Tyson Foods, Inc. (NYSE:TSN) Q1 2019 Earnings Conference Call Transcript

Feb 07, 2019 • 09:00 am ET

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Tyson Foods, Inc. (NYSE:TSN) Q1 2019 Earnings Conference Call Transcript

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Executive
Noel White

operations of BRF. The purchase includes four poultry processing facilities in Thailand, one in the United Kingdom, and one in the Netherlands. This deal furthers our growth strategy by expanding offerings of value-added protein in global markets.

We completed the Keystone acquisition on November 30th, and has provided us with a scalable platform in the Asian poultry market. The acquisition of the BRF facilities will help strengthen our presence in the Thai poultry industry and serve the high growth markets in that region. BRF assets in the United Kingdom and in the Netherlands give us the stronger foothold in Europe, where we are currently under-penetrated.

I'm confident in our ability to integrate the BRF operations, in part due to the pace and the level of teamwork taking place with the Keystone integration. Keystone is already playing an important role in our growth strategy, and we look forward to maximizing the opportunities, inherent in the combined business to benefit our customers as we strive to meet their needs and grow together.

As part of the integration process for Keystone, a few weeks ago, we announced several organizational changes. This refinement of our team will help us make the most of our biggest growth opportunities, which are value-added foods in the international markets. I'm glad to have everyone on board, and the team is eager and motivated to deliver results.

I'd also like to mention that Fortune magazine recently included us on the list of the World's Most Admired Companies, ranking Tyson Foods, Number One in the food production category for the third straight year. The rankings are based on key attributes that are important to us, as we execute our strategy to grow our business through differentiated capabilities, to deliver ongoing financial discipline, through continuous improvement, and to sustain our company in the world for future generations. I'm committed to our strategy and our team members are committed to deliver results based on the strategy.

Moving to our segment performance in the first quarter, in short, strong organic growth in Prepared Foods, and strong Beef fundamentals led the performance, while pork and chicken perform well, given market conditions. The dynamics across this business highlight the advantage of Tyson's diversified business model, as they work together to provide balanced and opportunity for long-term growth.

The Prepared Foods segment was a record first quarter with $268 million in operating income and a 12.5% return on sales, building on the momentum of a record year in 2018. The reported performance of Prepared Foods is a substitutor (ph) of several noncore businesses last year. When those are excluded, Prepared Foods delivered over 3% revenue growth and double-digit profit growth in the first quarter, and modest volume increases. This demonstrates the effectiveness of our branded, value-added, multi-channel Prepared Foods model.

Looking back at Prepared Foods, we've grown the business from $4 billion in sales to basically a 1% return in 2014. So business that in fiscal 2019 is projected to produce over $8 billion in sales