In this file:

 

·         Tyson Foods beats sales estimates on strong pork, beef demand

·         Media Release: Tyson Foods Reports Strong Fourth Quarter and Fiscal 2020 Results

 

 

Tyson Foods beats sales estimates on strong pork, beef demand

 

Reporting by Praveen Paramasivam in Bengaluru and Tom Polansek in Chicago; Editing by Maju Samuel, Reuters Staff

November 16, 2020

 

(Reuters) - Tyson Foods Inc TSN.N beat quarterly sales estimates on Monday, as the largest U.S. meat processor benefited from consumers buying more of its beef and pork products during the COVID-19 pandemic.

 

U.S. meat producers have seen sales volume recover after COVID-19-triggered temporary plants closures, boosted by strong demand from food retailers and an uptick in sales at several restaurant chains in recent weeks.

 

Tyson’s sales rose...

 

more

https://www.reuters.com/article/us-tyson-foods-results/tyson-foods-beats-sales-estimates-on-strong-pork-beef-demand-idUSKBN27W1JG

 

 

Tyson Foods Reports Strong Fourth Quarter and Fiscal 2020 Results

Company Remains Focused on Worker Health and Safety, Long Term Growth

 

Source: Tyson Foods, Inc.

via GlobeNewswire/Stockhouse - Nov 16, 2020

 

SPRINGDALE, Ark., Nov. 16, 2020 (GLOBE NEWSWIRE) -- Tyson Foods, Inc. (NYSE: TSN), one of the world’s largest food companies and a recognized leader in protein with leading brands including Tyson, Jimmy Dean, Hillshire Farm, Ball Park, Wright, Aidells, ibp and State Fair , today reported the following results:

 

n millions, except per share data)

Fourth Quarter

Twelve Months Ended

2020

2019

2020

2019

Sales

$

11,460

$

10,884

$

43,185

$

42,405

Operating Income

1,012

604

3,114

2,827

Net Income

695

372

2,150

2,035

Less: Net Income Attributable to Noncontrolling Interests

3

3

10

13

Net Income Attributable to Tyson

$

692

$

369

$

2,140

$

2,022

Net Income Per Share Attributable to Tyson

$

1.90

$

1.01

$

5.86

$

5.52

Adjusted¹ Sales

$

10,641

$

10,884

$

42,366

$

42,405

Adjusted¹ Operating Income

$

961

$

686

$

3,116

$

2,977

Adjusted¹ Net Income Per Share Attributable to Tyson

$

1.81

$

1.21

$

5.64

$

5.46

1 Adjusted sales, adjusted operating income and adjusted net income per share attributable to Tyson (Adjusted EPS) are non-GAAP financial measures and are explained and reconciled to a comparable GAAP measure at the end of this release. Adjusted sales, adjusted operating income and adjusted EPS for the fourth quarter and twelve months of fiscal 2020 are presented on a 13-week and 52-week basis, respectively.

 

 Fiscal 2020 Highlights

 

·         GAAP EPS of $5.86, up 6% from prior year; Adjusted EPS of $5.64 (52-week basis), up 3% from prior year

·         GAAP operating income of $3,114 million, up 10% from prior year; Adjusted operating income of $3,116 million (52-week basis), up 5% from prior year

·         Total Company GAAP operating margin of 7.2%; Adjusted operating margin of 7.4% (52-week basis)

·         Generated approximately $3.9 billion of operating cash flows

·         Results negatively impacted by approximately $540 million of direct incremental expenses related to COVID-19

 

Fourth Quarter Highlights

 

·         GAAP EPS of $1.90, up 88% from prior year; Adjusted EPS of $1.81 (13-week basis), up 50% from prior year

·         GAAP operating i ncome of $1,012 million, up 68% from prior year; Adjusted operating income of $961 million (13-week basis), up 40% from prior year

·         Total Company GAAP operating margin of 8.8%; Adjusted operating margin of 9.0% (13-week basis)

·         Liquidity of $3.2 billion at O ctober 3, 2020

·         Reduced total debt by $690 million

·         Results negatively impacted by approximately $200 million of direct incremental expenses related to COVID-19

 

“Our business performed well and delivered strong fourth quarter and full-year results,” said Dean Banks, President & CEO of Tyson Foods. “Our team members, agricultural partners, and customers have shown resilience. This has enabled us to maintain and accelerate our efforts to provide global consumers with a safe and accessible food supply.”

 

“While we will continue to face pandemic-related challenges in fiscal 2021, we’re settling the business down to be focused on executing our long-term strategy while generating strong returns for shareholders. I’m excited for the opportunities ahead for this great company, and am certain we have the people, products, and strategies in place to drive future growth.”

 

SEGMENT RESULTS (in millions)

Sales

(for the fourth quarter and twelve months ended October 3, 2020, and September 28, 2019)

Fourth Quarter

Twelve Months Ended

Volume

Avg. Price

Volume

Avg. Price

2020

2019

Change

Change

2020

2019

Change

Change

Beef

$

4,272

$

3,861

11.8

%

(1.2

)%

$

15,742

$

15,828

(4.5

)%

4.0

%

Pork

1,368

1,258

15.2

%

(6.4

)%

5,128

4,932

1.8

%

2.2

%

Chicken

3,433

3,447

1.9

%

(2.3

)%

13,234

13,300

0.1

%

(0.6

)%

Prepared Foods

2,277

2,153

1.6

%

4.2

%

8,532

8,418

(1.9

)%

3.3

%

Internat ional/Other

491

513

(3.5

)%

(1.0

)%

1,856

1,289

50.1

%

(6.1

)%

Intersegment Sales

(381

)

(348

)

n/a

n/a

(1,307

)

(1,362

)

n/a

n/a

Total

$

11,460

$

10,884

5.9

%

(0.6

)%

$

43,185

$

42,405

0.7

%

1.1

%

 

Operating Income (Loss)

(for the fourth quarter and twelve months ended October 3, 2020, and September 28, 2019)

Fourth Quarter

Twelve Months Ended

Operating Margin

Operating Margin

2020

2019

2020

2019

2020

2019

2020

2019

Beef

$

516

$

376

12.1

%

9.7

%

$

1,686

$

1,107

10.7

%

7.0

%

Pork

174

26

12.7

%

2.1

%

565

263

11.0

%

5.3

%

Chicke n

86

90

2.5

%

2.6

%

122

621

0.9

%

4.7

%

Prepared Foods

249

104

10.9

%

4.8

%

743

843

8.7

%

10.0

%

Intern ational/Other

(13

)

8

n/a

n/a

(2

)

(7

)

n/a

n/a

Total

$

1,012

$

604

8.8

%

5.5

%

$

3,114

$

2,827

7.2

%

6.7

%

Note: On June 3, 2019, we acquired the Thai and European operations of BRF S.A. The post-acquisition results from operations of these businesses are included in International/Other for segment presentation. On November 30, 2018, we acquired Keystone Foods. The post-acquisition results from operations of this business are included in our Chicken segment for Keystone's domestic operations and results for operations of Keystone's International business are included in International/Other for segment presentation.

Adjusted Segment Results (in millions)

Adjusted Sales (Non-GAAP)

(for the fourth quarter and twelve months ended October 3, 2020, and September 28, 2019)

Fourth Quarter

Twelve Months Ended

Adjusted Volume

Adjusted Avg. Price

Adjusted Volume

Adjusted Avg. Price

2020

2019

Change

Change

2020

2019

Change

Change

Beef

$

3,966

$

3,861

3.8

%

(1.1

)%

$

15,436

$

15,828

(6.5

)%

4.0

%

Pork

1,270

1,258

6.9

%

(5.9

)%

5,030

4,932

(0.2

)%

2.2

%

Chicken

3,188

3,447

(5.4

)%

(2.1

)%

12,989

13,300

(1.7

)%

(0.6

)%

Prepared Foods

2,114

2,153

(5.6

)%

3.8

%

8,369

8,418

(3.7

)%

3.1

%

International/Other

456

513

(10.4

)%

(0.9

)%

1,821

1,289

47.7

%

(6.5

)%

Intersegment Sales

(353

)

(348

)

n/a

n/a

(1,279

)

(1,362

)

n/a

n/a

Total

$

10,641

$

10,884

(1.6

)%

(0.6

)%

$

42,366

$

42,405

(1.3

)%

1.2

%

 

Adjusted Operating Income (Loss) (Non-GAAP)

(for the fourth quarter and twelve months ended October 3, 2020, and September 28, 2019)

Fourth Quarter

Twelve Months Ended

Adjusted Operating Margin (Non-GAAP)

Adjusted Operating Margin (Non-GAAP)

2020

2019

2020

2019

2020

2019

2020

2019

Beef

$

483

$

407

12.2

%

10.5

%

$

1,659

$

1,139

10.7

%

7.2

%

Pork

162

27

12.8

%

2.1

%

555

264

11.0

%

5.4

%

Chicken

91

95

2.9

%

2.8

%

148

655

1.1

%

4.9

%

Prepared Foods

236

149

11.2

%

6.9

%

752

902

9.0

%

10.7

%

International/Other

(11

)

8

n/a

n/a

2

17

n/a

n/a

Total

$

961

$

686

9.0

%

6.3

%

$

3,116

$

2,977

7.4

%

7.0

%

 

 

 Note: Adjusted sales, adjusted operating income and adjusted operating margin are non-GAAP financial measures and are explained and reconciled to comparable GAAP measures at the end of this release. Adjusted sales, adjusted operating income, adjusted volume change, adjusted average price change and adjusted operating margin for the fourth quarter and twelve months of fiscal 2020 are presented on a 13-week and 52-week basis, respectively.

 

Adjusted sales (due to the impact of the additional week in the fourth quarter of fiscal 2020), adjusted operating income and adjusted operating margin are presented as supplementary measures in the evaluation of our business that are not required by, or presented in accordance with, GAAP. We use adjusted sales, adjusted operating income and adjusted operating margin as internal performance measurements and as criteria for evaluating our performance relative to that of our peers. We believe adjusted sales, adjusted operating income and adjusted operating margin are meaningful to our investors to enhance their understanding of our financial performance and are frequently used by securities analysts, investors and other interested parties to compare our performance with the performance of other companies that report adjusted sales, adjusted operating income and adjusted operating margin. Further, we believe that adjusted sales, adjusted operating income and adjusted operating margin are useful measures because they improve comparability of results of operations from period to period. Adjusted sales, adjusted operating income and adjusted operating margin should not be considered as substitutes for sales, operating income, operating margin or any other measure of operating performance reported in accordance with GAAP. Investors should rely primarily on our GAAP results and use non-GAAP financial measures only supplementally in making investment decisions. Our calculation of adjusted sales, adjusted operating income and adjusted operating margin may not be comparable to similarly titled measures reported by other companies.

 

COVID-19 Expenses

 

·         We incurred direct incremental expenses associated with the impact of COVID-19 totaling approximately $200 million and $540 million for the fourth quarter and twelve months of fiscal year 2020, respectively. These direct incremental expenses primarily included team member costs associated with worker health and availability and production facility downtime, including direct costs for personal protection equipment, production facility sanitization, COVID-19 testing, donations, product downgrades and rendered product, partially offset by CARES Act credits. Other indirect costs associated with COVID-19 are not reflected in this amount, including costs associated with raw materials, distribution and transportation, plant underutilization and reconfiguration, premiums paid to cattle producers and pricing discounts.

 

Summary of Segment Results

 

·         Beef - Sales volume increased 11.8%, or increased 3.8% after removing the impact of an additional week, for the fourth quarter of fiscal 2020 primarily due to a fire that caused the temporary closure of a production facility during the fourth quarter of fiscal 2019. Sales volume decreased 4.5%, or decreased 6.5% after removing the impact of an additional week, for fiscal 2020 due to lower production throughput associated with the impact of COVID-19 during portions of fiscal 2020 and a reduction in live cattle harvest capacity as a result of a fire that caused the temporary closure of a production facility for the majority of the first quarter of fiscal 2020. Average sales price decreased in the fourth quarter of fiscal 2020 associated with increased availability of live cattle supply and lower livestock cost. Average sales price increased in fiscal 2020 as beef demand remained strong amid supply disruptions related to the impact of COVID-19. Operating income increased primarily due to market conditions, including COVID-19 disruptions, which increased the spread between preexisting contractual agreements and the cost of fed cattle, and the impact of an additional week in fiscal 2020, partially offset by price reductions offered to customers, as well as production inefficiencies and direct incremental expenses related to COVID-19. Additionally, the fourth quarter of fiscal 2019 was impacted by $31 million of net incremental costs from the production facility fire.

·         Pork - Sales volume increased 15.2%, or increased 6.9% after removing the impact of an additional week, for the fourth quarter of fiscal 2020 due to strong demand for our pork products and increased domestic availability of live hogs. Sales volume increased 1.8%, or decreased slightly after removing the impact of an additional week, for fiscal 2020, due to strong demand for our pork products and increased domestic availability of live hogs, offset by lower production throughput associated with COVID-19 during portions of fiscal 2020. Average sales price in the fourth quarter of fiscal 2020 decreased associated with lower livestock costs. Average sales price in fiscal 2020 increased as pork demand remained strong amid supply disruptions related to the impact of COVID-19, partially offset by lower livestock costs. Operating income increased primarily due to market conditions, including COVID-19 disruptions, which increased the spread between preexisting contractual agreements and the cost of live hogs, and the impact of an additional week in fiscal 2020, partially offset by production inefficiencies and direct incremental expenses related to COVID-19.

·         Chicken - Sales volume increased 1.9%, or decreased 5.4% after removing the impact of an additional week, for fourth quarter of fiscal 2020, and increased slightly, or decreased 1.7% after removing the impact of an additional week, for fiscal 2020 primarily due to lower production throughput associated with the impact of COVID-19 during portions of fiscal 2020 and lower foodservice demand, partially offset by increased retail demand. Average sales price decreased primarily due to weaker chicken pricing as a result of market conditions. Operating income decreased primarily from market conditions, unfavorable product mix, as well as production inefficiencies and direct incremental expenses related to COVID-19. Operating income was also impacted by approximately $45 million of net derivative gains in the fourth quarter of fiscal 2020 and approximately $70 million of net losses in the fourth quarter of 2019, in addition to approximately $50 million of decreased feed ingredient costs in the fourth quarter of fiscal 2020 as compared to the fourth quarter of fiscal 2019. For fiscal 2020, net derivative results and feed ingredient costs were relatively flat as compared to fiscal 2019. Operating income was further impacted by $34 million and $21 million in restructuring costs incurred in fiscal 2020 and fiscal 2019, respectively.

·         Prepared Foods - Sales volume increased 1.6%, or decreased 5.6% after removing the impact of an additional week, for fourth quarter of fiscal 2020, and decreased 1.9%, or decreased 3.7% after removing the impact of an additional week, for fiscal 2020 as growth in volume across the retail channel was offset by a reduction in the foodservice channel related to reduced demand and lower production throughput due to the impact of COVID-19 during portions of fiscal 2020. Average sales price increased in the fourth quarter and for fiscal 2020 due to favorable product mix associated with the surge in retail demand, and for fiscal 2020, the pass through of increased raw material costs. Operating income increased in the fourth quarter of fiscal 2020 due to favorable product mix associated with strong demand for retail products and the impact of an additional week, partially offset by the impacts of reduced foodservice sales. Operating income decreased in fiscal 2020 primarily due to increased operating costs, including a $105 million increase in net raw material costs and derivative losses, as well as production inefficiencies and direct incremental expenses related to COVID-19, partially offset by reduced promotional spend. Operating income was also impacted by $28 million and $18 million in restructuring costs incurred in fiscal 2020 and fiscal 2019, respectively. Additionally, operating income in the fourth quarter of fiscal 2019 was further impacted by a $41 million impairment from a planned divestiture of a business.

 

Outlook

For fiscal 2021, USDA indicates domestic protein production (beef, pork, chicken and turkey) should increase approximately 1% from fiscal 2020 levels. The following is a summary of the outlook for each of our segments, as well as an outlook for revenues, capital expenditures, net interest expense, liquidity, tax rate and dividends for fiscal 2021. On an adjusted basis, we anticipate the Beef and Pork segments will remain strong, although not at fiscal 2020 levels, and we believe the Chicken and Prepared Foods segments will likely strengthen in fiscal 2021 as compared to fiscal 2020. 2

 

·         COVID-19 – We continue to proactively manage the company and its operations through this global pandemic. Given the nature of our business, demand for food and protein may shift amongst sales channels and experience disruptions, but over time we expect worldwide demand to continue to increase. We are experiencing multiple challenges related to the pandemic. These challenges are anticipated to increase our operating costs and negatively impact our volumes into fiscal 2021. We cannot currently predict the ultimate impact that COVID-19 will have on our short- and long-term demand, as it will depend on, among other things, the severity and duration of the COVID-19 crisis. Our liquidity is expected to be adequate to continue to run our operations and meet our obligations as they become due.

·         Beef – USDA projects domestic production will increase approximately 2% in fiscal 2021 as compared to a COVID-19 impacted fiscal 2020. For fiscal 2021, we also expect sufficient supplies in regions where we operate our plants.

·         Pork – USDA projects relatively flat to slightly increased domestic production in fiscal 2021 as compared to a COVID-19 impacted fiscal 2020.

·         Chicken – USDA projects a relatively flat to slightly increased outlook for chicken production in fiscal 2021 as compared to fiscal 2020.

·         Prepared Foods – We will continue to be responsive to changes in consumer behavior as a result of the impacts of COVID-19 as we move into fiscal 2021.

·         International/Other – We expect improved results from our foreign operations in fiscal 2021.

·         Revenue – We expect sales to be $42 billion to $44 billion for fiscal 2021.

·         Capital Expenditures – For fiscal 2021, we expect capital expenditures to be approximately $1.2 billion to $1.4 billion. Capital expenditures include spending for capacity expansion, growth, safety, animal well-being, infrastructure replacements and upgrades, and operational improvements that are expected to result in production and labor efficiencies, yield improvements and sales channel flexibility.

·         Net Interest Expense – We expect net interest expense to approximate $440 million for fiscal 2021.

·         Liquidity – We expect total liquidity, which was approximately $3.2 billion at October 3, 2020, to remain above our minimum liquidity target of $1.0 billion.

·         Tax Rate – We currently expect our adjusted effective tax rate to be around 23% in fiscal 2021.

·         Dividends – Effective November 13, 2020, the Board of Directors increased the quarterly dividend previously declared on August 6, 2020, to $0.445 per share on our Class A common stock and $0.4005 per share on our Class B common stock. The increased quarterly dividend is payable on December 15, 2020, to shareholders of record at the close of business on December 1, 2020. The Board also declared a quarterly dividend of $0.445 per share on our Class A common stock and $0.4005 per share on our Class B common stock, payable on March 15, 2021, to shareholders of record at the close of business on March 1, 2021. We anticipate the remaining quarterly dividends in fiscal 2021 will be $0.445 and $0.4005 per share of our Class A and Class B stock, respectively. This results in an annual dividend rate in fiscal 2021 of $1.78 for Class A shares and $1.602 for Class B shares, or a 6% increase compared to the fiscal 2020 annual dividend rate.

 

2 The Company is not able to reconcile its full-year fiscal 2021 adjusted results to its fiscal 2021 projected GAAP results because certain information necessary to calculate such measure on a GAAP basis is unavailable or dependent on the timing of future events outside of our control. Therefore, because of the uncertainty and variability of the nature of the amount of future adjustments, which could be significant, the Company is unable to provide a reconciliation of this measure without unreasonable effort. Adjusted measures should not be considered a substitute for operating margin or any other measures of financial performance reported in accordance with GAAP. Investors should rely primarily on the Company’s GAAP results and use non-GAAP financial measures only supplementally in making investment decisions.

 

TYSON FOODS, INC.

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(In millions, except per share data)

(Unaudited)

 

more, including additional financial tables

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