Tyson Foods, Inc. · NYSE:TSN
Tyson Foods — Consumer Analyst Group of New York (CAGNY) 2018
72 slides from Tyson Foods's conference presentation, Feb 20, 2018
Slide 1: Clear strategy. Real results.
— Clear strategy. Real results. Consumer Analyst Group of New York February 20, 2018
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: Tom Hayes, President & CEO
Tom Hayes PRESIDENT & CEO
Slide 4: Slide 4
Slide 5: Clear strategy. Real results.
Clear strategy. Real results.
Slide 6: Agenda
AGENDA Clear Strategy. Real Results. TOM HAYES Strong Foundations for Long-Term Growth STEWART GLENDINNING Executing our Strategy: Grow SALLY GRIMES Executing our Strategy: Deliver + Sustain JUSTIN WHITMORE
Slide 7: An Advantaged Leader in a Pure Growth Market
An Advantaged Leader in a Pure Growth Market Tyson’s Protein Portfolio Decades of Protein Growth1 Other 1% 2.96% 11% FY17 SALES BY SEGMENT 20% 38% $38B G lobal Pr otein Cons um ption CAGR 30% 1SOURCE: Robert A. Brown, Inc., January 11, 2018 Includes Beef, Veal, Pork, Broilers and Turkeys; Graph depi
Slide 8: Raise the world's expectations for how much good food can do
DRIVEN BY PURPOSE — Raise the world’s expectations for how much good food can do.
Slide 9: Sustainably Feed the World With the Fastest Growing Protein Brands
FOCUSED ON A CLEAR STRATEGY — Sustainably Feed the World With the Fastest Growing Protein Brands Grow. Deliver. Sustain. — — — Our businesses Ongoing financial fitness Our company through differentiated through continuous and our world for capabilities improvement future generations
Slide 10: Streamlined for Growth
ORGANIZED TO EXECUTE — Streamlined for Growth CHICKEN PREPARED FOODS BEEF AND PORK Lean corporate functions focused on people, customers, technology and sustainability
Slide 11: Led by a Proven Team with Complementary Expertise
Mary Oleksiuk Justin Whitmore Tom Hayes Stewart Glendinning EVP & Chief Human EVP, Corporate Strategy & Sally Grimes President & CEO EVP & Chief Financial Officer Resources Officer Chief Sustainability Officer Group President, Prepared Foods Led by a Proven Team with Complementary Expertise Noel Whi
Slide 12: Delivering on Commitments
Delivering on Commitments Financial Performance Market Performance FY17 Value-added volume +3% FY17 Core 9 $ growth rate FY17 Adjusted EPS growth of 21%1 3X food and beverage2 Innovation Financial Fitness Achieved innovation vitality of On track to deliver 13% in FY17 $200M in FY18 1Represents a non
Slide 13: Growing EPS Consistently
Growing EPS Consistently 24.5% Projected 5-year $5.31 $6.55-$6.703 $0.85 Tax Reform Impact CAGR1 for adjusted EPS2 $4.39 $3.15 $2.94 $5.70- $2.26 $5.85 FY13 FY14 FY15 FY16 FY17 FY18 P 1Calculated based on midpoint of FY18 projected adjusted EPS 2Represents a non-GAAP financial measure. Adjusted EPS
Slide 14: Generating Shareholder Return
109% Total Shareholder Return Past 3 Years Generating 44% Shareholder 41% 35% Return 29% 23% 21% 18% 16% 15% 11% ADM BG HRL CAG PEP SJM PPC MDLZ GIS KO CPB HSY -18% SOURCE: Bloomberg -24% This information should not be deemed to be “soliciting material” subject to regulation 14A or 14C or to the lia
Slide 15: Sustaining Performance Over Time
Targeted Targeted Annual Earnings Sustaining Annual Value Added Per Share Growth Volume Growth Performance HIGH +3% Over Time SINGLE DIGITS
Slide 16: Quality of Management and Corporate Value Drivers
People Quality of Management Management Use of Corp Innovation Assets Social Financial Responsibility Soundness Quality of Long-Term Products & Investment Services Value Global Competitiveness
Slide 17: Stewart Glendinning, EVP & CFO
Stewart Glendinning EVP & CHIEF FINANCIAL OFFICER
Slide 18: A Strong Foundation for Long-Term Performance
A Strong Foundation for Long-Term Performance
Slide 19: Solid Fundamentals Lead to Long-Term Value Creation
Solid Fundamentals Lead to Long-Term Value Creation Strong Cash Prudent Capital Generation Allocation Portfolio Sustainable Shaping M&A Growth Model
Slide 20: Fueling Growth Through Strong Cash Flows and Expanding Operating Margins
Fueling Growth Through Strong Cash Flows and Expanding Operating Margins 8.6% - 8.9% $2,716 8.5% $2,569 $2,599 7.7% 5.5% $1,187 $1,314 $1,178 4.4% 4.0% FY12 FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17 FY18P2 Operating Cash Flow Adjusted Operating Margin1 In Millions of Dollars 1Represents a no
Slide 21: Allocating Capital to Generate Growth and Shareholder Return
Allocating Capital to Generate Growth and Shareholder Return 4.0x HSH 3.0x APF Acquisition 2.0x Target 1.0x FY14 ** FY15 FY16 FY17 2 FY18P Total Dividends in Millions Net Debt / EBITDA1 Dividends Dividends Per Share $1,868 $1,400 - $1,500 $1,069 $797 $854 $455 $695 $250 $632 FY14 FY15 FY16 FY17 FY18
Slide 22: Activating M&A to Shape Our Portfolio
Activating M&A to Shape Our Portfolio We will evaluate opportunities through four consistent lenses. New New Scale/ New Brands Capabilities Synergy Geographies/ Markets
Slide 23: Activating M&A to Shape Our Portfolio
Activating M&A to Shape Our Portfolio New New Scale/ New Brands Capabilities Synergy Geographies/ Markets
Slide 24: Activating M&A to Shape Our Portfolio
Activating M&A to Shape Our Portfolio New New Scale/ New Brands Capabilities Synergy Geographies/ Markets
Slide 25: Activating M&A to Shape Our Portfolio
Activating M&A to Shape Our Portfolio New New Scale/ New Brands Capabilities Synergy Geographies/ Markets
Slide 26: FY18 Outlook
FY 18 Outlook Sales of CapEx Adjusted EPS ~$41B Topline growth of 6-7% vs. FY17 as we ~$1.4-1.5B Includes $100M incremental $6.55-6.70~23-26% growth vs. FY17 1 grow volume and have full year benefit investment due to tax reform of AdvancePierre Beef Segment Pork Segment Chicken Segment Prepared Food
Slide 27: A Model for Sustained Profitable Growth
A Model for Sustained Profitable Growth Modern food company with Best-in-class execution unmatched scale generates momentum Purposeful approach Fly-wheel of cash generation to integration and growth investment
Slide 28: Sally Grimes, Group President, Prepared Foods
Sally Grimes GROUP PRESIDENT, PREPARED FOODS
Slide 29: Grow.
EXECUTING OUR STRATEGY — Grow.
Slide 30: Prepared Foods Has Fundamental Advantages
Prepared Foods Has Fundamental Advantages Protein-Centric Multi-Channel Diverse Products Brand Portfolio Leading edge demand generation Operations and supply chain expertise at scale
Slide 31: Growing Faster Than Top 10 Branded Food Companies
PREPARED FOODS RETAIL VOLUME PERFORMANCE — Growing Faster Than Top 10 Branded Food Companies 2017 Volume % Change: Tyson Retail Prepared Foods Compared to Top 10 Branded Food Companies 1.2% Total 0.7% F&B 0.2% -1.0% Prepared Total Foods -3.4% -3.7% -4.5% -5.0% -5.8% -5.9% -5.9% -8.0% Source: IRI Tot
Slide 32: Unleashing the Potential of Prepared Foods
Unleashing the Potential of Prepared Foods New Focus — New People and Culture — Clear Actions GROW EXPAND DEMAND MARGINS
Slide 33: Results Are Beginning to Reflect This Potential
Results Are Beginning to Reflect This Potential — Q1 FY2018 ADJUSTED OPERATING MARGIN 11.9% AT FY18 OUTLOOK: A ~$8B business 1 Growing volume 10%+ AOI % expanding ~240bps 1Excludes assets held for sale
Slide 34: Modernize, Create, Change
Modernize Today’s $1B Brands Create Tomorrow’s Iconic Brands Change The Game with New Growth Models
Slide 35: Modernize
Modernize Today’s $1B Brands
Slide 36: Fueling the Jimmy Dean Growth Engine
MODERNIZE TODAY’S $1B BRANDS — Fueling the Jimmy Dean® Growth Engine 5-Year $ Growth: 2012-2017 +31.1% +8.2% Total Food SOURCE: IRI Total US Multi-Ourtlet Calendar Year 2012 Ending 12-30-12 and Calendar Year 2017 Ending 12-24-17
Slide 37: Innovating for Flexibility has driven Jimmy Dean Growth
MODERNIZE TODAY’S $1B BRANDS — Innovating for Flexibility has driven Jimmy Dean® Growth
Slide 38: Slide 38
Slide 39: Keeping Up the Innovation Pace
MODERNIZE TODAY’S $1B BRANDS — Keeping Up the Innovation Pace Breakfast Morning Sunday Taste, Without Protein Tuesday Effort Bread Carbs On The Move
Slide 40: Reimagining Hillshire Farm
MODERNIZE TODAY’S $1B BRANDS — Reimagining Hillshire Farm® Cleaner New Modern Labels Usages Marketing
Slide 41: Slide 41
Slide 42: Modernizing Our Flagship Brand
MODERNIZE TODAY’S $1B BRANDS — Modernizing Our Flagship Brand 2016 2017 2017 Master Brand Campaign No Antibiotics Ever Web Content Series
Slide 43: Evolving the Identity of the Tyson Brand
MODERNIZE TODAY’S $1B BRANDS — Evolving the Identity of the Tyson® Brand
Slide 44: Create
Create Tomorrow’s Iconic Brands
Slide 45: Creating the Freedom to Fuel Rapid Growth of Emerging Brands
CREATE TOMORROW’S ICONIC BRANDS — Creating the Freedom to Fuel Rapid Growth of Emerging Brands Dollar Sales % Change vs YA 32.5% TYSON RAPID GROWTH BRANDS SOURCE: IRI Total US Multi-outlet, Calendar year 2017 ending 12/24/17
Slide 46: Creating the Case with Hillshire Snacking
CREATE TOMORROW’S ICONIC BRANDS — Creating the Case with Hillshire® Snacking NEARLY $100M BUSINESS! SOURCE: IRI Total US Retail Multi-outlet, Calendar year 2017 ending 12/24/17
Slide 47: Putting a Twist on Asian Tradition
CREATE TOMORROW’S ICONIC BRANDS — Putting a Twist on Asian Tradition
Slide 48: Partnering with an On-trend Growth Brand
CREATE TOMORROW’S ICONIC BRANDS — Partnering with an On-trend Growth Brand
Slide 49: Extending Reach and Relevance
CREATE TOMORROW’S ICONIC BRANDS — Extending Reach and Relevance
Slide 50: Change
Change The Game with New Growth Models
Slide 51: Doubling Down on the Freshly Prepared Grocerant
CHANGE THE GAME WITH NEW GROWTH MODELS — Doubling Down on the Freshly Prepared ‘Grocerant’ $34B CATEGORY GROWING 2X F&B SOURCE: Nielsen Fresh Facts, 52 Weeks Ending 7/1/17
Slide 52: Transforming Fresh Meat Into Consumer Fresh Goods
CHANGE THE GAME WITH NEW GROWTH MODELS — Transforming Fresh Meat Into Consumer Fresh Goods (CFG) SOURCE: Nielsen Perishables Group 52wks SOURCE: Nielsen Perishables Group Retail ending 12/30/17 Tyson Branded Fresh Tray - Tyson FY18 to date ending 11/25/17
Slide 53: Investing in Pioneering Innovation
CHANGE THE GAME WITH NEW GROWTH MODELS — Investing in Pioneering Innovation
Slide 54: Solving Big Challenges with Agile Innovation
CHANGE THE GAME WITH NEW GROWTH MODELS — Solving Big Challenges with Agile Innovation Big Challenge Agile Innovation Model New Growth Platform 34lbs of food Cross-functional wasted per person Design thinking + per month in US1 Agile methods 1 in 3 globally are 6 months idea to malnourished2 market t
Slide 55: Activating a Suite of Growth Models
BUILD INVEST Activating a Suite of Growth BUY PARTNER Models
Slide 56: Justin Whitmore, EVP Corporate Strategy & Chief Sustainability Officer
Justin Whitmore EVP, CORPORATE STRATEGY & CHIEF SUSTAINABILITY OFFICER
Slide 57: Deliver.
EXECUTING OUR STRATEGY — Deliver.
Slide 58: Creating a Continuous Improvement Culture Through Financial Fitness
Creating a Continuous Improvement Culture Through Financial Fitness FROM TO Reactive Proactive Reduce Cost Enable Growth Programs Continuous and Events and Daily Analog Technology Enabled
Slide 59: Tyson Productivity System
INSPIRING NEW WAYS OF WORKING — Tyson Productivity System
Slide 60: Delivering Real Impact
Targeted Annual Value Added Volume Growth +3% Delivering Real Impact FY 2020 $600M FY 2019 $400M FY 2018 $200M SAVINGS
Slide 61: Sustain.
EXECUTING OUR STRATEGY — Sustain.
Slide 62: Creating a Virtuous Cycle for Growth
Creating a Virtuous Cycle for Growth THE ENVIRONMENT SUSTAINABLE PROTEIN THE TEAM GLOBAL MEMBERS GROWTH THE CUSTOMERS EVOLVING CUSTOMER THE ANIMALS SHOPPER EXPECTATIONS
Slide 63: Importance of Company Practice / Policies in Purchasing Decisions
SUSTAINABILITY LEADERSHIP — Importance of Company Practice / Policies in Purchasing Decisions Respondents indicating “Very Important” (Top Box Score) Avoids inhumane Provides safe Tries to reduce Truly cares about treatment of working waste and communities where animals conditions pollution it does
Slide 64: Taking Bold Action to Lead
More with Less Reduce greenhouse gases by 30% by 2030 Taking Bold Team Member Potential English as second language, financial literacy Action and life skills training for all employees to Lead Need for Transparency Blockchain traceability pilot to create step change in transparency of food system In
Slide 65: Clear strategy. Real results.
Clear strategy. Real results.
Slide 66: Questions & Answers
Questions & Answers
Slide 67: Appendix
Appendix
Slide 68: Net Debt/EBITDA Reconciliations
Net Debt/EBITDA Reconciliations Fiscal 2017 (a) Fiscal 2016 (a) Fiscal 2015 (a) Fiscal 2014 (a) $ in millions Net income $ 1,778 $ 1,772 $ 1,224 $ 856 Unaudited Less: Interest income (7) (6) (9) (7) Add: Interest expense 279 249 293 132 Add: Income tax expense 850 826 697 396 Add: Depreciation 642 6
Slide 69: Net Debt/EBITDA Reconciliations, continued
Net Debt/EBITDA Reconciliations, continued (a) EBITDA and Adjusted EBITDA for fiscal 2015 were based on a 53-week year while fiscal 2017, 2016 and 2014 are based on a 52-week year. (b) Excludes the amortization of debt issuance and discount expense of $13 million, $8 million, $10 million and $10 mil
Slide 70: Segment Operating Income & Operating Margin Reconciliations
Segment Operating Income & Operating Margin Reconciliations $ in millions Uunaudited Adjusted Segm ent Operating Incom e (Loss) a) EPS impact for the first quarter of fiscal 2018 includes a $26 million impairment related to the expected sale of a non-protein business net of a $22 million realized pr
Slide 71: EPS & Operating Margin Reconciliations
EPS & Operating Margin Reconciliations $ in millions, except per share data Unaudited 12 Months Ended September 30, 2017 October 1, 2016 October 3, 2015 September 27, 2014 September 28, 2013 Report ed Sal es $ 38,260 $ 36,881 $ 40,623 ( a) $ 37,580 $ 34,374 Operating Operating Operating Operating Op
Slide 72: EPS & Operating Margin Reconciliations, continued
EPS & Operating Margin Reconciliations, continued (a) Adjusted for additional week in the fourth quarter of fiscal 2015. (b) Impact of additional week was calculated by using the fourth quarter of fiscal 2015 adjusted operating income (prior to the additional week impact) and divided by 14 weeks. (c
Tyson Foods — Consumer Analyst Group of New York (CAGNY) 2018 on 6ix