The paragraph introduces the Tyson Foods Fourth Quarter 2024 Earnings Conference Call. The call is facilitated by Sean Cornett and features remarks from Tyson's CEO, Donnie King, and CFO, Curt Calaway, followed by a Q&A session. Additional executives are present, and a supplemental presentation is available online. The discussion will include forward-looking statements about future expectations, which are subject to risks and uncertainties. These statements are protected by the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, with disclaimers and further risk details available in the company's SEC filings. Tyson Foods assumes no obligation to update these statements.

The paragraph outlines the strong financial performance of the company in the fourth quarter and fiscal year 2024, with notable improvements in adjusted operating income (AOI) and earnings per share (EPS), both of which significantly increased compared to the previous year. The company achieved a turnaround in its chicken segment and saw strong results in prepared food and improvements in pork, despite challenges in beef. Free cash flow more than doubled, driven by increased AOI and effective capital expenditure management. The paragraph also credits the company's workforce for their contributions to this success and provides an optimistic outlook for fiscal year 2025, anticipating continued growth in AOI and financial strength.

The company expects more than $2 billion combined AOI from prepared food and chicken, highlighting the advantages of their diverse portfolio and focus on business fundamentals. In fiscal 2024, prepared food showed stable profitability and 2% AOI growth, despite startup costs at a new plant. Chicken performed above expectations due to lower grain costs and improved operations, achieving the best AOI in seven years. While beef results exceeded expectations in Q4, profitability declined overall due to compressed spreads. The company remains optimistic about long-term shareholder value.

The paragraph discusses the challenges in the cattle industry and highlights the company's success and future strategies. Despite difficulties in the cattle cycle, the company focuses on factors within their control, achieving solid results in fiscal 2024, notably in pork due to improved herd health and demand. Looking ahead to 2025, the company emphasizes operational excellence through modernization, scale efficiencies, and performance standards. They aim to build on their strong brand presence by enhancing consumer engagement and expanding market penetration through innovation. Additionally, the company plans to invest in digital technologies like big data and AI to optimize decision-making, operations, and customer engagement.

The company is enhancing its digital demand and supply planning, focusing on capital allocation to drive growth, and prioritizing team development. In 2024, it improved cash management and aims to maintain this discipline in 2025 by managing capital expenditures and working capital to boost free cash flow. The company is targeting increased profitability in prepared foods by improving operational efficiency, reducing waste, and leveraging data analytics to align with consumer preferences and drive innovation. For example, they launched new products like Spicy Chicken Honey Biscuits to tap into consumer trends. Their successful innovations and top-performing products are being used to expand distribution. Operational excellence has delivered significant efficiencies in their chicken segment.

The paragraph outlines Tyson's strategy for 2025, focusing on enhancing operational efficiency and customer service through disciplined planning and strategic partnerships. It highlights investments in expanding their value-added chicken portfolio and the introduction of new packaging and advertising to strengthen their market position. Tyson aims to continue capital spending on high ROI areas like their fully-cooked portfolio and new facilities to boost financial performance and competitive standing. Additionally, they are preparing to optimize their beef operations for when the cattle cycle improves.

The company is aligning its operations, from procurement to distribution, to meet consumer demand, particularly in the beef sector with new pre-seasoned products. They've improved cost structures and efficiency and progressed in operational improvements, especially in their pork business, aided by network optimization. Data analytics are being scaled to enhance product mix and yield. The focus on controlling variables aims for sustainable cash flow and operational success in fiscal 2025. Additionally, there is positive momentum in their prepared foods and chicken sectors, despite challenges in the beef cycle.

The paragraph discusses the company's financial performance and highlights key improvements in profitability. It notes that value-added businesses are expected to enhance earnings stability, with prepared foods showing significant growth in adjusted operating income (AOI) in fiscal '24. The company anticipates further earnings increases in fiscal '25. Total company net sales rose, driven mainly by beef and chicken. The fourth quarter and full-year AOI and adjusted earnings per share (EPS) showed substantial growth, largely due to improved chicken profitability. In Q4, prepared foods experienced a decline in revenue due to lower retail volume but showed increased AOI because of lower raw material costs, operational efficiencies, and reduced marketing expenses. Overall, the segment achieved its best AOI performance in six years.

In the latest quarter, chicken sales rose by 2.3% with a slight year-over-year volume drop but a 1% increase from Q4 fiscal '22, enhancing alignment between supply and demand. The adjusted operating income (AOI) in chicken rose to $356 million, propelled by lower input costs and operational efficiencies. For the year, chicken AOI grew by nearly $1.1 billion, marking the strongest performance since fiscal '17. Beef revenue increased by 4.6% due to higher volume, but AOI declined due to expected compressed spreads. Pork revenue fell by 3.7% due to lower pricing but was partially offset by increased volume, with AOI rising by $27 million due to better operational execution. For the year, pork AOI rose by $270 million. The company focuses on maintaining financial strength, business investment, and returning cash to shareholders while retaining its investment-grade credit rating. Full-year operating cash flow jumped by $840 million, surpassing CapEx, and fiscal '24 free cash flow rose by over $1.6 billion. Free cash flow reached nearly $1.5 billion, more than doubling the total dividend.

The company announced a dividend increase for the 13th consecutive year, highlighting confidence in cash flow generation and maintaining the dividend as the primary method for returning cash to shareholders. They ended the fiscal year with $4 billion in liquidity after repaying $1.25 billion in senior notes, reducing net leverage to 2.6x. Their goal is to achieve a net leverage of 2x net debt to adjusted EBITDA. For fiscal '24, their strategy successfully enhanced financial strength. Looking ahead to fiscal '25, they anticipate sales being flat or slightly down, with growth in chicken and prepared foods offset by declines in beef and pork. They project an AOI of $1.8 billion to $2.2 billion, a 10% growth driven by prepared foods and chicken. Key financial projections include $380 million in interest expenses, a 24-25% tax rate, and CapEx between $1 billion and $1.2 billion. They expect free cash flow to surpass $700 million, aligning with the expected annual cash dividend. The AOI breakdown by segment will commence with prepared foods.

The company anticipates significant growth in the prepared foods segment by focusing on operational improvements, projecting AOI between $900 million and $1.1 billion for fiscal '25. They plan to build on chicken operational improvements with a reinvestment in their value-added portfolio, targeting a chicken AOI of $1 billion to $1.2 billion. The beef segment faces uncertainties, with expectations of a loss ranging from $400 million to $200 million, while the pork segment anticipates similar profitability as the previous year, with AOI between $100 million and $200 million. Improvements in the international business are expected to continue, contributing to overall solid earnings growth. The company highlights the strength of its multi-protein, multi-channel portfolio and significant financial improvements in fiscal 2024.

The paragraph highlights the achievements of Tyson Foods, attributing them to the team's discipline and strategic focus, and expresses optimism for future improvements and progress in fiscal 2025. Acknowledgment is given to team members for their commitment, and Kyle Narron is introduced as the new Group President of Prepared Foods, succeeding Melanie Boulden. Melanie's contributions and ongoing role as Chief Growth Officer are praised, emphasizing her impact on growth and innovation. Kyle's seamless transition and leadership are expected to sustain business momentum. The paragraph concludes with a handover to Sean for the Q&A session, noting the usual cautions on statements and measures.

The paragraph contains an excerpt from a Q&A session in which Ben Theurer from Barclays congratulates Donnie King and his team on a successful fiscal year 2024. Ben asks about the prospects for 2025, noting that the previous year exceeded expectations. In response, Donnie King expresses satisfaction with the company's performance in Q4 and throughout fiscal 2024, highlighting the benefits of their multi-protein portfolio. He explains that the company has seen strong cash generation and reduced net leverage ratio, and outlines several enterprise priorities that contribute to optimism for growth in 2025. These priorities include operational excellence, customer focus, leveraging data and digital tools, capital allocation, and team member development, all of which are driving efficiency, brand expansion, innovation, improved decision-making, and a strong company culture.

In fiscal year 2025, the company anticipates that both prepared foods and chicken will each contribute about 50% to its Adjusted Operating Income (AOI), marking a shift to a more valuable product mix. Prepared foods and chicken are expected to drive 10% of AOI growth. Prepared foods have shown the best performance since 2018, with expectations of double-digit profitability growth. The chicken segment also saw its best performance since 2017, with expected high single-digit profitability growth. Pork experienced significant AOI growth due to improved spreads, and similar profitability is anticipated for 2025. Although beef faces spread compression due to tight cattle supply, similar profitability is expected. International performance has improved and is anticipated to continue improving in 2025. Overall AOI growth for 2025 is expected to be 10%, on a range of $1.8 to $2.2 billion. Key strategic points include shifting to branded value-added products, increasing household penetration, emphasizing proteins in diets, improving returns on invested capital, and executing operations with excellence. Volume for beef and pork is expected to decrease slightly.

The paragraph discusses the company's improved performance in its chicken business compared to previous years. Despite having originally projected an AOI of up to $700 million, they achieved over $1 billion in FY '24, with a forecast of $1 billion to $1.2 billion for FY '25, indicating high single-digit growth. The company also invested around $100 million in new advertising and product innovation. Wes Morris mentions that a significant operational improvement of over $0.5 billion was made by aligning supply and demand, resulting in their strongest Q4 ever, all while setting the stage for future revenue growth and consumer engagement.

The paragraph discusses the company's recent improvements in product quality, innovation, packaging, and advertising, which have exceeded consumer expectations and resonated with both core and younger shoppers. It highlights the company's strong business outlook, particularly for 2025, and emphasizes the effective teamwork between business growth and R&D. The company has improved its speed and go-to-market strategies, resulting in a strong pipeline of new products. The speaker is optimistic about 2025, citing a good team, better fundamentals, and stable markets.

The paragraph discusses a company's strategy to improve profitability by implementing a performance improvement plan to counteract inflation and investing $100 million in value-added initiatives. Despite slightly lower volumes, the company has begun adjusting its product mix to enhance profitability. The company boasts a strong cost structure and aggressive market strategies for 2025, claiming resilience against market volatility. They are confident in their guidance considering various factors like macroeconomic impacts, industry supply, export effects, weather patterns, and feed costs. Heather Jones from Heather Jones Research asks about the year-on-year growth and operational changes in the chicken business. Donnie King responds by emphasizing their focus on continuous improvement and operational excellence, which they plan to maintain going into 2025.

The paragraph discusses a financial improvement made by a company that's independent of market conditions, valued at $500 million to $700 million annually. Heather Jones asks about the beef production, noting unexpected high production due to new feed additives leading to longer time on feed and affecting the price gap between beef and chicken. Brady Stewart responds by highlighting strong beef demand from a price perspective, with a 2% increase in choice cutout prices from 2023 to 2024, indicating good demand. The discussion also mentions the complexities of dissecting the demand by specific beef cuts.

The paragraph discusses the current state of the beef market, noting flat prices for ribs and loins but significant price increases for lean trims and grinds. It highlights that beef demand remains strong, leading retailers to utilize promotional strategies for ribs and loins to boost sales. The text further mentions that beef demand is expected to remain steady into 2025. Wes Morris adds that a new plant in Danville, Virginia, launched in 2024, has sold out its fully cooked wines, impacting the 2025 revenue plan. Ken Goldman of JPMorgan then prompts a discussion about chicken and changes in operating income expectations.

The paragraph discusses concerns about a potential increase in chicken supply impacting Tyson's guidance. Donnie King responds by stating that their guidance of a 1 to 1.2 growth rate already considers these factors. He highlights the company's strategy of shifting from commodity chicken to value-added branded products, mentioning the growth in their Danville, Virginia plant and potential expansion to another plant. Wes Morris adds that Tyson is outperforming the industry in meeting strong poultry demand despite challenges in hatch and livability, noting a 2.6% increase for the full year in their performance.

The paragraph discusses the reasons for growing chickens, emphasizing that they are primarily raised for strategic customers and to serve the company's fully cooked and par-fry business. The speaker expresses confidence in the company's strong position regardless of industry changes. A follow-up question about potential impacts of a new presidential administration on the business, such as labor tariffs and regulations, is addressed by Donnie King. He emphasizes the company's adaptability over its 90-year history and intention to work with the incoming administration while focusing on controllable factors. A new question from Pooran Sharma seeks clarity on the company's outlook for beef, particularly concerning heifer retention and herd rebuilding.

The paragraph discusses Tyson's financial outlook for its beef segment. Donnie King mentions that despite challenges and a forecasted operating loss between $200 million and $400 million, the situation in 2025 is expected to be similar to 2024, factoring in various market conditions like heifer retention and heavier weight cattle. Brady Stewart highlights Tyson's efforts to control aspects like operating costs, which have improved in 2024 compared to 2023 despite inflation and labor challenges. He emphasizes the complexity of the current beef market cycle, noting record cutout prices and cattle weights, and how these factors influence Tyson's business outlook.

The paragraph discusses the implementation of advanced data platforms to enhance business analysis and decision-making, which are crucial for achieving meaningful outcomes. The importance of understanding high demand and cutout values is emphasized, along with initiatives to improve yields and optimize lean trim conversion into products like chubs or patties. The company is focusing on innovation and convenience for customers by offering diverse beef product platforms and making significant efficiency improvements year-over-year. Pooran Sharma then asks about the optimization of the company’s network, including plant closures and benefits from operational excellence.

In the paragraph, Donnie King discusses Tyson Foods' approach to future operations, emphasizing the importance of controlling controllable aspects of the business and executing with excellence across all areas. When evaluating their network, they consider factors like the age, profitability, scale, competitiveness, and future capital requirements of their assets to make long-term decisions, despite the challenges involved. Thomas Palmer from Citi then asks about the specifics regarding expected drivers for prepared foods, including mix, volume expectations, cost inflation, and productivity, and inquires about the timing of operating profit growth. Donnie King acknowledges these points and notes that 2024 was the best year since 2018 for Tyson Foods.

The paragraph discusses the success and future plans for a prepared foods business. It emphasizes efforts to reduce waste, foster consumer connections, and introduce innovative products. Achievements in 2024 include the best performance in six years, with improvements in operational efficiency, service levels, and sales metrics. The company anticipates 10% growth from 2024 to 2025 and highlights the strategic focus on operational discipline. Kyle Narron thanks the team for their contributions and notes substantial commercial success, including increased distribution and successful product launches like Jimmy Dean griddle cakes and chicken biscuits.

The paragraph contains a discussion about the company's strategy and operational focus, highlighting that their increased distribution is driven by high trial and repeat rates, leveraging data and digital tools for promotional efficiency and long-term growth. They emphasize that their profitability improvements are controllable and will continue focusing on growth initiatives such as core distribution and innovation. Operationally, they aim to maintain standard performance, reduce complexity, and eliminate waste to carry momentum into 2025. Curt Calaway adds that the year might be more balanced with less seasonality due to operational efficiencies. The operator then introduces a question from Michael Lavery of Piper Sandler about chicken supply, noting USDA's expected 3% growth and a recent 6% increase in egg and chick production, seeking the company's expectations.

In the given paragraph, Wes Morris discusses the ongoing challenges in the poultry industry, particularly with hatching and livability issues that prevent increased egg sets and chicks from reaching processing plants. Avian influenza and metapneumovirus contribute to this tough environment, expected to continue through 2025. The impact is somewhat mitigated by increased bird weights, driving a 2.6% increase in weight per head. Michael Lavery and Kyle Narron discuss the plant startup costs, noting a $20 million impact for FY '24, with lower depreciation affecting overhead in the year's first half. Andrew Strelzik then inquires about operational improvements in the beef segment, to which Brady Stewart replies that 85% of the business is affected by uncontrollable market spreads, though there are internal efforts to improve the situation.

The paragraph discusses a company's strategic financial planning and capital deployment. It highlights the opportunity to optimize yield and minimize losses in a challenging business cycle, emphasizing the use of its resources. The conversation then shifts to capital deployment and cash flow generation, noting a reduction in leverage from 4.1x to 2.6x over the year. Despite maintaining a disciplined approach to cash management in 2024, the company invested $1.1 billion in capital expenditures (CapEx) and plans to invest $1 billion to $1.2 billion in 2025. Additionally, the company expects free cash flow to exceed its annual dividend, estimated at around $700 million.

In the paragraph, the speaker discusses their company's capital allocation priorities, emphasizing the importance of building financial strength, investing in the business, and returning cash to shareholders. They mention an increase in dividends and a commitment to maintaining an investment-grade credit rating and a leverage target of at or below two times. Donnie King highlights a focus on improving returns on previously invested capital as a current priority. The session ends with expressions of gratitude for interest in Tyson Foods and a note that the conference has concluded.

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