Tyson Foods Q4 2025 Earnings Call: Contradictions Emerge on Chicken Production, Beef Market, and Consumer Demand Projections

Date of Call: November 10, 2025

Financials Results

• Revenue: $13.9B (Q4), up 4.8% YOY; full year $54.4B, up 3.3% YOY
• EPS: $1.15 adjusted EPS (Q4), up 25% YOY; full year adjusted EPS $4.12, up 33% YOY
• Operating Margin: Adjusted operating income $608M (Q4), up 19% YOY; full year adjusted operating income $2.3B, up 26% YOY

Guidance:

• Fiscal 2026 sales expected to increase 2%–4% YoY (52-week comparable).
• Total company adjusted operating income expected $2.1B–$2.3B.
• Interest expense ~ $390M; tax rate ~ 25%.
• CapEx guidance $700M–$1.0B; free cash flow $800M–$1.3B.
• Segment outlook: Prepared Foods $950M–$1.05B; Chicken $1.25B–$1.5B; Beef loss $(600M)–$(400M); Pork $150M–$250M; International $100M–$150M.

Business Commentary:

• Strong Financial Performance:
• Tyson Foods reported sales of $13.9 billion for Q4 2025, up 4.8% compared to the prior year, and adjusted operating income of $608 million, up 19%.

• The growth was driven by strong performance in the Chicken, Pork, and Prepared Foods segments, as well as international operations.

• Chicken Segment Growth:

• The Chicken segment delivered adjusted operating income of $457 million, marking a 28% increase year-over-year.

• This was supported by higher volumes, improved operational execution, and lower feed costs, contributing to Tyson's overall upward trajectory.

• Prepared Foods Challenges and Recovery:

• The Prepared Foods segment faced a $135 million commodity cost pressure in Q4, impacting margins, despite sales growth of 3% and adjusted operating income of 7.4%.

• The segment experienced a rebound in performance due to improved operational efficiency and enhanced product mix, which is expected to continue into 2026.

• Beef Segment Challenges:

• Tyson's Beef segment saw a decline in adjusted operating income due to higher cattle costs outpacing sales growth from strong demand.
• Factors such as record low cattle supplies, drought, and potential herd rebuilding are contributing to market headwinds, with projections indicating continued challenges in 2026.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management highlighted Q4 and FY25 growth: 'sales grew 4.8% to $13.9 billion' and 'full year adjusted operating income was $2.3 billion, an increase of 26%.' Leadership described momentum in chicken, margin improvements in pork and prepared foods, and a confident 2026 outlook with targeted segment guidance and strengthened balance sheet (net leverage 2.1x).

Q&A:

• Question from Benjamin Theurer (Barclays Bank PLC): Can you give us maybe your assumptions for the Chicken guidance ($1.25B–$1.5B) — what would drive the high end vs the low end?
  Response: Guidance assumes 2026 operating conditions similar to 2025: modest industry production growth (~USDA +1%), stable grain costs, sustained strong demand, and continued execution gains (yields, live performance, value‑added mix) providing the upside.

• Question from Benjamin Theurer (Barclays Bank PLC): On Prepared Foods — what drove the softer finish and how should we think about the ~$1B midpoint for 2026?
  Response: Q4 weakness driven by rapid commodity cost inflation and pricing lags ($135M Q4 commodity pressure; $344M for the year); expect stabilization of raw material costs and recovery via operational improvements, innovation and targeted customer partnerships in 2026.

• Question from Leah Jordan (Goldman Sachs Group, Inc.): Can you provide more detail on cattle supply and costs through 2026 and other mitigation opportunities for Beef?
  Response: Heifer retention appears regionally concentrated (North/Upper Midwest) tightening near-term cattle supply; mitigation focuses on controllables — yield improvement, shifting processing volumes back to harvest facilities and operational adaptability — but near-term beef headwinds remain.

• Question from Leah Jordan (Goldman Sachs Group, Inc.): The CapEx range ($700M–$1B) is wide and lower than historical levels — what are the main buckets and drivers of the range?
  Response: Range reflects pacing and timing of projects (maintenance plus profit‑improvement projects) and existing network capacity to grow without large new expansions; it's a function of project spend timing rather than a change in allocation discipline.

• Question from Thomas Palmer (JPMorgan Chase & Co): You noted you were insulated but not immune to lower chicken prices in September — did that flow through to Q4 and how does it affect the outlook?
  Response: September spot weakness was an aberration and largely spot/excess; guidance considered commodity markets but assumes continued strong demand and portfolio mix (value‑added) that provides insulation versus commodity movements.

• Question from Thomas Palmer (JPMorgan Chase & Co): How are you thinking about Prepared Foods seasonality in 2026 vs 2025?
  Response: FY25 was atypical due to raw material pressures; FY26 is expected to revert closer to historical, more balanced seasonality as inputs stabilize and operational gains continue.

• Question from Alexia Howard (Sanford C. Bernstein & Co.): What are the top 2–3 uncertainties for fiscal 2026 that could move results vs your forecast?
  Response: Top uncertainties are consumer demand dynamics (income divergence and spending shifts) and commodity/input volatility; management believes diversified portfolio, strong brands and market adaptability mitigate these risks.

• Question from Alexia Howard (Sanford C. Bernstein & Co.): Any impact yet from SNAP benefit payout delays due to the government shutdown?
  Response: Too early to tell; team is monitoring closely but expects resilience given diverse price‑tiered portfolio, strong brand penetration and ability to pivot marketing/promotions.

• Question from Heather Jones (Heather Jones Research LLC): Given recent extreme volatility in cattle futures, should we think about Q1 beef seasonality differently?
  Response: Expect continued volatility but Q1 retail demand looks good; guidance incorporates current futures and regional risks (e.g., New World screwworm impact), so no material deviation from the guided outlook.

• Question from Heather Jones (Heather Jones Research LLC): Are you assuming chicken price appreciation above normal seasonality for 2026?
  Response: Generally yes — confidence based on strong consumer demand, limited signs of runaway supply, and superior execution across the chicken supply chain supporting better-than-seasonal performance.

• Question from Pooran Sharma (Stephens Inc.): You said you've stabilized margins on a substantial portion of the portfolio — any updated quantify on chicken self‑improvement and across other businesses?
  Response: No updated single‑number provided; management emphasized a multiyear cultural efficiency program across segments, shifting mix to branded/value‑added and eliminating non‑value activities, with tangible margin gains in Prepared Foods and Pork.

• Question from Pooran Sharma (Stephens Inc.): Can you color regional differences in heifer retention — why North/Midwest vs West/South?
  Response: Regional differences stem largely from drought and local economics; data are noisy and decisions by ranchers vary (temporary holding/feed strategies), making permanence hard to quantify.

• Question from Peter Galbo (BofA Securities): Any help on phasing of chicken profitability through the year?
  Response: No quarterly guidance provided; expect normal seasonality across segments with some volatility from beef dynamics, but no specific intra‑year phasing disclosed.

• Question from Peter Galbo (BofA Securities): What's happening competitively in lunch meat/deli — is the category pricing rational and how is it affecting profitability?
  Response: Category dynamics appear rational; Tyson gained share (lunch meat +10.3% volume) via distribution gains, targeted MAT/promotional investments and real‑time data adjustments; pricing is largely pass‑through with lags and company will take price action if input pressure is sustained.

• Question from Guilherme Palhares (Banco Santander, S.A.): Can you give color on working capital drivers and the free cash flow guidance for 2026?
  Response: FCF guidance ($800M–$1.3B) reflects operating income and CapEx ranges; working capital may see some inflationary movement with sales but overall FCF is expected to exceed dividends (up to ~2x) within the guided range.

• Question from Guilherme Palhares (Banco Santander, S.A.): What's your exposure to small bird vs big bird and commodity‑price sensitivity?
  Response: Tyson participates in both small and big bird and across value‑added formats; no percentage disclosed, but value‑added business grew ~2x the segment average, reducing pure commodity exposure.

• Question from Andrew Strelzik (BMO Capital Markets): What specifically drove the step‑up in Q4 chicken performance relative to peers — was there a step function in ops?
  Response: Q4 strength reflects cumulative multiyear fixes: improved genetics and live performance, better yields, higher capacity utilization and aggressive cost/spend elimination across the supply chain driving a step improvement in execution.

• Question from Andrew Strelzik (BMO Capital Markets): How have imports factored into your beef outlook and impact on the business?
  Response: Imports are up (~20%) (notably boneless from Australia) and largely supply grind needs; exports down (~10%); imports help supply grinding demand amid domestic tightness but do not eliminate underlying cattle supply constraints.

Contradiction Point 1

Chicken Production and Market Outlook

It directly impacts expectations regarding the chicken market's stability and Tyson's strategic positioning, which could influence investor expectations and operational strategies.

What are your assumptions for the FY 2026 chicken guidance, particularly for the $1.25 billion to $1.5 billion range? - Benjamin Theurer (Barclays Bank PLC, Research Division)

2025Q4: FY 2026 is expected to be similar to FY 2025, with stable grains and USDA projecting a 1% increase in chicken production. - Donnie King(CEO)

What is the impact of investments in the Chicken segment on the business? - Ben Theurer (Barclays)

2025Q3: We expect chicken production to increase 1.7% in 2025 and 0.8% in 2026 due to 2023 flock liquidations and the rebound in chicken production. - Donnie King(CEO)

Contradiction Point 2

Beef Market and Herd Rebuilding

It involves differing expectations about the beef market, herd rebuilding, and the potential impact on cattle supplies, which are crucial for Tyson's beef segment operations and profitability.

What are the cattle supply and beef costs for FY 2026, and what cost mitigation strategies are being considered? - Leah Jordan (Goldman Sachs Group, Inc., Research Division)

2025Q4: Potential signs of heifer retention are observed in the North and Upper Midwest. Market conditions are expected to remain challenging, with tight cattle supplies impacting market conditions. - Donnie King(CEO)

Can you discuss the beef segment's cattle supply and costs and the impact of heifer retention? - Leah Jordan (Goldman Sachs)

2025Q3: Cattle supplies are tightening, with beef cow slaughter down 16% year-over-year since January. Heifer retention is likely beginning, with herd rebuilding expected in earnest in 2026. - Donnie King(CEO)

Contradiction Point 3

Chicken Pricing Expectations

This contradiction involves differing expectations for chicken pricing and market conditions, which could impact investor and consumer expectations.

Are you expecting a seasonal improvement in chicken pricing for FY 2026? - Thomas Palmer (JPMorgan Chase & Co, Research Division)

2025Q4: We expect that chicken will be pressured in Q1, and we'll have a better pricing comparison in Q2 when we start to have more clarity with our USDA guidance. But as you can see, you think the midpoint of that range is very solid for us. - Donnie King(CEO)

Why didn't you raise the lower end of the guidance range despite strong results? - Andrew Strelzik (BMO)

2025Q1: We expect that chicken will be pressured in Q1, and we'll have a better pricing comparison in Q2 when we start to have more clarity with our USDA guidance. But as you can see, you think the midpoint of that range is very solid for us. - Donnie King(CEO)

Contradiction Point 4

Beef Cycle and Market Conditions

This contradiction pertains to the expected market conditions and challenges in the beef cycle, which can impact operational strategies and financial performance.

Could you elaborate on cattle supply and beef costs for FY 2026 and what cost mitigation strategies are you exploring? - Leah Jordan (Goldman Sachs Group, Inc., Research Division)

2025Q4: Potential signs of heifer retention are observed in the North and Upper Midwest. Market conditions are expected to remain challenging, with tight cattle supplies impacting market conditions. - Donnie King(CEO)

How is the current beef cycle impacting your results, and can you explain the seasonality across segments? - Ben Theurer (Barclays)

2025Q1: The beef business is at the bottom of the cycle with improvements in herd conditions. Profitability for cattle producers is high, leading to potential herd expansion. - Brady Stewart(Group President, Beef, Pork and Chief Supply Chain Officer)

Contradiction Point 5

Consumer Demand and Market Dynamics

This contradiction involves differing perspectives on consumer demand and market dynamics, which are crucial for business strategy and market positioning.

What are the key uncertainties for fiscal '26 and how do you prioritize them versus your forecast? - Alexia Howard (Sanford C. Bernstein & Co., LLC., Research Division)

2025Q4: Consumer demand for protein is expected to remain strong, especially with chicken as an affordable option. The brand's market penetration and innovation are key strengths. - Kristina Lambert(Chief Growth Officer)

Can you discuss the sustainability of chicken margins and plant performance and execution? - Michael Lavery (Piper Sandler)

2025Q1: The chicken business saw improvements driven by operational excellence and supply chain execution. Chicken is positioned as the most affordable protein. - Donnie King(CEO)