Tyson Foods, Inc. · NYSE:TSN
Tyson Foods — Consumer Analyst Group of New York (CAGNY) 2017
86 slides from Tyson Foods's conference presentation, Feb 21, 2017
Slide 1: Strong Today, Leading for Tomorrow
Strong Today, Leading for Tomorrow Consumer Analyst Group of New York (CAGNY) February 21, 2017 Tyson Foods
Slide 2: Forward Looking Statements
Forward Looking Statements Certain information contained in the press release 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 GAAP EPS guidance
Slide 3: Feed & Hatchery
¢*) — FEED & HATCHERY “Tew Hamp shine - White Crosser BABY CHICKS EVERY DAY OF YEAR
Slide 4: Agenda
AGENDA 1 STRONG TODAY, LEADING FOR TOMORROW 2 BUILDING A MODERN GROWTH PORTFOLIO 3 LEADING THE WAY IN FOOD SUSTAINABILITY
Slide 5: Strong Today Leading for Tomorrow
STRONG TODAY LEADING FOR TOMORROW
Slide 6: Consistent EPS Growth
STRONG TODAY 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.” **Project
Slide 7: Strong Cash Flow Fuels Growth
STRONG TODAY 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)
Slide 8: Rapid Deleveraging Positions Us for Growth
STRONG TODAY Rapid Deleveraging Positions Us for Growth Favorable Net Debt/ 3.0X Adjusted EBITDA* 2.0X 1.7X .8X .7X FY12*** FY13*** FY14** FY15* FY16*** *Represents a non-GAAP financial measure. Net debt/adjusted EBITDA is explained and reconciled to a comparable GAAP measure in the Appendix. ** FY1
Slide 9: Unmatched Shareholder Return
STRONG TODAY Unmatched Shareholder Return Total Shareholder Return (TSR*) Last 3 years 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” s
Slide 10: Uniquely Positioned to Lead
STRONG TODAY Uniquely OPPORTUNITY Positioned Changing Consumers and Markets Create Opportunity to Lead TSN CAPABILITY Differentiated Capability Aligned to Growing Demand Creates FIREPOWER Advantage Business Model and Performance Create Firepower for Growth
Slide 11: No. 1 Most Admired Company
STRONG TODAY, LEADING FOR TOMORROW FORTUNE No. 1 Most Admired Company Food Production Industry
Slide 12: Ready to Shape the Future
STRONG TODAY, LEADING FOR TOMORROW Ready to Shape the Future
Slide 13: Returns Through Purpose
STRONG TODAY, LEADING FOR TOMORROW Returns Through Purpose
Slide 14: Video Playing
VIDEO PLAYING
Slide 15: Placeholder
STRONG TODAY, LEADING FOR TOMORROW Placeholder
Slide 16: Strategic Intent
STRONG TODAY, LEADING FOR TOMORROW Strategic Intent Sustainably feed the world with the fastest growing portfolio of protein packed brands
Slide 17: Enablers
STRONG TODAY, LEADING FOR TOMORROW Sustainably feed the Twin Engines of Growth world with the fastest growing portfolio Growing our portfolio of Delivering sustainable of protein protein packed brands food at scale packed brands Driving profitable growth with and for our customers Enablers Critical
Slide 18: A New Approach to Efficiency Will Fund Investments for Sustainable Growth
STRONG TODAY, LEADING FOR TOMORROW 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 to growth TRANSFORM our business through technology
Slide 19: Aspiration for Value Creation
STRONG TODAY, LEADING FOR TOMORROW 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 Aspiration +3% HSD Value for Value Creation Share Repurchases Div
Slide 20: Superior Total Company Results Through Sharp Portfolio Roles
STRONG TODAY, LEADING FOR TOMORROW Superior Total Company Results Through Sharp 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 A
Slide 21: Proven Leadership Team Aligned to Deliver Against Our Strategy
STRONG TODAY, LEADING FOR TOMORROW Proven Leadership Team Aligned to Deliver Against Our Strategy Designed to Elevate Focus on CONSUMERS CUSTOMERS SUSTAINABILITY TECHNOLOGY
Slide 22: A Simple Framework for M&A
STRONG TODAY, LEADING FOR TOMORROW A Simple New Framework Brands for M&A IDEAL New New Capabilities Geographies
Slide 23: Strong Today, Leading for Tomorrow
TYSON FOODS Strong Today, Leading for Tomorrow Future Strong Unique Purpose Clear Focused Financials Position Driven Strategy Team
Slide 24: Building a Modern Growth Portfolio
BUILDING A MODERN GROWTH PORTFOLIO
Slide 25: Modern Growth Portfolio
BUILDING A MODERN GROW TH PORTFOLIO Modern Growth Portfolio Advantaged Differentiated Spaces Capabilities Multiple Brand Models Portfolio
Slide 26: Retail Brands: A Growth Business with Attractive Financials
BUILDING A MODERN GROW TH PORTFOLIO A GROWTH Business with Attractive Financials Retail Brands High Growth High Margin
Slide 27: Protein Provides a Powerful Tailwind
BUILDING A MODERN GROW TH PORTFOLIO Protein Provides a Powerful Tailwind 1Source: Source: Hartman Health & Wellness 2015 2Source: Desirability of Health and Wellness Attributes - Datassential CPP Protein 2015
Slide 28: Large Spaces in Which to Play
BUILDING A MODERN GROW TH PORTFOLIO Packaged Protein1 Large Spaces in $98B Which to Packaged Meat CAGR2 Play 1.7X 1Source: IRI Total US - Multi Outlet, Latest 52 Weeks Ending 01-15-17 2Source: 4yr CAGR IRI Total US - Multi Outlet, Latest 52 Weeks Ending 01-15-17
Slide 29: Large Spaces in Which to Play
BUILDING A MODERN GROW TH PORTFOLIO $46B RETAIL Fresh Large Meat1 Spaces in Which to Branded Play Value Added Unbranded 1Source: Nielsen Perishables Universe; 52 Weeks Ending 12/31/16 = $31B, Estimate 67% coverage of total retail market
Slide 30: Large Spaces in Which to Play
BUILDING A MODERN GROW TH PORTFOLIO Large CONSUMER Spaces in Which to FRESH Play GOODS
Slide 31: Differentiated Capabilities
BUILDING A MODERN GROW TH PORTFOLIO DIFFERENTIATED CAPABILITIES
Slide 32: Opportunity in Current Spaces
BUILDING A MODERN GROW TH PORTFOLIO 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% 34% 37% 30% 30% 26% 28% 23% 21% 7% 5% 10% Cate
Slide 33: As Well as Unlock New Businesses
BUILDING A MODERN GROW TH PORTFOLIO As Well as Unlock New Businesses Emerging Brands New Businesses
Slide 34: A Repeatable Model Creates a Fresh Story in Frozen
BUILDING A MODERN GROW TH PORTFOLIO A Repeatable Model Creates a Fresh Story in Frozen
Slide 35: Video Playing
VIDEO PLAYING
Slide 36: This Approach Delivers Proven Results
BUILDING A MODERN GROW TH PORTFOLIO This Approach Delivers Proven Results Volume sales % change among top 10 branded food companies > $5B 6.6% 6.3% 0.5% Core 9 Total Total -1.0% Food & -2.4% Bev. -2.7% -3.1% -3.4% -3.4% -7.0% -9.6% -9.9% Source: IRI Total U.S. Multi-Outlet (x Costco) Volume Sales 13
Slide 37: Through Healthy Growth
BUILDING A MODERN GROW TH PORTFOLIO Through Healthy Growth Volume sales % change among top 10 branded food companies > $5B 6.6% 6.3% HHs Buying: +1PT Amount Each HH Buys: +6% 0.5% Core 9 Total Total -1.0% Food & -2.4% Bev. -2.7% -3.1% -3.4% -3.4% -7.0% -9.6% -9.9% Source: IRI Total U.S. Multi-Outlet
Slide 38: #1 Large Food & Beverage Growth Performer
BUILDING A MODERN GROW TH PORTFOLIO That is Recognized Within and Beyond Our Industry #1 Large Food & Beverage Growth Performer Based upon composite growth index
Slide 39: Growth Demands Multi-Dimensional Innovation
• BUILDING A MODERN GROWTH PORTFOLIO Growth Demands Multi-Dimensional Innovation FRESH FLEXIBLE FUNCTIONAL
Slide 40: The Perimeter of the Store is Fresh
BUILDING A MODERN GROWTH PORTFOLIO FRESH The Perimeter of the Store is SOURCE: Hartman, America’s Supermarkets in Transition, 2016 OUR Center SOURCE: Videomining Custom Research, 2015 SOURCE: Canadean, 2015
Slide 41: On Demand Eating
BUILDING A MODERN GROWTH PORTFOLIO FLEXIBLE FORMS On Demand Eating SOURCE: Hartman, Snacking Report, 2015
Slide 42: Complete Protein
BUILDING A MODERN GROWTH PORTFOLIO F U N C T I O N AL Complete SOURCE: IFC Food & Health Survey 2016 Protein Not All Protein is Equal SOURCE: Nancy Rodriguez PHD, RDN
Slide 43: This Approach is Behind the Success of Recent Launches
BUILDING A MODERN GROW TH PORTFOLIO This Approach is Behind the Success of Recent Launches
Slide 44: Innovation Performance
BUILDING A MODERN GROW TH PORTFOLIO Innovation Performance Tyson Foods Retail New Product Vitality FY14-FY16 Innovation Net Revenue Growth 14% 12% +21% FY14 FY16 SOURCE: Internal financials
Slide 45: Consumer Fresh Goods
BUILDING A MODERN GROW TH PORTFOLIO Consumer Fresh Keeping Fresh Take on Core 9 Goods Breakfast Fresh
Slide 46: Tyson Tastemakers Ecommerce
BUILDING A MODERN GROW TH PORTFOLIO Tyson Tastemakers TM Ecommerce THE INSIGHT T H E AD V AN T AG E Culinary adventures can A curated dinner be daunting experience made fresh and easy at home
Slide 47: Tyson Tastemakers at Retail
BUILDING A MODERN GROWTH PORTFOLIO Tyson TastemakersTM at Retail
Slide 48: CFG: Ground Fresh Poultry
BUILDING A MODERN GROW TH PORTFOLIO CFG: Ground Fresh Poultry Large Fresh With Room And Poultry’s Category for Chicken Leading Brand Fresh Ground Poultry1 Fresh Ground Poultry1 Fresh Poultry1 52wk $ Sales $ Sales by Type $ Sales by Type $1B+ 9% 86% 64% Fresh Ground Poultry $s are generated by Privat
Slide 49: Tyson Ground Chicken
BUILDING A MODERN GROW TH PORTFOLIO Tyson ® Ground Chicken THE INSIGHT T H E AD V AN T AG E Chicken is America’s Lean, All natural ground favorite protein, but it has chicken with… yet to make in roads into No Antibiotics Ever! one of meat’s favorite forms
Slide 50: Building a Trusted Brand in China
BUILDING A MODERN GROW TH PORTFOLIO Building a Trusted Brand in China THE INSIGHT T H E AD V AN T AG E Sensitive to issues of Embedded QR Code safety, Chinese traceability on every consumers desire package assurance that their food is healthy and safe
Slide 51: A Category Ripe for 'Fresh' Breakfast Innovation
BUILDING A MODERN GROW TH PORTFOLIO A Category Ripe for ‘Fresh’ Breakfast Innovation REFRIGERATED MEALS: BUT BREAKFAST IS BECAUSE IT HAS BEEN UNDER LARGE & GROWING RAPIDLY UNDER REPRESENTED INNOVATED % $s From New Items 5.0% 33% Breakfast & AM Category Size $6.5B Snack Share of Eating Occasions YOY
Slide 52: Jimmy Dean Simple Scrambles
BUILDING A MODERN GROW TH PORTFOLIO Jimmy Dean Simple Scrambles™ THE INSIGHT T H E AD V AN T AG E Warm, real breakfast is Breakfast scramble too much work most freshly prepared in days minutes
Slide 53: Jimmy Dean Premium Breakfast Bowls
BUILDING A MODERN GROW TH PORTFOLIO Jimmy Dean ® Premium Breakfast Bowls THE INSIGHT T H E AD V AN T AG E Most frozen breakfast Hearty, satisfying items aren’t hearty breakfast bowls made enough for when I’m with high quality really hungry ingredients and bold flavors
Slide 54: Jimmy Dean Pancake and Sausage Bites
BUILDING A MODERN GROW TH PORTFOLIO Jimmy Dean ® Pancake and Sausage Bites THE INSIGHT T H E AD V AN T AG E Breakfast options for my Snackable form of a family need to be quick, breakfast favorite in easy and portable individual on-the-go pouches
Slide 55: Jimmy Dean Delights Omelets
BUILDING A MODERN GROW TH PORTFOLIO Jimmy Dean Delights® Omelets THE INSIGHT T H E AD V AN T AG E Breakfast needs to be Substantial and delicious filling, but still a smart egg white omelet for start to the day fewer than 200 calories
Slide 56: Hillshire Snacking
BUILDING A MODERN GROW TH PORTFOLIO Hillshire® Snacking THE INSIGHT T H E AD V AN T AG E The expectation of Sophisticated flavors in snacks has evolved from forms that fit into flexible satisfaction to experience lives
Slide 57: Hillshire Farm Slow Smoked Meats
BUILDING A MODERN GROW TH PORTFOLIO Hillshire Farm ® Slow Smoked Meats THE INSIGHT T H E AD V AN T AG E The best flavor takes a Slow smoked meat in long time to develop – minutes, not hours time I don’t have during the week
Slide 58: Ball Park Prime Franks
BUILDING A MODERN GROW TH PORTFOLIO BallPark ® Prime Franks THE INSIGHT T H E AD V AN T AG E I want a cleaner label, Only premium hot dog higher quality hot dog I made with 100% USDA can feel good about prime beef, no added serving nitrates
Slide 59: The Tyson Brand & No Antibiotics Ever!
BUILDING A MODERN GROW TH PORTFOLIO The Tyson brand & No Antibiotics Ever! Meeting the growing consumer demand for no antibiotics across our portfolio.
Slide 60: Bringing Our Brands to Life: Telling Fresh, Modern Stories
BUILDING A MODERN GROW TH PORTFOLIO Bringing Our Brands to Life: Telling Fresh, Modern Stories
Slide 61: Evolution of the Tyson Consumer Brand
BUILDING A MODERN GROW TH PORTFOLIO Evolution of the Tyson Consumer Brand
Slide 62: Video Playing
VIDEO PLAYING
Slide 63: Hillshire Snacking
HILLSHIRE” SNACKING
Slide 64: For the New Breed of Eater
FORTHE <*> NEL TARE. NEW BREED OF EATER. HB
Slide 65: A Disciplined Approach to Investment & Return
BUILDING A MODERN GROW TH PORTFOLIO A Disciplined Approach to Investment & Return Tyson Foods Media ROI1 Marketing mix models on Core 9 brands track return on investment and optimize spend 1Represents a weighted average across Jimmy Dean, Hillshire Farm, Ball Park, and Tyson FY14 FY15 FY16
Slide 66: Modern Growth Portfolio
BUILDING A MODERN GROW TH PORTFOLIO Modern Growth Portfolio Advantaged Differentiated Spaces Capabilities Multiple Brand Models Portfolio
Slide 67: Leading the Way in Food Sustainability
LEADING THE WAY IN FOOD SUSTAINABILITY
Slide 68: The Case for Sustainability & Shared Value
LEADING THE W AY IN FOOD SUSTAINABILITY The Case for Sustainability & Shared Value SOCIAL ENVIRONMENTAL BUSINESS It’s the right thing to do & companies that do the right thing win!
Slide 69: Our Bold, New Approach to Sustainability
LEADING THE W AY IN FOOD SUSTAINABILITY Our Bold, New Healthier Food Healthier Animals Approach to Sustainability Healthier Bottom-line Healthier Workplace Healthier Environment
Slide 70: System-level Sustainability Solutions
LEADING THE W AY IN FOOD SUSTAINABILITY From Issues to System-level Sustainability Tyson Foods aims to create Solutions competitive advantage by advancing all dimensions of sustainability
Slide 71: Our Approach Starts With Chicken
LEADING THE W AY IN FOOD SUSTAINABILITY Our Approach THE HEART AND Starts With H E R I TA G E O F O U R O R G A N I Z AT I O N Chicken
Slide 72: Poultry Farm of the Future
LEADING THE W AY IN FOOD SUSTAINABILITY Poultry Farm of the Future
Slide 73: Poultry Farm of the Future
LEADING THE W AY IN FOOD SUSTAINABILITY Poultry Farm of the Future
Slide 74: Poultry Farm of the Future
LEADING THE W AY IN FOOD SUSTAINABILITY Poultry Farm of the Future Reduces Improves Improves Improves Reduces Greenhouse Worker Animal Food Land Emissions Welfare Welfare Safety Use
Slide 75: Evidence-based Targets, Long-term Commitment
LEADING THE W AY IN FOOD SUSTAINABILITY Evidence-based Targets, Long-term Commitment 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 tre
Slide 76: Over Time Sustainability Investments Will Fund Themselves
LEADING THE W AY IN FOOD SUSTAINABILITY Over Time Sustainability Investments Will Fund Themselves Sustainability Investments Resources Waste Cost Innovation Volume Profits
Slide 77: Investing in The Future: Tyson New Ventures
LEADING THE W AY IN FOOD SUSTAINABILITY Investing in ROLE: Tyson New Ventures answers the The Future: question of how we, and our food production system, might Tyson New adapt to continue to provide safe, high quality, affordable, Ventures and sustainable nutrition to the ~9B+ human beings who will
Slide 78: Beyond Meat
LEADING THE W AY IN FOOD SUSTAINABILITY Beyond Meat
Slide 79: The Bright Future of Tyson Foods
THE BRIGHT FUTURE OF TYSON FOODS
Slide 80: Strong Today, Leading for Tomorrow
TYSON FOODS Strong Today, Leading for Tomorrow Future Strong Unique Purpose Clear Focused Financials Position Driven Strategy Team
Slide 81: Strong Today, Leading for Tomorrow
Strong Today, Leading for Tomorrow
Slide 82: Thank You
CE) | Thank Tyson | You
Slide 83: Appendix
Appendix
Slide 84: Net Debt/EBITDA Reconciliations
STRONG TODAY, LEADING FOR TOMORROW Net Debt/EBITDA Reconciliations $ in millions (Unaudited) Fiscal 2016 (a) Fiscal 2015 (a) Fiscal 2014 (a) Fiscal 2013 (a) Fiscal 2012 (a) Net income $ 1,772 $ 1,224 $ 856 $ 778 $ 576 Less: Interest income (6) (9) (7) (7) (12) Add: Interest expense 249 293 132 145 3
Slide 85: Net Debt/EBITDA Reconciliations - continued
STRONG TODAY, LEADING FOR TOMORROW Net Debt/EBITDA Reconciliations - continued (a) EBITDA and Adjusted EBITDA for fiscal 2015 were based on a 53-week year while fiscal 2016, 2014, 2013 and 2012 are based on a 52-week year. (b) Excludes the amortization of debt discount expense of $8 million, $10 mil
Slide 86: EPS Reconciliations
STRONG TODAY, LEADING FOR TOMORROW 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 E
Tyson Foods — Consumer Analyst Group of New York (CAGNY) 2017 on 6ix