Wes Morris: Yes, Adam, I’d just add that we’re seeing really good dark meat demand. We’ve seen a reemergence of our wing demand, and we’re seeing a slight shift towards foodservice.
Adam Samuelson: All right. That’s all really helpful. I’ll pass it on. Thank you.
Donnie King: Thanks, Adam.
Operator: The next question comes from Ken Goldman with JPMorgan. Please go ahead.
Ken Goldman: Hi, thanks so much. I wanted to ask a little bit about competition on the Prepared Food side. Are there any of your more important categories that you’re starting to feel maybe a little incremental pressure in terms of competition, whether it’s on the pricing side or however you want to frame it? And I guess, how comfortable are you with your price gaps versus these competitors today just in a general sense?
Donnie King: So, in terms of competition, I mean, regardless of the business, I mean there’s — we have some very strong competitors in every space that we play. And so, I’ll leave that there. But I’ll give Melanie the opportunity to talk about more specifics in categories. For example, I would just simply say that we saw a strong performance in breakfast sausage and cocktails, and we had some headwinds in our lunch meat and our frozen protein breakfast area. Melanie, do you want to add to that?
Melanie Boulden: Yeah. I would just say, Ken, at the end of the day, this is a challenging consumer environment, and boy, competition is stepping up. We’re not only seeing competition step up from branded players, but also private label is a factor. And I think overall, we’re doing very well and holding our position. But at the end of the day, we are just focused on our own retail business, in particular, and making sure that we’re doing what we have to drive consumption, to address any price gaps and make sure that we are maintaining our leadership position in — which, as you know, in eight of our 10 categories. So right now, we are focused on making sure that we grow through high ROI merchandising with a strong feature and display at shelf.
We’re increasing our MAP investment to continue to grow our household penetration. We’ve got strong innovation on shelf now and also coming, which is going to offer strong engagement with consumers. And very importantly, to address pricing, we’re making sure that we’re enhancing our price pack architecture offering so we can ensure that we are maximizing our distribution footprint. And we think all these steps together, we’re starting to see actions in the marketplace and are confident in our full-year outlook.
Ken Goldman: Thank you for that. And then, a follow-up is on Chicken. As we look at some of the export data, and I realize some of the monthly data is a couple of months in arrears usually. But the export data in general in terms of pounds for chicken, they’ve been a little bit weaker as 2023 anyway, progressed. And yet as we start into 2024, at least according to Urner Barry, leg quarter prices have done pretty well, which might be not what one might expect at first glance is seeing the trade number. So, just curious for a little bit of your thoughts on how to think about like demand for leg quarters, export demand in general. Any color there would be helpful. Thank you.
Wes Morris: Yeah, I’ll take that, Ken. Thanks. We’ve seen a lot of disruption in the [part] (ph) export side. Specific to leg quarters, freezer stocks are at a really low level and demand seems to be robust enough to clear it at very attractive prices.
Ken Goldman: Thank you.
Operator: The next question comes from Ben Bienvenu with Stephens Inc. Please go ahead.
Ben Bienvenu: Hi. Thanks. Good morning.
Donnie King: Good morning, Ben.
Ben Bienvenu: I want to ask — I know, Chicken has gotten a lot of focus, congrats on the quarterly results. John, I wanted to drill down on the 2Q commentary that you provided, recognizing it sounds like there’s some operational headwinds and disruptions from weather early in the year. What I’m curious on is if fundamental — commodity fundamentals continue to improve and grain prices stay low, supply/demand comes into better balance, is that enough positive to offset the temporal operational dynamics that we saw in the second quarter?
John R. Tyson: I think there are reasons to believe why some of that could offset it. But I think it would be — I think, to quantify exactly what that offset is, we’re not really ready to do that. But let’s zoom out and talk about the broader year, because I think I just want to hone in on some factors that are at play about why we remain cautious on the Chicken outlook. And it has to do with what’s going on in the total protein markets. Beef continues to be volatile. I think we’ve had predictions about where beef prices and beef markets were going to go, some have held through, some have not. There is projections for more pork to be on the market this year. We’ve already talked about the consumer today. So, I just want to make sure that we land the message today while there — we’re cautiously optimistic about chicken, there remains a lot of uncertainty and a lot of time left in the year.
So, Ben, I think I addressed at least parts of your question. Hopefully, that’s helpful.
Ben Bienvenu: That’s great. Sorry.
Donnie King: If I could add one thing or a couple of things to that as it relates to Chicken. Those operational improvements that all of us have talked about in Chicken, those continue. And those fundamentals, while we are improved, there’s still a lot of work left to do there. And we got a really good team working against those things. But keep that in mind as you are looking at Q2 and the balance of the year as well.
Ben Bienvenu: Okay. Very good. Thinking about the cash flow statement, John Randal, you guys came into fiscal ’24, bringing down your CapEx budget materially. You’ve sustained the range again this quarter. Is there yet still room to tighten that budget as we move through the year, or do you think that number is more set in stone with potentially improvements coming into 2025?
John R. Tyson: That’s a great question. I think there’s probably room to tighten it a little bit, but let me kind of talk about the total picture. When we gave guidance in the first quarter, we talked about striving to be free cash flow positive that we would pay attention to our ability to manage the business and working capital as well as our operational results, and that would influence our thinking in terms of the total spend. If you just extrapolate where we are in Q1, that would take you towards a higher end of that $1.5 billion range. But that’s really just a product of lot of good projects in flight that we have, our efforts to slow down from the spin that was projected in north of $2 billion in recent years. And I would just say we’re not trending to that higher end because, “Hey, we’ve made some adjustment in our opening up the capital floodgates again,” we remain very committed to getting that spend down to the midpoint of our range or below as we move through the balance of this year and next year.
So that’s what I want you to take away from a CapEx guidance standpoint.
Ben Bienvenu: Great. Thanks so much.
Donnie King: Thanks, Ben.
Operator: The next question comes from Andrew Strelzik with BMO. Please go ahead.
Andrew Strelzik: Hey, good morning. Thanks for taking the questions. My first one is actually on the Pork segment and the outlook there. If I look at the performance in the quarter, and it seems like some solid performance is probably continuing into the second quarter. It doesn’t seem like there’s much baked into the back part of the year. So I guess, how are you thinking about pork margins from here evolving through the year and kind of the puts and takes as we get into the back part of the year?
Donnie King: Let me start off, and then I will flip it to Brady to talk about Pork. Hog supply drove lower hog costs, leading to improved spreads. We’re seeing a number of benefits of better execution in Pork, and we have assembled a really, really strong team in our Pork business led by Kyle Narron. He and his team have really taken out inefficiencies from procurement all the way to the customer, consumer, and very proud of that work. But I would also tell you there’s still room for more. And you will probably continue to hear that from us is there’s — every time — excuse me, every time we turn over a rock, we find something else, but where our moat is one of continual improvement. And Brady, any big nuggets that I have not touched on?
Brady Stewart: No. Thanks, Donnie. And Q1, obviously, is seasonally the strongest quarter of the year. And we’d expect to see some typical seasonality as we move through specifically the latter part of this year as well. The team understands it’s their responsibility to control the controllables. And as Donnie indicated, done a really good job of being able to take advantage of some of the spreads we have seen in Q1 and certainly expect those improvements to continue through the course of the year as well. Really seeing some increased operational efficiencies, and the team has done a great job increasing the true business performance through the data and analytics platforms that they’ve stood up that allow us for better decision-making and really adaptation of some of these market trends in the current conditions.
