Donnie King
President and Chief Executive Officer at Tyson Foods
Thank you. Megan and thank you to everyone for joining us for the call today. Earlier today, we announced our first quarter fiscal 2022 results. Tyson Foods once again delivered strong financial results. I would like to start by thanking our team members for their dedication herculean efforts this quarter as we managed a complex and dynamic operating environment.
At our Investor Day, I shared our plan to grow our top and bottom lines aggressively over the next three years. This meant EPS growth of high single digits relative to a 2019 baseline and volume growth ahead of the market. Our results this quarter put us firmly on that path. We achieved double-digit sales and earnings growth, both of which were driven by ongoing demand strength, productivity savings and improving execution across our segments. Our diverse protein portfolio, omnichannel capabilities, leading brands and value-added products contributed to our results.
Strong performance in our Beef segment, earlier than expected recovery in Prepared Foods and improvement in Chicken and Pork, all supported strong earning results. Our retail core business lines, which include our iconic brands Tyson, Jimmy Dean, Hillshire Farm and Ballpark maintain their volume share position, even as we work through price increases to address inflationary pressure. And our foodservice focused six product lines grew share year-over-year in broadline distribution. This growth was driven in large part by value added Chicken, which outperformed industry recovery and breakfast sausage, where we were seeing improved fill rates.
Importantly and despite the continued impact of COVID-19, our volumes improved slightly across the company relative to the same quarter last year. Chicken was a bright spot where we saw our volumes improve 3.6%. While this is a good start, we are not where we want to be on volume. So, we're taking actions segment by segment to improve our volume performance.
These actions include investing in our team members, in additional capacity and in brands and product innovation. As discussed at Investor Day, we're also in the process of building 12 new plants, each of these is progressing and each will enable Tyson to address capacity constraints and meet the growing global demand for protein. Bottom line, we're committed to improving our total company volumes during the year.
We're also making sure that our pricing incorporates inflationary cost pressures on our business. In the quarter, our cost of goods sold was up 18%, relative to the same period last year. We are seeing higher costs across our supply chain including higher input costs such as speed and ingredients. We are also managing higher cost of labor, transportation due to strong demand and limited availability. With these higher costs, we work closely with our customers to achieve a fair value for our products. As a result, our average sales price for the quarter increased 19.6% relative to the same period last year. This helped us capture some of the unrecovered costs due to the timing lag between inflation and price.
Finally, our balance sheet and overall liquidity position are strong, providing optionality to pursue strategic growth priorities and invest in growth across our portfolio. We have a disciplined approach to deploying capital to support capacity expansion, while achieving improved returns on invested capital. Our first quarter results clearly demonstrate that we are making progress on our growth objectives that we remain focused on outpacing the overall market, improving operating margins and driving strong returns for our shareholders.
While we're growing our business, we are mindful of our corporate responsibilities around environment, social and governance goals. For example, we committed to investing in and supporting our communities in rural America and around the world. Last year, Tyson Foods donated more than 16 million pounds of protein, the equivalent of 64 million meals to fight hunger. We are incredibly proud of this work and the people that make it possible. Tyson is a great company with a great team doing great things and I'm pleased that this was recognized. Just last week by Fortune Magazine to announce that for the sixth year in a row, Tyson Foods was number one in our sector in their rankings of the World's Most Admired Companies.
Now let's look at a few financial highlights from the first quarter. Our results included double-digit top and bottom line growth. We delivered solid operating income performance, up 40% for the quarter. This performance was broad based across segments where continued strong consumer demand and affected pricing to mitigate the impact of inflation drove higher earnings.
On volume, we are up slightly and while we're working to achieve optimal throughput across our segments, labor challenges are still impacting our volumes and the ability to achieve optimal mix across our network. Compared to pre-pandemic levels, our volume performance is outpacing our peer set, in retail, despite substantial market pressures, core business lines held share in the first quarter, led by strong performance in lunch meat, hot dogs, snacking and bacon.
We also realized strong e-commerce results with Tyson Foods outpacing total food and beverage growth and our core lines gaining share in the quarter, still customer demand continues to outpace our ability to supply products. So we have targeted actions in each segment to improve volumes. This is key to delivering on our commitments. To realize our volume goals, we must be able to fully staff our plants across the company.
We continue to take meaningful action toward becoming the most sought after place to work. For example, we provided our hourly team members with more than $50 million in bonuses during the first quarter. We are piloting subsidized and onsite childcare and we are adjusting schedules to flex with workforce needs. These actions are bearing fruit as we see some improvement on the labor front and while we have seen some labor challenges during the omicron surge, we are generally seeing lower turnover and absenteeism.
We saw chicken volumes grow 3.6% in the quarter, driven by strong fundamental demand and improved live production. What is important to note is that we grew ahead of the market and gain market share. In Prepared Foods, volumes were down 2.6% in the first quarter, about half the decline was related to pet treats divestiture. We expect to sequentially improve these results over the remainder of fiscal year '22 as we take actions to expand and improve capacity utilization.
In Beef, volumes were down 6.2%, driven by labor shortages previously mentioned. In addition, port congestion has also dampened export volumes in the segment. We expect these headwinds on volume to normalize over the course of fiscal 2022. In Pork, we have sequentially improved our capacity utilization. We are still working to optimize the mix. In International/Other, while we are starting from a relatively small base, our investment in capacity, innovation and brands are supporting our market share growth objectives.
Overall, we expect to grow our total company volumes by 2% to 3% in FY '22, outpacing protein consumption growth. Chicken remains a top priority and we continue to execute against our roadmap to achieve an operating income margin of 5% to 7% on a run rate basis by mid fiscal '22. I remain confident we will meet this goal.
In the first quarter, we've started to see profitability improvement resulting from our actions. For example, we are investing aggressively in automation and technology to help us address some of the most hard to fill roles. This is not a series of projects, but is a well-planned program of automation designed to use common designs and equipment across our plants to optimize cost, maintenance and asset utilization. The second imperative is to improve operational performance and critical to improving performance is maximizing our fixed cost leverage, which means having enough birds to run our plants full.
Since September, we've seen an improvement in our hatch rate ahead of our expectations. We continue to expect full recovery in this year. We were pleased with our volume growth in the quarter and expect further improvements as we grow our harvest capacity utilization from an average of 37 million head per week in FY '21 to 40 million head per week by year-end.
We've noted previously that strength in spot prices for commodity chicken products put our buy versus grow program at a relative disadvantage. We have reduced our reliance on outside meat accordingly. We will staff our plants, service our customers, grow our volumes and be the best in the business. The plan we have continues to be the right plan and our commitment to winning with our team members, winning with our customers and consumers and winning with operational excellence is delivering results.
Last year, we announced the launch of a new productivity program designed to drive a better, faster and more agile organization that is supported by our culture of continuous improvement and faster decision making. The program aims to deliver $1 billion in recurring productivity savings by the end of fiscal '24 relative to a fiscal 2021 cost base line and has three critical focus areas, which are operational and functional excellence, digital solutions and automation. We're making some good progress on this front. As told just a minute ago about our investments in automation, but we've also attacked other issues.
In Prepared Foods, we're making use of supply chain digitization and advanced analytics. Our digital manufacturing platform allows us to analyze real-time data to take actions to optimize process conditions that drive better yields, lower costs, consistent quality and increased output. In transportation and logistics, we have established ongoing optimization of the mix and allocation of our private fleet, dedicated fleet and third party fleet, mitigating inflationary pressures and supporting better on-time deliveries to our customers.
In addition, we continued the expansion of our direct shipment program, reducing miles driven and product touches in our supply chain. As a result of projects like these, we are on track to deliver $300 million to $400 million of savings in fiscal 2022. We shared at our Investor Day that we are taking actions to accelerate our growth and drive disciplined return on invested capital. The five imperatives on this slide show how we will achieve our commitments and drive value creation. This stars first with our commitment to our team members with a focus on ensuring their health, safety and well being, as well as ensuring an inclusive and equitable work environment.
We are proud of our COVID-19 vaccine policy, implemented last year in the U.S. and have the broader investments that we have made to keep our team members, their families and our community safe. Because of our policy, our team members are better protected and the cases we do see have been mild or asymptomatic, resulting in an extremely low number of hospitalizations. We are strongly encouraging boosters and our hosting clinics to make it easier for our team members and their families to get boosted.
Second, we are working to enhance our portfolio and capacity to better address demand. This includes increasing the contribution of branded and value-added sales. As a result, we expect our volume to outpace this growing market. Third, we are aggressively restoring competitiveness in our Chicken segment. This starts by returning our operating margin to the 5% to 7% level by the middle of fiscal 2022. Fourth, we're driving operational and functional excellence and investing in digital and automation initiatives. This is at the heart of our new productivity program. We are working diligently to drive out waste, minimize bureaucracy and enhance decision-making speed across the organization.
Fifth, to address projected demand growth over the next decade, we are using our financial strength to invest in our business. On capital alone, we're expected to invest $2 billion in fiscal year '22 with a disproportionate share focused on new capacity and automation objectives. And we continue to return cash to shareholders. During the quarter, we returned over $500 million in dividends and share repurchases. To wrap it up, we are committed to winning with our team members, customers and consumers, as well as winning with operational excellence. I'm more excited about the future of Tyson Foods with each passing day.
And I will now turn the call over to Stewart to walk us through our financial results in detail.
