Tyson Foods, Inc. ($TSN)

Good morning. I'm Andrew Strelzik, BMO's Agribusiness, Beverages and Restaurants Analyst. And I'm delighted to welcome everyone to our Annual Farm to Market and Chemicals Conference. The conference is now in its third decade. And this year, we have the pleasure of hosting over 100 companies and 1,000 total attendees over the course of today and tomorrow. Our goal today remains unchanged, provide a forum to explore key themes and investment opportunities across the food value chain. The conference will highlight fireside chats and presentations from senior executives of leading companies spanning from farm to market, including the fertilizer, chemical, agribusiness, protein, food, beverage, distribution and food retail sectors. I want to take a moment to thank the many people who make the conference the success you see today. The management teams have been incredibly generous with their time and insights that form the foundation for the conference. Our sales force, editorial staff and conference coordinators are remarkable in their commitment to make this event the success for investors and companies alike and the investors joining us from across the globe who really make this event special. In addition to the variety of company and sector dynamics we expect to explore over the next 2 days, we seek to keep the conference relevant each year for the rapidly evolving dynamics across the agriculture and food value chain. We're fortunate to have as our keynote lunch panel today, a discussion with 4 senior leaders from BMO's commercial food and agriculture lending practice about the state of the union around agriculture and farmers. And tomorrow's keynote presentation from BMO's Chief Investment Strategist, François Trahan, will focus on how investors can think about positioning portfolios for a potentially prolonged period of inflation and the impact on the consumer. We hope you come away from the conference with incremental insights and a better understanding of company strategies and outlooks, opportunities and challenges, key issues and new ideas. If you have any questions or need any help, please don't hesitate to ask. Thank you, and enjoy the conference. We're fortunate to have Tyson kicking off our conference again this year. Under the leadership of CEO, Donnie King, Tyson has the opportunity to realize a third consecutive year of operating profit growth as its disciplined focus on controlling the controllables has materially improved performance in its Chicken business, enabled Prepared Foods to outperform peers and increased earnings contributions in Pork and International. All while navigating an increasingly challenged beef operating environment. Donnie is joined by CFO, Curt Calaway, who continues to enhance Tyson's leadership team through his disciplined approach to managing Tyson's balance sheet, including $2 billion of debt reduction over the last 18 months and creating greater flexibility to return cash to shareholders. Donnie and Curt, thanks for joining us today.

Good morning.

Maybe I'll kick things off on the Prepared Foods side. Your performance in Prepared Foods has been a little bit different than maybe what some of the peers or the rest of the category has been experiencing from a volume growth perspective, profit growth perspective. So can you talk about what's kind of differentiated your portfolio from what we've seen from the rest of the category?

Sure. And good morning, everyone. Thanks for the question, Andrew. So -- what is it now? About 3 years ago, we talked about a multiyear strategy as it relates to Prepared Foods. And I got to tell you that multiyear strategy is working, and we're starting to see the compounding benefits from that. We just completed our second consecutive quarter of volume growth in Prepared Foods. And if you look at peers in the Packaged Foods Group, you would find that that's -- we're one of the only companies, if not the only company that's actually growing in the space. So we're very happy about that. But there are several things that differentiate us in this area, and it starts with execution. We're executing at a very high level today in Prepared Foods. We've done a lot of great things from one end of the supply chain to the other, and it truly is an end-to-end approach in terms of eliminating waste up and down all the different functions within Prepared Foods. So we're very proud of that. And it starts with the simple execution and this commitment to execution, whether that be inside the 4 walls of the plant. We were -- we had a lot of opportunity from a capacity utilization perspective. A lot of processes were not disciplined. We had a lot of opportunity there to be better. And so we simply began to grow our volume. And we've done that very well relative to the peers, our peer set. The operating environment out there in packaged goods and food in general is not -- it's not an easy place to play presently with inflation and the consumer under pressure and so forth. And so just that multiyear approach, targeting customers and consumers. And I'll go back a little ways. And when I became the CEO right at 5 years ago, there were 3 things that we need to do. And remember, this is back in COVID, in the middle of COVID, there were 3 things we needed to do. And frankly, we weren't doing any of the 3 very well. The first one was winning with customers and consumers. We weren't winning. We weren't servicing them. We weren't doing the basics very well at all. And then our team members, again, right in the middle of COVID, we're trying to staff plants, get people to work, get people back in offices, those kinds of things, but we had to win with our team members. We didn't have a chance to succeed with customers and consumers, if we didn't have our team aligned. And I'm happy to say that we do have that today. And then execution is the third component of that. And frankly, we were not very good at all at execution in the most fundamentals of things. And so the biggest difference between now and then is that we do all those very well. We also did made a decision to just reference customers and consumers, but getting aligned with strategic customers. And that looks a lot like having multiyear deals with customers where we create this win-win relationship, whereby their shared risk in prepared foods or in chicken even, you shared risk relative to the inputs. It could be grain. And then we owned execution and the customers in this case would own the responsibility of delivering the volume, which ultimately gave us a stable volume and at the same time, helped us absorb overhead or fixed costs. And so all that worked together. Of course, the brands have all done very, very well. We've really tightened up our focus and our execution as it relates to product innovation and how we collect information, data and analytics as it relates to the consumer.

I might add just real quick, Andrew, just to dive into Donnie's point on execution and a multiyear journey, right? We started that journey, as Donnie said, a couple of years ago, but it was really about the -- starting with the execution inside the plants, the 4 walls of the plant, right? We knew we had great opportunity there, but we got very dedicated and disciplined on making sure that we were operating with the level of intensity inside our Prepared Foods business that we did in the rest of the business. And that really was the start of a catalyst of reshaping our cost structure and allow us -- allowing us to make some choices and investments that are what we're seeing the benefit of today relative to innovation, relative to R&D activities, right, and really meeting the consumers' needs, but it started with making sure we had a really well running and a great execution inside the plants.

You've talked about utilization rates across the business. In Prepared Foods, has anything changed with the asset base? Or are you just getting more out of what you have or have had?

Sure. The beauty of execution is this. We had to make some decisions in Prepared Foods. We did it in all businesses. But in terms of the footprint of the assets that we have. We had some that didn't make sense anymore, some that we probably held on to a little too long. Some wear products, product mix changed, that type thing. But we did that. But through the fundamentals of the business and execution, just eliminating waste. Eliminating waste means you improve efficiencies throughout the organization. So at the time we started this, we had excess capacity in our Prepared Foods business. So goal there was to grow the business, fill the capacity and say yes more often to customers, which -- I mean, I realize that sounds a little foolish, but we literally had to do that and to fill up the plants and run more efficiently. So as you fill them up, as you get more efficient, you have more capacity and you got more room to grow and you have a better cost structure, and it just begins to compound and good stacks on top of it.

What has changed from an innovation perspective in Prepared? I mean you talked about the data and analytics and some of those things. Can you talk about how that approach has evolved?

Sure. I think the first thing is the -- is we're leading with data and analytics. And we've begun, like I'm sure many have, began to collect first-party data so that we can connect directly with the consumer. And we understand what they like, what they dislike more readily. They give us that instant feedback. So whenever you go and you shop online and you see that 1 through 5-star rating or some third parties that will describe your product about what -- how they think about that, getting all that right is really important. But you start with a more focused approach to innovation. And we, like I'm sure many -- at one time, it was -- we can do anything. And we tried anything and everything. But what we had to do is get more targeted against those consumers. And part of our strategy was to become more targeted toward younger consumers. We were over-indexing, which is not a bad thing to older consumers, but we were under-indexing to younger consumers, and they have different perspectives in terms of what those product qualities should look like. And so engaging with them and getting more targeted. Part of this process is using tools and analytics to -- everybody has a stage gate process. It typically takes 18 months in the packaged goods arena. Well, there's nobody that is willing to entertain an 18-month product innovation cycle. I mean the customer, frankly, is going to get somebody else to produce the product, provide product, it takes you 18 months. So you got to streamline that and do a lot of concurrent activity as opposed to doing everything sequentially. So all those things have worked better. So we got a sharper focus on the innovation in our business, and that's working very well. We just recently launched a new high-protein line of breakfast under the Jimmy Dean brand, bowls, sandwiches and even a protein waffle, which was an expansion. All of that was driven based off those data and analytics that I just referenced, and they're all doing very, very well in the marketplace.

I think as well, during the last several years, as Donnie said, we focus on making sure what we're executing, we're executing very well. But 2 other catalysts that we're in where we condensed and brought in a number of our business units that previously had been more disaggregated, right? And the benefit of having together collectively with the business units working with one another, but also working with R&D and innovation, all together in the same place has really showed the benefits. And you couple that with being really aligned with the business unit to make sure what we are working on are the big ticket items that are going to drive a difference and are really resonating with all the data and insights that we've gathered to make sure that each one of those investments produces a higher return.

You started the internal improvement journey in the Chicken business earlier than you did in the prepared side. Can you maybe compare the opportunity in prepared to what we've seen you execute against on the Chicken side? Is the magnitude of improvement the same? Kind of how do you think about looking at Chicken as kind of a leading indicator to what you can achieve in Prepared?

Sure. I'd first acknowledge that we have had great success in Chicken over recent years. And the playbook that we have there is very similar to the playbook that we have in Prepared Foods. And it's -- these are all simple things. They're simple, but yet challenging to do is control the controllables. And so people can get at times sidetracked by what is the cost of grain, what is the inflation, what is -- what's the price of gasoline, what's going to happen in the Strait of Hormuz, all these different things. Well, the fact of the matter is, I don't control any of those. But what I do control is what we do inside our business. And so getting everyone focused against that has been really important. In terms of across all of our businesses. The playbook that you referenced in Chicken is the same playbook or very similar in Prepared Foods. It's very similar in our beef and pork businesses in our international business as well. It's controlling those things that we can control. It's executing with excellence. It's being aligned with customers and consumers and taking care of our people that make all this happen. And so what's the size of that order of magnitude? Remember, our Prepared Foods business is roughly half the size of our Chicken business. But the upside for Prepared Foods and continue to growing that organically and inorganically, there's tremendous upside to this business. The -- just the multiple, the opportunity, the branded portfolio that sits inside Prepared Foods and also the Tyson brand as well is those are all really, really good things. But the playbooks are very similar. The upside would be similar in terms of order of magnitude.

It's obviously been a very inflationary environment here so far this year. So I guess I'm curious, like to what extent have the improvements been masked by that so far this year? And when I think about your assumptions on the input cost environment going forward, what have you assumed in your outlook? Are we going to see that abate and maybe some of the benefits start to increasingly come through from a profit growth perspective?

Sure. Great question. The -- looking at inflation, we think safer Prepared Foods, the raw material, beef, pork, turkey, some chicken, the inflationary effect of that, we think will persist. I don't know for how long. I don't know there's a point where you reach the point where the consumer will back away based on pricing. But inflation is real. It is persistent. We have modeled into our '26. And as we even think about '27 based on what we know now, we don't see that going down in any kind of meaningful way. So we have to manage those things very well. You said, well, why do you think that? 7 out of the last 8 quarters, we've seen inflation in raw materials. So we think that's probably a pretty good trend. We don't like that. The consumer doesn't like that. And what we spend our time doing is trying to offset and defray those costs and try to make sure that through pricing, promotion, all those levers that we have that we make that product relevant and that we make it affordable for the customer and the consumer and while maintaining volume. And so -- but I don't see any sign of that going. You've got gasoline prices now in our Q3, you're seeing gasoline prices go up. You've seen them go up well over $1, and that will start having impact in terms of the consumer and where they buy, where they shop, which channel they do that.

I think just to build on what Donnie said, 7 out of the last 8 quarters in Prepared Foods, we've seen commodity inflation. But you look at our performance relative to the last 3 years, it's incredibly stable, but actually growing at the bottom line, and as Donnie mentioned earlier, growing at volume, right? So we've certainly, to an earlier question you asked, demonstrated a very different performance. But our execution, what we said at the beginning around being very efficient inside the plant gives us the capacity to make choices between investments that we're making and having the benefit of driving not only volume growth that we're talking about, but our products in retail are performing incredibly well, right? And that allows us an opportunity to have a conversation about multiple ways to deal with increasing inflation, one of which is increased volume, right? And so it gives us multiple options based on the moves that we made and our cost structure improvements and discipline we've had for several years now.

Given some of the challenges that the rest of the category is experiencing, are you seeing changes in competitive behavior, especially with the consumer that may be more stretched? And if so, or if that were to happen, what are the levers that you have to still achieve your goals?

Sure. I would say, first and foremost, we're not comfortable in the environment that we're in. We would never be comfortable with a competitor and saying, you know what, we're good. We're as good as we can be. We believe we earn the right to serve that customer every day. That means we got to provide the right kind of quality, the right kind of service, the right kind of innovation. But what levers if there's a competitive response, there's certainly some of that goes on today. But we just have -- we have to perform better than them. And we have vehicles to do that and process in place to do that with our customers. We talk a lot about strategic customers. Some would call it key customers. There's a number of different names, but it's those customers you intend to win with. In many cases, it's those customers that are growing and winning in the market themselves. And so what is really important to me is that you keep volume growing. I think that is a critical indicator of your success and the strength and health of your business. And so we watch that very closely across all businesses. And so -- so in Prepared Foods specifically, we adjust those labor. We make sure that the products that whether it's pricing, promotion, those type things, keep the product on the shelf, keep it moving, making sure that the quality is there, making sure that we are best-in-class in servicing those customers and then making sure that we continue to bring new innovation for those new consumers that we want to intersect with and namely, as I referenced earlier, these younger consumers.

Can you talk a little bit more about the strategic customer relationships? Is that more of a volume benefit for the company, a visibility benefit, a margin benefit? Kind of how does that impact your business?

Well, if I look foundationally or fundamentally, those strategic customer relationships -- they're critical. They're critical to our strategy. They're critical to our success. And when I talked about becoming the CEO, there was a period where I thought we -- I believe that we were mad at the customer and kind of irritated that the customer would want us to sell them product, and we had to produce it. So we had to change that, right? And so getting aligned with those strategic customers opens up a lot of opportunities. It is truly a win-win relationship. And so what does that do? It provides a stable volume. It provides fixed cost absorption. And it also allows us to have conversations with those customers, let's say, inflation enters in, in the raw material. What that allows us to do then is have a conversation with the customer. Instead of increasing the pricing or passing on pricing, can we offset that with incremental volume to fill up that line to offset that so that we keep our price points relevant as it relates to the consumer so that we keep that volume moving and not only for us, but also for the customer. And so it's working there. The critical -- the strategic customers are critical to the model that we have in place. And we handle it with kid gloves and it's working very well. And we get more and more customers that we bring online where we have shared risk. And so the best part about all that is, one, you're growing, but secondly, you change all the conversations from price to how do we grow together. And we -- when our customers' business grows, we tend to grow with them. And so it's working very well.

The framework behind that as well, Andrew, right, as Donnie mentioned, is absolutely on ensuring that we're providing a quality product, right? It tastes good, right? Those elements are always there, but also around the innovation, and Donnie touched on a few elements of what innovation we have brought, but the continual evolution and new things introduced that are resonating with the customers and consumers, as I mentioned earlier, but it's service, right? And that -- those elements of assuring our customers, right, that we're going to be there, right, with a quality product consistently delivered service on time, and we're bringing innovation creates a point of difference for us to offer up in that partnership. Great.

Shifting gears to the Chicken business. I think one of the most surprising things that we heard from you guys in the most recent quarter was the discussion around the genetics business and the profitability improvement there. Can you talk about what exactly changed? And how should we think about that evolving from here? Does that build? Does it change? If you could talk about that.

Sure. Sure. And it was brought into the conversation in the most recent earnings. And so let me start with explaining how our genetics business works inside Tyson. In our genetics business, which we've been in for a long time, it's always been a part of our Chicken business, but it has always been a service to our Domestic Chicken business. But at the same time, we sell that product, have sold that product to customers around the world, competitors included. And so that's the way it works. It all rolls up into the Chicken segment. And so it is -- we have seen a structural change in that business. And I can give you a short history lesson, if you go back to about 2015, we primarily had one genetics -- line of genetics that service essentially chickens, live chickens that would be like 7, 7.5 pounds and down. We had a very good package for that. If you recall back in 2015 and moving on, chicken bird weights began to get higher. We had -- we made a couple of attempts to have a line of genetics. And quite frankly, it didn't perform. It didn't perform for us. It didn't perform for customers. And so we were sitting without a line of genetics. So back to 2015, from 2015 all the way into '23, '24, we began to see the performance of the genetics business continue to decline with all those -- influenced by all those things I just referenced. We launched a new breed, a new line of genetics that had all the characteristics of the breed that we had, but it also addressed yield and egg production for a bigger bird, that 7.5 pounds and larger. That's been in development now for some time. We've done tremendous field trials and so forth with that. We're actually harvesting -- we're early innings, but we're harvesting in our Q2. Some of those birds are, let's call it, we're about 1/4 of the way there in terms of the birds that we intend to use out of this big bird population. But we're seeing the benefit of that from the COB or the genetics company. We're seeing the benefit on their P&L because we're selling that product. It's largely being sold to Tyson, right, our broiler division, our Domestic Chicken business. And so that has done well. You saw the benefit of that, and we called it out in our Q2. What you haven't seen yet is those genetics flowing through the Domestic Chicken business. And we're, again, fairly early innings in that. And in terms of the population we will put on those new genetics, let's call it, mid-'27. You should see the impact of that across our business where that is -- and that has a sizable uplift in itself. And think breast meat to live yield, which is probably one of the bigger measurements as it relates to chicken and particularly in the big bird deboning arena. And so that looks really good. So we got our genetics working. We got a genetic for a smaller bird, a larger bird, and it's performing very, very well. But that overnight success took a decade. And so it's a pretty protracted event.

Speaking of '27, probably the most frequent question I've been getting recently is about your ability to grow Chicken profits again in 2027. You've obviously had tremendous progress on the operational efficiencies or operational improvements. You have this genetic step-up. I think people are pretty worried about the kind of underlying Chicken margin environment. So how would you address that? What's your level of confidence in your ability to grow Chicken again or profits again in '27?

Sure. I think a couple of things I would point out with that. If I look at the results that we delivered, I think it's important to note that we saw a pretty significant drop in the market price for chicken breast meat, chicken wings, chicken tender lines, the whole deal in our Q2. I think industry -- I know the industry saw that as well. So that's the first thing to point out. But I think the other thing that is most important here is our results were execution led. They weren't market-driven. That's really satisfying to me in that we control our destiny with that, controlling the controllables. And so if I think about the balance of '26, '27, and I'm certainly not guiding into '27 at this point. I think what we're doing in our Chicken business and the compounding benefit of that will continue to move into '27 and beyond. I think we will continuously get better as we get better at every one of these -- in every part of this business. There's a Hall of Fame Coach Nick Saban used to -- would say that to be successful as a team that every person needs to win their spot. So when I talk about execution, executional excellence, it's every person up and down the supply chain winning their spot. And so my confidence in going forward is based on this execution that we do and everybody winning their spot, not based on what the market might give or take. I won't say I'm agnostic to that, and I won't say I'm not impacted by that. But our model is we have a little insulation to that, particularly based on that customer relationship, strategic customer relationship, where we can adjust pricing and we change the narrative from pricing to volume growth and that type of thing.

I think our -- this -- our second quarter was a good proof point, right? As Donnie had said, right, commodity chicken pricing was down. And given our mix in our portfolio, right, our average price held through, right? And we grew volume, right? And that was a clear point of differential that the model that Donnie talked about between strategic partnership, execution within the plants. And we've made a lot of hard choices over the years to set us up for much better success, and we've rededicated the capital to the right mix of projects to ensure that we have that sustainability and then connect it with the genetics business. And remember, we're end-to-end as can be between genetics all the way to rendering and everything in between sets us up with a point of difference as well.

Maybe if I could add one more point to that. So in our Chicken business, we've had 6 consecutive quarters of volume growth. In the most recent quarter, we had about -- in our Chicken business, about 2% volume growth. And across these 6 quarters I referenced, our branded value-added business has grown 3x that. So that gives you some indication of where our focus is in growing our business. It's in the branded value-added. We are a huge player in that. We have the #1 branded chicken. And so that's where we're growing in there. It's less about commodity. It's more about branded value added on both fresh and frozen product.

And that was super helpful. On the Beef side, where things have been a bit more challenged, you have made some changes, closing a plant recently, adjusting some shifts. Originally, when you made that move, you talked about we'll get some productivity, but there's also some incremental costs. How has that played out? How is that impacting your network and your profitability having made that decision?

Yes. So as a reminder, right, the changes that we made, we announced in November, but they didn't really go into effect until our Q2, the quarter that just ended. And so it's early through that, right? But the expectation was processing within our new footprint, right, which is designed for where we felt the cattle would be available in the future, not yesterday or not today, but the right size for where it needed to be, closing one facility and taking from 2 shifts to 1 was the move for us to make. Now that enables us to run the available cattle in the industry in an environment, where we can be absolutely competitive as anybody else. right? We're not going to control cattle costs. We're not going to control the ultimate cut out. But what we can do is operate with great efficiency inside our network. And it's early, right? But we're starting to see the benefits of that as we've moved into that footprint. Now naturally, when you're in a transition period, while, yes, there's a date in which that happens, there's still costs associated with it is moving things around or inefficiencies as you're running that activity. And so our third quarter will be the first point in which we're operating completely in that new footprint and the expectation of being absolutely competitive in the industry is there.

Does that balance between cost and efficiency? I mean is that the point that you're making, I guess, that now we're going to see that lean a little more heavily towards the efficiency side than the cost side?

Yes. And we're seeing that today. And a lot of those costs were short term in nature as -- I mean, you this closing of a plant and going to one shift and another, we're all -- a lot of those costs associated with that were short term in nature. And essentially, we've worked through that. And those plants that we have and the footprint we have, we're operating at a very high level of efficiency or utilization, I should say, which is making us more efficient, more cost competitive, which was the intent of the moves that we made.

The guidance implied in the back half of the year, right, is another proof point in the expectation that while we're still in a loss situation, right, narrowing those losses in the back half of the year were apparent in our guidance for the back half.

You guys were one of the first, I think, to kind of call out that you were starting to see some heifer retention about a year ago. How has that evolved? Are the conditions there for an acceleration in Heifer Retention? Are we seeing it yet? Or is there any hope?

It's still, I would say, spotty and regional, right? The pace at which perhaps some had forecasted before hasn't picked up. Look, it's still going to be a tight cattle supply situation as we move through '26 and into '27. But as I said earlier, what we're controlling and back to Donnie's mission for us to make sure we're controlling controllables, that's what we did with the footprint, and that's what we're executing, and we'll manage through in '26 and into '27. And we'll still manage in a tight cattle supply.

With all the improvements in the business, we've seen the earnings trajectory really pick up as that continues to happen, as the cash flow improves, how are you thinking about incremental capital deployment? What are the priorities around that from here?

Yes. So happy to say, in addition to improving guidance for the year between $2.2 billion and $2.4 billion, we also raised free cash flow guidance for 2026 to $1.2 billion to $1.8 billion. Our CapEx has been in the range, as we said, the entire year, between $700 million and $1 billion. Our historical average is a little above that, more like, call it, $1.2 billion. But I'll hurry on to remind everybody that we spent a lot of capital over the last couple of years, right? We put a lot of capacity expansion in the network, built 4 domestic plants in the United States, built 7 internationally, and we added a lot. And we've been working on certainly filling that up and operating with excellence, as Donnie mentioned earlier, but ultimately, our long-term expectation of leverage is at or below 2x. And at the end of our Q1, we hit 2.0x. Naturally, for us, Q1 is -- we generate a little excess cash. Q2, we use a little cash, just the normal cycle. So leverage was at 2.2x as we finished Q2. But it's very much a sweet spot for us. We have ultimate optionality and flexibility. And as you pointed out earlier in the opening comments, we've been very diligent in paying down gross debt, $300 million this quarter, $1 billion in the last year, nearly $2 billion in the last 6 quarters, right? We've demonstrated a commitment to that, and we have a lot of optionality and flexibility. I'll just end with our return cash to shareholders as well. We've returned in the first half of the year just under $450 million through dividends and share repos. I think it's a very impressive stat.

You talked about some of the investments and capacity expansions that you've made. Are there other internal projects that as you look forward are exciting or interesting that would be kind of top of mind as you weigh that against maybe further cash returns to shareholders?

Yes, I'll start. Donnie can add anything as well. Look, we have a lot of opportunity ahead of us, right? We've -- as I said, we had a little bit lower CapEx this year. That was planned as we were fully digesting all the investments we put in the last few years. But we have a lot of runway ahead of us. And the businesses have a lot of views relative to what can continue and making those investments in the business that we see really great returns on. And we're excited about that. But the optionality and flexibility that capital structure provides us gives us a lot of opportunity.

If I could add this, I talked about these strategic customers. One of the responsibilities that go with that is to make sure that we've got capacity in front of us. So I also talked about utilization and how important that was. But our responsibility to our customers to continue to grow with them as they grow is to make sure whether it would be harvest capacity, fully cooked capacity, whatever the capacity is to keep that in front of us. And we go to great lengths to plan that capital deployment. So it will be ready before the actual demand materializes. And so that's where the capital will be spent. There may be inorganic opportunities. There's certainly -- it's certainly a great time to be thinking about if you wanted to buy something, but Curt is pretty disciplined as it relates to capital. And so we are very disciplined in that whole approach in terms of deployment of capital.

I think I'd have to follow-up on that point. Is there -- is that a geographic kind of diversification kind of comment? Is it in any specific area that would be most interesting, I guess?

Well, if I were to -- yes, it's going to be Poultry and Prepared Foods. I mean that's where we're growing the most. That's where we see the opportunity. That's where our strategy will lead us. Consumers today are looking for food that, first and foremost, taste good, but they're looking for food that is nutritious, affordable and convenient. And when you can intersect with the consumer in that way, where all 3 of those things are important, you have a real high likelihood of success.

And maybe I'll just close with this question. When you think about all the improvements to the business over the last several years, now kind of transitioning to Prepared more recently, how far along in the business improvement journey do you feel like overall for the total company, you are? Where are we? What inning, however you want to frame it, are we in this opportunity?

I can look across all businesses, and I will tell you, we're executing as well as I've seen us execute. And I've been doing -- I've been at Tyson, since 1982. And so I'm seeing great execution across every one of our businesses. But I'd also have to look you in the eye and tell you that there's still plenty of runway ahead in terms of that. So I don't think you will ever hear me tell you that, you know what, we have arrived. There's nothing left to go get because every rock we turn over, we find something that leads us down another path and another way to eliminate waste and improve profitability. So the journey will never be over. It's unfinished business, but our mindset is to wake up every day and be better today than we were yesterday, be better tomorrow than we are today and so forth. It is a continuous improvement mindset.

Out of time. We'll leave it there. Thank you both very much for being here.

Thank you.

Thank you.