... All right. Well, good morning, and thank you very much for joining us. Next to the stage, I'm pleased to introduce Tyson Foods, one of the world's largest protein producers across all major proteins: chicken, pork, beef, and the company also operates a very sizable prepared foods business. With us today, we got Curt Calaway, company's CFO, as well as Devin Cole, recently named Chief Operating Officer. And with that, I'd like to kick it off, actually, over to you, Devin. I mean, recently, just a few days ago, you got a little promotion up to Chief Operating Officer. So really, the first question is, with that more expanded role versus what you previously oversaw, what are, like, the key priorities you are tasked to look at for the next couple of quarters?
Yeah, sure. Thank you. Thanks for the question. You know, listen, I should first start by saying how grateful I am for the opportunity. We have a very robust succession mechanism in place at our company, and so this is you know, thankfully not as a complete surprise to me or others. And this will give me an opportunity to have a bit more visibility directly with all of our company. Certainly been involved with our prepared foods and our poultry business over the years, and you know, was actually a part of Tyson back when we did the IBP acquisition in early 2000s. So I've been around the beef and pork business a good bit.
But to answer your question, listen, I think, you know, like anybody should probably say in a new role, my first priority is to do no harm. We have exceptional talent at all levels of the organization, you know, all the group presidents, all of the finance talent that we have. What I will always insist on in any organization is to make sure that we have great alignment, great clarity, and great communication.
And I think, you know, with this new role, that will only allow us to elevate that a bit, to make sure that we're seeing across all of the proteins, globally, quite honestly, with our international business as well, making sure that we have the visibility to have best practices in place and to take advantage of any opportunity that we see anywhere that we have the ability to do business. So, you know, as I will be very inquisitive over the coming weeks and months, I don't see any major changes to our business because thankfully, we're in a very good spot.
And the thing that I will assure, you know, our team members as well as our stakeholders, is that we will do nothing but accelerate the momentum that we already have and that I am very fortunate to inherit.
Okay, good stuff. Now, obviously, one of the bigger themes here at the conference has all been talking about consumer health, and we've seen a lot of, like, discussions about, like, just cautious sentiment, spending somewhat under pressure. So if you look at the different major protein categories within your portfolio, what have you seen in, like, terms of, like, consumer behavior here? And how do you feel overall increased priority for protein consumption has helped you short term, but also will continue to be a driver long term?
Yeah, sure. You know, it has been widely reported, you know, we are dealing with a cautious consumer, and that's not really new news. It's just a continuation of what we've been seeing. You know, customers, definitely, we see restaurant traffic counts being down and more of a pivot to a bit more retail shopping and probably a bit more frequent retail shopping with, you know, a lower ring size per occurrence. And so we're aware of all those things. I think the great news for us as a company is that, as you mentioned, protein is winning, you know, for a variety of reasons, and also protein, particularly animal protein, is seen as an essential part of people's diets, more so now than ever.
And so, you know, what we are seeing even at food service, particularly with our chicken portfolio, is because of the value relative to the other proteins and the innovation and the great partners that we have at foods ervice, we are seeing that value-added business grow, thankfully, even with traffic counts being down, so that's great news for us, and then as you look at our retail business, I mean, we have an exceptional innovation pipeline across every place that we do business, and we talk a lot about value-added, and I wanna make sure people understand that that's not just a term that we refer to for, say, partially cooked or fully cooked, which is a big part of convenience.
But even in our fresh chicken, right, we see an opportunity through, throughout that category to provide better opportunities for people. Maybe it's pack size, maybe it's the packaging itself, maybe it's the attributes that we offer, even in fresh chicken. Our deli business is growing, certainly as consumers wanna have a restaurant-quality experience, even, even at home. And luckily, we have the expertise to know how to make those products where they're easily reconstituted, whether that be in an air fryer, an oven, a microwave. However people want to utilize those pieces of equipment, we understand that, and we're creating products for them. We also have, you know, across all of our branded portfolio, particularly in prepared foods, we have a great innovation with breakfast, with Jimmy Dean items.
We have, you know, great innovation with Hillshire Farms, both in lunch meat as well as snacking occasions. And then, of course, with our chicken offerings, I think we had 20 plus innovation items in our retail chicken this past year. We talked a lot about accelerated marketing spend, and that's not just in trade and marketing, although that's a piece of it. We also have spent a tremendous amount of money making sure we have the right quality products, making sure we have the right packaging, making sure that not only that, but we understand where that consumer is going, and when we do spend those trade dollars, we have better visibility than ever to make sure that we're spending them in the right way, that it is driving the right behavior, and that we're getting a return from that.
Okay. I mean, along the line of these, like, focused spending, et cetera, you've done a lot of production improvement over the last couple of years. Anything that's still pending? I mean, we've seen a few things, obviously, in chicken that clearly has started to pay off, more recently. I think you've done a few things within pork. So what is it you're currently reviewing from an operations side, where you see opportunities to potentially further improve?
Yeah. You know, I think, you know, what, what we're always mindful of and what will really create consistency in this business over a very long time horizon is what we control. You know, certainly there are inputs relative to that particular part of our business that we are mindful of. We don't see anything on the horizon there that would be disruptive. And even in the most recent quarter, if you look at what our results were really driven by, it was our own operational excellence, and it was also making sure that we had the right innovation. So the way I think about that business is we've done some work with our footprint.
We feel like we're in a very good, very good place, you know, in terms of not only the footprint that we have, but the capacity that we have within that footprint. And so, you know, if you think about today's, you know, construction cost, for example, obviously, we want to utilize, you know, the prior investments that we've made to the utmost before we go out and spend incremental CapEx. So it's made us better, I think, investors of our capital, but it's also given us, you know, real insight into how good these facilities can be. And I think that we're running, you know, the best operational piece of our business that I've ever seen, but I would also tell you, we're not sitting still. It's like anything else.
Everyone is improving constantly, and we recognize our leadership position, but we also recognize that it, it only matters if we are continually getting better, and we are doing that. So I look at all of our businesses, quite frankly, with the same lens, whether that be international, whether that be beef, pork or prepared foods or chicken. What has really driven the results is our high level of execution and having visibility into how we get better from here.
Got it. I mean, clearly, chicken is currently kind of like the bright spot within the commodity piece for you.
Yeah.
I remember you talked about, like, certain investments up to $100 million, if I remember right, in the chicken business for the second fiscal half. But you still, after third fiscal quarter, kind of, like, upped your outlook here for operating income. How is these investments coming together? Is that still on track, and is that something as we move into next year, you probably don't have that, assuming margins stay where they are, there's additional upside from where you are right now?
Yeah. So we are still on track. We will, of course, wrap up here in the next few weeks, our Q4, and we'll fully have exercised our commitment against those marketing dollars, those spend dollars. And, you know, we've already set our planning in motion for FY 2026. And what I would tell you is again, going back to the visibility that we have, the analytics, the team that we have in place, the data, how we're talking to these consumers today in a new way, it's way more efficient than it's ever been in terms of our marketing dollars.
But just the visibility and the partnership that we have with our customers tells us that we are on the right track, and we see no reason to change that trajectory based on the results that we are seeing, and we will have the same discipline moving forward.
Okay. Within chicken, the value-added sales obviously has kind of, like, gained share internally. How sustainable is that, and where do you think there's maybe further opportunity to improve?
Yeah, listen, I'm very, very bullish on our ability to continue. We've seen some very large gains both in volume, dollar share, household penetration, whatever metric you want to look at, across retail and food service with our value-added portfolio, which only says next year we will have to, you know, achieve that and something greater than that. And I fully believe that we will do that, and the reason I do is I have had the opportunity to have a glimpse at our innovation pipeline. And it's all those things that I've talked about. You know, it's not just a complete turnover of our products, because one thing I would point out is that, you know, innovation can be expensive.
We're making sure when we place these bets, that we are not only getting trial but getting repeat, you know, across every day part, particularly in snacking, we've had tremendous success more recently. It's not just line extensions, I should point out, too. It is truly a lot of white space for us. I think that we will continue to grow within the category, or within the segments that we're known for, but I think people will be excited and surprised to see some of the things that are in, particularly the prepared foods pipeline for next year, that they might not expect from us.
Thank you. Clearly, chicken can be very volatile, very fast, and you always warn about the downside risks no matter what. So just remind us a little bit, what are you seeing in the market? What could go wrong, right? What could go wrong in chicken to kind of, like, reverse course and have a little more of a negative impact, maybe in the next couple of months? Is it too much production because hatcheries issues are solved?
Right
... or what are the key things you're watching?
... You know, I think if you think about the industry, you know, sort of biomarkers that are widely talked about, it appears to us that it will continue to be a stable environment. So as I think about, you know, USDA projections on grain, yeah, there's certainly some calls and puts relative to tariffs and some of the, you know, imports and exports, but I don't see anything disruptive on the grain front. In terms of overall production, it's certainly something that we watch. You know, we have very thankfully managed our live production footprint very well. You know, we're confident in the breed that we use, but we're more confident in our team.
Because at the end of the day, it really is about the execution in that part of the business and the management of it. And so luckily, we have seen, you know, relative to the public data that's out there, a better performance on that side of the business. So, I don't see a lot of numbers that are available that would tell me there's gonna be a huge uptick in production next year. If you look at USDA forecasts across all the proteins, you know, it's pretty minimal, and I think the demand will more than outweigh that. So I don't see anything from an industry perspective.
But I would also tell you this, too: in our, you know, value-added poultry business, if we did see an opportunity, where the industry were to produce more than they could consume, we certainly can go take advantage of that and bring that into our operations. And so I think what I focus on is our business, how fast our business is growing, and making sure that we have the right supply to take care of our customers. You know, the one thing I'm very proud of across prepared and poultry is that we've maintained a 98% plus fill rate. And so we are, you know, not only making sure we have the right quality, but it's in the right place at the right time for our customers. So, you know, what could go wrong?
Listen, this is a difficult business, and, you know, what I have confidence in is that the things that could go wrong are largely execution, and I think we're proving ourselves as being very competent in execution. But I would also tell you, I don't say that with any ego, meaning that we wake up every day realizing we need to do the same thing today or better than we did yesterday. It is about continuous improvement for us, and that is what we're focused on.
Good stuff. Obviously, opposite of the cycle, kind of like great in chicken, but pretty challenging in beef still. What signs have you seen over summer? Are you getting a little more, call it, excited or optimistic about some of the, a rebuild happening? What are, like, kind of, like, the markers? And more short term, how much of an impact does it have on your business that there is this restriction from Mexican cattle because of screw worm coming into the U.S.?
Yeah.
Curt?
Yeah. So certainly, you know, start with an overview relative to beef. You know, it's been certainly limited availability, right? Has been the journey we've been on. And we've seen a spread volatility during that time period, as well. But I think from our business, you know, we have continued to focus on the efficiencies within our business and controlling what we can. We have seen, to your question, you know, an environment where we've said for the first time, you know, about a quarter ago, if we haven't reached the point, we could see it from where we're at. And we talked a bit more definitively last month, that we believe the signs are there, that herd rebuilding is in place.
We've talked about, you know, the beef cow herd or the cow herd, we've talked about heifer retention, and we talked about beef cow slaughter being down year- over- year as well. All signs positive. Certainly, a number of other macroeconomic environment conditions that we've seen that we believe we're at that point, right? Now, that's gonna take a while once, right, once heifer retention has begun, that's gonna take a cycle as it works its way through before those animals are available for us. You mentioned New World screw worm and the Mexico border currently closed, continues to present, you know, another challenge. While not hugely meaningful, it is meaningful and more meaningful to the southern parts of the beef cattle processors.
But ultimately, you know, as we work our way through the cycle and we said that it's likely to be 2028 before it gets to the point in which you can see meaningfully back to a sustainable level of a cattle herd into the processing plants. But in the meantime, we're gonna continue to run our operations as efficiently as we can. We're gonna continue our cost savings programs, just as Devin had illustrated we're doing in other parts of the business. But most importantly, as well, we're gonna continue to meet where the consumer is. So as the consumer continues to seek protein, they continue to seek protein from animal sources, and they're looking for fresh and convenient alternatives.
And we're meeting that need with not only fresh items, but continuing to add seasoned and marinated options and more convenient options for the consumer. That's gonna be the difference as we manage our way through 2026, 2027 and beyond in 2028.
Just as a follow-up on that, you said about the investment operational excellence. So as you look at it, and let's just fast-forward maybe towards the end of the decade, with all these investments, would you expect that on a normal availability level, profit margins are gonna be better than the last time, excluding the whole COVID spikes and all that kind of stuff? Thinking more like 10 years ago and not so much 5 years ago.
Yeah, certainly, we've not shared a normalized range. Certainly, we've got to get through the herd cycle and see where it all settles out at.
... but we're very optimistic relative to what we've done within our business to control our future, and the cattle cycle will manage its way through, and it'll balance over time.
Okay, we're waiting for that in the future then, as an update. Switching gears, back to prepared foods, which has been, like, kind of like their very strong segment over the last couple of quarters and continue to do very well with, I mean, the outlook close to about $1 billion in operating profit this year. What is different for Tyson in that business versus some of the peers? Because obviously, we're talking, listening to a lot of packaged food companies, and a lot of them struggle, but you continue to do somewhat better, so what differentiates Tyson Foods here in the prepared foods business?
Yeah, listen, certainly, it's a large category, with a variety of different companies involved, sort of all chasing, if you will, that same consumer. I think what I see in our business and what gives me confidence are some of the things that I've mentioned. You know, one, just the uniqueness of our offerings, both from an innovation standpoint and the ability that we have to give very high protein offerings to people in a convenient fashion. I think, you know, in my career, the things that will never go out of fashion with regard to consumer preference is, it needs to, you know, one, be a great value. That's not necessarily the cheapest price, but the relative price point to the value of it.
It's gonna have to be convenient, and it's gonna have to taste great, and we never lose sight of those things. And so, you know, when I walk around, which I often do, the store, just to look at what's going on around us and our position, you know, in the marketplace, I am, you know, really, really confident and happy with what I see because I see so many places that people can interact with our products. I know they're gonna be happy with what they get, whether we're talking about our, you know, our Jimmy Dean offerings at breakfast, and again, Hillshire, you know, during the snacking part of the day, increasingly so, or at lunch, and then, of course, the Tyson-branded offerings at lunch and then the dinner day part.
And don't forget too, that we, you know, we have a presence, you know, around the perimeter of the store, with fresh chicken and also a big presence in the deli. So it would be very difficult, if not impossible, to walk around a store and find something that didn't fit either the price, the offering, the convenience, or the day part that you're looking for for us. So that's one piece of it. But then the second piece of this, you know, for me, what is different is just the confidence I have in our operational excellence. It is better than it has ever been. It will continue to get better. We have exceptional people on that business, but they also have a great strategy in place.
It's not happening by accident. And so, daily, they are sitting down to talk about where they are either missing or making, you know, their marks that they have set out as a strategy, and what are they gonna do to either improve or to expand upon the places that they're having a positive impact. And so I see that going on, and it makes me feel very good. But again, if I think about that whole category of products, it's in a place that it hasn't been in quite some time, and I see nothing that will deter the momentum of that business in the future.
Okay. Following up real quick, I mean, obviously, we've seen a lot of, like, input price pressure-
Mm-hmm.
from a raw material side within prepared foods.
Yeah.
Thinking bellies, trim, and-
Yeah.
Clearly, you have somewhat of an integrated sourcing. You know, where it's coming from.
Sure.
How much does that knowledge allow you to kind of, like, anticipate needed price increases? How much have you done, and what do you think you need to kind of, like, shake out on the pricing side to kind of, like, offset that input cost pressure?
Yeah. So coming out of Q3, you know, certainly the time of year when we tend to see the height of those raw material markets, and we're building inventory, you know, that will flow through. And we have a couple different pricing, you know, mechanisms. Certainly, we have, you know, we have formula pricing that tends to have a lag, so you'll see that flow through. And then we have the ability, certainly to, you know, to change price, you know, just at the point of sale, and we've done some of that, right? And I think the thing that I point to the most is that we have...
We are very cautiously and very consciously watching those price points to make sure that we are staying within the realm of what I would characterize as providing value to that consumer, and also within the category to make sure that we are competitive to the set. But yeah, those are kind of the two mechanisms that we've had, and we've taken advantage of both of those.
Okay. And then I remember, Devin, in the past, you kind of like was also--you were very much in charge of the international business. You didn't get that many questions in the past on conference calls, but gonna focus on very specific international questions now for you. Clearly, one of these segments--the segment as well has done better, and we were seeing a lot of growth activity. There's a lot going on trade, right?
Yeah.
I mean, between China, Brazil, and the U.S., Australia, you name it. I mean, there's just a lot of moving pieces. As you look at the Tyson portfolio, you look at the business of Tyson and the opportunity in international, where do you think are low-hanging fruits, and where would you like to potentially expand on opportunities to kind of keep that business going with the momentum it has been showing?
Yeah, yeah, so maybe just, you know, we don't talk a lot about it. We don't get a lot of questions about it, and I guess from my perspective, given the number of hours of the day that it requires, we certainly don't get a lot of questions, which, you know, is fine, but I'm very proud of that business. And so really, the journey that we've, you know, embarked on over the last, call it eighteen months is we had made tremendous investment. We have amazing assets every place that we do business around the world, which is, you know, for those that don't know, primarily Southeast Asia, China. We have some sales offices in Europe and Latin America. We have some joint venture partners in South America and the Middle East.
And so we have the assets in place. We now have the leadership team in place, and we certainly have great customer partnerships around the world. You know, primarily a food service business, primarily a further processing business, but we certainly have a retail presence in certain areas of the world also. And so I think what we have, you know, what we've done over this time frame to get the results that we've seen is not unlike everything else that we've talked about. We took a step back and said, "Okay, where are we really, and where do we want to go?
What is the strategy that will get us there from a commercial lens, and also, what are the opportunities and best practice sharing that we can learn from having done this a very long time in the U.S., and get to a point around the world where we have the same sort of metrics in place, the same sort of culture from a, you know, from an operational excellence and safety perspective that we would expect?" And, you know, one, we have made tremendous progress. And two, I would tell you, we have, we have as much progress to make. So I'm very optimistic about the trajectory of that business moving forward. And listen, I don't want to gloss over the fact that those businesses, just by their sheer nature, certainly have, you know, their headwinds, if you will, right?
There's all sorts of geopolitical as well as economic pressure on those businesses, but that's true for everyone. It's not unique to us. And so what I have confidence in is that, one, we have put a leadership team in place. We support that from the U.S., but they are running these businesses in country by country. So they understand the nuances. They are closer to these conditions as they change, and we have dialogue every day, every morning, every night, about what we're going to do about them. And so while those things exist, my confidence lies in the fact that now more than ever, we're in a position to both plan for those things and react to them when necessary.
Okay. Last segment, pork. You revised that one up, so that was another positive one in the last quarter. Obviously, probably benefits from some of the down-trading patterns, as it's just a cheaper alternative to beef. As you look at, in your specific operations within pork, where do you think you could do better in that business from a profit margin perspective? Because it feels it's still a little below where it could be. So what are the missing pieces here? What type of investments you're planning on getting that back to what we've seen in the past on a margin profile?
Yeah. So I think I'd start with certainly acknowledging, as you said, right? We not only narrowed but raised the midpoint of the guidance. And it's been performing very well this year, and that really is attributed to the team and their execution. They've done a phenomenal job across 2025, and we expect them to continue that as well. But as to your point, relative to a trade down, right? Certainly in an environment where beef availability down and likely probably down a little bit as we move forward, based on the USDA data, and chicken being up somewhat, right? So it'll continue to have a benefit of a rather stable outlook relative to availability. And consumers are continuing to seek value, and to your point, that's another opportunity.
What we have to do, just as I mentioned in beef as well, is continue with seasoned and marinated offerings. As Devin talked about, relative to pack type, pack size, and attributes that we're giving them, is very important for us to continue to accelerate that business. But we're optimistic on the future for it as well, and done a very nice job. We've done those operational execution things within the pork business as well. We did make a decision a while ago that we condensed our footprint. Still kept the same throughput, but minimized our overhead associated with one facility. Continuing the journey, as is expected of us, to optimize that footprint.
No, no changes relative to that in the future, but within the operational execution of each of those, they're continuing to operate better and meeting that consumer need.
Okay. To wrap it, just a few things on capital allocation, cash allocation. You just reopened, restored share repurchases.
Mm-hmm.
How are you gonna think of executing that over the course of the next two years? How do you think about buybacks versus dividends versus CapEx and/or M&A, just in general, like, kind of, like, from a priority standpoint of view?
Yeah. It certainly starts with our capital allocation priorities, and as we've consistently said, our net leverage target of at or below two times. We finished last quarter at two point one times. So we're almost there, very close, and that gave us an opportunity. You illustrated at the beginning of the question, to reopen a small degree, but reopen share repurchases, something we hadn't done since Q1 of 2023. So we had not bought back some of the equity dilution that we normally experience, so we've probably got a, you know, some of that to catch up since we've been out of the market since Q1 of 2023. But certainly also looking at the share price, where it was at was an attractive entry point for us.
We did increase last year or for this year, our dividend, which is the thirteenth consecutive year of an increase, a very important metric for us as well. And while CapEx is down a little versus historical, meaning the last few years, it's not really down much relative to a longer-term historical. We spent a high-water mark near $1.9 billion a couple of years ago in back-to-back years, really, as we added capacity in the network and spent on new facilities, both domestically and internationally. That's not necessary as we move forward relative to that pace that we were on. And so I would expect it to be lower relative to certainly those high-water marks, but we're very comfortable with the level of CapEx that we've shared.
And M&A is always going to be opportunistic for us. I think we've shown a very disciplined approach, and would expect that to continue to be the case with expecting, you know, a high return, a high confidence, and most importantly, a need to meet that consumer need will be important for us in the lens to look at.
Okay. So just to confirm, it's about $1 billion in CapEx, which you would think is, like, kind of like a normalized level without expansion, or?
Yeah, that's a very reasonable number, yes.
Okay. Perfect. All right. Well, Curt, Devin, thank you very much. We do not have a breakout, but obviously, you have the opportunity to meet the team in group meetings or one-on-ones. And, thanks for joining us. Congrats once again on-
Pleasure
... the expanded role, and hope to see you next year. Thank you very much.
Thank you.