Tyson Foods, Inc. · NYSE:TSN
Tyson Foods — Investor Presentation (March 2017)
53 slides from Tyson Foods's investor presentation, March 2017
Slide 1: Strong Today, Leading for Tomorrow
Strong Today Leading for Tomorrow Investor Presentation March 2017
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 “FY17 Outlook” section and statements relating to projected EPS
Slide 3: Why Invest in TSN
Why Invest in TSN • Our Total Shareholder Return far exceeds our peer set over the past three years • We’ve produced consistent earnings growth and returned cash to shareholders through share repurchases and dividends • We occupy a unique position at the intersection of Opportunity, Capability and F
Slide 4: FY16 – Another Record Year
FY16 – Another Record Year ($ in millions) FY16 FY15 YOY Growth Net Sales $36,881 $40,623* -9% • Record Operating Income Adjusted Operating Income* $2,833 $2,253 26% • Record Operating Margin Adjusted Operating Margin* 7.7% 5.5% • Record Adjusted EPS * Adjusted EPS* $4.39 $3.15 39% • Record Operatin
Slide 5: FY17 Outlook
FY17 Outlook • EPS of $4.90-5.05* • Chicken Segment operating margin at ~12% growth over FY16 adjusted EPS* * the upper end of the 9-11% normalized range • Sales of ~$37B • Beef Segment operating margin around Similar to FY16 as we grow volume 5% across each segment, offset by lower beef prices
Slide 6: Strong Today, Leading for Tomorrow
Strong Today, Leading for Tomorrow Future Strong Unique Purpose Clear Focused Financials Position Driven Strategy Team 6 Tyson Foods, Inc. Investor Presentation | March 2017
Slide 7: Unmatched Shareholder Return Among Peers
Unmatched Shareholder Return Among Peers Total Shareholder Return * Past 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” subject
Slide 8: Consistent EPS Growth
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.” **Projected EPS guidan
Slide 9: Returning Cash to Shareholders
Returning Cash to Shareholders Dividends Paid per Class A Share $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 FY12 FY13 FY14 FY15 FY16 Regular Dividend Special Dividend Board of Directors increased regular quarterly dividend by 50% to $0.225 per share for Class A common stock payable on 12/15/16 B
Slide 10: Strong Cash Flow Fuels Growth
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) 10 Tyson Foods, Inc. Investor Presentation | March 2017
Slide 11: Rapid Deleveraging Positions Us for Growth
Rapid Deleveraging Positions Us for Growth Favorable Net Debt/ Adjusted EBITDA* 3.0X 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. ** FY14 Net Debt/EB
Slide 12: 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 13: A Simple Framework for M&A
A Simple Framework for M&A New Brands IDEAL New New Capabilities Geographies 13
Slide 14: Strategy for Growth
Strategy for Growth
Slide 15: Strategic Intent
Strategic Intent Sustainably feed the world with the fastest growing portfolio of protein packed brands 15 Tyson Foods, Inc. Investor Presentation | March 2017
Slide 16: Enablers
Twin Engines of Growth Sustainably feed the Growing our portfolio of protein packed brands Delivering sustainable food at scale world with the fastest Driving profitable growth with and for our growing Enablers Critical customers through differentiated capabilities Creating fuel for reinvestment thr
Slide 17: Value Creation Model
Value Creation Model 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 Value +3% HSD Share Repurchases Dividends Total Shareholder Return Top 1/3 17 T
Slide 18: A New Approach to Efficiency Will Fund Investments for Sustainable Growth
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 for growth TRANSFORM our business through technology 18 Tyson Foods, Inc. Investor Presentation | March 2017
Slide 19: Superior Results Through Defined Portfolio Roles
Superior Results Through Defined 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 ALL-CHANNELS FOODSERVICE and customer partnershi
Slide 20: Proven Leadership Team Aligned Against Our Strategy
Proven Leadership Team Aligned Against Our Strategy Designed to Elevate Focus on CONSUMERS CUSTOMERS SUSTAINABILITY TECHNOLOGY 20 Tyson Foods, Inc. Investor Presentation | March 2017
Slide 21: Leading the Way in Food Sustainability
Leading the Way in Food Sustainability
Slide 22: No. 1 Most Admired Company
FORTUNE No. 1 Most Admired Company Food Production Industry 22 Tyson Foods, Inc. Investor Presentation | March 2017
Slide 23: Over Time Sustainability Investments Will Fund Themselves
Over Time Sustainability Investments Will Fund Themselves Sustainability Investments Resources Waste Cost Innovation Volume Profits 23 Tyson Foods, Inc. Investor Presentation | March 2017
Slide 24: The Tyson Brand Goes No Antibiotics Ever!
The Tyson Brand Goes No Antibiotics Ever! Meeting the growing consumer demand for no antibiotics across our retail branded portfolio. 24 Tyson Foods, Inc. Investor Presentation | March 2017
Slide 25: Poultry Farm of the Future
Poultry Farm of the Future 25 Tyson Foods, Inc. Investor Presentation | March 2017
Slide 26: Poultry Farm of the Future
Poultry Farm of the Future Reduces Improves Improves Improves Reduces Greenhouse Worker Animal Food Land Emissions Welfare Welfare Safety Use 26 Tyson Foods, Inc. Investor Presentation | March 2017
Slide 27: Evidence-based Targets, Long-term Commitments
Evidence-based Targets, Long-term Commitments 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 treatment of targets chickens 27 Tyson Foo
Slide 28: Retail Packaged Brands
Retail Packaged Brands
Slide 29: Brand Portfolio for All Eating Occasions
Brand Portfolio for All Eating Occasions 29 Tyson Foods, Inc. Investor Presentation | March 2017
Slide 30: Retail Packaged Brands
Retail Packaged Brands Product Innovations and Brand Adjacencies 30 Tyson Foods, Inc. Investor Presentation | March 2017
Slide 31: “Core 9” Advantaged Brands in Advantaged Categories
“Core 9” Advantaged Brands in Advantaged Categories Frozen 1 Prepared Chicken 1 Hot Dogs 1 Branded Stacked Bacon 1 Frozen Protein Breakfast 1 Breakfast Sausage 1 Smoked Sausage 2 Branded Lunchmeat 1 Corn Dogs 1 Super Premium Smoked Sausage Sources: IRI, Total US Multi-Outlet, data thru 2/26/17 31 Ty
Slide 32: Core 9 and Total Tyson Leading in CPG Volume Performance
Core 9 and Total Tyson Leading in CPG Volume Performance Volume sales % change among top 10 branded food companies >$5B 5.5% 5.2% Tyson -0.4% Core 9 -1.9% Total -2.8% -3.3% Food -3.9% & Bev. -4.8% -4.9% -6.7% -11.5% -11.9% Source: IRI Total U.S. Multi-Outlet (x Costco) Volume Sales 13 weeks ending 2
Slide 33: Core 9 and Total Tyson Leading in CPG Dollar Performance
Core 9 and Total Tyson Leading in CPG Dollar Performance Dollar sales % change among top 10 branded food companies >$5B 3.1% 3.0% 0.3% Core 9 -0.6% -0.6% -0.8% -1.7% -2.1% Total Edible -4.1% -4.4% -5.9% -7.7% Source: IRI Total U.S. All Outlet (x Costco) Dollar Sales, 13 weeks ending 2/26/17 33 Tyson
Slide 34: #2 in Frozen Food
#2 in Frozen Food Sales in Billions $7.1 Tyson Foods leads in the growing categories of frozen poultry and protein breakfast $3.5 $2.9 $2.4 $2.0 $1.9 $1.3 $1.2 $1.0 Source: IRI U.S. Multi-Outlet frozen category sales, 52 weeks ending 2/26/17 34 Tyson Foods, Inc. Investor Presentation | March 2017
Slide 35: #8 in Total U.S. CPG Retail Food Sales
#8 in Total U.S. CPG Retail Food Sales Among branded food companies >$5B Sales in Billions $25.8 In addition to retail, Tyson Foods is a leading supplier to the $21.3 foodservice industry $16.4 $12.0 $8.7 $7.8 $7.6 $7.6 $6.4 $6.3 $5.7 $5.7 $5.4 $5.0 Source: IRI Total U.S. Multi-Outlet Sales, 52 week
Slide 36: Opportunity in Current Spaces
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% Category HH Penetration Brand HH Penetra
Slide 37: Innovation Performance
Innovation Performance insights Retail Packaged Brands innovation vitality growing FY16 14% FY15 12.5% innovation research & development % of sales dollars from Retail Packaged Brands products created in the previous three years 37 Tyson Foods, Inc. Investor Presentation | March 2017
Slide 38: Tyson Tastemakers®
Tyson Tastemakers® Currently in e-commerce and coming to traditional retail 38 Tyson Foods, Inc. Investor Presentation | March 2017
Slide 39: Appendix
Appendix
Slide 40: Tyson Foods, Inc. Investor Presentation | March 2017
40 Tyson Foods, Inc. Investor Presentation | March 2017
Slide 41: Leading U.S. Protein Producers
Leading U.S. Protein Producers Tyson Foods Tyson Foods Tyson Foods Other 18% 21% Other 25% 24% 29% Other 47% Pilgrim’s Pride Smithfield 17% National Beef 25% 10% Hormel JBS USA 8% 22% JBS USA Cargill 20% 19% Sanderson Perdue Farms 8% Farms 7% U.S. Chicken Producers U.S. Fed Beef Packers U.S. Pork Pa
Slide 42: FY16 Sales − $37 Billion
FY16 Sales − $37 Billion Other Other 1% 4% Pork International 11% Prepared 11% Foods 20% Consumer Products Food 53% Beef 38% Chicken Service 30% 32% Sales by Sales by Segment Distribution Channel 42 Tyson Foods, Inc. Investor Presentation | March 2017
Slide 43: FY16 International Sales
FY16 International Sales Japan Other 17% 30% Mexico 15% Taiwan China & 4% Hong Kong 21% Canada 6% South Korea 7% FY16 International Sales $4.1 Billion* *Includes exports and in-country production 43 Tyson Foods, Inc. Investor Presentation | March 2017
Slide 44: FY16 International Sales
FY16 International Sales Other China & Hong Canada Japan 17% Kong 4% 18% 23% Other Mexico 48% Italy 6% 12% Mexico 11% Taiwan 7% South Brazil China & Korea 6% Hong Kong 12% India 6% 24% Canada Guatemala 3% 3% Chicken Beef $1.2 Billion* $2.0 Billion *Includes exports and in-country production 44 Tyson
Slide 45: FY16 International Sales
FY16 International Sales South Korea 4% Other 12% Other Canada Japan 32% 30% China & 37% H.K. 11% Canada 12% Mexico Mexico Japan 22% 24% S. Korea 5% 11% Pork Prepared Foods $848 million $87 million 45 Tyson Foods, Inc. Investor Presentation | March 2017
Slide 46: Chicken Segment
Chicken Segment The Road to Higher, More Stable Margins Optimize cost structure Change pricing structure Upgrade value-added Buy vs. Grow strategy Deliver high quality products products and customer service 46 Tyson Foods, Inc. Investor Presentation | March 2017
Slide 47: Synergies
Synergies • FY15 – $322 million realized • FY16 – $580 million realized • FY17 – expecting approximately $675 million • Synergy Categories Prepared Foods Improvements Procurement Manufacturing & Logistics Organizational & Fiduciary 47 Tyson Foods, Inc. Investor Presentation | March 2017
Slide 48: Debt Maturity Profile
Debt Maturity Profile Fiscal Year Maturities as of 12/31/2016 2,250 2,000 1,750 Pre-Payable 1,500 $ in millions 1,250 1,000 750 500 250 0 '17 '18 '19 '20 '21 '22 '23 '24 '33 '34 '44 TFI Bonds Hillshire Bonds Term Loans • Term loans are pre-payable at par. • Excludes $53MM Tangible Equity Units amort
Slide 49: Sales, Operating Income and Operating Margin Reconciliations
Sales, Operating Income and Operating Margin Reconciliations Fiscal Year 2016 2015 Reported Sales $ 36,881 $ 41,373 Less: Impact of additional week (a) - (750) Adjusted sales $ 36,881 $ 40,623 Reported operating income $ 2,833 $ 2,169 Add: China impairment - 169 Add: Merger and integration costs - 5
Slide 50: Net Debt/EBITDA Reconciliations
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 249 293 132 145 356 Add: Income tax expense 826 697 39
Slide 51: 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 2016, 2014, 2013 and 2012 were based on a 52-week year. (b) Excludes the amortization of debt discount expense of $8 million, $10 million, $10 million, $28 million and
Slide 52: Segment Operating Income Reconciliations
Segment Operating Income Reconciliations In millions (Unaudited) Adjusted Segm ent Operating Incom e (Loss) (for 12 months ended October 3, 2015) Prepared C hick en Beef Pork F oods Other Total Reported operating income (loss) $ 1,366 $ (66) $ 380 $ 588 $ (99) $ 2,169 Add: China impairment - - - - 1
Slide 53: EPS Reconciliations
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 EPS Income EPS Reported from Continuin