Tyson Foods, Inc. (TSN) Earnings Call Transcript & Summary

Thank you, and good morning. It is my honor as Chairman of the Board of Directors of Tyson Foods to welcome you to our 62nd Annual Meeting of Shareholders, and to give all honor and glory to God. We appreciate you joining us here today at Tyson on Tot, otherwise Tyson on Thompson, otherwise known as Tot, for the start of our 90th year here in the great city of Springdale, Arkansas. It is 10 a.m., central time February 6, and our meeting is called to order. Every year, I look forward to this moment to share the progress we've made as One Team and One Tyson. This year, as I spoke earlier, is meaningful, 90 years of Tyson Foods in Springdale, Arkansas. So when my granddad left Kansas City to find his way to make a living, and this city has been good to us. We started in 1935, and we have made real progress towards being a world-class food company and a global leader. There are many current leaders and past leaders in this room, and I thank you, for each and every one of you and the contributions you've made to this success. And I am proud of the decades of hard work that has brought us to this milestone. To all 138,000 Tyson Food team members play an important role in our mission of feeding the world like family. It is an honor to feed people and we take it seriously and is guided by our core values. We are dedicated to producing safe, healthy, sustainable and affordable food for millions of people around the world each and every day. We do this with integrity, respect for each other, our customers, the animals and the natural resources entrusted to us. In this, we work every day to create value for our shareholders. We strive every day to invest in our people, products and processes and earn the consistent profits for our shareholders in a challenging business, otherwise known as the agricultural business and the food business. We have begun our 90th year in business with positive momentum. You heard the report the other day from Donnie and Curt. We are more efficient. We are more focused. Our fundamentals are getting stronger and we have prepared ourselves for the future. I am confident we are working on the right things at the right time, with the right effort, with the right people to meet our goals. I do look forward to the road ahead, the difference we can make, and all that we can accomplish as One team, One Tyson. In a few moments, you'll hear from Curt, and you'll hear from Donnie, our CFO and our CEO. But now we have to get to the business portion of the meeting. The bylaws of the company specify that the Chairman and the Secretary of the company, are the Chairman and Secretary of the annual meeting of our shareholders. And with that, the Chair recognizes our company's Secretary, Adam Deckinger, who will report on our preparations for our annual meeting. Adam?

Mr. Chairman, all shareholders were sent to the notice of Annual Meeting and proxy on, or about, December 18, 2024, which is evidenced by an affidavit from our mail agent, Broadridge Financial Solutions, Inc. As required by Delaware law, a certificate list of shareholders as of the record date of December 9, 2024, is available for inspection in the lobby. Those who might wish to overrule their previous proxy cards, or to vote if they have not already voted, may do so by raising their hand and requesting a voting card. The bylaws of the company also provide for a proxy committee of one or more persons designated by the Board of Directors. The Board of Directors has appointed John H. Tyson and Kevin McNamara as members of the proxy committee. Mr. Chairman, I'm reporting that at the direction of the proxy committee, that of the total outstanding shares of 356,172,554 as of December 9 2024, a clear majority of the shares were voted and represent a quorum at this meeting.

Thank you, Adam. Based upon the report of our company secretary, I hereby declare that the shareholders meeting has been called to order, and we do have a quorum present. I do ask that any questions from shareholders be submitted in writing. If you have a question, there are note pads located on the table in the back of the room. When finished, please return the note pad to the attendant at the welcome table, and we will collect it. You will receive a written answer as soon as practical after this meeting, if relevant to meeting business. I hereby appoint Brett Johnson as sergeant in arms and authorize him to appoint deputies to enforce the rules of the meeting, which are in your program and you can read at your convenience. Our next item of business is the election of your directors. The nominees for the ensuing year are set forth in the proxy. They are Les Baledge -- and hold your applause till they all stand up. Mike Beebe, Maria Borras, David Bronczek, Donnie King, Maria Martinez, Kevin McNamara, Cheryl Miller, Kate Quinn, Jeff Schomburger, Barbara Tyson; Noel White and myself, John H. Tyson. This slate of directors has been nominated as presented. Would the Secretary please report the results of the vote regarding the election of directors?

Mr. Chairman, votes cast favoring the election of each nominee presented, represented a clear majority of the votes cast.

With a clear majority of the votes cast favoring the election of the nominees, I declare the slate of directors elected as nominated. Thank you all for helping me. Before we move on, I want to acknowledge a retiring Board member, Jonathan Mariner, who's been on our Board for 6 years has given us time, thoughts and wisdom. Jonathan, I personally thank you for your time. Your fellow Board members, thank you. Why don't you stand up and wave it everybody for us. Yes. Jonathan has brought wisdom has brought insights not only to me, to the leadership team and the Board of Directors, and I do thank you for your time personally, and I know you're heading off to have some fun, and come back any time. The next item of business is the proposal to ratify the selection of PricewaterhouseCoopers, LLP as the company's independent registered public accountant for the year ending September 27, 2025. And would the Secretary report the results of the vote regarding the ratification?

Mr. Chairman, votes cast favoring ratification of selection of PricewaterhouseCoopers LLP as independent registered public accountant represented a clear majority of the votes cast.

With a clear majority of the votes cast for ratification, I declare the selection of PricewaterhouseCoopers LLP as the company's independent registered public accountant for the year ending September '25 ratified. Next item of business. The proposal to approve the amendment and restatement of the Tyson Foods, Inc. 2000 Stock Incentive Plan is set forth in the proxy statement. Once again, would the Secretary report the results?

Mr. Chairman, votes cast favoring this proposal represented a clear majority of the votes cast.

The next item of business -- yes. The next item of business is a shareholder proposal regarding the reporting of shareholder voting rights. The Chair recognizes a representative of the proponent to present the proposal.

Good morning, Tyson Board members and shareholders. My name is [ Magali Koli ], and I'm here today to move proposal 4 filed by the American Baptist Home Mission Societies and 9 co-filers, asking for the company to disclose the voting results according to the class of shares. Because insider shareholder, Tyson Limited partnership has 71.74% of the total voting power. Independent shareholders believe Tyson is not adequately addressing their concerns related to the human rights of workers. As Executive Director of Venceremos, a worker based organization dedicated to the ensuring the human rights of poultry workers, I have heard directly from Tyson workers about the terrible working conditions in the plants. Over the last 5 years, workers have been telling me how these horrible working conditions have been worsening every day. The ever-shrinking workforce in the plants and increasing production requirements further contribute to excessive harm to workers' health. Harms that could have been prevented by the company. Tyson keeps denying and silencing workers' voices, while only offering lip service to the public about its so-called respect for the well-being of its workers. For years, faith-based investors have been calling on Tyson to uphold the human rights of its workers, but working conditions only appear to be getting worse. This is why this shareholder proposal is necessary. It's time Tyson starts to take accountability for its poor human rights record, by listening to workers and independent shareholders who are calling on the company to meaningfully address the issues. I urge all shareholders to support this proposal to promote accountability and transparency. And I call on Tyson to protect his workers human rights and dignity. Thank you.

You know what makes this country great, we all have observations. I can tell you the men and women and this room work hard every day to take care of our people and to take care of our folks, but we appreciate your observations. The Board of Directors with respect to the shareholder proposal set forth in the proxy statement and speaks for itself. Would the Secretary report the results, please?

Mr. Chairman, votes cast favoring the shareholder proposal represented a minority of the votes cast. Votes cast against shareholder proposal represented a clear majority of the votes cast.

With a clear majority of the votes cast against this shareholder proposal, I declare that this shareholder proposal has been defeated. This concludes our business portion of our meeting. I think my granddad and dad would be happy. We kept it under about 8 or 9 minutes. We've got business goals in here. There being no further business, I declare the business portion of the 62nd Annual Shareholders Meeting adjourned. I'm pleased to turn the meeting over to Curt and Donnie and he'll share their remarks, and then we'll close out later on.

Thank you, Mr. Chairman, and thank you to everyone for joining this morning. First, let me start with a reminder that any of our remarks today that are not historical facts are forward-looking statements pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. For more information on the risk factors that can affect our business, I encourage you to visit ir.tyson.com, where you can find our most recent 10-K and 10-Q. We entered fiscal '24 with a clear plan to improve our operational execution and drive better financial performance. This reflects our control the controllables approach, a principle that we emphasized throughout the year, and continue to focus on today. Through deliberate actions, we successfully executed this plan, resulting in a significant improvement in profitability over fiscal '23, a year that was challenging for our business. Earnings per share on a U.S. GAAP basis increased $4.12, from a loss of $1.87, to profit of $2.25. Notably, we delivered improved results in the second half of fiscal '24, both on a year-over-year and sequential basis. As you saw in our earnings release this week, this momentum continued into the first quarter of fiscal '25. Based on our performance in Q1, and our full year outlook for fiscal '25, we believe our performance continues to move in the right direction. We applied the control the controllables approach to our cash management. Our priorities for allocating capital remain unchanged, driving our -- driving -- building financial strength, investing in the business and returning cash to shareholders. We were intentional in managing working capital, primarily inventory. The actions that we took, combined with the improved profitability, led to nearly 48% increase in operating cash flows in fiscal '24. We continue to deploy capital to support future growth. At the same time, we were more disciplined in our approach. And as a result, our capital expenditures declined by more than 40%. The improvement in cash flows led to a tripling of our cash and cash equivalents on the balance sheet of $1.7 billion at the end of September. We remain committed to the dividend as our primary method of returning cash to shareholders. In '24, we paid $684 million to our shareholders through dividends. In our most recent quarter, we paid $175 million in dividends, as our Board increased the annual per Class A share for fiscal '25 to an estimated $2, a significant milestone. This marks the 13th consecutive year of increasing our dividend per share. In fact, our dividends have increased more than tenfold over that period. This increase in the dividend reflects the confidence of our management team and our Board in the cash flows of our business. With that, I'd like to hand things over to our President and Chief Executive Officer, Donnie King.

Thank you, Curt, and good morning, everyone. Tyson is the global leader in the protein industry, with strong iconic brands, a diverse portfolio of products across multiple channels and an exceptional team. We have all the tools necessary for success. But Tyson is more than that. We are a world-class food company driven by a powerful purpose, to feed the world like family. This morning, I want to highlight our strategy, which defines where we play, how we win in the market and enables us to deliver on our purpose and drive long-term value for shareholders. At the core of our foundation, our protein businesses, beef, pork and poultry, where our teams continue to focus on the fundamentals, and operating our business with excellence, independent of external market conditions. The businesses enable us to reinvest in building our brands, expanding our value-added offerings, creating new avenues for growth. As our brands and value-added businesses grow, and we expect them to contribute a larger share of profitability, resulting in higher margins and more stable earnings profile over time. How we win is driven by five essential enablers. Operational excellence, customer and consumer obsession, data and digital delivery, capital allocation, team member development. Operational excellence never gets old and never goes out of style. For us, a key element of our operational excellence is achieving enterprise scale and unlocking savings in our controllables. We've modernized our operations and are driving performance to standards. You've seen the benefits of this in significant turnaround results in our chicken business in fiscal 2024, where we focused on improvements in live plant operations as well as discipline in our sales and operations planning processes. Additionally, in Prepared Foods for fiscal 2025, we're driving operations to engineered standards to improve throughput, and yield, and eliminate waste, while also reducing SKU complexity and raising our service levels. With an unwavering focus on our customers and consumers, we are leveraging our iconic brands to enhance the value of our core proteins, foster win-win partnerships and deliver exceptional experiences for our customers and consumers. We have three of the top brands in protein with Tyson, Jimmy Dean and Hillshire Farm. And while our brands remain strong, we see significant opportunities to grow household penetration, by innovating to meet consumer needs across new mill occasions, categories and channels. You've already seen our customer and consumer obsession enabler at work. Expanding prepared foods distribution, investing in value-added chicken, and driving category leadership, all while building stronger customer relationships for lasting win-win partnerships. We're also investing in digital capabilities and leveraging big data, predictive analytics and artificial intelligence to enhance decision-making and drive results. Our efforts on data and digital delivery improve yield and mix across multiple aspects of our operations, while modernizing customer engagement and deepening consumer insight. As you heard from Curt, capital allocation is an important enabler that unlocks fuel for the enterprise. We made tremendous strides in our cash management in fiscal 2024, and we plan to remain disciplined going forward, maintaining a strong commitment to managing CapEx and working capital to optimize cash flow. We recognize that our success relies on the dedication and contributions of our incredible team members, which is why we prioritize team member development as the cornerstone of our plans and culture. By fostering development and encouraging growth across the organization, we are ensuring that we have the right talent and the skills in place now and for the future. It is a privilege to represent One Team, One Tyson. A team that truly knows how to deliver the recipe for success. I'm proud of the progress we've made together in fiscal 2024. Looking ahead, I'm very optimistic about our future. We have a great team and a great company focused on driving continued growth. A sincere thank you to our fellow shareholders for your continued interest, investment and confidence in what we're doing at Tyson. I'm so deeply thankful to our Board, our leadership team and the Tyson family for their support, and for our 138,000 team members, thank you for your dedication and hard work you do every day to feed the world like family. With that, Mr. Chairman, I'll turn the meeting back over to you.

We really do have a great company, with a lot of great folks, with a lot of great products. It's just amazing. It absolutely is. Thank you, Donnie. Thank you, Curt. Thanks to everyone here in person and online today for your time and the interest in our company. We work every day to make a difference. We try to lead with our core values. Thank you to my family. My sister, Cheryl and Carla, to aunt Barbara, who's been my partner over the years, to my son-in-law, who's now part of the family. But most of all, to my children, John Ran and Olivia, who will lead our family and our company into the future. We're in good hands with our Board, we're in good hands with our leadership team, and you're in good hands for the future from our family. Thank you to the communities where we live and work, and particularly our hometown in Springdale. It's a long ways from Emma Avenue to where we are today. And there's been a lot of hard work by a lot of individuals through the years, today and into the future. That's why we have incredible team members, and its the team members who make a difference and make Tyson Foods what it is. As One team, One Tyson, my commitment to you, we will continue to operate with integrity, and trust, and all we do to bring high-quality, affordable food to every table in the world. As I said, we are a great company with great products, with great people. I thank you, and I declare the 62nd Annual Meeting adjourned. Everybody travel safe. Bye-bye.