Tyson Foods, Inc. · NYSE:TSN
Tyson Foods — Consumer Analyst Group of New York (CAGNY) Annual Conference 2016
79 slides from Tyson Foods's conference presentation, Feb 16, 2016
Slide 1: Consumer Analyst Group of New York Annual Conference
Consumer Analyst Group of New York February 16, 2016 Annual Conference
Slide 2: Presenters
Donnie Smith Andy Callahan Sally Grimes Jon Kathol President & President, President, Vice President, CEO Retail Packaged International & Chief Investor Relations Brands Global Growth Officer
Slide 3: Presenters
Tom Hayes Donnie King Dennis Leatherby Chief Commercial Officer & President, Executive Vice President & President, Food Service North American Operations CFO
Slide 4: Forward-Looking Statements
F O RW A R D - L O O K I N G S TAT E M E N T S Certain information contained in this presentation may constitute forward-looking statements, such as statements relating to expected performance. These forward-looking statements are subject to a number of factors and uncertainties which could cause ou
Slide 5: Different company
different company.
Slide 6: Iconic Brands
ICONIC BRANDS Tyson, Jimmy Dean, Hillshire Farm – Billion $ Brands
Slide 7: FY15 Adjusted Sales
T Y S O N F O O D S I S O N E O F T H E W O R L D ’ S L A R G E S T F O O D C O M PA N I E S $40.6 billion in FY15 adjusted sales* Sales Other Sales by Other 2% 4% by Segment Distribution Channel Pork Prepared Int’l 11% Foods 13% 19% Consumer Chicken Foodservice Products Beef 41% 27% 31% 52% *Repres
Slide 8: Adjusted EPS Growth
ADJUSTED EPS* GROWTH $3.85-3.95** $3.15 $2.94 $2.26 $1.97 FY12 FY13 FY14 FY15 FY16 proj. *Represents a non-GAAP financial measure. Adjusted EPS is explained and reconciled to a comparable GAAP measure in the Appendix. ** Projected EPS guidance as of 02/05/16
Slide 9: Tyson Foods Financial Trends
TYSON FOODS FINANCIAL TRENDS Sales (Bn) EBITDA** (MM) $40.6* $37.3* $33.1 $34.4 $2,906 $32.0 $1,767 $1,818 $1,897 $1,731 FY11 FY12 FY13 FY14 FY15 FY11 FY12 FY13 FY14 FY15 *Adjusted sales represents a non-GAAP financial measure, which is **Represents a non-GAAP financial measure. EBITDA is explained
Slide 10: Priorities for Cash
PRIORITIES FOR CASH Growing Existing Businesses Strategic Acquisitions Returning Cash to Shareholders
Slide 11: TSN Performance vs. S&P and Peer Group
TSN PERFORMANCE VS. S&P 500 AND PEER GROUP* comparison of 5-year cumulative total returns $350 $300 $250 $200 $150 $100 $50 $0 FYE 10/2/10 10/1/11 9/29/12 9/28/13 9/27/14 10/3/15 Tyson Foods S&P 500 Index Peer Group *The total cumulative return on investment (change in the year-end stock price plus
Slide 12: Andy Callahan, President, Retail Packaged Brands
President, Andy Callahan Retail Packaged Brands
Slide 13: Different Portfolio, Different Business Model
different portfolio. different business model. Tyson Foods, Inc.
Slide 14: Today's Takeaways
DIFFERENT PORT FOLIO. DIFFERENT BUSINESS MODEL // today’s takeaways Advantaged Leading Differentiated categories brands approach We play in attractive, We leverage our Our business model high-growth protein portfolio of leading uniquely positions us categories brands and scale to to drive value crea
Slide 15: Consumer Behavior Will Drive Protein Growth
DIFFERENT PORT FOLIO // PROT EIN consumer behavior will drive continued growth in protein 54% of consumers are deliberately increasing protein in their diet
Slide 16: Protein Growth Is Outpacing Total Food
DIFFERENT PORT FOLIO // PROT EIN protein growth is outpacing total food 3.8% +0.9pts 2.9% Total US Sales vs. Year Ago Total Edible High/Medium Protein SOURCE: IRI TSV Total US MULO+C, 52WE 01/24/16 High Protein: ≥ 10 g Protein per Serving, Medium Protein: 5-9.99 g, Low Protein: 0.1-4.99 g
Slide 17: Tyson Foods Across Meat Protein Categories
D I F F E R E N T P O R T F O L I O / / A D VA N TA G E D C AT E G O R I E S tyson foods uniquely plays across all major meat protein categories Beef Pork Chicken Prepared Supply for further Fastest growing Leading processor Advantaged brands processed protein High revenue Strong categories Leading
Slide 18: Advantaged Protein Segments
D I F F E R E N T P O R T F O L I O / / A D VA N TA G E D C AT E G O R I E S we are driving growth in advantaged protein segments Chicken High growth Prepared Foods High margin $11.1Bn $7.7Bn Sustained advantage 15% 0% commodity commodity sales sales
Slide 19: Mix Shifting to Value-Added Segments
D I F F E R E N T P O R T F O L I O / / A D VA N TA G E D C AT E G O R I E S our mix is shifting to value-added segments Chicken Growth and Profitability Prepared Foods Consumer/Retail Retail 'Core 9' Emerging/Other Brands Foodservice Foodservice Pure Commodity
Slide 20: Leading Brands Across Categories
DIFFERENT PORT FOLIO // LEADING BRANDS our brands have leading share and growth across categories 1 Frozen Prepared Chicken 1 Hot Dogs 1 Branded Stack Pack Bacon 1 Frozen Breakfast Sandwiches 1 Breakfast Sausage 1 Smoked Sausage 2 Branded Lunchmeat 1 Corn Dogs 1 Super Premium Sausage
Slide 21: Emerging Brands Drive Incremental Sales
DIFFERENT PORT FOLIO // LEADING BRANDS emerging brands drive incremental sales in high-growth categories Portfolio of ‘start up’ businesses > $225MM today Sales growth rate > 50% vs. 2014
Slide 22: We Are Investing to Grow
we are investing to grow Tyson Foods, Inc.
Slide 23: Investing in Our Customers
D I F F E R E N T B U S I N E S S M O D E L / / VA L U E C R E AT I O N we are investing in our customers +2.0pts Tyson distribution growth rate FY2015 vs. year ago -0.01pts Competitors Tyson Foods SOURCE: TDPs, latest MULO 4 Weeks September 13, 2015
Slide 24: Investing in Our Brands
D I F F E R E N T B U S I N E S S M O D E L / / VA L U E C R E AT I O N we are investing in our brands
Slide 25: Tyson Brand Investment
D I F F E R E N T B U S I N E S S M O D E L / / VA L U E C R E AT I O N VIDEO TYSON BRAND INVESTMENT
Slide 26: We Are Building Consumer Advocates
D I F F E R E N T B U S I N E S S M O D E L / / VA L U E C R E AT I O N we are building consumer advocates Brand Advocacy: % Recommend Tyson Foods vs. Next Branded Competitor Chicken Nuggets Breaded Chicken Strips Hot Dogs Frozen Breakfast Sandwich Fresh Breakfast Sausage Cooked Breakfast Sausage Co
Slide 27: Portfolio Commands Premium Pricing
D I F F E R E N T B U S I N E S S M O D E L / / VA L U E C R E AT I O N our portfolio commands premium pricing $4.40 Average Price per Pound $4.20 11% premium $4.00 above category Tyson ‘Core 9’ average price $3.80 $3.60 Total Categories $3.40 $3.20 2012 2013 2014 2015 SOURCE: IRI Total US MULO, 52
Slide 28: Brands Extend into New Categories
D I F F E R E N T B U S I N E S S M O D E L / / VA L U E C R E AT I O N our brands successfully extend into new categories
Slide 29: Brand Strength Beyond Retail
D I F F E R E N T B U S I N E S S M O D E L / / VA L U E C R E AT I O N our brand strength enables us to win in channels beyond retail Consumer Perceptions: C-store Breakfast Sandwiches Jimmy Dean® Brand vs. Next Branded Competitor Likelihood to purchase +24pts High quality +34pts Great tasting +33p
Slide 30: Positioned to Lead Growth and Value Creation
D I F F E R E N T P O R T F O L I O . D I F F E R E N T B U S I N E S S M O D E L / / VA L U E C R E AT I O N tyson is uniquely positioned to lead growth and value creation over time • Growth above food & beverage • Portfolio mix driving margin value creation expansion • Brand advocates • Investing
Slide 31: Different Portfolio. Different Business Model.
different portfolio. different business model. ... Just getting started Tyson Foods, Inc.
Slide 32: Sally Grimes, President, International & Chief Global Growth Officer
President, International & Sally Grimes Chief Global Growth Officer
Slide 33: Different Today. Different Tomorrow.
different today. different tomorrow.
Slide 34: Tyson Growth Video
D I F F E R E N T T O D AY. D I F F E R E N T T O M O R R O W / / TYSON GROWTH VIDEO
Slide 35: Today's Takeaways
D I F F E R E N T T O D AY. D I F F E R E N T T O M O R R O W / / today’s takeaways Differentiated Capabilities Position Tyson for Growth Supply Demand Today Tomorrow Expertise at scale that Deep insight that is Continuous ‘Core 9’ Committed to global enables Tyson Foods translated into innovation g
Slide 36: Expertise at Scale
D I F F E R E N T T O D AY. D I F F E R E N T T O M O R R O W / / S U P P LY expertise at scale Agricultural Network Operations & FSQA Distribution & Logistics Safely producing ~36MM head One of the country’s largest Advancing innovation and of chicken, beef, and pork, and temperature controlled net
Slide 37: Insight to Innovation
D I F F E R E N T T O D AY / / D E M A N D insight to innovation Insights Innovation Research & Development Extensive examination of the Extending the spark and spirit of State of the art R&D centers, forces shaping food & proprietary an entrepreneurial branded food sophisticated sensory tools & too
Slide 38: Top Tier Innovation Performance
D I F F E R E N T T O D AY / / top tier innovation performance Branded Retail Food Companies 2015 Comparison insights innovation vitality1 12.9% 12.5% 10.8% innovation 8.6% 8.4% research & development 1SOURCE: Nielsen total US XAOC – Expanded all outlet channel and includes Walmart
Slide 39: Inspired Innovation
D I F F E R E N T T O D AY / / inspired innovation
Slide 40: Focused Innovation Momentum
D I F F E R E N T T O D AY / / focused innovation ovation momentum Launch continuous Extend iconic brands into Build a differentiated innovation in ‘Core 9’ adjacencies protein snacking portfolio 12 major launches in ‘Core 9’ 2016 innovation in adjacent Differentiated platforms in categories over ne
Slide 41: Success Story: Hillshire Farm Naturals
D I F F E R E N T T O D AY / / success story: hillshire farm naturals™ The Insight The Innovation All natural products An all natural usually don’t taste lunchmeat that as good requires no sacrifice in taste The Advantage The Impact Expertise in Highly incremental delivery of superior launch, drawin
Slide 42: Success Story: Hillshire Snacking
D I F F E R E N T T O D AY / / success story: hillshire® snacking The Insight The Innovation The expectation of Sophisticated snacks has flavors in forms evolved from that fit into flexible satisfaction to lives experience The Advantage The Impact Expertise in protein Velocities + bakery significant
Slide 43: Success Story: Ballpark Jerky
D I F F E R E N T T O D AY / / success story: ballpark® jerky The Insight The Innovation Meat from the grill Flame grilled taste just tastes better with unique tender texture The Advantage The Impact Proprietary Largest brand flame-grilled launch in the manufacturing category in the last process 5 y
Slide 44: Jimmy Dean Bacon
D I F F E R E N T T O D AY / / jimmy dean® bacon The Insight The Innovation Bacon is the Fill the breakfast ultimate breakfast plate with another comfort food satisfying Jimmy Dean meat The Advantage The Impact Unmatched Jimmy Dean is expertise in bacon bringing incremental consumers to the bacon ca
Slide 45: Jimmy Dean Stuffed Hash Browns
D I F F E R E N T T O D AY / / jimmy dean® stuffed hash browns The Insight The Innovation Morning snacking Crispy hashbrown is on the rise with out of the consumers seeking microwave with unique handheld warm cheese and offerings meat fillings
Slide 46: Jimmy Dean Delights Frittata
D I F F E R E N T T O D AY / / jimmy dean delights® frittata The Insight The Innovation A healthier start in Bread-free, low a convenient calorie, warm handheld form breakfast in a unique form
Slide 47: Tyson Naturals Lightly Breaded Chicken
D I F F E R E N T T O D AY / / tyson naturals™ lightly breaded chicken The Insight The Innovation Less processed Real, 100% all without less taste natural ingredients with healthy breadings and no antibiotics ever
Slide 48: Tyson Naturals Grilled Nuggets
D I F F E R E N T T O D AY / / tyson naturals™ grilled nuggets The Insight The Innovation Healthier Unbreaded grilled alternative chicken chicken nuggets nugget that the with 50% fewer whole family can calories & no enjoy antibiotics ever
Slide 49: Hillshire Snacking Extensions
D I F F E R E N T T O D AY / / hillshire® snacking extensions The Insight The Innovation Experience a Foodie-worthy snacking snacking with 3 adventure with the protein-packed goodness of components protein
Slide 50: Ballpark Frozen Expansion
D I F F E R E N T T O D AY / / ballpark® frozen expansion The Insight The Innovation Guys want bold On-trend forms flavor with minimal and flavors that prep can go from freezer to table in 3 minutes
Slide 51: Momentum
D I F F E R E N T T O D AY / / momentum Launching continuous Extending iconic brands Building a differentiated innovation in ‘Core 9’ into adjacencies protein snacking portfolio
Slide 52: Tomorrow
tomorrow
Slide 53: Vision
DIFFERENT TOMORROW // vision The global innovative leader of food experiences Selling more branded, protein centric food than any other company in the world
Slide 54: The World Is Changing
Emerging economies and the rise of the global middle class The world Technological innovation and increased connectivity is changing… Population increase and resource scarcity Consumer value shifts: health, sustainability, transparency
Slide 55: The World Is Changing, and So Are We
Growth Markets The world is changing, Growth Channels and so are we. Growth Brands
Slide 56: New Consumers in New Markets
DIFFERENT TOMORROW // GROW TH MARKET S new consumers in new markets represent significant growth potential Macro Opportunity Market Opportunity population food expenditure fresh poultry, pork & beef processed meat & seafood 96% 88% 89% 85% USA Rest of World Source: Population / Food Expenditure - Eu
Slide 57: Our Strategy Has Evolved
DIFFERENT TOMORROW // GROW TH MARKET S our strategy has evolved to capitalize on massive market and consumer shifts the world is urbanizing from to > 50% of people in Supplying Meeting developing markets will live customers consumer needs in urban areas by 2020 our evolution United Developing a new
Slide 58: The Opportunity Is Big
DIFFERENT TOMORROW // GROW TH MARKET S the opportunity is big, our focus is clear and progress has begun CHINA INDIA • Fastest growth in disposable income of any • World’s largest pork & poultry market nation over next 15yrs • 2nd largest packaged food market • Packaged food growth 3X global rate •
Slide 59: Grow Where the Growth Is
DIFFERENT TOMORROW // GROW TH CHANNELS grow where the growth is Traditional channel growth is slowing Dedicated Growth Channels In the next 5 years, the Innovation Experts majority of retail growth will come from non-traditional channels Customized Product Offerings Ecommerce is coming to food and b
Slide 60: Baby Chicks Every
| Tew Hampahine — BABY ‘CHICKS EVERY
Slide 61: Keep It Real. Keep It Tyson.
DIFFERENT TOMORROW // GROW TH BRANDS Keep it real. Keep it Tyson.
Slide 62: Tyson Brand Video
DIFFERENT TOMORROW // GROW TH BRANDS EMBED TYSON VIDEO TYSON BRAND VIDEO
Slide 63: A Brand to Come Back to
DIFFERENT TOMORROW // GROW TH BRANDS a brand to come back to time and again
Slide 64: Differentiation
DIFFERENT TOMORROW // GROW TH BRANDS tyson is uniquely positioned to capitalize on the opportunity of ‘CFG’ (consumer fresh goods) SITUATION OPPORTUNITY Consumer demand drives a sharp Create more value for fresh sales increase in fresh food growth Dollar Growth, 3 YR CAGR Branded 4.0% added value DI
Slide 65: Tyson CFG Will Value Up Fresh Meat
DIFFERENT TOMORROW // GROW TH BRANDS tyson ‘CFG’ will value up one of food’s largest categories The fresh meat category… is ripe for consumer value creation $33B Source: Nielsen Perishables Group, 52 weeks ending 12/26/15
Slide 66: The Purveyors of the Better Food Experience
The purveyors of the better food experience
Slide 67: Empower the At Home Chef
DIFFERENT TOMORROW // GROW TH BRANDS to empower the at home chef
Slide 68: Adding Value Beyond the Product
DIFFERENT TOMORROW // GROW TH BRANDS adding value beyond the product Preparation Exploration Knowledge
Slide 69: Curated Line of Dinners Made Fresh
DIFFERENT TOMORROW // GROW TH BRANDS a curated line of dinners made fresh at home
Slide 70: A Different Kind of Food Company
D I F F E R E N T T O D AY. D I F F E R E N T T O M O R R O W / / S U M M A R Y a different kind of food company Differentiated Capabilities Position Tyson Foods for Growth Supply Demand Today Tomorrow Expertise at scale that Deep insight that is Continuous ‘Core 9’ Committed to global enables Tyson
Slide 71: Different Company. Different Model.
different company. different model. different today. different tomorrow.
Slide 72: Donnie Smith, President & CEO
President & Donnie Smith Chief Executive Officer
Slide 73: Consumer Analyst Group of New York Annual Conference
Consumer Analyst Group of New York February 16, 2016 Annual Conference
Slide 74: Appendix
Appendix
Slide 75: TSN Performance vs. S&P 500 and Peer Group
TSN PERFORMANCE VS. S&P 500 AND PEER GROUP The peer group includes: Archer-Daniels-Midland Company, Bunge Limited, Campbell Soup Company, ConAgra Foods, Inc., Dean Foods Company, General Mills, Inc., Hormel Foods Corp., Kellogg Co., McCormick & Co., Mondelez International Inc., PepsiCo, Inc., Pilgri
Slide 76: EPS Reconciliations
E P S R E C O N C I L I AT I O N S 12 Months Ended Unaudited October 3, 2015 September 27, 2014 September 28, 2013 September 29, 2012 EPS EPS EPS EPS Reported from Continuing Operations $ 2.95 $ 2.37 $ 2.31 $ 1.68 Less: Recognition of previously unrecognized tax benefit (0.06) (0.15) - - Insurance p
Slide 77: EBITDA Reconciliations
E B I T D A R E C O N C I L I AT I O N S $ in millions Unaudited 12 Months Ended 2015 2014 2013 2012 2011 Net income $ 1,224 $ 856 $ 778 $ 576 $ 733 Less: Interest income (9) (7) (7) (12) (11) Add: Interest expense 293 132 145 356 242 Add: Income tax expense (a) 697 396 411 351 341 Add: Depreciation
Slide 78: Sales Reconciliations
S A L E S R E C O N C I L I AT I O N S $ in millions Unaudited Fiscal Year 2015 2014 Reported sales $ 41,373 $ 37,580 Less: Interest income (750) - Add: Interest expense - (325) EBITDA $ 40,623 $ 37,255 (a) The estimated impact of the additional week in fiscal 2015 was calculated by dividing unadjus
Slide 79: Adjusted Sales and Operating Income Reconciliations
A D J U S T E D S A L E S , A D J U S T E D O P E R AT I N G I N C O M E ( L O S S ) , A D J U S T E D O P E R AT I N G M A R G I N R E C O N C I L I AT I O N S $ in millions Unaudited Adjusted Sales, Adjusted Operating Income (Loss) and Adjusted Operating Margin (for the 12 months ended October 3,
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