Tyson Foods, Inc. (NYSE:TSN) Q2 2015 Earnings Conference Call - Final Transcript
May 04, 2015 • 09:00 am ET
Thank you, sir. We will now begin the question-and-answer session. (Operator Instructions) Ken Goldman.
I know these are difficult to sort of put into numbers, but you had two headwinds in the quarter, right, avian flu in the West Coast, port strike that you said didn't help, right? So, is there any way for us to quantify how much of these headwinds maybe hurt margins or EPS in the quarter?
Ken, as we look at -- I'm going to combine the both, probably around $20 million for Q2, as you know, they're continuing to linger, so we're going to have to continue dealing with them over the next quarter or two. But we're hoping that the West Coast pork issue should clear up in the next two to three months. There are some ebb and flows that kind of keep us from having all the confidence we'd like to have in that, but figure Q2 at $20 million, and some of that gets boost into Q3 and on forward.
And that's $20 million to the operating line?
Right. Round number is $0.03 a share or something like that.
No, I just wanted to make sure it wasn't on the net line. And then I realized not everything is going as well as initially forecast this year, namely beef, but most of the business is doing pretty well and you keep beating consensus estimates, raising synergy targets. So, I think, I guess, my question is this, if you had to focus on one reason why you didn't raise guidance today, would beef be the primary reason or is there, I guess, something else we should be looking at?
As we look at Prepared Foods, we'll continue to deliver over 8% in Prepared Foods. Now, there's a couple of categories -- by the way, the categories that are showing really good growth where we've given up a little bit of share and we're going to need to reinvest some of the raw materials savings in the back half to regain that share and protect those businesses for the long term.
The other categories, it's probably export-related. With the West Coast port slowdown, if we're two to three months from seeing that, then that's going to linger a little bit into Q4, and we're just uncertain as to whether or not our estimate on that is correct. And then, these AI bans we've seen -- even as late as last week, we saw a couple of other outbreaks or few more outbreaks of AI up in the upper Midwest in turkey and table egg flocks. And as those outbreaks continue, it continues to push out the time when those AI bans would be lifted. And so, we're predicting a little bit more export leg quarter pricing softness in the back half than what we had thought before. So, hopefully, that sums it up.
It does. Thank you very much.
By the way, Ken, if we're overly conservative on these issues, then certainly our back