Tyson Foods, Inc. Barclays 19th Annual Global Consumer Conference
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All right, perfect. So good morning, everyone. Next on stage, we are glad to have with us Tyson Foods, which is one of the world's largest protein producers across all major proteins, chicken, pork, and beef, and has a very sizable brand of Prepared Foods business. With us today are Jeff Schomburger, who was recently announced as the next CEO of the company beginning in October, and along with Curt Calaway, CFO. Now, before addressing the recent guidance changes, let's welcome Jeff and we will get to the outlook changes right after. But before that, Curt, a couple of forward-looking statements, please.
Kick it off. Thanks. Just a quick housekeeping matter.
Our comments may include forward-looking statements. Actual results may differ materially due to risk and uncertainties, and I refer you to our SEC filings for a discussion of these risk factors, and we undertake no obligation to update these statements.
All right. Thank you. Good.
With that, Jeff, as you step into the CEO role in about a month, what would you say are the primary focus for you as you begin your tenure, and what opportunities excite you most when you start?
Well, Ben, it's good to be here with you and to see you again. I've been around this company a long time, and fortunately, I've got to know the team and the business and the board really well. Most importantly, they made it very clear, stay the course. The work this team has done over the past three or four years to stabilize the business and set us on a path to growth is outstanding. Just staying the course there. I've also had the chance the last 60 days to get out in a lot of plants. I think I've been in eight plants. I've gotten to visit 10 customers. I've been with four consumers in their homes to see how they experience our categories and brands. I've really gotten and with our business teams as well.
I've just gotten a really good chance to think about what we do and how we do it and formulate the strategies going forward. What excites me, the most important job number one at Tyson Foods is always operational excellence. 1% improvement or savings in our footprint is $330 million in profit. That's the culture of this company. We're outstanding at operational excellence, and I certainly will get behind that 100%. Where I'll spend the most of my time is with consumers and customers and growth. I'm going to spend a lot of time with R&D, with innovation, building our brand, building capabilities, and helping us win with customers.
Number one priority, growth, most excitement, consumers and customers, and I really want to bring that same operational expertise and the discipline and rigor of which we run our plants to our three-year innovation pipeline, to our master brand plans, and to our joint business planning with customers, and that excites me big time.
All right. You've been on the board for many years at Tyson Foods. Talk a little bit about the time when you were a board member. What was your role, and then what ultimately made you actually interested in accepting the role as CEO when you got invited?
Well, 10 years on the board, I've learned a lot about the great brands that we have. The culture of this company is outstanding. I've got to know the family really well, and I've known John Tyson for 25 years, since I was in Arkansas previously with Procter & Gamble. Just deep respect for the culture, the brands, the company, and the family, and the board. I think the board has strengthened over 10 years, and a lot of that credit goes to Mr. Tyson. As I look out in the future, it's really just what I said. We are standing here with three iconic brands, Tyson, Jimmy Dean, Hillshire Farm, and the biggest priority in the company right now is to shift and grow our business disproportionately in our branded and our value-added products.
With that strategic choice, it really made me want to jump right in. I'm really excited to help lead this journey to becoming a house of brands.
Okay, perfect. We'll come back with a couple of questions for you as well, but maybe on the new guidance, Curt, can you walk us through what really drove the changes? You've highlighted cattle as a big thing, but there were a couple of dynamics in the quarter. Maybe talk to us, what was just those dynamics versus what may be more on the underlying consumer softness that drove some of the other parts of the revision?
Sure. Let me start with, obviously, as you read, we changed our guidance in a release last week, but it was beef led. Beef was the driver associated with that. We revised our range down about $125 million in our beef segment, but that was really driven by the cattle pricing and the cattle cycle. So we have a small portion of our beef business that has some vertical integration, and we have exposure to live animals. We acquired those live animals, call it six months or so ago. As the price has fallen relative, those animals will need to take, or we anticipated we would need to take a non-cash impairment on those live cattle. That is shifting loss into Q4 for animals that would otherwise be processed in our facilities in the first half of 2027.
The majority of the beef adjustment was really related just to the live cattle non-cash impairment that we're anticipating at the end of the fourth quarter. Now, we did leave the range $150 million wide because that price ultimately still has some flexibility until we get to the end of the period. There is still some range associated with that that we left in. But it was a beef driven and specifically live cattle generated adjustment that we made. To your point, we did make a couple of other changes as we opened up and provided a new guidance range. We did revise down slightly our pork outlook as well, and we really narrowed the range in chicken and boxed that in around the low end of our previous range.
Our previous range was $1.9 billion to $2.05 billion, and we adjusted that to box it in around the $1.9 billion at $1.85 billion to $1.95 billion. That was really driven by, as we announced in our release, we've seen a little bit of consumer softness, as you've probably heard through this conference. But specifically for us, we saw our food service business pull back a little bit. That really is what led to the change in our chicken guidance for the quarter.
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