泰森食品 (TSN) 2007 Q3 法說會逐字稿

Good morning, and thank you for standing by.

At this time all participants are in a listen-only mode.

After the presentation we will conduct a question-and-answer session.

(OPERATOR INSTRUCTIONS) Today's conference is being recorded.

If you have any objections, you may wish to disconnect at this time.

Now I will turn the meeting over to Ms.

Ruth Wisener.

Ms.

Wisener, you may begin.

Good morning and thank you for joining us today for Tyson Foods third quarter conference call.

With me today are Dick Bond, our President and CEO and Wade Miquelon, our Chief Financial Officer.

Before we move on to discuss the operating performance for the quarter, I want to remind everyone that some of the things we talk about today may include forward-looking statements.

That means those statements are going to be based on our view of the world as we know it today and that means things can change.

So I would encourage you to look at today's press release for a discussion of the risks that can affect our business.

I'm now going to turn things over to Dick Bond.

Thank you, Ruth Ann, and good morning.

Good morning to all of our investors, our analysts, and team members.

We're glad you could join us for Tyson Foods third quarter 2007 earnings call.

This is another strong quarter for us and I give the credit for our continued turn around to the Tyson team.

Their focus has made the difference and has resulted in a $569 million year-to-date turn around in operating income versus 2006.

Earnings per share were $0.31 versus a loss of $0.15 in the same period last year.

Sales dollars, operating income, and operating margins were greatly improved over the third quarter of 2006 and were up over the second quarter of '07, as well.

Volumes were lower in chicken, beef, and prepared foods, primarily as a result of planned production cuts and the impact of price increases.

Our management team has shown great leadership and the willingness to make tough choices.

If something needed to be changed or stopped, we've done it.

If entirely new methods are to be used, we've done that, as well.

Most importantly, we've stripped away most of the nonvalue-added costs.

I'll discuss the impact of those decisions in a moment, but before that, I'm going to turn the call over to our CFO, Wade Miquelon.

Thank you, Dick.

In Q3 '07, we achieved earnings of $0.31 per share.

This compares to a loss of $0.15 per share in Q3 '06.

This dramatic $0.46 year-over-year improvement is a result of strong performance in all four segments and continues to be driven by improved cost efficiencies and better pricing.

For the quarter, a couple of reconciling items to mention include a net gain of $9.8 million from the sale of two poultry plants, partially offset by a charge of $5.2 million for the software-related asset impairment.

Additionally, our third quarter results include a year-on-year negative net grain impact of $113 million, which represents $120 million corn and soybean meal increase net of a $7 million positive commodity risk management impact.

Our third quarter debt balance of $2.98 billion, while not as strong as we had hoped, was distorted from payable receipt timing items and also the significant increases in working capital fueled by sales growth.

Still our debt to EBITDA ratio continues to improve and is now under 2.9.

Guidance.

Now let's talk about the remainder of the year as we enter into the fourth quarter.

Our third quarter results build on the improvements delivered in the first half of the fiscal year.

We have revised our full-year guidance upward to a range of $0.82 to $0.92 per share.

While this range reflects a slight EPS reduction quarter over quarter, it is primarily a function of increased spend related to our "Thank You, Mom" ad campaign and chicken segment projected to be slightly lower due to the impact of recent softening of breast meat prices, as well as the affect of a $9.8 million gain recognized in Q3 for the sale of our two commodity plants.

We project this following specific information for the remainder of fiscal '07.

Revenues for the fiscal year to be $27 billion.

Depreciation and amortization is expected to about $515 million.

We expect capital spending to come in under $300 million.

Net interest expense is expected to be around $220 million.

Our tax rate for the full fiscal is expected to be around 35%.

Weighted average shares will be approximately 356 million.

Our net debt position will continue to decline and we should finish the year at around $2.7 billion, leaving us with a debt-to-EBITDA ratio below 2.5 by the fiscal year-end.

I feel great about the progress we are making.

Our team members are working across the business units for the good of the Company and it's gratifying to see how their resolve has led to the overall strengthening of Tyson Foods.

Our central philosophy is to have a willingness to invest, but not a willingness to waste, and in that vain we must strike the proper balance to deliver short-term results without compromising our long-term objectives, and we will.

Now I'm going to turn the call back over to Dick for discussion on the segments.

Thanks, Wade.

I'm going to start first with chicken.

Our Chicken sales increased $146 million and operating income increased $154 million over the third quarter of 2006.

Year to date, operating income is up $156 million over the same period last year.

Third quarter sales prices were up nearly 19%, although volume was down almost 10%.

A third of the lower volume is attributed to the sale the two commodity poultry plant, as well as a plant destroyed by fire.

Another third is due to reduced leg quarter inventories from the high levels of last year, and the remaining third is due to planned production cuts.

Grain impact, excluding risk management activities, was $120 million for the quarter and $229 million for fiscal year to date.

Near the end of the third quarter, we launched Raised Without Antibiotics fresh chicken in the retail market and it has been received very well.

Through expanded distribution with current customers, along with the acquisition of new accounts, our fresh chicken volume is up almost 35 million pounds on an analyzed basis as a result of this initiative and we see significant sales potential going forward.

Retailer interest has allowed us to penetrate markets in areas where we had limited distribution.

We're proceeding with plans to convert the deli rotisserie and marinated raw breaded chicken to the Raised Without Antibiotics platform later on this summer.

Earlier this month we announced Any'tizers, a line of restaurant-quality appetizers that can be enjoyed any time.

and we anticipate this line of frozen products to do extremely well.

Customers representing 89% of the all channel food volume have accepted Any'tizers.

On average these customers took seven out of the ten items, which was exactly on target.

We began shipping on July 8th, and Any'tizers are beginning to show up in freezer cases across the country.

Our Beef segment continues its turn around, as sales increased $330 million and operating income increased $43 million over third quarter of fiscal '06.

Operating income for the nine months of fiscal '07 is up $296 million over the same period last year.

Volumes were down in the third quarter, primarily due to lower carcass weights.

Our operating margin was 1%, moving towards our historical normalized range.

Conversion costs improved by 7.6% versus the same quarter last year as a result of operating cost efficiencies and plant rationalizations.

In addition, yields improved significantly.

We also benefited from improved margin spreads and favorable risk management activities.

Capacity utilization improved year over year from the low to the mid 80s.

While some people have voiced concern about tightening cattle supplies, I'd like to remind everyone that even though placements are down, the July 1 "Cattle on Feed" report indicated feed lot supply was down just slightly from last year's herd, and it is still the third highest in the past ten years.

Turning to Pork, our pork sales increased $99 million and operating income increased $25 million over the third quarter of '06.

Operating income for the nine months of fiscal '07 is up $78 million over the same period last year.

Operating results in the third quarter benefited from improved margin spreads, strong export sales -- particularly to Japan -- and increased sales volume due to strong case-ready sales.

Our team members have done a great job in reducing costs and improving yields.

Despite a tightening spread, we maintained pricing and improved capacity utilization to 80% compared to 76% in the third quarter last year.

Pricing improvements led to a $5 million sales increase in the prepared foods segment.

Operating income increased $13 million, over the third quarter of '06, although higher raw material costs minimized gain.

Operating income for the nine months of fiscal '07 is up $31 million over the same period last year.

In the past, we've talked about internalizing raw materials and it goes well beyond bellies to bacon.

For example, we're using and developing more sauces from our plants in Fort Worth and Chicago for a broader range of our own prepared foods.

This reduces the need to purchase sauces from external suppliers and improves the efficiencies of our operations.

In our second quarter call, I told you about a national fast-casual restaurant chain that recently asked us for help with a summer sandwich promotion.

I'd like to report that from our initial meeting in the Discovery Center in April to a national launch, we've achieved this in 60 days.

We're supplying meat and sandwich spreads so that this is a tremendous success story for our prepared foods segment as well as for our Discovery Center.

Now turning from the domestic to our international results.

Total export sales were up $661 million -- I'm sorry, total export sales were $661 million, up 31% from the third quarter last year, and we experienced stronger pricing across all three proteins during the quarter.

Within Chicken, lower volumes and higher sales prices, leg quarters contributed $70 million more to third quarter sales.

Third quarter 2007 volumes were down because we were working to reduce large inventories in the third quarter of 2006, which resulted in unusually high sales volumes.

The news stories recently about China banning all Tyson products were inaccurate.

We continue to do business with China and they are an excellent trading partner.

Not only have we done a good job of growing our leg quarter exports to China, but also to Asia, Africa, and the Middle East.

By having multiple international outlets, as well as focusing our growing domestic demand for dark meat, we are creating a more diversified customer base.

Within Beef, we believe we will move towards improved international beef trade.

Taiwan and South Korea should normalize this fall, and by the end of the calendar year, we expect Japan to change its current practices and allow imports of 30-month and under cattle.

Within Pork, overall boxed pork export sales were higher than the same period last year, but Mexico could not keep pace with last year's record volumes.

We did, however, maintain our market share; strong interest in Japan replaced some of that lost volume.

Now I'm going to talk briefly about the Discovery Center.

The Discovery Center has sure lived up to our expectations.

The facility, along with our strong food service consumer products and R&D teams, has provided a great environment to innovate and create growth for Tyson and our valued customers.

In less than six months, 50 of our largest customers representing more than a third of our total business have utilized Tyson's discovery process to develop consumer insights, create new food solutions, and utilize our unique resources.

We're excited about the opportunities we can create with our customers to drive their growth and ours.

Now just briefly on our cost management initiative.

For the nine months of fiscal '07, we've experienced a 12.4% reduction in SG&A.

Our team has done a great job in controlling costs and it's reflected in the Company's performance.

We've already surpassed our original $200 million cost management initiative goal for 2007 and we expect to exceed $250 million for the fiscal year.

In conclusion, as I've said many times, we can't save our way to prosperity, and we've been working to create new growth opportunities.

I mentioned earlier about our Raised Without Antibiotics and Any'tizers product launches.

We started the new "Thank You, Mom" advertising campaign and our renewable fuels ventures are very exciting, and there are more innovations in the pipeline.

There are always challenges in our business, and despite significant improvement our Company will not be immune.

However, I couldn't be more optimistic about the long-term future of the Company.

We're developing an agile, high-performing organization focused on achieving our long-term success to excellence in demand creation, pricing, and supply chain.

We're going to keep innovating with our customer partners and building international trade relationships to create more game changers for our Company.

In closing, I want to thank everyone at Tyson Foods.

I'm running out of adjectives to describe how pleased I am with the work of our team members over the past year, and I know they will continue generating new ideas for growth and cost management.

I thank you all for your attention and now I'll turn the call over to Susan for your questions.

Thank you, sir.

(OPERATOR INSTRUCTIONS) Our first question comes from Christine McCracken, Cleveland Research.

Your line is open.

Good morning.

Good morning.

Just wanted to touch on your comments relative to beef.

I think you said that you're not really concerned about the outlook for beef, given that we still have the third, I think largest herd on record, and still when I look at your utilization rates in beef, they're now in the mid 80s.

I think that when we look at the latest data it seems like we're still not growing the herd up to your expectations, at least what you've said earlier in terms of expansion.

I'm wondering what's it going to take for the industry to get in better balance?

Is it that we need to shut more capacity or what's going to turn that industry around?

Well, Christine, I think it's a couple of things.

I think if you just look at pure supply, there probably is enough animals that are going to be available to us in the short term.

I think what will help longer term is getting our export markets back.

As I said, I think that between Korea, Taiwan, Japan, and China, I think by the end of the calendar year, we will have a much better export situation for us and for the industry than what we do today.

There's no doubt that in the industry today there still is enough capacity.

That's for sure.

But that is what it is and we're just going to have to be able to play in that game and be the most efficient and be the low-cost producer and be the one that is there driving value for our customers and for our Company.

Well, what happens when -- now that JVS has announced they're going to go to a second shift at Greeley, isn't that going to make the situation even worse?

And how does that fit with your expectations for further improvement in that segment?

Well, again, JVS is going to do what JVS is going to do and we can't, again, change that.

So we have to manage our business as well as we possibly can.

And I still think that the improvement in exports along with our own internal work will keep us very, very competitive in this business.

Okay.

And then just one follow up.

On country of origin labeling, there's been some progress there in terms of some visibility around when that'll come.

How does that affect your cost structure in beef and pork and how are you going to adjust for that?

Now, there hasn't been anything really finalized there.

There has been an amendment that's attached to the farm bill that has hit the House floor and hasn't been through compromised, hasn't been through the Senate yet, so it is really hard to say where this is going to end up.

But the revisions to the original [Cool] legislation are better for us in that the segregation costs should not be as much as they once could have been the way the law was originally written, if in fact, we do get the -- a compromise through the Senate and end up with the law the way the House has approved it at this point.

So yes, it is going to have a cost impact.

It doesn't have as great of a cost impact as it once could have, again, if it comes out the way it is currently written.

All right.

I'll get back in the queue.

Thank you.

Your next question comes from Tim Ramey, D.A.

Davidson.

You may ask your question.

Congratulations, Dick.

This is starting to be fun.

Yes, it is starting to be a little fun.

Thanks, Tim.

Hey, couple of things.

On the Raised Without Antibiotics, I'd love to hear any specific anecdotes about what the penetration rates are with -- I don't know if you can talk about specific retailers or just anything to really give us some sense of how that's going a couple of months into the initiative?

And then I'd love to have you chat about impact on tallow from the biofuels initiative?

Well, Tim, I think it's still probably a little bit too early on the Raised Without Antibiotics.

We have had tremendous interest from our retailers; not only are current customer retailers, but a number of other retailers in geographic areas where we might not have the strength.

I think that it's a great program, it's something that over 90% -- or 91% of the consumers said it was important to them, so I think it is something that is going to gain and will continue to gain traction.

But in terms of specifics, one, I think it's a little bit too early and two, I wouldn't want to talk about specific customers as such at this point.

But we think -- we're glad we were able to introduce it first.

Secondly, on the tallow issue, what we've seen here in the last -- I guess six months anyway, we've seen tallow rise from the low 20s to the mid 30s.

Now that's helped tremendously on the drop credit for our fresh meats group.

We're still very excited about our renewable fuels activities, both with ConocoPhillips, and that's on stream to start the first plant, at this point still in late October, first of November.

We are in the site selection time frame on our Syntroleum joint venture.

We're active in both of those and still believe that they're very important to our future.

And that's really probably about all I can say about that at this point, Tim.

Thanks a lot, Dick.

Our next question comes from Eric Katzman, Deutsche Bank.

Hi, good morning.

Congratulations, again.

Thanks, Eric.

Good morning.

I guess a few questions, first a follow up on Christine's question on the beef plant.

Any word out of your potential competitor in western Oklahoma and whether that plant is further along on being built?

Or what are you hearing in the industry?

Eric, the last I saw publicly was that it was being delayed, but I can't remember the reason why, but that's the status -- that's the last public status that I saw of it.

Okay.

And then second on chicken I guess to also follow up on Tim's question.

You were obviously using antibiotics historically for a reason, assuming that that was going to improve your yield, so there must be some kind of cost to going antibiotic free.

And I'm wondering do you then have to assume that there's a somewhat lower yield in terms of the flock size or how do we think about that?

And I assume that because you're going to get a better price per pound that it works out for you in either case, but I'm just wondering what the offset is?

You're right on your second point.

The revenue stream is a little bit higher.

Our costs are a little bit higher, as well.

Let me just back up and say that if a chicken -- chicken and -- antibiotics do not affect the yield of the chicken per se.

There are going to be flocks of chicken that do need antibiotics, because if a chicken or a flock of chickens are sick, we are going to treat those chickens with antibiotics.

However, those chickens will not go into the Raised Without Antibiotics segment.

They'll go into a different segment.

So in general, we are going to have slightly higher costs, but we're also slightly higher revenue, and what we think we've done here is really answer a consumer need for mainstream America.

Before, you did have the raised without antibiotics chicken available, but in general, they were more available at a tremendously high premium.

We believe now with the Tyson branded chicken available for mainstream and available in a lot more supermarkets that that is right, not only for our customers, but for anyone who wants to have raised without antibiotic chicken.

Okay, that's helpful.

And then last question and I'll pass it on.

Wade, I think you made some comments about a slight roll over in breast prices in chicken and that's affecting your outlook for the fourth quarter.

Does that suggest that your feed costs were fairly -- were already hedged and you're not going to get the benefit of this roll over in the corn?

Because it would seem even if breast prices have come down a bit, given how much corn has rolled over, it should still net out to be a pretty significant positive for you.

I would say that we'll get that benefit from a cash impact, but because of the timing of our -- the weighted cost averaging method, it takes a lot longer for it to flow through the P&L.

So effectively, the way we do our accounting, grain will be effectively flat quarter on quarter.

Okay, but -- but on the roll over, Dick, are you concerned on that or is it -- do you think it's more coming out of the summer or is it a little bit more supply?

What do you think is factoring in there?

Eric, I would say that typically breast meat prices generally peak in the mid-summer period, generally in July.

And I think all we're saying is that if history repeats itself, usually August and September breast prices do have a tendency to soften a little bit.

Plus there is, I would say, a tendency for a little bit more supply to be available.

So I think between the two of them, I think normal seasonal activity plus a little bit greater supply probably has led us to believe we'll see that weakening in breast meat prices during Q4.

Okay, thank you.

The next question comes from Farha Aslam, Stephens, Inc.

Your line is open.

Hey, good morning.

Morning.

How are you?

Good, thanks.

And your pork margin remains very, very high, Dick.

I was wondering if you could just provide us some color on what allowed you to achieve that?

Did you have a good hedge in place?

You cited market spreads were pretty favorable, but from our calculations they were okay to good, but not great, and your margin in pork was great.

Could you just provide some more color on that pork number?

Farha, I'd say it's a combination of two things.

One, it's improved utilization.

And improved utilization that really, really -- I have to give a lot of credit to our pork fresh meat people from an operations perspective.

We have done a great job of reducing costs, making sure that we are running our plants both efficiently and effectively.

And I think that's probably one of the biggest differences is our own internal management of our own pork plants.

Not only from a pure operations standpoint, but how we schedule those plants and all the things that are associated with really running a very, very good commodity business.

The other thing I would add is on our case-ready side of the business, we did see some good volume improvement on our case-ready pork and that also is factored into that pork segment.

So I think those are the two primary reasons.

and we had reasonably good export sales led by Japan also in Q3.

And when you look out into the next quarter, would you anticipate your fiscal fourth quarter volumes to -- or margins to be even better in pork given that it's going into the seasonally easier period with lower hog costs?

Farha, I'm not going to answer that.

That would be -- that would be probably telling you a little bit more than what we want to -- than what we want to give you at this point.

Okay, that's fair.

And can you comment on market talk that China is potentially increasing their import of pork, possibly from the U.S.?

Well, that's a very, very interesting topic, because there is a lot of rumors, there is a lot of talk about disease in China amongst a very, very large herd, and it's very difficult to get good information.

I do believe that there is an opportunity there, but as of yet, we haven't seen -- I don't think we -- and I mean us Tyson, as well as the industry, has really seen anything definitive in terms of China importing lots of additional pork from anywhere in the world.

So I think it remains to be seen.

It could be a very positive for us in the industry, but as of this point, there's nothing definitive that we can point to that says that is, in fact, going to happen.

Thank you.

And can we just switch to chickens and your chicken antibiotic free, what premium versus normal chicken are you selling at right now?

And longer term, where do you think that margin could be in terms of pennies per pound?

The only thing that we have said publicly, Farha, was that the on-breast meat itself, that by the time that product got priced to the consumer that we thought there'd be less than an $0.80 a pound up charge for that breast meat.

Now that would include everything.

so not only what we would be charging, but also what the retailer would be adding on in the way of their margin or their markup.

And that is considerably less.

That's about half of the increase that is out there on your more niche brands, which are easily over $1.50 to more like $2 a pound on boneless breast meat.

Great.

Thank you very much.

Our next question comes from Kenneth Zaslow, BMO Capital Markets.

You may ask your question.

Hey, good morning, everyone.

Good morning.

I guess the first question I have is, you guys said that you're generating more cost savings than the expectation.

What will you be doing with that excess money?

Is that going to be dropping down to the bottom line next year?

Are you reinvesting that?

How do you think about that extra, I think, $50 million?

Well, Ken, I would tell you that we are looking at that in a number of different ways.

I think that we will reinvest some and we will attempt to drop some to the bottom line.

As an example, our "Thank You, Mom" campaign is going to cost us some additional dollars in advertising, so we're looking to reinvest there.

We are looking to make sure that our Discovery Center is being fully utilized, which we have some additional depreciation, but some additional expense from an R&D perspective to invest in our customers and to invest in building that win-win situation for not only us, but for our customers.

So I think it's a combination of attempting to drive growth, but also dropping some of that to the bottom line.

The second question is, on your longer term outlook for chicken -- or maybe not longer term but like at 12 months to 18 month outlook, the thought was with higher corn prices it kept more rational production.

Is your outlook more optimistic or less optimistic, given that corn has come back 25 or so percent.

Is that good or bad for how you think about the industry?

Well, I guess I could answer that by saying it might have some good and it might have some bad.

Certainly the lower cost of corn as an input certainly gives us lower cost of goods on our Chicken segment, so that's a positive to make sure that it's a very competitive protein, both domestically and internationally.

On the other hand, I would tell you that lower corn prices have had a tendency to increase supply, so I think there's a double-edged sword there.

But overall, I would say that lower corn prices are a positive for our Chicken segment results going forward.

Great.

Thank you very much.

Our next question comes from Jonathan Feeney, Wachovia.

You may ask your question.

Thank you.

Good morning.

Morning.

Dick, you mentioned that by year end you were hoping that we're in a much better situation on the beef side, beef exports being the key to normalization of margins in this market.

I guess I was just looking at the May data, we're still at 18% of pre-ban levels to Japan.

In that market particularly -- which is really sort of the meat and potatoes, if you will, of the Asian export market -- what reason is there for hope that we're going to see improvement over the next six months?

Well, Ken, I do believe that there is a lot of -- there is a lot of discussion going on between USDA, USTR and the Japanese government.

And I feel fairly confident that we will see a change in the age specifications on product going minimally to a 30 month and down type of a program by the time we get to the end of the calendar year.

I believe that.

I think there's very, very good possibilities that that will take place and that's where my optimism comes from.

And I said the end of the calendar year, not the end of the fiscal year, so --

Right.

-- by December 31, I believe that that will be the start to a much bigger export potential to Japan.

And you're right, that is the meat and potatoes of our beef export.

Thanks.

And you mentioned conversion costs had improved 7.6% year over year in beef, do you expect similar conversion costs improvements or continued conversion cost improvements over the course of the next 12 months in beef or are we sort of in the right place now?

Jonathan, I would tell you that we still have -- I believe we still have some improvements that we will continue to work on.

That beef team is also doing a great job just like the pork team, and I believe there still are some additional improvements there that we'll be able to do over the course of the next year.

To say that we can achieve another -- an incremental 7.6%, that might be a little aggressive.

Okay.

And just -- and finally on the chicken side.

I guess we've seen the broiler hatchery numbers start to come up a little bit and part of that's, I guess, the stabilization of corn prices and to be expected.

Is this consistent with what you've seen in prior profitability in times of comparable profitability in past cycles?

Is this sort of -- ist this a buildup of supply you're seeing or is this more restrained than usual?

I think restraint has been part of the game here.

I think typically we might have seen a greater rise in terms of supply potential.

I think the key, though, is still -- I think there's a lot of volatility left in terms of what might happen on grains here.

We have a much greater crop potential in the acres that have been planted.

Some would say that the yields are going to be a lot better, some would say they're not going to be much better, so I think there's still a lot of volatility.

We do know that with the price of crude oil where it is and with ethanol profitability most likely where it is that the demand for corn is also going to continue to be strong.

So my only reason for even talking about that is I do believe that there still is volatility in corn in terms of where the pricing of this crop and looking into next year where all this might end up at this point.

So I think there is still some restraint in terms of adding supply based on that factor and really that factor alone.

Great.

Thank you very much.

Our final question comes from Ann Gurkin, Davenport.

You may ask your question.

Good morning, I know you all talked a little bit about the weakening in breast prices and I just wanted to review it again.

It's my understanding that the seasonal demand has been more spotty than normal and is that due to consumers facing pricing?

And can we go through that one more time?

Ann, are you talking about historically or --

Yes, on a historic basis, yes.

On a historic basis.

The seasonal demand this year versus the historic average level.

I think that we have seen some reasonably good demand this summer, especially on the food service side.

We have also seen some reasonably good ads on the retail side.

So I think given that the supply that has been out there, we've had reasonably good demand during our third quarter on breast meat.

We went up, we retreated, we've gone back up again, and now probably -- again, as I said earlier, we are probably looking for a little bit of softness as we finish out the fourth quarter here during August and September.

Other competing proteins are still relatively high, meaning beef and pork are still relatively high prices.

So chicken and all the elements of chicken in terms of featuring are still a very, very good value with breast meat prices where they are today.

So the seasonal demand is in line with what you were expecting as we went into this period, is that fair?

Yes, I would say that is fair.

And then can we get an update -- I'm sorry if you talked about this, but on resetting the meat cases and grocery stores, where are we with that?

You're going to have to give me --

At your Discovery Center you showed us a new meat case where it was reset with more Tyson products.

Where are you in terms of resetting that case?

Oh, okay.

That's something that with each and every customer that comes to the Discovery Center, we talk to them about resetting the meat case, regenerating, really, around Tyson activity.

And that's an ongoing process that we talk to our customers and our retailers each and every day about it.

I just thought I would tell you it's not an event, it's a process that we are constantly working to get more SKUs and to get more placement of our products, whether they be beef, pork, chicken, or prepared foods, within the meat case of today and within the meat case of the future.

That's great.

Thank you very much.

There are no other questions.

Well, very good.

We appreciate you taking the time this morning to join us.

We thank you.

I thank all of our Tyson team members for their hard work, and have a great day.

This concludes today's conference.

Thank you for joining us.

You may disconnect at this time.