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:
(in millions, except per share
data) |
Third Quarter |
|
Nine Months Ended |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Sales |
$ |
10,022 |
|
|
$ |
10,885 |
|
|
$ |
31,725 |
|
|
$ |
31,521 |
|
Operating Income |
775 |
|
|
781 |
|
|
2,102 |
|
|
2,223 |
|
|
|
|
|
|
|
|
|
Net Income |
527 |
|
|
681 |
|
|
1,455 |
|
|
1,663 |
|
Less: Net Income Attributable
to Noncontrolling Interests |
— |
|
|
5 |
|
|
7 |
|
|
10 |
|
Net Income Attributable to
Tyson |
$ |
527 |
|
|
$ |
676 |
|
|
$ |
1,448 |
|
|
$ |
1,653 |
|
|
|
|
|
|
|
|
|
Net Income Per Share
Attributable to Tyson |
$ |
1.44 |
|
|
$ |
1.84 |
|
|
$ |
3.96 |
|
|
$ |
4.51 |
|
|
|
|
|
|
|
|
|
Adjusted¹ Operating
Income |
$ |
760 |
|
|
$ |
796 |
|
|
$ |
2,155 |
|
|
$ |
2,291 |
|
|
|
|
|
|
|
|
|
Adjusted¹ Net Income Per Share
Attributable to Tyson |
$ |
1.40 |
|
|
$ |
1.47 |
|
|
$ |
3.83 |
|
|
$ |
4.25 |
|
1 Adjusted operating income and adjusted net income per share
attributable to Tyson, or Adjusted EPS, are non-GAAP financial
measures and are explained and reconciled to a comparable GAAP
measure at the end of this release.
First Nine Months Highlights
- GAAP EPS of $3.96, down 12%
from prior year; Adjusted EPS of $3.83, down 10% from prior
year
- GAAP operating income of
$2,102 million; Adjusted operating income of $2,155
million
- Total Company GAAP operating
margin of 6.6% and Adjusted operating margin of 6.8%
- Generated $2.7 billion of
operating cash flows
- Results negatively impacted by
approximately $340 million of direct incremental expenses related
to COVID-19
Third Quarter Highlights
- GAAP EPS of $1.44, down 22%
from prior year; Adjusted EPS of $1.40, down 5% from prior
year
- GAAP operating income of $775
million and Adjusted operating income of $760 million
- Total Company GAAP operating
margin of 7.7% and adjusted operating margin of 7.6%
- Liquidity of $3.1 billion at
June 27, 2020
- Results negatively impacted by
approximately $340 million of direct incremental expenses related
to COVID-19
“Without a doubt, our third fiscal quarter was one of the most
volatile and uncertain periods I’ve seen during my time in the
industry,” said Noel White, Tyson Foods’ CEO. “However, our
commitment to team member health and safety and investments in
operations and portfolio strategy effectively positioned us to
weather unprecedented COVID-19 marketplace volatility while
allowing us to support our farmers, ranchers and producers and meet
our customers’ needs.”
“I want to thank our team members for their dedication and
diligence as we continue to navigate the COVID-19 pandemic. At
Tyson Foods, our focus remains on ensuring the health and safety of
our team members, their families and our communities. We take this
responsibility very seriously, and we’re proud that our team
members have gone above and beyond to help us supply food for the
nation.”
“Within each of our segments, we absorbed higher-than-normal
operating costs related to COVID-19. Nonetheless, Tyson delivered
strong results during the third quarter led by strength in our Beef
and Pork segments. Despite short-term challenges, we’re maintaining
a clear focus on the long term. Our fourth quarter is off to a
solid start, and while COVID-19 has been disruptive, we have a
strong long-term outlook for Tyson Foods.”
SEGMENT RESULTS (in millions)
Sales |
(for the third quarter ended June 27, 2020, and June 29, 2019) |
|
Third Quarter |
Nine Months Ended |
|
|
|
Volume |
Avg. Price |
|
|
Volume |
Avg. Price |
|
2020 |
2019 |
Change |
Change |
2020 |
2019 |
Change |
Change |
Beef |
$ |
3,653 |
|
$ |
4,157 |
|
(23.8 |
)% |
11.6 |
% |
$ |
11,470 |
|
$ |
11,967 |
|
(9.8 |
)% |
5.7 |
% |
Pork |
1,115 |
|
1,323 |
|
(16.5 |
)% |
0.8 |
% |
3,760 |
|
3,674 |
|
(2.4 |
)% |
4.7 |
% |
Chicken |
3,112 |
|
3,331 |
|
(4.2 |
)% |
(2.4 |
)% |
9,801 |
|
9,853 |
|
(0.4 |
)% |
(0.1 |
)% |
Prepared
Foods |
2,035 |
|
2,089 |
|
(6.0 |
)% |
3.4 |
% |
6,255 |
|
6,265 |
|
(3.1 |
)% |
2.9 |
% |
International/Other |
402 |
|
356 |
|
25.0 |
% |
(9.2 |
)% |
1,365 |
|
776 |
|
86.8 |
% |
(5.8 |
)% |
Intersegment
Sales |
(295 |
) |
(371 |
) |
n/a |
|
n/a |
|
(926 |
) |
(1,014 |
) |
n/a |
|
n/a |
|
Total |
$ |
10,022 |
|
$ |
10,885 |
|
(10.6 |
)% |
2.6 |
% |
$ |
31,725 |
|
$ |
31,521 |
|
(1.1 |
)% |
1.8 |
% |
Operating Income (Loss) |
(for the third quarter ended June 27, 2020, and June 29, 2019) |
|
Third Quarter |
Nine Months Ended |
|
|
|
Operating Margin |
|
|
Operating Margin |
|
2020 |
2019 |
2020 |
2019 |
2020 |
2019 |
2020 |
2019 |
Beef |
$ |
651 |
|
$ |
270 |
|
17.8 |
% |
6.5 |
% |
$ |
1,170 |
|
$ |
731 |
|
10.2 |
% |
6.1 |
% |
Pork |
107 |
|
42 |
|
9.6 |
% |
3.2 |
% |
391 |
|
237 |
|
10.4 |
% |
6.5 |
% |
Chicken |
(120 |
) |
230 |
|
(3.9 |
)% |
6.9 |
% |
36 |
|
531 |
|
0.4 |
% |
5.4 |
% |
Prepared
Foods |
145 |
|
229 |
|
7.1 |
% |
11.0 |
% |
494 |
|
739 |
|
7.9 |
% |
11.8 |
% |
International/Other |
(8 |
) |
10 |
|
n/a |
|
n/a |
|
11 |
|
(15 |
) |
n/a |
|
n/a |
|
Total |
$ |
775 |
|
$ |
781 |
|
7.7 |
% |
7.2 |
% |
$ |
2,102 |
|
$ |
2,223 |
|
6.6 |
% |
7.1 |
% |
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 Operating Income (Loss) (Non-GAAP) |
(for the third quarter ended June 27, 2020, and June 29, 2019) |
|
Third Quarter |
Nine Months Ended |
|
|
|
Adjusted Operating Margin (Non-GAAP) |
|
|
Adjusted Operating Margin (Non-GAAP) |
|
2020 |
2019 |
2020 |
2019 |
2020 |
2019 |
2020 |
2019 |
Beef |
$ |
636 |
|
$ |
271 |
|
17.4 |
% |
6.5 |
% |
$ |
1,176 |
|
$ |
732 |
|
10.3 |
% |
6.1 |
% |
Pork |
107 |
|
42 |
|
9.6 |
% |
3.2 |
% |
393 |
|
237 |
|
10.5 |
% |
6.5 |
% |
Chicken |
(120 |
) |
237 |
|
(3.9 |
)% |
7.1 |
% |
57 |
|
560 |
|
0.6 |
% |
5.7 |
% |
Prepared Foods |
145 |
|
236 |
|
7.1 |
% |
11.3 |
% |
516 |
|
753 |
|
8.2 |
% |
12.0 |
% |
International/Other |
(8 |
) |
10 |
|
n/a |
|
n/a |
|
13 |
|
9 |
|
n/a |
|
n/a |
|
Total |
$ |
760 |
|
$ |
796 |
|
7.6 |
% |
7.3 |
% |
$ |
2,155 |
|
$ |
2,291 |
|
6.8 |
% |
7.3 |
% |
Note: Adjusted operating income is a non-GAAP financial measure
and is explained and reconciled to a comparable GAAP measure at the
end of this release.
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 operating income and adjusted operating
margin as internal performance measurements and as two criteria for
evaluating our performance relative to that of our peers. We
believe 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 operating income and adjusted operating margin. Further,
we believe that adjusted operating income and adjusted operating
margin are useful measures because they improve comparability of
results of operations from period to period. Adjusted operating
income and adjusted operating margin should not be considered as
substitutes for 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 operating income
and adjusted operating margin may not be comparable to similarly
titled measures reported by other companies.
COVID-19 Expenses
- During the third quarter of fiscal
2020, we incurred direct incremental expenses related to COVID-19
totaling approximately $340 million. These COVID-19 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, rendered product, certain
professional fees and $114 million of thank you bonuses to
frontline employees, 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 decreased in the
third quarter and the first nine months of fiscal 2020 primarily
due to lower production throughput associated with the impact of
COVID-19 in the third quarter 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 increased in the
third quarter and first nine months of fiscal 2020 as beef demand
remained strong amid supply disruptions related to the impact of
COVID-19. Operating income in the third quarter and first nine
months of fiscal 2020 increased primarily due to COVID-19
disruptions which increased the spread between preexisting
contractual agreements and the cost of fed cattle, partially offset
by price reductions offered to customers, as well as production
inefficiencies and direct incremental expenses related to COVID-19.
Additionally, operating income in the third quarter of fiscal 2020
was impacted by approximately $45 million of net derivative gains
and $15 million of net insurance proceeds from a production
facility fire.
- Pork - Sales volume decreased in the
third quarter and first nine months of fiscal 2020 primarily due to
lower production throughput associated with COVID-19 despite strong
demand for our pork products and increased domestic availability of
live hogs. Average sales price increased in the third quarter and
first nine months of fiscal 2020 as pork demand remained strong
amid supply disruptions related to the impact of COVID-19.
Operating income increased in the third quarter and first nine
months of 2020 primarily due to COVID-19 disruptions which
increased the spread between preexisting contractual agreements and
the cost of live hogs, partially offset by production
inefficiencies and direct incremental expenses related to
COVID-19.
- Chicken - Sales volume decreased in
the third quarter and first nine months of fiscal 2020 primarily
due to lower production throughput associated with the impact of
COVID-19 in the third quarter of fiscal 2020 and lower foodservice
demand, partially offset by increased volumes in consumer products.
Average sales price decreased in the third quarter of fiscal 2020
primarily due to weaker chicken pricing as a result of market
conditions. Average sales price was relatively flat in the first
nine months of fiscal 2020 as reduced sales volumes of lower priced
rendering and blending products had the effect of increasing
average sales price, which was largely offset by weaker chicken
pricing as a result of market conditions. Operating income
decreased in the third quarter and first nine months of fiscal 2020
primarily from market conditions, unfavorable product mix, as well
as production inefficiencies and direct incremental expenses
related to COVID-19. Operating income was further impacted by $110
million of net derivatives losses in each of the third quarter and
first nine months of fiscal 2020, and by approximately $50 million
in increased feed ingredient costs in first nine months of fiscal
2020, as compared to the same periods in fiscal 2019. Additionally,
operating income was impacted by $21 million in restructuring costs
incurred in the first nine months of fiscal 2020.
- Prepared Foods - Sales volume
decreased in the third quarter and first nine months of fiscal 2020
as growth in volume across the consumer products 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 in
the third quarter of fiscal 2020. Average sales price increased in
the third quarter and first nine months of fiscal 2020 due to
favorable product mix associated with the surge in consumer product
demand, as well as the pass through of increased raw material
costs. Operating income decreased in the third quarter and first
nine months of fiscal 2020 primarily due to increased operating
costs, including a $135 million increase in net raw material costs
and derivative losses in the first nine months of fiscal 2020, as
well as production inefficiencies and direct incremental expenses
related to COVID-19 in the third quarter of fiscal 2020.
Additionally, operating income was impacted by $22 million
restructuring costs incurred in the first nine months of fiscal
2020.
OutlookFor 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 capital expenditures, net interest expense, liquidity
and tax rate for fiscal 2021.
- 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 for
the remainder of fiscal 2020 and into fiscal 2021. Operationally,
we have faced and expect to continue to face capacity utilization
slowdowns in production facilities from team member absenteeism and
choices we make to ensure team member health and safety. The lower
levels of productivity and higher costs of production we have
experienced will likely continue until COVID-19 is better
understood and its impacts diminish. Each of our segments has also
experienced a shift in demand from foodservice to retail; however,
the volume increases in retail have not been sufficient to offset
the losses in foodservice and as a result, we expect decreases in
volumes in the last quarter of fiscal 2020 in our Chicken and
Prepared Foods segments. 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. Due to the inability to
reasonably quantify the total impact of COVID-19 to our operations,
we are not currently providing segment adjusted operating margin
guidance.
- Beef – USDA projects domestic
production will increase approximately 3% in fiscal 2021 as
compared to a COVID-19 impacted fiscal 2020. For fiscal 2021, we
also expect ample supplies in regions where we operate our
plants.
- Pork – USDA projects domestic
production will increase approximately 1% 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.
- Capital Expenditures – For fiscal
2020, we expect capital expenditures to be approximately $1.2
billion with a similar amount expected in fiscal 2021. Capital
expenditures include spending for production 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 $470 million for fiscal 2020 and
$440 million for fiscal 2021.
- Liquidity – We expect total liquidity,
which was approximately $3.1 billion at June 27, 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 2020 and
fiscal 2021.
TYSON FOODS,
INC.CONSOLIDATED CONDENSED STATEMENTS OF
INCOME(In millions, except per share
data)(Unaudited)
|
Three Months Ended |
|
Nine Months Ended |
|
June 27, 2020 |
|
June 29, 2019 |
|
June 27, 2020 |
|
June 29, 2019 |
Sales |
$ |
10,022 |
|
|
$ |
10,885 |
|
|
$ |
31,725 |
|
|
$ |
31,521 |
|
Cost of Sales |
8,709 |
|
|
9,549 |
|
|
27,951 |
|
|
27,638 |
|
Gross Profit |
1,313 |
|
|
1,336 |
|
|
3,774 |
|
|
3,883 |
|
|
|
|
|
|
|
|
|
Selling, General and
Administrative |
538 |
|
|
555 |
|
|
1,672 |
|
|
1,660 |
|
Operating Income |
775 |
|
|
781 |
|
|
2,102 |
|
|
2,223 |
|
Other (Income) Expense: |
|
|
|
|
|
|
|
Interest income |
(3 |
) |
|
(2 |
) |
|
(9 |
) |
|
(9 |
) |
Interest expense |
122 |
|
|
121 |
|
|
361 |
|
|
339 |
|
Other, net |
(11 |
) |
|
(62 |
) |
|
(133 |
) |
|
(72 |
) |
Total Other (Income)
Expense |
108 |
|
|
57 |
|
|
219 |
|
|
258 |
|
Income before Income
Taxes |
667 |
|
|
724 |
|
|
1,883 |
|
|
1,965 |
|
Income Tax Expense |
140 |
|
|
43 |
|
|
428 |
|
|
302 |
|
Net Income |
527 |
|
|
681 |
|
|
1,455 |
|
|
1,663 |
|
Less: Net Income Attributable
to Noncontrolling Interests |
— |
|
|
5 |
|
|
7 |
|
|
10 |
|
Net Income Attributable to
Tyson |
$ |
527 |
|
|
$ |
676 |
|
|
$ |
1,448 |
|
|
$ |
1,653 |
|
Weighted Average Shares
Outstanding: |
|
|
|
|
|
|
|
Class A Basic |
292 |
|
|
293 |
|
|
293 |
|
|
293 |
|
Class B Basic |
70 |
|
|
70 |
|
|
70 |
|
|
70 |
|
Diluted |
364 |
|
|
367 |
|
|
366 |
|
|
366 |
|
Net Income Per Share
Attributable to Tyson: |
|
|
|
|
|
|
|
Class A Basic |
$ |
1.48 |
|
|
$ |
1.90 |
|
|
$ |
4.07 |
|
|
$ |
4.64 |
|
Class B Basic |
$ |
1.33 |
|
|
$ |
1.71 |
|
|
$ |
3.65 |
|
|
$ |
4.17 |
|
Diluted |
$ |
1.44 |
|
|
$ |
1.84 |
|
|
$ |
3.96 |
|
|
$ |
4.51 |
|
Dividends Declared Per
Share: |
|
|
|
|
|
|
|
Class A |
$ |
0.420 |
|
|
$ |
0.375 |
|
|
$ |
1.305 |
|
|
$ |
1.200 |
|
Class B |
$ |
0.378 |
|
|
$ |
0.338 |
|
|
$ |
1.175 |
|
|
$ |
1.081 |
|
|
|
|
|
|
|
|
|
Sales Growth |
(7.9 |
)% |
|
|
|
0.6 |
% |
|
|
Margins: (Percent of
Sales) |
|
|
|
|
|
|
|
Gross Profit |
13.1 |
% |
|
12.3 |
% |
|
11.9 |
% |
|
12.3 |
% |
Operating Income |
7.7 |
% |
|
7.2 |
% |
|
6.6 |
% |
|
7.1 |
% |
Net Income Attributable to Tyson |
5.3 |
% |
|
6.3 |
% |
|
4.6 |
% |
|
5.3 |
% |
Effective Tax Rate |
21.0 |
% |
|
6.0 |
% |
|
22.7 |
% |
|
15.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TYSON FOODS,
INC.CONSOLIDATED CONDENSED BALANCE
SHEETS(In
millions)(Unaudited)
|
June 27, 2020 |
|
September 28, 2019 |
Assets |
|
|
|
Current Assets: |
|
|
|
Cash and cash equivalents |
$ |
1,365 |
|
|
$ |
484 |
|
Accounts receivable, net |
2,064 |
|
|
2,173 |
|
Inventories |
3,915 |
|
|
4,108 |
|
Other current assets |
355 |
|
|
404 |
|
Total Current Assets |
7,699 |
|
|
7,169 |
|
Net Property, Plant and
Equipment |
7,515 |
|
|
7,282 |
|
Goodwill |
10,890 |
|
|
10,844 |
|
Intangible Assets, net |
6,842 |
|
|
7,037 |
|
Other Assets |
1,612 |
|
|
765 |
|
Total Assets |
$ |
34,558 |
|
|
$ |
33,097 |
|
|
|
|
|
Liabilities and
Shareholders’ Equity |
|
|
|
Current Liabilities: |
|
|
|
Current debt |
$ |
750 |
|
|
$ |
2,102 |
|
Accounts payable |
1,743 |
|
|
1,926 |
|
Other current liabilities |
1,780 |
|
|
1,485 |
|
Total Current Liabilities |
4,273 |
|
|
5,513 |
|
Long-Term Debt |
11,279 |
|
|
9,830 |
|
Deferred Income Taxes |
2,370 |
|
|
2,356 |
|
Other Liabilities |
1,632 |
|
|
1,172 |
|
|
|
|
|
Total Tyson Shareholders’
Equity |
14,858 |
|
|
14,082 |
|
Noncontrolling Interests |
146 |
|
|
144 |
|
Total Shareholders’
Equity |
15,004 |
|
|
14,226 |
|
|
|
|
|
Total Liabilities and
Shareholders’ Equity |
$ |
34,558 |
|
|
$ |
33,097 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TYSON FOODS,
INC.CONSOLIDATED CONDENSED STATEMENTS OF CASH
FLOWS(In
millions)(Unaudited)
|
Nine Months Ended |
|
June 27, 2020 |
|
June 29, 2019 |
Cash Flows From Operating
Activities: |
|
|
|
Net income |
$ |
1,455 |
|
|
$ |
1,663 |
|
Depreciation and amortization |
876 |
|
|
809 |
|
Deferred income taxes |
27 |
|
|
43 |
|
Other, net |
(7 |
) |
|
41 |
|
Net changes in operating assets and liabilities |
357 |
|
|
(1,021 |
) |
Cash Provided by Operating
Activities |
2,708 |
|
|
1,535 |
|
|
|
|
|
Cash Flows From Investing
Activities: |
|
|
|
Additions to property, plant and equipment |
(907 |
) |
|
(971 |
) |
Purchases of marketable securities |
(59 |
) |
|
(47 |
) |
Proceeds from sale of marketable securities |
41 |
|
|
46 |
|
Acquisitions, net of cash acquired |
— |
|
|
(2,461 |
) |
Proceeds from sale of business |
29 |
|
|
— |
|
Acquisition of equity investments |
(183 |
) |
|
— |
|
Other, net |
(64 |
) |
|
98 |
|
Cash Used for Investing
Activities |
(1,143 |
) |
|
(3,335 |
) |
|
|
|
|
Cash Flows From Financing
Activities: |
|
|
|
Proceeds from issuance of debt |
1,589 |
|
|
4,619 |
|
Payments on debt |
(485 |
) |
|
(2,179 |
) |
Borrowings on revolving credit facility |
1,210 |
|
|
335 |
|
Payments on revolving credit facility |
(1,280 |
) |
|
(335 |
) |
Proceeds from issuance of commercial paper |
14,318 |
|
|
13,060 |
|
Repayments of commercial paper |
(15,317 |
) |
|
(12,970 |
) |
Purchases of Tyson Class A common stock |
(200 |
) |
|
(225 |
) |
Dividends |
(451 |
) |
|
(403 |
) |
Stock options exercised |
29 |
|
|
60 |
|
Other, net |
(7 |
) |
|
(30 |
) |
Cash (Used for) Provided by
Financing Activities |
(594 |
) |
|
1,932 |
|
Effect of Exchange Rate
Changes on Cash |
(8 |
) |
|
4 |
|
Increase in Cash and Cash
Equivalents and Restricted Cash |
963 |
|
|
136 |
|
Cash and Cash Equivalents and
Restricted Cash at Beginning of Year |
484 |
|
|
270 |
|
Cash and Cash Equivalents and
Restricted Cash at End of Period |
1,447 |
|
|
406 |
|
Less: Restricted Cash at End
of Period |
82 |
|
|
— |
|
Cash and Cash Equivalents at
End of Period |
$ |
1,365 |
|
|
$ |
406 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TYSON FOODS, INC.EBITDA
Reconciliations(In
millions)(Unaudited)
|
Nine Months Ended |
|
Fiscal Year Ended |
|
Twelve Months Ended |
|
June 27, 2020 |
|
June 29, 2019 |
|
September 28, 2019 |
|
June 27, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
1,455 |
|
|
$ |
1,663 |
|
|
$ |
2,035 |
|
|
$ |
1,827 |
|
Less: Interest income |
(9 |
) |
|
(9 |
) |
|
(11 |
) |
|
(11 |
) |
Add: Interest expense |
361 |
|
|
339 |
|
|
462 |
|
|
484 |
|
Add: Income tax expense |
428 |
|
|
302 |
|
|
396 |
|
|
522 |
|
Add: Depreciation |
662 |
|
|
600 |
|
|
819 |
|
|
881 |
|
Add: Amortization (a) |
204 |
|
|
201 |
|
|
267 |
|
|
270 |
|
EBITDA |
$ |
3,101 |
|
|
$ |
3,096 |
|
|
$ |
3,968 |
|
|
$ |
3,973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
Add: Keystone purchase
accounting and acquisition related costs (b) |
— |
|
|
37 |
|
|
37 |
|
|
— |
|
Add: Impairments net of
realized gains associated with the divestiture of businesses
(c) |
— |
|
|
— |
|
|
41 |
|
|
41 |
|
Add: Restructuring and related
charges |
52 |
|
|
31 |
|
|
41 |
|
|
62 |
|
Add: Beef production facility
fire costs, net of insurance proceeds |
1 |
|
|
— |
|
|
31 |
|
|
32 |
|
Add: Loss (Gain) from pension
plan terminations |
(116 |
) |
|
— |
|
|
15 |
|
|
(101 |
) |
Less: Gain on sale of
investment |
— |
|
|
(55 |
) |
|
(55 |
) |
|
— |
|
Total Adjusted EBITDA |
$ |
3,038 |
|
|
$ |
3,109 |
|
|
$ |
4,078 |
|
|
$ |
4,007 |
|
|
|
|
|
|
|
|
Total gross debt |
|
|
|
|
$ |
11,932 |
|
|
$ |
12,029 |
|
Less: Cash and cash
equivalents |
|
|
|
|
(484 |
) |
|
(1,365 |
) |
Less: Short-term
investments |
|
|
|
|
(1 |
) |
|
(2 |
) |
Total net debt |
|
|
|
|
$ |
11,447 |
|
|
$ |
10,662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio Calculations: |
|
|
|
|
|
|
|
|
|
|
|
Gross debt/EBITDA |
|
|
|
|
|
3.0x |
|
|
|
3.0x |
|
Net debt/EBITDA |
|
|
|
|
|
2.9x |
|
|
|
2.7x |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross debt/Adjusted
EBITDA |
|
|
|
|
|
2.9x |
|
|
|
3.0x |
|
Net debt/Adjusted EBITDA |
|
|
|
|
|
2.8x |
|
|
|
2.7x |
|
(a) |
|
Excludes the amortization of debt issuance and debt discount
expense of $10 million for the nine months ended June 27,
2020, $8 million for the nine months ended June 29, 2019, $12
million for the fiscal year ended September 28, 2019 and $14
million for the twelve months ended June 27, 2020 as it is
included in interest expense. |
(b) |
|
Keystone acquisition and integration costs for fiscal year 2019
included $11 million of purchase accounting adjustments and $26
million of acquisition related costs. |
(c) |
|
The fiscal year ended September 28, 2019 included a $41
million impairment associated with the planned divestiture of a
business. |
EBITDA is defined as net income before interest, income taxes,
depreciation and amortization. Net debt to EBITDA (Adjusted EBITDA)
represents the ratio of our debt, net of cash, cash equivalents and
short-term investments, to EBITDA (and to Adjusted EBITDA). EBITDA,
Adjusted EBITDA, net debt to EBITDA and net debt to Adjusted EBITDA
are presented as supplemental financial measurements in the
evaluation of our business. Adjusted EBITDA is a tool intended to
assist our management and investors in comparing our performance on
a consistent basis for purposes of business decision-making by
removing the impact of certain items that management believes do
not directly reflect our core operations on an ongoing basis.
We believe the presentation of these financial measures helps
management and investors to assess our operating performance from
period to period, including our ability to generate earnings
sufficient to service our debt, enhances understanding of our
financial performance and highlights operational trends. These
measures are widely used by investors and rating agencies in the
valuation, comparison, rating and investment recommendations of
companies; however, the measurements of EBITDA (and Adjusted
EBITDA) and net debt to EBITDA (and to Adjusted EBITDA) may not be
comparable to those of other companies, which may limit their
usefulness as comparative measures. EBITDA (and Adjusted EBITDA)
and net debt to EBITDA (and to Adjusted EBITDA) are not measures
required by or calculated in accordance with generally accepted
accounting principles (GAAP) and should not be considered as
substitutes for net income or any other measure of financial
performance reported in accordance with GAAP or as a measure of
operating cash flow or liquidity. EBITDA (and Adjusted EBITDA) is a
useful tool for assessing, but is not a reliable indicator of, our
ability to generate cash to service our debt obligations because
certain of the items added to net income to determine EBITDA (and
Adjusted EBITDA) involve outlays of cash. As a result, actual cash
available to service our debt obligations will be different from
EBITDA (and Adjusted EBITDA). Investors should rely primarily on
our GAAP results and use non-GAAP financial measures only
supplementally in making investment decisions.
TYSON FOODS, INC.EPS
Reconciliations(In millions, except per share
data)(Unaudited)
|
Third Quarter |
|
Nine Months Ended |
|
Pretax Impact |
|
EPS Impact |
|
Pretax Impact |
|
EPS Impact |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported net income per share
attributable to Tyson |
|
|
|
|
$ |
1.44 |
|
|
$ |
1.84 |
|
|
|
|
|
|
$ |
3.96 |
|
|
$ |
4.51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Restructuring and related charges |
$ |
— |
|
|
$ |
15 |
|
|
— |
|
|
0.03 |
|
|
$ |
52 |
|
|
$ |
31 |
|
|
0.11 |
|
|
0.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Less)/Add: Beef production
facility fire insurance proceeds, net of costs |
$ |
(15 |
) |
|
$ |
— |
|
|
(0.03 |
) |
|
— |
|
|
$ |
1 |
|
|
$ |
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Gain on sale of
investment |
$ |
— |
|
|
$ |
(55 |
) |
|
— |
|
|
(0.11 |
) |
|
$ |
— |
|
|
$ |
(55 |
) |
|
— |
|
|
(0.11 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Recognition of
previously unrecognized tax benefit |
$ |
— |
|
|
$ |
— |
|
|
— |
|
|
(0.29 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
— |
|
|
(0.29 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Keystone purchase
accounting and acquisition related costs (a) |
$ |
— |
|
|
$ |
— |
|
|
— |
|
|
— |
|
|
$ |
— |
|
|
$ |
37 |
|
|
— |
|
|
0.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Gain from pension plan
terminations |
$ |
(6 |
) |
|
$ |
— |
|
|
(0.01 |
) |
|
— |
|
|
$ |
(116 |
) |
|
$ |
— |
|
|
(0.24 |
) |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income per share
attributable to Tyson |
|
|
|
|
$ |
1.40 |
|
|
$ |
1.47 |
|
|
|
|
|
|
$ |
3.83 |
|
|
$ |
4.25 |
|
(a) |
|
Keystone purchase accounting and acquisition related costs for the
first nine months of fiscal 2019 included an $11 million purchase
accounting adjustment for the fair value step-up of inventory and
$26 million of acquisition related costs. |
Adjusted net income per share attributable to Tyson (Adjusted
EPS) is presented as 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.
TYSON FOODS,
INC.Operating Income
Reconciliation(In
millions)(Unaudited)
Adjusted Operating Income (Loss) |
(for the third quarter ended June 27, 2020) |
|
Beef |
Pork |
Chicken |
PreparedFoods |
International/Other |
Total |
Reported operating income (loss) |
$ |
651 |
|
$ |
107 |
|
$ |
(120 |
) |
$ |
145 |
|
$ |
(8 |
) |
$ |
775 |
|
Less: Beef production facility
fire insurance proceeds, net of costs |
(15 |
) |
— |
|
— |
|
— |
|
— |
|
(15 |
) |
Adjusted operating income
(loss) |
$ |
636 |
|
$ |
107 |
|
$ |
(120 |
) |
$ |
145 |
|
$ |
(8 |
) |
$ |
760 |
|
Adjusted Operating Income |
(for third quarter ended June 29, 2019) |
|
Beef |
Pork |
Chicken |
PreparedFoods |
International/Other |
Total |
Reported operating income |
$ |
270 |
|
$ |
42 |
|
$ |
230 |
|
$ |
229 |
|
$ |
10 |
|
$ |
781 |
|
Add: Restructuring and related
charges |
1 |
|
— |
|
7 |
|
7 |
|
— |
|
15 |
|
Adjusted operating income |
$ |
271 |
|
$ |
42 |
|
$ |
237 |
|
$ |
236 |
|
$ |
10 |
|
$ |
796 |
|
Adjusted Operating Income |
(for the nine months ended June 27, 2020) |
|
Beef |
Pork |
Chicken |
PreparedFoods |
International/Other |
Total |
Reported operating income |
$ |
1,170 |
|
$ |
391 |
|
$ |
36 |
|
$ |
494 |
|
$ |
11 |
|
$ |
2,102 |
|
Add:
Restructuring and related charges |
5 |
|
2 |
|
21 |
|
22 |
|
2 |
|
52 |
|
Add: Beef production facility
fire costs, net of insurance proceeds |
1 |
|
— |
|
— |
|
— |
|
— |
|
1 |
|
Adjusted operating income |
$ |
1,176 |
|
$ |
393 |
|
$ |
57 |
|
$ |
516 |
|
$ |
13 |
|
$ |
2,155 |
|
Adjusted Operating Income (Loss) |
(for the nine months ended June 29, 2019) |
|
Beef |
Pork |
Chicken |
PreparedFoods |
International/Other |
Total |
Reported operating income (loss) |
$ |
731 |
|
$ |
237 |
|
$ |
531 |
|
$ |
739 |
|
$ |
(15 |
) |
$ |
2,223 |
|
Add: Restructuring and related
charges |
1 |
|
— |
|
16 |
|
14 |
|
— |
|
31 |
|
Add: Keystone purchase
accounting and acquisition related costs |
— |
|
— |
|
13 |
|
— |
|
24 |
|
37 |
|
Adjusted operating income |
$ |
732 |
|
$ |
237 |
|
$ |
560 |
|
$ |
753 |
|
$ |
9 |
|
$ |
2,291 |
|
Adjusted operating income is presented as a supplementary
measure of our operating performance that is not required by, or
presented in accordance with, GAAP. We use adjusted operating
income as an internal performance measurement and as one criterion
for evaluating our performance relative to that of our peers. We
believe adjusted operating income is meaningful to our investors to
enhance their understanding of our operating 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 operating income. Further,
we believe that adjusted operating income is a useful measure
because it improves comparability of results of operations from
period to period. Adjusted operating income should not be
considered as a substitute for operating income 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 operating income
may not be comparable to similarly titled measures reported by
other companies.
Tyson 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 141,000 team members at September 28, 2019. Through
its Core Values, Tyson Foods strives to operate with integrity,
create value for its shareholders, customers, communities and team
members and serve as a steward of the animals, land and environment
entrusted to it. Visit www.tysonfoods.com.
A conference call to discuss the Company's financial results
will be held at 9 a.m. Eastern Monday, August 3, 2020. We encourage
participants to pre-register for the conference call using the
following link: http://dpregister.com/10145640. Callers who
pre-register will be given a conference passcode and unique PIN to
gain immediate access to the call and bypass the live
operator. Participants may pre-register at any time, including
up to and after the call has started. 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.
To listen to the live webcast, an archived replay or to view the
accompanying slides, go to the company’s investor website at
http://ir.tyson.com. The webcast also can be accessed by using the
direct link
https://event.on24.com/wcc/r/2396233/2D5C2E3AECE202F5CB086B64178DC885.
A telephone replay of the call will be available until September 3,
2020, 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 10145640. Financial information, such as this news
release, as well as other supplemental data, can be accessed from
the Company's web site at http://ir.tyson.com. To download Tyson
Foods’ free investor relations 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.
Forward-Looking StatementsCertain information
in this report constitutes forward-looking statements. Such
forward-looking statements include, but are not limited to, current
views and estimates of our outlook for the remainder of fiscal 2020
and fiscal 2021, other future economic circumstances, industry
conditions in domestic and international markets, our performance
and financial results (e.g., debt levels, return on invested
capital, value-added product growth, capital expenditures, tax
rates, access to foreign markets and dividend policy). These
forward-looking statements are subject to a number of factors and
uncertainties that could cause our actual results and experiences
to differ materially from 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. We undertake no
obligation to update any forward-looking statements, whether as a
result of new information, future events or otherwise. 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) 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; (ii) 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; (iii) outbreak of a livestock
disease (such as African swine fever (ASF), 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; (iv) the
effectiveness of our financial fitness program; (v) the
implementation of an enterprise resource planning system; (vi)
access to foreign markets together with foreign economic
conditions, including currency fluctuations, import/export
restrictions and foreign politics; (vii) changes in availability
and relative costs of labor and contract farmers and our ability to
maintain good relationships with employees, labor unions, contract
farmers and independent producers providing us livestock; (viii)
issues related to food safety, including costs resulting from
product recalls, regulatory compliance and any related claims or
litigation; (ix) changes in consumer preference and diets and our
ability to identify and react to consumer trends; (x) effectiveness
of advertising and marketing programs; (xi) our ability to leverage
brand value propositions; (xii) risks associated with leverage,
including cost increases due to rising interest rates or changes in
debt ratings or outlook; (xiii) impairment in the carrying value of
our goodwill or indefinite life intangible assets; (xiv) 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; (xv) adverse results from litigation; (xvi) cyber
incidents, security breaches or other disruptions of our
information technology systems; (xvii) our ability to make
effective acquisitions or joint ventures and successfully integrate
newly acquired businesses into existing operations; (xiii) risks
associated with our commodity purchasing activities; (xix) the
effect of, or changes in, general economic conditions; (xx)
significant marketing plan changes by large customers or loss of
one or more large customers; (xxi) impacts on our operations caused
by factors and forces beyond our control, such as natural
disasters, fire, bioterrorism, pandemics or extreme weather; (xxii)
failure to maximize or assert our intellectual property rights;
(xxiii) our participation in multiemployer pension plans; (xxiv)
the Tyson Limited Partnership’s ability to exercise significant
control over the Company; (xxv) effects related to changes in tax
rates, valuation of deferred tax assets and liabilities, or tax
laws and their interpretation; (xxvi) volatility in capital markets
or interest rates; (xxvii) risks associated with our failure to
integrate Keystone Foods’ operations or to realize the targeted
cost savings, revenues and other benefits of the acquisition;
(xxviii) pandemics or disease outbreaks, such as the global novel
coronavirus (COVID-19), may disrupt consumption and trade patterns,
supply chains, and production processes, which could materially
affect our operations and results of operations; (xxix) the
outbreak of the COVID-19 global pandemic and associated
responses has had, and is expected to continue to have, an adverse
impact on our business and operations; and (xxx) those factors
listed under Item 1A. “Risk Factors” in this report and Part I,
Item 1A. “Risk Factors” included in our Annual Report filed on
Form 10-K for the year ended September 28, 2019, our Current
Report on Form 8-K filed March 13, 2020, and our Quarterly Report
on Form 10-Q for the period ended June 27, 2020.
Media Contact: Gary Mickelson, 479-290-6111Investor
Contact: Jon Kathol, 479-290-4235 |
Source: Tyson Foods, Inc.Category: IR, Newsroom |
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