TYSON FOODS, INC. Q2 FY2025 earnings call

• Operational excellence is key, with fourth consecutive quarter of year-over-year growth in sales, adjusted operating income, and adjusted earnings per share. - Demand for protein remains robust, with meat having high household reach and being in many home-cooked dinners. - Prepared Foods is a high-performing segment with double-digit margin expansion and ongoing operational improvements. - Chicken had best second quarter adjusted operating income in nine years with volume growth. - Beef faces spread compression but has resilient consumer demand. - Pork delivered best second quarter adjusted operating income in three years. - Ongoing optimization of plant network and logistics infrastructure, including selling coal storage warehouses and transitioning to automated facilities for savings. - Elimination of petroleum-based synthetic dyes in most retail branded products by end of May.

Prepared Foods: Sales in line vs last year, higher pricing offset by softer volume. Adjusted operating income increased nearly 5% and margin improved 50 basis points. Chicken: Second consecutive quarter of year-over-year volume growth, contributing to 2% increase in sales. Adjusted operating income increased 95% versus last year. Beef: Sales increased primarily due to higher average price per pound, but adjusted operating income declined driven by spread compression. Pork: Sales roughly in line vs last year (excluding legal contingency accrual impact), adjusted operating income increased 67%, reflecting best second quarter results in past three years.

• Total company guidance unchanged: Sales expected flat to up 1% year-over-year. - Adjusted operating income expected between $1.9 billion and $2.3 billion. - Interest expense approximately $375 million, tax rate around 25%. - CAPEX expected between $1 billion and $1.2 billion, free cash flow in range of $1 billion to $1.6 billion.

• Macro environment uncertainties affecting business. - Tariff impacts and consumer pressure. - Weather disruptions impacting operations.

Q: You beat consensus expectations this quarter on the profit line, but didn't raise guidance for the full year. How did the result come through versus internal expectations and what's coming through better or worse than expected?

A: Curt Calaway mentioned the multi-protein, multi-channel portfolio's importance, and Donnie King and Devin Cole discussed chicken business performance and strategy.

Q: On the changes in cold storage facilities, get more detail on the split and what led to pulling the trigger?

A: Brady Stewart discussed the need to right-size the network, transition to automated facilities for savings, and Curt Calaway mentioned it's principally for Poultry and Prepared business.

Q: When will Prepared Foods see a real uptick in margin above 10% sustainably?

A: Donnie King and Brady Stewart talked about the management operating system, innovation pipeline, and foundation for improvement.

Q: Thoughts on chicken demand in QSR and future expectations?

A: Donnie King and Devin Cole discussed QSR growth potential and broad portfolio performance.

Q: Beef environment, supply of cattle, and cycle stage?

A: Brady Stewart discussed cattle weights, heifer retention, and signs of bottoming in cow inventories.

Q: International business performance, drivers, and persistence?

A: Devin Cole talked about operational fundamentals and commercial growth strategy.

Q: Third quarter expectations for chicken and pork?

A: Curt Calaway and Donnie King discussed year-to-date performance and investment plans.

Q: Tariffs impact on guidance and potential upside if resolved?

A: Curt Calaway mentioned guidance includes tariff impact and potential upside if resolved.

Q: Chicken investment, pricing, and second half guidance?

A: Donnie King and Devin Cole discussed investment components and value-added strategies.

Q: Free cash flow policy and bolt-on acquisitions?

A: Curt Calaway talked about free cash flow and selective M&A approach