Tyson Foods, Inc. (NYSE:TSN) Q1 2018 Earnings Conference Call - Final Transcript
Feb 08, 2018 • 09:00 am ET
Thank you, Mr. Glendinning. Ladies and gentlemen, we will begin the question-and-answer session. (Operator Instructions)
And your first question will come from Jeremy Scott of Mizuho. Please go ahead.
Thank you, and good morning. And thank you, Dennis for everything, and best of luck to you in the future.
I just wanted to ask on Prepared Foods, clearly, a strong quarter at 11.9% and you upped your synergy target for the year, but you nudged down the guidance 11% to 12%. Is this primarily the freight issue that you called out? And as you move through the year, can you give us a sense of how much that $200 million -- how much of that $200 million you are going to have to eat and how much can be passed through and maybe frame it quarter-to-quarter? It sounds like 2Q, you're going to have the brunt of it. But if you'd help us with the next quarter and the back half of the year to be, that'd be helpful.
Yes, sure. Hey, Jeremy. It's Tom. Absolutely. It's great performance in the first quarter. We're extraordinarily excited about it. We're extraordinarily pleased and proud of the team and what they've been able to do. As you called out, freight is a tough one. I mean, it's affecting all of our business so, to be clear, not just Prepared Foods. So, we do plan to and are in the middle of pricing for it, and it's not always easy to do that but it's something that we have to do because it's a cost. We got to pass it through and ultimately, the consumer is going to pay for it at some point, but it's -- to say how it's going to actually hit every quarter, I can't give you that specificity. But suffice to say, we feel great about Prepared Foods business. It's still early. It's Q1. Typically, Q4 is a little bit challenging for us, as you know.
So, the mix of products would be different; consumption base, schools being out of season and so forth. But we think that the year is going to be fantastic. We're guiding to around 11%, and we will overcome the challenges that we have with freight.
Right. And maybe on that -- just on that same issue, you called out it impacted every segment. Can you give us a sense of the impact in the quarter across each of your segments?
Not the quarter. We told -- for the year, it's about $200 million, but not specific for the quarter, we can't. Sorry.
Okay. I'll jump back in. Thank you.
The next question will come from Heather Jones of the Vertical Group. Please go ahead.
Good morning and congratulations, Dennis. I hope you enjoy your retirement.
Yes, you're welcome. On Chicken margins, you mentioned a difficult environment during Q1. And clearly, we saw the dynamics in breast meat and wings, but you guys are a net buyer of breast meat