Tyson Foods, Inc. (NYSE:TSN) Q1 2023 Earnings Call Transcript

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Wes, anything you want to add to that?

Wes Morris: Yes. Good morning, Ben, and thanks for the opportunity. First, let me say how excited I am to be a part of Tyson Foods. This is a great chicken company. It’s got great people, great brands, great customers. And I want to echo what Donnie said around, we did a lot of foundational work and executed it very well. We said that we would improve our capacity utilization. We would staff our plants and they are at a record staffing level. We’ve added automation and got some opportunities as we start up that that negatively impacted our yield in Q1. And then we said we’d rebuild inventory post COVID to better service our customers and our order fill rate indicates that we did that well. And so from a live perspective, we performed very well.

The volatility of our hatch numbers are behind us, and we did exactly what we said we were going to do on the live production side. And so that allows us to focus more of our energy on standing up that automation to its expected results. And to make sure we’re still meeting the needs of the consumer. But the one thing that’s obvious we can do better is understanding the consumer shifts in our business and making sure we got the right amount of birds in the right place at the right time.

Ben Bienvenu: Okay, very good. Thank you. My second question is on the Prepared Foods business, a very strong start to the year. The guidance is unchanged. I know it’s early in the year, but implied in the guidance being unchanged is a moderation in the operating margin. So what is it that we would need to see for that to happen? How much of that is it’s early in the year and you want to get a little bit more of the fiscal year under your belt to adjust that guidance versus explicit view that things soften from here?

Donnie King: So let me make a comment, and then I’ll flip it over to Stewart. In terms of prepared, we did deliver what we said we would in Q1. We feel good about that on a go-forward basis with these iconic billion-dollar-plus brands that we have, we feel good about that. Stewart said in the last quarter that retail was really, really good, and we had some work to do as it relates to the food service side. And of course, we’re still not back to pre-COVID levels in the food service channel. And so there is some upside for that opportunities when that happens, but we need more demand there. I would tell you, even in all of that we continue to grow our share in the foodservice prepared and poultry business. But Stewart, why don’t you add some color to this?

Stewart Glendinning: Yes. Thanks for that, Donnie. Well, look, foodservice, as I said last quarter is operating from a very, very strong platform. And investors should expect to see that over the medium-term that, that business continues to grow and the profitability improves. And in the short run, we have got a job to do on foodservice, and I believe we are making progress there as I look at the pipeline that’s developing. Very strong performance on retail, but acknowledge that in the first quarter, some of that is seasonal as you look at some of the Sausage Breakfast, Sausage Products that we have. And we are taking some of that benefit. I feel good about the guidance we have given for the year. There may be a little bit of variability in some of the quarters. But I am really standing on the fact that this is a solid platform that we can continue to see go from strength-to-strength.

Operator: Thank you. And our next question today comes from Adam Samuelson with Goldman Sachs. Please go ahead.

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