Andrew Strelzik: Okay. Great. That’s helpful. And then, on the Beef side, I guess, when I look at the typical seasonality and I look at kind of the performance in the first quarter and then the commentary around the second quarter, it seems like you would need to have pretty solid improvement in the back part of the year, not to be kind of towards the lower end of that range. I know there’s seasonality involved there as well. I guess I’m just curious, can you talk about maybe what would get you to the high and low end of that range? I understand certainly that there’s a lot of uncertainty as we move through the year. And then, maybe can you clarify also when we think about the second quarter, are you thinking about sequentially lower off the number that you reported adjusted operating income in the first quarter, or is that kind of once you back out the inventory adjustment? Thanks.
Brady Stewart: Well, thanks for the question. And as you pointed out there, I think it’s really important to emphasize what both John and Donnie indicated in the opening remarks, which was, in Q1, we saw that rapid decline in cattle futures and that was the driver for that inventory valuation adjustment, that was roughly $56 million in the first quarter. And really, as we look at the first quarter, obviously, we saw some headwinds relative to some decreased value in the drop. We saw the spread compression. And obviously, with lower supply, not only in Q1, but as we move through the rest of the year, we see that lower opportunity for cost dilution of our overhead structure relative to these volumes. But let me be really clear, we see a path to improvement as well.
And from an operational excellence perspective, how we manage the business today versus the past in a different economic cycle is very important. Focus on efficiency, yield and really balancing supply and demand, not only by a cut-by-cut basis and through our grinds complex, but also in terms of yield and efficiency is going to be paramount and important to the team, and they’re dialed in on that as well. We’ve made changes that certainly provide us opportunity in the future as well as we mentioned last quarter. We’ve right-sized our Beef value-added business really to match our customer needs and what we’re seeing from a supply perspective as we move through this. And again, as I’ve mentioned before, we have a well-capitalized asset base, and believe we’re really able to manage through a variety of headwinds and market conditions that we expect to see as we move through this cattle cycle.
Andrew Strelzik: Great. Thank you very much.
Donnie King: Thank you.
Operator: The next question comes from Ben Theurer with Bank of America — excuse me, with Barclays. Please go ahead.
Ben Theurer: Hi, good morning, Donnie, John. Thanks for taking my question.
Donnie King: Good morning.
Ben Theurer: So, just wanted to kind of understand a little bit some of the dynamics as it relates to the export business, because if I remember right, that used to be some sort of a headwind also in Beef. So, if we look into the details on sales into the international channels, particularly Beef, which kind of contrary to the rest of it, was actually even down in the sales. Could you elaborate a little bit on the dynamics in the export markets as it relates to Beef in particular, but also if you could just mention briefly what you’re seeing on exports for Chicken and Pork? That would be my first question. Thank you.
Brady Stewart: Sure. Well, thank you for the question. And I think it’s really important to understand, we’ve really been working within historically high rates from a beef product or cut-out perspective. And when we talk about the arbitrage opportunity between a domestic sale and an export sale, really puts the domestic beef business and industry at a disadvantage right now. We’re seeing large supplies from some of our competing countries that are in the southern hemisphere. And they’re really on the opposite side of the cycle from we are — from where we are. And so that’s really led to increased opportunity for some of those competing countries and a decreased opportunity for us here in the U.S. However, we have seen strong domestic beef demand has led the — held these cut-out values at a historically high level as well.
Wes Morris: Yeah. And Ben, this is Wes. I’ll touch briefly on Chicken. As I said earlier, parts have been interrupted due to [indiscernible]. And on leg quarters, we’re seeing frozen inventory in the US at almost record lows. Our inventory continues to be in check, and the pricing has been very good going forward.
Ben Theurer: Okay. Perfect. Thank you very much. And then just quickly following up as it relates to the Prepared Foods business. Can you quantify what the Williams sausage volume contribution was? Because I didn’t find that. I know it was positive, but if you could quantify that, that would be helpful.
Brady Stewart: Yeah. We haven’t broken that out, but it’s — we haven’t broken that out specifically, Ben.
Ben Theurer: Okay. That’s okay. Thank you.
Operator: The next question comes from Tom Palmer with Citi. Please go ahead.
Tom Palmer: Good morning, and thanks for the question. Maybe I could ask on feed costs. Just how locked in is your exposure this year? And then, when you look at the downward moves over the past few months, does this benefit your current fiscal year? Or if it continues, is this more of a 2025 flow-through? Because it does seem like there’s some incremental favorability.
Wes Morris: Yeah, Tom, this is Wes. I’ll touch on that. We have a very diverse commodity risk management group. We also have different pricing mechanisms with customers in which some of the grains flow-through through pricing. I would tell you it’s moderate and in the back half of the year.
Tom Palmer: Okay. Thank you. And then, I wanted to follow up on the Prepared Food side, maybe going back to Peter Galbo’s question just on the new customer wins. Are there particular products that you’re seeing these wins greatest in or particular channels within foodservice? Thanks.
Donnie King: Melanie?
Melanie Boulden: So Tom, your question was — I just want to make sure I’m clear. Are we — are there particular products where you are seeing more success? Can you just repeat your question for me?
Tom Palmer: Yes. Sorry. Exactly. Just you’ve noted some — your growth was driven by some new customer wins. And I was just curious what products were really driving that for you right now within Prepared Foods. Thanks.
Melanie Boulden: Yeah. So, I’d say that when I was talking about the customer expansion, we are making great strides in that area on the foodservice side of the business. And then, I would say, on the retail side of the business, we’re seeing strong growth in distribution with our existing customers behind our core business lines, but we’re also seeing excitement behind some of our — a lot of our new innovation. And in particular, I want to highlight our Jimmy Dean Maple Griddle Cake that we launched last year to success, and we are planning in a couple of months to launch an extension of that product item. Does that help, Tom?
Tom Palmer: Yes. Thank you.
Donnie King: Tom, let me add a little more color as it relates to foodservice there. As a reminder to everyone, in the middle of the pandemic, we had some operational issues being able to produce enough product for our customers, and we essentially had to give up some business. And we’ve been, since the pandemic, trying to go and regain that. But we have a nice diversification between what are the traditionally quick-service restaurants and as well as broad line distribution.
Tom Palmer: Okay. Thank you.
Operator: The next question comes from Michael Lavery with Piper Sandler. Please go ahead.
Michael Lavery: Thank you. Good morning.
Donnie King: Good morning.
Michael Lavery: I want to come back to Chicken and just trying to understand, obviously, the lift in the quarter was cost and margin driven. But when you point to the strategic actions and those benefits, can you help us understand maybe how to think of them kind of longer term? And would this put you at the higher end or above kind of a 5% to 7% margin range? I know you’re not wanting to think about margins as how you guide for the year. You gave a little bit of breadcrumbs for the second half. That’s all real helpful. But maybe just looking a little further out, is business structurally different enough that under normalized conditions, you would rethink what it’s capable of, what its earnings power is longer term?
Donnie King: So, let me start. This is Donnie. Let me start with a couple of points, and then I think John probably has a couple to add. But in terms of being prepared to give guidance, we’re not prepared to do that today and talk about that. But what I can tell you is what we’re doing as a company. We talked about the third consecutive quarter of over $100 million of AOI improvement. In the midst of that, what I can also tell you is market that’s for grain or the meat side, those were largely offsetting one another. So, the improvements are coming from operational improvements, operational excellence both in plants and in live production and really driving out waste from the business. But we also, as we said earlier, we’re realizing the benefits from plant closures that in terms of modernizing and right-sizing our footprint.
So, we’re seeing all of those. But this plan doesn’t really is — I mean, we’ve modeled the markets as they are today for the balance of the year, but this is all about operational excellence, and being more competitive and being better at what we do, at the same time driving up raw material to a more value-added and branded within the Chicken segment. John?
John R. Tyson: Yeah, Don, it’s a nice summary. I think, again, without touching on what the long-term outlook is like, the things I would point out about how the strategic moves we made have a sustaining impact in our business is a couple of things. First, we’re just taking cost out of the system while still keeping the same amount of volume with our customers. Over the long run, that means not putting capital into older and more tired assets, rather investing in those assets where we think we could achieve our targeted ROIC number. And then, I think the other thing, too, is we have really, in the last year, refocused our growth to be demand backed and to be in those subcategory within the Chicken segment, where we see favorable trends from a growth and margin standpoint.
