Tyson Foods, Inc. (NYSE:TSN) today announced increased adjusted
guidance for fiscal 2017, adjusted guidance for fiscal 2018 and
cost savings targets for 2018-2020.
Adjusted earnings guidance for the 2017 fiscal year, which ends
Saturday, has been increased to an adjusted $5.20-5.30 per share,
up from $4.95-5.05, primarily due to much better than expected
earnings in the Beef segment.
Guidance for fiscal 2018 is an adjusted $5.70-5.85 earnings per
share, which would be the seventh consecutive year of record
adjusted EPS.
The company plans to provide GAAP results for its fourth quarter
and full-year 2017 in its fourth quarter earnings report scheduled
for Nov. 13; however, at this time the company is unable to
reconcile its full-year fiscal 2017 and 2018 adjusted EPS guidance
to its full-year fiscal 2017 and 2018 projected GAAP guidance
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. These potential items include, but
are not limited to, the potential impairment of a non-protein
business classified as an asset held for sale and any gains or
losses upon the completion of the sale of three non-protein
businesses, potential impairments of long-lived assets and
intangible assets, and additional expense or modifications to its
restructuring plan and other charges. 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
efforts. Adjusted EPS should not be considered a substitute for net
income per share attributable to Tyson or any other measure of
financial 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.
Tom Hayes, Tyson’s president and chief executive officer, said
the company is implementing its previously announced “Financial
Fitness” plans. “We are creating momentum behind our continuous
improvement agenda as we know we can be even more efficient
operators,” he said. “We are a good partner for growth for our
customers and are constantly challenging ourselves to identify
opportunities to create value for our consumers, customers and
shareowners.”
Through a combination of synergies from the integration of
AdvancePierre Foods acquired in June, and additional eliminations
of non-value-added costs, the company expects cumulative net
savings of $200 million, $400 million and $600 million over fiscal
years 2018, 2019 and 2020, respectively. These savings primarily
will impact the Prepared Foods and Chicken segments, focusing on
three areas:
- Supply Chain
- Procurement
- Overhead
The company plans to reduce headcount by approximately 450
positions across several areas and job levels. Most of the
eliminated positions will come from the corporate offices in
Springdale, Chicago and Cincinnati.
“We’re grateful to everyone who has contributed to the company’s
success, and we’re thankful for their time with Tyson Foods,” Hayes
said. “These are hard decisions, but I believe our customers and
consumers will benefit from our more agile, responsive organization
as we grow our business through differentiated capabilities,
deliver ongoing financial fitness through continuous improvement
and sustain our company and our world for future generations.”
In its fiscal fourth quarter earnings report, Tyson Foods plans
to report restructuring and other charges of approximately $140 -
$150 million, composed of an approximately $70 million impairment
for costs related to in-process software implementations, $45 - $50
million in employee termination costs and $25 - $30 million in
contract termination costs.
The company plans to provide a reconciliation of its fourth
quarter adjusted EPS and its full-year fiscal 2017 adjusted EPS
guidance to its fourth quarter GAAP EPS and its full-year fiscal
2017 GAAP guidance in its fourth quarter earnings report scheduled
for Nov. 13. The company last provided a reconciliation of adjusted
EPS and GAAP EPS in its third quarter earnings release. For a
reconciliation of the company’s third quarter adjusted EPS and its
nine-months ended adjusted EPS to its third quarter and nine-months
ended GAAP EPS, respectively, see the company’s Current Report on
Form 8-K filed with the SEC on August 7, 2017.
Adjusted net income per share attributable to Tyson (adjusted
EPS) is a supplementary measure of our financial performance that
is not required by, or presented in accordance with, GAAP. We use
adjusted EPS as an internal performance measurement and as one
criterion for evaluating our performance relative to that of our
peers. We believe adjusted EPS is meaningful to our investors to
enhance their understanding of our financial performance and is
frequently used by securities analysts, investors and other
interested parties to compare our performance with the performance
of other companies that report adjusted EPS. Further, we believe
that adjusted EPS is a useful measure because it improves
comparability of results of operations from period to period.
Adjusted EPS should not be considered a substitute for net income
per share attributable to Tyson or any other measure of financial
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 EPS may not be comparable to similarly titled measures
reported by other companies.
The company will host a conference call with analysts to discuss
these announcements at 9 a.m. EDT Friday, Sept. 29, 2017.
Participants may pre-register for the call at
http://dpregister.com/10112611. Callers who pre-register will be
given a conference passcode and unique PIN to gain immediate access
to the call and bypass the operator. Participants may
pre-register at any time, including up to and after the call start
time. Those without internet access or who are unable to
pre-register may dial-in by calling toll free 1-844-890-1795 or
international toll 1-412-717-9589.
A live webcast, including slides, will be available on the Tyson
Foods Investor Relations website at http://ir.tyson.com. The
webcast also can be accessed by using the direct link
https://event.on24.com/wcc/r/1517267/0A51C0B8DD32E46218B1A4E8572833A7
A replay of the call will be available until Oct. 29, 2017, toll
free at 1-877-344-7529, international toll 1-412-317-0088 or Canada
toll free 855-669-9658. The replay access code
is 10112611. Financial information, such as
this news release, can be accessed from the Company's web site at
http://ir.tyson.com.
To download the free Tyson IR App, which offers access to SEC
filings, news releases, transcripts, webcasts and presentations,
please visit the App Store for iPhone and iPad or Google
Play for Android mobile devices.
About Tyson FoodsTyson Foods Inc. (NYSE:TSN) is
one of the world’s largest food companies and a recognized leader
in protein. Founded in 1935 by John W. Tyson and grown under three
generations of family leadership, the company has a broad portfolio
of products and brands like Tyson®, Jimmy Dean®, Hillshire Farm®,
Ball Park®, Wright®, Aidells®, ibp® and State Fair®. Tyson Foods
innovates continually to make protein more sustainable, tailor food
for everywhere it’s available and raise the world’s expectations
for how much good food can do. Headquartered in Springdale,
Arkansas, the company had 114,000 team members at October 1, 2016.
Through its Core Values, Tyson Foods strives to operate with
integrity, create value for its shareholders, customers,
communities and team members and serve as stewards of the animals,
land and environment entrusted to it. Visit www.tysonfoods.com.
Forward-Looking Statements Certain information
contained in this news release may constitute forward-looking
statements, including but not limited to statements relating to
expected performance, statements relating to adjusted EPS guidance
and synergies estimates, and statements relating to impairment and
other charges regarding restructuring and other termination
actions. These forward-looking statements are subject to a number
of factors and uncertainties which could cause our actual results
and experiences to differ materially from the anticipated results
and expectations expressed in such forward-looking statements. We
wish to caution readers not to place undue reliance on any
forward-looking statements, which speak only as of the date made.
Among the factors that may cause actual results and experiences to
differ from anticipated results and expectations expressed in such
forward-looking statements are the following: (i) the effect of, or
changes in, general economic conditions; (ii) fluctuations in the
cost and availability of inputs and raw materials, such as live
cattle, live swine, feed grains (including corn and soybean meal)
and energy; (iii) market conditions for finished products,
including competition from other global and domestic food
processors, supply and pricing of competing products and
alternative proteins and demand for alternative proteins; (iv)
successful rationalization of existing facilities and operating
efficiencies of the facilities; (v) risks associated with our
commodity purchasing activities; (vi) access to foreign markets
together with foreign economic conditions, including currency
fluctuations, import/export restrictions and foreign politics;
(vii) outbreak of a livestock disease (such as avian influenza (AI)
or bovine spongiform encephalopathy (BSE)), which could have an
adverse effect on livestock we own, the availability of livestock
we purchase, consumer perception of certain protein products or our
ability to access certain domestic and foreign markets; (viii)
changes in availability and relative costs of labor and contract
growers and our ability to maintain good relationships with
employees, labor unions, contract growers and independent producers
providing us livestock; (ix) issues related to food safety,
including costs resulting from product recalls, regulatory
compliance and any related claims or litigation; (x) changes in
consumer preference and diets and our ability to identify and react
to consumer trends; (xi) significant marketing plan changes by
large customers or loss of one or more large customers; (xii)
adverse results from litigation; (xiii) impacts on our operations
caused by factors and forces beyond our control, such as natural
disasters, fire, bioterrorism, pandemics or extreme weather; (xiv)
risks associated with leverage, including cost increases due to
rising interest rates or changes in debt ratings or outlook; (xv)
compliance with and changes to regulations and laws (both domestic
and foreign), including changes in accounting standards, tax laws,
environmental laws, agricultural laws and occupational, health and
safety laws; (xvi) our ability to make effective acquisitions or
joint ventures and successfully integrate newly acquired businesses
into existing operations; (xvii) cyber incidents, security breaches
or other disruptions of our information technology systems; (xviii)
effectiveness of advertising and marketing programs; (xix) our
ability to fully realize expected cost savings or operating
efficiencies associated with our strategic initiatives or
restructuring programs; and (xx) those factors listed under Item
1A. “Risk Factors” included in our Annual Report filed on Form 10-K
for the period ended October 1, 2016 and subsequently filed
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Media Contact: Gary Mickelson, 479-290-6111
Investor Contact: Jon Kathol, 479-290-4235
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