Donnie D. King
President, Chief Executive Officer & Director at Tyson Foods
Thanks, Sean, and thank you to everyone for joining us this morning.
I'm pleased with our performance in Q2, and I want to thank our team members for their ongoing commitment to driving operational excellence. We've certainly come a long way from where we were a year ago and wouldn't be where we are today without their hard work. Our momentum continues to strengthen and all of our businesses are running better today than they were last year. Our results this quarter are part of a solid performance in the first half of fiscal 2024 compared to the first half of last year. Adjusted EPS and adjusted operating income are both up nearly 60%, while operating cash flow increased by more than 50%, and capex decreased by more than 40%. This performance gives us confidence in our improved outlook for the fiscal year and in our long-term future.
As you saw in our results, tailwinds in Chicken again offset headwinds in Beef as we benefit from our multi-protein portfolio. While we're not immune to the macro-environment, we are taking steps to reduce our exposure to commodity markets. We are expanding our offerings in seasoned and marinated meats to value up our portfolio across Beef, Pork and Chicken to provide consumers convenience and new flavor options. Across our brands, we are focusing on meeting the consumers where they are by offering convenient restaurant-quality food options at home.
We are a leader in protein with some of the most iconic brands in food with offerings that span the value spectrum. This is why our share remains healthy despite a more challenging environment for consumers. We continue to support our brands through efficient marketing, effective innovation and strong partnerships with our customers. We continue to build financial strength by being disciplined in our capital deployment to improve cash flows and position us well to tackle challenges and capture opportunities. We also continue to take bold actions to improve performance and drive long-term value for shareholders. And I remain highly confident in our strategy and optimistic about our future.
Now let's delve into an update on market share. At Tyson Foods, we have a broad portfolio of offerings across foodservice and retail at a range of price points to meet consumers where they are, even as they manage through a challenging macro-environment. We also have some of the strongest and most iconic brands across food and beverage behind the Tyson, Jimmy Dean and Hillshire Farm names, which allows us to make efficient choices to maintain margin while strengthening our shelf position. We see this in the strength of our dollar share in our core business lines, which we believe reflects the quality of our share position. Since Q2 of fiscal 2019, we've added 400 basis points of dollar share in our core business lines. While our share is down modestly versus last year as we lapped some record performance, we have gained dollar share over each of the past three quarters.
Our core bacon brands, Wright and Jimmy Dean have contributed to this recent growth. In fact, our dollar share in bacon for Q2 was at a record high level over the past five years and we were the fastest-growing in the category during the quarter. I'm excited about our opportunities in bacon and expect our share to continue improving as our new bacon facility that opened in January ramps up. The value proposition of our iconic brands resonates strongly with our consumers and our market share and household penetration rates remain healthy. We continue to have opportunity to expand the household penetration of our great brands, leaving room for continued share growth over the long run.
Moving on to the segment performance, starting with Prepared Foods. Consumers focus on value continues to impact our retail volumes. However, our share remains healthy, and as I mentioned, we are gaining dollar share in bacon. Our volumes outside of retail continue gaining traction as we strive to grow this business with a focus on customer diversification and margin-accretive channels. Operational efficiencies and lower raw-material costs drove solid profitability both in Q2 and the first half of fiscal '24. In Chicken, the momentum established in the second half of fiscal '23 continued in Q2. In fact, versus the second quarter of last year, AOI increased more than $325 million. While we are benefiting from better market conditions, including lower grain costs, our bold actions and focus on the fundamentals are also evident in our results. We have made progress across the value chain.
Our live operations are substantially better. We've improved yield, labor efficiencies and utilization in our plants. Our demand planning and customer service have also taken significant steps forward. When our live operations are running well and our demand plan is more accurate, we can operate more efficiently and better service our customers. In summary, our focus on getting back to the basics in Chicken is working. As you all know, in Beef, limited cattle supplies led to spread compression. Despite some quarterly volatility reflecting market conditions, our results for the first half of fiscal year have come in as we expected. Our goal remains to offset some of the challenges of a tight cattle supply environment by focusing on the controllables, such as labor utilization and managing mix to meet customer and consumer demand.
Turning to Pork, better spreads and ongoing operational execution led to improved profitability in the quarter in the first half of the year. As you may have seen, we made the difficult decision to close one of our Pork facilities. This is part of our efforts to optimize our footprint and improve performance by reallocating resources to nearby more efficient plants while improving mix and better serving our customers.
Now let me take a step back and talk about our recent corporate rebranding initiative. We launched a new corporate logo earlier this year that captures our One Team One Tyson spirit. It encompasses our differentiated capabilities and scale and our diverse portfolio across channels, categories and eating occasions. Our Tyson Foods corporate logo represents our company's legacy and our team's purpose, which is to feed the world like family. Our approach to driving long-term value hasn't changed and is built on a core of three key pillars. First, we are fortifying our foundation of core proteins. We strive to be best-in-class operators while continuing to look for ways to value up our portfolio. Second, we are building our brands by delivering innovation for new occasions, categories and channels to better serve consumers.
Today, we have three of the top-10 protein brands with room to expand our household penetration. Brands are our best opportunity to drive faster growth, higher margin and stronger returns. Third, we are growing globally. Our international business grew revenue eight-fold to $2.5 billion over the five years through fiscal '23. We expect to drive profitable growth over time by capture expanding consumer markets, particularly in Asia, and we believe we are well-positioned to win. These strategic pillars are supported by key enablers of operational excellence, customer and consumer obsession along with data and digital.
A key element of operational excellence is to gain enterprise scale and unlock savings in our controllables by modernizing our operations and driving performance to standards. We win with our customers by building long-term partnerships and delivering top-tier experiences. We enrich consumers' lives by creating best-in-class marketing and innovation. Finally, we continue to build our digital capabilities utilizing data, automation and AI tech for better decision-making and outcomes.
Before I hand it over to John to review our financial performance, let me remind you of our priorities this year where we focused on controlling the controllables. Our results for the first half of the year clearly show that we are controlling our capex and working capital to drive strong cash flow. Another priority is to optimize our footprint and network. We've closed the last of the six chicken facilities that we announced in 2023, along with the two case-ready beef facilities. And as mentioned earlier, we are closing one of our pork plants. We're also focused on operational excellence by restoring performance in chicken, strengthening prepared foods, managing beef through a difficult cattle cycle and driving efficiencies in pork. As you have seen in our results so far this year, we are making tangible progress in all these areas.
With that, I'll turn the call over to John.
