Chicken Segment Outlook
Q: What's driving growth and potential upside in Chicken for FY'25?
A: Management highlighted that the Chicken business is fundamentally different and better than a year ago, achieving over $1 billion in AOI for FY'24, exceeding prior expectations of up to $700 million. They expect AOI between $1 billion to $1.2 billion in FY'25, a high single-digit growth at midpoint. This growth is driven by over $500 million in operational improvements, with an additional $185 million planned, independent of market conditions. They are investing around $100 million to drive a mix shift towards value-added products, leveraging upgrades in quality, packaging, and a new advertising campaign.

Prepared Foods Performance
Q: What are the drivers for Prepared Foods growth in FY'25?
A: The company reported the best Prepared Foods performance since 2018 and expects over 10% AOI growth in FY'25, driven entirely by controllable improvements. Key drivers include operational efficiencies with significant improvements in yield and throughput, a 26% reduction in distressed sales, and service levels improved over 170 points year-over-year. They're focusing on core business distribution gains and leveraging a robust innovation pipeline, carrying momentum from '24 into '25.

Beef Segment Challenges
Q: How is Tyson addressing challenges in the Beef segment?
A: Tyson is guiding to a loss of $400 million to $200 million in Beef for FY'25 due to continued challenges from tight cattle supply. They are implementing operational improvements to cushion against market pressures, focusing on efficiencies in plants, yields, and utilization of their six harvest assets. They aim to minimize losses during this cycle and position for future growth.

Operational Improvements Across Segments
Q: Can you quantify operational improvements across segments?
A: In Chicken, Tyson achieved over $500 million in operational improvements in FY'24 and plans an additional $185 million in FY'25, independent of markets. In Prepared Foods, they realized significant gains in yield and throughput, reduced distressed sales by 26%, and improved service levels over 170 points year-over-year. In Beef, they improved operating costs year-over-year and are leveraging data analytics to drive efficiencies and yield improvements.

Capital Allocation and Leverage
Q: How is Tyson approaching capital allocation and leverage targets?
A: Tyson reduced net leverage from 4.1x to 2.6x in FY'24 and plans to invest $1 billion to $1.2 billion in CapEx for FY'25. Free cash flow is expected to exceed the annual dividend, estimated at around $700 million. They remain committed to an investment-grade credit rating and a long-term target leverage of at or below 2x , and focus on improving returns on invested capital.

Impact of Higher Chicken Supply
Q: Will increased chicken supply affect Tyson's outlook?
A: Management acknowledges increased egg sets and chick placements but notes that industry challenges in hatch and livability mean excess chicks aren't reaching processing plants. They have accounted for potential supply increases in their guidance and believe supply and demand are fairly balanced. Tyson is more insulated due to its focus on strategic customers and value-added products.

Shift from Chicken to Beef Promotions
Q: Are retailers shifting promotions from Chicken to Beef?
A: Despite higher beef prices, demand remains strong, and retailers are employing various strategies, including promoting beef cuts to drive market baskets higher. Tyson expects beef demand to continue into '25 and is leveraging this through convenience products and innovation.

Network Optimization and Plant Closures
Q: Are there further plant closures or network changes planned?
A: Tyson evaluates assets based on age, profitability, scale, competitiveness, and future capital requirements. While they have made decisions to optimize their network, including plant closures, they are focused on controlling what they can and executing with excellence.

Prepared Foods Start-up Costs
Q: How are start-up costs affecting Prepared Foods profitability?
A: Start-up costs in FY'24 were around $20 million. The company expects to lap these costs in FY'25 but also notes lower depreciation in the first half due to overhead.

Impact of New Administration
Q: How might a new administration affect Tyson?
A: Management stated they have successfully operated for over 90 years, regardless of political changes, and will focus on controlling what they can control.

Capital Deployment and Cash Flow Generation
Q: How is Tyson planning future capital deployment?
A: Tyson plans to continue investing in the business and returning cash to shareholders, with CapEx between $1 billion to $1.2 billion in FY'25. They emphasize improving returns on invested capital and maintaining financial strength.

Further Improvements in Beef Segment
Q: Can operational improvements lessen Beef segment losses?
A: While acknowledging that 85% of the Beef business is influenced by uncontrollable market spreads, Tyson is implementing efficiencies to minimize losses and position for future success.

Prepared Foods Cadence
Q: How will Prepared Foods growth unfold across FY'25?
A: Management expects a more balanced performance across the year, differing from historical seasonality, due to ongoing operational efficiencies.

Expansion of Fully Cooked Lines
Q: Is Tyson expanding fully cooked production lines?
A: After successfully selling out five fully cooked lines in Danville, Virginia, Tyson is working on adding the next five lines to support growth in value-added products.