Tyson Foods, Inc. · NYSE:TSN
Tyson Foods — Consumer Analyst Group of New York (CAGNY) 2020
85 slides from Tyson Foods's conference presentation, Feb 19, 2020
Slide 1: Consumer Analyst Group of New York
Consumer Analyst Group of New York be .. February 19,2020. ° eA i — * oily 4 1 i
Slide 2: Noel White
Noel White Chief Executive Officer TYSON FOODS, INC. FEBRUARY 19, 2020 2
Slide 3: Forward-Looking Statements
Certain information in this report constitutes forward-looking statements. Such forward-looking statements include, but are not limited to, current views and estimates of our outlook for fiscal 2020, other future economic circumstances, industry conditions in domestic and international markets, our
Slide 4: Uniquely positioned to meet growing protein demand
Uniquely positioned to meet growing protein demand With our scale, diversified portfolio, international footprint and track record of growth, Tyson Foods is uniquely positioned for continued long-term growth in an environment of growing global demand for protein coupled with limited global supplies
Slide 5: Today's Key Takeaways
Today’s Key Takeaways 1 Global demand for protein is growing 2 Our strengths position us to meet the world’s need for more protein 3 Our strategy capitalizes on our strengths TYSON FOODS, INC. FEBRUARY 19, 2020 5
Slide 6: Today's Speakers
Today’s Speakers Noel White Dean Banks Stewart Glendinning CEO President EVP & CFO TYSON FOODS, INC. FEBRUARY 19, 2020 6
Slide 7: Product Portfolio
We operate in growing spaces Product Portfolio TYSON FOODS, INC. FEBRUARY 19, 2020 7
Slide 8: We are one of the largest food companies
We are one of the largest food companies Fiscal 2019 Sales $42.4 Billion Sales by Segment 36% 31% 10% 20% 3% Beef Chicken Pork Prepared Foods International / Other Sales by Distribution Channel 45% 31% 13% 11% Consumer Products Foodservice International Industrial / Other TYSON FOODS, INC. FEBRUARY
Slide 9: We know protein – leading market share
We know protein – leading market share #1 #1 #3 16% 21% 22% Source: Kerns and Source: Watt Poultry Fed Beef Associates, September 2018 USA, March 2019. Based Source: Cattle Buyers as reported in National Pork on ready-to-cook pounds Weekly, 2018. Based on Board Quick Facts. Based on produced. maximu
Slide 10: Global demand for protein is growing rapidly
Global demand for protein is growing rapidly Population growth + Global demand Disposable Income/GDP Growing over 5 years growth pounds [ + Ongoing Urbanization 45B 28B lbs. Chicken 8B lbs. Beef 9B lbs. Pork + Increasing Modernization of Retailing and Food Service Source: Euromonitor TYSON FOODS, IN
Slide 11: Global demand opportunity - As GDP rises, so does protein consumption
Global demand opportunity - As GDP rises, so does protein consumption GDP CAGR vs. Total Meat Volume CAGR (2005 –2018) 10% r = 0.53 9% India Fresh Meat Volume CAGR (2005 – 2018) 8% 7% United Arab Emirates 6% Egypt 5% Russia 4% Philippines Saudi Arabia Hong Kong, China Malaysia Vietnam 3% South Afric
Slide 12: The opportunity is enormous
The opportunity is enormous 2020 U.S. Protein U.S. Protein Production ~75 Billion Pounds Tyson Foods ~20% Share TYSON FOODS, INC. FEBRUARY 19, 2020 12
Slide 13: The opportunity is enormous
The opportunity is enormous 2020 Global Protein Production 568 Billion Pounds Data Source: Euromonitor TYSON FOODS, INC. FEBRUARY 19, 2020 13
Slide 14: The opportunity is enormous
The opportunity is enormous 2025 Global Protein Production Data Source: Euromonitor TYSON FOODS, INC. FEBRUARY 19, 2020 14
Slide 15: The opportunity is enormous
The opportunity is enormous 2050 Global Protein Production Data Source: Euromonitor
Slide 16: The opportunity is enormous
The opportunity is enormous 2050 Global Protein Production Data Source: Euromonitor Extrapolated from current U.S. market share For illustrative purposes only TYSON FOODS, INC. FEBRUARY 19, 2020
Slide 17: Our strengths position us to meet the world's need for protein
Our strengths position us to meet the world’s need for protein Strengths Opportunity to Differentiate • Diverse protein portfolio • Strength across all meal occasions and protein demand • Scale • Achieve low cost production and fulfillment along with superior • Leading market positions and brands di
Slide 18: Our scale allows us to invest in critical capabilities
Our scale allows us to invest in critical capabilities Insights & Supply Chain Technology Innovation Network TYSON FOODS, INC. FEBRUARY 19, 2020 18
Slide 19: Insights & innovation support our customers
Insights & innovation support our customers 2 R&D Centers 7 International Innovation Centers Pilot Plant Nearly $2B in FY19 Net Revenue from innovation launched in the past 3 years TYSON FOODS, INC. FEBRUARY 19, 2020 19
Slide 20: Our supply chain is a clear differentiator
Our supply chain is a clear differentiator • Extensive reach and capability • 42 distribution centers and cold storage facilities • 241 plants and facilities • Large temperature-controlled trucking fleet • 1,100+ trucks • 3,800 trailers TYSON FOODS, INC. FEBRUARY 19, 2020 20
Slide 21: Scale enables investment in technology
Scale enables investment in technology Advanced Manufacturing Robotics & Machine Analytics and Automation Automation Learning Center TYSON FOODS, INC. FEBRUARY 19, 2020 21
Slide 22: Iconic leading brands and rapid growth brands
Iconic leading brands and rapid growth brands Iconic Brands Emerging Brands TYSON FOODS, INC. FEBRUARY 19, 2020 22
Slide 23: We have deep customer relationships
We have deep customer relationships Consumer Products: 150+ Category captainships Foodservice: Leader in new product development All channels: consumer insights and innovation leads to sales growth, margin growth and repeat business TYSON FOODS, INC. FEBRUARY 19, 2020 23
Slide 24: Sustainability with a global approach
Sustainability with a global approach ESG Commitments: • 30% reduction in GHG emissions by 2030 Approved by Science-Based Targets Initiative • 12% reduction in water use intensity by 2020 • Support improved environmental practices on 2 million acres of corn by the end of 2020 • ProForest partnership
Slide 25: Our strategy
Our strategy Grow Deliver Sustain Our business by delivering Savings for growth and returns through Our company and our world for superior value to consumers and commercial, operational and financial future generations customers excellence WORKING DRAFT TYSON FOODS, INC. FEBRUARY 19, 2020 26 Last Mo
Slide 26: Dean Banks
Dean Banks President TYSON FOODS, INC. FEBRUARY 19, 2020 27
Slide 27: Key Takeaways
Key Takeaways 1 We have a global opportunity, and innovation is the key 2 We’re the beef and pork experts 3 Our differentiated chicken business is a competitive advantage 4 Prepared Foods growth has momentum; alternative protein shows tremendous promise 5 We’re expanding our international business T
Slide 28: Beef & Pork
Beef & Pork TYSON FOODS, INC. FEBRUARY 19, 2020 29
Slide 29: We are the Beef & Pork experts
We are the Beef & Pork experts Trusted leader in the The only Differentiators: Leading meat industry American-owned Knowledge customer brand for 60 years supplier of both Expertise and private label beef and pork Production capabilities supplier TYSON FOODS, INC. FEBRUARY 19, 2020 30
Slide 30: Case-ready growth opportunity
Case-ready growth opportunity ~50% of current U.S. meat sales are Then Now case-ready products TYSON FOODS, INC. FEBRUARY 19, 2020 31
Slide 31: We're seeing growth in international beef demand
We’re seeing growth in international beef demand… Annual U.S. Beef Exports 4,000 40% Millions of lbs. (carcass weight equivalent) 3,500 35% 3,000 30% % of Beef Production 2,500 25% 2,000 20% 1,500 15% 1,000 10% 500 5% 0 0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20
Slide 32: And especially international pork demand
…And especially international pork demand Annual U.S. Pork Exports 10,000 50% Millions of lbs. (carcass weight equivalent) 9,000 45% 8,000 40% 7,000 35% % of Pork Production 6,000 30% 5,000 25% 4,000 20% 3,000 15% 2,000 10% 1,000 5% 0 0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20
Slide 33: We're seeing early effects of African Swine Fever
We’re seeing early effects of African Swine Fever Estimated loss of >35% of the Chinese pork supply (’17 vs. ’20) ~5% of global Wholesale pork prices at record highs in protein supply China, EU and Brazil could be Global reallocation occurring eliminated across all proteins China now world’s largest
Slide 34: Chicken
Chicken TYSON FOODS, INC. FEBRUARY 19, 2020 35
Slide 35: Chicken is well positioned
Chicken is well positioned Animal Protein Consumption Chicken Aligns With Led By Chicken Consumer Expectations U.S. Annual Per Capita Consumption (lbs.) • Freshness 100 • Convenience 80 94 60 • Health 40 58 52 20 • Affordable 0 16 Chicken Beef Pork Turkey Source: Robert A Brown Inc., USDA data, thru
Slide 36: Tyson chicken's proven and sustainable business model
Tyson chicken’s proven and sustainable business model Key Metrics: Value-added Volume, Net Sales, Margin Growth, AOI, ROS Advantaged Portfolio & Innovation Best In Class Process & Capabilities Leading Broiler Producer in the US Customer Demand Deliver to Capacity Sales & Capacity Customer Operating
Slide 37: Flexible structure to continually value up
Flexible structure to continually value up Consumer Facing Rendering Big Bird / Tyson Ingredient Tray Pack Small Bird Retail Solutions 20-25% 15-20% 45-50% 5-10% of Chicken segment sales of Chicken segment sales of Chicken segment sales of Chicken segment sales Grocery Deli & Fast Food Retail & Dome
Slide 38: Tyson chicken portfolio is well balanced and diverse
Tyson chicken portfolio is well balanced and diverse Product Categories Tyson Competitor A Competitor B Competitor C Tray Pack Small Bird Big Bird - Value added Ingredient Solutions Genetics TYSON FOODS, INC. FEBRUARY 19, 2020 39
Slide 39: Global leader in poultry genetics
Global leader in poultry genetics Where Cobb products are sold TYSON FOODS, INC. FEBRUARY 19, 2020 40
Slide 40: New chicken product innovation
New chicken product innovation TYSON FOODS, INC. FEBRUARY 19, 2020 41
Slide 41: Prepared Foods
Prepared Foods TYSON FOODS, INC. FEBRUARY 19, 2020 42
Slide 42: Advantaged spaces, capabilities, and performance
Advantaged spaces, capabilities, and performance 60% Brands actively adding PROTEIN throughout the day1 Advantaged Expertise Insights Capabilities in Protein 55% of consumers say that high PROTEIN is important Innovation in deciding what to buy2 1. Hartman 2. Nielsen TYSON FOODS, INC. FEBRUARY 19, 2
Slide 43: Tyson leads in retail volume growth
Tyson leads in retail volume growth Tyson has delivered 6 consecutive quarters of growth 5.2% Volume Sales % Chg. among top 10 branded food companies > $5B 3.4% 1.9% 0.9% 0.9% 0.1% Core Bus. -0.4% Lines Total -0.2% Tyson Total F&B -1.6% -1.6% -3.5% -3.6% Source: Nielsen Fixed Weight Volume EQ Sales
Slide 44: Portfolio of powerhouse brands
Portfolio of powerhouse brands 80% HOUSEHOLD PENETRATION Source: Nielsen TYSON FOODS, INC. FEBRUARY 19, 2020 45
Slide 45: Brand strength
Brand strength 1.4x 1.6x higher average unaided more likely for a Tyson leading awareness for Tyson leading brand to be chosen as their brands vs. competition1 “favorite” by consumers than competitor brands2 2. Source: Tyson Brand Health Tracking, Q1 FY2020 1. Source: Tyson Brand Health Tracking, Q1
Slide 46: Brand Growth
Brand Growth Jimmy Dean Sales $ Growth Hillshire Farm Sales $ Growth 2.5 0.6 +19.1% +9.2% 2 0.5 0.4 BILLIONS BILLIONS 1.5 0.3 1 0.2 0.5 0.1 0 0 2017 2018 2019 2017 2018 2019 Source: Nielsen, most recent three calendar years, ending 2019 TYSON FOODS, INC. FEBRUARY 19, 2020 47
Slide 47: Room for more growth
Room for more growth Frozen Frozen Smoked Smoked Breakfast Prepared Protein Frozen Lunchmeat Bacon Hot Dogs Sausage Sausage Sausage Chicken Breakfast Corn Dogs Snacking Pet Treats { 81% 72% 68% 59% 59% 58% POTENTIAL 48% 38% 40% 40% 31% 26% 25% 26% 24% 24% 15% 19% 10% 5% 9% 4% Category HH Penetration
Slide 48: Innovation growth engine
Innovation growth engine TYSON FOODS, INC. FEBRUARY 19, 2020 50
Slide 49: Innovation in Fresh Food
⅔ Innovation in Fresh Food OF PEOPLE SAY fresh is important Source: Hartman group 2018 TYSON FOODS, INC. FEBRUARY 19, 2020 51
Slide 50: Innovation in Flexible Food
95 % Innovation in Flexible Food OF ADULTS snacked in the last 24 hrs. Source: Mintel 2019 TYSON FOODS, INC. FEBRUARY 19, 2020 52
Slide 51: Innovation in Functional Food
Innovation in Functional Food 2/3 OF PEOPLE SAY seek functional benefits Source: Proactive health white paper – Kerry Foods 2018 TYSON FOODS, INC. FEBRUARY 19, 2020 53
Slide 52: Beyond the buzz: significant incremental potential in alternative protein
Beyond the buzz: significant incremental potential in alternative protein SOURCE: Hartman Group & Tyson Foods: Consumer Opportunity Areas for Plant-Based Protein, 2018 TYSON FOODS, INC. FEBRUARY 19, 2020 54
Slide 53: Raised & Rooted – Tyson advantages in action
Raised & Rooted – Tyson advantages in action Excellent products Launched at scale Available widely in <1yr TYSON FOODS, INC. FEBRUARY 19, 2020 55
Slide 54: International
International TYSON FOODS, INC. FEBRUARY 19, 2020 56
Slide 55: International strategic purpose
International strategic purpose Drive growth in key demand markets with locally relevant products, enabled through a strategic supply chain to serve our customers as OneTyson TYSON FOODS, INC. FEBRUARY 19, 2020 57
Slide 56: International growth model
International growth model OPTIMIZE INVEST LEVERAGE existing production for growth through global sourcing footprint acquisition model TYSON FOODS, INC. FEBRUARY 19, 2020 58
Slide 57: Trade agreements
Trade agreements TYSON FOODS, INC. JUNE 20, 2019 59
Slide 58: 5-year International growth
5-year International growth CAGR $7,000 12.3% $6,000 $5,000 (In millions) $4,000 $3,000 $2,000 $1,000 $0 FY16 FY17 FY18 FY19 Q1 FY20 LTM Sales of Exports & In-Country Production TYSON FOODS, INC. FEBRUARY 19, 2020 60
Slide 59: Global Production Footprint
Global Production Footprint TYSON FOODS, INC. FEBRUARY 19, 2020 61
Slide 60: Our products are sold in 140+ countries around the world
Our products are sold in 140+ countries around the world TYSON FOODS, INC. FEBRUARY 19, 2020 62
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Slide 62: Stewart Glendinning
Stewart Glendinning Executive Vice President & Chief Financial Officer TYSON FOODS, INC. FEBRUARY 19, 2020 64
Slide 63: Key Takeaways
Key Takeaways 1 History of strong financial performance 2 Significant cash generation 3 Disciplined approach to capital allocation 4 We are focused on our return of capital employed TYSON FOODS, INC. FEBRUARY 19, 2020 65
Slide 64: We have a proven track record of growth
We have a proven track record of growth… 10-Year CAGR 59.89% 23.52% $3,500 $7 $3,000 $6 $2,500 $5 (In millions) $2,000 $4 $1,500 $3 $1,000 $2 $500 $1 $0 $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Adj. Operating Income Adj. EPS Adj. Operating Income and Adj. EPS are non-GAAP measures.
Slide 65: Tyson leads in total shareholder return
Tyson leads in total shareholder return 1000% 800% 600% 400% 200% N/A 0% TSN HRL HSY PPC MDLZ PEP KO CAG SJM GIS CPB ADM K BG KHC Source: Bloomberg. TSR = Current Share Price / Beginning Share Price + Accumulated Dividends Per Share Re-Invested Reflects activity during the period 12/31/09 to 12/27/1
Slide 66: Delivering strong cash returns while investing in our business
Delivering strong cash returns while investing in our business $3,500 12.0% $3,000 11.0% $2,500 10.0% (In millions) $2,000 9.0% $1,500 8.0% $1,000 $500 7.0% $0 6.0% FY15 FY16 FY17 FY18 FY19 Net Cash Generated Cash Returns Net cash generated and cash returns are non-GAAP measures. See the appendix fo
Slide 67: Capital allocation strategy
Capital allocation strategy Reduce / Invest in Fund our Repurchase maintain our growth dividend our shares debt levels commitments TYSON FOODS, INC. FEBRUARY 19, 2020 69
Slide 68: How we use our cash
How we use our cash Net Debt to Adjusted EBITDA Capital Expenditures 1,500 3x 1,200 $ in millions 2x 900 600 1x 300 0x 0 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 Dividends Share Repurchases 500 2,000 400 $ in millions 1,500 $ in millions 300 1,000 200 500 100 0 0 FY15 FY16 FY17 FY18 FY19 FY
Slide 69: We continue to look for strategic acquisitions
We continue to look for strategic acquisitions New New Scale & New Geographies Brands Capabilities Synergy + New Markets TYSON FOODS, INC. FEBRUARY 19, 2020 71
Slide 70: We've consistently demonstrated M&A success
We’ve consistently demonstrated M&A success $8.2B $3.2B $382M $864M $2.3B $326M American Proteins assets Thailand, EU AUGUST JUNE JUNE AUGUST NOVEMBER JUNE 2014 2017 2018 2018 2018 2019 TYSON FOODS, INC. FEBRUARY 19, 2020 72
Slide 71: Financial goals
Financial goals Investment grade Reduce leverage Maintain a strong Maintain a Create credit ratings to 2.0x balance sheet disciplined long-term for optionality approach toward shareholder strategic M&A value TYSON FOODS, INC. FEBRUARY 19, 2020 73
Slide 72: Financial goals
Financial goals Achieve over time: High Single Digit >3% Adjusted EPS Growth Value Added Sales Volume Growth TYSON FOODS, INC. FEBRUARY 19, 2020 74
Slide 73: Investment thesis
Investment thesis With our scale, diversified portfolio, international footprint and track record of growth, Tyson Foods is uniquely positioned for continued long-term growth in an environment of growing global demand for protein coupled with limited global supplies of beef, pork and chicken. TYSON
Slide 74: Grow. Deliver. Sustain.
Grow. Deliver. Sustain. TYSON FOODS, INC. JUNE 20, 2019 76
Slide 75: Appendix
Appendix TYSON FOODS, INC. FEBRUARY 19, 2020 77
Slide 76: Operating Income & EPS Reconciliations
Operating Income & EPS Reconciliations ($ in millions, except per share data) (unaudited) Fiscal Year Ended September 28, 2019 September 29, 2018 September 30, 2017 October 1, 2016 October 3, 2015 Operating Operating Operating Operating Operating Income EPS Income EPS Income EPS Income EPS Income EP
Slide 77: Operating Income (Loss) & EPS Reconciliations – continued
Operating Income (Loss) & EPS Reconciliations – continued ($ in millions, except per share data) (unaudited) Fiscal Year Ended September 27, 2014 September 28, 2013 September 29, 2012 October 1, 2011 October 2, 2010 October 3, 2009 Operating Operating Operating Operating Operating Operating Income E
Slide 78: Net Cash Generated and Cash Returns Reconciliations
Net Cash Generated and Cash Returns Reconciliations ($ in millions) Fiscal Year Ended September 28, 2019 September 29, 2018 September 30, 2017 October 1, 2016 October 3, 2015 (a) Net Income $ 2,035 $ 3,027 $ 1,778 $ 1,772 $ 1,224 Less: Interest income (11) (7) (7) (6) (9) Add: Interest expense 462 3
Slide 79: Net Cash Generated and Cash Returns Reconciliations – continued
Net Cash Generated and Cash Returns Reconciliations – continued ($ in millions) Fiscal Year Ended (d) Adjusted Income Tax Expense derived 2019 2018 2017 2016 2015 (a) from Adjusted EBITDA is calculated as follows: Reported Income Tax Expense (Benefit) $ 396 $ (282) $ 850 $ 826 $ 697 Adjustments to I
Slide 80: Net Cash Generated and Cash Returns Reconciliations – continued
Net Cash Generated and Cash Returns Reconciliations – continued ($ in millions) Fiscal Year Ended 2019 2018 2017 2016 2015 (a) Adjusted Effective Tax Rate is calculated by dividing Adjusted Income Tax Expense by Adjusted Income Before Income Taxes as follows: Net Income $ 2,035 $ 3,027 $ 1,778 $ 1,7
Slide 81: Net Cash Generated and Cash Returns Reconciliations – continued
Net Cash Generated and Cash Returns Reconciliations – continued ($ in millions) Fiscal Year Ended September 28, 2019 (e) Gross Operating Assets is calculated as follows: Three Months Ended December 29, 2018 March 30, 2019 June 29, 2019 September 28, 2019 Total Assets $ 32,335 $ 32,498 $ 33,665 $ 33,
Slide 82: Net Cash Generated and Cash Returns Reconciliations – continued
Net Cash Generated and Cash Returns Reconciliations – continued Fiscal Year Ended September 30, 2017 ($ in millions) Three Months Ended December 31, 2016 April 1, 2017 July 1, 2017 September 30, 2017 Total Assets $ 22,257 $ 22,596 $ 28,063 $ 28,066 Less: Cash (307) (243) (231) (318) Add: Accumulated
Slide 83: Net Cash Generated and Cash Returns Reconciliations – continued
Net Cash Generated and Cash Returns Reconciliations – continued ($ in millions) Fiscal Year Ended October 3, 2015 Three Months Ended December 27, 2014 March 28, 2015 June 27, 2015 October 3, 2015 Total Assets $ 23,758 $ 23,526 $ 23,443 $ 22,969 Less: Cash (381) (223) (471) (688) Add: Accumulated Dep
Slide 84: Adjusted EBITDA Reconciliations
Adjusted EBITDA Reconciliations ($ in millions) 2019 2018 Fiscal Year Ended 2017 2016 2015 (b) (unaudited) Net income $ 2,035 $ 3,027 $ 1,778 $ 1,772 $ 1,224 Less: Interest income (11) (7) (7) (6) (9) Add: Interest expense 462 350 279 249 293 Add: Income tax expense (benefit) 396 (282) 850 826 697 A
Slide 85: Adjusted EBITDA Reconciliations – continued
Adjusted EBITDA Reconciliations – continued (a) Excludes the amortization of debt issuance and debt discount expense of $12 million, $10 million, $13 million, $8 million and $10 million fiscal 2019, 2018, 2017, 2016 and 2015, respectively, as it is included in interest expense. (b) Fiscal 2015 was b
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