performance in Q1. They credit this success to their multi-protein portfolio and their focus on operational excellence. The speaker also acknowledges the efforts of their team members and highlights their disciplined approach to driving cash flow. Finally, they mention the importance of financial strength and prudent cash deployment for future success.

The company is committed to improving performance and addressing inefficiencies. They have seen improvements in their Chicken and Pork divisions and are cautiously optimistic about the future. Despite a slight decline in Q1 share compared to last year, their core business lines have grown overall share since 2019. Consumers are still willing to pay for trusted brands, and the company is focused on balancing customer elasticity and their own costs. The value proposition of their iconic brands is resonating with consumers, as evidenced by the growing penetration rate.

The company is excited about the potential for growth in their product line, as it is only in a third of households currently. They are focused on expanding their foodservice business and improving operational efficiencies. The company is also committed to growing their Branded Foods business through innovation and strong partnerships. In the Chicken segment, there has been a third consecutive quarter of growth, driven by operational improvements and improving market conditions. In Beef, limited cattle supply led to spread compression, but the company is focused on being efficient and has identified opportunities for improvement. In Pork, lower hog costs have led to improving spreads.

The team's focus on operational execution led to improved profits in Q1, and their priorities for the year include improving financial strength and driving cash flow. They have closed several older and less-efficient plants and are looking for opportunities to increase efficiency. In Chicken, they are focused on enhancing competitiveness, while in Prepared Foods they aim to build growth momentum and increase brand penetration. In Beef, they acknowledge challenges and are prepared for multiple outcomes during the current cattle cycle. In Pork, they are seeing improvements in operational execution. Sales in Q1 grew slightly, but adjusted operating profit declined due to lower profitability in Beef. However, there was significant improvement on a sequential basis. Adjusted EPS nearly doubled compared to last quarter.

In the first quarter, the Prepared Foods segment saw flat revenue, with volume growth from the Williams acquisition and foodservice business recovery. However, lower pricing due to retail mix and increased expenses offset this. In Chicken, sales declined due to lower production, but AOI more than doubled thanks to strategic actions and efficiencies. Beef saw a 6.4% revenue increase, but AOI decreased due to compressed spreads and an unfavorable inventory valuation adjustment.

In the first quarter, the company's pork revenue decreased slightly due to lower pricing, but AOI increased thanks to lower hog costs and improved execution. The International business also showed improvement, despite a decline in sales. The company remains committed to building financial strength, investing in the business, and returning cash to shareholders. Q1 saw strong operating cash flow and disciplined capital management. The company's net leverage declined and they ended the quarter with over $3.7 billion in liquidity. Their balance sheet management approach remains unchanged and they are committed to maintaining an investment-grade credit rating and returning net leverage to at or below 2 times net debt to EBITDA. The company remains committed to a disciplined yet opportunistic capital allocation strategy and is confident in their improved financial performance for fiscal 2024.

Despite uncertainties in the new fiscal year, the company has only made modest changes to their outlook. They will focus on managing the business for profit and cash generation, and are expecting flat sales for the year. The Prepared Foods segment had a strong start and is expected to continue with strong volume results. The Chicken segment is also expected to improve, leading to a tighter AOI guidance range. In Beef, spreads are compressing as expected but there is uncertainty surrounding the cattle cycle. The company is maintaining their full-year guidance for Beef. In Pork, strong Q1 results have led to an increase in guidance. The company is maintaining their total company AOI guidance and expects interest expense to be $400 million and a tax rate of 23-24%.

In paragraph 9, the speaker discusses the company's plans for controlling spending and generating positive free cash flow for the year. They also mention the impact of seasonality and weather on their business, but overall express confidence in the company's prospects and position in the global protein industry. The call ends with instructions for Q&A. The first question is about the state of the company's various segments.

Donnie King, CEO of the company, discusses the performance of the Prepared Foods division in the first quarter and its potential for growth. He mentions the challenges faced in the Chicken, Beef, and Pork businesses, but overall the company is seeing positive momentum. The company is cautiously optimistic for the rest of the fiscal year, taking into account various factors such as weather events and macro uncertainty. King emphasizes the importance of continuing to work hard and improve performance in all areas of the company.

The company is focused on controlling expenses and improving cash flow to support their dividend. They are taking steps to modernize their operations and are optimistic about their future. In the Prepared Foods segment, they saw strong performance in both retail and foodservice, regaining lost share and acquiring Williams sausage. Their branded core business line is a key focus and they have a competitive advantage. In the foodservice sector, they saw 3% growth due to customer expansion and are diversifying their customer base and building digital capabilities. In the Beef segment, the company is seeing strong performance.

The speaker discusses the recent cattle inventory report and the lack of heifer retention in the industry. Despite some improvements, the data does not indicate significant heifer retention and high cattle supplies are projected for the near future. The speaker also mentions the impact of interest rates on heifer retention.

The speaker discusses the profit drivers for the Chicken business in the quarter and mentions a $170 million feed tailwind. They also mention that the first quarter is tracking towards the high end of their segment profit guidance for the year. The speaker then goes on to mention network moves and operational performance improvements that have led to an adjustment in their guidance range. They also address concerns about their return on sales guidance peaking.

The company is not providing specific guidance for quarter three and four, but they believe it could be similar to quarter one. They have seen improvements from network moves and expect to see more tailwinds than headwinds in the market. They estimate the year's earnings to be between $500 million and $700 million. They also mention improvements in their fundamentals, specifically in live performance.

The company has a strong S&OP process and high forecast accuracy, allowing them to sell out and fill orders with less working capital. There has been a return to pre-COVID levels of consumer demand elasticity, and the company is prioritizing health and profitability when determining pricing strategies. Dark meat and wing demand is strong, and there has been a slight shift towards foodservice. There is competition in the Prepared Food industry, but the company is focused on understanding category dynamics and meeting consumer needs when making pricing decisions.

The speakers discussed competition and how it is a factor in their business, with strong competitors in every space. They mentioned a strong performance in certain categories and headwinds in others. They are focused on their own retail business and maintaining their leadership position in eight out of ten categories. They are using strategies such as high ROI merchandising, increasing MAP investment, strong innovation, and enhancing their price pack architecture to address pricing and maximize their distribution footprint.

The speaker discusses the steps taken in the marketplace and their confidence in the full-year outlook. They also mention the weaker export data for chicken but note that demand for leg quarters is still strong. When asked about the second quarter, they mention operational headwinds and disruptions from weather, but believe that improving commodity fundamentals and low grain prices may offset these challenges. However, they are not able to quantify this offset at this time.

The speaker discusses the cautious outlook for the chicken market, citing volatility in the beef market and projections for increased pork supply. They also mention ongoing operational improvements in the chicken sector, but caution that there is still uncertainty and a lot of time left in the year. In regards to the cash flow statement, they mention that there may be room to tighten the budget, but it is not set in stone and there are potential improvements in the future.

The speaker discusses the performance and outlook for the Pork segment, mentioning solid performance in the first quarter and potential for continued success in the second quarter. They attribute this to lower hog costs and improved execution, and highlight the strong team leading the Pork business.

The speaker discusses the improvements made in procurement and customer service, but acknowledges that there is still room for more. The first quarter is typically the strongest quarter, and the team is focused on controlling what they can and taking advantage of market trends. On the Beef side, there may need to be solid improvement in the second half of the year to meet expectations, but there is uncertainty due to current conditions.

The speaker, Brady Stewart, addresses a question about the company's adjusted operating income in the first quarter and clarifies that the rapid decline in cattle futures was the main driver for the inventory valuation adjustment. He also mentions that the company is focused on operational efficiency and balancing supply and demand in order to improve in the future. He also highlights the company's well-capitalized asset base as a strength in managing through market conditions.

During a conference call, Donnie King and John from Barclays discuss the dynamics of the export business, particularly in Beef. Brady Stewart explains that the domestic beef industry is at a disadvantage due to high supplies from competing countries in the southern hemisphere. However, strong domestic beef demand has kept cut-out values high. Wes Morris adds that chicken parts have been interrupted due to COVID-19 and there is a decrease in frozen inventory for leg quarters in the US.

In a recent earnings call, Tyson Foods reported that their inventory is under control and pricing has been favorable. They did not disclose the specific volume contribution of Williams sausage to their Prepared Foods business. When asked about feed costs, they stated that they have moderate exposure and some favorability in the back half of the year. In terms of new customer wins, they did not specify any particular products or channels driving growth.

Melanie Boulden and Donnie King of Prepared Foods discuss the growth and success of their products in foodservice and retail. They mention strong distribution with existing customers and new innovations, such as the Jimmy Dean Maple Griddle Cake. Donnie King adds that they had to give up some business during the pandemic, but are working to regain it. Michael Lavery asks about the lift in the quarter and the strategic actions, wondering if it will put them above the 5-7% margin range.

Donnie King and John R. Tyson discuss the company's recent financial performance and their plans for the future. They highlight the company's consecutive quarters of over $100 million in AOI improvement, driven by operational excellence and plant closures. They mention that the current market conditions for grain and meat are offsetting each other, but the company is focused on operational excellence and driving up raw material to increase value-added and branded products in the Chicken segment. They also mention that the strategic moves they have made will have a sustaining impact on the business by reducing costs, avoiding investments in older assets, and targeting a desired return on investment. They do not provide guidance for the future, but emphasize the importance of operational excellence and cost reduction in driving the company's success.

The company has refocused its growth strategy to be demand-backed and is seeing favorable trends in certain subcategories within the Chicken segment. They aim to be a best-in-class chicken company in terms of margins. The switch to NAIHM has improved live performance results. In the Prepared Foods segment, there is intense promotional activity and the company is focused on controlling what they can and increasing marketing investment to engage consumers.

Tyson Foods is expecting their second quarter to be softer in terms of operating income, but they are still projecting for leverage to continue to come down. This is due to their efforts to become more efficient with working capital and their projected decrease in CapEx. They are aiming to end their fiscal year in a better net leverage position than the previous year.

The company plans to continue investing in their business and supporting their dividend through capital allocation. The shift towards foodservice has caused some pricing pressure and a potential margin differential, but the company is regaining volume in foodservice and maintaining their iconic brands in retail.

The speaker, Alexia, adds that one of the reasons for the company's solid quarter and continued success is their focus on controlling operational efficiency. This includes improving service levels, asset utilization, and supply chain execution through automation. While the discussion has mainly focused on the top-line, the company is also working on improving the bottom-line. The CEO, John R. Tyson, emphasizes that while the range for Chicken and Pork has been adjusted, the total company guidance remains at $1 billion to $1.5 billion. This range is designed to account for various macro factors and the interplay between all segments. Any revisions to the guidance will be given as necessary throughout the year.

The article paragraph discusses the promising start to the year for Tyson Foods, but also mentions the unpredictable factors that could affect their success. Donnie King, a representative from Tyson Foods, thanks their team members for their contributions and talks about the company's strategy and leadership. He acknowledges that there is still work to be done, but is confident in their ability to drive long-term opportunity and shareholder value. The conference has now ended.

This summary was generated with AI and may contain some inaccuracies.