More tailwinds than headwinds in chicken right now, says Tyson Foods CFO

Well, Tyson Foods closing lower by more than 5% today after initially popping on its earnings report. The food giant posted a bottom line beat but came in light on revenue shares sliding after commentary in the earnings call around inflation eating into the consumer. Joining us now to discuss the results today is Tyson Foods CFO, John R Tyson. It’s great to have you on the show. Welcome. Thank you so much for having me. I’m excited to be here. All right, There’s a lot to dig into here with you. But first, I am going to start with what seems, at least based on several different comments we’ve gotten from analysts to be the thing that put shares under pressure, a weaker Q3 versus Q4, comments about that on the earnings call and specifically what you’re seeing with challenges and pork and prepared foods and higher commodity prices there. Walk me through it and I guess just add a little more context given the fact that you did also boost your guidance for the year. Yeah, well, thank you for the question. And I think the story of Tyson today and our earnings releases, we beat expectations and we raised our full year guidance by about $350 million if you just take it from midpoint to midpoint. And we see that as evidence of not only the momentum and the performance year to date, but also the outlook for the balance of the year. I think operating income and EPS each up about 60% roughly each compared to the same period a year ago. And we did have some discussion about the back half of the year. I think it’s important that we don’t really give guidance for, for, you know, on 1/4 to quarter basis, but we talked about the entire second-half of our fiscal and I think that there’s a lot of moving parts. But overall, we remain optimistic about what’s ahead of us for the balance of the year. Yeah, chicken, which has been beleaguered by oversupply issues for a while now returning to profit in the quarter and and a key part of the reason that you are boosting your full year private profit guidance. Walk me through what you’re seeing in chicken versus beef and if inflation is impacting how consumers are choosing their proteins. Well, you’re exactly right. Our performance in chicken has been phenomenal. We always talk at Tyson about controlling the controllable and we’ve got great momentum there. There’s also more tailwinds than there are headwinds I think in our chicken business and I think this is as good of a time to just remind our listeners or viewers about the the resilience of the multi protein portfolio. We’ve got it Tyson. We’ve seen headwinds in beef that’s been more than offset by chicken. And if you just think about the scope and scale of our business, we estimate in terms of our core proteins, chicken, beef and pork, nearly one in four servings in the US is coming from Tyson. And it’s not just food at home or food away from home, it’s both. It’s morning, noon and night. We always say that if a consumer is reaching for protein, we want it to come from Tyson and there’s several different examples of that. On the food service side, you would be hard pressed to name a QSR that we’re not in business with. And on the retail side, we’re constantly driving innovation, a product set of products that we launched recently some season and marinated meats of chicken, beef and pork at the supermarket. The reason that we’re doing that is because consumers are now expecting restaurant quality food at home that’s just as delicious and just as convenient. And I think the story of our earnings released today is that is that the the offsetting proteins are meaning that performance is going up. So John, welcome. Thanks for joining us. You guys said on the call that you’re seeing consumer shift from fine dining to quick service restaurants and from QSR to in home in in this inflationary environment. So how does that affect your food service business, which you mentioned you’ve got some QSR, but you’ve also got some mid tier, quite a bit mid tier fine dining in there. Yeah. I mean it’s fair to say that any type of restaurant in the US we do business with or our protein at least ends up there. And so we obviously pay attention to what’s going on in the various channels in order to be responsive and match supply with the demand. But you know we stand to win and no matter the economic backdrop just because of the breadth, the breadth of our portfolio. And then on chicken supply, on the call your CEO Donny King talked about reading beneath the surface on the USD as chicken supply numbers that hens out there are dying from disease, more so that the supply available to you is actually going to be down. So as customers demand more chicken that’s raised without antibiotics, where does that take us in the medium term? Will there just be periods like this or you know is is genetics work from you guys going to solve it? Well, there’s a lot of factors at play as we think about chicken supply and you are right, we did talk about you know our based on the data that we see how that may or may not differ from what the USDA projects in terms of a total chicken supply. But I think against the backdrop of growing protein demand, the number one brand and chicken and the Tyson brand, we feel like we’re well positioned to win. And we also talked about in our call today that our performance from a live operations standpoint, which is very critical for the chicken businesses is doing better than some of the industry data we see. So we see that as being ultimately, you know, favorable for us from a competitive standpoint.