Tyson Foods(TSN) - 2025 Q1 - Quarterly Results

First Quarter 2025 Results Overview Tyson Foods delivered strong Q1 2025 financial results, with significant growth in sales, operating income, and EPS, reflecting improved execution Key Financial Highlights Tyson Foods reported a strong start to fiscal year 2025, achieving its third consecutive quarter of year-over-year growth in sales, operating income, and EPS, reflecting improved execution across the business | Metric | Q1 2025 (Millions) | Q1 2024 (Millions) | Change (%) | | :------------------------------------- | :----------------- | :----------------- | :--------- | | Sales | $13,623 | $13,319 | 2.3% | | GAAP Operating Income | $580 | $231 | 151% | | Adjusted Operating Income (non-GAAP) | $659 | $411 | 60% | | GAAP EPS | $1.01 | $0.30 | 237% | | Adjusted EPS (non-GAAP) | $1.14 | $0.69 | 65% | | Total Company GAAP Operating Margin | 4.3% | 1.7% | +2.6 pp | | Total Company Adjusted Operating Margin (non-GAAP) | 4.8% | 3.1% | +1.7 pp | | Liquidity (as of Dec 28, 2024) | $4,500 | N/A | N/A | | Cash Provided by Operating Activities | $1,031 | $1,300 | -20.7% | | Free Cash Flow (non-GAAP) | $760 | $946 | -19.7% | CEO Commentary President & CEO Donnie King highlighted the company's best quarterly performance in over two years, attributing it to improved execution and a strong position to meet protein demand - Fiscal year 2025 started strong with the third consecutive quarter of year-over-year growth in sales, operating income, and EPS[3] - The company's best quarterly performance in over two years reflects improved execution, including exceptional results in chicken[3] - Tyson Foods is well-positioned to meet consumer demand for protein through its diversified multi-channel, multi-protein portfolio[3] Segment Performance This section details the financial performance of Tyson Foods' individual business segments, including both GAAP and adjusted results, highlighting key drivers of change GAAP Segment Results The Beef segment significantly reduced its operating loss, while Pork and Chicken segments showed strong growth in operating income, and Prepared Foods experienced a slight decline despite stable sales | Segment | Q1 2025 Sales (Millions) | Q1 2024 Sales (Millions) | Volume Change | Avg. Price Change | Q1 2025 Operating Income (Millions) | Q1 2024 Operating Income (Millions) | Q1 2025 Operating Margin | Q1 2024 Operating Margin | | :---------------- | :----------------------- | :----------------------- | :------------ | :---------------- | :---------------------------------- | :---------------------------------- | :----------------------- | :----------------------- | | Beef | $5,335 | $5,023 | 5.6% | 0.6% | $(64) | $(206) | (1.2)% | (4.1)% | | Pork | $1,617 | $1,517 | (0.4)% | 7.0% | $59 | $39 | 3.6% | 2.6% | | Chicken | $4,065 | $4,033 | 1.5% | (0.7)% | $351 | $177 | 8.6% | 4.4% | | Prepared Foods | $2,473 | $2,543 | (3.2)% | 0.4% | $209 | $243 | 8.5% | 9.6% | | International/Other | $584 | $582 | 4.3% | (4.0)% | $25 | $(22) | N/A | N/A | | Total | $13,623 | $13,319 | 1.6% | 0.7% | $580 | $231 | 4.3% | 1.7% | Adjusted Segment Results (Non-GAAP) On an adjusted basis, the Beef segment significantly narrowed its operating loss, while Pork and Chicken segments demonstrated robust growth in adjusted operating income, and Prepared Foods saw a modest decrease | Segment | Q1 2025 Adjusted Operating Income (Loss) (Millions) | Q1 2024 Adjusted Operating Income (Loss) (Millions) | Q1 2025 Adjusted Operating Margin (Non-GAAP) | Q1 2024 Adjusted Operating Margin (Non-GAAP) | | :---------------- | :-------------------------------------------------- | :-------------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Beef | $(32) | $(117) | (0.6)% | (2.3)% | | Pork | $59 | $68 | 3.6% | 4.5% | | Chicken | $368 | $192 | 9.1% | 4.8% | | Prepared Foods | $234 | $264 | 9.5% | 10.4% | | International/Other | $30 | $4 | N/A | N/A | | Total | $659 | $411 | 4.8% | 3.1% | Fiscal Year 2025 Outlook This section outlines Tyson Foods' financial projections and expectations for fiscal year 2025, covering overall protein production, segment-specific performance, and total company financial targets Overall Protein Production Outlook The USDA projects a modest increase of approximately 1% in domestic protein production (beef, pork, chicken, and turkey) for fiscal year 2025 compared to fiscal 2024 - USDA projects domestic protein production (beef, pork, chicken, and turkey) to increase approximately 1% in fiscal 2025 compared to fiscal 2024[8] Segment-Specific Outlook Tyson Foods anticipates varied performance across its segments for fiscal 2025, with Beef expecting an adjusted operating loss, Pork, Chicken, and Prepared Foods projecting adjusted operating income, and International/Other expecting improved results - Beef: Anticipates adjusted operating loss between $(0.4) billion and $(0.2) billion in fiscal 2025, with USDA projecting a 1% decrease in domestic production[9] - Pork: Anticipates adjusted operating income of $0.1 billion to $0.2 billion in fiscal 2025, with USDA projecting a 2% increase in domestic production[10] - Chicken: Anticipates adjusted operating income of $1.0 billion to $1.3 billion for fiscal 2025, with USDA projecting a 2% increase in chicken production[11] - Prepared Foods: Anticipates adjusted operating income of $0.9 billion to $1.1 billion in fiscal 2025[12] - International/Other: Anticipates improved results from foreign operations on an adjusted basis in fiscal 2025[13] Total Company Financial Outlook Tyson Foods has raised its fiscal year 2025 guidance, expecting total company adjusted operating income between $1.9 billion and $2.3 billion, with revenue projected to be flat to up 1% | Metric | Fiscal Year 2025 Outlook | | :-------------------------- | :----------------------- | | Total Company Adjusted Operating Income | $1.9 billion to $2.3 billion | | Revenue | Flat to up 1% | | Capital Expenditures | $1.0 billion to $1.2 billion | | Net Interest Expense | Approximately $375 million | | Liquidity | Above minimum target of $1.0 billion (current $4.5 billion) | | Free Cash Flow | $1.0 billion to $1.6 billion | | Adjusted Effective Tax Rate | Approximately 25% | Consolidated Financial Statements This section presents Tyson Foods' consolidated financial statements, including the statements of income, balance sheets, and cash flows, providing a comprehensive view of the company's financial position and performance Consolidated Condensed Statements of Income Tyson Foods' consolidated income statement for Q1 2025 shows significant year-over-year improvements across key profitability metrics, including gross profit, operating income, and net income attributable to Tyson | (In millions, except per share data) | Three Months Ended Dec 28, 2024 | Three Months Ended Dec 30, 2023 | | :----------------------------------- | :------------------------------ | :------------------------------ | | Sales | $13,623 | $13,319 | | Cost of Sales | $12,528 | $12,496 | | Gross Profit | $1,095 | $823 | | Selling, General and Administrative | $515 | $592 | | Operating Income | $580 | $231 | | Income before Income Taxes | $478 | $161 | | Income Tax Expense | $112 | $47 | | Net Income | $366 | $114 | | Net Income Attributable to Tyson | $359 | $107 | | Diluted Net Income Per Share Attributable to Tyson | $1.01 | $0.30 | | Dividends Declared Per Share (Class A) | $0.510 | $0.500 | | Gross Profit Margin | 8.0% | 6.2% | | Operating Income Margin | 4.3% | 1.7% | | Net Income Attributable to Tyson Margin | 2.6% | 0.8% | | Effective Tax Rate | 23.5% | 29.4% | Consolidated Condensed Balance Sheets As of December 28, 2024, Tyson Foods' balance sheet shows an increase in total assets, primarily driven by higher cash and cash equivalents, while total liabilities remained relatively stable compared to September 28, 2024 | (In millions) | December 28, 2024 | September 28, 2024 | | :---------------------------------- | :------------------ | :------------------- | | Assets: | | | | Cash and cash equivalents | $2,292 | $1,717 | | Accounts receivable, net | $2,323 | $2,406 | | Inventories | $5,114 | $5,195 | | Total Current Assets | $10,082 | $9,751 | | Net Property, Plant and Equipment | $9,353 | $9,442 | | Goodwill | $9,805 | $9,819 | | Intangible Assets, net | $5,799 | $5,875 | | Total Assets | $37,310 | $37,100 | | Liabilities and Shareholders' Equity: | | | | Current debt | $95 | $74 | | Accounts payable | $2,497 | $2,402 | | Total Current Liabilities | $4,780 | $4,787 | | Long-Term Debt | $9,711 | $9,713 | | Total Tyson Shareholders' Equity | $18,503 | $18,390 | | Total Liabilities and Shareholders' Equity | $37,310 | $37,100 | Consolidated Condensed Statements of Cash Flows Cash provided by operating activities decreased year-over-year, while cash used for investing activities also decreased, leading to an overall increase in cash and cash equivalents at period-end | (In millions) | Three Months Ended Dec 28, 2024 | Three Months Ended Dec 30, 2023 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Net income | $366 | $114 | | Cash Provided by Operating Activities | $1,031 | $1,300 | | Cash Used for Investing Activities | $(233) | $(378) | | Cash Used for Financing Activities | $(195) | $(26) | | Increase in Cash and Cash Equivalents | $575 | $911 | | Cash and Cash Equivalents at End of Period | $2,292 | $1,484 | Non-GAAP Financial Measures This section defines and reconciles Tyson Foods' non-GAAP financial measures, providing additional insights into the company's operational performance and financial health Definitions of Non-GAAP Measures This section defines the non-GAAP financial measures used by Tyson Foods, including Adjusted Operating Income (Loss), Adjusted EPS, EBITDA, Adjusted EBITDA, and Free Cash Flow, emphasizing their role as supplemental tools for evaluating business performance - EBITDA is defined as net income before interest, income taxes, depreciation, and amortization[28] - Adjusted EBITDA, Adjusted Operating Income (Loss), Adjusted Income before Income Taxes, Adjusted Income Tax Expense, Adjusted Net Income Attributable to Tyson, and Adjusted EPS exclude impacts of items not directly reflecting core ongoing operations[29] - Free Cash Flow is defined as Cash Provided by Operating Activities minus payments for Property, Plant and Equipment[30] GAAP to Non-GAAP Reconciliations (Total Company) The company provides a reconciliation from GAAP to non-GAAP results for the total company, detailing adjustments for specific items such as production facility fire insurance proceeds, brand discontinuation, network optimization plan charges, and other one-time events | (In millions, except per share data) | Q1 2025 GAAP Results | Q1 2025 Adjustments | Q1 2025 Adjusted Non-GAAP Results | | :----------------------------------- | :------------------- | :------------------ | :-------------------------------- | | Operating Income | $580 | $79 | $659 | | Income before Income Taxes | $478 | $72 | $550 | | Income Tax Expense | $112 | $26 | $138 | | Net Income Attributable to Tyson | $359 | $46 | $405 | | EPS | $1.01 | $0.13 | $1.14 | | (In millions, except per share data) | Q1 2024 GAAP Results | Q1 2024 Adjustments | Q1 2024 Adjusted Non-GAAP Results | | :----------------------------------- | :------------------- | :------------------ | :-------------------------------- | | Operating Income | $231 | $180 | $411 | | Income before Income Taxes | $161 | $177 | $338 | | Income Tax Expense | $47 | $39 | $86 | | Net Income Attributable to Tyson | $107 | $138 | $245 | | EPS | $0.30 | $0.39 | $0.69 | Adjusted Operating Income (Loss) Reconciliations by Segment This section reconciles GAAP operating income (loss) to adjusted operating income (loss) for each segment, detailing specific adjustments such as network optimization charges for Q1 2025 and various restructuring and legal accruals for Q1 2024 | (In millions) | Beef | Pork | Chicken | Prepared Foods | International/Other | Total | | :------------------------------------ | :--- | :--- | :------ | :------------- | :------------------ | :---- | | Q1 2025: | | | | | | | | Reported operating income (loss) | $(64) | $59 | $351 | $209 | $25 | $580 | | Add: Brand discontinuation | — | — | $6 | — | — | $6 | | Add: Network optimization plan charges | $32 | — | $11 | $25 | $5 | $73 | | Adjusted operating income (loss) | $(32) | $59 | $368 | $234 | $30 | $659 | | Q1 2024: | | | | | | | | Reported operating income (loss) | $(206) | $39 | $177 | $243 | $(22) | $231 | | Less: Production facility fire insurance proceeds, net of costs incurred | — | — | $(24) | — | — | $(24) | | Add: The Netherlands facility | — | — | — | — | $26 | $26 | | Add: Restructuring and related charges | $4 | $1 | $4 | $21 | — | $30 | | Add: Plant closures and disposals | $40 | — | $35 | — | — | $75 | | Add: Legal contingency accruals | $45 | $28 | — | — | — | $73 | | Adjusted operating income (loss) | $(117) | $68 | $192 | $264 | $4 | $411 | EBITDA and Adjusted EBITDA Reconciliations Tyson Foods provides reconciliations for EBITDA and Adjusted EBITDA, along with calculations for gross and net debt to EBITDA and Adjusted EBITDA ratios, which improved significantly year-over-year | (In millions) | Three Months Ended Dec 28, 2024 | Three Months Ended Dec 30, 2023 | Twelve Months Ended Dec 28, 2024 | | :------------------------------------ | :------------------------------ | :------------------------------ | :------------------------------- | | Net income | $366 | $114 | $1,074 | | EBITDA | $918 | $627 | $3,163 | | Total Adjusted EBITDA | $961 | $744 | $3,337 | | Total net debt | N/A | N/A | $7,513 | | Gross debt/EBITDA | N/A | N/A | 3.1x | | Net debt/EBITDA | N/A | N/A | 2.4x | | Gross debt/Adjusted EBITDA | N/A | N/A | 2.9x | | Net debt/Adjusted EBITDA | N/A | N/A | 2.3x | Free Cash Flow Reconciliation The Free Cash Flow reconciliation shows a decrease in free cash flow year-over-year, primarily due to lower cash provided by operating activities, despite reduced capital expenditures | (In millions) | Three Months Ended Dec 28, 2024 | Three Months Ended Dec 30, 2023 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Cash Provided by Operating Activities | $1,031 | $1,300 | | Additions to property, plant and equipment | $(271) | $(354) | | Free cash flow | $760 | $946 | Company Information and Disclosures This section provides essential company information, including a brief overview of Tyson Foods, details for investor communications, and standard forward-looking statement disclosures About Tyson Foods, Inc. Tyson Foods, Inc. is a global leader in protein, founded in 1935, committed to providing high-quality, safe, sustainable, and affordable food worldwide through its portfolio of iconic brands - Tyson Foods, Inc. (NYSE: TSN) is a world-class food company and recognized leader in protein, founded in 1935[42] - The company's purpose is 'Tyson Foods. We Feed the World Like Family™' and it has a broad portfolio of iconic brands including Tyson®, Jimmy Dean®, Hillshire Farm®, Ball Park®, Wright®, State Fair®, Aidells® and ibp®[42] - As of September 28, 2024, Tyson Foods had approximately 138,000 team members[42] Conference Call and Investor Information Details are provided for accessing the conference call webcast and replay for investors and media to discuss the financial results, along with contact information for media and investor relations - A conference call to discuss financial results was scheduled for February 3, 2025, at 9 a.m. Eastern[43] - Webcast and replay information is available on the Tyson Investor Relations website at https://ir.tyson.com[43](index=43&type=chunk) Forward-Looking Statements This standard disclosure cautions readers about forward-looking statements, which are subject to various factors and uncertainties that could cause actual results to differ materially from expectations, and advises against undue reliance on them - The release contains forward-looking statements regarding fiscal 2025 outlook, economic conditions, and financial results[44] - These statements are subject to factors and uncertainties that could cause actual results to differ materially from anticipated results[44] - Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date made, and the company undertakes no obligation to update them[44]