Tyson Foods, Inc. · NYSE:TSN
Tyson Foods — Investor Day (June 2019)
121 slides from Tyson Foods's investor day presentation, Jun 20, 2019
Slide 1: Tyson Foods, Inc. June 20, 2019
TYSON FOODS, INC. JUNE 20, 2019 1
Slide 2: Forward-Looking Statements
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 2019, other future economic circumstances, industry conditions in domestic and
Slide 3: John Tyson, Chairman of the Board
John Tyson Chairman of the Board TYSON FOODS, INC. JUNE 20, 2019 3
Slide 4: Tyson
Tyson
Slide 5: Noel White, President & Chief Executive Officer
Noel White President & Chief Executive Officer TYSON FOODS, INC. JUNE 20, 2019 5
Slide 6: We're helmed by a team of experienced leaders
We’re helmed by a team of experienced leaders. Noelle Steve Justin O’Mara Stouffer Whitmore Chad Donnie Stewart Martin King Glendinning TYSON FOODS, INC. JUNE 20, 2019 6
Slide 7: Today's Key Takeaways
Today’s Key Takeaways 1 Clear strategy for long-term growth. 2 Portfolio diversity and scale are our strength. 3 Innovation and value added products are growth drivers. 4 Positioned for global growth by meeting local demand. TYSON FOODS, INC. JUNE 20, 2019 7
Slide 8: Our long-term strategy remains clear
Our long-term strategy remains clear. Grow Deliver Sustain Growing our business Delivering ongoing Sustaining through differentiated financial discipline our company capabilities. through continuous and our world for improvement. future generations. TYSON FOODS, INC. JUNE 20, 2019 8
Slide 9: Our strengths are our global advantage
Our strengths are our global advantage. Insights & Supply Chain Distribution Technology Innovation Network & Logistics TYSON FOODS, INC. JUNE 20, 2019 9
Slide 10: A talented team fuels our growth
A talented team fuels our growth. Team Company Culture Team Member Members Development ~140,0001 Core Values Education and Hunger Relief Programs 1. Includes team members from Keystone and BRF Thailand & EU acquisitions. TYSON FOODS, INC. JUNE 20, 2019 10
Slide 11: Our billion dollar brands are our foundation
Our billion dollar brands are our foundation. TYSON FOODS, INC. JUNE 20, 2019 11
Slide 12: Our family of brands will meet consumer demand
Our family of brands will meet consumer demand – today and tomorrow. Iconic Brands Emerging Brands TYSON FOODS, INC. JUNE 20, 2019 12
Slide 13: We sell more protein in more places
We sell more protein in more places. Fiscal 2018 Sales By Segment 37% 30% 10% 22% 1% Beef Chicken Pork Prepared Foods Other By Distribution Channel 48% 30% 11% 11% Consumer Products Foodservice International Industrial / Other TYSON FOODS, INC. JUNE 20, 2019 13
Slide 14: We have a proven track record of growth
We have a proven track record of growth… 5-Year CAGR 22.21% 19.07% $3,500 $7 $3,000 $6 $2,500 $5 (In millions) $2,000 $4 $1,500 $3 $1,000 $2 $500 $1 $0 $0 2013 2014 2015 2016 2017 2018 Adj. Operating Income Adj. EPS Adj. Operating Income and Adj. EPS are non-GAAP measures. See the appendix for recon
Slide 15: ...And we have for a long time
…And we have for a long time. 10-Year CAGR 33.60% 23.25% $3,500 $7 $3,000 $6 $2,500 $5 (In millions) $2,000 $4 $1,500 $3 $1,000 $2 $500 $1 $0 $0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Adj. Operating Income Adj. EPS Adj. Operating Income and Adj. EPS are non-GAAP measures. See the app
Slide 16: We've built our business on strategic acquisitions
We’ve built our business on strategic acquisitions. 2019 2nd new case ready beef and pork plant announced 2006 BRF assets purchased 1st new case-ready in Thailand, UK, beef and pork plant Netherlands 1998 Hudson Foods 2003 2018 Choctaw Maid Farms 4th new poultry plant 1989 1995 under construction Ho
Slide 17: Our focus is where the growth is
Our focus is where the growth is. Where we were. Where we are. Where we’re going. 2013 2018 2023 1% 4% 22% 10% 37% 13% 41% 10% 32% 30% (for illustration only) Beef Sales Chicken Sales Pork Sales Prepared Foods Sales Other / International Sales TYSON FOODS, INC. JUNE 20, 2019 17
Slide 18: Innovative products come from innovative companies
Innovative products come from innovative companies. Tyson Mobile apps Robotics Advanced Piloting use Manufacturing Analytics of blockchain and Automation Center TYSON FOODS, INC. JUNE 20, 2019 18
Slide 19: We've opened the door to exponential global growth
We’ve opened the door to exponential global growth. TYSON FOODS, INC. JUNE 20, 2019 19
Slide 20: Our business is grounded in agriculture
Our business is grounded in agriculture. So we’ll continue to advocate for farmers. TYSON FOODS, INC. JUNE 20, 2019 20
Slide 21: Significant global impact from African Swine Fever
We anticipate significant global impact from African Swine Fever. Estimated loss of 20% to 35% 5% of global of the Chinese hog herd. protein supply could Breed herd losses will delay be affected. Chinese industry’s recovery. That’s more than the Spread to Vietnam, Cambodia, entire U.S. Mongolia and
Slide 22: Today's Key Takeaways
Today’s Key Takeaways 1 Clear strategy for long-term growth. 2 Portfolio diversity and scale are our strength. 3 Innovation and value added products are growth drivers. 4 Positioned for global growth by meeting local demand. TYSON FOODS, INC. JUNE 20, 2019 22
Slide 23: Noelle O'Mara, Chief Marketing Officer
Noelle O’Mara Chief Marketing Officer TYSON FOODS, INC. JUNE 20, 2019 23
Slide 24: Prepared Foods & Innovation
Prepared Foods & Innovation TYSON FOODS, INC. JUNE 20, 2019 24
Slide 25: Key Takeaways
Key Takeaways 1 Prepared Foods has become a large, profitable growth engine. 2 An all day protein portfolio is a clear growth advantage. 3 Innovation, branding, and marketing capabilities coupled with supply expertise drive growth perpetually. TYSON FOODS, INC. JUNE 20, 2019 25
Slide 26: Prepared Foods is now a major contributor for Total Tyson
Prepared Foods is now a major contributor for Total Tyson. 35% 30% 29% 25% 22% 20% 15% 10% 10% 5% 3% 0% FY14 FY18 FY14 FY18 Sales Adjusted Operating Income Adj. Operating Income is a non-GAAP measure. See the appendix for reconciliation to GAAP. TYSON FOODS, INC. JUNE 20, 2019 26
Slide 27: We have a proven model for ongoing growth
We have a proven model for ongoing growth. Expand FY2018 Increase FY2018 Gross Volume Sales Adjusted Operating Income Margin +4.1% +11.1% GROW FUEL Manage Invest in Structural Growth SG&A Adj. Operating income is a non-GAAP measure. See the appendix for reconciliation to GAAP. TYSON FOODS, INC. JUNE
Slide 28: Our portfolio is a clear growth advantage
Our portfolio is a clear growth advantage. Creates a Large Where We Have an Consumer Demand Growing Space Advantaged Footprint Tyson Share Refrigerated Protein 51% Morning 60% $18.1B +3.3% 16% of people 60% Meals 60% adding 16% protein to Frozen Protein their diets1 $5.5B +2.5% Snacks 20% 49% Frozen
Slide 29: Tyson leads in dollar performance for top food manufacturers
Tyson leads in dollar performance for top 10 retail food manufacturers... 3.0% 2.3% 2.0% 2.0% 1.9% Core 9 Total Total -0.1% -0.2% -0.3% Tyson -0.5% F&B -1.4% -1.6% -2.0% Dollar Sales % Chg. among top 10 branded food companies >$5B1 Source: Nielsen Total U.S. xAOC Fixed Weight Volume EQ Sales 13 week
Slide 30: And there's plenty of room to grow
...And there’s plenty of room to grow. Category vs. Brand Penetration 83% 74% 69% 59% 59% 59% 51% 37% 27% 31% 25% 25% 24% 23% 20% 7% 10% 5% Branded $ Share Position #2 #1* #1 #1 #1 #1** #1 #1 #1 YOY Category 1.5% 2.7% 1.1% 2.8% 4.8% 4.8% 1.8% 4.1% 1.2% $ Growth Lunchmeat Bacon Hot Dogs Breakfast Smo
Slide 31: Our growth is fueled by three unmatched capabilities
Our growth is fueled by three unmatched capabilities. Innovation Brands Marketing that grows that are available, that works efficiently categories to grow admired and chosen to reach many while Tyson share. by consumers. resonating individually. TYSON FOODS, INC. JUNE 20, 2019 31
Slide 32: Multi-dimensional approach to innovation: Fresh, Flexible, Functional
We take a multi-dimensional approach to innovation. Fresh Flexible Functional TYSON FOODS, INC. JUNE 20, 2019 32
Slide 33: We're creating a portfolio of consumer fresh goods
We’re creating a portfolio of consumer fresh goods. Contemporize Create 2/3 of people say fresh is important. Source: Hartman Group 2018. TYSON FOODS, INC. JUNE 20, 2019 33
Slide 34: Flexible products for flexible schedules
We’re making flexible products for flexible schedules. Contemporize Create 95% of adults snacked in the last 24hrs. Source: Mintel 2019. TYSON FOODS, INC. JUNE 20, 2019 34
Slide 35: Where food meets function
We’re building a portfolio where food meets function. Contemporize Create 65% of people seek functional benefits. Source: Proactive Health White Paper from Kerry Ingredients 2018. TYSON FOODS, INC. JUNE 20, 2019 35
Slide 36: Our core retail lines lead in volume performance
Our core retail lines lead in volume performance. 4.8% 2.3% 0.4% Total F&B Core Total Retail Tyson -0.3% -0.4% Lines -0.9% -0.9% -0.9% -2.0% -2.1% -4.6% -5.4% Volume Sales % Chg. among top 10 branded food companies >$5B Source: Nielsen Total U.S. xAOC Fixed Weight Volume EQ Sales 13 weeks ending 05/
Slide 37: Our brands create consumer value that drives growth
Our brands create consumer value that drives growth. Strong Brands Available Admired Chosen Are: In Growing Growing Growing Service Sales Margin Relevance To: TYSON FOODS, INC. JUNE 20, 2019 37
Slide 38: Our mission is brand-led growth
Our mission is brand-led growth. Strategies for distinctive and valuable brands Brand Foundation Creativity Strategies for Discipline distinctive and • Bold Ideas valuable brands • Data & Decision Science • Strategic Content Brand Performance • Advanced Analytics • Envision, Test, Learn, Iterate Mea
Slide 39: Our brands create cultural impact
Our brands create cultural impact. Bringing the power of Creating curated Keeping it real makes optimism to all occasions. combinations for a things better. snack above adventure. TYSON FOODS, INC. JUNE 20, 2019 39
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Slide 41: Key Takeaways
Key Takeaways 1 Prepared Foods has become a large, profitable growth engine. 2 An all day protein portfolio is a clear growth advantage. 3 Innovation, branding, and marketing capabilities coupled with supply expertise drive growth perpetually. TYSON FOODS, INC. JUNE 20, 2019 41
Slide 42: Steve Stouffer, Group President, Fresh Meats
Steve Stouffer Group President, Fresh Meats TYSON FOODS, INC. JUNE 20, 2019 42
Slide 43: Beef & Pork
Beef & Pork TYSON FOODS, INC. JUNE 20, 2019 43
Slide 44: Key Takeaways
Key Takeaways 1 We are the leader in the industry, and rewarded by our customers for bringing valued solutions to their businesses. 2 We build strategic relationships that deliver financially sustainable results. 3 We are well-positioned to drive margin with accelerating global demand. TYSON FOODS,
Slide 45: Tyson consistently outperforms USDA benchmarks
Tyson consistently outperforms USDA benchmarks. Beef Pork '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 USDA Gross Margin/cwt Tyson Gross Margin/cwt Note: FY data represented. TYSON FOODS, INC. JUNE 20, 2019 45
Slide 46: We are the Beef & Pork Experts
We are the Beef & Pork Experts. Trusted leader Only American- Knowledge, expertise Leading customer in the meat industry owned supplier of and production brand and private for 60 years. both beef and pork. capabilities label supplier. differentiate us. TYSON FOODS, INC. JUNE 20, 2019 46
Slide 47: We deliver customer solutions first and foremost
We deliver customer solutions first and foremost. Providing customer Shoppers want convenience – What we hear from customers – solutions in multi- 79% purchase prepackaged, we consistently provide channel distribution. pickup-and-go meat options. exceptional customer service. The Power of Meat, Food
Slide 48: Driving incremental revenue by increasing value on commodity products
Driving incremental revenue by increasing value on commodity products. Start with high quality Value-added solutions Delivering higher value, livestock supply drive incremental differentiated products partnerships. revenues. for customers and their consumers. TYSON FOODS, INC. JUNE 20, 2019 48
Slide 49: Tyson leads the way in case ready and value added beef and pork
Tyson leads the way in case ready and value added beef and pork 1,100 1,000 Volume (millions of lbs) 900 800 10-year CAGR = 4.9% 700 600 500 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E 2019 information is Q2 FY’19 YTD, annualized. TYSON FOODS, INC. JUNE 20, 2019 49
Slide 50: Our success depends on trusted supplier relationships
Our success depends on trusted supplier relationships. We are the largest purchaser of livestock in the U.S., partnering with more than 5,600 independent farmers. We earn supplier trust and loyalty. Together, we set the bar on meaningful animal welfare and responsible practices. • Pork Quality Assur
Slide 51: Our plant locations are positioned near the livestock (beef)
Our plant locations are positioned near the livestock. Tyson Fed Beef Plants 2017 Census of Agriculture 1 Dot – 10,000 Cattle and Calves United States Total 93,648,041 17 – M208 U.S. Department of Agriculture, National Agricultural Statistics Service. TYSON FOODS, INC. JUNE 20, 2019 51
Slide 52: Our plant locations are positioned near the livestock (pork)
Our plant locations are positioned near the livestock. Tyson Pork Plants 2017 Census of Agriculture 1 Dot – 20,000 Hogs and Pigs United States Total 72,381,007 17 – M211 U.S. Department of Agriculture, National Agricultural Statistics Service. TYSON FOODS, INC. JUNE 20, 2019 52
Slide 53: We invest in team member relationships
We invest in team member relationships. Keeping team Focused daily on exceeding At the core of our Record high members safe. expectations and delivering culture – We Care. employee high quality products in a retention. safe and sustainable manner. TYSON FOODS, INC. JUNE 20, 2019 53
Slide 54: We're seeing growth in beef exports
We’re seeing growth in beef exports… USA Annual 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 2019E 2020E Expor
Slide 55: And especially in pork exports
…And especially in pork exports. USA Annual 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 2016 2017 201
Slide 56: We're prepared to meet increasing demand
We’re prepared to meet increasing demand. Tyson exported over Quality and value of We are prepared $3.4 billion of beef and IBP brand is globally to respond to African pork to more than 70 recognized as a Swine Fever opportunities. countries last year. premium product. TYSON FOODS, INC. JUNE 20, 201
Slide 57: There's a structural shift happening in beef
There’s a structural shift happening in beef. Economic modeling indicates a structural improvement in beef margins. Cattle supplies, quality and capacity utilization are expected to remain high in our regions. Resulting in historically Key indicators suggest exports will favorable continue to rise,
Slide 58: Key Takeaways
Key Takeaways 1 We are the leader in the industry, and rewarded by our customers for bringing valued solutions to their businesses. 2 We build strategic relationships that deliver financially sustainable results. 3 We are well-positioned to drive margin with accelerating global demand. TYSON FOODS,
Slide 59: Justin Whitmore, EVP Alternative Proteins & Chief Sustainability Officer
Justin Whitmore Executive Vice President, Alternative Proteins & Chief Sustainability Officer TYSON FOODS, INC. JUNE 20, 2019 59
Slide 60: Sustainability
Sustainability TYSON FOODS, INC. JUNE 20, 2019 60
Slide 61: Key Takeaways
Key Takeaways 1 Tyson has quickly become an industry leader in sustainability. 2 Our sustainability approach is creating economic value. 3 We are uniquely positioned to become an industry leader in alternative protein. 4 Raised & Rooted™, our exciting new alternative protein brand, is just the begin
Slide 62: Sustainability is delivering real results at Tyson Foods
Sustainability is delivering real results at Tyson Foods. 18% 17% 12% Beef & Pork Modified Chicken Modified Water initiatives Modified Internal Rate of Return1 Internal Rate of Return1 Internal Rate of Return1 80% 52% 5% Reduction in turnover at Reduction in OSHA Increase Upward Academy sites record
Slide 63: Our industry-leading sustainability programs focus on what matters most
Our industry-leading sustainability programs focus on what matters most. Minimize our Enable our team Transparently Supporting environmental members to reach improving animal the world where impact as we their unique welfare and help is needed feed the world potential experience most Science-based 2
Slide 64: The world is taking notice
The world is taking notice. Tyson Foods steps up sustainability efforts with Environmental Defense Fund partnership TYSON FOODS, INC. JUNE 20, 2019 64
Slide 65: Alternative Proteins
Alternative Proteins TYSON FOODS, INC. JUNE 20, 2019 65
Slide 66: Alternative proteins are experiencing significant growth
Alternative proteins are experiencing significant growth. 10% to <12% 12% to <14% >14% 3-year sales $ CAGR +12.5% Nielsen Total Meat Alternatives Latest 52 weeks 3-year CAGR ending 4/13/19. TYSON FOODS, INC. JUNE 20, 2019 66
Slide 67: This growth is driven by three factors
This growth is driven by three factors. 57% 25% 13% Health & Taste & Sustainability Well Being Convenience Tyson Foods Research, U.S. Consumers, n=3252. TYSON FOODS, INC. JUNE 20, 2019 67
Slide 68: We're uniquely positioned to meet growing demand
We’re uniquely positioned to meet growing demand. Culinary Leading brand Supply Customer expertise building chain relationships TYSON FOODS, INC. JUNE 20, 2019 68
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Slide 70: TYSON FOODS, INC. JUNE 20, 2019
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Slide 71: TYSON FOODS, INC. JUNE 20, 2019
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Slide 72: Let's eat.
Let’s eat. TYSON FOODS, INC. JUNE 20, 2019 72
Slide 73: Chad Martin, Group President, Poultry
Chad Martin Group President, Poultry TYSON FOODS, INC. JUNE 20, 2019 73
Slide 74: Chicken
Chicken TYSON FOODS, INC. JUNE 20, 2019 74
Slide 75: Key Takeaways
Key Takeaways 1 We have a powerful portfolio of products that the marketplace demands. 2 We have a business model and structure that allows flexibility to continually value-up. 3 We have an unmatched distribution network that enables us to service our customers. TYSON FOODS, INC. JUNE 20, 2019 75
Slide 76: We're growing through innovation and acquisition
We’re growing through innovation and acquisition. • Value Added Mix • Acquisition (Keystone, API and Smart Chicken) • New Construction Grow • Footprint Optimization TYSON FOODS, INC. JUNE 20, 2019 76
Slide 77: We're delivering stability of earnings
We’re delivering stability of earnings with our standards of excellence. • Operational Excellence • Customer Promise • Tyson Productivity System Deliver • Continuous Improvement TYSON FOODS, INC. JUNE 20, 2019 77
Slide 78: We're operating sustainably at scale
We’re operating sustainably at scale. • Team Members • Food Safety • Animal Well Being • Environment • Communities Sustain • Research Farm • Poultry Farmers Bill of Rights TYSON FOODS, INC. JUNE 20, 2019 78
Slide 79: Our range of brands enables innovation
Our range of brands enables innovation. TRUSTED ORGANIC TYSON FOODS, INC. JUNE 20, 2019 79
Slide 80: Chicken Segment Businesses
Chicken Segment Businesses Based on Sales Big Bird / Tyson Ingredient Tray Pack Small Bird Retail Solutions 20-25% 15-20% 45-50% 5-10% of segment of segment of segment of segment Retail and Domestic and Grocery Deli & Fast Food Foodservice International Markets • Tray Pack • Select Fast Food • Quick
Slide 81: Poultry Process & Capabilities
Poultry Process & Capabilities Key Metrics Value-added Volume | Net Sales | Margin Growth | AOI | ROS Advantaged Portfolio & Innovation Sales and Operating Plan Leading Broiler in the US Customer Demand D S E U M Deliver to P Capacity 54 plants A Customer P N 37+ MM head/week L Diverse Go-To-Market
Slide 82: Key Takeaways
Key Takeaways 1 We have a powerful portfolio of products that the marketplace demands. 2 We have a business model and structure that allows flexibility to continually value-up. 3 We have an unmatched distribution network that enables us to service our customers. TYSON FOODS, INC. JUNE 20, 2019 82
Slide 83: Donnie King, Group President, International
Donnie King Group President, International & Chief Administration Officer TYSON FOODS, INC. JUNE 20, 2019 83
Slide 84: International Growth Strategy
International Growth Strategy TYSON FOODS, INC. JUNE 20, 2019 84
Slide 85: Key Takeaways
Key Takeaways 1 Demand-driven international approach. 2 Locally relevant products and local innovation. 3 Strategic customer alignment. 4 Global sourcing on a global scale. 5 One Tyson. TYSON FOODS, INC. JUNE 20, 2019 85
Slide 86: Global protein consumption is growing
Global protein consumption is growing. It’s estimated that nearly 98% of global protein consumption growth will occur outside the U.S. As the population continues to grow, Tyson will grow with it. 70% of the volume growth will come from Asia. Source: Euromonitor International from national statistic
Slide 87: Our International Strategy
Our International Strategy OPTIMIZE INVEST DEVELOP existing production for growth through global sourcing footprint. acquisition. model. TYSON FOODS, INC. JUNE 20, 2019 87
Slide 88: Key Supply And Demand Markets Across Multiple Proteins
Key Supply And Demand Markets Across Multiple Proteins Priority Supply Priority Demand Markets Markets Europe Europe: Affluent market with 800M people, supply shift from Western to Eastern Europe (plus Canada imports) Korea: Affluent market, United States consumption growth served via imports Brazil
Slide 89: We're optimizing a strong footprint
We’re optimizing a strong footprint… Before Keystone and BRF TYSON FOODS, INC. JUNE 20, 2019 89
Slide 90: And building on a foundation of growth
…And building on a foundation of growth. Tyson Branded Chicken Growth in China E-commerce Growth in China (FY18 over FY17) (FY18 over FY17) 34% 25% 82% 83% Volume Growth Revenue Growth Volume Growth Revenue Growth FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18 TYSON FOODS, INC. JUNE 20, 2019 90
Slide 91: New acquisitions open new markets
New acquisitions open new markets. After Acquisitions ~$2B International Sales ~$5B Current U.S. Export Sales1 ~$7B Total Sales2 1. Reporting in applicable protein segment. 2. Combined annual international and export sales post-acquisitions. TYSON FOODS, INC. JUNE 20, 2019 91
Slide 92: Global capabilities are fueled by local innovation
Global capabilities are fueled by local innovation. TYSON FOODS, INC. JUNE 20, 2019 92
Slide 93: The future is One Tyson
The future is One Tyson. Canada Europe China United States Japan Philippines Tyson Supply Thailand Global Sourcing Beef Brazil/ Argentina Chicken Australia Pork Value-Added / Prepared HIGHLY CONFIDENTIAL – TYSON FOODS, INC. 93
Slide 94: Key Takeaways
Key Takeaways 1 Demand-driven international approach. 2 Locally relevant products and local innovation. 3 Strategic customer alignment. 4 Global sourcing on a global scale. 5 One Tyson. TYSON FOODS, INC. JUNE 20, 2019 94
Slide 95: One Tyson
One Tyson TYSON FOODS, INC. JUNE 20, 2019 95
Slide 96: Stewart Glendinning, EVP & Chief Financial Officer
Stewart Glendinning Executive Vice President & Chief Financial Officer TYSON FOODS, INC. JUNE 20, 2019 96
Slide 97: Financial Performance
Financial Performance TYSON FOODS, INC. JUNE 20, 2019 97
Slide 98: Key Takeaways
Key Takeaways 1 We have a history of delivering a strong financial performance. 2 Tyson is a fly-wheel of cash generation and reinvestment for future growth. 3 Our capital allocation is focused on driving the highest return for shareholders. 4 Our balance sheet gives us options for growth and the ad
Slide 99: We have a proven track record of growth
We have a proven track record of growth. 5-Year CAGR 22.21% 19.07% $3,500 $7 $3,000 $6 $2,500 $5 (In millions) $2,000 $4 $1,500 $3 $1,000 $2 $500 $1 $0 $0 2013 2014 2015 2016 2017 2018 Adj. Operating Income Adj. EPS Adj. Operating Income and Adj. EPS are non-GAAP measures. See the appendix for recon
Slide 100: Outlook for Fiscal 2019
Outlook for Fiscal 2019 Adjusted Operating Margin 10-12% ~7% >6% ~6% Prepared Foods Beef Pork Chicken TYSON FOODS, INC. JUNE 20, 2019 100
Slide 101: We're set for success in FY'20
We’re set for success in FY’20. Prepared Foods Beef Pork Chicken Higher input Ample cattle supplies, Growing demand, Strong demand, costs expected, similar margin improved pricing, limited supply taking price increases. outlook to ‘19. global reallocation growth. of supply TYSON FOODS, INC. JUNE 20,
Slide 102: Tyson leads in total shareholder return
Tyson leads in total shareholder return. 1000% 800% 600% 400% 200% N/A 0% TSN HRL MDLZ HSY SJM PEP CAG KO GIS K ADM CPB BG KHC Source: Bloomberg. Reflects activity during the period 3/29/09 to 3/30/19. Pilgrims Pride was excluded from analysis as they were in bankruptcy during the period. TYSON FOOD
Slide 103: Strong cash flows fuel our future growth
Strong cash flows fuel our future growth. $3,500 $3,000 $2,500 (In millions) $2,000 $1,500 $1,000 $500 $0 FY14 FY15 FY16 FY17 FY18 Operating Cash Flow Free Cash Flow Free Cash Flow is a non-GAAP measure. See the appendix for reconciliations to GAAP. TYSON FOODS, INC. JUNE 20, 2019 103
Slide 104: Capital Allocation Strategy
Capital Allocation Strategy Reduce / Fund our Repurchase Invest in maintain dividend our shares our growth debt levels commitments TYSON FOODS, INC. JUNE 20, 2019 104
Slide 105: How we use our cash
How we use our cash. Net Debt to Adjusted EBITDA Capital Expenditures 4x 1,500 1,200 900 2x 600 300 0x 0 FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 Dividends Share Repurchases /(Issues) 500 2,000 400 1,000 300 0 200 FY14 FY15 FY16 FY17 FY18 -1,000 100 0 -2,000 FY14 FY15 FY16 FY17 FY18 Net Deb
Slide 106: 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. JUNE 20, 2019 106
Slide 107: We've consistently demonstrated M&A success
We’ve consistently demonstrated M&A success. $8.2B $3.2B $382M $866M $2.3B $340M American Proteins assets Thailand, EU AUGUST JUNE JULY AUGUST NOVEMBER JUNE 2014 2017 2018 2018 2018 2019 TYSON FOODS, INC. JUNE 20, 2019 107
Slide 108: Financial Goals
Financial Goals Investment grade Reduce leverage Maintain a strong Maintain a Create credit ratings to 2.0x. balance sheet disciplined long-term for optionality. approach toward shareholder strategic M&A. value. TYSON FOODS, INC. JUNE 20, 2019 108
Slide 109: Financial Goals
Financial Goals High Single Digit >3% Adjusted EPS Growth Value Added Sales Volume Growth TYSON FOODS, INC. JUNE 20, 2019 109
Slide 110: Key Takeaways
Key Takeaways 1 We have a history of delivering a strong financial performance. 2 Tyson is a fly-wheel of cash generation and reinvestment for future growth. 3 Our capital allocation is focused on driving the highest return for shareholders. 4 Our balance sheet gives us options for growth and the ad
Slide 111: Grow. Deliver. Sustain.
Grow. Deliver. Sustain. TYSON FOODS, INC. JUNE 20, 2019 111
Slide 112: Appendix
Appendix TYSON FOODS, INC. JUNE 20, 2019 112
Slide 113: EPS Reconciliations
EPS Reconciliations 12 Months Ended September 29, 2018 September 30, 2017 October 1, 2016 October 3, 2015 September 27, 2014 Operating Operating Operating Operating Operating ($ in millions, except per share data) Income EPS Income EPS Income EPS Income EPS Income EPS (unaudited) Reported from Conti
Slide 114: EPS Reconciliations – continued
EPS Reconciliations – continued ($ in millions, except per share data) (unaudited) September 28, 2013 September 29, 2012 October 1, 2011 October 2, 2010 October 3, 2009 September 27, 2008 Operating Operating Operating Operating Operating Operating Income EPS Income EPS Income EPS Income EPS Income E
Slide 115: Sales, Adjusted EBITDA and Adjusted EBITDA Margin % Reconciliations
Sales, Adjusted EBITDA and Adjusted EBITDA Margin % Reconciliations ($ in millions); (unaudited) Fiscal Year Ended 2018 2017 2016 2015 (b) 2014 Sales $ 40,052 $ 38,260 $ 36,881 $ 41,373 $ 37,580 Net income $ 3,027 $ 1,778 $ 1,772 $ 1,224 $ 856 Less: Interest income (7) (7) (6) (9) (7) Add: Interest
Slide 116: Sales, Adjusted EBITDA and Adjusted EBITDA Margin % Reconciliations – continued
Sales, Adjusted EBITDA and Adjusted EBITDA Margin % Reconciliations – continued ($ in millions); (unaudited) • Excludes the amortization of debt issuance and debt discount expense of $10 million, $13 million, $8 million, $10 million and $10 million fiscal 2018, 2017, 2016, 2015 and 2014, respectivel
Slide 117: Segment Adjusted Operating Income (Loss) Reconciliation
Segment Adjusted Operating Income (Loss) Reconciliation ($ in millions); (unaudited) Segment adjusted operating income is presented as a supplementary measure of our operating performance that is not required by, or presented in accordance with, GAAP. We use segment adjusted operating income as an i
Slide 118: Segment Adjusted Operating Income (Loss) Reconciliation
Segment Adjusted Operating Income (Loss) Reconciliation ($ in millions); (unaudited) Segment adjusted operating income is presented as a supplementary measure of our operating performance that is not required by, or presented in accordance with, GAAP. We use segment adjusted operating income as an i
Slide 119: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation ($ in millions) Free Cash Flow is defined as net cash provided by operating activities, less capital expenditures, less dividends. We use this non-GAAP financial measure to focus management and investors on the amount of cash available for debt repayment, acquisition op
Slide 120: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in millions); (unaudited) Free Cash Flow is defined as net cash provided by operating activities, less capital expenditures, less dividends. We use this non-GAAP financial measure to focus management and investors on the amount of cash available for debt repayment,
Slide 121: Adjusted EBITDA Reconciliation – continued
Adjusted EBITDA Reconciliation – continued ($ in millions); (unaudited) • Excludes the amortization of debt issuance and debt discount expense of $10 million, $13 million, $8 million, $10 million and $10 million fiscal 2018, 2017, 2016, 2015 and 2014, respectively, as it is included in interest expe