Tyson Foods, Inc. · NYSE:TSN
Tyson Foods — Investor Presentation (May 2017)
67 slides from Tyson Foods's investor presentation, May 17, 2017
Slide 1: Strong Today, Leading for Tomorrow
Strong Today Leading for Tomorrow Investor Presentation May 2017
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain information contained in this presentation may constitute forward-looking statements, such as statements relating to expected performance and including, but not limited to, statements appearing in the “Outlook” section and statements relating to adjusted EPS guidan
Slide 3: Forward-Looking Statements (continued)
Forward-Looking Statements (continued) This presentation also includes statements regarding the expected consummation of the acquisition of AdvancePierre Foods Holdings, Inc. (“AdvancePierre Foods”), which involve a number of risks and uncertainties, including the satisfaction of closing conditions
Slide 4: Additional Information and Where to Find It
Additional Information and Where to Find It This announcement is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell securities, nor is it a substitute for the tender offer materials filed with the SEC. The solicitation and offer to buy AdvanceP
Slide 5: Why Invest in TSN
Why Invest in TSN • Our three-year Total Shareholder Return far exceeds our peer set • We’ve produced consistent earnings growth and returned cash to shareholders through share repurchases and dividends; however, following the AdvancePierre acquisition, we will prioritize debt repayment over share r
Slide 6: Strong Today, Leading for Tomorrow
Strong Today, Leading for Tomorrow Future Strong Unique Purpose Clear Focused Financials Position Driven Strategy Team 6 Tyson Foods, Inc. Investor Presentation | May 2017
Slide 7: FY16 – Another Record Year
FY16 – Another Record Year ($ in millions) FY16 FY15 YOY Growth Net Sales $36,881 $40,623* -9% • Record Operating Income Adjusted Operating Income* $2,833 $2,253 26% • Record Operating Margin Adjusted Operating Margin* 7.7% 5.5% • Record Adjusted EPS* Adjusted EPS* $4.39 $3.15 39% • Record Operating
Slide 8: First Half of FY17
First Half of FY17 Six Months Highlights ($ in millions, except per share data) FY17 Sales $18,265 • Record Adjusted EPS* of Adjusted Operating Income* $1,605 $2.60, up 17% from last year Adjusted Operating Margin* 8.8% Adjusted EPS* $2.60 • Record Adjusted Operating Income* up 8% to $1.6 billion ($
Slide 9: Driving Unmatched Shareholder Return
Driving Unmatched Shareholder Return Total Shareholder Return * 2014-2016 169% 88% 68% 68% 64% 56% 49% 48% 46% 44% 44% 38% 23% 11% DF BG HRL PPC CAG MKC SAFM MDLZ PEP GIS K CPB SJM ADM HSY -10% -18% *SOURCE: Bloomberg - This information should not be deemed to be “soliciting material” subject to reg
Slide 10: Consistent EPS Growth
Consistent EPS Growth FY16 Adjusted EPS* Growth Up 39% vs. FY 2015 $4.90 – 5.05** $4.39* $3.15* $2.94* $2.26* $1.97* FY12 FY13 FY14 FY15 FY16 FY17 proj. *Represents a non-GAAP financial measure. Adjusted EPS is explained and reconciled in the Appendix at “EPS Reconciliations.” **Projected adjusted E
Slide 11: FY17 Outlook
FY17 Outlook Adjusted EPS of Sales of $36-37B** CapEx of ~$1B $4.90-5.05* Similar to FY16 as we grow ~12% growth over FY16 volume across each segment, offset by lower beef prices Chicken Segment Beef Segment Pork Segment Prepared Foods operating margin in 9- operating margin operating margin Segment
Slide 12: Returning Cash to Shareholders
Returning Cash to Shareholders Dividends Paid per Class A Share $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 FY12 FY13 FY14 FY15 FY16 Regular Dividend Special Dividend Board of Directors increased regular quarterly dividend by 50% to $0.225 per share for Class A common stock payable on 12/15/16 B
Slide 13: Strong Cash Flow Fuels Growth
Strong Cash Flow Fuels Growth $2,716 $2,570 $1,314 $1,187 $1,178 FY12 FY13 FY14 FY15 FY16 Operating Cash Flow ($ in millions) 13 Tyson Foods, Inc. Investor Presentation | May 2017
Slide 14: Priorities for Cash
Priorities for Cash • Debt repayment • Growing our businesses organically through operational efficiency and capital expansion projects, along with investing in innovation and brand building • Acquiring businesses that support our strategic objectives • Returning cash to shareholders through share r
Slide 15: A Simple Framework for M&A
A Simple Framework for M&A New Brands IDEAL New New Capabilities Geographies 15
Slide 16: Strategy for Growth
Strategy for Growth
Slide 17: Our Purpose
Our Purpose Raise the world’s expectations for how much good food can do 17 Tyson Foods, Inc. Investor Presentation | May 2017
Slide 18: Strategic Intent
Strategic Intent Sustainably feed the world with the fastest growing portfolio of protein packed brands 18 Tyson Foods, Inc. Investor Presentation | May 2017
Slide 19: Twin Engines of Growth
Twin Engines of Growth Sustainably Growing our portfolio of Delivering sustainable feed the protein packed brands food at scale world with the fastest Driving profitable growth with and for our Enablers growing Critical customers through differentiated capabilities Creating fuel for reinvestment thr
Slide 20: Value Creation Model
Value Creation Model Protein Packed Financial Leveraging Bold Brands Fitness Model capabilities to commitment to drive profitable sustainable growth food at scale Annual Value-Added Annual Volume Growth EPS Growth Shared High Value +3% Single Digits Share Repurchases (after deleveraging) Dividends T
Slide 21: A New Approach to Efficiency Will Fund Investments for Sustainable Growth
A New Approach to Efficiency Will Fund Investments for Sustainable Growth REDUCE waste across the entire company through Continuous Improvement ALLOCATE financial and human capital for growth TRANSFORM our business through technology 21 Tyson Foods, Inc. Investor Presentation | May 2017
Slide 22: Superior Results Through Defined Portfolio Roles
Superior Results Through Defined Portfolio Roles Branded & Value Added Commodity Grow above industry Grow above industry Leverage throughput by investing in brand and expand margins and efficiency to building, innovation through customer generate cash ALL-CHANNELS FOODSERVICE and customer partnershi
Slide 23: Proven Leadership Team Aligned Against Our Strategy
Proven Leadership Team Aligned Against Our Strategy Tom Hayes President & CEO Team Elevates Focus on Justin Whitmore CONSUMERS CUSTOMERS SUSTAINABILITY TECHNOLOGY 23 Tyson Foods, Inc. Investor Presentation | May 2017
Slide 24: Leading the Way in Food Sustainability
Leading the Way in Food Sustainability
Slide 25: No. 1 Most Admired Company
FORTUNE No. 1 Most Admired Company Food Production Industry 25 Tyson Foods, Inc. Investor Presentation | May 2017
Slide 26: Over Time Sustainability Investments Will Fund Themselves
Over Time Sustainability Investments Will Fund Themselves Sustainability Investments Resources Waste Cost Innovation Volume Profits 26 Tyson Foods, Inc. Investor Presentation | May 2017
Slide 27: Poultry Farm of the Future
Poultry Farm of the Future 27 Tyson Foods, Inc. Investor Presentation | May 2017
Slide 28: Poultry Farm of the Future
Poultry Farm of the Future Reduces Improves Improves Improves Reduces Greenhouse Worker Animal Food Land Emissions Welfare Welfare Safety Use 28 Tyson Foods, Inc. Investor Presentation | May 2017
Slide 29: Evidence-based Targets, Long-term Commitments
Evidence-based Targets, Long-term Commitments FOOD PEOPLE ANIMALS ENVIRONMENT Convert chicken Reduce workplace 3rd party audit of Working with partners supply chain to no injuries by 15% farms to certify to set science-based antibiotics ever per year humane treatment of targets chickens 29 Tyson Foo
Slide 30: Retail Packaged Brands
Retail Packaged Brands
Slide 31: Brand Portfolio for All Eating Occasions
Brand Portfolio for All Eating Occasions 31 Tyson Foods, Inc. Investor Presentation | May 2017
Slide 32: “Core 9” Advantaged Brands in Advantaged Categories
“Core 9” Advantaged Brands in Advantaged Categories Frozen 1 Prepared Chicken 1 Hot Dogs 1 Branded Stacked Bacon 1 Frozen Protein Breakfast 1 Breakfast Sausage 1 Smoked Sausage 2 Branded Lunchmeat 1 Corn Dogs 1 Super Premium Smoked Sausage Sources: IRI, Total US Multi-Outlet, data thru 4/30/17 32 Ty
Slide 33: Core 9 and Total Tyson Leading in CPG Volume Performance
Core 9 and Total Tyson Leading in CPG Volume Performance Volume sales % change among top 10 branded food companies >$5B 5.0% 4.8% Total Food & Bev. -0.2% -0.5% -2.9% -4.0% -4.0% -5.7% -6.7% -7.2% -11.3% -12.6% Source: IRI Total U.S. Multi-Outlet (x Costco) Volume Sales 13 weeks ending 4/30/2017 Prod
Slide 34: Core 9 and Total Tyson Leading in CPG Dollar Performance
Core 9 and Total Tyson Leading in CPG Dollar Performance Dollar sales % change among top 10 branded food companies >$5B 4.0% 3.8% 1.9% 0.4% Total Food -0.6% -0.8% -1.1% & Bev. -1.6% -3.6% -4.2% -5.8% -7.8% Source: IRI Total U.S. All Outlet (x Costco) Dollar Sales, 13 weeks ending 4/30/17 34 Tyson Fo
Slide 35: #2 in Frozen Food
#2 in Frozen Food Sales in Billions $7.1 Tyson Foods leads in the growing categories of frozen poultry and protein breakfast $3.5 $2.9 $2.4 $2.0 $1.9 $1.3 $1.2 $1.0 Source: IRI U.S. Multi-Outlet frozen category sales, 52 weeks ending 4/30/17 35 Tyson Foods, Inc. Investor Presentation | May 2017
Slide 36: #7 in Total U.S. CPG Retail Food Sales
#7 in Total U.S. CPG Retail Food Sales Among branded food companies >$5B Sales in Billions $25.8 In addition to retail, Tyson Foods is a leading supplier to the $21.3 foodservice industry $16.4 $11.8 $8.6 $7.8 $7.7 $7.6 $6.4 $6.4 $5.7 $5.7 $5.3 $5.0 Source: IRI Total U.S. Multi-Outlet Sales, 52 week
Slide 37: Opportunity in Current Spaces
Opportunity in Current Spaces Breakfast Smoked Smoked Frozen Prepared Frozen Protein Frozen Corn Total Core 9 Lunchmeat Bacon Hot Dogs Sausage Sausage Sausage Chicken Breakfast Dogs 98% 86% 78% 79% 75% 62% 63% 63% 52% 33% 37% 30% 30% 26% 28% 23% 21% 7% 6% 10% Category HH Penetration Brand HH Penetra
Slide 38: Innovation
Innovation
Slide 39: Innovation Performance
Innovation Performance insights Retail Packaged Brands innovation vitality growing FY16 14% FY15 12.5% innovation research & development % of sales dollars from Retail Packaged Brands products created in the previous three years 39 Tyson Foods, Inc. Investor Presentation | May 2017
Slide 40: Innovation: No Antibiotics Ever & Organic
Innovation: No Antibiotics Ever & Organic 40 Tyson Foods, Inc. | May 2017
Slide 41: Retail Packaged Brands
Retail Packaged Brands Product Innovations and Brand Adjacencies 41 Tyson Foods, Inc. Investor Presentation | May 2017
Slide 42: Tyson Tastemakers™
Tyson Tastemakers™ Currently in e-commerce 42 Tyson Foods, Inc. | May 2017
Slide 43: Tyson Tastemakers™
Tyson Tastemakers™ Expanding to Retail 43 Tyson Foods, Inc. | May 2017
Slide 44: AdvancePierre Acquisition
AdvancePierre Acquisition
Slide 45: Transaction Overview
Transaction Overview • Tender offer to acquire all AdvancePierre outstanding common shares for $40.25 per Summary and share in cash Terms • Enterprise value of ~$4.2 billion, including $3.2 billion in equity value and $1.1 billion in assumed debt • Not subject to financing condition Financing • Comm
Slide 46: Compelling Strategic Rationale
Compelling Strategic Rationale SUSTAINABLY FEED THE WORLD WITH FASTEST GROWING PORTFOLIO OF PROTEIN-PACKED BRANDS GROWING OUR PORTFOLIO OF DELIVERING SUSTAINABLE PROTEIN-PACKED BRANDS FOOD AT SCALE > Expands prepared foods offering by joining > AdvancePierre’s strength in foodservice complementary
Slide 47: Logical Next Step in Strategy
Logical Next Step in Strategy • Expands Tyson’s prepared foods offerings with AdvancePierre’s portfolio of ready-to-eat lunch Expands prepared and dinner sandwiches, sandwich components, entrees, and snacks foods offering; joins • Broadens Tyson’s competitive position across poultry, beef and pork c
Slide 48: Complementary Portfolios of Strong Brands
Complementary Portfolios of Strong Brands 48
Slide 49: Strong Today and Leading for Tomorrow
Strong Today and Leading for Tomorrow NEW BRANDS, NEW CAPABILITIES, NEW GEOGRAPHIES Natural extension of our Consolidated Enhanced distribution supply chain manufacturing footprint channels Leading foodservice brands with Leading supplier to national and Reaching a broader cross- high operator/distr
Slide 50: Driving Financial Results
Driving Financial Results CREATES SIGNIFICANT SYNERGIES • Expected to result in cost synergies of approximately $200 million to be fully realized within three years • Cost synergies created by consolidated manufacturing footprint, lower input pricing, and addressing redundant foodservice and retail
Slide 51: Tyson and AdvancePierre Combine to Create Long-Term Value
Tyson and AdvancePierre Combine to Create Long-Term Value Next step in growth strategy and opportunity to refine the shape of our portfolio Financially compelling; expected to be immediately accretive to Tyson EPS based on $200 million in cost synergies Significant value for AdvancePierre shareholde
Slide 52: Additional Information
Additional Information
Slide 53: Tyson Foods, Inc. Investor Presentation | May 2017
53 Tyson Foods, Inc. Investor Presentation | May 2017
Slide 54: Leading U.S. Protein Producers
Leading U.S. Protein Producers Tyson Foods Tyson Foods Tyson Foods Other 18% 21% Other 25% 24% 29% Other 47% Pilgrim’s Pride Smithfield 17% National Beef 25% 10% Hormel JBS USA 8% 22% JBS USA Cargill 20% 19% Sanderson Perdue Farms 8% Farms 7% U.S. Chicken Producers U.S. Fed Beef Packers U.S. Pork Pa
Slide 55: FY16 Sales − $37 Billion
FY16 Sales − $37 Billion Other Other 1% 4% Pork International 11% Prepared 11% Foods 20% Consumer Products Food 53% Beef 38% Chicken Service 30% 32% Sales by Sales by Segment Distribution Channel 55 Tyson Foods, Inc. Investor Presentation | May 2017
Slide 56: FY16 International Sales
FY16 International Sales Japan Other 17% 30% Mexico 15% Taiwan China & 4% Hong Kong 21% Canada 6% South Korea 7% FY16 International Sales $4.1 Billion* *Includes exports and in-country production 56 Tyson Foods, Inc. Investor Presentation | May 2017
Slide 57: FY16 International Sales
FY16 International Sales Other China & Hong Canada Japan 17% Kong 4% 18% 23% Other Mexico 48% Italy 6% 12% Mexico 11% Taiwan 7% South Brazil China & Korea 6% Hong Kong 12% India 6% 24% Canada Guatemala 3% 3% Chicken Beef $1.2 Billion* $2.0 Billion *Includes exports and in-country production 57 Tyson
Slide 58: FY16 International Sales
FY16 International Sales South Korea 4% Other 12% Other Canada Japan 32% 30% China & 37% H.K. 11% Canada 12% Mexico Mexico Japan 22% 24% S. Korea 5% 11% Pork Prepared Foods $848 million $87 million 58 Tyson Foods, Inc. Investor Presentation | May 2017
Slide 59: Chicken Segment
Chicken Segment The Road to Higher, More Stable Margins Optimize cost structure Change pricing structure Upgrade value-added Buy vs. Grow strategy Deliver high quality products products and customer service 59 Tyson Foods, Inc. Investor Presentation | May 2017
Slide 60: HSH Synergies
HSH Synergies • FY15 – $322 million realized • FY16 – $580 million realized • FY17 – expecting approximately $675 million • Synergy Categories Prepared Foods Improvements Procurement Manufacturing & Logistics Organizational & Fiduciary 60 Tyson Foods, Inc. Investor Presentation | May 2017
Slide 61: Appendix
Appendix
Slide 62: EPS Reconciliations
EPS Reconciliations $ In millions, except per share data (Unaudited) Six Months Ended Pre-Tax Impact EPS Impact 2017 2016 2017 2016 Reported net income per share attributable to Tyson $ 2.51 $ 2.25 Add: San Diego Prepared Foods operation impairment $ 52 $ - 0.09 - Less: Recognition of previously unr
Slide 63: Segment Operating Income and Operating Margin Reconciliations
Segment Operating Income and Operating Margin Reconciliations $ In millions (Unaudited) Adjusted Segm ent Operating Incom e (Loss) (for six months ended April 1, 2017) Prepared Intersegm ent Beef Pork C hick en F oods Other Sales Total Sales $ 7,015 $ 2,554 $ 5,504 $ 3,646 $ 172 $ (626) $ 18,265 Rep
Slide 64: Sales, Operating Income and Operating Margin Reconciliations
Sales, Operating Income and Operating Margin Reconciliations $ In millions Fiscal Year (Unaudited) 2016 2015 Reported Sales $ 36,881 $ 41,373 Less: Impact of additional week (a) - (750) Adjusted sales $ 36,881 $ 40,623 Reported operating income $ 2,833 $ 2,169 Add: China impairment - 169 Add: Merger
Slide 65: Segment Operating Income Reconciliations
Segment Operating Income Reconciliations $ In millions (Unaudited) Adjusted Segm ent Operating Incom e (Loss) (for 12 months ended October 3, 2015) Prepared Beef Pork C hick en F oods Other Total Reported operating income (loss) $ (66) $ 380 $ 1,366 $ 588 $ (99) $ 2,169 Add: China impairment - - - -
Slide 66: Combined Tyson Foods & AdvancePierre Proforma Net Debt to Proforma Adjusted EBITDA
Combined Tyson Foods & AdvancePierre Proforma Net Debt to Proforma Adjusted EBITDA $ In millions, except per share data (Unaudited) 12 Months Ended (a) Excludes the amortization of debt discount expense of $8 million April 1, 2017 for the twelve months ended April 1, 2017, as it is included in inter
Slide 67: EPS Reconciliations
EPS Reconciliations $ In millions, except per share data (Unaudited) 12 Months Ended October 1, 2016 October 3, 2015 September 27, 2014 September 28, 2013 September 29, 2012 Operating Operating Operating Operating Operating Income EPS Income EPS Income EPS Income EPS Income EPS Reported from Continu