What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-05 compared with 2024-05-06 · 197 added, 176 removed, 304 unchanged (55% of the section changed)

18 unchanged sentences

International/Other primarily includes our foreign operations in Australia, China, Malaysia, Mexico, the Netherlands, South Korea, Thailand and the Kingdom of Saudi Arabia, third-party merger and integration costs and corporate overhead related to Tyson New Ventures, LLC.

Sales decreased slightly in the second quarter and were flat in the first six months of fiscal 2024 as decreased sales in our Chicken and Prepared Foods segments were largely offset by increased sales in our Beef and Pork segments.

We recorded operating income of $312 million for the second quarter of fiscal 2024 as compared to an operating loss of $49 million in the second quarter of fiscal 2023 as we experienced higher operating income in our Chicken and Pork segments, partially offset by lower operating income in our Beef and Prepared Foods segments.

During the second quarter and first six months of fiscal 2024, we incurred higher performance-based compensation costs of $104 million and $200 million, respectively, driven by improved consolidated results.

Sales increased in the third quarter and in the first nine months of fiscal 2024 driven by increased sales in our Beef, Pork and Prepared Foods segments, partially offset by decreased sales in our Chicken segment.

We recorded operating income of $341 million for the third quarter of fiscal 2024 as compared to an operating loss of $350 million in the third quarter of fiscal 2023 primarily driven by higher operating income in our Chicken segment and International/Other, partially offset by lower operating income in our Beef segment.

During the third quarter and first nine months of fiscal 2024, we incurred higher performance-based compensation costs of $89 million and $308 million, respectively, driven by improved consolidated results.

Due to the nature of our performance-based compensation plans, our segments were primarily impacted based on their relative number of eligible team members, and thus, our Chicken and Prepared Foods segments incurred a greater proportion of the total costs.

Additionally, in the second quarter of fiscal 2024, our operating income was impacted by $54 million of costs related to a production facility fire and our current intention to discontinue the use of certain productive assets in the Netherlands and $39 million in plant closure charges.

In the second quarter of fiscal 2023, our operating income was impacted by $22 million of restructuring and related charges and $92 million of charges related to plant closures.

Operating income of $543 million for the first six months of fiscal 2024 was up 30% compared to the first six months of fiscal 2023 as we experienced higher operating income in our Chicken and Pork segments, partially offset by lower operating income for our Beef and Prepared Foods segments.

In the first six months of fiscal 2024, our operating income was impacted by $114 million of plant closure charges, $80 million of costs related to a production facility fire and our current intention to discontinue the use of certain productive assets in the Netherlands, $73 million in legal contingency accruals and $31 million of restructuring and related charges, partially offset by the benefit of $24 million of insurance proceeds, net of costs incurred related to facility fires.

Additionally, in the six months ended April 1, 2023, our operating income was impacted by $43 million of restructuring and related charges and benefited from $35 million of insurance proceeds net of costs, related to facility fires.

Additionally, in the third quarter of fiscal 2024, our operating income was impacted by $101 million in legal contingency accruals and $41 million in plant closure charges.

In the third quarter of fiscal 2023, our operating income was impacted by $448 million of goodwill impairment charges, $50 million of restructuring and related charges, $15 million in plant closures charges, a $38 million legal contingency accrual, and benefited from $22 million of insurance proceeds, net of costs incurred associated with a production facility fire.

We recorded operating income of $884 million for the first nine months of fiscal 2024 as compared to operating income of $68 million for the first nine months of fiscal 2023 primarily driven by higher operating income in our Chicken and Pork segments and International/Other, partially offset by lower operating income in our Beef segment.

In the first nine months of fiscal 2024, our operating income was impacted by $174 million in legal contingency accruals, $155 million of plant closure charges, $83 million of costs related to a production facility fire in the Netherlands and the subsequent decision to sell the facility and $31 million of restructuring and related charges, partially offset by the benefit of $19 million of insurance proceeds, net of costs incurred related to facility fires.

In the nine months ended July 1, 2023, our operating income was impacted by $448 million of goodwill impairment charges, $107 million in plant closures charges, $93 million of restructuring and related charges, and a $38 million legal contingency accrual and benefited from $57 million of insurance proceeds net of costs, related to facility fires.

Market Environment

According to the United States Department of Agriculture, domestic protein production (beef, pork, chicken and turkey) decreased slightly in the second quarter of fiscal 2024 as compared to the same period in fiscal 2023.

The Beef segment experienced limited supply of market-ready cattle in the second quarter of fiscal 2024 as well as increased cattle costs.

According to the United States Department of Agriculture, domestic protein production (beef, pork, chicken and turkey) increased slightly in the third quarter of fiscal 2024 as compared to the same period in fiscal 2023.

The Beef segment experienced limited supply of market-ready cattle in the third quarter of fiscal 2024 as well as increased cattle costs.

Additionally, uncertainty exists regarding the timing of the anticipated cattle herd rebuilding.

The Pork segment experienced sufficient supply and reduced hog costs.

The Pork segment experienced sufficient supply and increased hog costs.

The Chicken segment experienced reduced feed ingredient costs.

The Prepared Foods segment experienced decreased raw material costs primarily due to lower meat costs.

The Prepared Foods segment is currently experiencing increased raw material costs primarily due to higher meat costs.

Additionally, the conflict between Ukraine and Russia has led to economic sanctions against Russia and certain regions of Ukraine and Belarus.

However, the conflict is still ongoing and there are many risks and uncertainties in relation to the conflict that are outside of our control.

Furthermore, the ongoing conflict in the Middle East escalated during the first six months of fiscal 2024 creating economic and political uncertainty within the region.

As of March 30, 2024, the impact of these conflicts have not had a material direct impact on our financial performance.

If these conflicts escalate further, impact additional regions or countries, or additional economic sanctions are imposed, it could have a material impact on our business operations and financial performance.

Furthermore, during fiscal 2024, the ongoing conflict in the Middle East escalated and created economic and political uncertainty within the region.

As of June 29, 2024, the impact of these conflicts have not had a material direct impact on our financial performance.

If these conflicts escalate further, impact additional regions or countries, or have additional economic sanctions imposed, it could have a material impact on our business operations and financial performance.

The Federal Reserve has increased interest rates, and may continue to increase interest rates or maintain elevated interest rates in the near term.

Our direct exposure to elevated interest rates is somewhat tempered given our strong liquidity position in addition to our current debt structure in which most of our borrowings have fixed interest rates.

At March 30, 2024, we had $4.4 billion of liquidity and our current debt was $1.3 billion, which we intend to repay with the remaining proceeds from our $1.5 billion of senior notes issued in March 2024.

At June 29, 2024, we had $4.8 billion of liquidity and our current debt was $1.3 billion, which we intend to repay with the remaining proceeds from our $1.5 billion of senior notes issued in March 2024.

Should we need to issue additional debt or borrow under our existing revolving credit facility, we may be exposed to higher interest rates than our current outstanding borrowings.

Our total operating margin was 2.4% in the second quarter of fiscal 2024.

Our total operating margin was 2.6% in the third quarter of fiscal 2024.

Operating margins by segment were as follows:

8 unchanged sentences

In the fourth quarter of fiscal 2022, the Company approved a restructuring program, the 2022 Program, which is expected to improve business performance, increase collaboration, enhance team member agility, enable faster decision-making and reduce redundancies.

We recognized $1 million and $22 million of pretax charges in the three months ended March 30, 2024 and April 1, 2023, respectively, and $31 million and $43 million of pretax charges in the six months ended March 30, 2024 and April 1, 2023, respectively, associated with the 2022 Program consisting of severance related costs, relocation and related costs, accelerated depreciation, contract and lease termination and professional and other fees.

We recognized $50 million of pretax charges in the three months ended July 1, 2023, and $31 million and $93 million of pretax charges in the nine months ended June 29, 2024 and July 1, 2023, respectively, associated with the 2022 Program consisting of severance related costs, relocation and related costs, accelerated depreciation, contract and lease termination and professional and other fees.

The Company currently anticipates the 2022 Program will result in cumulative pretax charges of approximately $225 million.

3 unchanged sentences

Restructuring and Related Charges (in millions).

Three Months Ended Six Months Ended

March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

Three Months Ended Nine Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Cost of Sales $ — $ 19 $ — $ 23

1 unchanged sentence

Total Restructuring and related charges, pretax $ — $ 50 $ 31 $ 93

Three Months Ended Six Months Ended 2022 Program charges to date Total estimated

March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023 March 30, 2024 2022 Program charges

Three Months Ended Nine Months Ended 2022 Program charges to date Total estimated

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 June 29, 2024 2022 Program charges

Beef $ — $ 13 $ 4 $ 26 $ 53 $ 54

5 unchanged sentences

Summary of Results

in millions Three Months Ended Six Months Ended

March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

in millions Three Months Ended Nine Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Sales $ 13,353 $ 13,140 $ 39,744 $ 39,533

2 unchanged sentences

Sales growth 1.6 % 0.5 %

Second quarter – Fiscal 2024 vs Fiscal 2023

Third quarter – Fiscal 2024 vs Fiscal 2023

• Sales Volume – Sales were positively impacted by an increase in sales volume, which accounted for a $142 million increase in sales driven by increased sales volume in our Beef, Pork and Prepared Foods segments, partially offset by decreased sales volume in our Chicken segment.

• Average Sales Price – Sales were positively impacted by higher average sales prices, which accounted for an increase of $78 million, driven by increased pricing in our Beef and Pork segments, partially offset by lower average sales prices in our Chicken segment.

◦ The above changes in average sales price exclude a $45 million and $38 million reduction of Sales from the recognition of legal contingency accruals in the third quarter of fiscal 2024 and 2023, respectively.

Nine months – Fiscal 2024 vs Fiscal 2023

• Sales Volume – Sales were negatively impacted by a decrease in sales volume, which accounted for a $53 million decrease in sales driven by decreased sales volume in our Chicken segment, partially offset by increased sales volume in our Beef, Pork and Prepared Foods segments.

• Average Sales Price – Sales were positively impacted by higher average sales prices, which accounted for an increase of $271 million, driven by increased pricing in our Beef and Pork segments, partially offset by lower average sales prices in our Chicken and Prepared Foods segments.

Six months – Fiscal 2024 vs Fiscal 2023

• Sales Volume – Sales were negatively impacted by a decrease in sales volume, which accounted for a $195 million decrease in sales driven by decreased sales volume in our Beef and Chicken segments, partially offset by increased sales volume in our Pork and Prepared Foods segments.

• Average Sales Price – Sales were positively impacted by higher average sales prices, which accounted for an increase of $193 million, driven by increased pricing in our Beef segment, partially offset by lower average sales prices in our Pork, Chicken and Prepared Foods segments.

◦ The above changes in average sales price exclude a $45 million and $38 million reduction of Sales from the recognition of legal contingency accruals for the nine months ended June 29, 2024 and July 1, 2023, respectively.

Cost of Sales

in millions Three Months Ended Six Months Ended

March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

in millions Three Months Ended Nine Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Cost of sales $ 12,475 $ 12,463 $ 37,177 $ 37,361

1 unchanged sentence

Cost of sales as a percentage of sales 93.4 % 94.8 % 93.5 % 94.5 %

Second quarter – Fiscal 2024 vs Fiscal 2023

• Cost of sales decreased $400 million.

Lower sales volume decreased cost of sales by $182 million while lower input cost per pound decreased cost of sales by $218 million.

Third quarter – Fiscal 2024 vs Fiscal 2023

• Cost of sales increased $12 million.

Higher sales volume increased cost of sales by $133 million while lower input cost per pound decreased cost of sales by $121 million.

• The $121 million impact of lower input cost per pound was impacted by:

• Increase in cattle costs of approximately $325 million in our Beef segment.

• Increase in performance-based compensation costs of $48 million.

• Increase of $54 million in International/Other from costs related to a production facility fire and our current intention to discontinue the use of certain productive assets in the Netherlands.

• Increase due to net derivative losses of $46 million in the second quarter of fiscal 2024, compared to net derivative losses of $21 million in the second quarter of fiscal 2023 due to our risk management activities.

These amounts exclude offsetting impacts from related physical purchase transactions, which are included in the change in live cattle and hog costs and raw material and feed ingredient costs described herein.

• Decrease of approximately $305 million in our Chicken segment related to decreased feed ingredient costs.

• Decrease due to net derivative gains of $6 million in the third quarter of fiscal 2024, compared to net derivative losses of $89 million in the third quarter of fiscal 2023 due to our risk management activities.

• Decrease in freight and transportation costs of approximately $60 million.

• Decrease in hog costs of approximately $75 million in our Pork segment.

• Decrease of $53 million due to costs associated with plant closures.

• Decrease in raw material and other input costs of approximately $20 million in our Prepared Foods segment.

• Decrease of $19 million in restructuring and related costs.

• Increase in cattle costs of approximately $240 million in our Beef segment.

• Increase in hog costs of approximately $110 million in our Pork segment.

• Increase of $56 million related to the recognition of a legal contingency accrual in our Chicken segment.

• Increase in performance-based compensation costs of $27 million.

• Increase in raw material and other input costs of approximately $35 million in our Prepared Foods segment.

• Increase of $27 million in our Chicken segment from insurance proceeds, net of costs, related to a production facility fire in the fourth quarter of fiscal 2021.

• Increase of $26 million due to costs associated with plant closures.

• Remaining decrease in costs across all of our segments primarily driven by net impacts on average cost per pound from mix changes in addition to savings from our productivity program.

Six months – Fiscal 2024 vs Fiscal 2023

Nine months – Fiscal 2024 vs Fiscal 2023

• Cost of sales decreased $184 million.

1 unchanged sentence

• The $133 million impact of lower input cost per pound was impacted by:

• Increase in cattle costs of approximately $900 million in our Beef segment.

• Increase of $80 million in International/Other from costs related to a production facility fire and our current intention to discontinue the use of certain productive assets in the Netherlands.

• Increase of $73 million related to the recognition of legal contingency accruals in our Beef and Pork segments.

• Increase in performance-based compensation costs of $93 million.

• Increase of $42 million in our Beef segment from insurance proceeds received in the first quarter of fiscal 2023 related to the fire at our production facility in the fourth quarter of fiscal 2019.

• Increase due to net derivative losses of $51 million in the first six months of fiscal 2024, compared to net derivative losses of $9 million in the first six months of fiscal 2023 due to our risk management activities.

• Increase of $22 million due to costs associated with plant closures.

• Decrease of approximately $665 million in our Chicken segment related to decreased feed ingredient costs.

• Decrease in hog costs of approximately $180 million in our Pork segment.

• Decrease in freight and transportation costs of approximately $230 million.

• Decrease in hog costs of approximately $70 million in our Pork segment.

• Decrease due to net derivative losses of $45 million in the first nine months of fiscal 2024, compared to net derivative losses of $98 million in the first nine months of fiscal 2023 due to our risk management activities.

• Decrease in raw material and other input costs of approximately $40 million in our Prepared Foods segment.

• Decrease of $31 million in our Chicken segment from insurance proceeds, net of costs, related to a production facility fire in the fourth quarter of fiscal 2021.

• Decrease of $23 million in restructuring and related costs.

• Increase in cattle costs of approximately $1,140 million in our Beef segment.

• Increase in performance-based compensation costs of $140 million.

• Increase of $129 million related to the recognition of legal contingency accruals in our Beef, Pork and Chicken segments.

• Increase of $83 million in International/Other from costs related to a production facility fire in the Netherlands and subsequent decision to sell the facility.

• Increase of $48 million due to costs associated with plant closures.

• Remaining decrease in costs across all of our segments primarily driven by net impacts on average cost per pound from mix changes in addition to savings from our productivity program.

Selling, General and Administrative

in millions Three Months Ended Six Months Ended

March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

in millions Three Months Ended Nine Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Selling, general and administrative expense $ 537 $ 579 $ 1,683 $ 1,656

As a percentage of sales 4.0 % 4.4 % 4.2 % 4.2 %

Second quarter – Fiscal 2024 vs Fiscal 2023

Third quarter – Fiscal 2024 vs Fiscal 2023

• Decrease of $42 million in selling, general and administrative was primarily driven by:

• Decrease of $22 million in restructuring and related costs.

• Decrease of $45 million in marketing, advertising and promotion expenses.

• Decrease of $11 million in product donations.

• Decrease of $31 million in restructuring and related costs.

• Decrease of $7 million in rent expense.

• Increase of $51 million in team member costs including $62 million in performance-based compensation partially offset by a decrease of $11 million in all other team member costs.

Six months – Fiscal 2024 vs Fiscal 2023

Nine months – Fiscal 2024 vs Fiscal 2023

• Increase of $27 million in selling, general and administrative was primarily driven by:

• Increase of $125 million in team member costs including $168 million in performance-based compensation partially offset by a decrease of $43 million in all other team member costs.

• Increase of $20 million in professional fees.

• Decrease of $53 million in marketing, advertising and promotion expenses.

• Decrease of $39 million in restructuring and related costs.

Goodwill Impairment

in millions Three Months Ended Nine Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Goodwill Impairment $ — $ 448 $ — $ 448

Third quarter and nine months – Fiscal 2024 vs Fiscal 2023

• We recorded a $448 million goodwill impairment charge in the third quarter of fiscal 2023.

Interest (Income) Expense

in millions Three Months Ended Nine Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Interest income $ (36) $ (6) $ (60) $ (22)

Interest expense 135 89 351 262

in millions Three Months Ended Six Months Ended

March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

$ 111 $ 89 $ 216 $ 173

Second quarter and six months – Fiscal 2024 vs Fiscal 2023

• The increase in interest expense for the three and six months ended March 30, 2024 was primarily due to interest expense on the balance of our term loan facilities.

Third quarter and nine months – Fiscal 2024 vs Fiscal 2023

• The increase in interest income for the three and nine months ended June 29, 2024 was primarily due to higher cash and cash equivalents held and increased interest rates.

• The increase in interest expense for the three and nine months ended June 29, 2024 was primarily due to interest expense related to our recently issued 5.40% 2029 Notes and 5.70% 2034 Notes and interest expense on the balance of our term loan facilities.

Other (Income) Expense, net

in millions Three Months Ended Six Months Ended

March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

in millions Three Months Ended Nine Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Total other (income) expense, net $ (11) $ (7) $ (24) $ (50)

Second quarter and six months – Fiscal 2024

• Included $15 million of foreign exchange losses in the second quarter of fiscal 2024.

Included $10 million of income related to an amendment of a postretirement benefit plan in the first six months of fiscal 2024.

Second quarter and six months– Fiscal 2023

• Included $18 million of joint venture earnings and $29 million of foreign exchange gains in the first six months of fiscal 2023.

Third quarter and nine months – Fiscal 2024

• Included $19 million and $22 million of joint venture earnings in the third quarter and the first nine months of fiscal 2024, respectively, offset by $9 million and $4 million of foreign exchange losses in the third quarter and the first nine months of fiscal 2024, respectively.

Additionally, included $14 million of income related to an amendment of a postretirement benefit plan in the first nine months of fiscal 2024.

Third quarter and nine months– Fiscal 2023

• Included $22 million of production facilities fire insurance proceeds offset by $7 million of foreign exchange losses in the third quarter of fiscal 2023.

Included $22 million of foreign exchange gains and $16 million of joint venture earnings in the first nine months of fiscal 2023.

Effective Tax Rate

Three Months Ended Six Months Ended

March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

Three Months Ended Nine Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

22.9 % (1.8) % 25.9 % (67.9) %

Second quarter – Fiscal 2024 vs Fiscal 2023

• The second quarter of fiscal 2024 was impacted by increased foreign losses.

Third quarter – Fiscal 2024 vs Fiscal 2023

• The third quarter of fiscal 2024 was impacted by increased foreign losses, offset by a $9 million benefit related to the remeasurement of deferred income taxes, primarily due to legislation decreasing state tax rates enacted in the third quarter.

• In both periods, the effective tax rates were impacted by state taxes and various tax benefits;

however, tax benefits increase the effective tax rate in a period of pretax loss and decrease the effective tax rate in a period of pretax income, resulting in a higher effective tax rate in the second quarter of fiscal 2023.

however, tax benefits increase the effective tax rate in a period of pretax loss and decrease the effective tax rate in a period of pretax income.

• The fiscal 2023 third quarter effective tax rate was impacted by a $448 million non-deductible goodwill impairment.

Nine months – Fiscal 2024 vs Fiscal 2023

• The first nine months of fiscal 2024 was impacted by increased foreign losses, partially offset by a $9 million benefit related to the remeasurement of deferred income taxes, primarily due to legislation decreasing state tax rates enacted in the third quarter.

• The percentage impacts of items on the effective tax rate were greater in fiscal 2023 due to the level of pretax income (loss) in fiscal 2023 compared to fiscal 2024.

Six months – Fiscal 2024 vs Fiscal 2023

• In both periods, the effective tax rates were increased by state taxes, partially offset by various tax benefits;

however, increased foreign losses in fiscal 2024 resulted in a higher effective tax rate compared to fiscal 2023.

• In both periods, the effective tax rates were impacted by state taxes and various tax benefits;

however, tax benefits increase the effective tax rate in a period of pretax loss and decrease the effective tax rate in a period of pretax income.

• The effective tax rate for the first nine months of fiscal 2023 was impacted by a $448 million non-deductible goodwill impairment.

Net Income (Loss) Attributable to Tyson

in millions, except per share data Three Months Ended Six Months Ended

March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

in millions, except per share data Three Months Ended Nine Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Net income (loss) attributable to Tyson $ 191 $ (417) $ 443 $ (198)

Net income (loss) attributable to Tyson – per diluted share 0.54 (1.18) 1.25 (0.56)

Second quarter – Fiscal 2024 – Net income (loss) attributable to Tyson included the following items:

• $54 million pretax, or ($0.15) per diluted share, of charges related to a production facility fire and our current intention to discontinue the use of certain productive assets in the Netherlands.

Third quarter – Fiscal 2024 – Net income (loss) attributable to Tyson included the following items:

• $101 million pretax, or ($0.22) per diluted share, related to the recognition of legal contingency accruals.

• $41 million pretax, or ($0.09) per diluted share, of charges related to plant closures.

Six months – Fiscal 2024 – Net income (loss) attributable to Tyson included the following items:

• $5 million pretax, or ($0.01) per diluted share, of production facilities fire costs incurred, net of insurance proceeds.

• $3 million pretax, or ($0.01) per diluted share, of charges related to a production facility fire in the Netherlands and our subsequent decision to sell the facility.

Nine months – Fiscal 2024 – Net income (loss) attributable to Tyson included the following items:

• $174 million pretax, or ($0.38) per diluted share, related to the recognition of legal contingency accruals.

• $155 million pretax, or ($0.31) per diluted share, of charges related to plant closures.

• $80 million pretax, or ($0.22) per diluted share, of charges related to a production facility fire and our current intention to discontinue the use of certain productive assets in the Netherlands.

• $73 million pretax, or ($0.16) per diluted share, related to the recognition of a legal contingency accrual.

• $83 million pretax, or ($0.23) per diluted share, of charges related to a production facility fire in the Netherlands and our subsequent decision to sell the facility.

• $31 million pretax, or ($0.06) per diluted share, of restructuring and related charges.

• $22 million pretax, or $0.05 per diluted share, of production facilities fire insurance proceeds, net of costs incurred.

Second quarter – Fiscal 2023 – Net income (loss) attributable to Tyson included the following items:

Third quarter – Fiscal 2023 – Net income (loss) attributable to Tyson included the following items:

• $44 million pretax, or $0.10 per diluted share, of production facilities fire insurance proceeds, net of costs incurred.

• $424 million pretax, or ($1.20) per diluted share, of goodwill impairment charges (non-tax deductible) net of $24 million associated with Net Income (Loss) Attributable to Noncontrolling Interests.

• $50 million pretax, or ($0.11) per diluted share, of restructuring and related charges.

• $38 million pretax, or ($0.08) per diluted share, related to the recognition of a legal contingency accrual.

• $15 million pretax, or ($0.04) per diluted share, of charges related to plant closures.

Six months – Fiscal 2023 – Net income (loss) attributable to Tyson included the following items:

Nine months – Fiscal 2023 – Net income (loss) attributable to Tyson included the following items:

• $79 million pretax, or $0.17 per diluted share, of production facilities fire insurance proceeds, net of costs incurred.

• $43 million pretax, or ($0.09) per diluted share, of restructuring and related charges.

• $107 million pretax, or ($0.22) per diluted share, of charges related to plant closures.

• $93 million pretax, or ($0.20) per diluted share, of restructuring and related charges.

• $38 million pretax, or ($0.08) per diluted share, related to the recognition of a legal contingency accrual.

Segment Results

3 unchanged sentences

in millions Sales

Three Months Ended Six Months Ended

March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

Three Months Ended Nine Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Beef $ 5,241 $ 4,956 $ 15,218 $ 14,296

6 unchanged sentences

in millions Operating Income (Loss)

Three Months Ended Six Months Ended

March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023

Beef $ (35) $ — $ (241) $ 166

Pork (1) (33) 38 (54)

Chicken 158 (258) 335 (189)

Three Months Ended Nine Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

$ (69) $ 66 $ (310) $ 232

(62) (74) (24) (128)

244 (314) 579 (503)

Prepared Foods 203 206 676 705

International/Other (40) 1 (62) (4)

International/Other (d)

25 (234) (37) (238)

Total $ 341 $ (350) $ 884 $ 68

(a) Beef segment results for the nine months ended June 29, 2024 included a $45 million legal contingency accrual and $41 million of costs related to plant closures.

Beef segment results for the nine months ended July 1, 2023 included $42 million of insurance proceeds, net of costs incurred.

(b) Pork segment results for the three and nine months ended June 29, 2024 included $39 million and $73 million, respectively, of costs related to plant closures.

Additionally, Pork segment results for the three and nine months ended June 29, 2024 included $45 million and $73 million, respectively, related to the recognition of legal contingency accruals.

(c) Chicken segment results for the three and nine months ended June 29, 2024 included $2 million and $41 million, respectively, of costs related to plant closures and $5 million of production facility fire costs incurred, net of insurance proceeds, and $19 million of insurance proceeds, net of costs incurred, respectively.

Chicken segment results for the three and nine months ended June 29, 2024 also included a $56 million legal contingency accrual.

Chicken segment results for the three and nine months ended July 1, 2023 included production facility fire insurance proceeds, net of costs incurred, of $22 million and $15 million, respectively, and costs related to plant closures of $15 million and $107 million, respectively.

Chicken segment results for the three and nine months ended July 1, 2023 also included a charge of $38 million related to the recognition of a legal contingency accrual, and $210 million of goodwill impairment.

(d) International/Other results for the three and nine months ended June 29, 2024 included $3 million and $83 million, respectively, of costs, net of insurance proceeds, related to a fire at our production facility in the Netherlands and subsequent decision to sell.

Beef Segment Results

in millions Three Months Ended Six Months Ended

March 30, 2024 April 1, 2023 Change March 30, 2024 April 1, 2023 Change

in millions Three Months Ended Nine Months Ended

June 29, 2024 July 1, 2023 Change June 29, 2024 July 1, 2023 Change

Sales $ 5,241 $ 4,956 $ 285 $ 15,218 $ 14,296 $ 922

3 unchanged sentences

Operating margin (1.3) % 1.3 % (2.0) % 1.6 %

Second quarter and six months – Fiscal 2024 vs Fiscal 2023

• Sales Volume - Sales volume increased in the second quarter of fiscal 2024 primarily due to higher average carcass weights.

Sales volume for the first six months decreased due to overall lower availability of market-ready cattle.

• Average Sales Price - Average sales price increased in the second quarter and first six months of fiscal 2024 primarily due to increased input costs.

• Operating Income (Loss) - Operating income decreased in the second quarter and first six months of fiscal 2024 primarily due to compressed beef margins.

Operating income for the first six months of fiscal 2024 was impacted by a $45 million legal contingency accrual and $41 million of costs related to plant closures.

Operating income for the second quarter of fiscal 2023 was impacted by $8 million of restructuring and related charges while operating income for the first six months of fiscal 2023 was impacted by $13 million of restructuring and related charges and benefited from $42 million of insurance proceeds related to a fire at a production facility in 2019.

Third quarter and nine months – Fiscal 2024 vs Fiscal 2023

• Sales Volume - Sales volume increased in the third quarter and the first nine months of fiscal 2024 primarily due to higher average carcass weights.

• Average Sales Price - Average sales price increased in the third quarter due to increased demand, and in the first nine months of fiscal 2024 due to increased input costs and increased demand.

• Operating Income (Loss) - Operating income decreased in the third quarter of fiscal 2024 primarily due to compressed beef margins.

Operating income decreased in the first nine months of fiscal 2024 primarily due to compressed beef margins, recognition of a legal contingency accrual and plant closure costs in fiscal 2024, and insurance proceeds in fiscal 2023 related to a fire at a production facility in 2019.

Pork Segment Results

in millions Three Months Ended Six Months Ended

March 30, 2024 April 1, 2023 Change March 30, 2024 April 1, 2023 Change

in millions Three Months Ended Nine Months Ended

June 29, 2024 July 1, 2023 Change June 29, 2024 July 1, 2023 Change

Sales $ 1,462 $ 1,324 $ 138 $ 4,465 $ 4,274 $ 191

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Operating margin (4.2) % (5.6) % (0.5) % (3.0) %

Second quarter and six months – Fiscal 2024 vs Fiscal 2023

• Sales Volume - Sales volume increased in the second quarter and first six months of fiscal 2024 due to improved market conditions and increased domestic availability of market-ready hogs.

• Average Sales Price - Average sales price increased in the second quarter of fiscal 2024 due to improved demand.

For the first six months of fiscal 2024, average sales price decreased as pork product supplies outpaced the recovering demand environment.

• Operating Income (Loss) - Operating income increased in the second quarter and first six months of fiscal 2024 primarily due to improved pork margins.

Operating income for the second quarter and first six months of fiscal 2024 was impacted by $34 million of costs related to a plant closure.

Additionally, operating income for the first six months of fiscal 2024 was impacted by a $28 million legal contingency accrual.

Third quarter and nine months – Fiscal 2024 vs Fiscal 2023

• Sales Volume - Sales volume increased in the third quarter and the first nine months of fiscal 2024 due to improved market conditions and increased domestic availability of market-ready hogs.

• Average Sales Price - Average sales price increased in the third quarter and the first nine months of fiscal 2024 due to improved demand.

The change in average sales price excludes a $45 million reduction of Sales from the recognition of a legal contingency accrual recorded in the third quarter of fiscal 2024.

• Operating Income (Loss) - Operating income increased in the third quarter and the first nine months of fiscal 2024 primarily due to higher pork margins, improved results in our live hog operations and lapping the impacts of a production facility fire in the third quarter of fiscal 2023, partially offset by the recognition of legal contingency accruals and plant closure costs in fiscal 2024.

Chicken Segment Results

in millions Three Months Ended Six Months Ended

March 30, 2024 April 1, 2023 Change March 30, 2024 April 1, 2023 Change

in millions Three Months Ended Nine Months Ended

June 29, 2024 July 1, 2023 Change June 29, 2024 July 1, 2023 Change

Sales $ 4,076 $ 4,212 $ (136) $ 12,174 $ 12,905 $ (731)

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Operating margin 6.0 % (7.5) % 4.8 % (3.9) %

Second quarter and six months – Fiscal 2024 vs Fiscal 2023

• Sales Volume - Sales volume decreased in the second quarter and first six months of fiscal 2024 primarily due to reduced domestic production.

• Average Sales Price - Average sales price decreased in the second quarter and first six months of fiscal 2024 due to the impact of lower input costs.

• Operating Income (Loss) - Operating income increased in the second quarter and first six months of fiscal 2024 primarily due to improved operational efficiencies, in addition to reductions of $190 million and $360 million of feed ingredient costs in the second quarter and first six months of fiscal 2024, respectively, partially offset by lower average sales price.

Additionally, operating income in the second quarter and first six months of fiscal 2024 was impacted by $55 million and $65 million of net derivative losses, respectively.

The first six months of fiscal 2024 was impacted by $39 million in plant closure charges offset by $24 million of insurance proceeds, net of costs incurred associated with a production facility fire in the fourth quarter of fiscal 2021.

Operating income for the second quarter and first six months of fiscal 2023 was impacted by $35 million and $15 million of net derivative losses, respectively, in addition to $92 million of charges associated with plant closures.

Third quarter and nine months – Fiscal 2024 vs Fiscal 2023

• Sales Volume - Sales volume decreased in the third quarter and first nine months of fiscal 2024 primarily due to reduced domestic production.

• Average Sales Price - Average sales price decreased in the third quarter and the first nine months of fiscal 2024 due to the impact of lower input costs.

The change in average sales price excludes a $38 million reduction of Sales from the recognition of a legal contingency accrual recorded in the third quarter of fiscal 2023.

• Operating Income (Loss) - Operating income increased in the third quarter of fiscal 2024 primarily due to improved operational efficiencies, a goodwill impairment charge recorded in fiscal 2023 and $63 million of reduced net derivative losses, partially offset by lower average sales price and reduced insurance proceeds, net of costs incurred associated with a production facility fire in the fourth quarter of fiscal 2021.

Operating income increased in the first nine months of fiscal 2024 primarily due to improved operational efficiencies, a goodwill impairment charge incurred in fiscal 2023 and lower plant closure charges, partially offset by lower average sales price.

Additionally, we experienced lower feed ingredient costs of $305 million and $665 million in the third quarter and the first nine months of fiscal 2024, respectively.

Prepared Foods Segment Results

in millions Three Months Ended Six Months Ended

March 30, 2024 April 1, 2023 Change March 30, 2024 April 1, 2023 Change

in millions Three Months Ended Nine Months Ended

June 29, 2024 July 1, 2023 Change June 29, 2024 July 1, 2023 Change

Sales $ 2,432 $ 2,383 $ 49 $ 7,379 $ 7,343 $ 36

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Operating margin 8.3 % 8.6 % 9.2 % 9.6 %

Second quarter and six months – Fiscal 2024 vs Fiscal 2023

• Sales Volume – Sales volume increased in the second quarter and first six months of fiscal 2024 primarily due to the acquisition of Williams Sausage Company in the third quarter of 2023.

• Average Sales Price – Average sales price decreased in the second quarter and first six months of fiscal 2024 primarily due to sales mix.

• Operating Income – Operating income decreased in the second quarter and first six months of fiscal 2024 partially due to lower average sales price which was largely offset by reduced raw materials costs.

Additionally, operating income for the first six months of fiscal 2024 was impacted by $24 million of restructuring and related costs.

Operating income for the second quarter and first six months of fiscal 2023 was impacted by $11 million and $19 million of restructuring and related costs, respectively.

Third quarter and nine months – Fiscal 2024 vs Fiscal 2023

• Sales Volume – Sales volume increase in the third quarter of fiscal 2024 was primarily from the foodservice channel offset by reduced sales from the retail channel.

Sales volume increased for the first nine months of fiscal 2024 due to the acquisition of Williams Sausage Company in the third quarter of 2023 and increased sales in the foodservice channel.

• Average Sales Price – Average sales price was relatively flat in the third quarter and decreased in the first nine months of fiscal 2024 primarily due to sales mix.

• Operating Income – Operating income decreased slightly in the third quarter as increased raw material costs were largely offset by reduced marketing, advertising and promotional spend.

Operating income decreased for the first nine months of fiscal 2024 partially due to lower average sales price which was largely offset by reduced raw materials costs in the first half of the year.

International/Other Results

in millions Three Months Ended Six Months Ended

March 30, 2024 April 1, 2023 Change March 30, 2024 April 1, 2023 Change

in millions Three Months Ended Nine Months Ended

June 29, 2024 July 1, 2023 Change June 29, 2024 July 1, 2023 Change

Sales $ 582 $ 633 $ (51) $ 1,744 $ 1,879 $ (135)

Operating income (loss) 25 (234) 259 (37) (238) 201

Second quarter and six months – Fiscal 2024 vs Fiscal 2023

• Sales – Sales were negatively impacted in the second quarter and first six months of fiscal 2024 by lower volume and unfavorable sales mix across the Asia-Pacific region and China due to macroeconomic headwinds, partially offset by volume increases in the other regions.

• Operating Income (Loss) – Operating income decreased primarily due to charges related to a production facility fire in the Netherlands in the first quarter of fiscal 2024 and current intention to discontinue the use of certain productive assets in the second quarter of fiscal 2024.

Third quarter and nine months – Fiscal 2024 vs Fiscal 2023

• Sales – Sales decreased in the third quarter and the first nine months of fiscal 2024 due to lower average sales price and the impact of the production facility fire in the Netherlands partially offset by increased volumes in the other regions.

• Operating Income (Loss) – Operating income increased primarily due to a goodwill impairment charge recorded in the third quarter of fiscal 2023 partially offset by charges related to a production facility fire in the first quarter of fiscal 2024 and the subsequent decision to sell the facility.

LIQUIDITY AND CAPITAL RESOURCES

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Cash Flows from Operating Activities

in millions Six Months Ended

March 30, 2024 April 1, 2023

Net income $ 262 $ 229

in millions Nine Months Ended

June 29, 2024 July 1, 2023

Net income (loss) $ 458 $ (206)

Non-cash items in net income 1,250 1,537

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Net cash provided by operating activities $ 1,973 $ 1,429

• Non-cash items in net income primarily includes depreciation and amortization of $722 million and $620 million for the six months ended March 30, 2024 and April 1, 2023, respectively.

• Cash provided by operating activities for the first six months of fiscal 2024 was $1.2 billion, an increase of $408 million compared to the first six months of fiscal 2023, due to $94 million of higher earnings, net of non-cash items, and a $314 million increase in cash provided by the net changes in operating assets and liabilities which was primarily impacted by:

• An increase of $293 million due to a decrease of $48 million in the net changes in other operating assets and liabilities in the first six months of fiscal 2024, compared to a decrease of $341 million in fiscal 2023, primarily driven by performance-based compensation.

• An increase of $277 million due to a decrease in inventory of $272 million in the first six months of fiscal 2024, compared to an increase of $5 million in the first six months of fiscal 2023, primarily driven by decreased average cost of inventory and lower volume of livestock.

• Non-cash items in net income primarily included depreciation and amortization of $1,082 million and $943 million for the nine months ended June 29, 2024 and July 1, 2023, respectively, and a $448 million goodwill impairment for the nine months ended July 1, 2023.

• Cash provided by operating activities for the first nine months of fiscal 2024 was $2.0 billion, an increase of $544 million compared to the first nine months of fiscal 2023, due to $377 million of higher earnings, net of non-cash items, and a $167 million increase in cash provided by the net changes in operating assets and liabilities which was primarily impacted by:

• An increase of $469 million due to an increase of $215 million in the net changes in other operating assets and liabilities in the first nine months of fiscal 2024, compared to a decrease of $254 million in fiscal 2023, primarily driven by performance-based compensation.

• An increase of $111 million due to a decrease in inventory of $249 million in the first nine months of fiscal 2024, compared to a decrease of $138 million in the first nine months of fiscal 2023, primarily driven by decreased average cost of inventory and lower volume of livestock.

• Partially offset by:

• A decrease of $180 million due to a decrease in accounts payable of $325 million during the first six months of fiscal 2024, compared to a decrease of $145 million in the first six months of fiscal 2023, primarily due to lower input costs and changes in days payables outstanding.

• A decrease of $71 million due to a decrease in accounts receivable of $116 million in the first six months of fiscal 2024, compared to a decrease of $187 million in the first six months of fiscal 2023.

• A decrease of $165 million due to a decrease in income taxes payable/receivable of $20 million during the first nine months of fiscal 2024, compared to an increase of $145 million in the first nine months of fiscal 2023 due to an increase in taxable income and a tax refund received in the first nine months of fiscal 2023 related to fiscal 2022.

• A decrease of $145 million due to a decrease in accounts payable of $252 million during the first nine months of fiscal 2024, compared to a decrease of $107 million in the first nine months of fiscal 2023, primarily due to lower input costs and decrease in days payables outstanding.

• A decrease of $103 million due to a decrease in accounts receivable of $73 million in the first nine months of fiscal 2024, compared to a decrease of $176 million in the first nine months of fiscal 2023.

The reduced decline in accounts receivable was primarily due to level of sales in the last few weeks of each quarter end.

Cash Flows from Investing Activities

in millions Six Months Ended

March 30, 2024 April 1, 2023

in millions Nine Months Ended

June 29, 2024 July 1, 2023

Additions to property, plant and equipment $ (884) $ (1,564)

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This includes completion of capacity expansion projects as well as new equipment, automation technology and processes for product innovation.

• Acquisition, net of cash acquired for the six months ended April 1, 2023 included our 60% equity stake in Supreme Foods Processing Company, a producer and distributor of value-added and cooked chicken and beef products.

• Acquisition, net of cash acquired for the nine months ended July 1, 2023 included $223 million, net of cash acquired, for the acquisition of Williams Sausage Company and $39 million for the 60% equity stake in Supreme Foods Processing Company, a producer and distributor of value-added and cooked chicken and beef products.

Cash Flows from Financing Activities

in millions Six Months Ended

March 30, 2024 April 1, 2023

in millions Nine Months Ended

June 29, 2024 July 1, 2023

Proceeds from issuance of debt $ 2,391 $ 1,117

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Other, net (22) (5)

Net cash provided by (used for) financing activities $ 1,051 $ (101)

• During the first six months of fiscal 2024, proceeds from issuance of debt included $750 million of proceeds from the term loan facility due May 2028, $600 million of proceeds from the 5.40% 2029 Notes, and $900 million from the 5.70% 2034 Notes.

• Payments on debt during the six months ended March 30, 2024 included a payment of $250 million on our term loan facility due May 2026.

Net cash provided by financing activities $ 883 $ 101

• During the first nine months of fiscal 2024, proceeds from issuance of debt included $750 million of proceeds from the term loan facility due May 2028, $600 million of proceeds from the 5.40% 2029 Notes, and $900 million from the 5.70% 2034 Notes.

• Payments on debt during the nine months ended June 29, 2024 included a payment of $250 million on our term loan facility due May 2026.

• Purchases of Tyson Class A stock included:

• $300 million of cash paid for shares repurchased pursuant to our share repurchase program during the six months ended April 1, 2023.

• $31 million and $32 million of shares repurchased to fund certain obligations under our equity compensation programs during the six months ended March 30, 2024 and April 1, 2023, respectively.

• Dividends paid during the six months ended March 30, 2024 reflected a 2% increase to our fiscal 2023 quarterly dividend rate.

• $300 million of cash paid for shares repurchased pursuant to our share repurchase program during the nine months ended July 1, 2023.

• $44 million and $43 million of shares repurchased to fund certain obligations under our equity compensation programs during the nine months ended June 29, 2024 and July 1, 2023, respectively.

• Dividends paid during the nine months ended June 29, 2024 reflected a 2% increase to our fiscal 2023 quarterly dividend rate.

Expiration Date Facility

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Borrowed Amount

March 30, 2024

June 29, 2024

Cash and cash equivalents $ 2,569

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• Liquidity includes cash and cash equivalents, short-term investments and availability under our revolving credit, less the outstanding commercial paper balance.

• At March 30, 2024, we had current debt of $1,315 million, which we intend to pay with cash generated from our operating activities and other existing or new liquidity sources.

• At June 29, 2024, we had current debt of $1,320 million, which we intend to pay with our existing cash balance, cash generated from our operating activities and other existing or new liquidity sources.

• The revolving credit facility supports our short-term funding needs and also serves to backstop our commercial paper program.

We had no borrowings under the revolving credit facility during the six months ended March 30, 2024.

We had no borrowings under the revolving credit facility during the nine months ended June 29, 2024.

Under the terms of the facility, we have the option to establish incremental commitment increases of up to $500 million if certain conditions are met.

• We expect net interest expense to approximate $395 million for fiscal 2024.

• Our current ratio was 1.8 to 1 at March 30, 2024 and 1.3 to 1 at September 30, 2023.

• Our current ratio was 1.8 to 1 at June 29, 2024 and 1.3 to 1 at September 30, 2023.

The increase in fiscal 2024 is primarily due to increased cash and cash equivalents and decreased current debt.

• At March 30, 2024, approximately $649 million of our cash was held in the accounts of our foreign subsidiaries.

• At June 29, 2024, approximately $683 million of our cash was held in the accounts of our foreign subsidiaries.

Generally, we do not rely on the foreign cash as a source of funds to support our ongoing domestic liquidity needs.

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We also have a revolving credit facility, with a committed capacity of $2.25 billion, to provide additional liquidity for working capital needs and to backstop our commercial paper program.

At March 30, 2024, amounts available for borrowing under our revolving credit facility totaled $2.25 billion.

At June 29, 2024, amounts available for borrowing under our revolving credit facility totaled $2.25 billion.

Our revolving credit facility is funded by a syndicate of 20 banks, with commitments ranging from $35 million to $175 million per bank.

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The maturities of the notes may vary, but may not exceed 397 days from the date of issuance.

As of March 30, 2024, we had no commercial paper outstanding under this program.

As of June 29, 2024, we had no commercial paper outstanding under this program.

Our ability to access commercial paper in the future may be limited or its costs increased.

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Baa3/BBB- or lower 0.175 % 1.875 %

Term Loan Facility due May 2026

S&P applicable rating is “BBB” and Moody’s applicable rating is “Baa2”.

The below table outlines the borrowing spread on the outstanding principal balance of our term loan facility due May 2026 that corresponds to the applicable ratings levels from S&P and Moody’s.

Ratings Level (Moody’s/S&P) Borrowing Spread

A2/A or above 0.875 %

A3/A- 1.000 %

Baal/BBB+ 1.125 %

Baa2/BBB (current level) 1.250 %

Baa3/BBB- or lower 1.375 %

Revolving Credit Facility

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and engage in certain consolidations, mergers and sales of assets.

We were in compliance with all debt covenants at March 30, 2024, and we expect that we will maintain compliance.

We were in compliance with all debt covenants at June 29, 2024, and we expect that we will maintain compliance.

RECENTLY ISSUED/ADOPTED ACCOUNTING PRONOUNCEMENTS

13 unchanged sentences

Refer to Part I, Item 1, Notes to Consolidated Condensed Financial Statements, Note 1:

Accounting Policies, for updates to our significant accounting policies during the six months ended March 30, 2024.

Accounting Policies, for updates to our significant accounting policies during the nine months ended June 29, 2024.

These critical accounting policies require us to make estimates and assumptions that affect the amounts reported in the consolidated condensed financial statements and accompanying notes.

Our qualitative assessment for the first and second quarters of fiscal 2024 did not indicate that it was more likely than not the fair value of any of our reporting units or indefinite lived intangibles was less than the carrying amount, and as such, no quantitative test was deemed necessary.

Our qualitative assessment for the first three quarters of fiscal 2024 did not indicate that it was more likely than not the fair value of any of our reporting units or indefinite lived intangibles was less than the carrying amount, and as such, no quantitative test was deemed necessary.

We consider reporting units and indefinite lived intangibles that have 20% or less excess fair value over carrying amount to have a heightened risk of impairment.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis