Tyson Foods, Inc.

Good morning and welcome to the Tyson Suh Second Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Megan Britt of Investor Relations. Please go ahead.

Hello and welcome to the second quarter fiscal 2021 earnings conference call for Tyson Foods. On the call today are Dean Banks, President and Chief Executive Officer, Donnie King, Group President Poultry and Chief Operating Officer, and Stuart Glenn Denning, EVP and Chief Financial Officer. We have prepared presentation slides to supplement our comments, which are available on the investor relations section of the Tyson website and through the link to our webcast. During this call, we'll make forward-looking statements regarding our expectations for the future. These statements are subject to risks, uncertainties, and assumptions, which may cause actual results to differ materially from our current projections. please refer to our forward-looking statement disclaimers on slide two, as well as our SEC filings for additional information concerning risk factors that could cause our actual results to differ materially from our projections. Please note that references on earnings per share, operating income, and operating margin in our remarks are on an adjusted basis unless otherwise noted. For reconciliations of these non-GAAP measures to their corresponding GAAP measures, please refer to our earnings press release. I'll now turn the call over to Dean.

Thank you, Megan. Before we get started, I'd like to welcome Donnie King to the earnings call and congratulate him on his recent promotion to chief operating officer. I would also like to thank our 140,000 team members for their continued efforts and resilience. They are what makes this company an incredible place to work. And I'm proud of their focus on raising the world's expectations for how much good food can do. Earlier today, we released our second quarter results for fiscal 2021. We delivered a solid operating earnings performance, recording $739 million in adjusted operating income for the quarter, which represents a 43% increase relative to the same period last year. We delivered $1.34 in adjusted earnings per share, a 68% increase from the same period last year. These results were reinforced by our solid performance in retail, our continuing efforts to ensure the safety of our team members, our partnership with customers to enable recovery, and our focused execution to overcome inflationary headwinds. Our results in the quarter reflect our continued focus on team member health and safety. This is our top priority and I'm proud of the progress that we have made on our comprehensive safety, health, and wellness agenda, along with our recent vaccine deployment efforts. We also saw improvement in the food service channel during the quarter. We've been working closely with our customers to support food service recovery. As consumer demand patterns continue to create operational complexities, we've taken action to make our organization more responsive to demand signals and customer needs to accelerate our speed to market. Agility is increasingly important as we look to extend the gains that we have achieved in the retail channel. We continue to drive retail volume growth across our core business lines. Delivering growth in the recent quarter is particularly notable as we are now comparing to a prior quarter that included some benefit from initial COVID-19 pantry loading. As we navigate market volatility and rising inflationary pressures, we're focused on operational excellence and disciplined cost management. Our balance sheet is strong, and we continue to invest in our business. We have prioritized capacity expansion and automation technology investments and have significantly increased our capital allocated to both of these areas. As an example, our Humboldt production facility in Tennessee has recently commenced operations, and our team shipped the first saleable product in late April. To support growth in case ready beef and pork, we are also excited for the reopening of our Columbia, South Carolina plant, as well as the grand opening of our Eagle Mountain, Utah plant, both occurring later this year. We are expanding capacity in our international operations and have six sites where new capacity is currently under construction, positioning our international business for continued growth and profitability in the future. As we look at the balance of the year, we realize that we have a challenging second half ahead as inflationary pressure has continued to build. We also have several bright spots, notably our performance in the retail channel and the continued strength in our beef segment. Looking past the inflationary headwinds that are impacting our input costs, I'm confident that our team is executing on the right priorities to meet our commitments and drive shareholder value creation. Turning to slide four, team member health and safety is and will continue to be our top priority. Through our partnership with Matrix Medical and our local communities, over 42,000 of our team members have been vaccinated since February. As of today, we've offered onsite vaccination clinics at over 100 locations in more than 30 states. We've also launched a pilot project to enhance health and wellness of our team members. This involves the opening of seven clinics that will enable team members and their families to receive easier access to high-quality healthcare services. Our first facility opened recently in New Bern, Tennessee. Turning now to slide five, our total Tyson and core business lines have posted 11 consecutive quarters of volume and share growth. Notably, our team delivered volume growth in Q2 despite the unusually strong demand associated with pantry loading that occurred during the comparable quarter last year. Sales volume for Tyson core business lines are up 12.7% and total Tyson is up 8.5% in the latest 52 weeks. Our share growth has been the strongest in breakfast sausage, hot dogs, frozen value-added poultry, and frozen protein breakfast. Our growth during these periods was driven in large part by our ability to bring incremental households into our brand and product lines. Total Tyson household penetration reached 81% for the latest 52 weeks. Also, consumers continue to rely on low to no contact buying methods. As a result, we experienced e-commerce sales growth of 105% in the latest 13 weeks compared with last year. This equated to approximately $425 million of sales through our e-commerce channel partners. Turning to slide six, innovation is important to our success in both retail and food service channels. And we continue to invest in the launch and scaling of new product innovations, On this slide, we have three examples of how our product innovation is tied to meaningful consumer insights. In a recent survey, nearly half of Americans expressed dissatisfaction with available plant-based options for the grill. This insight spurred our recent nationwide Raised and Rooted launch, which includes three new products to meet increasing demand for plant-based protein options. We're also excited for a recent launch of alternative protein offerings in the Europe and Asia Pacific markets, which will support growing global demand for protein. Our Jimmy Dean breakfast nuggets are another example of our ability to pair brand and category leadership in frozen breakfast with our unique production capabilities to deliver protein-dense offerings that complement Tyson's current product portfolio. Finally, annual servings per capita for breaded chicken sandwiches at restaurants are up 14%, and our products in this space have enabled us to capitalize on the growing popularity. Moving to chart seven, as we continue to navigate complex consumer dynamics overall, we're closely monitoring several factors to effectively engage with our customers and consumers in support of the overall recovery. Protein has remained relevant throughout the pandemic with 54% of consumers indicating a deliberate intent to increase protein intake within their daily diet and 20% indicating that they are consuming animal protein more often than they were a year ago. In addition to overall protein consumption, we are closely monitoring reopening and recovery patterns. Approximately 76% of the U.S. states are now at 75% or more capacity for in-restaurant dining. With vaccine rollouts and consumer mobility improving, away-from-home traffic is gradually increasing on a sequential basis. Currently, QSR and C-stores are leading the recovery as consumers are very comfortable with ordering takeout. While we are seeing some challenges in our international markets, progress against COVID domestically should continue to improve consumer confidence and mobility in the second half. The U.S. economy is improving rapidly, in part due to government stimulus. While we expect some degree of elevated retail consumption to remain post-COVID, our success in growing retail share and driving relevant innovation will allow us to meet the strong demand for protein and serve our customers across all channels. I'll now turn the call over to Donnie to walk us through the segment operating results in detail.