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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Q & A
Operator
Operator

Thank you, Mr. White. We'll now begin the question-and-answer session. (Operator Instructions) The first question will come from Adam Samuelson of Goldman Sachs. Please go ahead.

Analyst
Adam Samuelson

Yes, thanks. Good morning, everyone.

Executive
Noel White

Good morning.

Analyst
Adam Samuelson

So maybe first, I was hoping I could dig in a little bit on the updated guidance in the Chicken segment. You've changed the margin outlook by, something on the order of 150 basis points to 175 basis points from kind of near 8% (ph) to above 6% (ph). And I'm trying to just understand how much of that is the increments of Keystone layering into the business versus a change in the outlook for the legacy or existing business that you were guiding to in November? And so far, as the legacy business guidance change, can you help us understand what has changed from a pricing cost perspective that has caused you to remain in the forecast?

Executive
Noel White

Yeah, sure Adam. The change was in fact to almost entirely to our legacy business. In the November call, there is a lot of pricing that was not complete, particularly on the tray pack side. That business is largely complete and that is by far the best reason that we've revised the guidance for the corporate segment. So Keystone had little to no effect on the change.

Analyst
Adam Samuelson

Okay, that's very helpful. And just maybe then, digging in on the tray pack pricing, is it purely tray pack pricing? I think on the prepared to further process pricing and maybe just a little bit more color around the tray pack pricing environment that led to a more tempered outlook?

Executive
Noel White

Yeah, sure. It is the tray pack pricing, Adam. So within the businesses that we operate, whether it's our value-add businesses or small bird business or big bird business, pricing outside of tray pack was almost exactly as we expected. There was some pressure on the tray pack pricing, that was greater than what we expected, and that is what has led to the revision in expectation.

Analyst
Adam Samuelson

Okay. I appreciate the color, I'll respect the one-follow up and I'll pass it on.

Executive
Noel White

Thank you.

Operator
Operator

And the next question will be from Jeremy Scott of Mizuho. Please go ahead.

Analyst
Jeremy Scott

Hey, good morning.

Executive
Noel White

Good morning.

Analyst
Jeremy Scott

When you stack up all the acquisitions you've made in the Chicken industry in the last 12 months or so. Can you give us a sense of what's a reasonable synergy capture, as you start to roll these businesses and when can we expect to see that in the coming years?

Executive
Stewart Glendinning

Well, Stewart here. I'll pick that up. I think really, we've sort of announced that acquisition by acquisition, as you know, in Keystone, we announced $50 million worth of expected synergies, that's been our biggest acquisition. We're off to a strong start there, and I can say that we feel confident about delivering those synergies. So to get through each of the following acquisitions, we're happy to talk about those. Specifically on BRF, that's both Chicken and International.