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Tyson Foods (TSN) Q4 Earnings Lag Estimates, Sales Increase
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Tyson Foods, Inc. (TSN - Free Report) posted fourth-quarter fiscal 2022 results, wherein the bottom line fell short of the Zacks Consensus Estimate and declined year over year. However, the top line increased and beat the consensus mark. Shares of the company rallied nearly 2% in the pre-market trading session on Nov 14.
Management stated that its record fiscal 2022 results were backed by a diversified portfolio and the strong consumer demand for protein. Results were driven by robust Beef unit performance and an improvement in the Chicken unit. The company continued to gain share from its foodservice Focus 6 categories and retail core business lines, including its Tyson, Jimmy Dean, Hillshire Farm and Ball Park brands.
The company is also moving fast with its productivity program, which is likely to generate its fiscal 2024 targeted savings of more than $1 billion before the schedule by the end of fiscal 2023. This program is focused on operational and automation and advanced technologies, functional excellence and digital solutions.
Tyson Foods, Inc. Price, Consensus and EPS Surprise
Adjusted earnings came in at $1.63 per share, falling short of the Zacks Consensus Estimate of $1.70. The bottom line declined 29% year over year.
Total sales came in at $13,737 million, up 7.2% from the $12,811 million reported in the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $13,289 million. Gains from the average price change were 5.1%, while total volumes rose 2.1%.
The gross profit in the quarter came in at $1,307 million, down from the $2,476 million reported in the prior-year quarter. The gross profit, as a percentage of sales, came in at 9.5%, down from the 19.3% reported in the year-ago quarter.
Tyson Foods’ adjusted operating income decreased 29% to $823 million. The adjusted operating margin contracted to 6% from the around 9% reported in the year-ago quarter.
Segment Details
Beef: Sales in the segment declined to $4,859 million from the $5,012 million reported in the year-ago quarter. Volumes inched up 5.1% on a better operational performance. However, the average price decreased 8.2% in the segment, led by the lower demand for premium cuts of beef.
Pork: Sales in the segment decreased to $1,604 million from the $1,646 million reported in the year-ago quarter. Sales volumes declined 1.1% due to the reduced domestic availability of live hogs. The average price declined 1.5% due to an adverse product mix related to export demand and the increased domestic availability of finished products.
Chicken: Sales in the segment increased to $4,619 million from the $3,873 million reported in the year-ago quarter. Sales volumes climbed 1.1% on higher domestic production, somewhat negated by the impacts of inventory growth and a strategic initiative mix. The average price increased 18.2% on the impacts of pricing actions undertaken amid the inflationary cost environment.
Prepared Foods: Sales in the segment rose to $2,516 million from the $2,253 million reported in the year-ago quarter. Prepared Foods’ sales volumes rose 0.3%. The average price increased 11.4%, mainly due to revenue management efforts amid an inflationary cost environment.
International/Other: Sales in the segment were $638 million, up from the $546 million reported in the year-ago quarter. Volumes moved up 7.3%, while the average sales price jumped 9.5%.
Other Financial Updates
Tyson Foods exited the quarter with cash and cash equivalents of $1,031 million, long-term debt of $7,862 million and total shareholders’ equity (including non-controlling interests) of $19,811 million. In the 12 months ended Oct 1, 2022, cash provided by operating activities amounted to $2,687 million.
Liquidity was roughly $3.3 billion as of Oct 1, 2022. Management expects liquidity to remain more than the company’s minimum target of $1 billion.
The company projects capital expenditures of nearly $2.5 billion for fiscal 2023. These include expenditures related to capacity expansion and utilization, automation to battle labor-related hurdles, and product and brand innovation.
Effective Nov 11, 2022, management raised its quarterly dividend rate to 48 cents per share for its Class A shares and 43.2 cents a share for its Class B shares. This is payable on Dec 15, 2022 to shareholders of record as of Dec 1. The resultant annual dividend rate for fiscal 2023 ($1.92 for Class A and $1.728 for Class B stock) represents a 4% hike from the fiscal 2022 annual dividend rate.
Guidance
For fiscal 2023, the United States Department of Agriculture (“USDA”) projects domestic protein production (beef, pork, chicken and turkey) to dip 1% from the fiscal 2022 levels.
Starting from fiscal 2022, management launched a new productivity program to drive a better, faster and more agile organization. The company generated productivity savings of more than $700 million in fiscal 2022, which helped fight inflationary hurdles. The program is expected to generate savings of more than $1 billion by the end of fiscal 2023.
Management anticipates sales in the $55-$57 billion range in fiscal 2023. The net interest expense is expected to be $320 million.
Segment-Wise Guidance for Fiscal 2023
For the Beef segment, USDA projects domestic production to fall roughly 6% year over year. For Pork, domestic production is projected to remain nearly flat. Per USDA forecasts, production in the Chicken segment will likely improve by nearly 2% in fiscal 2023. For the fiscal, the company expects better results from its foreign operations in the International/Other segment.
Shares of this Zacks Rank #4 (Sell) company have decreased 17.9% in the past three months compared with the industry’s decline of 13.5%.
Lamb Weston, a frozen potato product company, currently sports a Zacks Rank #1 (Strong Buy). LW has a trailing four-quarter earnings surprise of 47.3%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggests growth of 14.6% and 45.7%, respectively, from the year-ago reported numbers.
The J.M. Smucker, which manufactures and markets branded food and beverage products, sports a Zacks Rank #1 at present. The J.M. Smucker has a trailing four-quarter earnings surprise of 20.8%, on average.
The Zacks Consensus Estimate for SJM’s current financial-year sales suggests growth of 4.6% from the year-ago reported number.
Conagra Brands, which operates as a consumer-packaged goods food company, currently carries a Zacks Rank of 2 (Buy). CAG has a trailing four-quarter earnings surprise of 1.8%, on average.
The Zacks Consensus Estimate for Conagra Brands’ current financial-year sales and EPS suggests growth of 5.2% and around 3%, respectively, from the corresponding year-ago reported figures.
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Tyson Foods (TSN) Q4 Earnings Lag Estimates, Sales Increase
Tyson Foods, Inc. (TSN - Free Report) posted fourth-quarter fiscal 2022 results, wherein the bottom line fell short of the Zacks Consensus Estimate and declined year over year. However, the top line increased and beat the consensus mark. Shares of the company rallied nearly 2% in the pre-market trading session on Nov 14.
Management stated that its record fiscal 2022 results were backed by a diversified portfolio and the strong consumer demand for protein. Results were driven by robust Beef unit performance and an improvement in the Chicken unit. The company continued to gain share from its foodservice Focus 6 categories and retail core business lines, including its Tyson, Jimmy Dean, Hillshire Farm and Ball Park brands.
The company is also moving fast with its productivity program, which is likely to generate its fiscal 2024 targeted savings of more than $1 billion before the schedule by the end of fiscal 2023. This program is focused on operational and automation and advanced technologies, functional excellence and digital solutions.
Tyson Foods, Inc. Price, Consensus and EPS Surprise
Tyson Foods, Inc. price-consensus-eps-surprise-chart | Tyson Foods, Inc. Quote
Quarter in Detail
Adjusted earnings came in at $1.63 per share, falling short of the Zacks Consensus Estimate of $1.70. The bottom line declined 29% year over year.
Total sales came in at $13,737 million, up 7.2% from the $12,811 million reported in the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $13,289 million. Gains from the average price change were 5.1%, while total volumes rose 2.1%.
The gross profit in the quarter came in at $1,307 million, down from the $2,476 million reported in the prior-year quarter. The gross profit, as a percentage of sales, came in at 9.5%, down from the 19.3% reported in the year-ago quarter.
Tyson Foods’ adjusted operating income decreased 29% to $823 million. The adjusted operating margin contracted to 6% from the around 9% reported in the year-ago quarter.
Segment Details
Beef: Sales in the segment declined to $4,859 million from the $5,012 million reported in the year-ago quarter. Volumes inched up 5.1% on a better operational performance. However, the average price decreased 8.2% in the segment, led by the lower demand for premium cuts of beef.
Pork: Sales in the segment decreased to $1,604 million from the $1,646 million reported in the year-ago quarter. Sales volumes declined 1.1% due to the reduced domestic availability of live hogs. The average price declined 1.5% due to an adverse product mix related to export demand and the increased domestic availability of finished products.
Chicken: Sales in the segment increased to $4,619 million from the $3,873 million reported in the year-ago quarter. Sales volumes climbed 1.1% on higher domestic production, somewhat negated by the impacts of inventory growth and a strategic initiative mix. The average price increased 18.2% on the impacts of pricing actions undertaken amid the inflationary cost environment.
Prepared Foods: Sales in the segment rose to $2,516 million from the $2,253 million reported in the year-ago quarter. Prepared Foods’ sales volumes rose 0.3%. The average price increased 11.4%, mainly due to revenue management efforts amid an inflationary cost environment.
International/Other: Sales in the segment were $638 million, up from the $546 million reported in the year-ago quarter. Volumes moved up 7.3%, while the average sales price jumped 9.5%.
Other Financial Updates
Tyson Foods exited the quarter with cash and cash equivalents of $1,031 million, long-term debt of $7,862 million and total shareholders’ equity (including non-controlling interests) of $19,811 million. In the 12 months ended Oct 1, 2022, cash provided by operating activities amounted to $2,687 million.
Liquidity was roughly $3.3 billion as of Oct 1, 2022. Management expects liquidity to remain more than the company’s minimum target of $1 billion.
The company projects capital expenditures of nearly $2.5 billion for fiscal 2023. These include expenditures related to capacity expansion and utilization, automation to battle labor-related hurdles, and product and brand innovation.
Effective Nov 11, 2022, management raised its quarterly dividend rate to 48 cents per share for its Class A shares and 43.2 cents a share for its Class B shares. This is payable on Dec 15, 2022 to shareholders of record as of Dec 1. The resultant annual dividend rate for fiscal 2023 ($1.92 for Class A and $1.728 for Class B stock) represents a 4% hike from the fiscal 2022 annual dividend rate.
Guidance
For fiscal 2023, the United States Department of Agriculture (“USDA”) projects domestic protein production (beef, pork, chicken and turkey) to dip 1% from the fiscal 2022 levels.
Starting from fiscal 2022, management launched a new productivity program to drive a better, faster and more agile organization. The company generated productivity savings of more than $700 million in fiscal 2022, which helped fight inflationary hurdles. The program is expected to generate savings of more than $1 billion by the end of fiscal 2023.
Management anticipates sales in the $55-$57 billion range in fiscal 2023. The net interest expense is expected to be $320 million.
Segment-Wise Guidance for Fiscal 2023
For the Beef segment, USDA projects domestic production to fall roughly 6% year over year. For Pork, domestic production is projected to remain nearly flat. Per USDA forecasts, production in the Chicken segment will likely improve by nearly 2% in fiscal 2023. For the fiscal, the company expects better results from its foreign operations in the International/Other segment.
Shares of this Zacks Rank #4 (Sell) company have decreased 17.9% in the past three months compared with the industry’s decline of 13.5%.
Looking for Consumer Staple Stocks? Check These
Some better-ranked stocks from the sector are Lamb Weston (LW - Free Report) , The J.M. Smucker (SJM - Free Report) and Conagra Brands (CAG - Free Report) .
Lamb Weston, a frozen potato product company, currently sports a Zacks Rank #1 (Strong Buy). LW has a trailing four-quarter earnings surprise of 47.3%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggests growth of 14.6% and 45.7%, respectively, from the year-ago reported numbers.
The J.M. Smucker, which manufactures and markets branded food and beverage products, sports a Zacks Rank #1 at present. The J.M. Smucker has a trailing four-quarter earnings surprise of 20.8%, on average.
The Zacks Consensus Estimate for SJM’s current financial-year sales suggests growth of 4.6% from the year-ago reported number.
Conagra Brands, which operates as a consumer-packaged goods food company, currently carries a Zacks Rank of 2 (Buy). CAG has a trailing four-quarter earnings surprise of 1.8%, on average.
The Zacks Consensus Estimate for Conagra Brands’ current financial-year sales and EPS suggests growth of 5.2% and around 3%, respectively, from the corresponding year-ago reported figures.