Tyson Foods, Inc. (NYSE:TSN) Q2 2017 Earnings Conference Call - Final Transcript
May 08, 2017 • 09:00 am ET
Good morning and welcome to the Tyson Foods Second Quarter Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note, this event is being recorded. I would now like to turn the conference over to Jon Kathol, VP of IR. Please go ahead, sir.
Good morning, and welcome to the Tyson Foods Incorporated second quarter earnings call for the 2017 fiscal year. On today's call are Tom Hayes, President and CEO; and Dennis Leatherby, EVP and CFO. Slides accompanying today's prepared remarks are available as a quarterly supplemental report on the Investor Relations section of our website at ir.tyson.com. Tyson Foods issued an earnings news release this morning which has been filed with the SEC on Form 8-K and also is available on our website at ir.tyson.com. (Forward-Looking Cautionary Statements)
I would like to remind everyone that this call is being recorded on Monday, May 8, 2017 at 9 AM Eastern Time. A replay of today's call will be available on Tyson's website approximately one hour after the conclusion of this call. This broadcast is the property of Tyson Foods and any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Tyson Foods is strictly prohibited. I'll now turn the call over to Tom Hayes.
Thank you very much, Jon. Good morning, everybody, and thanks for joining us today. We concluded a record first half in fiscal 2017, and we're off to a strong start in the second half. Because the seasonality of our business can distort our earnings from quarter-to-quarter, we get a better indication of performance trends if we look at the fiscal year in terms of front half and back half rather than four quarters. Q1 was very strong, our best quarter in company history. We knew that Q2 would be a challenge and it was due to typical seasonality and a late Easter. There're also some unexpected challenges, which I'll explain as I dive into the segments.
But both combined, Q1 and Q2, made for a record first half that saw 17% improvement year-over-year. This gives us confidence in reiterating our adjusted EPS guidance of between $4.90 and $5.05 for the current year. Integration synergies for the second quarter were $173 million with $29 million incremental to Q2 of 2016. Total synergies through Q2 were $649 million and allowing us to increase compensation for team members in our plants, invest in innovation and build our brand, so lay the groundwork for a long future of growth.
So, now let's move to our operating results. In the Beef segment, operating income for the second quarter was $126 million with an operating margin of 3.6%. Sales volume was down 1.1% as we ran our plans for the margin, not for market share. As price was down 3.1%, reflecting the continued lower cut-out due to improved cattle availability. Consumer demand for beef, both domestically and internationally,