Tyson Foods, Inc. (NYSE:TSN) Q3 2023 Earnings Call Transcript

What is the cow harvest? And I think from there, at that point on in time, we might be able to make better projections about what ‘24 and ‘25 look like. And so I think that’s probably as much as we can tell you on that today.

Peter Galbo: No. That’s helpful, John. Thank you for that just because kind of as we think about watch outs. And then maybe just back on chicken dies, just two questions or a two-part question. First is, with the four facilities you have today, are there any further anticipated impairments that you may have to take or kind of was that all contemplated today? And then secondly, maybe more broadly Donnie, this mark-to-market hedging program in Chicken seems to kind of be an unexpected headwind over a lot of quarters. Just curious as you’re re-evaluating, all parts of the business, I mean, is there a thought process on just unwinding the hedging program and kind of going to a more hand-to-mouth approach. Thanks very much.

Donnie King: Sure. Thanks. Let me – in terms of the plant closures, as I said earlier, we’re continuing to evaluate everything as we automate and modernize these assets. And so, we’ll continue to look. I will tell you from an execution standpoint again, performance was much better in Q3 and a lot of momentum moving into Q4 in our chicken business. We we’re still growing with customers and we still have capacity to be able to do that going forward. So, but in terms of mark-to-market, I see it as well, we’ve talked about in a great deal at what the other options are for that in the business. Let me, let me send it over to John and let him add a little color about that.

John Tyson: Yeah, I think there were two questions in there. One around the impairments and one around the mark-to-market program. I think on the hedging program, look, we, we manage that – try to manage for margin with for ourselves and as part of our relationship with our customers. We’re always evaluating how we can do things different and better and recognize that they can create a little bit of noise in the numbers. But at this point in time, we don’t have any plans to change our approach on how we do that. So that’s number one. And then on the impairment, I think it’s just worth pointing out there were goodwill impairment in our chicken business in our Q3. But as it relates to these asset closures, the details of those charges would come through in our Q4 and we will give a little more clarity on that as relates to the asset impairments, and the one-time cash cost, which all continue to get work through as we work through the details with the quarter.

Peter Galbo: Great. Thanks very much, John.

Operator: Our next question comes from Adam Samuelson from Goldman Sachs. Please go ahead with your question.

Adam Samuelson: Yes. Thank you. Good morning, everyone.

Donnie King: Good morning, Adam,

Adam Samuelson: Morning. So maybe just continuing in chicken and John you have some helpful color and quantifying how it benefits from some of the plant closures and production shifts on the business. And you quoted a $200 million kind of profit run rate that would equate to give or take 110, or 120 basis points to margin at your current revenue levels. So, as we think about where you’re exiting fiscal ‘23 with the business in a loss position, the cumulative effect of those actions would get you to functionally marginal levels of profitability. So help us think about beyond that. So these are things you can control and they get you slightly profitable. Is it really a market-dependent question on Chicken demand has to improve chicken – commodity chicken pricing has to improve is what would actually get you to those historical 5% plus margins that the company had been previously still aiming for a longer term?