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Packaged meat producer, Hillshire Brands Company , reported adjusted earnings of 33 cents per share in the fourth quarter of fiscal 2014, which comprehensively beating the Zacks Consensus Estimate of 26 cents by almost 27%.

Earnings also grew nearly 30% year over year driven by strong top-line growth and solid cost management.

Hillshire neither provided any outlook for the next fiscal year nor held a conference call to discuss the fourth-quarter results following its pending merger with meat producer, Tyson Foods, Inc. (TSN - Analyst Report).

Revenues & Margins

Adjusted net sales of the Zacks Rank #3 (Hold) company grew 10.7% from the prior-year quarter to $1.06 billion in the reported quarter as price/mix gains made up for volume declines. Moreover, easier comparisons from last year and delay in Easter timing aided the top line. Revenues also beat the Zacks Consensus Estimate of $985 million by 8%.

While price/mix increased 10.8%, volumes declined 1.2% in the fourth quarter. The company raised the prices of its products to counter the acute cost inflation witnessed in the quarter, which in turn resulted in some volume erosion.

Gross margins declined 150 basis points (bps) to 26.5% in the quarter as higher sales were offset by rising meat costs.

Consolidated adjusted operating income grew 18.8% to $75 million in the quarter. Operating margin grew 40 bps to 7% as gross margin weakness was offset by pricing gains and lower costs.

Segment Discussion

Hillshire’s Retail segment net sales of $766 million grew 8.5% from the prior-year quarter, driven by positive price/mix and volumes. The segment’s operating income of $72 million grew 25.1%, as higher sales and cost savings made up for higher input costs.

Hillshire’s Foodservice/Other segment net sales of $298 million up 16.7% from the prior-year quarter driven by higher pricing and favorable mix which offset volume declines. The segment’s adjusted operating income of $21 million grew 61.5%, on higher sales and lower costs.

Full Year Results

Adjusted net sales grew 4.2% year over year to $4.09 billion in fiscal 2014 as price/mix gains offset volume declines. Adjusted diluted earnings of $1.82 grew 5.2% year over year.

Tyson Deal Update

Hillshire is expected to be bought by Tyson per a deal entered into in Jul 2014. Per the deal, Tyson will pay $63 per share in cash for all the outstanding shares of Hillshire, valuing the company at approximately $8.55 billion, including debt. The acquisition is expected to be completed by Sep 27.

Both the companies received a request for additional information from the Anti-trust Division of the Department of Justice earlier this week. The companies are working to sort out the issue.

In order to get through with the Tyson deal, Hillshire had to call off its proposed purchase of frozen foods maker Pinnacle Foods, Inc. (PF - Snapshot Report). Chicago-based Hillshire Brands had proposed to buy Pinnacle Foods for about $6.6 billion on May 12, including debt, in order to diversify its portfolio. (Read: Hillshire to Buy Pinnacle Foods for $6.6B). However, two weeks later, Tyson and poultry producer Pilgrim’s Pride Corp. (PPC - Snapshot Report) engaged in a bidding war to acquire Hillshire. Tyson finally clinched the deal with its offer of $63 per share made on Jun 9.

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