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Tyson Foods Inc. (NYSE: TSN ) is one of the world’s largest protein companies , producing approximately 20% of the beef, pork, and chicken in the United States. It is primarily US-focused (over 80% of sales) but exports to over 100 countries. ItI am a UK-based equity enthusiast and private investor with a professional background in finance. With over a decade of experience, I aim to bring a pragmatic, valuation driven approach to equity research. My focus is on identifying and analysing underappreciated fun ...

Core Viewpoint - Tyson Foods is facing a complex market environment characterized by tight beef supplies and ongoing cost inflation, which are impacting margins, while strong performance in the chicken segment provides some balance [1][2][10] Group 1: Market Challenges - The company is navigating immediate operational pressures alongside its long-term growth strategy, with supply constraints and rising costs being significant factors [2] - Analysts from Piper Sandler project that beef supply stabilization may take two to three years, affecting the fiscal 2026 outlook [3] - A slow recovery in heifer retention is a key challenge, contributing to ongoing supply shortages in the beef sector [4] Group 2: Financial Projections - Tyson anticipates that fiscal 2026 will represent the "low point" for supply, with margin pressures expected to continue through the fourth quarter of fiscal 2025 [5] - The Prepared Foods division is experiencing cost inflation, particularly due to a 41.9% year-to-date increase in pork belly prices, which is straining margins [6] - Revenue is expected to grow modestly from $54.7 billion in fiscal 2025 to $55.5 billion in fiscal 2026, with supply constraints being a primary risk [9] Group 3: Operational Highlights - A recent recall of 58 million pounds of products has raised operational risks, but analysts expect the financial impact to be adjusted out of fourth-quarter results [7] - The chicken segment is performing well, with a revised sales growth forecast of 2.5% for the fourth quarter of fiscal 2025, driven by operational efficiencies and value-added products [7] - Cost savings from phasing out owned cold storage facilities are projected to generate $200 million in benefits through 2028, potentially improving chicken margins from 8% towards historical levels of 10-11% [8] Group 4: Profitability Outlook - Piper Sandler maintains fiscal 2025 earnings per share (EPS) estimate at $3.90 and fiscal 2026 EPS at $4.20, indicating stable core profitability [8] - The company's ability to manage costs and gradually rebuild cattle herds will be crucial for maintaining steady profitability and positioning for long-term supply stabilization [10]

Core Insights - Wingstop is expanding its footprint by adding new stores, indicating a growth strategy focused on increasing market presence [1] - Competitors McDonald's and Wendy's are enhancing their chicken offerings, suggesting a competitive response to the growing demand for chicken products in the fast-food sector [1] Company Developments - Wingstop's strategy includes the addition of new locations, which may lead to increased revenue and market share [1] - McDonald's and Wendy's are both investing in their chicken menus, which could impact consumer preferences and market dynamics [1] Industry Trends - The fast-food industry is witnessing a shift towards chicken products, with major players adapting their menus to capture consumer interest [1] - The competitive landscape is intensifying as companies like Wingstop, McDonald's, and Wendy's vie for dominance in the chicken segment [1]

Core Viewpoint - Companies with a strong history of dividend payments and increases, such as PepsiCo, Black Hills, and Tyson Foods, are attractive to income-focused investors, offering dividend yields between 3% and 4% [1] Group 1: PepsiCo - PepsiCo has raised its dividends for 53 consecutive years, with a recent increase of 5% to $1.4225 per share, resulting in an annual dividend of $5.69 per share [3] - The current dividend yield for PepsiCo is 4.02% [3] - As of June 30, PepsiCo's annual revenue was $91.75 billion, and it reported Q2 2025 EPS of $2.12 and revenues of $22.73 billion, both exceeding consensus estimates [4] Group 2: Black Hills - Black Hills has a 55-year history of consecutive dividend increases, with the latest hike raising the quarterly payout from $0.65 to $0.676 per share, equating to an annual figure of $2.70 per share [6] - The current dividend yield for Black Hills is 4.63% [6] - As of June 30, Black Hills' annual revenue was $2.24 billion, and it reported Q2 2025 revenues of $439 million, which fell short of the consensus estimate of $448.40 million, while EPS of $0.38 exceeded the consensus of $0.37 [7] Group 3: Tyson Foods - Tyson Foods has increased its dividends annually for the past 12 years, with the most recent increase raising the quarterly payout from $0.49 to $0.50 per share, resulting in an annual dividend of $2 per share [9] - The current dividend yield for Tyson Foods is 3.58% [9]

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Latin American Proteins, specifically focusing on beef and chicken markets in the US and Latin America [1][2] Core Insights 1. **Beef Prices in the US**: - Beef prices are expected to remain high due to resilient income growth and limited supply, with retail prices increasing approximately 15% since January 2024 [2][6] - A forecasted 5% year-over-year increase in beef prices for 2026 is supported by a projected decline in beef production by 2% year-over-year, potentially marking the lowest output in a decade [2][6] 2. **Impact on Chicken Demand**: - Higher beef prices are anticipated to drive increased demand for chicken, with a projected 4% year-over-year income growth supporting this trend [6][7] - Despite higher grain prices potentially squeezing chicken margins, strong price support is expected to maintain profitability above historical averages, with a projected EBIT margin of 10.5% for JBS's PPC in the US [6][7] 3. **European and UK Beef Demand**: - The EU and UK are emerging as significant markets for Latin American beef exporters due to structural declines in local production and resilient demand [7][8] - Beef prices in the UK have risen by 19% year-to-date, while prices in Europe have increased by 7% year-to-date, indicating strong demand for imports [8][10] 4. **Brazil's Export Growth**: - Brazil's beef exports to Europe and the UK have increased significantly, with total volumes up from 2.6% to 3.5% of total exports year-to-date [10][10] - The added demand from these regions should not be underestimated, as it represents a growing opportunity for Brazilian exporters [7][10] Additional Important Insights - **Macroeconomic Correlation**: - There is a historical correlation of approximately 90% between average income growth in the US and protein/beef consumption, indicating that economic conditions will continue to influence demand [2][6] - **Production Challenges**: - The cattle industry is facing structural challenges, including higher costs and competition from cheaper imports, which are contributing to a decline in local production in the EU and UK [8][15] - **Market Dynamics**: - The report emphasizes the importance of not overlooking the potential of the EU and UK markets in the context of global beef trade, which is often dominated by discussions around China and the US [7][8] This summary encapsulates the key points discussed in the conference call, highlighting the dynamics of the beef and chicken markets, the implications of pricing trends, and the opportunities for Latin American exporters in the global market.

Financial Data and Key Metrics Changes - The company has experienced nine consecutive years of growth in sales, EBITDA, and EPS, but this year marks a disappointing performance [4][5][13] - The company is targeting a 1% to 3% CAGR in EBITDA over the next three years, with a focus on improving the quality of earnings and reducing exceptional items [37][39] Business Line Data and Key Metrics Changes - The company has seen stabilization in volume market share and growth in volume share in the frozen food category, despite a decline in the overall category growth due to unusual weather conditions [8][34] - The ice cream business has faced challenges, particularly in July and August, due to unrest in Serbia affecting out-of-home sales [36][64] Market Data and Key Metrics Changes - The frozen food category has shown resilience, with growth over the last ten years, although recent months have seen a decline linked to weather conditions [34][35] - The company has reaffirmed its guidance for 2025, indicating confidence in future performance despite recent challenges [65] Company Strategy and Development Direction - The company is focusing on a "Must Win Battles" strategy to concentrate on key markets where it holds significant market share [7] - A new master brand advertising campaign is being rolled out to enhance brand visibility and efficiency in media spending [18][47] - The company plans to increase its productivity program by 25%, targeting €200 million in savings over the next three years, primarily in supply chain and overheads [39][40] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges faced this year, including inflation and supply chain issues, but emphasizes the importance of learning from these experiences to strengthen future performance [6][10][13] - The company believes there are significant growth opportunities in the frozen food category, particularly in markets with lower penetration compared to the U.S. [15][16] Other Important Information - The company is committed to innovation, with plans to increase the percentage of renovated products and introduce new offerings in the ready meals category [21][23] - The foodservice segment, which accounts for around 8% of the business, is expected to grow, particularly in the Nordics and Southern Europe [29][32] Q&A Session Summary Question: Why has the company lowered its long-term growth targets? - Management indicated that the previous targets were too ambitious given the volatile environment and emphasized the need for a larger savings program to create space for reinvestment [53][55] Question: Are the targeted cost savings realistic? - Management clarified that the $200 million savings target is an increase from previous savings and is essential for maintaining competitiveness and reinvesting in product quality [60][62] Question: How does the company plan to manage pricing and market share? - Management explained that they have developed a revenue growth management tool to make more informed pricing decisions by category and country, allowing for better management of market share [71] Question: What is the outlook for capital allocation moving forward? - Management highlighted that the company has been active in share buybacks and dividends, and will continue to evaluate capital allocation based on current valuations [72]

Core Insights - Tyson Foods reported strong Q3 fiscal 2025 results, with both earnings and sales exceeding estimates and showing year-over-year growth [3][4][5] Financial Performance - Adjusted earnings per share were 91 cents, surpassing the Zacks Consensus Estimate of 72 cents, and up 4.6% from 87 cents in the prior year [4] - Total sales reached $13,884 million, a 4% increase year-over-year, exceeding the Zacks Consensus Estimate of $13,628 million [5] - Gross profit for the quarter was $1.1 billion, up from $878 million in the same period last year [5] - Adjusted operating income rose 2.9% to $505 million, while the adjusted operating margin decreased by 10 basis points to 3.6% [6] Segment Performance - Beef segment sales increased to $5,603 million, with a 10% rise in average price despite a 3.1% drop in volumes [7] - Pork segment sales rose to $1,506 million, with a 1.5% increase in volumes but a 1.6% decline in average price [7] - Chicken segment sales improved to $4,220 million, with volumes up 2.4% and average price up 1.1% [8] - Prepared Foods segment sales reached $2,515 million, with a 5.7% increase in average price despite a 2.3% decline in volumes [8] - International/Other segment sales were $557 million, down from $582 million, with a 0.8% decline in volumes and a 3.5% drop in average price [9] Financial Position - As of the end of the quarter, the company had cash and cash equivalents of $1.5 billion and long-term debt of $8.2 billion [10] - Total liquidity was reported at $4 billion, with expectations to remain above the minimum target of $1 billion for fiscal 2025 [11] - Projected capital expenditure for fiscal 2025 is at or below $1.0 billion, focusing on profit-improvement and maintenance projects [11] Future Outlook - USDA forecasts suggest flat domestic protein production for fiscal 2025, with specific projections for each segment [13][14] - Total company revenue growth is anticipated to be in the range of 2-3% for fiscal 2025, with adjusted operating income expected between $2.1 billion and $2.3 billion [16] - Net interest expenses are projected at $375 million, with an adjusted effective tax rate near 25% for fiscal 2025 [16] Market Sentiment - Recent estimates for Tyson Foods have shown a downward trend, with a consensus estimate shift of -5.35% [17] - The stock has a Zacks Rank of 3 (Hold), indicating expectations for an in-line return in the coming months [19]

Cavalcanti, JBS CFO. Good morning, and thank you for joining us. >> Good morning Frank.>> All right. Talk to me about the quarter here in the quarter, even though you beat expectations, you talked about a challenging geopolitical environment. What's the challenge and what has changed from a quarter ago.A quarter ago, you guys said there was strong demand for protein. >> The demand for protein still strong. So and we show this quarter I think the challenging factor is more the beef segment in us given the si ...

Core Insights - Wendy's plans to reduce the number of promotions for the remainder of the year after experiencing challenges with too many initiatives during the summer [1][2] - The company reported earnings per share of $0.29, a 7.4% increase year-on-year, and revenue of $560.9 million, a 1.7% decrease, both exceeding analysts' expectations [3] - Foot traffic to Wendy's locations decreased by 3% compared to the same quarter last year, although this was an improvement from a 4.7% decline in Q1 [8] Promotions and Strategy - The interim CEO highlighted that the summer promotions, while appealing, overwhelmed restaurant teams and confused customers [2] - Future focus will be on chicken innovation and a new beverage lineup, including a collaboration with Netflix for the second season of "Wednesday" [3] Technology and Innovation - Wendy's is expanding its use of voice AI for drive-thru orders, aiming to implement this technology in up to 600 restaurants by the end of 2025 [9] - The company has been testing innovative drive-thru solutions, including food delivery robots in underground tunnels [9] Market Reaction - Following the earnings report, Wendy's shares increased by approximately 1.5% [4]