Tyson Foods(US:TSN)2024-11-12 12:34Financial Performance - Sales increased by $0.4 billion to $53.3 billion in fiscal 2024, driven by higher average sales prices in the Beef segment[93]. - Operating income for fiscal 2024 was $1,409 million, a significant recovery from an operating loss of $395 million in fiscal 2023[93]. - Total sales for fiscal 2024 reached $53.3 billion, a 0.8% increase from $52.9 billion in 2023, with operating income of $1.4 billion compared to a loss of $395 million in 2023[112]. - Net income attributable to Tyson for 2024 was $800 million, compared to a loss of $648 million in 2023, resulting in a diluted earnings per share of $2.25 versus a loss of $1.87[110]. - The company reported a net income of $822 million for fiscal 2024, a significant recovery from a net loss of $649 million in fiscal 2023[146]. Segment Performance - The Beef segment reported sales of $20.5 billion in 2024, up 6.0% from $19.3 billion in 2023, but operating loss increased to $381 million from a loss of $91 million[114]. - The Pork segment generated $5.9 billion in sales for 2024, a 2.3% increase from $5.8 billion in 2023, with operating loss improving to $40 million from $139 million[116]. - The Chicken segment's sales decreased to $16.4 billion in 2024 from $17.1 billion in 2023, but operating income improved significantly to $988 million from a loss of $770 million[120]. - Prepared Foods segment sales remained stable at $9.9 billion in 2024, with operating income increasing to $879 million from $823 million in 2023[112]. - International/Other segment sales were $2.4 billion in 2024, down from $2.5 billion in 2023, with an operating loss of $37 million compared to a loss of $218 million in 2023[112]. Cost and Expenses - Cost of sales decreased by $568 million in fiscal 2024, primarily due to lower input costs, including a $895 million decrease in the Chicken segment related to feed ingredient costs[99]. - Selling, general and administrative expenses decreased by $27 million to $2,218 million in fiscal 2024, maintaining 4.2% as a percentage of sales[101]. - The company incurred $378 million in performance-based compensation costs in fiscal 2024, reflecting improved consolidated results[93]. - Interest expense increased to $481 million in fiscal 2024, primarily due to term loan facilities and newly issued notes[106]. Tax and Legal Matters - The effective tax rate for fiscal 2024 was impacted by state taxes and $63 million of non-deductible goodwill associated with the sale of a facility[109]. - Legal contingency accruals amounted to $174 million pretax in 2024, affecting earnings by $0.38 per diluted share[110]. - The company recognized $174 million and $156 million in legal accrual charges for fiscal 2024 and 2023, respectively, related to various litigations[150]. Debt and Liquidity - The company had total liquidity of $3,977 million as of September 28, 2024, including cash and cash equivalents, short-term investments, and availability under the revolving credit facility[131]. - The current ratio improved to 2.0 to 1 at September 28, 2024, compared to 1.3 to 1 at September 30, 2023, indicating enhanced short-term financial health[131]. - Total gross debt increased to $9,787 million as of September 28, 2024, compared to $9,506 million in the previous year, while total net debt decreased to $8,060 million from $8,918 million[145]. - The company maintained compliance with all debt covenants as of September 28, 2024, and anticipates continued compliance[139]. Pension and Benefits - The funded status of defined benefit pension plans showed an underfunded position of $158 million at the end of fiscal 2024, compared to $149 million at the end of fiscal 2023[140]. - The company expects to contribute approximately $14 million to its pension plans in fiscal 2025, consistent with contributions made in fiscal 2024[140]. - The projected benefit obligation for the defined benefit pension plans was $188 million at the end of fiscal 2024, with a net periodic benefit cost of $8 million for the same fiscal year[160]. Goodwill and Impairment - The company recorded no goodwill impairment charges in fiscal 2024, a recovery from $781 million in fiscal 2023[104]. - The company evaluates goodwill and indefinite life intangible assets for impairment annually, with the assessment date set for the first day of the fourth quarter[164]. - As of September 28, 2024, the Beef segment reporting unit had goodwill of $0.3 billion, with a heightened risk of impairment due to challenging market conditions and lower cattle supplies[166]. - The Chicken segment reporting units had goodwill of $3.0 billion at September 28, 2024, with projected long-term operating margins needing to average approximately 4.0%-5.0% to avoid impairment[166]. Operational Efficiency - The company experienced a significant reduction in feed ingredient costs, amounting to $895 million in 2024, contributing to improved operational efficiencies[121]. - Cash provided by operating activities for fiscal 2024 was $2,590 million, an increase of $838 million compared to $1,752 million in fiscal 2023[127]. - Capital expenditures for fiscal 2025 are expected to be between $1.0 billion and $1.2 billion, focusing on profit improvement projects and maintenance[128]. Market and Economic Factors - The Beef segment faced limited supply of market-ready cattle and increased live cattle costs, while the Pork segment experienced sufficient supply and reduced hog costs[94]. - A hypothetical 10% increase in interest rates would increase annualized interest expense by approximately $10 million[179]. - The company has foreign exchange exposure primarily from certain receivable and payable balances, with a hypothetical 10% change in foreign exchange rates impacting pretax income by $25 million at September 28, 2024[180].