Tyson Foods, Inc. · NYSE:TSN
Tyson Foods — Investor Presentation (March 2016)
43 slides from Tyson Foods's investor presentation, Mar 22, 2016
Slide 1: Different company. Different model.
different company. different model. different today. different tomorrow. ae March 2016 Tyson Foods, Inc.
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. These forward-looking statements are subject to a number of factors and uncertainties which could cause our actual results and
Slide 3: Tyson Foods, Inc. Investor Presentation
Tyson Foods, Inc. Investor Presentation | March 2016| 3 Tyson Foods, Inc. Investor Presentation | March 2016 |3
Slide 4: Why Invest in TSN?
Why Invest in TSN? • One of world’s leading food companies • Advantaged brands in advantaged product categories, focused on protein • Multi-protein, multi-channel, all day parts, all meal occasions • #1 or #2 brands in 13 categories • #2 in U.S. frozen food with products in growth categories • Innov
Slide 5: FY15 Adjusted Sales – $40.6 Billion
FY15 Adjusted Sales* – $40.6 Billion Other Other 2% 4% Pork Prepared International 11% Foods 13% 19% Consumer Food Products Beef Chicken Service 52% 41% 27% 31% Sales by Segment Sales by Distribution Channel *Represents a non-GAAP financial measure, which is explained and reconciled to a comparable
Slide 6: Leading Brands in Growth Categories "Core 9"
Leading Brands in Growth Categories “Core 9” Frozen Frozen 1 Prepared Chicken* 1 Hot Dogs 1 Branded Stack Pack Bacon 1 Breakfast Sandwiches 1 Breakfast Sausage 1 Smoked Sausage 2 Branded Lunchmeat 1 Corn Dogs 1 Super Premium Sausage Sources: IRI, Total US Multi-Outlet, data thru 2/28/2016 *Nielsen P
Slide 7: Multiple Areas to Grow in Large Categories
Multiple Areas to Grow in Large Categories Frozen Cooked Frozen Protein Lunchmeat Hot Dogs Uncooked Bacon Breakfast Sausage Smoked Sausage Prepared Chicken Breakfast 89% 76% 70% 62% 62% 55% 34% 37% 28% 29% 26% 27% 23% 8% Size of Category $6.7Bn $2.6Bn $3.5Bn $2.0Bn $2.0Bn $2.7Bn $1.7Bn Dollar Growth
Slide 8: Our Retail Portfolio Commands Premium Pricing
Our Retail Portfolio Commands Premium Pricing Average Price per Pound 11% premium above categories’ Tyson Core 9 average price Total Categories 2012 2013 2014 2015 SOURCE: IRI Total US MULO, 52 weeks ending December 2012-2015 Tyson Foods, Inc. Investor Presentation | March 2016 |8
Slide 9: Brand Portfolio Participates Across Meal Occasions
Brand Portfolio Participates Across Meal Occasions Tyson Foods, Inc. Investor Presentation | March 2016 |9
Slide 10: Reframe from Product to Brand
Reframe from Product to Brand Tyson Foods, Inc. Investor Presentation | March 2016 |10
Slide 11: Retail Packaged Brands
Retail Packaged Brands Tyson Foods, Inc. Investor Presentation | March 2016 |11
Slide 12: Product Innovations and Brand Adjacencies
Product Innovations and Brand Adjacencies Tyson Foods, Inc. Investor Presentation | March 2016 |12
Slide 13: Top Tier Innovation Performance
Top Tier Innovation Performance insights Branded Retail Food Companies 2015 Comparison innovation vitality 12.9% 12.5% 10.8% innovation research & 8.6% 8.4% development % of sales dollars from products created in the previous three years SOURCE: Nielsen total US XAOC – Expanded all outlet channel an
Slide 14: #8 in Total U.S. CPG Retail Sales
#8 in Total U.S. CPG Retail Sales Among branded food companies > $5B Sales in Billions $25.5 In addition to retail, Tyson Foods is a leading supplier $21.7 to the foodservice industry $16.5 $13.3 $8.9 $8.4 $7.7 $7.6 $6.4 $6.2 $5.7 $5.6 $5.4 Source: IRI Total U.S. Multi-Outlet Sales, 52 weeks ending
Slide 15: #2 in Frozen Food
#2 in Frozen Food Sales in Billions $7.2 Tyson Foods leads in the growth categories of frozen poultry and protein breakfast $3.6 $3.1 $2.3 $2.0 $1.8 $1.8 $1.2 $1.1 Source: IRI U.S. Multi-Outlet frozen category sales, 52 weeks ending 2/28/16 Tyson Foods, Inc. Investor Presentation | March 2016 |15
Slide 16: Adjusted EPS Growth
Adjusted EPS* Growth $3.85-3.95** $3.15 $2.94 $2.26 Our goal is to deliver $1.97 at least 10% annual EPS growth over time 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 g
Slide 17: Financial Trends
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 *Represents adjusted sales, a non-GAAP financial measure, which **Represents a non-GAAP financial measure. EBITDA is explained and reconciled
Slide 18: Free Cash Flow
Free Cash Flow* $1,569 $652 $440 $442 $344 FY11 FY12 FY13 FY14 FY15 Free Cash Flow in millions Free Cash Flow = Operating Cash Flow – CapEx - Dividends *Represents a non-GAAP financial measure. Free Cash Flow is explained and reconciled to a comparable GAAP measure in the Appendix. Tyson Foods, Inc.
Slide 19: Net Debt/Adjusted EBITDA
Net Debt/Adjusted EBITDA* Positioned for growth through rapid deleveraging 3.0X 2.0X 1.7X FY14** FY15 LTM Q1'16 *Represents a non-GAAP financial measure. Net debt/adjusted EBITDA is explained and reconciled to a comparable GAAP measure in the Appendix. ** FY14 Net Debt/EBITDA calculated on a pro for
Slide 20: Priorities for Cash
Priorities for Cash 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 repurchases and di
Slide 21: Synergies
Synergies FY15 – $322 million realized FY16 – expecting more than $500 million FY17 – expecting more than $700 million Synergy Categories: • Prepared Foods Improvements • Procurement • Manufacturing & Logistics • Organizational & Fiduciary Tyson Foods, Inc. Investor Presentation | March 2016 |21
Slide 22: FY15 $40.6 Billion in Adjusted Sales
FY15 $40.6 Billion in Adjusted $2.6 Billion in Sales* Operating Cash Flow Up 9% over FY14 $3.15 Adjusted EPS* 5.5% Total Company Up 7% over FY14 Adjusted Return on Sales* $2.25 Billion in Adjusted Operating Income* Up 37% over FY14 *Represents a non-GAAP financial measure. Adjusted sales, adjusted o
Slide 23: Q1'16 Operating Results
Q1’16 Operating Results Record Operating Income Record Return on Sales Record EPS YOY Growth ($ in millions) Q1’16 Q1’15 % Sales $ 9,152 $ 10,817 -15% Adj. Oper. Income* $ 776 $ 564 38% ROS* 8.5% 5.2% Adj. EPS* $ 1.15 $ 0.77 49% *Represents a non-GAAP financial measure. Adjusted operating income, ad
Slide 24: FY2016 Outlook
FY2016 Outlook EPS of $3.85-3.95* Prepared Foods Segment margins near Represents approximately 22-25% growth over the low end of the 10-12% range FY15 adjusted EPS** Chicken Segment margins more than 11% Sales of ~$37B Includes impact of divestitures and deflationary Pork Segment above its normalize
Slide 25: TSN Performance vs. S&P 500 and Peer Group
TSN Performance vs. S&P 500 and Peer Group* Comparison of 5-year cumulative total returns $300 TSN $250 S&P 500 $200 Peer Group $150 $100 $50 FYE 10/2/10 10/1/11 9/29/12 9/28/13 9/27/14 10/3/15 *The total cumulative return on investment (change in the year-end stock price plus reinvested dividends),
Slide 26: Why Invest in TSN?
Why Invest in TSN? • One of world’s leading food companies • Advantaged brands in advantaged product categories, focused on protein • Multi-protein, multi-channel, all day parts, all meal occasions • #1 or #2 brands in 13 categories • #2 in U.S. frozen food with products in growth categories • Innov
Slide 27: Appendix
Appendix
Slide 28: Tyson Foods, Inc. Investor Presentation
Tyson Foods, Inc. Investor Presentation | March 2016 |28
Slide 29: Meat Protein Market Share
Meat Protein Market Share Tyson Foods Other Tyson Foods Tyson Foods 21% 25% 24% Other 17% 30% Other 47% Pilgrim’s Pride National Beef Smithfield 17% 10% JBS USA 26% 22% Hormel Cargill 8% JBS USA 19% 19% Sanderson Perdue Farms 8% Farms 7% U.S. Chicken Production Top U.S. Beef Packers U.S. Pork Produc
Slide 30: FY15 International Sales
FY15 International Sales China & Hong Kong Other 22% 31% Japan 15% Taiwan 5% Canada South Mexico 6% Korea 13% 8% FY15 International Sales $4.6 Billion* * Based on 52 weeks. Includes all exports as well as in-country production in China and India. In-country production sales in Mexico and Brazil are
Slide 31: FY15 International Sales
FY15 International Sales Other 13% Other S. Korea 23% 6% Japan 35% China & H.K. Japan 4% Canada 9% 48% Puerto Rico Canada 6% 14% Mexico Mexico 23% 19% FY15 International Pork Sales* FY15 International Prepared Foods Sales* $938 Million $126 Million * Based on 52 weeks. Tyson Foods, Inc. Investor Pre
Slide 32: FY15 International Sales
FY15 International Sales Other China & 13% China & Vietnam Hong Kong Hong Kong Canada 4% 26% Other 27% 4% 41% Italy 6% Brazil 7% Taiwan 7% Japan 14% India 6% South Mexico Korea Mexico UAE 5% 13% 13% Angola 4% 2% Russia 2% Puerto Rico Taiwan 3% 3% FY15 International Chicken Sales* FY15 International
Slide 33: Debt Maturity Profile
Debt Maturity Profile Debt Maturity Skyline as of 1.2.16 Fiscal Year Maturities ($ in millions) 1,750 1,500 Pre-Payable 1,250 1,000 750 Pre-Payable 500 250 0 '16 '17 '18 '19 '20 '21 '22 '23 '24 '33 '34 '44 TFI Bonds Hillshire Bonds Term Loans • Excludes $123MM Tangible Equity Units amortizing note,
Slide 34: Adjusted Sales, Adjusted Operating Income and Adjusted Operating Margin
Adjusted Sales, Adjusted Operating Income and Adjusted Operating Margin $ in millions Unaudited 12 Months Ended October 3, 2015 Reported sales $ 41,373 Less: Estimated impact of additional week (a) (750) Adjusted sales $ 40,623 Reported operating income (loss) $ 2,169 Add: China impairment 169 Add:
Slide 35: Operating Income and Operating Margin Reconciliation
Operating Income and Operating Margin Reconciliation in millions Unaudited First Quarter 2016 2015 Reported Sales $ 9,152 $ 10,817 Reported operating income 776 509 Add: Merger and integration costs - 19 Add: Costs related to a legacy Hillshire Brands plant fire - 36 Adjusted operating income 776 56
Slide 36: Sales Reconciliations
Sales Reconciliations $ in millions Unaudited Fiscal Year 2015 2014 Reported sales $ 41,373 $ 37,580 Less: Impact of additional week (a) (750) - Less: Hillshire Brands post-closing sales - (325) Adjusted sales $ 40,623 $ 37,255 (a) The estimated impact of the additional week in fiscal 2015 was calcu
Slide 37: EPS Reconciliations
EPS Reconciliations Unaudited 12 Months Ended 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) - - (0.02) - - - Insurance pro
Slide 38: EPS Reconciliations
EPS Reconciliations in millions, except per share data Unaudited First Quarter Pre-Tax Impact EPS Impact 2016 2015 2016 2015 Reported net income per share attributable to Tyson $ 1.15 $ 0.74 Add: Costs related to a legacy Hillshire Brands plant fire $ - $ 36 - 0.06 Add: Merger and integration costs
Slide 39: Net Debt/Adjusted EBITDA Reconciliations
Net Debt/ Adjusted EBITDA Reconciliations $ in millions Unaudited 12 Months Ended (b) January 2, 2016 October 3, 2015 September 27, 2014 Net income $ 1,375 $ 1,224 $ 856 Less: Interest income (9) (9) (7) Add: Interest expense 283 293 132 Add: Income tax expense 823 697 396 Add: Depreciation 612 609
Slide 40: Net Debt/Adjusted EBITDA Reconciliations, Continued
Net Debt/ Adjusted EBITDA Reconciliations, Continued (a) Excludes the amortization of debt discount expense of $8 million, $10 million and $10 million for the twelve months ended January 2, 2016, October 3, 2015, and September 27, 2014, respectively, as it is included in Interest expense. (b) Adjust
Slide 41: Historical EBITDA Reconciliations
Historical EBITDA Reconciliations $ in millions Unaudited 12 Months Ended (a) 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 (b) 697 396 411 351 341 Add: Depreciation 60
Slide 42: Free Cash Flow Reconciliations
Free Cash Flow Reconciliations $ in millions Unaudited 12 Months Ended 2015 2014 2013 2012 2011 Cash Provided by Operating Activities $ 2,570 $ 1,178 $ 1,314 $ 1,187 $ 1,046 Less: Capital Expenditures (854) (632) (558) (690) (643) Less: Dividends Paid (147) (104) (104) (57) (59) Free Cash Flow $ 1,5
Slide 43: 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