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Tyson Foods (TSN) Q3 Earnings Top Estimates, Sales Up Y/Y
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Tyson Foods, Inc. (TSN - Free Report) posted impressive third-quarter fiscal 2021 results, with the top and the bottom line increasing year over year. Sales and earnings surpassed the Zacks Consensus Estimate.
The company’s performance in the reported quarter reflected sales growth in all the segments. The company continued to see robust growth in the retail business, while its foodservice business saw rebound as the restaurant industry started to reopen. The company’s beef business expanded production to meet solid U.S. and international demand for better-quality items.
Quarter in Detail
Adjusted earnings came in at $2.70 per share, which beat the Zacks Consensus Estimate of $1.77. The bottom line surged 93% year over year.
Total sales came in at $12,478 million, which increased 24.5% from $10,022 million reported in the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $11,198.8 million. Gains from average price change were 17.1%, while total volumes increased 9.7%.
Tyson Foods, Inc. Price, Consensus and EPS Surprise
Gross profit in the quarter came in at $1,620 million, up from $1,313 million reported in the prior-year quarter. Gross profit, as a percentage of sales, came in at 13%, down from 13.1% reported in the year-ago quarter. Tyson Foods’ adjusted operating income soared 81% to $1,372 million. Moreover, adjusted operating margin expanded from 7.6% to 10.8% in the quarter.
During the quarter, the company incurred nearly $55 million as direct incremental expenses associated with COVID-19, which put pressure on results to an extent. These include team member costs, production facility sanitization, testing for coronavirus, donations, product downgrades, rendered product and some professional fees. Apart from these factors, indirect COVID-19 costs included expenses associated with raw materials, transportation, underutilization and reconfiguration of plant, premiums offered to cattle producers and discounts on pricing.
Segment Details
Beef: Sales in the segment increased to $4,954 million from $3,653 million reported in the year-ago quarter. Volume improved 24% on the back of solid global demand and lower year-over-year production inefficiencies related to the pandemic. Average price increased 11.6% on the back of solid beef products demand.
Pork: Sales in the segment increased to $1,715 million from $1,115 million reported in the year-ago quarter. Sales volume gained 14.5% on the back of solid global demand and lower year-over-year production inefficiencies related to the pandemic. Average price increased 39.3% owing to strong demand conditions.
Chicken: Sales in the segment increased to $3,476 million from $3,112 million reported in the year-ago quarter. Sales volume increased 3.3% mainly owing to higher demand in the foodservice channel and lower year-over-year production inefficiencies related to the pandemic. Average price increased 15.6% due to favorable sales mix and inflationary market conditions.
Prepared Foods: Sales in the segment increased to $2,323 million from $2,035 million reported in the year-ago quarter. Prepared Foods’ sales volume increased 4.5% mostly driven by higher demand in the foodservice channel as well as sustained retail demand. Lower year-over-year production inefficiencies related to the pandemic also led to the upside. Average price increased 9.7% due to favorable product mix and passthrough of higher raw material costs.
International/Other: Sales in the segment were $488 million, up from $402 million reported in the year-ago quarter. Sales volume inched up 1.8%, while average sales price surged 19.6%.
Other Financial Updates
The company exited the quarter with cash and cash equivalents of $1,613 million, long-term debt of $8,786 million and total shareholders’ equity (including non-controlling interests) of $16,693 million. In the first nine months ended Jul 3, 2021, cash provided by operating activities amounted to $2,656 million.
Liquidity was about $3.4 billion as of Jul 3, 2021. Management expects liquidity to remain more than the company’s minimum target of $1 billion. The company projects capital expenditures to be nearly of $1.3 for fiscal 2021.
Outlook
Management anticipates sales in the bracket of $46-$47 billion in fiscal 2021. Earlier, the company had projected the metric in the bracket of $44-$46 billion. For fiscal 2021, the United States Department of Agriculture (“USDA”) expects domestic protein production (chicken, beef, pork and turkey) to rise less than 1% compared with fiscal 2020 levels. On an adjusted basis, the company expects its Prepared Foods unit to remain flat in fiscal 2021 year on year. The Pork segment is expected to remain lower than fiscal 2020 levels. The Beef segment is expected to deliver better performance in fiscal 2021 compared with fiscal 2020 levels. The Chicken unit is likely to deliver lower results in fiscal 2021.
Image Source: Zacks Investment Research
Segment-Wise Guidance for Fiscal 2021
For the Beef segment, USDA projects domestic production to increase nearly 3% year over year in fiscal 2021. For Pork, domestic production is likely to be flat year over year, per the USDA. Further, USDA forecasts domestic production in the Chicken segment to decline less than 1% in fiscal 2021. For the Prepared Foods segment, the company continues to focus on responding to the changing consumer behavior and rising costs. The company expects better results from its operations in the International/Other segment.
Shares of this Zacks Rank #3 (Hold) company have gained 10.4% so far this year compared with the industry’s rise of 4.3%.
Darling Ingredients Inc. (DAR - Free Report) , currently carrying a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 29.8%, on average.
Aramark (ARMK - Free Report) , currently carrying a Zacks Rank #2, has a trailing four-quarter earnings surprise of 9.2%, on average.
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Tyson Foods (TSN) Q3 Earnings Top Estimates, Sales Up Y/Y
Tyson Foods, Inc. (TSN - Free Report) posted impressive third-quarter fiscal 2021 results, with the top and the bottom line increasing year over year. Sales and earnings surpassed the Zacks Consensus Estimate.
The company’s performance in the reported quarter reflected sales growth in all the segments. The company continued to see robust growth in the retail business, while its foodservice business saw rebound as the restaurant industry started to reopen. The company’s beef business expanded production to meet solid U.S. and international demand for better-quality items.
Quarter in Detail
Adjusted earnings came in at $2.70 per share, which beat the Zacks Consensus Estimate of $1.77. The bottom line surged 93% year over year.
Total sales came in at $12,478 million, which increased 24.5% from $10,022 million reported in the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $11,198.8 million. Gains from average price change were 17.1%, while total volumes increased 9.7%.
Tyson Foods, Inc. Price, Consensus and EPS Surprise
Tyson Foods, Inc. price-consensus-eps-surprise-chart | Tyson Foods, Inc. Quote
Gross profit in the quarter came in at $1,620 million, up from $1,313 million reported in the prior-year quarter. Gross profit, as a percentage of sales, came in at 13%, down from 13.1% reported in the year-ago quarter. Tyson Foods’ adjusted operating income soared 81% to $1,372 million. Moreover, adjusted operating margin expanded from 7.6% to 10.8% in the quarter.
During the quarter, the company incurred nearly $55 million as direct incremental expenses associated with COVID-19, which put pressure on results to an extent. These include team member costs, production facility sanitization, testing for coronavirus, donations, product downgrades, rendered product and some professional fees. Apart from these factors, indirect COVID-19 costs included expenses associated with raw materials, transportation, underutilization and reconfiguration of plant, premiums offered to cattle producers and discounts on pricing.
Segment Details
Beef: Sales in the segment increased to $4,954 million from $3,653 million reported in the year-ago quarter. Volume improved 24% on the back of solid global demand and lower year-over-year production inefficiencies related to the pandemic. Average price increased 11.6% on the back of solid beef products demand.
Pork: Sales in the segment increased to $1,715 million from $1,115 million reported in the year-ago quarter. Sales volume gained 14.5% on the back of solid global demand and lower year-over-year production inefficiencies related to the pandemic. Average price increased 39.3% owing to strong demand conditions.
Chicken: Sales in the segment increased to $3,476 million from $3,112 million reported in the year-ago quarter. Sales volume increased 3.3% mainly owing to higher demand in the foodservice channel and lower year-over-year production inefficiencies related to the pandemic. Average price increased 15.6% due to favorable sales mix and inflationary market conditions.
Prepared Foods: Sales in the segment increased to $2,323 million from $2,035 million reported in the year-ago quarter. Prepared Foods’ sales volume increased 4.5% mostly driven by higher demand in the foodservice channel as well as sustained retail demand. Lower year-over-year production inefficiencies related to the pandemic also led to the upside. Average price increased 9.7% due to favorable product mix and passthrough of higher raw material costs.
International/Other: Sales in the segment were $488 million, up from $402 million reported in the year-ago quarter. Sales volume inched up 1.8%, while average sales price surged 19.6%.
Other Financial Updates
The company exited the quarter with cash and cash equivalents of $1,613 million, long-term debt of $8,786 million and total shareholders’ equity (including non-controlling interests) of $16,693 million. In the first nine months ended Jul 3, 2021, cash provided by operating activities amounted to $2,656 million.
Liquidity was about $3.4 billion as of Jul 3, 2021. Management expects liquidity to remain more than the company’s minimum target of $1 billion. The company projects capital expenditures to be nearly of $1.3 for fiscal 2021.
Outlook
Management anticipates sales in the bracket of $46-$47 billion in fiscal 2021. Earlier, the company had projected the metric in the bracket of $44-$46 billion. For fiscal 2021, the United States Department of Agriculture (“USDA”) expects domestic protein production (chicken, beef, pork and turkey) to rise less than 1% compared with fiscal 2020 levels. On an adjusted basis, the company expects its Prepared Foods unit to remain flat in fiscal 2021 year on year. The Pork segment is expected to remain lower than fiscal 2020 levels. The Beef segment is expected to deliver better performance in fiscal 2021 compared with fiscal 2020 levels. The Chicken unit is likely to deliver lower results in fiscal 2021.
Image Source: Zacks Investment Research
Segment-Wise Guidance for Fiscal 2021
For the Beef segment, USDA projects domestic production to increase nearly 3% year over year in fiscal 2021. For Pork, domestic production is likely to be flat year over year, per the USDA. Further, USDA forecasts domestic production in the Chicken segment to decline less than 1% in fiscal 2021. For the Prepared Foods segment, the company continues to focus on responding to the changing consumer behavior and rising costs. The company expects better results from its operations in the International/Other segment.
Shares of this Zacks Rank #3 (Hold) company have gained 10.4% so far this year compared with the industry’s rise of 4.3%.
Solid Food Bets
Medifast, Inc. (MED - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 16%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Darling Ingredients Inc. (DAR - Free Report) , currently carrying a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 29.8%, on average.
Aramark (ARMK - Free Report) , currently carrying a Zacks Rank #2, has a trailing four-quarter earnings surprise of 9.2%, on average.