What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-05 compared with 2025-02-03 · 198 added, 130 removed, 274 unchanged (54% of the section changed)

21 unchanged sentences

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.

Sales were relatively flat in the second quarter and increased 1.2%, or $306 million, in the first six months of fiscal 2025, driven by increased sales in our Beef and Chicken segments, partially offset by decreased sales in our Pork and Prepared Foods segments.

Sales were negatively impacted in the second quarter and the first six months by 2.6% and 1.3%, respectively, from the recognition of $343 million of legal contingency accruals.

Operating income of $100 million for the second quarter of fiscal 2025 was down 68% as compared to the second quarter of fiscal 2024, as we experienced lower operating income in our Beef and Pork segments, partially offset by higher operating income in our Chicken and Prepared Foods segments and International/Other.

Additionally, in the second quarter of fiscal 2025, our operating income was impacted by $343 million of legal contingency accruals, $43 million in network optimization plan charges, $23 million of plant closures and disposal charges and $6 million in brand discontinuation charges.

In the second quarter of fiscal 2024, our operating income was impacted by $54 million of costs related to a production facility fire in the Netherlands and our subsequent decision to sell the facility and $39 million of plant closures and disposal charges.

Operating income of $680 million for the first six months of fiscal 2025 was up 25% compared to the first six months of fiscal 2024 as we experienced higher operating income in our Chicken segment and International/Other, partially offset by lower operating income for our Beef, Pork and Prepared Foods segments.

In the first six months of fiscal 2025, our operating income was impacted by $343 million of legal contingency accruals, $116 million in network optimization plan charges, $23 million of plant closures and disposal charges and $12 million in brand discontinuation charges.

In the first six months ended March 30, 2024, our operating income was impacted by $114 million of plant closures and disposal charges, $80 million of costs related to a production facility fire in the Netherlands and our subsequent decision to sell the facility, $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.

Market Environment

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.

According to the United States Department of Agriculture, domestic protein production (beef, pork, chicken and turkey) was flat in the second quarter of fiscal 2025 as compared to the same period in fiscal 2024.

The Beef segment continues to experience limited supply of market-ready cattle as well as increased cattle costs.

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

2 unchanged sentences

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

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

We are subject to changes in import and export policies, including trade restrictions, new or increased tariffs or quotas, and customs restrictions through our international sales and operations.

Our exports account for less than 10% of our business, primarily composed of chicken leg quarters and paws, boxed beef and variety meats of all proteins.

As a result of the recent changes in trade policies and tariffs both domestically and internationally, we may experience some sales disruptions and other impacts associated with tariffs.

There is uncertainty regarding the impact the current changes will have on the price and demand of our products in the affected countries, commodity pricing and other general economic conditions, and uncertainty in future changes that may have a material impact.

We will continue to analyze the impact of supply chain and tariff impacts in the upcoming months.

Our total operating margin was 0.8% in the second quarter of fiscal 2025.

Operating margins by segment were as follows:

8 unchanged sentences

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.

We recognized charges of $43 million and $116 million in the second quarter and first six months of fiscal 2025, respectively, related to the network optimization plan, which primarily included the closure of two facilities in the Prepared Foods segment, a non-harvesting facility closure in the Beef segment and asset write-offs in the Chicken segment and International/Other.

All estimated charges related to actions approved through March 29, 2025 have been recognized and included $47 million that have resulted or will result in cash outflows and $69 million of non-cash for the first six months of fiscal 2025.

We expect to incur additional charges in the future as additional actions are approved.

In April 2025, following a strategic review of our domestic logistics and storage network, the Company approved a plan to execute various long-term cold storage service agreements and the sale of multiple Tyson-owned and operated distribution centers.

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

1 unchanged sentence

Summary of Results

in millions Three Months Ended

December 28, 2024 December 30, 2023

in millions Three Months Ended Six Months Ended

March 29, 2025 March 30, 2024 March 29, 2025 March 30, 2024

Sales $ 13,074 $ 13,072 $ 26,697 $ 26,391

2 unchanged sentences

Sales growth — % 1.2 %

First quarter – Fiscal 2025 vs Fiscal 2024

Second quarter – Fiscal 2025 vs Fiscal 2024

• Sales Volume – Volumes were essentially flat, accounting for a $3 million decrease in sales as increased sales volume in our Chicken segment was offset by decreased 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 $348 million, driven by increased pricing in our Beef, Pork and Prepared Foods segments, partially offset by lower average sales prices in our Chicken segment.

◦ The above changes in average sales price exclude a $343 million reduction of Sales for the recognition of legal contingency accruals recorded in the second quarter of fiscal 2025.

Six months – Fiscal 2025 vs Fiscal 2024

• Sales Volume – Sales were positively impacted by an increase in sales volume, which accounted for a $205 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 $444 million, driven by increased pricing in our Beef, Pork and Prepared Foods segments, partially offset by lower average sales prices in our Chicken segment.

◦ The above changes in average sales price exclude a $343 million reduction of Sales from the recognition of legal contingency accruals recorded in the second quarter of fiscal 2025.

Cost of Sales

in millions Three Months Ended

December 28, 2024 December 30, 2023

in millions Three Months Ended Six Months Ended

March 29, 2025 March 30, 2024 March 29, 2025 March 30, 2024

Cost of sales $ 12,474 $ 12,206 $ 25,002 $ 24,702

1 unchanged sentence

Cost of sales as a percentage of sales 95.4 % 93.4 % 93.7 % 93.6 %

First quarter – Fiscal 2025 vs Fiscal 2024

Second quarter – Fiscal 2025 vs Fiscal 2024

• Cost of sales increased $268 million.

Higher sales volume increased cost of sales by $195 million while lower input cost per pound decreased cost of sales by $163 million.

• The $163 million impact of lower input cost per pound was impacted by:

• Decrease of approximately $155 million in our Chicken segment related to decreased feed ingredient costs.

• 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 $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.

Lower sales volume decreased cost of sales $3 million while higher input cost per pound increased cost of sales by $271 million.

• The $271 million impact of higher input cost per pound was impacted by:

• Increase in cattle costs of approximately $470 million in our Beef segment.

• Increase in hog costs of approximately $100 million in our Pork segment.

• Increase in raw material and other input costs of approximately $80 million in our Prepared Foods segment.

• Increase of $43 million related to network optimization plan charges.

• Decrease of approximately $110 million in our Chicken segment related to decreased feed ingredient costs.

• Decrease of $54 million in International/Other from costs recognized in fiscal 2024 related to a production facility fire in the Netherlands and the subsequent decision to sell the facility.

• Decrease in freight and transportation costs of approximately $30 million.

• Decrease due to net derivative losses of $24 million in the second quarter of fiscal 2025, compared to net derivative losses of $46 million in the second quarter of fiscal 2024 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 $16 million due to lower plant closures and disposal charges.

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

Six months – Fiscal 2025 vs Fiscal 2024

• Cost of sales increased $300 million.

Higher sales volume increased cost of sales by $192 million while higher input cost per pound increased cost of sales by $108 million.

• The $108 million impact of higher input cost per pound was impacted by:

• Increase in cattle costs of approximately $510 million in our Beef segment.

• Increase in hog costs of approximately $160 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.

• Increase in raw material and other input costs of approximately $160 million in our Prepared Foods segment.

• Increase of $114 million related to network optimization plan charges.

• 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.

• Decrease of approximately $265 million in our Chicken segment related to decreased feed ingredient costs.

• Decrease of $91 million due to lower plant closures and disposal charges.

• Decrease of $80 million in International/Other from costs recognized in fiscal 2024 related to a production facility fire in the Netherlands and the subsequent decision to sell the facility.

• Decrease of $73 million related to the recognition of legal contingency accruals in our Beef and Pork segments in fiscal 2024.

• Decrease in freight and transportation costs of approximately $70 million.

• Decrease due to net derivative losses of $31 million in the first six months of fiscal 2025, compared to net derivative losses of $51 million in the first six months of fiscal 2024 due to our risk management activities.

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

Selling, General and Administrative

in millions Three Months Ended

December 28, 2024 December 30, 2023

in millions Three Months Ended Six Months Ended

March 29, 2025 March 30, 2024 March 29, 2025 March 30, 2024

Selling, general and administrative expense $ 500 $ 554 $ 1,015 $ 1,146

As a percentage of sales 3.8 % 4.2 % 3.8 % 4.3 %

First quarter – Fiscal 2025 vs Fiscal 2024

Second quarter – Fiscal 2025 vs Fiscal 2024

• Decrease of $54 million in selling, general and administrative was primarily driven by:

• Decrease of $27 million in restructuring and related costs.

• Decrease of $18 million in marketing, advertising and promotion expenses.

• Decrease of $18 million in employee costs.

• Decrease of $7 million in donations.

• Decrease of $17 million in employee costs primarily from performance-based compensation.

• Decrease of $17 million in professional fees.

Six months – Fiscal 2025 vs Fiscal 2024

• Decrease of $131 million in selling, general and administrative was primarily driven by:

• Decrease of $41 million in marketing, advertising and promotion expenses.

• Decrease of $35 million in employee costs primarily from performance-based compensation.

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

• Decrease of $22 million in professional fees.

Interest (Income) Expense

in millions Three Months Ended

December 28, 2024 December 30, 2023

in millions Three Months Ended Six Months Ended

March 29, 2025 March 30, 2024 March 29, 2025 March 30, 2024

Interest income $ (17) $ (14) $ (42) $ (24)

Interest expense 110 111 230 216

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.

Second quarter and six months – Fiscal 2025 vs Fiscal 2024

• The increase in interest income for the second quarter and six months ended March 29, 2025 was primarily due to higher cash and cash equivalents held during the quarter.

• The increase in interest expense for the six months ended March 29, 2025 was primarily due to interest expense related to our 5.40% 2029 Notes and 5.70% 2034 Notes, partially offset by lower interest expense related to the repayment of the term loan due May 2026 in the second quarter of fiscal 2025 and the repayment of the August 2024 senior notes in the fourth quarter of fiscal 2024.

Other (Income) Expense, net

in millions Three Months Ended

December 28, 2024 December 30, 2023

in millions Three Months Ended Six Months Ended

March 29, 2025 March 30, 2024 March 29, 2025 March 30, 2024

Total other (income) expense, net $ (23) $ 12 $ (16) $ (13)

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.

Second quarter and six months – Fiscal 2025

• Included $15 million of joint venture earnings and $6 million of foreign exchange gains in the second quarter of fiscal 2025.

Included $27 million of joint venture earnings and $7 million of production facilities fire insurance proceeds, partially offset by $18 million of foreign exchange losses in the first six months of fiscal 2025.

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.

Effective Tax Rate

Three Months Ended

December 28, 2024 December 30, 2023

Three Months Ended Six Months Ended

March 29, 2025 March 30, 2024 March 29, 2025 March 30, 2024

51.0 % 26.9 % 25.1 % 28.0 %

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.

Second quarter – Fiscal 2025 vs Fiscal 2024

• The percentage impacts of items on the effective tax rate were greater in the second quarter of fiscal 2025 due to the level of pretax income in the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024.

• The second quarter of fiscal 2025 was increased by the impact of net unfavorable permanent book-to-tax differences and changes in unrecognized tax benefits.

• The second quarter of fiscal 2024 was impacted by increased foreign losses for which a tax benefit cannot be recognized.

Six months – Fiscal 2025 vs Fiscal 2024

• The effective tax rate for the first six months of fiscal 2025 was increased by changes in unrecognized tax benefits and decreased by the release of a $9 million valuation allowance on certain losses in the Netherlands due to tax legislation enacted in the first quarter of fiscal 2025.

• Increased foreign losses in fiscal 2024 resulted in a higher effective tax rate compared to fiscal 2025.

Net Income Attributable to Tyson

in millions, except per share data Three Months Ended

December 28, 2024 December 30, 2023

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

March 29, 2025 March 30, 2024 March 29, 2025 March 30, 2024

Net income attributable to Tyson $ 7 $ 145 $ 366 $ 252

Net income attributable to Tyson – per diluted share 0.02 0.41 1.03 0.71

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

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

• $343 million pretax, or ($0.73) per diluted share, related to the recognition of legal contingency accruals.

• $43 million pretax, or ($0.10) per diluted share, related to network optimization plan charges.

• $23 million pretax, or ($0.05) per diluted share, of plant closures and disposal charges.

• $6 million pretax, or ($0.02) per diluted share, of brand discontinuation charges.

Six months – Fiscal 2025 – Net income attributable to Tyson included the following items:

• $343 million pretax, or ($0.73) per diluted share, related to the recognition of legal contingency accruals.

• $116 million pretax, or ($0.26) per diluted share, related to network optimization plan charges.

• $23 million pretax, or ($0.05) per diluted share, of plant closures and disposal charges.

• $12 million pretax, or ($0.03) 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.

• $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:

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

• $54 million pretax, or ($0.15) per diluted share, of charges related to a production facility fire in the Netherlands and our subsequent decision to sell the facility.

• $39 million pretax, or ($0.06) per diluted share, of plant closures and disposal charges.

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

• $114 million pretax, or ($0.22) per diluted share, of plant closures and disposal charges.

• $80 million pretax, or ($0.22) per diluted share, of charges related to a production facility fire in the Netherlands and our subsequent decision to sell the facility.

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

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

• $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.

4 unchanged sentences

in millions Sales

Three Months Ended

December 28, 2024 December 30, 2023

Three Months Ended Six Months Ended

March 29, 2025 March 30, 2024 March 29, 2025 March 30, 2024

Beef $ 5,196 $ 4,954 $ 10,531 $ 9,977

6 unchanged sentences

in millions Operating Income (Loss)

Three Months Ended

December 28, 2024 December 30, 2023

Three Months Ended Six Months Ended

March 29, 2025 March 30, 2024 March 29, 2025 March 30, 2024

$ (258) $ (35) $ (322) $ (241)

(195) (1) (136) 38

262 158 613 335

Prepared Foods (d)

244 230 453 473

International/Other (e)

47 (40) 72 (62)

Total $ 100 $ 312 $ 680 $ 543

(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.

(a) Beef segment results for the three and six months ended March 29, 2025 included $16 million and $48 million, respectively, of network optimization plan charges and a $93 million legal contingency accrual.

Beef segment results for the six months ended March 30, 2024 included a $45 million legal contingency accrual and $41 million of plant closures and disposal charges.

(b) Pork segment results for the three and six months ended March 29, 2025 included a $250 million legal contingency accrual.

Pork segment results for the three and six months ended March 30, 2024 included $34 million of plant closures and disposal charges.

Pork segment results for the six months ended March 30, 2024 included a $28 million legal contingency accrual.

(c) Chicken segment results for the three and six months ended March 29, 2025 included $21 million and $32 million, respectively, of network optimization plan charges, $6 million and $12 million, respectively, of brand discontinuation charges and $23 million of plant closures and disposal charges.

Chicken segment results for the six months ended March 30, 2024 included $39 million of plant closures and disposal charges and $24 million of insurance proceeds, net of costs incurred.

(d) Prepared Foods segment results for the six months ended March 29, 2025 included $25 million of network optimization plan charges.

Prepared Foods segment results for the six months ended March 30, 2024 included $24 million of restructuring and related charges.

(e) International/Other results for the three and six months ended March 29, 2025 included $6 million and $11 million, respectively, of network optimization plan charges.

International/Other results for the three and six months ended March 30, 2024 included $54 million and $80 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

December 28, 2024 December 30, 2023 Change

in millions Three Months Ended Six Months Ended

March 29, 2025 March 30, 2024 Change March 29, 2025 March 30, 2024 Change

Sales $ 5,196 $ 4,954 $ 242 $ 10,531 $ 9,977 $ 554

3 unchanged sentences

Operating margin (5.0) % (0.7) % (3.1) % (2.4) %

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.

Second quarter and six months – Fiscal 2025 vs Fiscal 2024

• Sales Volume - Sales volume decreased in the second quarter of fiscal 2025 primarily due to lower head harvested, partially offset by higher average carcass weights.

Sales volume for the first six months increased primarily due to higher average carcass weights.

• Average Sales Price - Average sales price increased in the second quarter and first six months of fiscal 2025 primarily due to increased input costs and strong demand.

The change in average sales price excludes a $93 million reduction of Sales from the recognition of a legal contingency accrual recorded in the second quarter of fiscal 2025.

• Operating Income (Loss) - Operating income decreased in the second quarter and first six months of fiscal 2025 as Beef margins remained compressed, partially offset by improved operational execution.

Additionally, operating income for the second quarter and first six months of fiscal 2025 was impacted by the recognition of legal contingency accruals and network optimization plan charges.

Pork Segment Results

in millions Three Months Ended

December 28, 2024 December 30, 2023 Change

in millions Three Months Ended Six Months Ended

March 29, 2025 March 30, 2024 Change March 29, 2025 March 30, 2024 Change

Sales $ 1,244 $ 1,486 $ (242) $ 2,861 $ 3,003 $ (142)

1 unchanged sentence

Average sales price change 4.3 % 5.7 %

Operating income $ 59 $ 39 $ 20

Operating income (loss) $ (195) $ (1) $ (194) $ (136) $ 38 $ (174)

Operating margin (15.7) % (0.1) % (4.8) % 1.3 %

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.

Second quarter and six months – Fiscal 2025 vs Fiscal 2024

• Sales Volume - Sales volume decreased in the second quarter and first six months of fiscal 2025 due to production decreases associated with a plant closure in 2024 which were partly offset by production increases at other facilities and higher average carcass weights.

• Average Sales Price - Average sales price increased in the second quarter and first six months of fiscal 2025 as demand for our pork products remained strong.

The change in average sales price excludes a $250 million reduction of Sales from the recognition of a legal contingency accrual recorded in the second quarter of fiscal 2025.

• Operating Income (Loss) - Operating income (loss) decreased in the second quarter and first six months of fiscal 2025 due to compressed pork margins and the recognition of a legal contingency accrual in the second quarter of fiscal 2025, partially offset by lower operating costs, improved results in our live hog operations and lapping the impacts of plant closures and disposals recorded in the second quarter of fiscal 2024.

Chicken Segment Results

in millions Three Months Ended

December 28, 2024 December 30, 2023 Change

in millions Three Months Ended Six Months Ended

March 29, 2025 March 30, 2024 Change March 29, 2025 March 30, 2024 Change

Sales $ 4,141 $ 4,065 $ 76 $ 8,206 $ 8,098 $ 108

3 unchanged sentences

Operating margin 6.3 % 3.9 % 7.5 % 4.1 %

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.

Second quarter and six months – Fiscal 2025 vs Fiscal 2024

• Sales Volume - Sales volume increased in the second quarter and first six months of fiscal 2025 primarily due to increased domestic production, partially offset by inventory growth.

• Average Sales Price - Average sales price decreased in the second quarter and first six months of fiscal 2025 primarily due to the impact of lower input costs.

• Operating Income - Operating income increased in the second quarter and first six months of fiscal 2025 driven by operational execution, improved volumes and $110 million and $265 million of net decreases in feed ingredient costs, respectively, which was partially offset by associated decreases in average sales price.

Additionally, operating income in the second quarter was impacted by charges related to prior plant closures and disposals as well as network optimization plan charges.

Operating income in the first six months of fiscal 2025 was impacted by reduced insurance proceeds, net of costs and network optimization plan charges, partially offset by lower plant closures and disposal charges.

Prepared Foods Segment Results

in millions Three Months Ended

December 28, 2024 December 30, 2023 Change

in millions Three Months Ended Six Months Ended

March 29, 2025 March 30, 2024 Change March 29, 2025 March 30, 2024 Change

Sales $ 2,396 $ 2,404 $ (8) $ 4,869 $ 4,947 $ (78)

3 unchanged sentences

Operating margin 10.2 % 9.6 % 9.3 % 9.6 %

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.

Second quarter and six months – Fiscal 2025 vs Fiscal 2024

• Sales Volume – Sales volume decreased in the second quarter and first six months of fiscal 2025 due to a challenging consumer environment.

• Average Sales Price – Average sales price increased in the second quarter and first six months of 2025 primarily due to the pass through of increased raw material costs.

• Operating Income – Operating income increased in the second quarter of 2025 primarily due to higher average sales price and lower selling, general and administrative costs and improved operational execution, partly offset by increased raw material costs.

Operating income decreased in the first six months of fiscal 2025 primarily due to increased raw material costs and network optimization plan charges, partially offset by higher average sales price and lower freight costs, selling, general and administrative costs, restructuring and related charges and improved operational execution.

International/Other Results

in millions Three Months Ended

December 28, 2024 December 30, 2023 Change

in millions Three Months Ended Six Months Ended

March 29, 2025 March 30, 2024 Change March 29, 2025 March 30, 2024 Change

Sales $ 566 $ 580 $ (14) $ 1,150 $ 1,162 $ (12)

Operating income (loss) 47 (40) 87 72 (62) 134

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.

Second quarter and six months – Fiscal 2025 vs Fiscal 2024

• Sales – Sales for the second quarter and first six months of fiscal 2025 were relatively flat.

• Operating Income (Loss) – Operating income increased in the second quarter and first six months of fiscal 2025 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, partly offset by network optimization charges.

LIQUIDITY AND CAPITAL RESOURCES

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Cash Flows from Operating Activities

in millions Three Months Ended

December 28, 2024 December 30, 2023

in millions Six Months Ended

March 29, 2025 March 30, 2024

Net income $ 380 $ 262

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Net cash provided by operating activities $ 846 $ 1,177

• 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.

• Non-cash items in net income primarily included depreciation and amortization of $700 million and $722 million for the six months ended March 29, 2025 and March 30, 2024, respectively.

• Cash provided by operating activities for the first six months of fiscal 2025 was $846 million, a decrease of $331 million compared to the first six months of fiscal 2024, as the $80 million of higher earnings, net of non-cash items, was more than offset by a $411 million decrease in cash provided by the net changes in operating assets and liabilities which was primarily impacted by:

• A decrease of $501 million due to an increase in inventory of $229 million in the first six months of fiscal 2025, compared to a decrease of $272 million in the first six months of fiscal 2024, primarily due to increased average cost of inventory and higher volume of livestock.

• A decrease of $98 million due to a decrease in income taxes payable/receivable of $41 million in the first six months of fiscal 2025, compared to an increase of $57 million in the first six months of fiscal 2024, primarily driven by an increase in tax payments as a result of higher taxable income associated with payments made in fiscal 2025 compared to fiscal 2024.

• Partially offset by:

• 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.

• An increase of $322 million due to a decrease in accounts payable of $3 million during the first six months of fiscal 2025, compared to a decrease of $325 million in the first six months of fiscal 2024, primarily due to a reduction in accounts payable in fiscal 2024 associated with lower input costs.

Cash Flows from Investing Activities

in millions Three Months Ended

December 28, 2024 December 30, 2023

in millions Six Months Ended

March 29, 2025 March 30, 2024

Additions to property, plant and equipment $ (464) $ (621)

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Cash Flows from Financing Activities

in millions Three Months Ended

December 28, 2024 December 30, 2023

in millions Six Months Ended

March 29, 2025 March 30, 2024

Proceeds from issuance of debt $ 31 $ 2,327

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Other, net (1) (12)

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.

Net cash (used for) provided by financing activities $ (1,132) $ 1,051

• 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 29, 2025 and March 30, 2024 included payments of $750 million and $250 million, respectively, on our term loan due May 2026.

• Dividends paid during the six months ended March 29, 2025 reflected a 2% increase to our fiscal 2024 quarterly dividend rate.

Expiration Date Facility

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Borrowed Amount

December 28, 2024

March 29, 2025

Cash and cash equivalents $ 992

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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 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.

• At March 29, 2025, we had current debt of $896 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 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 had no borrowings under the revolving credit facility during the six months ended March 29, 2025.

• On April 15, 2025, subsequent to the end of our second quarter of fiscal 2025, we terminated our existing revolving credit facility and entered into a new $2.5 billion revolving credit facility.

The new revolving credit facility will mature, and the commitments thereunder will terminate, in April 2030 with options for two one-year extensions.

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

The covenants and other terms of the new facility are generally consistent with those of the terminated facility.

• We expect net interest expense to approximate $375 million for fiscal 2025.

• 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.

• Our current ratio was 1.7 to 1 at March 29, 2025 and 2.0 to 1 at September 28, 2024.

The decrease in fiscal 2025 is primarily due to decreased cash and cash equivalents and increased current debt.

• At March 29, 2025, $646 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 December 28, 2024, amounts available for borrowing under our revolving credit facility totaled $2.25 billion.

At March 29, 2025, 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 December 28, 2024, we had no commercial paper outstanding under this program.

As of March 29, 2025, we had no commercial paper outstanding under this program.

In April 2025, subsequent to the end of our second quarter of fiscal 2025, we increased the aggregate maximum principal amount to $1.75 billion in conjunction with the execution of the new revolving credit facility.

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

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Revolving Credit Facility

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

The below table outlines the fees paid on the unused portion of the facility (“Facility Fee Rate ” ) and letter of credit fees and borrowings (“All-in Borrowing Spread ” ) that corresponds to the applicable ratings levels from S&P and Moody’s.

Ratings Level (Moody’s/S&P) Facility Fee Rate All-in Borrowing Spread

Under the new revolving credit facility, the below table outlines the fees paid on the unused portion of the facility (“Facility Fee Rate ” ) and letter of credit fees and borrowings (“Borrowing Spread ” ) that corresponds to the applicable ratings levels from S&P and Moody’s.

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

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

A3/A- or above 0.090 % 0.785 %

A3/A- 0.090 % 1.000 %

Baal/BBB+ 0.100 % 0.900 %

Baa2/BBB (current level) 0.110 % 1.015 %

Baa3/BBB- or lower 0.175 % 1.375 %

Baa3/BBB- 0.150 % 1.100 %

Ba1/BB+ or lower 0.200 % 1.175 %

In the event the rating levels fall within different levels, the applicable rate will be based upon the higher of the two Levels or, if there is more than a one-notch split between the two Levels, then the Applicable Rate will be based upon the Level that is one Level below the higher Level.

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

We were in compliance with all debt covenants at December 28, 2024, and we expect that we will maintain compliance.

We were in compliance with all debt covenants at March 29, 2025, and we expect that we will maintain compliance.

RECENTLY ISSUED/ADOPTED ACCOUNTING PRONOUNCEMENTS

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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 three months ended December 28, 2024.

Accounting Policies, for updates to our significant accounting policies during the six months ended March 29, 2025.

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.

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.

Our qualitative assessment for the first and second quarters 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 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.

our Beef and Chicken segment reporting units, with 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.

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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