Tyson Sales Down, Profit Up
Tyson Foods' Earnings Beat Estimates on Soaring Meat Prices
Tyson Foods sees upbeat sales as meat prices, restaurant demand jump
Media Release: Tyson Foods Reports Strong Fourth Quarter and Fiscal 2021 Results
Tyson Sales Down, Profit Up
By Pan Demetrakakes, Food Processing
Nov 15, 2021
Tyson Foods is selling less meat but getting more money for it.
That’s the takeaway from the company’s latest quarterly report, which covers the three months ending Sept. 30. It shows a drop in production of 11% overall, including 15% for beef and 18% for pork. Tyson officials attributed the lower production mostly to difficulty in finding labor, with some weather-related problems as well.
However, helped by higher meat prices, Tyson managed to put up some good numbers. Revenue went up 12%, to $12.8 billion, and earnings more than doubled, to $1.36 billion. Even stripping out one-time items, earnings per share were up 28%.
The earnings were attributable almost entirely to inflation in meat prices...
Tyson Foods' Earnings Beat Estimates on Soaring Meat Prices
Rising labor, freight costs are adding to higher prices
Volumes of beef, pork are expected to drop in next fiscal year
By Michael Hirtzer, Bloomberg
November 15, 2021
Tyson Foods Inc., the top U.S. meat company by sales, reported better-than-expected earnings as surging prices for beef and chicken helped to offset a decline in volumes amid a tight labor market.
Beef prices were up by a third, while pork climbed 38% and chicken rose 19% in the fiscal fourth quarter, Tyson said Monday in a statement. Sales volumes dropped, with the decline partially tied to one fewer week in the period compared with 2020.
Demand for meat has remained strong even as higher costs including labor and freight add to an inflationary environment that’s making every plate of food more expensive. Protein producers including Springdale, Arkansas-based Tyson have struggled to find enough workers to staff facilities, and the labor shortages mean consumers are expected to continue paying elevated prices. Tyson’s results follow record earnings reported last week by rival JBS SA...
... Tyson said it expects chicken production to increase slightly in the next fiscal year, while output of beef and pork will decline...
Tyson Foods sees upbeat sales as meat prices, restaurant demand jump
By Karl Plume and Praveen Paramasivam, Reuters
November 15, 2021
(Reuters) - Top U.S. meatpacker Tyson Foods Inc (TSN.N) beat quarterly profit estimates on Monday and forecast fiscal 2022 revenue above market expectations on rising meat prices and improving demand from restaurants that have reopened after COVID-19 restrictions.
The Springdale, Arkansas-based company reported a double-digit jump in sales and earnings in the fiscal fourth-quarter ended Oct. 2.
"We delivered a record performance in our beef segment and experienced share gains in our retail core business lines ... while supporting the continued recovery in foodservice," CEO Donnie King said.
Pent-up demand for dine-in experiences, newer meat items on restaurant menus and a boom in Chinese demand for U.S. pork and beef have worked in favor of American meat processing firms.
Increased costs for labor, transportation and items such as feed grain and packaging have created headaches, however.
Tyson reported about $335 million in direct costs in fiscal 2021 related to COVID-19, including protective equipment, testing and vaccinations for employees. The total did not include...
Tyson Foods Reports Strong Fourth Quarter and Fiscal 2021 Results
Company delivers strong sales, earnings growth; announces productivity savings initiative
Source: Tyson Foods, Inc.
via GlobeNewswie - November 15, 2021
SPRINGDALE, Ark., Nov. 15, 2021 (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...
Fiscal 2021 Highlights
GAAP EPS of $8.34, up 48% from prior year; Adjusted EPS of $8.28, up 53% from prior year
GAAP operating income of $4,396 million, up 46% from prior year; Adjusted operating income of $4,288 million, up 42% from prior year
Total Company GAAP operating margin of 9.3%; Adjusted operating margin of 9.0%
Generated $3.8 billion of operating cash flows
Results impacted by approximately $335 million of direct incremental expenses related to COVID-19
Reduced total debt by approximately $2 billion; reduced net debt by approximately $3 billion
Fourth Quarter Highlights
GAAP EPS of $3.71, up 107% from prior year; Adjusted EPS of $2.30, up 35% from prior year
GAAP operating income of $1,909 million, up 98% from prior year; Adjusted operating income of $1,152 million, up 26% from prior year
Total Company GAAP operating margin of 14.9%; Adjusted operating margin of 9.0%
Liquidity of $4.8 billion at October 2, 2021
Closed the sale of our Pet Treats business for $1.2 billion
“We delivered double digit sales and earnings growth during the fourth quarter and full year, and our performance was supported by our diverse portfolio and continued strength in consumer demand for protein,” said Donnie King, president and CEO of Tyson Foods. "We delivered a record performance in our beef segment and experienced share gains in our retail core business lines, which include our Tyson, Jimmy Dean, Hillshire Farm and Ball Park iconic brands, while supporting the continued recovery in foodservice.”
King added, “To foster continuous improvement and faster decision making, we’re launching a new productivity program designed to deliver more than $1 billion in annual savings by the end of 2024. The focus of this plan includes operational and functional excellence, digital solutions, and automation and advanced technologies.
“We have tremendous opportunity ahead as we work to fulfill growing global demand for safe and nutritious protein products. We’re entering fiscal 2022 with great momentum and are committed to delivering strong returns for shareholders into the future.”
SEGMENT RESULTS (in millions) ...
We incurred direct incremental expenses associated with the impact of COVID-19 totaling approximately $65 million and $335 million for the fourth quarter and twelve months of fiscal 2021, respectively. These direct incremental expenses primarily included team member costs associated with worker health and availability including direct costs for personal protection equipment, production facility sanitization, COVID-19 testing and vaccinations, donations, product downgrades, rendered product and certain professional fees, partially offset by CARES Act credits. We anticipate some of these direct incremental expenses to become permanent over time. Other indirect costs associated with COVID-19 are not reflected in these amounts, 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
Sales volume decreased 15.4% during the fourth quarter of fiscal 2021, or decreased 8.8% after removing the impact of an additional week in 2020, due to the impact associated with a challenging labor environment, partially offset by strong global demand. Sales volume increased 0.3% during fiscal 2021, or increased 2.4% after removing the impact of an additional week in fiscal 2020, due to strong global demand, partially offset by the impacts associated with a challenging labor environment and severe weather. Average sales price increased as input costs such as live cattle, labor, freight and transportation costs increased and demand for our beef products remained strong. Operating income increased due to strong demand as we continued to optimize revenues relative to live cattle supply, partially offset by production inefficiencies due to labor challenges. Additionally, operating income in fiscal 2021 was impacted by a cattle supplier's misappropriation of Company funds, which resulted in a $55 million gain related to the recovery of cattle inventory as compared to a $106 million loss recognized in fiscal 2020.
Sales volume decreased 17.7% during the fourth quarter of fiscal 2021, or decreased 11.3% after removing the impact of an additional week in 2020, and decreased 2.7% in fiscal 2021, or decreased 0.8% after removing the impact of an additional week in 2020, due to the impacts associated with lower hog supplies and a challenging labor environment, partially offset by strong global demand. Average sales price increased as input costs such as live hog, labor, freight and transportation costs increased and demand for our pork products remained strong. Operating income decreased primarily due to lower hog supplies relative to industry capacity as well as production inefficiencies related to COVID-19 and a challenging labor environment, partially offset by a reduction in direct incremental expenses related to COVID-19 in fiscal 2021 as compared to fiscal 2020. Additionally, volatile market conditions resulted in net derivative losses of $90 million in fiscal 2021 and net derivative gains of $70 million in fiscal 2020, which were offset by the impacts of related physical purchase transactions.
Sales volume decreased 5.9% during the fourth quarter of fiscal 2021, or increased 1.3% after removing the impact of an additional week in 2020, primarily due to increased demand in the foodservice channel. Sales volume decreased 3.3% for fiscal 2021, or decreased 1.5% after removing the impact of an additional week in 2020. Despite a strong demand environment, volume decreased due to the impacts associated with a decline in hatch rate, a challenging labor environment and disruptions due to severe weather in the second quarter of fiscal 2021. Average sales price increased due to favorable sales mix and inflationary market conditions. Operating income decreased during the fourth quarter of fiscal 2021 primarily due to $325 million of higher feed ingredient costs, $75 million of net derivative losses in the fourth quarter of fiscal 2021 as compared to $45 million of net derivative gains in the fourth quarter of fiscal 2020, increased supply chain costs and a $23 million expense related to a fire at a production facility, partially offset by favorable product mix. Operating income decreased during fiscal 2021 primarily due to a $626 million loss from the recognition of legal contingency accruals, $735 million of higher feed ingredient costs as compared to fiscal 2020, increased supply chain costs, $23 million of expenses related to a fire at a production facility, decline in hatch rate and disruptions due to severe weather. This was partially offset by favorable product mix, reduced direct incremental expense associated with COVID-19 and $65 million of net derivative gains in fiscal 2021 as compared to $50 million of net derivative losses in fiscal 2020.
Sales volume decreased 12.5% during the fourth quarter of fiscal 2021, or decreased 5.7% after removing the impact of an additional week in 2020, due to lower production throughput primarily associated with a challenging labor and supply environment. Sales volume decreased 5.4% for fiscal 2021, or decreased 3.7% after removing the impact of an additional week in 2020, driven by lower production throughput primarily associated with a challenging labor and supply environment and reduced foodservice demand in the first half of fiscal 2021. Average sales price increased due to favorable product mix and inflation-justified pricing. Operating income increased in the fourth quarter of fiscal 2021 due to the recognition of a $784 million gain from the sale of our pet treats business and favorable pricing and product mix, which were offset by the impact of inflationary market conditions including $255 million of increased raw materials and other input costs, increased supply chain costs and a challenging labor environment. Operating income increased during fiscal 2021 due to the recognition of a $784 million gain from the sale of our pet treats business, lower commercial spend as well as favorable pricing and product mix, which were partially offset by the impact of inflationary market conditions including a $520 million increase in raw material costs during fiscal 2021, increased supply chain costs and a challenging labor environment.
For fiscal 2022, the United States Department of Agriculture (“USDA”) indicates domestic protein production (beef, pork, chicken and turkey) should increase slightly as compared to fiscal 2021 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 2022.3
Beginning in fiscal 2022, we are launching a new productivity program, which is designed to drive a better, faster and more agile organization that is supported by a culture of continuous improvement and faster decision making. We are targeting $1 billion in productivity savings by the end of fiscal 2024 and $300 million to $400 million in fiscal 2022, relative to a fiscal 2021 cost baseline.
USDA projects domestic production will decrease approximately 2% in fiscal 2022 as compared to fiscal 2021. We anticipate another strong year with adjusted operating margin between 9% to 11% in fiscal 2022. We expect the first half of the fiscal year will be stronger than the second half as a combination of higher utilization and demand for cattle may result in a narrowing spread.
USDA projects domestic production will decrease approximately 2% in fiscal 2022 as compared to fiscal 2021. We believe our Pork segment's adjusted operating margin will be 5% to 7% in fiscal 2022.
USDA projects chicken production will increase slightly in fiscal 2022 as compared to fiscal 2021. We anticipate an adjusted operating margin at the lower end of 5% to 7% for fiscal 2022 as our adjusted operating margin should achieve this on a run rate basis by the middle of the year resulting in overall stronger performance in the second half of the fiscal year.
We believe our adjusted operating margin will be around 7% to 9% in fiscal 2022. We will remain disciplined in our pricing initiatives to ensure additional inflationary pressures are passed through to customers, while also working diligently to deliver productivity savings to reduce costs.
We anticipate improved results from our foreign operations in fiscal 2022.
We expect sales to approximate $49 billion to $51 billion in fiscal 2022.
We expect capital expenditures of approximately $2 billion for fiscal 2022. Capital expenditures include spending for capacity expansion and utilization, automation to alleviate labor challenges and brand and product innovation.
Net Interest Expense
We expect net interest expense to approximate $380 million for fiscal 2022.
We expect total liquidity, which was approximately $4.8 billion at October 2, 2021, to remain above our minimum liquidity target of $1.0 billion.
We currently expect our adjusted effective tax rate to be around 23% in fiscal 2022.
Effective November 12, 2021, the Board of Directors increased the quarterly dividend previously declared on August 12, 2021, to $0.46 per share on our Class A common stock and $0.414 per share on our Class B common stock. The increased quarterly dividend is payable on December 15, 2021, to shareholders of record at the close of business on December 1, 2021. The Board also declared a quarterly dividend of $0.46 per share on our Class A common stock and $0.414 per share on our Class B common stock, payable on March 15, 2022, to shareholders of record at the close of business on March 1, 2022. We anticipate the remaining quarterly dividends in fiscal 2022 will be $0.46 and $0.414 per share of our Class A and Class B stock, respectively. This results in an annual dividend rate in fiscal 2022 of $1.84 for Class A shares and $1.656 for Class B shares, or a 3% increase compared to the fiscal 2021 annual dividend rate.
3 The Company is not able to reconcile its full-year fiscal 2022 projected adjusted results to its fiscal 2022 projected GAAP results because certain information necessary to calculate such measures 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, such as legal contingency accruals and other significant items which could be significant, the Company is unable to provide a reconciliation for these forward-looking non-GAAP measures without unreasonable effort. Adjusted operating margin 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)
more, including financial tables