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About Cobb-Vantress, Inc.

Tyson Foods spreads its wings beyond the chicken coop. While it is one of the largest US chicken producers (with processing capacity of some 45 million a week), Tyson's Fresh Meats division makes it a giant in the beef and pork sectors as well. The company also offers value-added processed and pre-cooked meats and refrigerated and frozen prepared foods. Its chicken operations are vertically integrated -- the company hatches the eggs, supplies contract growers with the chicks and feed, and brings them back for processing when ready. Tyson's brands include Tyson, Jimmy Dean, Hillshire Farm, Ball Park, Wright, ibp, Aidells, and State Fair. Its customers include retail, wholesale, and food service companies worldwide, although the US accounts for most sales.

Operations

The company operates in four reportable segments: beef, chicken, prepared foods and pork. The company makes some 35% of its revenue from its beef segment and about 30% from its poultry operations. Prepared foods and pork products contribute about 20% and more than 10%, respectively.

Beef segment includes operation related to processing live fed cattle and fabricating dressed beef carcasses. The chicken segment includes operation related to raising and processing live chickens into, and purchasing raw materials for fresh, frozen and value-added chicken products, as well as sales from allied products. Prepared foods includes operation related to manufacturing and marketing frozen and refrigerated food products and logistics operations to move products through the supply chain. Pork segment includes operation related to processing live market hogs and fabricating pork carcasses.

In terms of volume Tyson Foods is, indeed, a chicken company, with processing capacity of more than 45 million chickens a week compared to about 461,000 pigs and 155,000 head of cattle at its around 200 food production plants worldwide.

While its chicken operations reach from egg to drumstick, Tyson raises no cattle of its own. It buys live cattle on the open market, and they're raised under contract at third-party feed lots. The majority of Tyson's swine are bought from producers; however, it does raise some swine and supplies feeder pigs to independent producers on a contract basis.

Among Tyson's facilities are processing plants, rendering plants, blending mills, feed mills, broiler hatcheries, breeder houses, and distribution centers.

Geographic Reach

Headquartered in Springdale, Arkansas, Tyson Foods serves retail and foodservice customers across the US and in about 145 other countries worldwide.

Tyson's major export markets include Australia, Canada, Central America, Chile, China, the European Union, Japan, Mexico, the Middle East, South Korea, Thailand and Taiwan. The company generates limited revenue from exports however; they account for about $5 billion annually.

Sales and Marketing

Tyson's products are marketed and sold primarily by its sales staff to grocery retailers and wholesalers, meat distributors, warehouse club stores, military commissaries, industrial food processing companies, and chain restaurants or their distributors, among other customers. Additionally, sales to the military and a portion of sales to international markets are made through independent brokers and trading companies. Walmart alone accounts for more than 15% of its sales.

Tyson promotes its products with marketing, advertising, trade promotions, and consumer incentives such as coupons, discounts, rebates, and volume-based incentives.

The company advertising expense totaled $276 million, $243 million and $238 million in 2019, 2018 and 2017, respectively

Financial Performance

Since falling from $41.4 billion in 2016, Tyson Foods' revenue has steadily increased. Net income has had a stronger journey over the past five years, more than tripling since 2014.

In fiscal 2019 (ended September) the company reported revenue of $42 billion, up 6% from the prior year. The results were powered fairly equally by growth in sales volume (up 8.8%) which accounted for an increase of $3.5 billion primarily driven by incremental volumes from business acquisition which impacted the Chicken segment and International/Other, partially offset by business divestiture in fiscal 2018 in its Prepared Foods segment.

Net income that year was down 33% to $2 billion because of the increased revenue and a over $460 million income tax expense (related to the Tax Cuts and Jobs Act of 2017) compared to an $282 million benefit in fiscal 2018.

Cash at the end of fiscal 2019 was $484 million, an increase of about $214 million from the prior year. Cash from operations contributed $2.5 billion to the coffers, while investing activities used $3.4 billion, mainly for acquisitions and capital expenditures. Financing activities used another $1.2 billion, primarily for stock buyback and dividends paid.

Strategy

Chicken, beef, and pork have at least one thing in common: they're protein. And that's what Tyson Foods is placing its bets on. The company is going all-protein, all the time, divesting its non-protein businesses Sara Lee Frozen Bakery, Kettle, TNT Crust, and Van's. As it focuses on sources of protein, Tyson committed itself to producing that protein sustainably. It says that investments in sustainability should reduce waste and costs.

To help it develop more protein products, Tyson Foods is backing a $150 million fund to invest in food innovation. New Tyson Ventures focuses on commercializing alternative proteins, addressing food insecurity and food loss through commercial models, and promoting better use of resources, safety, and consumer empowerment in the food chain. The fund invests in entrepreneurial food businesses and Tyson provides expertise to accelerate development. Some major acquisitions over the past couple of years (Keystone Foods, AdvancePierre Foods) have also opened up new product avenues.

Besides developing new protein and products, Tyson Foods looks to run a leaner organization. The company began implementing a restructuring, what it calls a Financial Fitness Program, in late 2017. The program involves the integration of acquisitions and finding cost cuts and overhead improvements in supply chain, procurement, and the prepared foods and chicken segments to reach a total savings of $600 million by the end of 2020.

In addition, Tyson Foods partnered with Grupo Vibra, a Brazilian producer and exporter of poultry products. The investment will enable Tyson Foods to access poultry supplies in Brazil to meet the growing needs of Brazilian customer and of priority demand market in Asia, Europe and the Middle East. It is part of Tyson Food strategy to develop a more flexible supply chain and mitigate the volatility of their previous model, which relied primarily on U.S. export.

Mergers and Acquisitions

IIn 2019, Tyson Foods acquired the Thai and European business from BRF SA. The $340 million (USD) purchase includes four processing facilities in Thailand, one processing facility in the Netherlands and one processing facility in the United Kingdom. This deal builds on the company's growth strategy to expand offerings of value-added protein in global markets.

Company Background

Tyson Foods was founded in 1935 by John W. Tyson. In 1963 the family took the company public. Throughout the 1990s Tyson Foods entered new markets worldwide including countries in the Americas and the Asia-Pacific region. It became the world's largest processor and marketer of chicken, beef, and pork through the 2001 purchase of IBP.

Cobb-Vantress, Inc.

4703 Highway 412 E
Siloam Springs, AR 72761-8906
Phone: 1 (479) 524-3166

Firm Stats

Employer Type: Privately Owned
CIO, IT Directors: Chris Cry
Research Operations Manager: Cody Keen
Vice President, Production Operations: Randy Vardeman
Employees (This Location): 2,000
Employees (All Locations): 2,150

Major Office Locations

Siloam Springs, AR

Other Locations

Cleveland, AR
Fayetteville, AR
Siloam Springs, AR
Blairsville, GA
Cleveland, GA
Hartwell, GA
Monticello, KY
Wadesboro, NC
Rose, OK
Spavinaw, OK
Kinards, SC