What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-02-03 compared with 2024-08-05 · 150 added, 247 removed, 254 unchanged (61% of the section changed)

4 unchanged sentences

Description of the Company

We are one of the world’s largest food companies and a recognized leader in protein.

We are a world-class food company and recognized leader in protein.

Founded in 1935 by John W.

Tyson and grown under four generations of family leadership, the Company has a broad portfolio of products and brands including Tyson®, Jimmy Dean®, Hillshire Farm®, Ball Park®, Wright®, Aidells®, ibp® and State Fair®.

Tyson, it has grown under four generations of family leadership.

The Company is unified by this purpose:

We Feed the World Like Family TM and has a broad portfolio of iconic products and brands including Tyson®, Jimmy Dean®, Hillshire Farm®, Ball Park®, Wright®, State Fair®, Aidells® and ibp®.

Tyson Foods is dedicated to bringing high-quality food to every table in the world, safely, sustainably, and affordably, now and for future generations.

Some of the key factors influencing our business are customer demand for our products;

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We measure segment profit as operating income (loss).

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 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 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.

International/Other primarily includes our foreign operations in China, Malaysia, Mexico, 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 increased $304 million in the first quarter of fiscal 2025 driven by increased sales in our Beef, Pork and Chicken segments, partially offset by decreased sales in our Prepared Foods segment.

Operating income of $580 million for the first quarter of fiscal 2025 was up 151% as we experienced higher operating income in our Beef, Pork and Chicken segments, partially offset by lower operating income in our Prepared Foods segment.

In the first quarter of fiscal 2025, our operating income was impacted by $73 million in network optimization plan charges and $6 million in brand discontinuation charges.

In the first quarter of fiscal 2024, our operating income was impacted by $75 million in plant closures and disposal charges, $73 million in legal contingency accruals, $30 million of restructuring and related charges, $26 million related to a production facility fire in the Netherlands and our subsequent decision to sell the facility, and benefited from $24 million of production facility fire insurance proceeds, net of costs incurred, related to a production facility fire in the fourth quarter of fiscal 2021.

Market Environment

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.

According to the United States Department of Agriculture, domestic protein production (beef, pork, chicken and turkey) increased approximately 1% in the first quarter of fiscal 2025 as compared to the same period in fiscal 2024.

The Beef segment continued to experience limited supply of market-ready cattle in the first quarter of fiscal 2025 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 increased hog costs.

The Pork segment experienced sufficient supply of market-ready hogs and increased hog costs.

The Chicken segment experienced reduced feed ingredient 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, 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 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 2.6% in the third quarter of fiscal 2024.

Our total operating margin was 4.3% in the first quarter of fiscal 2025.

Operating margins by segment were as follows:

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and scale in international markets by delivering profitable value-added food offerings in high growth categories.

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 $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.

As the Company continues to evaluate its business strategies and long-term growth targets, additional restructuring activities may occur.

The following tables set forth the pretax impact of restructuring and related charges in the Consolidated Condensed Statements of Income and the pretax impact by our reportable segments.

For further description refer to Part I, Item 1, Notes to the Consolidated Condensed Financial Statements, Note 6:

Restructuring and Related Charges (in millions).

Three Months Ended Nine Months Ended

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

Cost of Sales $ — $ 19 $ — $ 23

Selling, General and Administrative — 31 31 70

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

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

Pork — 4 1 8 17 17

Chicken — 10 2 11 24 25

Prepared Foods — 14 24 33 109 111

International/Other — 9 — 15 18 18

Total Restructuring and related charges, pretax $ — $ 50 $ 31 $ 93 $ 221 $ 225

In the first quarter of fiscal 2025, the Company initiated a network optimization plan to optimize our global operations and logistics network.

As of December 28, 2024, we expect to incur $93 million of charges related to actions approved to date, which include an estimated $39 million of cash charges and $54 million of non-cash charges.

We recognized charges of $73 million in the first quarter of fiscal 2025, which included $29 million of charges that have resulted or will result in cash outflows and $44 million of non-cash charges.

We expect to incur costs related to the network optimization plan over a multi-year period.

For further description refer to Part I, Item I, Notes to the Consolidated Condensed Financial Statements, Note 5:

Restructuring and Related Charges.

Summary of Results

in millions Three Months Ended Nine Months Ended

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

in millions Three Months Ended

December 28, 2024 December 30, 2023

Sales $ 13,623 $ 13,319

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Sales growth 2.3 %

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.

◦ 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.

First quarter – Fiscal 2025 vs Fiscal 2024

• Sales Volume – Sales were positively impacted by an increase in sales volume, which accounted for a $208 million increase in sales driven by increased sales volume in our Beef and Chicken segments, partially offset by decreased 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 $96 million, driven by increased pricing in our Beef, Pork and Prepared Foods segments, partially offset by lower average sales prices in our Chicken segment.

Cost of Sales

in millions Three Months Ended Nine Months Ended

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

in millions Three Months Ended

December 28, 2024 December 30, 2023

Cost of sales $ 12,528 $ 12,496

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Cost of sales as a percentage of sales 92.0 % 93.8 %

Third quarter – Fiscal 2024 vs Fiscal 2023

First quarter – Fiscal 2025 vs Fiscal 2024

• Cost of sales increased $32 million.

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• Decrease of approximately $155 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.

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 $75 million due to plant closures and disposal charges.

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

• Decrease in freight and transportation costs of approximately $40 million.

• 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.

• Decrease of $26 million in International/Other from costs related to a production facility fire in in the Netherlands and the subsequent decision to sell the facility.

• Increase of $24 million in our Chicken segment from reduced insurance proceeds, net of costs, related to a production facility fire in the fourth quarter of fiscal 2021.

• Increase in raw material and other input costs of approximately $80 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.

Nine months – Fiscal 2024 vs Fiscal 2023

• Cost of sales decreased $184 million.

Lower sales volume decreased cost of sales by $51 million while lower input cost per pound decreased cost of sales by $133 million.

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

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

• 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 $23 million in restructuring and related costs.

• Increase of $71 million related to network optimization plan charges.

• Increase in cattle costs of approximately $40 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.

• 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.

• 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.

• Increase in hog costs of approximately $60 million in our Pork segment.

• Remaining increase in costs across all of our segments primarily driven by net impacts on average cost per pound from mix changes.

Selling, General and Administrative

in millions Three Months Ended Nine Months Ended

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

in millions Three Months Ended

December 28, 2024 December 30, 2023

Selling, general and administrative expense $ 515 $ 592

As a percentage of sales 3.8 % 4.4 %

Third quarter – Fiscal 2024 vs Fiscal 2023

First quarter – Fiscal 2025 vs Fiscal 2024

• Decrease of $77 million in selling, general and administrative was primarily driven by:

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

• Decrease of $27 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.

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.

• Decrease of $23 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.

• Decrease of $18 million in employee costs.

• Decrease of $7 million in donations.

Interest (Income) Expense

in millions Three Months Ended Nine Months Ended

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

in millions Three Months Ended

December 28, 2024 December 30, 2023

Interest income $ (25) $ (10)

Interest expense 120 105

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.

First quarter – Fiscal 2025 vs Fiscal 2024

• The increase in interest income for the three months ended December 28, 2024 was primarily due to higher cash and cash equivalents held.

• The increase in interest expense for the three months ended December 28, 2024 was primarily due to interest expense related to our 5.40% 2029 Notes and 5.70% 2034 Notes.

Other (Income) Expense, net

in millions Three Months Ended Nine Months Ended

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

in millions Three Months Ended

December 28, 2024 December 30, 2023

Total other (income) expense, net $ 7 $ (25)

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.

First quarter – Fiscal 2025

• Included $24 million of foreign exchange losses, partially offset by $12 million of joint venture earnings and $7 million of production facilities fire insurance proceeds.

First quarter – Fiscal 2024

• Included $19 million of foreign exchange gains and $10 million related to an amendment of a postretirement benefit plan.

Effective Tax Rate

Three Months Ended Nine Months Ended

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

Three Months Ended

December 28, 2024 December 30, 2023

23.5 % 29.4 %

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.

• 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.

• 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 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)

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.

• $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.

• $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.

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

First quarter – Fiscal 2025 vs Fiscal 2024

• The effective tax rates for both periods were increased by state taxes and net unfavorable permanent book-to-tax differences, partially offset by various tax benefits;

however, the relatively lower level of pretax income in the first quarter of fiscal 2024 resulted in a higher effective tax rate compared to the first quarter of fiscal 2025.

Additionally, the effective tax rate for the first quarter of fiscal 2025 was decreased by the release of a $9 million valuation allowance on certain losses in the Netherlands due to newly enacted tax legislation.

Net Income Attributable to Tyson

in millions, except per share data Three Months Ended

December 28, 2024 December 30, 2023

Net income attributable to Tyson $ 359 $ 107

Net income attributable to Tyson – per diluted share 1.01 0.30

First quarter – Fiscal 2025 – Net income attributable to Tyson included the following items:

• $73 million pretax, or ($0.16) per diluted share, related to network optimization plan charges.

• $6 million pretax, or ($0.01) per diluted share, of brand discontinuation charges.

• $7 million pretax, or $0.01 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.

• $9 million post tax, or $0.03 per diluted share, of benefit due to newly enacted tax legislation that resulted in the release of a valuation allowance on losses related to a production facility fire in the Netherlands and our subsequent decision to sell the facility.

First quarter – Fiscal 2024 – Net income attributable to Tyson included the following items:

• $75 million pretax, or ($0.16) per diluted share, of plant closures and disposal charges.

• $73 million pretax, or ($0.16) 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.

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.

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

• $30 million pretax, or ($0.06) 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.

• $26 million pretax, or ($0.07) per diluted share, of charges related to a production facility fire in the Netherlands and our subsequent decision to sell the facility.

• $27 million pretax, or $0.06 per diluted share, of production facilities fire insurance proceeds, net of costs incurred.

Segment Results

3 unchanged sentences

in millions Sales

Three Months Ended Nine Months Ended

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

Three Months Ended

December 28, 2024 December 30, 2023

Beef $ 5,335 $ 5,023

6 unchanged sentences

in millions Operating Income (Loss)

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 (d)

Three Months Ended

December 28, 2024 December 30, 2023

$ (64) $ (206)

Prepared Foods (d)

International/Other (e)

Total $ 580 $ 231

(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.

(a) Beef segment results for the three months ended December 28, 2024 included $32 million of network optimization plan charges.

Beef segment results for the three months ended December 30, 2023 included a $45 million legal contingency accrual and $40 million of plant closures and disposal charges.

(b) Pork segment results for the three months ended December 30, 2023 included a $28 million legal contingency accrual.

(c) Chicken segment results for the three months ended December 28, 2024 included $11 million of network optimization plan charges and $6 million of brand discontinuation charges.

Chicken segment results for the three months ended December 30, 2023 included $35 million of plant closures and disposal charges and $24 million of insurance proceeds, net of costs incurred.

(d) Prepared Foods segment results for the three months ended December 28, 2024 included $25 million of network optimization plan charges.

Prepared Foods segment results for the three months ended December 30, 2023 included $21 million of restructuring and related charges.

(e) International/Other results for the three months ended December 28, 2024 included $5 million of network optimization plan charges.

International/Other results for the three months ended December 30, 2023 included $26 million 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 Nine Months Ended

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

in millions Three Months Ended

December 28, 2024 December 30, 2023 Change

Sales $ 5,335 $ 5,023 $ 312

3 unchanged sentences

Operating margin (1.2) % (4.1) %

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.

First quarter – Fiscal 2025 vs Fiscal 2024

• Sales Volume - Sales volume increased due to higher average carcass weights and increased head harvested.

• Average Sales Price - Average sales price increased primarily due to increased input costs and strong demand.

• Operating Income (Loss) - Beef margins remained compressed, but operating income increased due to improved operational execution, lapping of a $56 million inventory lower of cost or net realizable value adjustment, plant closure and disposal charges and recognition of a legal contingency accrual in the first quarter of fiscal 2024, partially offset by network optimization plan charges in the first quarter of fiscal 2025.

Pork Segment Results

in millions Three Months Ended Nine Months Ended

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

in millions Three Months Ended

December 28, 2024 December 30, 2023 Change

Sales $ 1,617 $ 1,517 $ 100

1 unchanged sentence

Average sales price change 7.0 %

Operating income (loss) $ (62) $ (74) $ 12 $ (24) $ (128) $ 104

Operating income $ 59 $ 39 $ 20

Operating margin 3.6 % 2.6 %

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.

First quarter – Fiscal 2025 vs Fiscal 2024

• Sales Volume - Sales volume decreased slightly as production decreases associated with a plant closure in 2024 were partly offset by production increases at other facilities and higher average carcass weights.

• Average Sales Price - Average sales price increased as demand for our pork products remained strong.

• Operating Income - Operating income increased due to lower operating costs and the recognition of a legal contingency accrual in the first quarter of fiscal 2024, partially offset by compressed spreads.

Chicken Segment Results

in millions Three Months Ended Nine Months Ended

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

in millions Three Months Ended

December 28, 2024 December 30, 2023 Change

Sales $ 4,065 $ 4,033 $ 32

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Average sales price change (0.7) %

Operating income (loss) $ 244 $ (314) $ 558 $ 579 $ (503) $ 1,082

Operating income $ 351 $ 177 $ 174

Operating margin 8.6 % 4.4 %

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.

First quarter – Fiscal 2025 vs Fiscal 2024

• Sales Volume - Sales volume increased primarily due to improved foodservice and export channels partially offset by a reduction in the retail channel.

• Average Sales Price - Average sales price decreased due to the impact of lower input costs.

• Operating Income - Operating income increased driven by operational execution, improved volumes and $155 million of net decreases in feed ingredient costs which was partially offset by associated decreases in average sales price.

Additionally, we experienced reduced insurance proceeds, net of costs and lower plant closures and disposal charges, partially offset by network optimization plan charges.

Prepared Foods Segment Results

in millions Three Months Ended Nine Months Ended

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

in millions Three Months Ended

December 28, 2024 December 30, 2023 Change

Sales $ 2,473 $ 2,543 $ (70)

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Operating margin 8.5 % 9.6 %

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.

First quarter – Fiscal 2025 vs Fiscal 2024

• Sales Volume – Sales volume decreased due to a challenging consumer environment primarily impacting our retail channel.

• Average Sales Price – Average sales price increased slightly.

• Operating Income – Operating income decreased as increased raw material costs were partially offset by reduced marketing, advertising and promotional spend.

Additionally, operating income was impacted by network optimization plan charges and restructuring and related charges in the first quarter of fiscal 2025 and fiscal 2024, respectively.

International/Other Results

in millions Three Months Ended Nine Months Ended

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

in millions Three Months Ended

December 28, 2024 December 30, 2023 Change

Sales $ 584 $ 582 $ 2

Operating income (loss) 25 (22) 47

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.

First quarter – Fiscal 2025 vs Fiscal 2024

• Sales – Sales were relatively flat as increased volumes were mostly offset by foreign exchange translation impacts.

• Operating Income (Loss) – Operating income increased primarily due to improved performance and lapping the impacts of 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 Nine Months Ended

June 29, 2024 July 1, 2023

Net income (loss) $ 458 $ (206)

in millions Three Months Ended

December 28, 2024 December 30, 2023

Net income $ 366 $ 114

Non-cash items in net income 424 488

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Net cash provided by operating activities $ 1,031 $ 1,300

• 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.

• Non-cash items in net income primarily included depreciation and amortization of $348 million and $373 million for the three months ended December 28, 2024 and December 30, 2023, respectively.

• Cash provided by operating activities for the first three months of fiscal 2025 was $1.0 billion, a decrease of $269 million compared to the first three months of fiscal 2024, as the $188 million of higher earnings, net of non-cash items, was more than offset by a $457 million decrease in cash provided by the net changes in operating assets and liabilities which was primarily impacted by:

• A decrease of $373 million due to a decrease of $165 million in the net changes in other operating assets and liabilities in the first three months of fiscal 2025, compared to an increase of $208 million in fiscal 2024, primarily driven by an increase in performance-based compensation payouts.

• A decrease of $121 million due to a decrease in inventory of $57 million in the first three months of fiscal 2025, compared to a decrease of $178 million in the first three months of fiscal 2024, as the average value of inventory decreased less during the first three months of fiscal 2025 than the first three months of fiscal 2024.

• A decrease of $132 million due to a decrease in accounts receivable of $88 million in the first three months of fiscal 2025, compared to a decrease of $220 million in the first three months of fiscal 2024 as days sales outstanding decreased less during the first three months of fiscal 2025 than the first three months of fiscal 2024.

• Partially offset by:

• 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.

• An increase of $120 million due to an increase in accounts payable of $161 million during the first three months of fiscal 2025, compared to an increase of $41 million in the first three months of fiscal 2024, primarily due to an increase in days payables outstanding and higher input costs.

Cash Flows from Investing Activities

in millions Nine Months Ended

June 29, 2024 July 1, 2023

in millions Three Months Ended

December 28, 2024 December 30, 2023

Additions to property, plant and equipment $ (271) $ (354)

Proceeds from sale of (purchases of) marketable securities, net 1 (1)

Acquisition, net of cash acquired — (262)

Acquisition of equity investments (2) (26)

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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 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 Nine Months Ended

June 29, 2024 July 1, 2023

in millions Three Months Ended

December 28, 2024 December 30, 2023

Proceeds from issuance of debt $ 22 $ 771

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Other, net — 3

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 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.

Net cash used for financing activities $ (195) $ (26)

• During the first three months of fiscal 2024, proceeds from issuance of debt included $750 million of proceeds from the term loan facility due May 2028.

• Dividends paid during the three months ended December 28, 2024 reflected a 2% increase to our fiscal 2024 quarterly dividend rate.

Expiration Date Facility

3 unchanged sentences

Borrowed Amount

June 29, 2024

December 28, 2024

Cash and cash equivalents $ 2,292

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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 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.

• At December 28, 2024, we had current debt of $95 million, which we intend to pay with our existing cash balance, cash generated from our operating activities and other existing or new liquidity sources.

• On January 29, 2025, subsequent to the end of our first quarter of fiscal 2025, we repaid the $750 million term loan that matures in May 2026 using cash on hand.

• 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 nine months ended June 29, 2024.

We had no borrowings under the revolving credit facility during the three months ended December 28, 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 $375 million for fiscal 2025.

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

• Our current ratio was 2.1 to 1 at December 28, 2024 and 2.0 to 1 at September 28, 2024.

• At December 28, 2024, $559 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 June 29, 2024, amounts available for borrowing under our revolving credit facility totaled $2.25 billion.

At December 28, 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 June 29, 2024, we had no commercial paper outstanding under this program.

As of December 28, 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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and engage in certain consolidations, mergers and sales of assets.

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

We were in compliance with all debt covenants at December 28, 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 nine months ended June 29, 2024.

Accounting Policies, for updates to our significant accounting policies during the three months ended December 28, 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 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.

As further described in the impairment of goodwill and indefinite life intangible assets critical accounting estimate included in our Annual Report on Form 10-K for the fiscal year ended September 28, 2024, we assess goodwill and indefinite life assets for impairment at least annually as of the first day of the fourth quarter and whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

Our qualitative assessment for the first quarter of fiscal 2025 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.

The following reporting units and indefinite lived intangibles were considered at heightened risk of impairment as of the date of the most recent estimated fair value determination, which was in the fourth quarter of fiscal 2024:

our Chicken segment reporting units, our Beef reporting unit and our Pork reporting unit with goodwill totaling $3.1 billion, $0.3 billion and $0.4 billion, respectively, and two Prepared Foods brands with carrying values of $0.5 billion and $0.3 billion.

We continuously evaluate the changing macroeconomic conditions including inflationary pressures, rising interest rates, demand outlook and export markets as well as the Company's market capitalization.

Our reporting units with heightened risk of future impairments with $3.8 billion carrying value, as well as a brand with $0.5 billion carrying value, all had less than 10% of excess fair value above carrying value as of the date of the most recent estimated fair value determination.

Consequently, their estimated fair values remain highly sensitive to future discount rate increases, changing macroeconomic conditions and achievement of projected long-term operating margins.

our Beef and Chicken segment reporting units, with total total goodwill of approximately $0.3 billion and $3.0 billion, respectively, and one Prepared Foods brand with a carrying value of $0.5 billion.

We continuously evaluate the changing macro-economic conditions including inflationary pressures, rising interest rates, demand outlook and export markets as well as the Company's market capitalization.

Our reporting units with heightened risk of future impairments with $3.3 billion carrying value, as well as a brand with $0.5 billion carrying value, all had less than 20% of excess fair value above carrying value as of the date of the most recent estimated fair value determination with our Beef reporting unit having less than 10% of excess fair value above carrying value.

Consequently, their estimated fair values, especially our Beef reporting unit, remain highly sensitive to future discount rate increases, changing macro-economic conditions and achievement of projected long-term operating margins.

Although our remaining reporting units and indefinite life intangible assets generally had more than 20% excess fair value over carrying amount as of the date of the most recent estimated fair value determination, they are also susceptible to impairments if any assumptions, estimates, or market factors significantly change in the future.

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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