Tyson Foods(US:TSN)2026-02-02 12:10Financial Performance - Sales increased by 5% or $690 million in Q1 fiscal 2026, driven by growth in Beef, Chicken, and Prepared Foods segments, while Pork and International segments saw declines [134]. - Operating income for Q1 fiscal 2026 was $302 million, down 48% compared to Q1 fiscal 2025, impacted by $115 million in restructuring charges and $155 million in legal contingency accruals [134]. - Net income attributable to Tyson was $85 million in Q1 fiscal 2026, down from $359 million in Q1 fiscal 2025, resulting in a diluted earnings per share of $0.24 compared to $1.01 [155]. - The effective tax rate for Q1 fiscal 2026 was 29.7%, up from 23.5% in Q1 fiscal 2025, influenced by state taxes and foreign withholding tax on repatriated earnings [151][152]. Segment Performance - The Beef segment reported a sales increase to $5,771 million in Q1 fiscal 2026 from $5,335 million in Q1 fiscal 2025, while the Pork segment saw a slight decline in sales [157]. - Beef segment sales increased by $436 million to $5,771 million, with a sales volume change of -7.3% and an average sales price change of +17.2% [160]. - Pork segment sales decreased by $8 million to $1,609 million, with a sales volume change of +1.6% and an average sales price change of +1.6% [162]. - Chicken segment sales increased by $147 million to $4,212 million, with a sales volume change of +3.7% and an average sales price change of -0.1% [166]. - Prepared Foods segment sales increased by $200 million to $2,673 million, with a sales volume change of +0.2% and an average sales price change of +7.9% [167]. Cost and Expenses - Cost of sales increased by $977 million, with higher input costs per pound contributing approximately $1,017 million, including $850 million in cattle costs for the Beef segment [145]. - Selling, general and administrative expenses decreased to $506 million in Q1 fiscal 2026 from $515 million in Q1 fiscal 2025, representing 3.5% of sales [146]. - Corporate expenses decreased by $13 million to $188 million, while amortization decreased by $10 million to $54 million [174]. Cash Flow and Liquidity - Cash provided by operating activities was $942 million, a decrease of $89 million compared to the prior year [178]. - Total liquidity at December 27, 2025, was $4,528 million, including cash and cash equivalents of $1,278 million [181]. - The company had current debt of $909 million, which it intends to pay with existing cash and cash generated from operating activities [183]. - The revolving credit facility has a committed capacity of $2.5 billion, providing additional liquidity for working capital needs [184]. - The company entered into a $750 million revolving term loan credit facility, maturing in December 2028, with no borrowings under this facility during the three months ended December 27, 2025 [189]. Debt and Interest Rates - The company expects net interest expense to approximate $370 million for fiscal 2026 [189]. - As of December 27, 2025, $654 million of cash was held in international accounts of foreign subsidiaries, which are not relied upon for domestic liquidity needs [189]. - A hypothetical 10% increase in interest rates would increase annualized interest expense by less than $1 million, with variable rate debt of $44 million at a weighted average interest rate of 4.8% [205]. - The company had fixed-rate debt of $8,318 million with a weighted average interest rate of 4.8% [206]. - A hypothetical 10% decrease in interest rates would have increased the fair value of fixed-rate debt by approximately $227 million at December 27, 2025, and $231 million at September 27, 2025 [206]. Risk Management - The company assesses goodwill and indefinite life assets for impairment annually, with one international reporting unit having goodwill of $0.2 billion considered at heightened risk of impairment [196]. - The fair value of livestock and grain positions is sensitive to market price changes, with a 10% change in fair value resulting in potential impacts of $37 million for live cattle and $36 million for corn as of December 27, 2025 [204]. - The company utilizes derivative financial instruments to manage commodity price risks, with significant price fluctuations potentially impacting results of operations [203]. - The company is exposed to interest rate risk related to pension and post-retirement benefit obligations, which could increase cash contribution requirements if plan asset values decline [207]. - The primary foreign currencies the company is exposed to include the Brazilian real, British pound sterling, Canadian dollar, Chinese renminbi, European euro, Malaysian ringgit, Mexican peso, and Thai baht [208]. - A hypothetical 10% change in foreign exchange rates would have impacted pretax income by $14 million at December 27, 2025, and $21 million at September 27, 2025 [208]. Compliance and Governance - The company maintains compliance with all debt covenants as of December 27, 2025, and expects to continue doing so [193]. - Detailed discussions on concentration of credit risks are available in the company's Annual Report filed on Form 10-K for the fiscal year ended September 27, 2025 [209].