Tyson Foods, Inc. (NYSE:TSN) Q3 2023 Earnings Call Transcript

Ben Bienvenu : Okay, that’s very helpful. Thanks. May be thinking about the Pork business. You noted the facility fire impact in the quarter, we have been seeing the cutout rally pretty materially. So kind of a two-part question, One, I know despite the guide down for the balance of the year in Pork, how would you expect Pork packer margins to migrate as we move through the rest of this year? And then, two, as you’ve seen, some of the cutout cost prices that rally pretty materially, what impact does that have to cost a goods sold on the Prepared Foods business, as well. So, Ben, if I could make a couple comments and I’ll let Brady add color to, Q3 was challenging and we expected it to be. As Brady mentioned earlier, we are absolutely laser-focused on those things, which we can control. I’ll let Brady if you would speak to from the hog side, as well as from a Pork perspective.

Brady Stewart: Okay, thanks, Donnie. I think there’s a number of things at play here that we will continue to evaluate as we as we learn more about these markets. And obviously, one of the biggest impacts relative to the supply demand equation that we’ve seen in the last several months is the Supreme Court’s ruling on proposition 12. I think as a industry, we’re still learning what total impact that has from a supply demand perspective. I think it’s somewhat difficult right now to totally forecast with great accuracy. How that all plays out, coupled with the fact that, as I referenced earlier, we’re in the midst of a sell liquidation, cycle as well in the industry. We’re going to continue to monitor these macroeconomic factors that impact our business.

But let me be clear, we have the opportunity to continue to control the controllables, continue to use our footprint with our case ready and value-added assets to get closer to the consumer. And I feel good with the team that we have here in Springdale who stood up to manage the Pork business and are seeing significant operational improvements in that business.

Operator: And ladies and gentlemen, our next question comes from Peter Galbo from Bank of America. Please go ahead with your question.

Peter Galbo: Hey guys. Good morning. Thanks for taking the question.

Donnie King: Good morning, Peter.

Peter Galbo: Donnie, maybe we can actually start on Beef. I think you said it came in better than you expected in the quarter. But again your outlook here in 4Q maybe a bit weaker. And I just wanted to give you a chance to talk about kind of how you see that business play out over the next 18 months, not asking for formal guidance, but I think the last time, we were in this part of the Beef cycle in ‘14 and ‘15 you went through an extended period where packer margins were actually negative. And is that in within your considerations that is that in your outlook just would be helpful to hear from you. Let me start off with and we did, in fact have a better quarter than expected. We were not surprised necessarily by these results. As Brady is mentioned, and John did in the opening remarks, we continue to see herd liquidation. But we are focused on what we can control. Let me, let me flip it over to John and let him add some commentary around this.

John Tyson: Hey, Peter, just regarding your question on the Outlook, I think there is couple of things. So, you did know, right, just on what the implications are with our guidance ranges on the balance of our ‘23. And, we base that on dynamic market conditions. We’re obviously being is as intentional and aggressive as possible and trying to balance that supply and demand to manage the spread. But knowing what we know today that’s where things sit. As we think about ‘24, we expect to give you guidance in November as has been customary for us in the past kind of annual cycles. But as it relates to making any projections looks like. As we move into the fall, we will start to see some data around where pasture conditions were, what are the herd numbers looking like?