Tyson Foods, Inc.

Good morning, everyone, and welcome to the Tyson Foods fourth quarter 2023 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please send 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 and then one on your touch-tone telephones. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. And at this time, I'd like to turn the floor over to Sean Cornett, VP of Investor Relations. Sir, you may begin.

Good morning and welcome to Tyson Foods Fiscal Fourth Quarter 2023 Earnings Conference Call. On today's call, Tyson's President and Chief Executive Officer Donnie King and Chief Financial Officer John R. Tyson will provide some prepared remarks followed by Q&A. Additionally, Joining us today are Brady Stewart, Group President Beef, Pork, and Chief Supply Chain Officer, Melanie Bolden, Group President Prepared Foods and Chief Growth Officer, Wes Morris, Group President Poultry, and Amy Tu, President International. We have also provided a supplemental presentation which may be referenced on today's call and is available on Tyson's Investor Relations website and via the link in our webcast. During today's call, we will make forward-looking statements regarding our expectations for the future. These forward-looking statements made during this call are provided pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include comments reflecting our expectations, assumptions, or beliefs about future events or performance that do not relate solely to historical periods. These forward-looking statements are subject to certain risks and 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. We assume no obligation to update any forward-looking statements. Please note that references to earnings per share, operating income, and operating margin in our remarks are on an adjusted basis unless otherwise noted. For reconciliation of these non-GAAP measures to their corresponding GAAP measures, please refer to our earnings press release. Now, I'll turn the call over to Donnie.

Thanks, Sean, and thank you to everyone for joining us this morning. Earlier this morning, we announced our fourth quarter and total fiscal year 2023 results. In Q4, we saw another quarter of sequential improvements in our overall earnings as we continue to make good progress in improving our performance. And I want to thank our team members for delivering these results in what continues to be a tough macro environment. Consumer demand for protein remains relatively stable, and we're well positioned to meet this demand, giving us confidence in our long-term prospects. Q4 also wraps up an unusual fiscal year where all of our core protein categories were challenged, and yet one where our branded business delivered solid results while we continue to see challenging market dynamics our broader portfolio has set up well for the future. As we anticipated, our results continue to improve sequentially in chicken, with Q4 building on the momentum we gained in Q3 as part of a much better second half of fiscal 23 after a difficult start. Our brands continue to perform well, and we grew market share across our core business line, outperforming our peers. This helped our prepared food segment generate solid adjusted operating income in 2023. Market dynamics in beef and pork were challenging this past year, causing spread compression, although for different reasons. Despite these headwinds, our goal remains to be best in class operators so that we can manage these businesses as efficiently as possible. We remain focused on what we can control. One of our priorities is to execute with excellence. Our operations have improved across the business, and we have a long runway of opportunities to perform better. Controlling the controllables extends to capital allocation as well, where we will remain disciplined with CapEx and working capital. We continue to execute our multipoint plan focused on efficiency and modernization. You've seen us take bold actions to improve performance, and everything remains on the table to drive operational excellence and address inefficiencies. Our plan is working, and we are seeing tangible benefits of our efforts to end fiscal 2023. I remain very confident in our long-term strategy and optimistic about our future. Rest assured that we're leaving no stone unturned to drive long-term value for our shareholders. Let's dive into an overview of segment performance by starting with an update on market share. Our brands continue to outpace the broader food and beverage category in volume growth across the retail channel and Q4. Our volume grew while the overwhelming majority of food and beverage peers saw volume declines. Our core business lines, including the iconic retail brands Tyson, Jimmy Dean, Hillshire Farm, and Ballpark, saw Q4 volume growth of 3.2% versus last year, far outpacing our competition. Those four brands also all hold favorite brand status with consumers over our nearest competitor by a wide margin. We continue to show market share leadership in most of the retail categories in which we compete, delivering both pound and dollar share gains across our core business lines. We are accelerating food service where our focus six categories, including value-added chicken, breakfast sausage, dinner sausage, pepperoni pizza toppings, bacon, and Philly steak, outpace the broad line industry in volume growth in the quarter, both versus last year and sequentially. We have a strong food service portfolio and are aligning with key customers as we build momentum for the future. Speaking of winning with customers, we're proud to have made the top 10 for the second year in a row in the most recent Kantar Power Rankings. In fact, Tyson finished in the top 10 in seven of the nine categories they measure as we continue to focus on meeting customer needs and planning the future together with them. Moving to our segments, beginning with prepared foods. As I mentioned, our brand has performed well in Q4, in fact, over the last year. Nearly three-quarters of U.S. households purchased a TysonCorp Business Line product, which is an increase of 90 basis points. While this is impressive across our portfolio, it's worth noting that our product with the highest penetration rate is only in about a third of households, leaving us room for continued growth. This performance in retail helped Prepared Foods have a solid year in fiscal 23 with strong growth in AOI. As you know, our branded foods business is a strategic growth pillar for the future. We believe it is imperative to support our brands with marketing and advertising. As consumers began to face what could be a more difficult economic environment, we ramped up our map support for our brands in the second half of the year. and will continue to do so as we move into fiscal 2024. While the full year AOI for chicken was a modest loss, our progress toward improved performance continued in Q4, with sequential improvement versus Q3. In fact, this is the second consecutive quarter with more than $100 million in sequential AOI increases. I'm proud of what our team has accomplished over the past six months. Not only did we hold on to the operational enhancements we made in Q3, we made incremental improvements in yield and in our live operations. This allowed us to take advantage of improving market conditions, including lower grain costs, leading to a positive margin to end the year. As we head into new fiscal year, we expect a better outlook for input costs while seeing the benefits of some of the bold actions we took this year. Coming into fiscal 23, we expected beef to be under pressure due to limited cattle supply. This trend held true as cattle costs appreciated at a faster rate than the wholesale price of boxed beef, eroding export opportunities due to a strong US dollar and low price of competing exporters, and ultimately creating a very tight spread scenario. We also expected to see signs of rebuild of the herd to surface as cattle prices moved higher. However, This did not materialize. Until significant heifer retention and subsequent herd rebuilding takes place, we expect challenging supply conditions to remain. In this context, while the timing remains uncertain, we will be prepared by focusing on operational discipline. Moving to pork. As you know, in fiscal 23, the industry suffered from supply and demand imbalances, which negatively impacted spreads. While we are seeing some signs of improving spreads and lower grain costs, there is still an imbalance between supply and demand of pork. Our team is focused on running the business as efficiently as possible while continuing to review all the options. We saw significant sequential and year-over-year improvement in AOI and Q4 driven primarily by improving spreads and operational enhancements. Before I turn the call over to John to review our financials and FY24 guidance, I want to give you my priorities for the coming year. First is improving our financial strength with a focus on cash. I want to emphasize that we will be disciplined and prudent with capital while remaining committed to our dividend as the primary way of returning cash to shareholders. As you saw in our earnings press release this morning, we increased our dividend for the 12th consecutive year. We will continue to evaluate our production footprint and network to drive efficiencies. As you saw, we've made significant changes in chicken by announcing the closure of six of our older, less efficient plants, which we expect to improve our capacity utilization and mix. In a similar move to leverage efficiencies and reduce network redundancies, we also recently made the difficult decision to take two of our smaller fresh meats case ready value added facilities offline. Production from these locations will shift to larger, more efficient plants, and our harvest capacity, sales volume, and importantly, our customers will see no impact. We are reviewing whether there are similar opportunities across our segments. In chicken, we will remain focused on further enhancing our competitiveness going forward. Prepared Foods was the profit engine for the company last year. We want to sustain and build on that strength by supporting our brands and driving momentum in food service while being responsive to changes in the market conditions. Some of the key focus areas are making better use of our data, shifting more of our map support to digital media, and being disciplined with revenue management. In beef, multiple outcomes are possible during the current cattle cycle. We believe we have best-in-class assets and team members, and are aligning with the right suppliers and customers, giving us confidence that we'll be prepared for all of them. In Port, we believe we have a bright future ahead of us and are excited about the team we've built that continues to drive operational improvement and synergies with our prepared foods business. As we said before, we're taking a hard look at our cost structure to drive operational excellence. Our ongoing productivity initiatives are focused on things that can be deployed at scale enterprise-wide, including procurement, logistics, and digitalization. These are a few of the initiatives that will make us a fundamentally stronger business as we go forward. With that, I'll turn the call over to John.