The paragraph is an introduction to the Tyson Foods Fourth Quarter 2024 Earnings Conference Call. The operator announces the start of the call, noting that participants will initially be in listen-only mode with opportunities for questions later. Sean Cornett from the Investor Relations team introduces the event and the key speakers, including Tyson's CEO Donnie King and CFO Curt Calaway. Various other executives are also mentioned. A supplemental presentation is available online for reference during the call. The company will discuss forward-looking statements, highlighting that these are subject to risks and uncertainties that could cause actual results to differ significantly from projections.

The paragraph discusses a company's strong start to fiscal 2025, highlighting robust first-quarter results that surpassed expectations. Key achievements include significant improvements in the Chicken, Beef, and International segments, and solid performance in Prepared Foods. The company has seen three consecutive quarters of year-over-year growth in sales, adjusted operating income, and adjusted earnings per share. Specifically, adjusted operating income increased by 60%, and the margin expanded by 170 basis points compared to the previous year, while adjusted earnings per share grew by 65%. The company also reduced its net leverage ratio from 4.1 times at the end of 2023 to 2.3 times. These accomplishments occurred despite challenges from the current cattle cycle.

The paragraph highlights the increasing consumer focus on protein consumption, as evidenced by a study showing a rise in the number of U.S. consumers aiming to increase protein intake from 59% in 2022 to 71% in 2024. The company has successfully managed its diversified protein portfolio, particularly using chicken to offset challenges in beef. Strong cash flow, resulting from a disciplined approach to capital expenditure and working capital, is being used for business investment and dividends. Additionally, the company successfully lowered its net leverage ratio, aligning with its long-term financial goals. For Prepared Foods, operational enhancements and strategic innovations are driving performance improvements for fiscal 2025, with significant progress in key categories like bacon, snacking, and smoked sausage.

The paragraph discusses the company's growth driven by innovation and improved operational execution, despite challenges like input cost inflation. It highlights strong performance in the Chicken segment, with significant year-over-year growth in adjusted operating income and volume growth, particularly in food service. The company aims to strengthen long-term partnerships and meet customer demands, leading to a raised full-year adjusted operating income outlook. In the Beef segment, first-quarter results exceeded expectations, but challenges like limited cattle supply and seasonality may impact future performance, with unchanged expectations for fiscal 2025. The Pork segment met expectations, although higher haul costs compressed spreads, but operational improvements around yield, mix, and spend continued to be effective.

In fiscal 2025, the company's priorities are focused on cash flow, operational excellence, innovation, and expanding market presence through strengthened customer partnerships and efficient product strategies. With iconic brands like Tyson, Jimmy Dean, and Hillshire Farm maintaining consumer interest, the company sees growth potential in underpenetrated segments. Digital transformation, particularly using generative AI in the foodservice channel, enhances customer experience and provides insights into customer needs. The company emphasizes disciplined capital allocation and prioritizes talent development to ensure future success. Confident in their fiscal outlook and long-term strategy, they highlight the importance of their multi-protein portfolio and brand strength.

The company reported strong performance in the first quarter, with enterprise net sales growing by 2% year-over-year, driven by Beef, Pork, and Chicken. Adjusted operating income and earnings per share increased significantly, reaching their highest levels in nine quarters. In Prepared Foods, sales declined due to a dynamic consumer environment affecting retail volumes, and higher raw material costs. However, there are plans to recover these costs through price increases. Operational improvements are underway, and Chicken sales are rising, particularly in the foodservice channel with value-added products gaining popularity.

The company achieved record first-quarter performance with nearly doubled adjusted operating income, thanks to lower input costs and improved operations. Beef revenue rose due to higher volumes and carcass weights, while Pork revenue increased from higher cutouts, despite tightened spreads. International operations saw record adjusted operating income, driven by strong results in Asia and low raw material costs. Financially, the company maintained its focus on capital allocation, generating $1 billion in operating cash flow and $760 million in free cash flow, while distributing $175 million in dividends after increasing the rate to $0.50 per share. Net leverage improved for the fifth quarter, ending at 2.3 times. With $4.5 billion in liquidity, the company paid off a $750 million term loan to strengthen its financial position and enhance long-term shareholder value, and it provided an updated outlook for fiscal 2025.

The company is optimistic about achieving improved financial performance compared to fiscal '24, raising its sales guidance to flat or up 1%, driven by strong protein demand. Total adjusted operating income is expected to be $1.9 billion to $2.3 billion, with a projected interest expense of $375 million and a tax rate of 25%. CapEx will be tightly controlled at $1 billion to $1.2 billion, and free cash flow for the year is anticipated to be $1 billion to $1.6 billion, despite typical second-quarter seasonality. Prepared Foods is projected to achieve $900 million to $1.1 billion in adjusted operating income, with significant internal improvements. Chicken's guidance has been raised to $1 billion to $1.3 billion, while Beef and Pork guidance remains unchanged with expected losses and gains, respectively, due to operational and market factors. The international business continues to gain profitability.

In the paragraph, the company reports it expects international and other income to range from $50 million to $100 million this year, following a similar amount last year. Donnie King expresses gratitude to the company's 138,000 global team members, customers, and suppliers for their contributions to success. He mentions the company's optimism for fiscal 2025 due to increased consumer focus on protein, market leadership, and a strong brand portfolio. The company is committed to financial strength, shareholder returns, and operational excellence. He then hands over the session to Sean Cornett for the Q&A, during which Heather Jones from Heather Jones Research asks about key investor takeaways from their strong quarter results. Donnie King notes satisfaction with Q1 results and highlights the benefits of their multi-protein, multichannel portfolio.

The article highlights the strong Q1 performance, marking the best quarterly results in over two years, with three consecutive quarters of growth in sales, adjusted operating income, and earnings per share. The company's strategy to bolster its foundation and expand its branded and value-added businesses is proving successful. Moving forward, the focus will be on increasing household penetration of branded and value-added products, capitalizing on the trend of increasing protein consumption. Segment-specific highlights include record performance in the Chicken segment, better-than-expected results in Beef, and alignment with expectations in Pork and Prepared Foods despite some timing issues. International operations also posted record adjusted operating income, particularly in Asia. Looking ahead to 2025, the company aims for double-digit growth in Chicken and Prepared Foods' operating income and has significantly reduced debt and net leverage over the past five quarters.

The paragraph discusses a company's financial and operational strategies. They have built $4.5 billion in liquidity, enabling a $750 million debt reduction, while managing challenges like an unprecedented beef cycle. The company has raised its financial guidance by $100 million to a range of $1.9 billion to $2.3 billion, considering the impacts of tariffs, immigration, and market dynamics. In response to potential tariffs on U.S. pork exports to Mexico, which could affect hog and cattle costs, the company is engaging in contingency planning to minimize disruption. They plan to leverage global expertise and adapt to changing trade conditions, expressing confidence in their ability to succeed and work with the new U.S. administration and Congress.

The paragraph involves a discussion during an earnings call about the challenges facing the beef industry, particularly in relation to the current capital cycle and its unprecedented nature. Ben Theurer from Barclays asks Donnie King about the impact of USDA reports on heifer retention and how it might influence beef results, potentially leading to losses of $200 million to $400 million for the year. Donnie King passes the question to Brady Stewart, who explains that the beef business is cyclical and suggests that they are currently at the bottom of the cycle. He emphasizes the importance of monitoring leading indicators, including improved pasture conditions compared to previous years.

The paragraph discusses potential growth opportunities in cattle herd numbers due to high cattle and feeder prices, which create profitability for cow-calf operators. It mentions a 19% year-over-year decrease in cow harvest numbers, supporting a stable beef cow herd. It also highlights the continued use of pastures for beef cow production. The discussion includes a question from Ben Theurer about seasonal trends and the balance between the four major segments throughout the year. Donnie King initially struggles to hear the question but acknowledges the expectation of usual seasonality into the second fiscal quarter and a balanced performance across the segments in the first and second halves of the year.

In the discussion, Curt Calaway explains the company's expectations for its four major segments moving into the second quarter (2Q) and the second half of the year. He highlights that the Prepared Foods segment will have a different seasonality pattern this year, expecting more balanced performance throughout the year due to efficiency plans, rather than the usual stronger performance in the front half. For chicken and beef, stronger performance is expected in Q1 and Q3, while pork may face seasonal challenges in Q2 due to weather. Andrew Strelzik from BMO raises a question regarding input costs as a continued or increasing headwind and seeks further details on how the company plans to meet its guidance through pricing strategies and anticipated elasticity.

The paragraph features a discussion led by Donnie King and Kyle Narron regarding Tyson's productivity strategies throughout the year, specifically in their Prepared Foods segment. King mentions the company's efforts to expand distribution, innovate, and optimize operations despite Q1 challenges. Narron shares progress in these areas, noting a 40 basis point increase in distribution share, and highlights the success of key products like Jimmy Dean Bacon and Hillshire snacking items. He also celebrates the strong market performance of Jimmy Dean Griddle Cakes and chicken biscuits, both marking significant milestones in sales and growth, while expressing enthusiasm for upcoming product launches.

The paragraph discusses the company's strategic initiatives to optimize operations and maintain strong protein demand despite input cost inflation affecting margins. They are confident in achieving their financial guidance for the year. Andrew Strelzik asks about the chicken business outlook and why the lower end of the guidance range wasn't raised despite a strong quarter. Donnie King explains that they considered various factors like tariffs and market dynamics when setting their plan. Wes Morris responds, expressing confidence in the midpoint of the range and noting that Q1 was on plan with solid demand expected going forward.

In the article paragraph, a discussion is taking place during a Q&A session where Peter Galbo from Bank of America inquires about the current state and future plans for the Prepared Foods division. He asks Kyle Narron for his perspective on the portfolio's optimization, noting that while the division's margin profile is improving, it still lags behind competitors. Kyle responds by expressing satisfaction with their product portfolio, highlighting the company's strong brand presence with three of the top 10 protein brands and leadership in eight out of ten categories they operate in. He is optimistic about the future due to new distribution opportunities in retail anticipated to have a positive impact in the latter part of the year.

The paragraph discusses the company's strong performance in the foodservice industry, driven by growth in broadline distribution, commercial chains, and innovation. Despite facing margin pressures from input costs, the company is committed to executing its multiyear strategy by focusing on quality share growth and launching new products. Additionally, Donnie King addresses concerns regarding trade tariffs, particularly with Mexico, emphasizing the company's contingency plans for pork and chicken exports. They plan to utilize their global expertise to identify alternative markets for these products if needed. The company is working with the administration to navigate the trade dynamics.

The paragraph discusses the trade dynamics between the U.S., Mexico, and Canada, particularly focusing on agricultural products like chicken, pork, feeder cattle, and hogs. It highlights the adjustments being made in response to potential tariff changes and the importance of the global supply chain in the pork industry. The discussion also notes the small volume of U.S. chicken exports to Mexico and the major shipments of heavy chicken parts to Canada. The companies are monitoring trade developments closely to adapt their strategies, emphasizing the need to balance supply and demand globally.

In the paragraph, Tom inquires about a network optimization plan mentioned in a company's 10-Q report and asks for details on changes, impacted segments, and cost savings. Curt responds that the plan involves ongoing evaluation to improve network optimization across all segments without a specific cost savings target. Tom then asks about the Beef segment, noting that industry data suggested weaker results than reported, and requests details on increased value-added sales. Brady credits the team's execution and outlines their plan for continuous improvement and control during the beef cycle.

The paragraph discusses the increased cattle weights due to lower input costs and high live cattle values, which encourage feeders to add weight. The team did well in optimizing the type, mix, and grade of cattle to increase value. Strong demand is noted, particularly for end cuts and lean beef grinds, leading to value-added solutions for consumers. Additionally, chicken margins are at their highest in eight years, attributed to favorable feed costs and improved plant performance. The team is commended for their efforts and continues to focus on improving as a chicken company.

The paragraph discusses a company's improved performance in meeting customer and consumer demands, highlighting a significant achievement in order fill rates, which have reached over 98% for the first time in eight years. It mentions success in protein and convenience markets and describes a strategic shift to better align with consumer demand, leading to increased market share in both retail and foodservice. The company attributes this success to improved demand planning, forecast accuracy, and operational efficiency. A relaunch of a retail product is progressing well, contributing to this positive momentum. Inquiries from analysts focus on the structural changes that led to these improved order fill rates and their potential application to other segments.

In the paragraph, Donnie King addresses concerns about the impact of recent deportation activities on labor at Tyson Foods. He assures that the company employs only legally authorized workers and complies with various immigrant statuses like DACA and refugees, emphasizing their use of e-Verify. The company has seen no change in worker attendance or issues with recruitment. Alexia Howard then shifts the discussion to Tyson Foods' decrease in free cash flow from the previous year, questioning the reasons behind it and whether capital expenditure (CapEx) will increase. Curt Calaway begins to address this inquiry.

The paragraph discusses the company's financial performance and capital expenditure (CapEx) strategy. It highlights a decline in first-quarter cash flow from $946 million last year to $760 million this year, primarily due to changes in working capital. Despite this, the company maintains a robust free cash flow guidance of $1 billion to $1.6 billion for the year. CapEx was notably high in 2022 and 2023, at about $1.9 billion each year, driven by numerous new facilities. However, the company emphasizes a disciplined approach to capital deployment, aiming for a more typical CapEx range of $1 billion to $1.2 billion and ensuring returns on investment. The discussion then transitions to another question from Pooran Sharma about the chicken segment, with Donnie King responding positively.

In the paragraph, a discussion takes place regarding opportunities for cost reductions and operational improvements in the chicken and pork sectors. Wes Morris emphasizes ongoing efforts to lower controllable costs and improve operations in the chicken industry, suggesting they're well-positioned to manage consumer spending increases in 2025 through efficiencies. Pooran Sharma asks about potential improvements in pork margins given the USDA's projection of higher hog supplies in the latter half of the year. Brady Stewart acknowledges these conditions and praises the team's strong performance and efficiency gains in the pork business, highlighting their effective operational improvements.

The paragraph discusses improvements in plant operations, noting reduced input costs and stronger margins, which provide opportunities for stability and potential expansion. The company is comfortable with its team and plans, aided by a stable supply and effective management of disease impacts in the industry. A question from Manav Gupta of UBS addresses the company's decreasing leverage, asking about future financial strategies once the leverage target is met.

The paragraph discusses a company's progress in reducing its leverage from 4.1 times to 2.3 times over five quarters, driven by operational excellence and financial strategies. Despite the improvement, the company aims to achieve a long-term target of leverage at or below 2 times, though it sometimes maintains leverage below that target. Key financial priorities include maintaining financial strength, investing in business growth or profit improvement, and returning cash to shareholders. The company recently paid off a $750 million term loan and increased its dividend for the 13th consecutive year, reflecting its financial strategy and commitment to shareholders.

The paragraph announces that Wes Morris, who was brought out of retirement over two years ago to revitalize the Poultry business and establish a succession plan, will transition out of Tyson Foods by the end of the year as his three-year commitment concludes. The speaker expresses gratitude for Wes's leadership and notes that a new President of Poultry will be announced soon to ensure a seamless transition. Finally, the speaker thanks Wes and his wife, Carrie, for their contributions and looks forward to providing company updates in the next quarter. The conference is then concluded.

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