Tyson Foods, Inc. (TSN) Q3 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call summary indicates stable financial performance with some positive aspects such as operational efficiencies and product innovation. However, the cautious guidance on sales and lowered CapEx, along with mixed responses in the Q&A, suggest uncertainty. The flat sales guidance and narrowed free cash flow range reflect a conservative outlook. While there are positive elements, such as chicken segment growth and international margins, the lack of strong upward momentum in guidance tempers the overall sentiment, leading to a neutral prediction.

Key Financial Performance

Enterprise Sales $13.9 billion, up 4% year-over-year, led by beef with solid contributions from Chicken and Prepared Foods, reflecting the healthy demand environment for protein.

Adjusted Operating Income $505 million, up 2.9% year-over-year, driven by strong growth in Chicken, Prepared Foods, and pork, offsetting the decline in beef.

Adjusted Earnings Per Share $0.91, up 4.6% year-over-year, marking the fifth consecutive quarter of year-over-year growth.

Prepared Foods Adjusted Operating Income Increased 21% year-over-year, with margins expanding by 150 basis points, driven by progress on raw material cost recovery and enhanced product mix.

Chicken Adjusted Operating Income Increased 12% year-over-year, driven by efficiencies in plants and benefits of top-line growth, with grain costs roughly in line with last year.

Beef Adjusted Operating Income Declined due to significantly compressed spreads driven by higher cattle costs, despite resilient consumer demand.

Pork Adjusted Operating Income Increased 64% year-over-year, reflecting benefits from network optimization and operational efficiencies, marking the strongest third quarter results since 2021.

Year-to-Date Operating Cash Flow $1.6 billion, with capital expenditures of $691 million, resulting in free cash flow of $929 million, well ahead of year-to-date dividends of $524 million.

Net Leverage Reduced to 2.1x, nearly a full turn lower than the previous year, reflecting disciplined capital allocation and strong cash flows.

You have reached the limit Upgrade to access full content

Get started

Operating Highlights

Tyson Simple Ingredient Nuggets: Developed for consumers seeking high protein and simple ingredients, featuring chicken, cheese, and seasoning.

Mega Dino Nuggets: Family-friendly product aimed at driving engagement and incremental eating occasions.

Hillshire Farm Handhelds: New product line featuring Ham & Cheese, Buffalo Style Chicken, and Philly Cheesesteak, targeting demand for convenient high-protein options.

Retail Branded Volume Growth: Grew 1.5% in Q3, outpacing total food and beverage. Dollar sales grew 2%.

Snacking Portfolio: Volume grew 20%, with share increasing by 110 basis points, led by Hillshire brand snacks.

Tyson Branded Fresh Chicken: Volume grew 2.3%, meeting consumer demand for high-quality fresh options.

Operational Efficiencies in Chicken: Incremental efficiencies unlocked across plant network, contributing to profit growth.

Prepared Foods Operational Execution: Strengthened S&OP process, improved fill rates to above 98%, and reduced waste.

Network Optimization in Pork: Increased capacity utilization and enhanced value-added mix, leading to strongest Q3 adjusted operating income in four years.

Focus on Innovation: Robust innovation pipeline across brands, including new product launches and expanded distribution.

Financial Strength: Net leverage improved year-over-year and sequentially, with disciplined capital allocation.

Beef Segment Strategy: Managing tight cattle supply with network optimization and enhanced value-added mix.

You have reached the limit Upgrade to access full content

Get started

Risk or Challenges

Beef Segment Challenges: The beef segment is facing significant challenges due to record-low cattle availability, which has led to compressed spreads and higher cattle costs. This has negatively impacted adjusted operating income and remains a soft spot in the company's performance.

Cattle Supply Constraints: Tight cattle supply conditions are expected to persist, significantly affecting the beef segment's profitability. The company anticipates a loss in adjusted operating income for this segment in 2025.

Raw Material Cost Inflation: Prepared Foods and other segments are navigating higher raw material costs, which continue to exert pressure on margins despite operational improvements.

Consumer Spending Caution: Consumers remain cautious and selective in their spending, which could impact demand for certain product categories and overall sales growth.

Operational Efficiency Needs: While operational improvements have been made, there is still work to be done to eliminate inefficiencies and reduce waste, particularly in the Prepared Foods segment.

Market Headwinds in Beef: The beef segment is experiencing industry market headwinds, including tight cattle supply and higher costs, which are challenging profitability.

You have reached the limit Upgrade to access full content

Get started

Guidance & Outlook

Revenue Expectations: Tyson Foods anticipates full-year sales to increase by 2% to 3% year-over-year, reflecting a solid outlook for the fourth quarter.

Operating Income Projections: The company has raised its guidance for total company adjusted operating income to a range of $2.1 billion to $2.3 billion, indicating significant growth compared to the previous year.

Segment-Specific Guidance: Prepared Foods adjusted operating income is expected to range between $925 million and $1 billion. Chicken segment adjusted operating income guidance has been raised to $1.3 billion to $1.4 billion, representing a 33% year-over-year growth at the midpoint. Beef segment adjusted operating income is projected to be between a loss of $475 million and $375 million due to tight cattle supply. Pork segment adjusted operating income is expected to be between $175 million and $200 million, reflecting the high end of the range. International Other adjusted operating income is projected to be approximately $125 million.

Capital Expenditures and Free Cash Flow: Capital expenditures are expected to be at or below $1 billion, with free cash flow projected in the range of $1 billion to $1.3 billion.

Market Trends and Consumer Demand: The company expects robust consumer demand for protein, with beef, pork, and chicken continuing to be strong performers. Tight cattle supply conditions are anticipated to persist, impacting the Beef segment.

Operational and Strategic Plans: Tyson Foods plans to continue focusing on innovation, operational excellence, and efficiency improvements across its segments. The company is leveraging data and analytics to enhance decision-making and optimize its supply chain.

You have reached the limit Upgrade to access full content

Get started

Shareholder Return Plan

Dividends: Year-to-date dividends amounted to $524 million, which is the primary method of returning cash to shareholders.

Share Repurchase Program: The company restarted open market share repurchases under its share repurchase program late in the quarter, marking the first repurchases since Q1 of 2023. A total of $201 million was returned to shareholders through dividends and repurchases this quarter.

You have reached the limit Upgrade to access full content

Get started

Key Q&A

Q:Can you provide more detail on how you're thinking about cattle supply and cost for the beef segment in the near term and during the herd rebuilding phase?

A:Cattle supplies are tightening, creating a compression spread. Heifer retention has begun, with beef cow slaughter down 16% from January to June. Herd rebuilding is expected to begin in earnest in 2026, with benefits seen by 2028. The company is confident in managing through this challenging time by leveraging data, digital tools, and strategic pivots to optimize yield performance and align with consumer trends.

Q:Can you provide more detail on the input cost pressure in the Prepared Foods segment and how we should think about the flow-through of further pricing?

A:The Prepared Foods segment faced a $60 million unplanned raw material cost increase in the quarter. The team offset this through operational execution, innovation, and a robust innovation pipeline. The segment had its best Q3 ever and is on a multiyear journey to improve profitability, with 2025 expected to be the best year for Prepared Foods. Seasonal high raw material costs, such as pork trimmings and beef trim, are factored into Q4 guidance.

Q:Can you compare and contrast what you're seeing in the market today on heifer retention relative to the elongation of recovery that triggered the impairment on the beef business?

A:The current cycle has been different from past cycles due to a prolonged drought, leading to a more extended period of tight supply. Data shows beef cow harvest is significantly down year-over-year, and feeder calf receipts into feed yards are changing, indicating increased future supplies. The impairment was influenced by rising cattle costs and a reduced cushion for fair value exceeding carrying value.

Q:What elasticity are you seeing as you put through pricing on Prepared Foods items, and what are you observing in the competitive set?

A:The company is confident in managing cost pressures through strong brands and innovation. Elasticity remains low, with consumers prioritizing protein, which typically has lower elasticity. Competitive behavior in the category has been rational, and the company continues to leverage its multi-protein and value-added portfolio.

Q:Can you provide an update on the investments in the Chicken segment and their expected impact as we move into 2026?

A:The Chicken segment is running efficiently, with stable grain costs and $100 million in investments expected to wrap up in Q4. The segment is focused on operational efficiencies, innovation, and strategic partnerships. Branded chicken grew 10%, and value-added grew 8.8% in the quarter. The innovation pipeline includes over 20 new items, driving household penetration and momentum into 2026.

Q:Why was the CapEx guidance lowered, and how does it relate to free cash flow guidance?

A:CapEx guidance was lowered to the lower end of the $1 billion to $1.2 billion range, with a run rate of under $700 million. Free cash flow guidance was narrowed to $1 billion to $1.3 billion due to working capital investments, including higher cattle costs. The changes align with expectations and reflect disciplined capital allocation.

Q:What are your thoughts on the supply recovery in the pork segment, and when do you expect it to occur?

A:The pork segment has shown strong execution despite tightening spreads. USDA projects a 0.9% increase in pork production for 2025 and 1.6% for 2026. Producers are cautious about expansion due to inflationary costs for housing, but profitability has been positive for 13 months, setting a foundation for future growth.

Q:What is the normalized operating margin for the Chicken segment, and is there room for further improvement?

A:The Chicken segment has not yet peaked in profitability. Improvements are driven by better fill rates, yield improvements, labor management, and strategic customer alignments. The segment is focused on value-added and branded products, with a strong foundation and momentum expected to continue into 2026 and beyond.

Q:How significant is the threat from New World screwworms to the beef industry, and what are the potential impacts?

A:The USDA has taken actions to protect livestock from New World screwworms, and there has been no indication of U.S. producers changing decisions due to the threat. The border closure with Mexico has reduced imports by 500,000 head, tightening supply. The company continues to monitor the situation.

Q:What are your expectations for the proposed renewable fuel standard and its impact on feed costs for the Chicken segment?

A:The renewable fuel standard is not expected to significantly impact feed costs for the Chicken segment. The feed mix is relatively fixed, and grain prices are expected to remain steady due to a potentially high U.S. corn crop.

Q:What are the key factors driving strong international margins, and do you see these drivers continuing?

A:Strong international margins are driven by operational excellence, cost efficiencies, and managing controllable costs. Despite geopolitical and economic challenges, the team expects momentum to continue into FY 2026.

Q:What are your expectations for the magnitude of the herd recovery in the beef segment, and how does it compare to prior cycles?

A:The herd recovery is expected to begin in earnest in 2026, with benefits seen by 2028. The prolonged drought has created an elongated bottom of the cycle, making forecasting challenging. The company is focused on operational excellence and cost control, removing over $100 million in controllable costs this year.

Q:What efficiencies have been achieved in Prepared Foods, and what is the size of incremental efficiencies in the Chicken segment?

A:Prepared Foods has achieved sustained manufacturing efficiencies, with audits ensuring long-term benefits. The Chicken segment is focused on operational excellence, leveraging data and digital tools, and aligning with strategic customers to drive efficiencies and growth.

Q:How is management thinking about capital allocation given the leverage improvement?

A:Management remains focused on maintaining financial strength, investing in the business, and returning cash to shareholders. The share repurchase program has been restarted at a small pace, reflecting disciplined capital allocation.

Q:Review of Unclear Management Responses

A:Management avoided providing a direct answer to the question about the normalized or mid-cycle beef profits in this cycle compared to prior cycles. They acknowledged the challenges in forecasting due to the prolonged drought and dynamic environment but did not provide a clear comparison or specific expectations for mid-cycle profitability.

You have reached the limit Upgrade to access full content

Get started

Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

TSN Transcript

Tyson Foods, Inc. (TSN) Q4 2025 Earnings Call Transcript

Positive11-10

The earnings call highlights strong financial performance, particularly in the pork and chicken segments, with increased operating income and strategic customer partnerships. Despite challenges in the beef segment and commodity cost pressures, Tyson remains optimistic with raised guidance and plans for operational excellence and innovation. The Q&A section reveals management's confidence in sustaining improvements and addressing uncertainties, contributing to a positive outlook. However, some concerns remain about beef segment challenges and lack of detailed guidance, tempering the sentiment slightly.

Tyson Foods, Inc. (TSN) Presents At Barclays 18th Annual Global Consumer Staples Conference 2025 Transcript

Neutral9-10

Tyson Foods, Inc. (TSN) Q3 2025 Earnings Call Transcript

Unknown8-4

Tyson Foods, Inc. (TSN) Presents at 20th Annual BMO Global Farm to Market Conference (Transcript)

Neutral5-14

TSN Slides

Tyson Foods Q2 2025 slides: Fourth consecutive quarter of growth amid challenges

2025-05-05

TSN Report

TYSON FOODS, INC. 10-Q

10-Q

2025-02-03

TYSON FOODS, INC. 10-K

10-K

2024-11-12

TYSON FOODS, INC. 10-Q

10-Q

2024-08-05

TYSON FOODS, INC. 10-Q

10-Q

2024-05-06

Frequently Asked Questions

Where does this earnings call transcript come from?

All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.

How soon is the transcript available after the earnings call ends?

Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.

Is the transcript edited or altered in any way?

No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.

Why do some answers appear as “Unclear” or “Inaudible”?

When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.

Who creates the AI Summary and Key Q&A highlights shown above the transcript?

They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.