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Tyson Foods Inc.'s (TSN - Analyst Report) fourth-quarter fiscal 2013 adjusted earnings (excluding impairment charges and currency translation gains) of 70 cents per share beat the Zacks Consensus Estimate of 69 cents by a penny. Quarterly earnings also beat the prior-year quarter earnings of 57 cents by 22.8%.

Earnings were on the upswing due to strong sales in most of the business segments and the company’s lower outstanding shares following share buyback during the fourth quarter.

Revenues and Margins

Net sales shot up 7% to $8.9 billion in the quarter, due to sales growth in most of the business segments. Sales were in line with the Zacks Consensus Estimate.

Tyson's adjusted operating income climbed 18.0% to $416 million in the quarter. Adjusted operating margin inflated 40 basis points (bps) to 4.7% of sales backed by higher revenues although cost of sales was higher during the quarter.

Segment Details

Chicken: Sales in this segment increased 6.8% year over year to $3.2 billion backed by higher demand in both international and domestic markets. Operating margin inflated 80 bps to 5.5% from the year-ago quarter, backed by positive price/volume mix, improved live performance and efficient execution.

Beef: Sales in the Beef segment climbed 9.1% year over year to $3.7 billion. Operating margin inflated 90 bps to 3.4% following increased operational efficiencies and a relatively stable live cattle market.

Pork: The Pork segment sales climbed 6.3% year over year to $1.4 billion. Operating margin contracted 30 bps to 4.9% from the year-ago quarter due to higher average sales price and livestock cost. 

Prepared Foods: Prepared Foods’ sales went up 9.4% to $881 million compared with $805 million in the year-ago quarter. Operating margin shrank 300 bps to 1.8%, due to higher raw material cost and additional investments in lunchmeat business.

Fiscal 2013 Results

Fiscal 2013 adjusted earnings (excluding impairment charges and currency translation gains) of $2.26 per share beat the Zacks Consensus Estimate of $2.23 by 1.3%. Quarterly earnings also beat the prior-year quarter earnings of $1.97 by 14.7%.

Net sales increased 4.4% to $34.4 billion in the year, due to sales growth in Chicken and Beef segments. Sales were in line with the Zacks Consensus Estimate.

Other Financial Details

Tyson Foods held $1.14 billion of cash and cash equivalents as of Sep 28, 2013, compared to $943 million as of Jun 29, 2013. Long-term debt remained flat at $1.89 billion as of Sep 28, 2013 compared to that on Jun 29, 2013. The company repurchased 9.9 million shares for $300 million in fourth-quarter fiscal 2013.

On Nov 14, 2013, Tyson hiked the quarterly dividend by 50.0% to 0.75 cents per share payable on Dec 13, 2013, to shareholders of record on Nov 29, 2013.

Guidance for Fiscal 2014

Tyson maintained fiscal 2014 sales guidance of $36 billion which reflects its strategy to drive growth in domestic value-added chicken sales, prepared food sales and international chicken production. For fiscal 2014, Tyson expects capital expenditure within the range of $700 million–$700 million and interest expense of $100 million.

Tyson carries a Zacks Rank #3 (Hold).

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