Welcome to the Tyson Foods’ Quarterly Investor Earnings Call. At this time, all participants are in listen-only mode. After the presentation, we will conduct a question-and-answer session. [Operator Instructions] This call is being recorded. If you have objections, you may disconnect at this point. Now, I will turn the meeting over to your host Jon Kathol, VP of Investor Relations. Sir, you may begin.

Good morning and thank you for joining us for Tyson Foods’ conference call for the fourth quarter and 2015 fiscal year. On today’s call are Donnie Smith, President and Chief Executive Officer; and Dennis Leatherby, Executive Vice President and Chief Financial Officer. Our remarks today include forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause the actual results to differ materially from our expectations and projections. I encourage you to read the news release issued earlier this morning and our filings with the Securities and Exchange Commission for a discussion of the risks that can affect our business. We use non-GAAP results to provide investors with a better understanding of the Company’s operating performance by excluding the impact of certain non-recurring items affecting comparability. This morning, we will be referring to our fourth quarter and fiscal year adjusted results. As a reminder, fiscal 2015 included 53 weeks, with the additional week falling in the fourth quarter. Because our guidance for fiscal 2015 was on a 52-week basis, the adjusted results that we will be referring to exclude the impact of the additional week. Please refer to today’s news release for a full reconciliation of our GAAP to adjusted results. To ensure we get to as many of you as possible during the Q&A session, please limit yourself to one question and one follow-up, and then get back in the queue for any additional questions. I’ll now turn the call over to Donnie Smith.

Thanks, Jon. Good morning, everyone. And thanks for joining us today. I’d like to begin with a recap of another record year. With record adjusted earnings of $3.15 a share, it was our fourth consecutive year of EPS growth. Adjusted sales were $40.6 billion, a record for the sixth consecutive year. Adjusted operating income was a record $2.3 billion, an increase of 37% over last year and the third consecutive year of growth. Cash flows from operations were a record $2.6 billion, nearly doubling our previous record set in 2010. And the three-year compound annual growth rate for adjusted EPS is 17%. We’re certainly pleased with those accomplishments, especially in light of knowing we achieved them despite unusual challenges throughout the year. The West Coast port slowdown was a significant disruption for Beef and Pork exports, resulting in a $90 million negative effect. There was an avian influenza outbreak that closed several export markets for our Chicken business and affected our turkey operations for a total impact of $139 million. And in the last couple of weeks of the fiscal year, there was an unprecedented decline in the live cattle futures market, resulting in $70 million in losses from mark-to-market positions and an LCM inventory charge. We did not adjust our earnings for the nearly $300 million of these challenges costs and we still produced record adjusted sales, earnings, operating income and cash flows. Meanwhile we paid down debt, bought back $250 million of our stock, and successfully integrated two companies into Tyson 2.0, while capturing $322 million in total synergies. We have a great team at every level of the organization, and I want to thank them for staying focused and delivering despite all the challenges and distractions. Now, I’d like to give you some color on our operating…

Thanks, Donnie and good morning everyone. Fiscal 2015 was another record year as we proved our diversified business model can generate strong steady cash flows. Our operating cash flow of $2.6 billion allowed us to invest in our businesses, reduce debt and resume meaningful share repurchases as we bought back $250 million worth of shares in the fourth quarter and $200 million so far in Q1 of fiscal 2016, for a combined total of $450 million and more than 10 million shares. Fiscal 2015 adjusted revenues were $40.6 billion, representing 9% growth compared to prior year driven by a full year of Hillshire Brands results, offset by reductions from divestitures in our international operations. Total company adjusted return on sales for fiscal 2015 was 5.5%, and adjusted operating income was approximately $2.3 billion, representing a 37% increase over fiscal 2014. Our adjusted earnings of $3.15 per share, represents a 7% increase over our previous record of $2.94 last year. As we described in our press release this morning, live cattle futures experienced a large and rapid decline in September. This negatively impacted us in the fourth quarter by $70 million from losses on mark-to-market open derivative positions and lower cost or market inventory charges, which cost us approximately $0.11 per share. To be clear, we have not added this back for adjusted EPS purposes. We expect $218 million on capital expenditures for the fourth quarter and $854 million for the full fiscal year. This outpaced our depreciation by $245 million in fiscal 2015, as we continue to invest in projects with a focus on delivering high return on invested capital. On a GAAP basis, our effective tax rate in fiscal 2015 was 36.3%. On an adjusted basis, this was 34.3%. In the fourth quarter, we completed the sale of our…

We’ve wrapped up a record setting year at Tyson Foods; we’re off to a great start for 2016. From where we sit today, it looks like it will be another record year as we continue to deliver on our goal of at least 10% annual EPS growth over time. We’re capitalizing on the benefits of our diverse portfolio and our branding power. Our Prepared Foods business is performing very well and we’ll be capturing even more synergies this year giving us fuel to drive growth. Our Chicken business is strong. Pork continues to do well. And we think the worst is behind us in Beef. We bought back $250 million of our stock in Q4 and $200 million so far in Q1. We’re projecting strong cash flow and a positive outlook that will allow us to continue buying back our shares through 2016. And as Dennis said, we’ve just increased our regular dividend by 50% and plan to continue increasing it by at least $0.10 per share annually. We’ve got a lot of reasons to be confident. And we think 2016 is going to be another great year of producing strong shareholder returns. That concludes our prepared remarks. Operator, we’re ready to begin Q&A.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question is coming from the line of Adam Samuelson at Goldman Sachs. Your line is open.

So, I guess my question, Donnie, on guidance and a couple of different pieces here. First, I want to understand the guidance for the Prepared Food margins near 10% despite the fact that you’ve got about $175 million of year-over-year synergies and very sizeable year-over-year raw material tailwinds. Can you help us think about the scale of SG&A and reinvestment that you’re doing in the business? And then second, in Chicken, help us bridge the 12% margins you did this year to around 10% plus that you’re expecting for next year?

Sure, Adam. So on the Prepared Foods part, will take that first. We will be -- typically, we spend about 5% of sales in MAP. We’re going to be spending a little over that in this year, as we focus on the Hillshire Snacking and the Jimmy Dean launch and the new Jimmy Dean marketing campaign. We’re also investing in price gaps versus the competition. We’ve got some room in Jimmy Dean Roll Sausage. We’ve got price gaps in Hillshire Farm smoked sausage. And we need to get our lunchmeat business. We’ve just moved back the line pricing there as now we’ve got the turkey raw materials coming back to us from the AI. So it’s very important for us that we regain our volume growth in these categories. So, we’re going to be investing in trade and investing in MAP spending to drive our growth in those categories. Switching over to chicken, you’ve got a pretty cheap environment now with fresh meat trading pretty regularly below $0.90 a pound delivered. You’ve got leg quarter markets trading sub $0.20 and depending on how disjointed your logistics are you’re probably FOB the plant somewhere in the $0.12 to $0.13 range. That’s a pretty soft environment for pricing. We’ve got a lot of volume that is in RFP now. And so we feel very comfortable that we’ll be better than 10%, but we want to be cautiously optimistic until we get through this RFP season on our chicken business. But let me hasten on to say that our brands give us a good bit of insulation from our competition, plus our quality service and innovation helps set us apart. And we’ve done a lot in the last four years to optimize our poultry portfolio and to structure the pricing models within each part of that portfolio to deliver stable results. And that’s what we think will happen again this year.

It’s very helpful. And then maybe as a follow-up, can you help us think through the export assumptions that you’re thinking about for really chicken, beef and pork, and how those are influencing your margin outlook?

Yes. So, in chicken, we’ve actually forecasted sub $0.20 leg quarters for the rest of the fiscal year inside of our projection. So, if we get a feel of these AI closed markets to open up, that could be a little upside for us but we don’t have that baked into the plan. As we look at pork and beef, we’re going to continue to see based on a strong dollar competition from other regions around the world. You might think that we’ll have maybe a little bit of growth in the beef’s export volume for the year, probably not expecting very much in pork, but -- and then maybe you see chicken exports improve. So one thing to note though, I think we mentioned in the last call or two that we were taking a lot of our beef items like Short Plates and those kind of things, and rolling those in to the trim stream; those are now going back out into the export markets. Now they’re going back into those markets at much lower pricing than they were before, but it is better than the trim stream. And then one thing that -- I said one thing, there’s been about three things. Sorry. One last thing I’d like investors to think about is we have not projected any impact for MCOOL. [Ph] So, depending on whether or not Congress fails to act or acts and there are retaliatory tariffs, those would provide some cautionary note in our export sales. But we don’t have anything forecasted for that, and we also don’t have any AI impact built into our projection. So that’s the view.

Thank you. Our next question is coming from the line of Diane Geissler of CLSA. Your line is open.

First of all, congratulations on your quarter and just really your operations, all year long. I wanted to -- and thanks also for some of the details on your value-add portfolio and the breakdown on consumer retail versus foodservice. I guess, I just want to come back around on the chicken outlook and say that I think in the press release, you’ve said it was 2% from the USDA, but you actually expected it to be up a little bit more than that and that foodservice could possibly see demand lower than supply. So when we think about these breakdowns that you’ve given us, how much of that is sort of already booked in with a guaranteed margin? So, you’ve priced out a contract with the national account, you know what the margin on that will be in 2016. Can you provide us some color on what you know you’ve already booked versus maybe what is a little bit more open to the market as we get later in fiscal 2016?

It’s difficult to answer with a lot of specificity. I don’t know how to say that word specificity. You know that word, right? But let me say this, so as far as what we would have booked today that has pricing set and has perhaps the cost in commodity futures underneath it, you’re talking sub 20% of the portfolio but we have a lot of our portfolio that is line priced; we have a lot of the portfolio that has very short volume windows. So, if you ask me what is my expectation about how well we will do through pricing season and how well we’ll be able to maintain at least 10% margins or better, I feel very good about that. A couple of reasons, we’ve got the largest brand at present out there in the U.S. in Chicken. Our value-added portfolio, now we’ve got capacity around us to where we can continue to grow that. And by the way, our buy versus grow strategy in a year like this is a competitive advantage because we’re able to buy very, very cheap raw materials and then further process that into value-added items for predominantly foodservice, but also some at retail. And we’ve got best-in-class quality; we’ve got best-in-class service. And I think that drives our customers to us to ask us to help grow their categories. And we’ve got the innovation capabilities that they’re looking for to continue to grow their business. So that sets up very well for us. And I’m very positive about our Chicken business for 2016.

Have you finished most of the fall contracting with the foodservice?

No, it’ll take us about another 60 days or so to get through it. I can tell you that the early read is it’s going pretty good.

And just on the export -- to follow-up on that question, I mean it’s been awhile since we’ve had an AI case -- a new AI case discovered on the back of the high-path that happened earlier this spring. So, based on your experience, how long does it take for the trade partners to open the doors? I mean, at what point will they look at it and say, okay, there’s -- no new cases, we don’t expect any more cases and now we’re going to think about taking products from the U.S. again?

Historically, it’s been around six months to nine months, although I can tell you we haven’t had very many. We’re about nine months past March 5th now and we haven’t had very many regions open the doors yet. There is a lot of trade negotiations going on. TPP is up in the air, you’ve got MCOOL [ph] up in the air. There’s just a lot going on around trade. I don’t know how much that’s impacting. Whether or not these countries open up, we feel very safe about our supply chain. So, I don’t see any reason there for there to be any reason not to want to take great part of it from the U.S. So I’d really hesitate to try to guess on when these things will open up. So what we did, Diane, is we just put the current pricing in our year for the whole year. And if anything breaks lose, then it will benefit us.

Thank you. Our next question is coming from Brett Hundley of BB&T Capital. Your line is open.

Just two questions for me. Donnie, I can certainly appreciate you’re lowering your normalized range on beef just given challenges in recent years. But maybe to put this move into Wall Street jargon, I wonder if you’re downgrading the segment at the bottom here. One of your competitors in the space fairly recently was more bullish than I would have expected on the beef market going forward. And I’m just wondering as you add up the pieces, if you guys could potentially find yourselves above that new normalized range and back within your old range by 2017 or so?

So, first, let me explain why we took the action we did. We really did feel it’s important for our investor base to have a really solid understanding of what we feel the margin environment is going to be that we face out over the next few years. You’ve got relatively low cattle supply, you’ve got too much -- well, not to say too much, probably not the right way to say it, but you’ve got excess industry capacity. And that limits our ability to drive margins above the 1.5% to 3%, we think. I would say this though is that are there likely to be quarters out in those future years where we would see margins in the previous. Yes, I think you should expect that. But overall, for annual guidance, as we look forward for the next few years, this is the environment we think we’ll be operating in.

And then, my last question is just on your Prepared Foods business. Just to maybe help me with modeling that top line better, going forward, I was wondering if maybe you would separate out your legacy and Hillshire areas or maybe even talk to the different parts of your Prepared Foods business, more about volume and price expectations going forward. You have a very vast business there. And when I walk to stores here in my area, I see a fair amount of competitive behavior amongst all the participants. And you talked about your wanting to push volume growth. You’ve mentioned the synergy capture that you guys are garnering which I think gives you a lot of fire power there. But I just want to understand top line dynamics better on a go forward basis between different areas of your business there?

So, as you look at our Prepared Foods business, and I’m going to be painting with a fairly broad brush, it’s relatively evenly split between retail and foodservice. So if you think about our foodservice Prepared Foods business, so let’s look at that first. You’ve got predominantly a pizza toppings business and other ingredient meats combined with the portfolio of breaded products, tortillas, flat breads, that kind of thing, and the former, if you will, bakery and sweet goods business from Hillshire Brands. So, a lot of the meat in that portfolio is priced on a trailing basis to the markets. So, as the markets go down and we do expect cheaper pork raw materials, typically our pricing in Prepared Foods would go down as well, but we would hang on to the margin. And it would recover in some period of time. We’ve tried to shorten that window from 90-plus days down to 45 to 60 days or so and that should help stabilize the margin regardless of which way the market is moving. The bakery and sweet goods business has a very stable, low double-digit margin. And so, again, there is opportunities for us to grow a bit in that category. Although we do think that the largest potential is to continue to grow the meat business inside our Prepared Foods on foodservice side. Now let’s switch over to retail. We talked about the core nine on the script. And what we’re seeing -- let’s take it apart just a little bit. Jimmy Dean breakfast sausage, Hillshire Brands smoked sausage and our Hillshire Brands lunchmeat have been the three categories where we need to drive volume. We have seen -- let’s go from the bottom-up. So Hillshire farm lunchmeat. Obviously, our shortage of raw material and turkey has…

Thank you. Our next question is coming from the line of Farha Aslam of Stephens, Inc. Your line is open.

Donnie, could you talk about the synergy targets that you’ve set out? You’ve increased your long-term synergy target by $100 million. Could you share with us what gave you the confidence and where you’re finding that extra $100 million of cost savings?

Sure, Farha. So operational improvements through fiscal 2015 were more than we thought and we see increased opportunity as we get into 2016 to -- in the operational improvement. We’re just getting started on some of the network stuff. That’s probably going to be more of a 2017 answer for us. The purchasing synergies, as we work with a lot of our great supply partners, we’ve worked on several packaging innovations and just rethinking a lot of the categories. And together with our supply partners, we’re finding ways to lower our cost in a lot of these purchasing categories. And that has really been the increase that we see the most of in 2016. So, it’s really a good story and it provides a lot of fuel to fuel our growth.

And just to be clear, are you including sort of internally sourcing your meat for Hillshire in this 2017 number now?

No, not yet, Farha. We’re still under contract with other suppliers with our Hillshire -- former Hillshire Brands raw materials. And until those contracts run out and that could be anywhere from 12 months to 24 months, we’ll still be buying raw materials for that business from other folks.

And just as a follow-up, if we can think about Tyson’s longer term kind of ROIC targets and how beef fits in with those targets with your new reduced beef margins? That would be helpful.

I’ll take a break and get a cup of coffee. Dennis?

Farha, this is Dennis. Our longer term goal would be to be at 20% ROIC overall. And just to give you a little bit of a perspective around Beef, even at a 2% return on sales, we have about a 15% ROIC. So, 2.5% gets you pretty close to 20%. And we see no reason why we can’t work our way toward it.

Our next question is coming from the line of Kenneth Zaslow of BMO Capital Markets. Your line is open.

Just a couple of follow-up questions. You recently closed one of your plants, your beef plant. How much operating profit or cost reduction will you get from that and how much of that adds to your margin structure? I know that you took down the beef packer margin outlook, but I would think that would be at least somewhere between 30 basis points and 40 basis points incremental. How do you think about that?

Ken, you’d be higher there. It obviously depends on the fundamentals in that region about the cattle that come to market and that kind of thing, but 30 is too high. As I think through it, it’s hard for me just to put a number on it, but you’re high at 30. I promise.

And then the $139 million associated with the bird flu and turkey, how much of that get recuperated next year and the year after and how do you think about that?

So quite a bit of that’s caught up in the export markets, not being able to ship. Obviously -- I don’t know the breakout of the 139, how much is the Chicken export number versus how much is the actual turkey problems. But the turkey part of that should rebound as we get the plant full and we have the raw materials and we regain those sales. And that you should see that start flowing in. We’ve got it modeled in Q2, so you should see that flowing in then.

And just talking about pork a little bit, the pork packer outlook, it seems like we’re flushed with plenty of hogs out there. The reason I’m assuming that you’re keeping it within the guidance range is because the export markets are still in flux; is that a fair way of thinking about it because the domestic side of the pork outlook seems exceedingly strong; how do I look into that?

You’ve hit the nail on the head, Ken. We feel very good about pork. There’s going to be good hog availability which by the way provides good cheap raw materials for our Prepared Foods business. But this is just a cautionary note on exports and the high dollar and competition from other regions in the world for some primary markets. So that’s the cautionary note there. If some of that changes, then obviously there’s upside in our Pork segment.

Thank you. Our next question is coming from the line of Michael Piken of Cleveland Research.

Hi. This is Mike Henry actually in for Mike Piken. Thanks for taking my question. You highlighted some of the near-term contracts that I guess are more under negotiation with Chicken. I was wondering if you could comment on what percent of the contracting has already been completed for the year that might be a little bit of a tailwind as you go in over the next several quarters.

It is hard to say, Mike. My guess is of the volume that is RFPed, maybe 10%, 15% at most, something like that. You’ve got to remember there’s a lot of different pricing models that we have, some where we have guaranteed volume, and we really look at the price every 30, 60 or 90 days. We’ve got a good bit of our Chicken business that’s just right priced. But of that volume that will go through RFPs, I’m guessing you’re in those low-double digits. There is a lot yet to come there, yes.

And then just one follow-up, if I may, going back to the question on the market being oversupplied potentially for Chicken. Given where prices are today, do you think that we’re seeing this? And then, when we’re in this oversupply situation, how is Tyson kind of adjusting and reacting?

So, our reaction is to ramp up our buy versus grow strategy. We are buying a lot of raw material these days. We’re buying breast meat sub $0.90 delivered to our plants. So, we’ve got the opportunity to take advantage of this outside raw material in an oversupply situation to supply our value-added businesses. And as we said in the script, about 90% or so of our volume is really consumer pull and only about 10% is pushed out. We don’t sell very much CDP [ph] breast meat. We’re working hard every day to value up our leg quarters and not have any leg quarters to sell. So it’s a time like this when our buy versus grow strategy really helps us maintain our stable margins.

Thank you. Our next question is coming from the line of Robert Moskow of Credit Suisse. Your line is open.

Couple of questions. So, hey Donnie, when you say only 10% of your volume is pushed out, is that kind of a good proxy for saying only 10% exposed to like commodity pricing on a regular basis? So, like if I just made like a blanket statement that commodity prices are going to be down 25% year-over-year, could I apply that to that 10% to figure out commodity exposure for chicken? And then, I had a quick follow-up.

Sure. So, I think I’d rather you think about the 15% of our sales that our CDP [ph] breast meat, leg quarters and our rendering products. Those are the ones that have the most commodity exposure. Now, there is also a minority portion, for example, of our fresh tray pack business that gets priced off the Georgia Dock. So there are some market influences in those businesses. But in terms of just commodity exposure, probably think of the 15% of our portfolio and not the larger percent.

And then the follow-up, I guess it’s kind of two-fold. But you said about 20% of the volume you’ve got good visibility on in terms of locking in margins; I think that’s what you said. Is that typical for this time of year, are you ahead or is that about average; how does that compare to last year? And then also, how do I think about the $100 million improvement in your grain costs; how much of that are you able to drop to the bottom-line?

So, two great questions, yes. This year is about like every other. So, we’re going through about the same amount of RFP that we went through last year. And again, let me reiterate that it’s going pretty good so far. Still got some room to go, but going pretty good. Let’s see, the second part of your question, remind me of that again.

$100 million grain?

Yes, the grain. One thing that we always do is look at opportunities to lock in margins when we do get pricing contracts established. So, we’ll look at that. But it’s hard to say this early about how much of the impact of that $100 million will drop to the bottom-line until we get through this big RFP season, because if we can get the chance to lock in our margins underneath that we will. But that’s probably not.

Thank you. Our next question is coming from again Ken Goldman of JPMC. Your line is open.

Forgive me if this was asked, I didn’t hear it. But industry-wide, we are seeing some extraordinarily strong beef and pork processing margins in the last few weeks, if not more. And I recognize that just as we saw this past quarter with beef, sometimes it’s hard to translate what we’re seeing industry-wide to what a specific company’s margins will be. But, as we model out the year, is it reasonable for us, at least in these two segments, to sort of give a little bit more juice to the first half of the year or at least the first quarter just given some of the timing and what we’re actually seeing in the market today because some of the margins we’re seeing are just extraordinarily high and unusual for this time of year?

Probably able to do that in pork, I’d be cautious about doing that in beef. We had pretty good October, but here in the middle part of November, beef cut-out has dropped quite dramatically. I don’t know what Friday’s close was, but it’s probably going to be around 2.05 or something like that. And kind of depending on where cattle are north versus south, sometimes it takes a little while to get that change reflected in the cost of the cattle. Beef, my guess is that you’re probably backend loaded. Cattle, we saw the cattle and feed numbers Friday, our estimates would be that the increase in fed’s cattle coming to market this year would be in Q3 or Q4. So, you’re probably a little frontend loaded maybe and pork a little back and loaded and beef is kind of where I’m thinking about it.

And then a follow-up, if I can on Beef, it’s obviously been an unexpected, at least from my perspective, drag on earnings in the last two quarters. I think you guys have hinted and this is my interpretation you haven’t said it, but if you wanted to divest it, if you decided, this business is an albatross on our valuation; let’s just punt it. Do you think there would be a robust, even diverse group of suitors for the business or would it be really challenging to find someone interested in and maybe even able to take a look at it from an antitrust perspective? I’m just curious what the market might be for something like that out there, if you can even answer that.

No, I can’t answer that. No.

Alright. Well, I gave it a shot. Thanks.

Thank you. Our next question is coming from Tim Ramey of Pivotal Research Group. Your line is open.

Donnie, you mentioned getting started on some of the network stuff to be a fiscal ‘17 event. Can you flesh out a little bit what that means for us?

Yes. That wasn’t such a technical term; was it, Tim? So, we’re in the process now, you saw our announcement last Friday, of optimizing the production footprint. We’ll be moving lines of products within that footprint to optimize the logistics around the raw material and optimize the cost of the production. From that point then, the next move is to really look out into the distribution network and make sure that we have the right nodes of distribution, both from a hub-and-spoke and from a forward positioning basis to optimize our transportation cost and our service offering. So, once we get the production footprint established, largely it won’t be perfect. But then we will begin working on the distribution network. There is a couple things that we’re starting to focus on now around rationalizing some of the SKUs. We’ve got some end-to-end opportunities between primarily our pork business, but to some small extent our beef business and our Prepared Foods business to continue to work to optimize cost inside that network. So all of that will be -- we’ll begin working on that in 2016, but largely the effect of those changes will happen in 2017. Now, let me hasten on to say too that we’ve got work inside our Chicken business as well. We’ve just completed the conversion in South Georgia to the tray pack. We’ve got a lot of FP capacity around us now. And so, we’re able to go out and bid on business that we weren’t able to bid before. Our antibiotic-free business continues to grow. So as those grow, that will help us optimize the production and the distribution network as well. Hope that clears it up a little bit.

Yes. Just to follow on, on Beef, with the timing difference relative to the price decline in the futures market, it doesn’t sound like you’re saying that’s recouped in the 1Q. Is it more of a -- we should think about that as coming back into the numbers throughout the fiscal 2016 year or how should we think about that?

Yes, I would spread that cost throughout the fiscal 2016 year. So, we sell boxed beef out front and buy cattle futures against it to lock in the margin and so, some of those contracts are fairly well out through the year. And so, just kind of spread that cost on through the rest of the fiscal year.

And just we used to talk a lot about the pie season back in the day. Anything to say about the sweet goods sales?

It’s going well. We did have a problem which, Tim, you know my background; it’d be hard for me to think about a sweet potato problem. But the flooding that we had in South Carolina actually disrupted our supply chain a little bit on the sweet potatoes. We had a great team around that work through it very well and I think did as good as we could to get as much of our volume into the marketplace, as we can, really just some heroic efforts on the part of that business in our supply chain. So, yes, it’s going pretty well.

Thank you. Our next question is coming from David Palmer of RBC Capital Markets. Your line is open.

As you talk about buy versus grow, you mentioned the purchase mix can shift up to 10% or so over time. Any sense of where that stands now; and has that been evolving already, as you head into 2016?

We’re a little bit shy of the 10% now. It’s pretty easy for us frankly to buy about 100 loads a week. Most of that will be breast meat; some will be breast meat portions. And then, if wings were to soften up and we had good promotional volume for next spring’s wings season, we’ll always be out there buying wings and a few tenders when they’re available. Typically, the size of tenders that we need aren’t very readily available. So, mostly, I think breast meat but yes, we do spread that around to the other raw materials when we can use them.

Has your team guessed where the chicken industry profit margins would be around as we exit 2015; is the segment up low-single digits in margin or so?

David, honestly, we spend all of our time just focusing on our customers and our margins. We don’t spend a whole lot of time trying to figure out what the industry is doing.

And then just one small question about the dollar, it feels like the strong dollar. And we often talk about the AI trade restrictions. But strong dollar is perhaps holding back your earnings in indirect ways like limiting chicken export and encouraging beef imports from Australia. Could you comment on that? And if the dollar does stabilize, is that at least the removal of a negative?

Very much so, removal of the negative, and I would say that today the dollar impact is probably having more of an impact on pork and beef exports than it would chicken. I feel comfortable that if the export restrictions based on AI were relieved, then we could increase our exports in chicken pretty readily. So, dollar wouldn’t necessarily impact the chicken as much, but on pork and beef, yes.

Thank you. And that ends our Q&A session. I’ll hand it back over to Donnie for closing comments. Thank you.

Thanks everyone for joining us today and certainly for your interest in Tyson Foods. We wish you all a very happy Thanksgiving. Have a good day.