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) |
Fourth Quarter |
|
Twelve Months Ended |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Sales |
$ |
10,884 |
|
|
$ |
9,999 |
|
|
$ |
42,405 |
|
|
$ |
40,052 |
|
Operating Income |
604 |
|
|
819 |
|
|
2,827 |
|
|
3,032 |
|
|
|
|
|
|
|
|
|
Net Income |
372 |
|
|
537 |
|
|
2,035 |
|
|
3,027 |
|
Less: Net Income Attributable
to Noncontrolling Interests |
3 |
|
|
— |
|
|
13 |
|
|
3 |
|
Net Income Attributable to
Tyson |
$ |
369 |
|
|
$ |
537 |
|
|
$ |
2,022 |
|
|
$ |
3,024 |
|
|
|
|
|
|
|
|
|
Net Income Per Share
Attributable to Tyson |
$ |
1.01 |
|
|
$ |
1.47 |
|
|
$ |
5.52 |
|
|
$ |
8.19 |
|
|
|
|
|
|
|
|
|
Adjusted¹ Operating
Income |
$ |
686 |
|
|
$ |
822 |
|
|
$ |
2,977 |
|
|
$ |
3,268 |
|
|
|
|
|
|
|
|
|
Adjusted¹ Net Income Per Share
Attributable to Tyson |
$ |
1.21 |
|
|
$ |
1.58 |
|
|
$ |
5.46 |
|
|
$ |
6.16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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. Adjusted net income per share
attributable to Tyson guidance is provided on a non-GAAP basis
because certain information necessary to calculate such measure on
a GAAP basis is unavailable, dependent on future events outside of
our control and cannot be predicted without unreasonable efforts by
the Company. A further explanation of providing non-GAAP guidance
is included at the end of this release.
Fiscal 2019 Highlights
- GAAP EPS of $5.52, down 33% from record prior year
(prior year included a one-time tax benefit of $2.71)
- Adjusted EPS of $5.46, down 11% from record prior
year
- GAAP operating income of $2,827 million; Adjusted
operating income of $2,977 million
- GAAP operating margin of 6.7%; Adjusted operating
margin of 7.0%
- Record Beef GAAP operating margin of 7.0% and Adjusted
operating margin of 7.2%
Fourth Quarter Highlights
- GAAP EPS of $1.01, down 31% from prior year; Adjusted
EPS of $1.21, down 23% from prior year
- GAAP operating income of $604 million; Adjusted
operating income of $686 million
- Total Company GAAP operating margin of 5.5%; Adjusted
operating margin of 6.3%
Guidance
- High single digit Adjusted1 EPS growth over
time
“Fiscal 2019 was highlighted by significant progress in our
strategy to grow our business through differentiated capabilities,
deliver service and value to our customers, and sustain our company
and our world for future generations,” said Noel White, Tyson
Foods’ president and CEO. “We expanded our global footprint,
launched innovation in our iconic brands and our new alternative
protein brand, and prepared for future growth by investing in
technology and infrastructure.
“We’re very optimistic about fiscal 2020, and we currently
expect to meet or exceed our long-term earnings algorithm of high
single-digit adjusted earnings per share growth as we’re well
positioned to take advantage of opportunities in the global
marketplace.”
SEGMENT RESULTS (in millions)
Sales |
(for the fourth quarter and twelve months ended September 28, 2019,
and September 29, 2018) |
|
Fourth Quarter |
Twelve Months Ended |
|
|
|
Volume |
Avg. Price |
|
|
Volume |
Avg. Price |
|
2019 |
2018 |
Change |
Change |
2019 |
2018 |
Change |
Change |
Beef |
$ |
3,861 |
|
$ |
3,913 |
|
(4.2 |
)% |
2.8 |
% |
$ |
15,828 |
|
$ |
15,473 |
|
(0.1 |
)% |
2.4 |
% |
Pork |
1,258 |
|
1,134 |
|
2.9 |
% |
8.1 |
% |
4,932 |
|
4,879 |
|
0.8 |
% |
0.3 |
% |
Chicken |
3,447 |
|
3,115 |
|
13.1 |
% |
(2.4 |
)% |
13,300 |
|
12,044 |
|
19.7 |
% |
(9.3 |
)% |
Prepared
Foods |
2,153 |
|
2,097 |
|
(2.6 |
)% |
5.2 |
% |
8,418 |
|
8,668 |
|
(8.3 |
)% |
5.4 |
% |
International/Other |
513 |
|
60 |
|
480.3 |
% |
272.9 |
% |
1,289 |
|
305 |
|
162.4 |
% |
160.5 |
% |
Intersegment
Sales |
(348 |
) |
(320 |
) |
n/a |
|
n/a |
|
(1,362 |
) |
(1,317 |
) |
n/a |
|
n/a |
|
Total |
$ |
10,884 |
|
$ |
9,999 |
|
8.9 |
% |
— |
% |
$ |
42,405 |
|
$ |
40,052 |
|
8.8 |
% |
(3.0 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss) |
(for the fourth quarter and twelve months ended September 28, 2019,
and September 29, 2018) |
|
Fourth Quarter |
Twelve Months Ended |
|
|
|
Operating Margin |
|
|
Operating Margin |
|
2019 |
2018 |
2019 |
2018 |
2019 |
2018 |
2019 |
2018 |
Beef |
$ |
376 |
|
$ |
347 |
|
9.7 |
% |
8.9 |
% |
$ |
1,107 |
|
$ |
1,013 |
|
7.0 |
% |
6.5 |
% |
Pork |
26 |
|
76 |
|
2.1 |
% |
6.7 |
% |
263 |
|
361 |
|
5.3 |
% |
7.4 |
% |
Chicken |
90 |
|
174 |
|
2.6 |
% |
5.6 |
% |
621 |
|
866 |
|
4.7 |
% |
7.2 |
% |
Prepared
Foods |
104 |
|
232 |
|
4.8 |
% |
11.1 |
% |
843 |
|
845 |
|
10.0 |
% |
9.7 |
% |
International/Other |
8 |
|
(10 |
) |
n/a |
|
n/a |
|
(7 |
) |
(53 |
) |
n/a |
|
n/a |
|
Total |
$ |
604 |
|
$ |
819 |
|
5.5 |
% |
8.2 |
% |
$ |
2,827 |
|
$ |
3,032 |
|
6.7 |
% |
7.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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. In fiscal
2018, we acquired Tecumseh Poultry, LLC and American Proteins, Inc.
The post-acquisition results from operations of these businesses
are included in our Chicken segment. In fiscal 2018, we also
completed the sale of four non-protein businesses as part of our
strategic focus on protein brands. All of these businesses were
part of our Prepared Foods segment and included Sara Lee® Frozen
Bakery, Kettle, Van’s®, and TNT Crust. Additionally, in the first
quarter of fiscal 2019, we adopted a new defined benefit and other
postretirement accounting standard that required retrospective
adjustment of prior periods. Accordingly, total Company and
Prepared Foods operating income and adjusted operating income for
the fourth quarter and twelve months of fiscal 2018 were reduced by
$9 million and $23 million, respectively.
Adjusted Segment Results (in millions)
Adjusted Operating Income (Loss) (Non-GAAP) |
(for the fourth quarter and twelve months ended September 28, 2019,
and September 29, 2018) |
|
Fourth Quarter |
Twelve Months Ended |
|
|
|
Adjusted Operating Margin (Non-GAAP) |
|
|
Adjusted Operating Margin (Non-GAAP) |
|
2019 |
2018 |
2019 |
2018 |
2019 |
2018 |
2019 |
2018 |
Beef |
$ |
407 |
|
$ |
348 |
|
10.5 |
% |
8.9 |
% |
$ |
1,139 |
|
$ |
1,044 |
|
7.2 |
% |
6.7 |
% |
Pork |
27 |
|
76 |
|
2.1 |
% |
6.7 |
% |
264 |
|
374 |
|
5.4 |
% |
7.7 |
% |
Chicken |
95 |
|
182 |
|
2.8 |
% |
5.8 |
% |
655 |
|
947 |
|
4.9 |
% |
7.9 |
% |
Prepared Foods |
149 |
|
226 |
|
6.9 |
% |
10.8 |
% |
902 |
|
956 |
|
10.7 |
% |
11.0 |
% |
International/Other |
8 |
|
(10 |
) |
n/a |
|
n/a |
|
17 |
|
(53 |
) |
n/a |
|
n/a |
|
Total |
$ |
686 |
|
$ |
822 |
|
6.3 |
% |
8.2 |
% |
$ |
2,977 |
|
$ |
3,268 |
|
7.0 |
% |
8.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
Summary of Segment Results
- Beef - Sales volume decreased due to a reduction in live cattle
processing capacity from the temporary closure of a production
facility as a result of a fire. Average sales price increased as
demand for our beef products remained strong. Operating income
increased as we continued to maximize our revenues relative to live
fed cattle costs, partially offset by increased operating costs and
$31 million of net incremental costs from the production facility
fire.
- Pork - Sales volume increased due to increased domestic
availability of live hogs and strong demand for our pork products.
Average sales price increased associated with higher livestock
costs. Operating income decreased due to periods of compressed pork
margins caused primarily by the combination of increased livestock
supplies, excess domestic availability of pork and export
constraints, which drove livestock costs up faster than sales
prices.
- Chicken - Sales volume increased primarily due to incremental
volume from business acquisitions. Average sales price decreased
due to market conditions and sales mix primarily associated with
the acquisition of a poultry rendering and blending business in the
fourth quarter of fiscal 2018. Operating income decreased due to
increased operating costs and challenging pricing conditions.
Additionally, operating income was impacted by approximately $40
million and $55 million for the twelve months and fourth quarter of
fiscal 2019, respectively, of net feed ingredient costs and
realized and mark-to-market derivative losses. Operating income was
impacted by approximately $100 million and $60 million for the
twelve months and fourth quarter of fiscal 2018, respectively, of
net feed ingredient costs and realized and mark-to-market
derivative losses.
- Prepared Foods - Sales volume decreased primarily from business
divestitures. Average sales price increased due to product mix,
which was positively impacted by business divestitures, as well as
pricing increases in our ongoing business from the pass through of
raw material costs. Operating income decreased in the fourth
quarter of fiscal 2019 and was relatively flat in fiscal 2019
compared to fiscal 2018 as strong demand for our products and
improved product mix was partially offset by increased operating
costs, including a $60 million increase in raw material costs.
Additionally, operating income in the fourth quarter of fiscal 2019
was impacted by a $41 million impairment from a planned divestiture
of a business. Operating income was impacted in fiscal 2018 by a
$68 million impairment, net of realized gains, associated with the
divestiture of non-protein businesses.
OutlookFor fiscal 2020, USDA indicates domestic
protein production (beef, pork, chicken and turkey) should increase
approximately 2-3% from fiscal 2019 levels, but we expect export
markets should absorb the increased production. 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,
tax rate and dividends for fiscal 2020. As our accounting cycle
results in a 53-week year in fiscal 2020 as compared to a 52-week
year in fiscal 2019, the fiscal 2020 outlook is based on a
comparable 52-week year.
Adjusted operating margin guidance is provided below on a
non-GAAP basis2.
- Beef – We expect industry fed cattle supplies to increase
approximately 2% in fiscal 2020 as compared to fiscal 2019. We
expect ample supplies in regions where we operate our plants. For
fiscal 2020, we believe our Beef segment's adjusted operating
margin will be 6.5% to 7.5%, absent impacts from ASF.
- Pork – We expect industry hog supplies to increase
approximately 3% in fiscal 2020 as compared to fiscal 2019. We
expect increased livestock costs in fiscal 2020 as compared to
fiscal 2019. For fiscal 2020, we believe our Pork segment's
adjusted operating margin will be 6% to 8%, absent impacts from
ASF.
- Chicken – USDA projects a 2-3% increase in chicken production
in fiscal 2020 as compared to fiscal 2019. For fiscal 2020, we
believe our Chicken segment's adjusted operating margin will be 6%
to 8%, absent impacts from ASF.
- Prepared Foods – We expect raw material costs to rise in fiscal
2020 as compared to fiscal 2019, but we expect to recover the
increased raw material costs through pricing. Many of our sales
contracts are formula based or shorter-term in nature, but there
may be a lag time for price changes to take effect. For fiscal
2020, we believe our Prepared Foods segment's adjusted operating
margin will be 10% to 12%.
- International/Other – International/Other includes our Keystone
International operations, our Thai and European operations, our
foreign operations in China, third-party merger and integration
costs and corporate overhead related to Tyson New Ventures, LLC. We
expect improved results in fiscal 2020 from improvement in our
legacy foreign operations as well as the impact of a full year of
Keystone International and our Thai and European operations.
- Capital Expenditures – For fiscal 2020, we expect capital
expenditures to be approximately $1.3 billion. Capital expenditures
will 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 $450 million for fiscal 2020.
- Liquidity – We expect total liquidity, which was approximately
$1.2 billion at September 28, 2019, to remain above our minimum
liquidity target of $1.0 billion.
- Tax Rate – We expect our adjusted effective tax rate to be
around 23.5% in fiscal 2020.
- Dividends – Effective November 11, 2019, the Board of Directors
increased the quarterly dividend previously declared on August 8,
2019, to $0.42 per share on our Class A common stock and $0.378 per
share on our Class B common stock. The increased quarterly dividend
is payable on December 13, 2019, to shareholders of record at the
close of business on November 29, 2019. The Board also declared a
quarterly dividend of $0.42 per share on our Class A common stock
and $0.378 per share on our Class B common stock, payable on March
13, 2020, to shareholders of record at the close of business on
February 28, 2020. We anticipate the remaining quarterly dividends
in fiscal 2020 will be $0.42 and $0.378 per share of our Class A
and Class B stock, respectively. This results in an annual dividend
rate in fiscal 2020 of $1.68 for Class A shares and $1.512 for
Class B shares, or a 12% increase compared to the fiscal 2019
annual dividend rate.
2The Company is not able to reconcile its full-year fiscal 2020
adjusted operating margin guidance to its fiscal 2020 projected
GAAP operating margin guidance 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 operating margin should not
be considered a substitute for operating margin or any other
measure 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 |
|
Twelve Months Ended |
|
September 28, 2019 |
|
September 29, 2018 |
|
September 28, 2019 |
|
September 29, 2018 |
Sales |
$ |
10,884 |
|
|
$ |
9,999 |
|
|
$ |
42,405 |
|
|
$ |
40,052 |
|
Cost of Sales |
9,745 |
|
|
8,660 |
|
|
37,383 |
|
|
34,956 |
|
Gross Profit |
1,139 |
|
|
1,339 |
|
|
5,022 |
|
|
5,096 |
|
|
|
|
|
|
|
|
|
Selling, General and
Administrative |
535 |
|
|
520 |
|
|
2,195 |
|
|
2,064 |
|
Operating Income |
604 |
|
|
819 |
|
|
2,827 |
|
|
3,032 |
|
Other (Income) Expense: |
|
|
|
|
|
|
|
Interest income |
(2 |
) |
|
(1 |
) |
|
(11 |
) |
|
(7 |
) |
Interest expense |
123 |
|
|
87 |
|
|
462 |
|
|
350 |
|
Other, net |
17 |
|
|
(24 |
) |
|
(55 |
) |
|
(56 |
) |
Total Other (Income)
Expense |
138 |
|
|
62 |
|
|
396 |
|
|
287 |
|
Income before Income
Taxes |
466 |
|
|
757 |
|
|
2,431 |
|
|
2,745 |
|
Income Tax Expense
(Benefit) |
94 |
|
|
220 |
|
|
396 |
|
|
(282 |
) |
Net Income |
372 |
|
|
537 |
|
|
2,035 |
|
|
3,027 |
|
Less: Net Income Attributable
to Noncontrolling Interests |
3 |
|
|
— |
|
|
13 |
|
|
3 |
|
Net Income Attributable to
Tyson |
$ |
369 |
|
|
$ |
537 |
|
|
$ |
2,022 |
|
|
$ |
3,024 |
|
Weighted Average Shares
Outstanding: |
|
|
|
|
|
|
|
Class A Basic |
293 |
|
|
294 |
|
|
293 |
|
|
295 |
|
Class B Basic |
70 |
|
|
70 |
|
|
70 |
|
|
70 |
|
Diluted |
367 |
|
|
367 |
|
|
366 |
|
|
369 |
|
Net Income Per Share
Attributable to Tyson: |
|
|
|
|
|
|
|
Class A Basic |
$ |
1.03 |
|
|
$ |
1.50 |
|
|
$ |
5.67 |
|
|
$ |
8.44 |
|
Class B Basic |
$ |
0.93 |
|
|
$ |
1.35 |
|
|
$ |
5.10 |
|
|
$ |
7.59 |
|
Diluted |
$ |
1.01 |
|
|
$ |
1.47 |
|
|
$ |
5.52 |
|
|
$ |
8.19 |
|
Dividends Declared Per
Share: |
|
|
|
|
|
|
|
Class A |
$ |
0.375 |
|
|
$ |
0.300 |
|
|
$ |
1.575 |
|
|
$ |
1.275 |
|
Class B |
$ |
0.338 |
|
|
$ |
0.270 |
|
|
$ |
1.418 |
|
|
$ |
1.148 |
|
|
|
|
|
|
|
|
|
Sales Growth |
8.9 |
% |
|
|
|
5.9 |
% |
|
|
Margins: (Percent of
Sales) |
|
|
|
|
|
|
|
Gross Profit |
10.5 |
% |
|
13.4 |
% |
|
11.8 |
% |
|
12.7 |
% |
Operating Income |
5.5 |
% |
|
8.2 |
% |
|
6.7 |
% |
|
7.6 |
% |
Net Income Attributable to Tyson |
3.4 |
% |
|
5.4 |
% |
|
4.8 |
% |
|
7.6 |
% |
Effective Tax Rate |
20.2 |
% |
|
29.1 |
% |
|
16.3 |
% |
|
(10.3 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
TYSON FOODS, INC. |
CONSOLIDATED CONDENSED BALANCE SHEETS |
(In millions) |
(Unaudited) |
|
|
September 28, 2019 |
|
September 29, 2018 |
Assets |
|
|
|
Current Assets: |
|
|
|
Cash and cash equivalents |
$ |
484 |
|
|
$ |
270 |
|
Accounts receivable, net |
2,173 |
|
|
1,723 |
|
Inventories |
4,108 |
|
|
3,513 |
|
Other current assets |
404 |
|
|
182 |
|
Total Current Assets |
7,169 |
|
|
5,688 |
|
Net Property, Plant and
Equipment |
7,282 |
|
|
6,169 |
|
Goodwill |
10,844 |
|
|
9,739 |
|
Intangible Assets, net |
7,037 |
|
|
6,759 |
|
Other Assets |
765 |
|
|
754 |
|
Total Assets |
$ |
33,097 |
|
|
$ |
29,109 |
|
|
|
|
|
Liabilities and
Shareholders’ Equity |
|
|
|
Current Liabilities: |
|
|
|
Current debt |
$ |
2,102 |
|
|
$ |
1,911 |
|
Accounts payable |
1,926 |
|
|
1,694 |
|
Other current liabilities |
1,485 |
|
|
1,426 |
|
Total Current Liabilities |
5,513 |
|
|
5,031 |
|
Long-Term Debt |
9,830 |
|
|
7,962 |
|
Deferred Income Taxes |
2,356 |
|
|
2,107 |
|
Other Liabilities |
1,172 |
|
|
1,198 |
|
|
|
|
|
Total Tyson Shareholders’
Equity |
14,082 |
|
|
12,803 |
|
Noncontrolling Interests |
144 |
|
|
8 |
|
Total Shareholders’
Equity |
14,226 |
|
|
12,811 |
|
|
|
|
|
Total Liabilities and
Shareholders’ Equity |
$ |
33,097 |
|
|
$ |
29,109 |
|
|
|
|
|
|
|
|
|
|
TYSON FOODS, INC. |
CONSOLIDATED CONDENSED STATEMENTS OF CASH
FLOWS |
(In millions) |
(Unaudited) |
|
|
Twelve Months Ended |
|
September 28, 2019 |
|
September 29, 2018 |
Cash Flows From Operating
Activities: |
|
|
|
Net income |
$ |
2,035 |
|
|
$ |
3,027 |
|
Depreciation and amortization |
1,098 |
|
|
943 |
|
Deferred income taxes |
92 |
|
|
(865 |
) |
Gain on dispositions of businesses |
(17 |
) |
|
(42 |
) |
Impairment of assets |
94 |
|
|
175 |
|
Stock-based compensation expense |
77 |
|
|
69 |
|
Other, net |
(20 |
) |
|
(58 |
) |
Net changes in operating assets and liabilities |
(846 |
) |
|
(286 |
) |
Cash Provided by Operating
Activities |
2,513 |
|
|
2,963 |
|
|
|
|
|
Cash Flows From Investing
Activities: |
|
|
|
Additions to property, plant and equipment |
(1,259 |
) |
|
(1,200 |
) |
Purchases of marketable securities |
(64 |
) |
|
(42 |
) |
Proceeds from sale of marketable securities |
63 |
|
|
37 |
|
Acquisitions, net of cash acquired |
(2,462 |
) |
|
(1,474 |
) |
Proceeds from sale of business |
170 |
|
|
797 |
|
Other, net |
88 |
|
|
(24 |
) |
Cash Used for Investing
Activities |
(3,464 |
) |
|
(1,906 |
) |
|
|
|
|
Cash Flows From Financing
Activities: |
|
|
|
Proceeds from issuance of debt |
$ |
4,634 |
|
|
$ |
1,148 |
|
Payments on debt |
(3,208 |
) |
|
(1,307 |
) |
Borrowings on revolving credit facility |
1,135 |
|
|
1,755 |
|
Payments on revolving credit facility |
(1,065 |
) |
|
(1,755 |
) |
Proceeds from issuance of commercial paper |
17,722 |
|
|
21,024 |
|
Repayments of commercial paper |
(17,327 |
) |
|
(21,197 |
) |
Purchases of Tyson Class A common stock |
$ |
(252 |
) |
|
$ |
(427 |
) |
Dividends |
(537 |
) |
|
(431 |
) |
Stock options exercised |
$ |
99 |
|
|
$ |
102 |
|
Other, net |
(30 |
) |
|
(14 |
) |
Cash Provided by (Used for)
Financing Activities |
1,171 |
|
|
(1,102 |
) |
Effect of Exchange Rate
Changes on Cash |
(6 |
) |
|
(3 |
) |
Increase (Decrease) in Cash
and Cash Equivalents |
214 |
|
|
(48 |
) |
Cash and Cash Equivalents at
Beginning of Year |
270 |
|
|
318 |
|
Cash and Cash Equivalents at
End of Period |
$ |
484 |
|
|
$ |
270 |
|
|
|
|
|
|
|
|
|
|
TYSON FOODS, INC. |
EBITDA Reconciliations |
(In millions) |
(Unaudited) |
|
|
Twelve Months Ended |
|
September 28, 2019 |
|
September 29, 2018 |
|
|
|
|
Net income |
$ |
2,035 |
|
|
$ |
3,027 |
|
Less: Interest income |
(11 |
) |
|
(7 |
) |
Add: Interest expense |
462 |
|
|
350 |
|
Add: Income tax expense
(benefit) |
396 |
|
|
(282 |
) |
Add: Depreciation |
819 |
|
|
723 |
|
Add: Amortization (a) |
267 |
|
|
210 |
|
EBITDA |
$ |
3,968 |
|
|
$ |
4,021 |
|
|
|
|
|
Adjustments to EBITDA: |
|
|
|
Add: One-time cash bonus to
frontline employees |
$ |
— |
|
|
$ |
109 |
|
Add: Keystone purchase
accounting and acquisition related costs (b) |
37 |
|
|
— |
|
Add: Impairments net of
realized gains associated with the divestiture of businesses
(c) |
41 |
|
|
68 |
|
Add: Restructuring and related
charges |
41 |
|
|
59 |
|
Add: Beef production facility
fire costs |
31 |
|
|
— |
|
Add: Pension plan termination
charge |
15 |
|
|
— |
|
Less: Gain on sale of
investment |
(55 |
) |
|
— |
|
Total Adjusted EBITDA |
$ |
4,078 |
|
|
$ |
4,257 |
|
|
|
|
|
Total gross debt |
$ |
11,932 |
|
|
$ |
9,873 |
|
Less: Cash and cash
equivalents |
(484 |
) |
|
(270 |
) |
Less: Short-term
investments |
(1 |
) |
|
(1 |
) |
Total net debt |
$ |
11,447 |
|
|
$ |
9,602 |
|
|
|
|
|
|
Ratio Calculations: |
|
|
|
|
Gross debt/EBITDA |
3.0x |
|
|
2.5x |
|
Net debt/EBITDA |
2.9x |
|
|
2.4x |
|
|
|
|
|
|
|
|
|
Gross debt/Adjusted
EBITDA |
2.9x |
|
|
2.3x |
|
Net debt/Adjusted EBITDA |
2.8x |
|
|
2.3x |
|
|
|
|
|
|
|
(a) |
Excludes the amortization of debt issuance and debt discount
expense of $12 million and $10 million for the twelve months ended
September 28, 2019, and September 29, 2018, respectively,
as it is included in interest expense. |
(b) |
Keystone acquisition and
integration costs for the fiscal year 2019 included $11 million of
purchase accounting adjustments and $26 million acquisition related
costs. |
(c) |
The fiscal year ended September
28, 2019 included a $41 million impairment associated with the
planned divestiture of a business. The fiscal year ended September
29, 2018 included $101 million of impairments net of $33 million
realized gains associated with the divestitures of non-protein
businesses. |
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) |
|
|
Fourth Quarter |
|
Twelve Months Ended |
|
Pretax Impact |
|
EPS Impact |
|
Pretax Impact |
|
EPS Impact |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported net income per share
attributable to Tyson |
|
|
|
|
$ |
1.01 |
|
|
$ |
1.47 |
|
|
|
|
|
|
$ |
5.52 |
|
|
$ |
8.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Restructuring and related charges |
$ |
10 |
|
|
$ |
14 |
|
|
0.02 |
|
|
0.03 |
|
|
$ |
41 |
|
|
$ |
59 |
|
|
0.08 |
|
|
0.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Impairment net of
realized gains associated with the divestiture of businesses
(a) |
$ |
41 |
|
|
$ |
(11 |
) |
|
0.09 |
|
|
0.08 |
|
|
$ |
41 |
|
|
$ |
68 |
|
|
0.09 |
|
|
0.34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Beef production facility
fire costs |
$ |
31 |
|
|
$ |
— |
|
|
0.06 |
|
|
— |
|
|
$ |
31 |
|
|
$ |
— |
|
|
0.06 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Pension plan termination
charge |
$ |
15 |
|
|
$ |
— |
|
|
0.03 |
|
|
— |
|
|
$ |
15 |
|
|
$ |
— |
|
|
0.03 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Gain on sale of
investment |
$ |
— |
|
|
$ |
— |
|
|
— |
|
|
— |
|
|
$ |
(55 |
) |
|
$ |
— |
|
|
(0.11 |
) |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Recognition of
previously unrecognized tax benefit |
$ |
— |
|
|
$ |
— |
|
|
— |
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
(0.29 |
) |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Keystone purchase
accounting and acquisition related costs (b) |
$ |
— |
|
|
$ |
— |
|
|
— |
|
|
— |
|
|
$ |
37 |
|
|
$ |
— |
|
|
0.08 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: One-time cash bonus to
frontline employees |
$ |
— |
|
|
$ |
— |
|
|
— |
|
|
— |
|
|
$ |
— |
|
|
$ |
109 |
|
|
— |
|
|
0.22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Tax benefit from
remeasurement of net deferred tax liabilities at lower enacted tax
rates |
$ |
— |
|
|
$ |
— |
|
|
— |
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
— |
|
|
(2.71 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income per share
attributable to Tyson |
|
|
|
|
$ |
1.21 |
|
|
$ |
1.58 |
|
|
|
|
|
|
$ |
5.46 |
|
|
$ |
6.16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
EPS impact for the fourth quarter and twelve months of fiscal year
2019 included a $41 million impairment associated with the planned
divestiture of a business. EPS impact for the twelve months of
fiscal 2018 included $101 million of impairments related to the
expected sale of a non-protein business net of $33 million realized
gains associated with the sale of non-protein businesses, which
combined on an after-tax basis resulted in a $0.34 impact to EPS.
EPS impact for the fourth quarter of fiscal 2018 included a pretax
gain, but a post-tax loss, associated with sale of a non-protein
business. |
(b) |
Keystone purchase accounting and
acquisition related costs for the twelve 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.
Adjusted EPS guidance is provided on a non-GAAP basis. The
Company is not able to reconcile its full-year fiscal 2019 Adjusted
EPS guidance to its full-year fiscal 2019 projected GAAP EPS
guidance 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.
|
TYSON FOODS, INC. |
Operating Income Reconciliation |
(In millions) |
(Unaudited) |
|
Adjusted Operating Income (Loss) |
(for the fourth quarter ended September 28, 2019) |
|
Beef |
Pork |
Chicken |
Prepared Foods |
Other |
Total |
Reported operating income (loss) |
$ |
376 |
|
$ |
26 |
|
$ |
90 |
|
$ |
104 |
|
$ |
8 |
|
$ |
604 |
|
Add:
Restructuring and related charges |
— |
|
1 |
|
5 |
|
4 |
|
— |
|
10 |
|
Add:
Beef production facility fire costs |
31 |
|
— |
|
— |
|
— |
|
— |
|
31 |
|
Add:
Impairment associated with the planned divestiture of a business
(a) |
— |
|
— |
|
— |
|
41 |
|
— |
|
41 |
|
Adjusted
operating income (loss) |
$ |
407 |
|
$ |
27 |
|
$ |
95 |
|
$ |
149 |
|
$ |
8 |
|
$ |
686 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Income (Loss) |
(for the fourth quarter ended September 29, 2018) |
|
Beef |
Pork |
Chicken |
Prepared Foods |
Other |
Total |
Reported operating income (loss) |
$ |
347 |
|
$ |
76 |
|
$ |
174 |
|
$ |
232 |
|
$ |
(10 |
) |
$ |
819 |
|
Add:
Restructuring and related charges |
1 |
|
— |
|
8 |
|
5 |
|
— |
|
14 |
|
Less: Realized gain associated
with the divestiture of a non-protein business (a) |
— |
|
— |
|
— |
|
(11 |
) |
— |
|
(11 |
) |
Adjusted operating income
(loss) |
$ |
348 |
|
$ |
76 |
|
$ |
182 |
|
$ |
226 |
|
$ |
(10 |
) |
$ |
822 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Income (Loss) |
(for the twelve months ended September 28, 2019) |
|
Beef |
Pork |
Chicken |
PreparedFoods |
Other |
Total |
Reported operating income (loss) |
$ |
1,107 |
|
$ |
263 |
|
$ |
621 |
|
$ |
843 |
|
$ |
(7 |
) |
$ |
2,827 |
|
Add: Restructuring and related charges |
1 |
|
1 |
|
21 |
|
18 |
|
— |
|
41 |
|
Add: Keystone purchase accounting and acquisition related
costs |
— |
|
— |
|
13 |
|
— |
|
24 |
|
37 |
|
Add:
Beef production facility fire costs |
31 |
|
— |
|
— |
|
— |
|
— |
|
31 |
|
Add:
Impairment associated with the planned divestiture of a business
(a) |
— |
|
— |
|
— |
|
41 |
|
— |
|
41 |
|
Adjusted
operating income (loss) |
$ |
1,139 |
|
$ |
264 |
|
$ |
655 |
|
$ |
902 |
|
$ |
17 |
|
$ |
2,977 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Income (Loss) |
(for the twelve months ended September 29, 2018) |
|
Beef |
Pork |
Chicken |
Prepared Foods |
Other |
Total |
Reported operating income (loss) |
$ |
1,013 |
|
$ |
361 |
|
$ |
866 |
|
$ |
845 |
|
$ |
(53 |
) |
$ |
3,032 |
|
Add: One-time cash bonus to frontline employees |
27 |
|
12 |
|
51 |
|
19 |
|
— |
|
109 |
|
Add: Restructuring and related charges |
4 |
|
1 |
|
30 |
|
24 |
|
— |
|
59 |
|
Add: Impairment net of a
realized gain associated with the divestitures of non-protein
businesses (a) |
— |
|
— |
|
— |
|
68 |
|
— |
|
68 |
|
Adjusted
operating income (loss) |
$ |
1,044 |
|
$ |
374 |
|
$ |
947 |
|
$ |
956 |
|
$ |
(53 |
) |
$ |
3,268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Operating income for the fourth quarter and twelve months of fiscal
year 2019 included a $41 million impairment associated with the
planned divestiture of a business. Operating income impact for
fiscal 2018 included $101 million of impairments related to the
expected sale of a non-protein business net of $33 million realized
pretax gains associated with the sale of non-protein businesses.
Operating income impact for the fourth quarter of fiscal 2018
included a $11 million realized pretax gain associated with the
sale of a non-protein business. |
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 Tuesday, November 12, 2019. We
encourage participants to pre-register for the conference call
using the following link: http://dpregister.com/10136099. 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/2082311/BABF854EF5809AB7023D2789449C7100.
A telephone replay of the call will be available until December 12,
2019, 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 10133550. 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 fiscal 2020, 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; (xviii) 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; and
(xxviii) those factors listed under Item 1A. “Risk Factors”
included in our Annual Report filed on Form 10-K for the period
ended September 28, 2019.
Media Contact: Gary Mickelson, 479-290-6111Investor
Contact: Jon Kathol, 479-290-4235 |
Source: Tyson Foods, Inc.Category: IR, Newsroom |
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