Tyson Foods, Inc. · NYSE:TSN
Tyson Foods — Consumer Analyst Group of Europe (CAGE) 2016
62 slides from Tyson Foods's conference presentation, Mar 22, 2016
Slide 1: Consumer Analyst Group of Europe
Consumer Analyst March 22, 2016 Group of Europe
Slide 2: Presenters: Leatherby, Smith, Kathol
Dennis Leatherby Donnie Smith Jon Kathol Executive Vice President & President & Vice President, Chief Financial Officer Chief Executive Officer Investor Relations 2
Slide 3: Forward-Looking Statements
F O RW A R D - L O O K I N G S TAT E M E N T S 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 ou
Slide 4: different company.
different company.
Slide 5: Iconic Brands
ICONIC BRANDS Tyson, Jimmy Dean, Hillshire Farm – Billion $ Brands 5
Slide 6: Tyson Foods is one of the world’s largest food companies
T Y S O N F O O D S I S O N E O F T H E W O R L D ’ S L A R G E S T F O O D C O M PA N I E S $40.6 billion in FY15 adjusted sales* Sales Other Sales by Other 2% 4% by Segment Distribution Channel Pork Prepared Int’l 11% Foods 13% 19% Consumer Chicken Foodservice Products Beef 41% 27% 31% 52% *Repres
Slide 7: Our goal is to deliver at least 10% annual EPS growth over time
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 8: Tyson Foods Financial Trends
TYSON FOODS 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 an
Slide 9: Positioned for Growth Through Rapid Deleveraging
POSITIONED FOR GROWTH THROUGH RAPID DELEVERAGING net debt/adjusted EBITDA* 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 10: Free Cash Flow and Priorities for Cash
FREE CASH FLOW * AND PRIORITIES FOR CASH Priorities for Cash CapEx for Organic Growth $1,569 Strategic Acquisitions Returning Cash to Shareholders $652 $440 $442 $344 FY11 FY12 FY13 FY14 FY15 Free Cash Flow in millions *Represents a non-GAAP financial measure. Free Cash Flow is explained and reconci
Slide 11: TSN Performance vs. S&P and Peer Group
TSN PERFORMANCE VS. S&P 500 AND PEER GROUP* comparison of 5-year cumulative total returns $300 TSN $250 $200 S&P 500 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 12: Donnie Smith
President & Donnie Smith Chief Executive Officer
Slide 13: different portfolio. different business model.
different portfolio. different business model. Tyson Foods, Inc.
Slide 14: 54% of consumers are deliberately increasing protein in their diet
DIFFERENT PORT FOLIO // PROT EIN consumer behavior will drive continued growth in protein 54% of consumers are deliberately increasing protein in their diet 14
Slide 15: Protein growth is outpacing total food
DIFFERENT PORT FOLIO // PROT EIN protein growth is outpacing total food 3.8% +0.9pts 2.9% Total US Sales vs. Year Ago Total Edible High/Medium Protein SOURCE: IRI TSV Total US MULO+C, 52WE 01/24/16 High Protein: ≥ 10 g Protein per Serving, Medium Protein: 5-9.99 g, Low Protein: 0.1-4.99 g 15
Slide 16: Tyson Foods uniquely plays across all major proteins
D I F F E R E N T P O R T F O L I O / / A D VA N TA G E D C AT E G O R I E S tyson foods uniquely plays across all major proteins Beef Pork Chicken Prepared Supply for further Fastest growing Leading processor Advantaged brands processed protein High revenue Strong categories Leading global Vertical
Slide 17: We are driving growth in advantaged protein segments
D I F F E R E N T P O R T F O L I O / / A D VA N TA G E D C AT E G O R I E S we are driving growth in advantaged protein segments Chicken High growth Prepared Foods High margin $11.2Bn* $7.7Bn* Sustained advantage 15% 0% commodity commodity sales sales *Adjusted sales represents a non-GAAP financial
Slide 18: Our mix is shifting to value-added
D I F F E R E N T P O R T F O L I O / / A D VA N TA G E D C AT E G O R I E S our mix is shifting to value-added Chicken Growth and Profitability Prepared Foods Consumer/Retail Retail 'Core 9' Emerging/Other Brands Foodservice Foodservice Pure Commodity 18
Slide 19: Our brands have leading share and growth across categories
DIFFERENT PORT FOLIO // LEADING BRANDS our brands have leading share and growth across categories 1 Frozen Prepared Chicken 1 Hot Dogs 1 Branded Stack Pack Bacon 1 Frozen Breakfast Sandwiches 1 Breakfast Sausage 1 Smoked Sausage 2 Branded Lunchmeat 1 Corn Dogs 1 Super Premium Sausage Sources: IRI, T
Slide 20: Emerging brands drive incremental sales in high-growth categories
DIFFERENT PORT FOLIO // LEADING BRANDS emerging brands drive incremental sales in high-growth categories Portfolio of “start up businesses” >$225MM with a sales growth rate >50% vs. 2014 20
Slide 21: we are investing to grow
we are investing to grow SS Tyson Foods, Inc.
Slide 22: We are investing in our customers
D I F F E R E N T B U S I N E S S M O D E L / / VA L U E C R E AT I O N we are investing in our customers +2.0pts Tyson distribution growth rate FY2015 vs. year ago -0.01pts Competitors Tyson Foods SOURCE: IRI TDPs, latest MULO 4 Weeks September 13, 2015 22
Slide 23: We are investing in our brands
D I F F E R E N T B U S I N E S S M O D E L / / VA L U E C R E AT I O N we are investing in our brands 23
Slide 24: We are building consumer advocates
D I F F E R E N T B U S I N E S S M O D E L / / VA L U E C R E AT I O N we are building consumer advocates Brand Advocacy: % Recommend Tyson Foods vs. Next Branded Competitor Chicken Nuggets Breaded Chicken Strips Hot Dogs Frozen Breakfast Sandwich Fresh Breakfast Sausage Cooked Breakfast Sausage Co
Slide 25: Our portfolio commands premium pricing
D I F F E R E N T B U S I N E S S M O D E L / / VA L U E C R E AT I O N our portfolio commands premium pricing $4.40 Average Price per Pound $4.20 11% premium $4.00 above categories’ Tyson ‘Core 9’ average price $3.80 $3.60 Total Categories $3.40 $3.20 2012 2013 2014 2015 SOURCE: IRI Total US MULO,
Slide 26: Our brands successfully extend into new categories
D I F F E R E N T B U S I N E S S M O D E L / / VA L U E C R E AT I O N our brands successfully extend into new categories 27
Slide 27: Our brand strength enables us to win in channels beyond retail
D I F F E R E N T B U S I N E S S M O D E L / / VA L U E C R E AT I O N our brand strength enables us to win in channels beyond retail Consumer Perceptions: C-store Breakfast Sandwiches Jimmy Dean® Brand vs. Next Branded Competitor Likelihood to purchase +24pts High quality +34pts Great tasting +33p
Slide 28: We are uniquely positioned to lead growth and value creation over time
D I F F E R E N T P O R T F O L I O . D I F F E R E N T B U S I N E S S M O D E L / / VA L U E C R E AT I O N we are uniquely positioned to lead growth and value creation over time • Growth above food & beverage • Portfolio mix driving margin value creation expansion • Brand advocates • Investing to
Slide 29: different today. different tomorrow.
different today. different tomorrow.
Slide 30: Top Tier Innovation Performance
D I F F E R E N T T O D AY / / top tier innovation performance Branded Retail Food Companies 2015 Comparison insights innovation vitality1 12.9% 12.5% 10.8% innovation 8.6% 8.4% research & development 1SOURCE: Nielsen total US XAOC – Expanded all outlet channel and includes Walmart 31
Slide 31: Focused Innovation Momentum
D I F F E R E N T T O D AY / / focused innovation ovation momentum Launch continuous Extend iconic brands into Build a differentiated innovation in ‘Core 9’ adjacencies protein snacking portfolio 12 major launches in ‘Core 9’ 2016 innovation in adjacent Differentiated platforms in categories over ne
Slide 32: Success Story: Hillshire Farm Naturals
D I F F E R E N T T O D AY / / success story: hillshire farm naturals™ The Insight The Innovation All natural products An all natural usually don’t taste lunchmeat that as good requires no sacrifice in taste The Advantage The Impact Expertise in Highly incremental delivery of superior launch, drawin
Slide 33: Success Story: Hillshire Snacking
D I F F E R E N T T O D AY / / success story: hillshire® snacking The Insight The Innovation The expectation of Sophisticated snacks has flavors in forms evolved from that fit into flexible satisfaction to lives experience The Advantage The Impact Expertise in protein Velocities + bakery significant
Slide 34: Success Story: Ball Park Jerky
D I F F E R E N T T O D AY / / success story: ballpark® jerky The Insight The Innovation Meat from the grill Flame grilled taste just tastes better with unique tender texture The Advantage The Impact Proprietary Largest brand flame-grilled launch in the manufacturing category in the last process 5 y
Slide 35: Jimmy Dean Bacon
D I F F E R E N T T O D AY / / jimmy dean® bacon The Insight The Innovation Bacon is the Fill the breakfast ultimate breakfast plate with another comfort food satisfying Jimmy Dean meat The Advantage The Impact Unmatched Jimmy Dean is expertise in bacon bringing incremental consumers to the bacon ca
Slide 36: Jimmy Dean Stuffed Hash Browns
D I F F E R E N T T O D AY / / jimmy dean® stuffed hash browns The Insight The Innovation Morning snacking Crispy hashbrown is on the rise with out of the consumers seeking microwave with unique handheld warm cheese and offerings meat fillings 37
Slide 37: Jimmy Dean Delights Frittata
D I F F E R E N T T O D AY / / jimmy dean delights® frittata The Insight The Innovation A healthier start in Bread-free, low a convenient calorie, warm handheld form breakfast in a unique form 38
Slide 38: Tyson Naturals Lightly Breaded Chicken
D I F F E R E N T T O D AY / / tyson naturals™ lightly breaded chicken The Insight The Innovation Less processed Real, 100% all without less taste natural ingredients with healthy breadings and no antibiotics ever 39
Slide 39: Tyson Naturals Grilled Nuggets
D I F F E R E N T T O D AY / / tyson naturals™ grilled nuggets The Insight The Innovation Healthier Unbreaded grilled alternative chicken chicken nuggets nugget that the with 50% fewer whole family can calories & no enjoy antibiotics ever 40
Slide 40: Hillshire Snacking Extensions
D I F F E R E N T T O D AY / / hillshire® snacking extensions The Insight The Innovation Experience a Foodie-worthy snacking snacking with 3 adventure with the protein-packed goodness of components protein 41
Slide 41: Ballpark Frozen Expansion
D I F F E R E N T T O D AY / / ballpark® frozen expansion The Insight The Innovation Guys want bold On-trend forms flavor with minimal and flavors that prep can go from freezer to table in 3 minutes 42
Slide 42: Momentum
D I F F E R E N T T O D AY / / momentum Launching continuous Extending iconic brands Building a differentiated innovation in ‘Core 9’ into adjacencies protein snacking portfolio 43
Slide 43: Our Focus
DIFFERENT TOMORROW // GROW TH CHANNELS grow where the growth is Traditional channel growth is slowing Dedicated Growth Channels In the next 5 years, the Innovation Experts majority of retail growth will come from non-traditional channels Customized Product Offerings Ecommerce is coming to food and b
Slide 44: Tyson Foods, Inc. Springdale, Arkansas
Tyson's Foods, Inc. > Springdale,Arkansas
Slide 45: A Brand to Come Back to Time and Again
DIFFERENT TOMORROW // GROW TH BRANDS a brand to come back to time and again 47
Slide 46: Differentiation
DIFFERENT TOMORROW // GROW TH BRANDS tyson is uniquely positioned to capitalize on the opportunity of ‘CFG’ (consumer fresh goods) SITUATION OPPORTUNITY Consumer demand drives a sharp Create more value for fresh sales increase in fresh food growth Dollar Growth, 3 YR CAGR Branded 4.0% added value DI
Slide 47: Tyson 'CFG' Will Value Up One of Food’s Largest Categories
DIFFERENT TOMORROW // GROW TH BRANDS tyson ‘CFG’ will value up one of food’s largest categories The fresh meat category… is ripe for consumer value creation $33B Source: Nielsen Perishables Group, 52 weeks ending 12/26/15 49
Slide 48: The Purveyors of the Better Food Experience
The purveyors of the better food experience 50
Slide 49: Adding Value Beyond the Product
DIFFERENT TOMORROW // GROW TH BRANDS adding value beyond the product Preparation Exploration Knowledge 51
Slide 50: A Curated Line of Dinners Made Fresh at Home
DIFFERENT TOMORROW // GROW TH BRANDS a curated line of dinners made fresh at home 52
Slide 51: different company. different model. different today. different tomorrow.
different company. different model. different today. different tomorrow.
Slide 52: Consumer Analyst Group of Europe
Consumer Analyst March 22, 2016 Group of Europe
Slide 53: Appendix
Appendix 55
Slide 54: EPS Reconciliations
E P S R E C O N C I L I AT I O N S 12 Months Ended Unaudited 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) - -
Slide 55: Sales Reconciliations
S A L E S R E C O N C I L I AT I O N S $ 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 fisc
Slide 56: Net Debt/Adjusted EBITDA Reconciliations
12 Months Ended (b) N E T D E B T / A D J U S T E D E B I T D A R E C O N C I L I AT I O N S January 2, 2016 October 3, 2015 September 27, 2014 $ in millions Net income $ 1,375 $ 1,224 $ 856 Unaudited Less: Interest income (9) (9) (7) Add: Interest expense 283 293 132 Add: Income tax expense 823 697
Slide 57: Net Debt/Adjusted EBITDA Reconciliations, Continued
N E T D E B T / A D J U S T E D E B I T D A R E C O N C I L I AT I O N S , C O N T I N U E D (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
Slide 58: Historical EBITDA Reconciliations
H I S T O R I C A L E B I T D A R E C O N C I L I AT I O N S $ 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 3
Slide 59: Free Cash Flow Reconciliations
F R E E C A S H F L O W R E C O N C I L I AT I O N S $ 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
Slide 60: 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
Slide 61: Adjusted Sales, Adjusted Operating Income & Adjusted Operating Margin
A D J U S T E D S A L E S , A D J U S T E D O P E R AT I N G I N C O M E ( L O S S ) & A D J U S T E D O P E R AT I N G M A R G I N Adjusted Sales, Adjusted Operating Income (Loss) and Adjusted Operating Margin (for the 12 months ended October 3, 2015) Prepared Intersegment Chicken Beef Pork Foods O
Slide 62: Adjusted Sales, Adjusted Operating Income & Margin, Continued
A D J U S T E D S A L E S , A D J U S T E D O P E R AT I N G I N C O M E ( L O S S ) & A D J U S T E D O P E R AT I N G M A R G I N , CONTINUED (a) The estimated impact of the additional week in the 12 months of fiscal 2015 was calculated by dividing unadjusted sales for the fourth quarter of fiscal
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