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 |
|
2021 |
|
2020 1 |
|
2021 |
|
2020 1 |
Sales |
$ |
12,478 |
|
|
$ |
10,022 |
|
|
$ |
34,238 |
|
|
$ |
31,725 |
|
Operating Income |
1,062 |
|
|
773 |
|
|
2,487 |
|
|
2,046 |
|
|
|
|
|
|
|
|
|
Net Income |
753 |
|
|
526 |
|
|
1,702 |
|
|
1,414 |
|
Less: Net Income Attributable
to Noncontrolling Interests |
4 |
|
|
— |
|
|
10 |
|
|
7 |
|
Net Income Attributable to
Tyson |
$ |
749 |
|
|
$ |
526 |
|
|
$ |
1,692 |
|
|
$ |
1,407 |
|
|
|
|
|
|
|
|
|
Net Income Per Share
Attributable to Tyson |
$ |
2.05 |
|
|
$ |
1.44 |
|
|
$ |
4.63 |
|
|
$ |
3.85 |
|
|
|
|
|
|
|
|
|
Adjusted2 Operating
Income |
$ |
1,372 |
|
|
$ |
758 |
|
|
$ |
3,136 |
|
|
$ |
2,099 |
|
|
|
|
|
|
|
|
|
Adjusted2 Net Income Per Share
Attributable to Tyson |
$ |
2.70 |
|
|
$ |
1.40 |
|
|
$ |
5.98 |
|
|
$ |
3.72 |
|
1 Certain items for the third quarter and nine months of fiscal
2020 have been revised as described in Part I, Item 1. Notes to
Consolidated Condensed Financial Statements in the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended July 3,
2021.
2 The Company reports its financial results in accordance with
U.S. generally accepted accounting principles (GAAP). Adjusted
operating income and adjusted net income per share attributable to
Tyson (Adjusted EPS) are non-GAAP financial measures. Refer to the
end of this release for an explanation and reconciliation of these
and other non-GAAP financial measures used in this release to
comparable GAAP measures.
First Nine Months Highlights
- GAAP EPS of $4.63, up 20% from prior year; Adjusted EPS
of $5.98, up 61% from prior year
- GAAP operating income of $2,487 million, up 22% from
prior year; Adjusted operating income of $3,136 million, up 49%
from prior year
- Total Company GAAP operating margin of 7.3%; Adjusted
operating margin of 9.0%
- Generated approximately $2.7 billion of operating cash
flows
- Results impacted by approximately $270 million of
direct incremental expenses related to COVID-19
- Reduced total debt by approximately $1
billion
Third Quarter Highlights
- GAAP EPS of $2.05, up 42% from prior year; Adjusted EPS
of $2.70, up 93% from prior year
- GAAP operating income of $1,062 million, up 37% from
prior year; Adjusted operating income of $1,372 million, up 81%
from prior year
- Total Company GAAP operating margin of 8.5%; Adjusted
operating margin of 10.8%
- Liquidity of $3.4 billion at July 3, 2021
- Entered into an agreement to sell our Pet Treats
business for $1.2 billion; closed in the fourth quarter of fiscal
2021
- Team member safety remains top priority; requiring
vaccination for U.S. team members; nearly 50% vaccinated so
far
“We delivered a strong performance in a strong protein market,”
said Tyson Foods President & CEO Donnie King. “With trusted
brands that met strong consumer demand, we have delivered 12
consecutive quarters of share gains in core business lines at
retail. Our foodservice volume improved as the restaurant industry
began to reopen and recover. Our beef business increased production
to meet strong U.S. and international demand for higher-quality
products. And we continued to build financial strength, reducing
our debt and investing in future growth by laying out plans to
expand our business, both to address capacity constraints and meet
growing demand.”
SEGMENT RESULTS (in millions)
Sales |
(for the third quarter ended July 3, 2021, and June 27, 2020) |
|
Third Quarter |
Nine Months Ended |
|
|
|
Volume |
Avg. Price |
|
|
Volume |
Avg. Price |
|
2021 |
2020 1 |
Change |
Change 3 |
2021 |
2020 1 |
Change |
Change 3 |
Beef |
$ |
4,954 |
|
|
$ |
3,653 |
|
|
24.0 |
% |
11.6 |
% |
$ |
12,987 |
|
|
$ |
11,470 |
|
|
6.6 |
|
% |
6.6 |
% |
Pork |
1,715 |
|
|
1,115 |
|
|
14.5 |
% |
39.3 |
% |
4,631 |
|
|
3,760 |
|
|
2.9 |
|
% |
20.3 |
% |
Chicken |
3,476 |
|
|
3,112 |
|
|
3.3 |
% |
15.6 |
% |
9,860 |
|
|
9,801 |
|
|
(2.4 |
) |
% |
8.5 |
% |
Prepared Foods |
2,323 |
|
|
2,035 |
|
|
4.5 |
% |
9.7 |
% |
6,600 |
|
|
6,255 |
|
|
(3.0 |
) |
% |
8.5 |
% |
International/Other |
488 |
|
|
402 |
|
|
1.8 |
% |
19.6 |
% |
1,444 |
|
|
1,365 |
|
|
(1.5 |
) |
% |
7.3 |
% |
Intersegment Sales |
(478 |
) |
|
(295 |
) |
|
n/a |
|
n/a |
|
(1,284 |
) |
|
(926 |
) |
|
n/a |
|
|
n/a |
|
Total |
$ |
12,478 |
|
|
$ |
10,022 |
|
|
9.7 |
% |
17.1 |
% |
$ |
34,238 |
|
|
$ |
31,725 |
|
|
0.1 |
|
% |
9.5 |
% |
Operating Income (Loss) |
(for the third quarter ended July 3, 2021, and June 27, 2020) |
|
Third Quarter |
Nine Months Ended |
|
|
|
Operating Margin |
|
|
Operating Margin |
|
2021 |
2020 1 |
2021 |
2020 1 |
2021 |
2020 1 |
2021 3 |
2020 1 |
Beef |
$ |
1,120 |
|
|
$ |
649 |
|
|
22.6 |
|
% |
17.8 |
|
% |
$ |
2,093 |
|
|
$ |
1,114 |
|
16.1 |
|
% |
9.7 |
% |
Pork |
67 |
|
|
107 |
|
|
3.9 |
|
% |
9.6 |
|
% |
250 |
|
|
391 |
|
5.4 |
|
% |
10.4 |
% |
Chicken |
(279 |
) |
|
(120 |
) |
|
(8.0 |
) |
% |
(3.9 |
) |
% |
(489 |
) |
|
36 |
|
(5.0 |
) |
% |
0.4 |
% |
Prepared Foods |
150 |
|
|
145 |
|
|
6.5 |
|
% |
7.1 |
|
% |
633 |
|
|
494 |
|
9.6 |
|
% |
7.9 |
% |
International/Other |
4 |
|
|
(8 |
) |
|
n/a |
|
|
n/a |
|
|
— |
|
|
11 |
|
n/a |
|
|
n/a |
|
Total |
$ |
1,062 |
|
|
$ |
773 |
|
|
8.5 |
|
% |
7.7 |
|
% |
$ |
2,487 |
|
|
$ |
2,046 |
|
7.3 |
|
% |
6.4 |
% |
ADJUSTED SEGMENT RESULTS (in millions)
Adjusted Operating Income (Loss) (Non-GAAP) |
(for the third quarter ended July 3, 2021, and June 27, 2020) |
|
Third Quarter |
Nine Months Ended |
|
|
|
Adjusted Operating Margin (Non-GAAP) |
|
|
Adjusted Operating Margin (Non-GAAP) |
|
2021 |
2020 1 |
2021 |
2020 1 |
2021 |
2020 1 |
2021 3 |
2020 1 |
Beef |
$ |
1,120 |
|
$ |
634 |
|
|
22.6 |
% |
17.4 |
|
% |
$ |
2,093 |
|
$ |
1,120 |
|
16.1 |
% |
9.8 |
% |
Pork |
67 |
|
107 |
|
|
3.9 |
% |
9.6 |
|
% |
250 |
|
393 |
|
5.4 |
% |
10.5 |
% |
Chicken |
27 |
|
(120 |
) |
|
0.7 |
% |
(3.9 |
) |
% |
137 |
|
57 |
|
1.3 |
% |
0.6 |
% |
Prepared Foods |
150 |
|
145 |
|
|
6.5 |
% |
7.1 |
|
% |
633 |
|
516 |
|
9.6 |
% |
8.2 |
% |
International/Other |
8 |
|
(8 |
) |
|
n/a |
|
n/a |
|
|
23 |
|
13 |
|
n/a |
|
n/a |
|
Total |
$ |
1,372 |
|
$ |
758 |
|
|
10.8 |
% |
7.6 |
|
% |
$ |
3,136 |
|
$ |
2,099 |
|
9.0 |
% |
6.6 |
% |
3 Average Price Change and Adjusted Operating Margin for the
Chicken Segment and Total Company excludes $225 million and $545
million for the three and nine months ended July 3, 2021,
respectively, of legal contingency accruals recognized as a
reduction to Sales.
COVID-19 EXPENSES
We incurred direct incremental expenses associated with the
impact of COVID-19 totaling approximately $55 million and $270
million for the third quarter and first nine 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, donations,
product downgrades, rendered product and certain professional fees,
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
BeefSales volume increased during the third
quarter of fiscal 2021 due to strong global demand and reduced
production inefficiencies associated with COVID-19 compared to the
third quarter of fiscal 2020. Sales volume increased for the first
nine months of fiscal 2021 due to strong global demand and
increased cattle processed in the third quarter of fiscal 2021 as
compared to fiscal 2020, partially offset by the impacts associated
with severe weather in the second quarter of fiscal 2021 and a
challenging labor environment. Additionally, sales volume for the
first nine months of fiscal 2021 was impacted by a fire, which
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 2021
as demand for our beef products remained strong. Operating income
increased in the third quarter and first nine months of fiscal 2021
due to strong demand as we continued to optimize revenues relative
to live cattle supply, partially offset by production
inefficiencies and a net increase in direct incremental expenses
related to COVID-19 in the first nine months of fiscal 2021.
Additionally, operating income in the first nine months of 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 $56 million loss
recognized in the first nine months of fiscal 2020.
PorkSales volume increased during the third
quarter of fiscal 2021 due to strong global demand and reduced
production inefficiencies associated with COVID-19 compared to the
third quarter of fiscal 2020. Sales volume increased for the first
nine months of fiscal 2021 due to strong global demand and
increased live hogs processed in the third quarter of fiscal 2021
as compared to fiscal 2020, partially offset by the impacts of a
challenging labor environment. Average sales price increased in the
third quarter and first nine months of fiscal 2021 due to strong
demand. Operating income decreased in the third quarter and first
nine months of fiscal 2021 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 the third quarter of fiscal 2021 as compared to fiscal
2020. Additionally, operating income in the third quarter and first
nine months of fiscal 2021 was impacted by approximately $45
million and $115 million, respectively, of incremental net
derivative losses as compared to the third quarter and first nine
months of fiscal 2020.
ChickenSales volume increased during the third
quarter of fiscal 2021 primarily due to increased demand in the
foodservice channel and reduced production inefficiencies
associated with COVID-19 compared to the third quarter of fiscal
2020. Sales volume decreased during the first nine months of fiscal
2021 from the impact of lower production throughput associated with
COVID-19, disruptions due to severe weather in the second quarter
of fiscal 2021, decline in hatch rate and a challenging labor
environment, partially offset by increased demand. Average sales
price increased in the third quarter and first nine months of
fiscal 2021 due to favorable sales mix and inflationary market
conditions. Operating loss increased during the third quarter of
fiscal 2021 primarily due to a $306 million loss from the
recognition of legal contingency accruals and $270 million of
higher feed ingredient costs, partially offset by $125 million of
incremental net derivative gains as compared to the third quarter
of fiscal 2020. Operating income decreased during the first nine
months of fiscal 2021 primarily due to a $626 million loss from the
recognition of legal contingency accruals, $410 million of higher
feed ingredient costs as compared to fiscal 2020, production
inefficiencies related to COVID-19, decline in hatch rate and
disruptions due to severe weather, partially offset by reduced
direct incremental expense associated with COVID-19 and $235
million of incremental net derivative gains as compared to the
first nine months of fiscal 2020.
Prepared FoodsSales volume increased during the
third quarter of fiscal 2021 primarily due to increased demand in
the foodservice channel and sustained retail demand as well as
reduced production throughput disruptions associated with COVID-19
compared to the third quarter of fiscal 2020. Sales volume
decreased during the first nine months of fiscal 2021 driven by
reduced foodservice demand in the first half of fiscal 2021, lower
production throughput partially associated with a challenging labor
and supply environment and the impact of severe weather in the
second quarter of fiscal 2021, partially offset by strong demand in
the retail sales channel. Average sales price increased in the
third quarter and first nine months of fiscal 2021 due to favorable
product mix and the passthrough of increased raw material costs.
Operating income increased slightly in the third quarter of fiscal
2021 primarily due to favorable pricing and product mix and the
reduction of direct incremental expenses related to COVID-19
compared to the third quarter of fiscal 2020, which was offset by
$160 million of increased raw materials costs as compared to the
third quarter of fiscal 2020. Operating income increased during the
first nine months of fiscal 2021 due to lower commercial spend as
well as favorable pricing and product mix partially offset by
increased operating costs, including a $265 million increase in raw
material costs during the first nine months of fiscal 2021, as well
as production inefficiencies due in part to the impact of a
challenging labor and supply environment along with the impact of
severe weather in the second quarter of fiscal 2021. Additionally,
operating income in the third quarter and first nine months of
fiscal 2021 was impacted by $15 million and $60 million,
respectively, of incremental net derivative gains as compared to
the third quarter and first nine months of fiscal 2020.
OUTLOOKFor fiscal 2021, the United States
Department of Agriculture (“USDA”) indicates domestic protein
production (beef, pork, chicken and turkey) to increase less than
1% compared to 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 and
tax rate for the remainder of fiscal 2021. On an adjusted basis, we
anticipate Prepared Foods results in fiscal 2021 to be similar to
fiscal 2020, and Pork results will likely be lower in fiscal 2021
as compared to fiscal 2020. At current grain prices, we believe
Chicken results will likely be lower in fiscal 2021 as compared to
fiscal 2020, and because of stronger than expected performance in
beef and current market conditions, we expect Beef to deliver
improved fiscal 2021 results as compared to fiscal 2020.4
COVID-19We 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 continue to 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 continue to increase
our operating costs in 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 pandemic. Our liquidity is expected
to be adequate to continue to run our operations and meet our
obligations as they become due. For fiscal 2021, we estimate
that we will incur approximately $325 million of direct incremental
expenses associated with the impact of COVID-19; however, some of
these incremental expenses may become permanent over time.
BeefUSDA projects domestic production will
increase approximately 3% in fiscal 2021 as compared to fiscal
2020.
PorkUSDA projects domestic production will be
relatively flat in fiscal 2021as compared to fiscal 2020.
ChickenUSDA projects chicken production will
decrease less than 1% in fiscal 2021 as compared to fiscal
2020.
Prepared FoodsWe will continue to be responsive
to an accelerating inflationary environment, rising raw material
costs and changes in consumer behavior as a result of the impacts
of COVID-19.
International/OtherWe expect improved results
from our foreign operations in fiscal 2021.
RevenueWe expect sales to approximate $46
billion to $47 billion in fiscal 2021.
Capital ExpendituresWe expect capital
expenditures of approximately $1.3 billion for fiscal 2021. 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 increased capacity, production and labor efficiencies, yield
improvements and sales channel flexibility.
Net Interest ExpenseWe expect net interest
expense to approximate $420 million for fiscal 2021.
LiquidityWe expect total liquidity, which was
approximately $3.4 billion at July 3, 2021, to remain above
our minimum liquidity target of $1.0 billion.
Tax RateWe currently expect our adjusted
effective tax rate to be around 22.5% in fiscal 2021.
4 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)
|
Three Months Ended |
|
Nine Months Ended |
|
July 3, 2021 |
|
June 27, 2020 1 |
|
July 3, 2021 |
|
June 27, 2020 1 |
Sales |
$ |
12,478 |
|
|
|
$ |
10,022 |
|
|
|
$ |
34,238 |
|
|
|
$ |
31,725 |
|
|
Cost of Sales |
10,858 |
|
|
|
8,709 |
|
|
|
30,188 |
|
|
|
27,951 |
|
|
Gross Profit |
1,620 |
|
|
|
1,313 |
|
|
|
4,050 |
|
|
|
3,774 |
|
|
|
|
|
|
|
|
|
|
Selling, General and
Administrative |
558 |
|
|
|
540 |
|
|
|
1,563 |
|
|
|
1,728 |
|
|
Operating Income |
1,062 |
|
|
|
773 |
|
|
|
2,487 |
|
|
|
2,046 |
|
|
Other (Income) Expense: |
|
|
|
|
|
|
|
Interest income |
(2 |
) |
|
|
(3 |
) |
|
|
(6 |
) |
|
|
(9 |
) |
|
Interest expense |
105 |
|
|
|
122 |
|
|
|
325 |
|
|
|
361 |
|
|
Other, net |
(7 |
) |
|
|
(11 |
) |
|
|
(38 |
) |
|
|
(133 |
) |
|
Total Other (Income)
Expense |
96 |
|
|
|
108 |
|
|
|
281 |
|
|
|
219 |
|
|
Income before Income
Taxes |
966 |
|
|
|
665 |
|
|
|
2,206 |
|
|
|
1,827 |
|
|
Income Tax Expense |
213 |
|
|
|
139 |
|
|
|
504 |
|
|
|
413 |
|
|
Net Income |
753 |
|
|
|
526 |
|
|
|
1,702 |
|
|
|
1,414 |
|
|
Less: Net Income Attributable
to Noncontrolling Interests |
4 |
|
|
|
— |
|
|
|
10 |
|
|
|
7 |
|
|
Net Income Attributable to
Tyson |
$ |
749 |
|
|
|
$ |
526 |
|
|
|
$ |
1,692 |
|
|
|
$ |
1,407 |
|
|
Weighted Average Shares
Outstanding: |
|
|
|
|
|
|
|
Class A Basic |
293 |
|
|
|
292 |
|
|
|
293 |
|
|
|
293 |
|
|
Class B Basic |
70 |
|
|
|
70 |
|
|
|
70 |
|
|
|
70 |
|
|
Diluted |
366 |
|
|
|
364 |
|
|
|
365 |
|
|
|
366 |
|
|
Net Income Per Share
Attributable to Tyson: |
|
|
|
|
|
|
|
Class A Basic |
$ |
2.11 |
|
|
|
$ |
1.48 |
|
|
|
$ |
4.76 |
|
|
|
$ |
3.96 |
|
|
Class B Basic |
$ |
1.89 |
|
|
|
$ |
1.33 |
|
|
|
$ |
4.27 |
|
|
|
$ |
3.55 |
|
|
Diluted |
$ |
2.05 |
|
|
|
$ |
1.44 |
|
|
|
$ |
4.63 |
|
|
|
$ |
3.85 |
|
|
Dividends Declared Per
Share: |
|
|
|
|
|
|
|
Class A |
$ |
0.445 |
|
|
|
$ |
0.420 |
|
|
|
$ |
1.360 |
|
|
|
$ |
1.305 |
|
|
Class B |
$ |
0.400 |
|
|
|
$ |
0.378 |
|
|
|
$ |
1.224 |
|
|
|
$ |
1.175 |
|
|
|
|
|
|
|
|
|
|
Sales Growth |
24.5 |
|
% |
|
|
|
7.9 |
|
% |
|
|
Margins: (Percent of
Sales) |
|
|
|
|
|
|
|
Gross Profit |
13.0 |
|
% |
|
13.1 |
|
% |
|
11.8 |
|
% |
|
11.9 |
|
% |
Operating Income |
8.5 |
|
% |
|
7.7 |
|
% |
|
7.3 |
|
% |
|
6.4 |
|
% |
Net Income Attributable to Tyson |
6.0 |
|
% |
|
5.2 |
|
% |
|
4.9 |
|
% |
|
4.4 |
|
% |
Effective Tax Rate |
22.1 |
|
% |
|
20.9 |
|
% |
|
22.9 |
|
% |
|
22.6 |
|
% |
TYSON FOODS,
INC.CONSOLIDATED CONDENSED BALANCE
SHEETS(In
millions)(Unaudited)
|
July 3, 2021 |
|
October 3, 2020 1 |
Assets |
|
|
|
Current Assets: |
|
|
|
Cash and cash equivalents |
$ |
1,613 |
|
|
$ |
1,420 |
|
Accounts receivable, net |
2,324 |
|
|
1,952 |
|
Inventories |
4,262 |
|
|
3,859 |
|
Other current assets |
1,009 |
|
|
367 |
|
Total Current Assets |
9,208 |
|
|
7,598 |
|
Net Property, Plant and
Equipment |
7,725 |
|
|
7,596 |
|
Goodwill |
10,554 |
|
|
10,899 |
|
Intangible Assets, net |
6,587 |
|
|
6,774 |
|
Other Assets |
1,589 |
|
|
1,589 |
|
Total Assets |
$ |
35,663 |
|
|
$ |
34,456 |
|
|
|
|
|
Liabilities and
Shareholders’ Equity |
|
|
|
Current Liabilities: |
|
|
|
Current debt |
$ |
1,566 |
|
|
$ |
548 |
|
Accounts payable |
1,950 |
|
|
1,876 |
|
Other current liabilities |
2,668 |
|
|
1,810 |
|
Total Current Liabilities |
6,184 |
|
|
4,234 |
|
Long-Term Debt |
8,786 |
|
|
10,791 |
|
Deferred Income Taxes |
2,308 |
|
|
2,317 |
|
Other Liabilities |
1,692 |
|
|
1,728 |
|
|
|
|
|
Total Tyson Shareholders’
Equity |
16,561 |
|
|
15,254 |
|
Noncontrolling Interests |
132 |
|
|
132 |
|
Total Shareholders’
Equity |
16,693 |
|
|
15,386 |
|
|
|
|
|
Total Liabilities and
Shareholders’ Equity |
$ |
35,663 |
|
|
$ |
34,456 |
|
TYSON FOODS,
INC.CONSOLIDATED CONDENSED STATEMENTS OF CASH
FLOWS(In
millions)(Unaudited)
|
Nine Months Ended |
|
July 3, 2021 |
|
June 27, 2020 1 |
Cash Flows From Operating
Activities: |
|
|
|
Net income |
$ |
1,702 |
|
|
|
$ |
1,414 |
|
|
Depreciation and
amortization |
906 |
|
|
|
876 |
|
|
Deferred income taxes |
(3 |
) |
|
|
12 |
|
|
Other, net |
72 |
|
|
|
(7 |
) |
|
Net changes in operating
assets and liabilities |
(21 |
) |
|
|
413 |
|
|
Cash Provided by Operating
Activities |
2,656 |
|
|
|
2,708 |
|
|
|
|
|
|
Cash Flows From Investing
Activities: |
|
|
|
Additions to property, plant
and equipment |
(859 |
) |
|
|
(907 |
) |
|
Purchases of marketable
securities |
(57 |
) |
|
|
(59 |
) |
|
Proceeds from sale of
marketable securities |
55 |
|
|
|
41 |
|
|
Proceeds from sale of
business |
— |
|
|
|
29 |
|
|
Acquisition of equity
investments |
(44 |
) |
|
|
(183 |
) |
|
Other, net |
122 |
|
|
|
(64 |
) |
|
Cash Used for Investing
Activities |
(783 |
) |
|
|
(1,143 |
) |
|
|
|
|
|
Cash Flows From Financing
Activities: |
|
|
|
Proceeds from issuance of
debt |
573 |
|
|
|
1,589 |
|
|
Payments on debt |
(1,608 |
) |
|
|
(485 |
) |
|
Borrowings on revolving credit
facility |
— |
|
|
|
1,210 |
|
|
Payments on revolving credit
facility |
— |
|
|
|
(1,280 |
) |
|
Proceeds from issuance of
commercial paper |
— |
|
|
|
14,318 |
|
|
Repayments of commercial
paper |
— |
|
|
|
(15,317 |
) |
|
Purchases of Tyson
Class A common stock |
(50 |
) |
|
|
(200 |
) |
|
Dividends |
(477 |
) |
|
|
(451 |
) |
|
Stock options exercised |
33 |
|
|
|
29 |
|
|
Other, net |
(13 |
) |
|
|
(7 |
) |
|
Cash Used for Financing
Activities |
(1,542 |
) |
|
|
(594 |
) |
|
Effect of Exchange Rate
Changes on Cash |
11 |
|
|
|
(8 |
) |
|
Increase in Cash and Cash
Equivalents and Restricted Cash |
342 |
|
|
|
963 |
|
|
Cash and Cash Equivalents and
Restricted Cash at Beginning of Year |
1,466 |
|
|
|
484 |
|
|
Cash and Cash Equivalents and
Restricted Cash at End of Period |
1,808 |
|
|
|
1,447 |
|
|
Less: Restricted Cash at End
of Period |
195 |
|
|
|
82 |
|
|
Cash and Cash Equivalents at
End of Period |
$ |
1,613 |
|
|
|
$ |
1,365 |
|
|
|
|
|
|
TYSON FOODS, INC.EBITDA
Reconciliations(In
millions)(Unaudited)
|
Nine Months Ended |
|
Fiscal Year Ended |
|
Twelve Months Ended |
|
July 3, 2021 |
|
June 27, 2020 1 |
|
October 3, 2020 1 |
|
July 3, 2021 |
|
|
|
|
|
|
|
|
Net income |
$ |
1,702 |
|
|
|
$ |
1,414 |
|
|
|
$ |
2,071 |
|
|
|
$ |
2,359 |
|
|
Less: Interest income |
(6 |
) |
|
|
(9 |
) |
|
|
(10 |
) |
|
|
(7 |
) |
|
Add: Interest expense |
325 |
|
|
|
361 |
|
|
|
485 |
|
|
|
449 |
|
|
Add: Income tax expense |
504 |
|
|
|
413 |
|
|
|
593 |
|
|
|
684 |
|
|
Add: Depreciation |
697 |
|
|
|
662 |
|
|
|
900 |
|
|
|
935 |
|
|
Add: Amortization 5 |
198 |
|
|
|
204 |
|
|
|
278 |
|
|
|
272 |
|
|
EBITDA |
$ |
3,420 |
|
|
|
$ |
3,045 |
|
|
|
$ |
4,317 |
|
|
|
$ |
4,692 |
|
|
|
|
|
|
|
|
|
|
Adjustments to EBITDA: |
|
|
|
|
|
|
|
Add: China plant relocation
charge 6 |
$ |
23 |
|
|
|
$ |
— |
|
|
|
$ |
— |
|
|
|
$ |
23 |
|
|
Add: Legal contingency
accruals 7 |
626 |
|
|
|
— |
|
|
|
— |
|
|
|
626 |
|
|
Add: Restructuring and related
charges |
— |
|
|
|
52 |
|
|
|
75 |
|
|
|
23 |
|
|
Add/(Less): Beef production
facility fire costs, net of insurance proceeds |
(6 |
) |
|
|
1 |
|
|
|
1 |
|
|
|
(6 |
) |
|
Less: Gain from pension plan
terminations |
— |
|
|
|
(116 |
) |
|
|
(116 |
) |
|
|
— |
|
|
Less: Impact of additional
week in fiscal 2020 |
— |
|
|
|
— |
|
|
|
(96 |
) |
|
|
(96 |
) |
|
Total Adjusted EBITDA |
$ |
4,063 |
|
|
|
$ |
2,982 |
|
|
|
$ |
4,181 |
|
|
|
$ |
5,262 |
|
|
|
|
|
|
|
|
|
|
Total gross debt |
|
|
|
|
$ |
11,339 |
|
|
|
$ |
10,352 |
|
|
Less: Cash and cash
equivalents |
|
|
|
|
(1,420 |
) |
|
|
(1,613 |
) |
|
Less: Short-term investments |
|
|
|
|
— |
|
|
|
— |
|
|
Total net debt |
|
|
|
|
$ |
9,919 |
|
|
|
$ |
8,739 |
|
|
|
|
|
|
|
|
|
|
Ratio Calculations: |
|
|
|
|
|
|
|
Gross debt/EBITDA |
|
|
|
|
|
2.6x |
|
|
|
|
2.2x |
|
|
Net debt/EBITDA |
|
|
|
|
|
2.3x |
|
|
|
|
1.9x |
|
|
|
|
|
|
|
|
|
|
Gross debt/Adjusted
EBITDA |
|
|
|
|
|
2.7x |
|
|
|
|
2.0x |
|
|
Net debt/Adjusted EBITDA |
|
|
|
|
|
2.4x |
|
|
|
|
1.7x |
|
|
5 Excludes the amortization of debt issuance and debt discount
expense of $11 million for the nine months ended July 3, 2021,
$10 million for the nine months ended June 27, 2020, $14
million for the fiscal year ended October 3, 2020, and $15 million
for the twelve months ended July 3, 2021 as it is included in
interest expense.
6 Relates to a plant relocation from a government land
expropriation and includes accelerated depreciation and team member
related charges.
7 Legal contingency accruals included $545 million recognized as
a reduction of Sales and $81 million recognized as an increase of
Cost of Sales.
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 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 |
|
2021 |
|
2020 |
|
2021 |
|
2020 1 |
|
2021 |
|
2020 |
|
2021 |
|
2020 1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported net income per share
attributable to Tyson (GAAP EPS) |
|
|
|
|
$ |
2.05 |
|
|
$ |
1.44 |
|
|
|
|
|
|
|
$ |
4.63 |
|
|
|
$ |
3.85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: China plant relocation
charge 6 |
$ |
4 |
|
|
$ |
— |
|
|
|
0.01 |
|
|
— |
|
|
|
$ |
23 |
|
|
|
$ |
— |
|
|
|
$ |
0.05 |
|
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Legal contingency
accruals 7 |
$ |
306 |
|
|
$ |
— |
|
|
|
0.64 |
|
|
— |
|
|
|
$ |
626 |
|
|
|
$ |
— |
|
|
|
1.31 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Less)/Add: Beef production
facility fire insurance proceeds, net of costs |
$ |
— |
|
|
$ |
(15 |
) |
|
|
— |
|
|
(0.03 |
) |
|
|
$ |
(6 |
) |
|
|
$ |
1 |
|
|
|
(0.01 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Restructuring and related
charges |
$ |
— |
|
|
$ |
— |
|
|
|
— |
|
|
— |
|
|
|
$ |
— |
|
|
|
$ |
52 |
|
|
|
— |
|
|
|
0.11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Gain from pension plan
terminations |
$ |
— |
|
|
$ |
(6 |
) |
|
|
— |
|
|
(0.01 |
) |
|
|
$ |
— |
|
|
|
$ |
(116 |
) |
|
|
— |
|
|
|
(0.24 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income per share
attributable to Tyson (Adjusted EPS) |
|
|
|
|
$ |
2.70 |
|
|
$ |
1.40 |
|
|
|
|
|
|
|
$ |
5.98 |
|
|
|
$ |
3.72 |
|
|
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 (Loss)
Reconciliation(In
millions)(Unaudited)
Adjusted Operating Income (Loss) |
(for the third quarter ended July 3, 2021) |
|
Beef |
Pork |
Chicken |
Prepared Foods |
International/Other |
Total |
Reported operating income
(loss) |
$ |
1,120 |
|
$ |
67 |
|
$ |
(279 |
) |
|
$ |
150 |
|
$ |
4 |
|
$ |
1,062 |
|
Add: Legal contingency accruals
7 |
— |
|
— |
|
306 |
|
|
— |
|
— |
|
306 |
|
Add: China plant relocation
charge 6 |
— |
|
— |
|
— |
|
|
— |
|
4 |
|
4 |
|
Adjusted operating income |
$ |
1,120 |
|
$ |
67 |
|
$ |
27 |
|
|
$ |
150 |
|
$ |
8 |
|
$ |
1,372 |
|
Adjusted Operating Income
(Loss)1 |
(for the third quarter ended June 27, 2020) |
|
Beef |
Pork |
Chicken |
Prepared Foods |
International/Other |
Total |
Reported operating income
(loss) |
$ |
649 |
|
|
$ |
107 |
|
$ |
(120 |
) |
|
$ |
145 |
|
$ |
(8 |
) |
|
$ |
773 |
|
|
Less: Beef production facility
fire insurance proceeds, net of costs |
(15 |
) |
|
— |
|
— |
|
|
— |
|
— |
|
|
(15 |
) |
|
Adjusted operating income
(loss) |
$ |
634 |
|
|
$ |
107 |
|
$ |
(120 |
) |
|
$ |
145 |
|
$ |
(8 |
) |
|
$ |
758 |
|
|
Adjusted Operating Income (Loss) |
(for the nine months ended July 3, 2021) |
|
Beef |
Pork |
Chicken |
Prepared Foods |
International/Other |
Total |
Reported operating income
(loss) |
$ |
2,093 |
|
$ |
250 |
|
$ |
(489 |
) |
|
$ |
633 |
|
$ |
— |
|
$ |
2,487 |
|
Add: Legal contingency accruals
7 |
— |
|
— |
|
626 |
|
|
— |
|
— |
|
626 |
|
Add: China plant relocation
charge 6 |
— |
|
— |
|
— |
|
|
— |
|
23 |
|
23 |
|
Adjusted operating income |
$ |
2,093 |
|
$ |
250 |
|
$ |
137 |
|
|
$ |
633 |
|
$ |
23 |
|
$ |
3,136 |
|
Adjusted Operating Income
(Loss)1 |
(for the nine months ended June 27, 2020) |
|
Beef |
Pork |
Chicken |
Prepared Foods |
International/Other |
Total |
Reported operating income |
$ |
1,114 |
|
$ |
391 |
|
$ |
36 |
|
$ |
494 |
|
$ |
11 |
|
$ |
2,046 |
|
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 |
$ |
1,120 |
|
$ |
393 |
|
$ |
57 |
|
$ |
516 |
|
$ |
13 |
|
$ |
2,099 |
|
Adjusted operating income (loss) 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 (loss) as an internal performance measurement and as one
criterion for evaluating our performance relative to that of our
peers. We believe adjusted operating income (loss) 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 (loss). Further, we believe that adjusted
operating income (loss) is a useful measure because it improves
comparability of results of operations from period to period.
Adjusted operating income (loss) should not be considered as a
substitute for operating income (loss) 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 (loss) may
not be comparable to similarly titled measures reported by other
companies.
About Tyson Foods, Inc.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 139,000 team
members at October 3, 2020. 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.
Conference Call Information and Other Selected
DataA conference call to discuss the Company's financial
results will be held at 9 a.m. Eastern Monday, August 9, 2021. We
encourage participants to pre-register for the conference call
using the following link:
https://dpregister.com/sreg/10158338/eabc7bb65e. 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 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/3193884/288B45B5DAC500E5392D4F32F5634F3F.
For those who cannot participate at the scheduled time, a replay of
the live webcast and the accompanying slides will be available at
http://ir.tyson.com until Wednesday, September 8, 2021. A
telephone replay will also be available until Wednesday, September
8, 2021, 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 10158338. 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.
Forward-Looking StatementsCertain information
in this report constitutes forward-looking statements as
contemplated by the Private Securities Litigation Reform Act of
1995. Such forward-looking statements include, but are not limited
to, current views and estimates of our outlook for 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 are
expressly qualified in their entirety by this cautionary statement
and 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) the COVID-19 global pandemic and
associated responses thereto have had an adverse impact on our
business and operations, and the extent that the COVID-19 pandemic
continues to impact us will depend on future developments, which
are highly uncertain and cannot be predicted with confidence,
including the scope, severity and duration of the pandemic, the
speed and effectiveness of vaccine and treatment developments and
their deployment, and public adoption rates of COVID-19 vaccines
and their effectiveness against emerging variants of COVID-19,
including the Delta variant; (ii) our ability to make effective
acquisitions or joint ventures and successfully integrate newly
acquired businesses into existing operations; (iii) the
effectiveness of our financial fitness program; (iv) the
implementation of an enterprise resource planning system; (v)
access to foreign markets together with foreign economic
conditions, including currency fluctuations, import/export
restrictions and foreign politics; (vi) cyber incidents, security
breaches or other disruptions of our information technology
systems; (vii) risks associated with our failure to consummate
favorable acquisition transactions or integrate certain
acquisitions' operations; (viii) the Tyson Limited Partnership’s
ability to exercise significant control over the Company; (ix)
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; (x) 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; (xi)
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; (xii) changes in consumer preference and diets
and our ability to identify and react to consumer trends; (xiii)
effectiveness of advertising and marketing programs; (xiv)
significant marketing plan changes by large customers or loss of
one or more large customers; (xv) our ability to leverage brand
value propositions; (xvi) changes in availability and relative
costs of labor and contract farmers and our ability to maintain
good relationships with team members, labor unions, contract
farmers and independent producers providing us livestock; (xvii)
issues related to food safety, including costs resulting from
product recalls, regulatory compliance and any related claims or
litigation; (xviii) 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; (xix) adverse results from
litigation; (xx) risks associated with leverage, including cost
increases due to rising interest rates or changes in debt ratings
or outlook; (xxi) impairment in the carrying value of our goodwill
or indefinite life intangible assets; (xxii) our participation in
multiemployer pension plans; (xxiii) volatility in capital markets
or interest rates; (xxiv) risks associated with our commodity
purchasing activities; (xxv) the effect of, or changes in, general
economic conditions; (xxvi) impacts on our operations caused by
factors and forces beyond our control, such as natural disasters,
fire, bioterrorism, pandemics or extreme weather; (xxvii) failure
to maximize or assert our intellectual property rights; (xxviii)
effects related to changes in tax rates, valuation of deferred tax
assets and liabilities, or tax laws and their interpretation;
(xxix) the effectiveness of our internal control over financial
reporting, including identification of additional material
weaknesses; and (xxx) the other risks and uncertainties detailed
from time to time in our filings with the Securities and Exchange
Commission.
Media Contact: Gary Mickelson,
479-290-6111Investor Contact: Megan Britt, 479-236-4927 |
Source: Tyson Foods,
Inc.Category: IR, Newsroom |
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