View all news

Tyson Reports First Quarter Fiscal 2011 Results

Feb 4, 2011
  --  1st quarter 2011 EPS was $0.78 compared to $0.42 last year


  --  This included $11 million, or $0.03 per diluted share, related to a gain
      on a sale of interests in an equity method investment


  --  1st quarter Sales were $7.6 billion, up 14.8% compared to last year
  --  Overall operating margin was 6.5%:


  --  Chicken operating income $181 million, or 6.9% of sales
  --  Beef operating income $116 million, or 3.6% of sales
  --  Pork operating income $177 million, or 14.3% of sales
  --  Prepared Foods operating income $28 million, or 3.5% of sales


SPRINGDALE, Ark., Feb. 4, 2011 (GLOBE NEWSWIRE) -- Tyson Foods, Inc. (NYSE:TSN), today reported the following results:

  (in millions, except per share data)        First Quarter
                                             ---------------

                                              2011     2010
                                             -------  ------
  Sales                                       $7,615  $6,635
  Operating Income                               498     314

  Net Income                                     294     159
  Less: Net Loss Attributable to
   Noncontrolling Interest                       (4)     (1)
                                             -------  ------
  Net Income Attributable to Tyson              $298    $160

  Net Income Per Diluted Share Attributable
   to Tyson                                    $0.78   $0.42

  --  First Quarter fiscal 2011 included an $11 million, or $0.03 per diluted
      share, gain related to a sale of interests in an equity method
      investment.


"Tyson produced record sales and earnings for the fiscal first quarter of 2011," said Donnie Smith, president and chief executive officer of Tyson Foods. "The Chicken, Beef and Pork segments produced operating income in or above their normalized ranges. With strong operating cash flows, we reduced our net debt to a 10-year low of $1.4 billion, down $132 million from the fiscal fourth quarter of 2010. Return on invested capital was strong at 26%.

"Our performance is due to on-going, sustainable operational improvements across all four segments," Smith said. "Our view of 2011 is basically the same as it was a few months ago. Beef and Pork are off to a great start, and their combined results in 2011 should be similar to 2010. Since 2008, our Chicken segment has produced approximately $600 million in performance improvements, with nearly all of that amount coming from operational efficiencies. There are more opportunities to realize, which will contribute to Chicken's profitability in the remaining quarters of the fiscal year.

"Because of the structural changes we've made throughout our businesses, we are competing effectively, even within the volatile markets we're facing," Smith said. "While 2011 will have its challenges, it has the potential to be comparable to 2010."

  Segment Performance Review
   (in millions)
  -----------------------------


  ------------------------------------------------
                       Sales

   (for the first quarter ended January 1, 2011,
                and January 2, 2010)
  ------------------------------------------------

                           First Quarter
                ----------------------------------
                                             Avg.
                                  Volume     Price

                 2011     2010    Change    Change
                -------  ------  ---------  ------
  Chicken        $2,619  $2,425       8.4%  (0.4)%
  Beef            3,185   2,717       0.7%   16.4%
  Pork            1,238     947       5.8%   23.5%
  Prepared
   Foods            806     713       0.3%   12.6%
  Other               8       0        n/a     n/a
  Intersegment
   Sales          (241)   (167)        n/a     n/a
                -------  ------  ---------  ------

  Total          $7,615  $6,635       4.5%    9.8%
                -------  ------  ---------  ------


  ------------------------------------------------
               Operating Income (Loss)

   (for the first quarter ended January 1, 2011,
                and January 2, 2010)
  ------------------------------------------------

                           First Quarter
                ----------------------------------
                                  Operating Margin
                                         %

                 2011     2010      2011     2010
                -------  ------  ---------  ------
  Chicken          $181     $78       6.9%    3.2%
  Beef              116     119       3.6%    4.4%
  Pork              177      62      14.3%    6.5%
  Prepared
   Foods             28      55       3.5%    7.7%

  Other             (4)       0        n/a     n/a
                -------  ------  ---------  ------

  Total            $498    $314       6.5%    4.7%
                -------  ------  ---------  ------

Fiscal 2011 Outlook

In fiscal 2011, overall domestic protein (chicken, beef, pork and turkey) production is expected to slightly increase. Because exports are likely to grow as well, we forecast total domestic availability of protein to be down slightly compared to fiscal 2010, which should continue to support pricing. The following is a summary of the fiscal 2011 outlook for each of our segments, as well as an outlook on capital expenditures, net interest expense and debt:

  --  Chicken -- Going into fiscal 2011, we planned seasonal production
      cutbacks, which we then continued into our second quarter in order to
      match our supply with customer demand. Based on USDA data, we expect
      industry production will increase from fiscal 2010 levels. In addition,
      current futures prices indicate higher grain costs in fiscal 2011
      compared to fiscal 2010 of approximately $500 million. We expect to
      offset a significant portion of the increased grain costs and the impact
      of additional supplies with operational, pricing and mix improvements.


  --  Because of these factors, we expect our operating margins will be lower
      for the remainder of fiscal 2011, as compared to the first quarter
      fiscal 2011. Unlike fiscal 2008 when the industry experienced a similar
      production and grain cost environment, we expect to remain profitable
      during the remainder of fiscal 2011. Our expectations are based on the
      significant operational improvements of approximately $600 million
      realized since 2008. Additionally, a significant portion of our
      increased capital expenditures focused on spending for production and
      labor efficiencies, yield improvements and sales mix flexibility. These
      improvements, which began in late fiscal 2010 and are scheduled to
      continue into fiscal 2011, are expected to result in an additional $200
      million of savings in fiscal 2011.


  --  Beef -- We expect to see a gradual reduction in fed cattle supplies of
      1-2% for the remainder of fiscal 2011 as compared to fiscal 2010, while
      live weights should increase. We do not expect a significant change in
      the fundamentals of our Beef business for the balance of fiscal 2011. We
      expect adequate supplies in the regions we operate our plants and for
      beef exports to remain strong in fiscal 2011.

  --  Pork -- We expect hog supplies in fiscal 2011 to be comparable to fiscal
      2010 and to be adequate in the regions in which we operate. We expect
      pork exports to remain strong in fiscal 2011. Our first quarter of
      fiscal 2011 was a record quarter due to strong exports and demand. While
      we expect results should remain above our normalized range for the
      balance of the fiscal year, we do not expect the remainder of fiscal
      2011 to be at our first quarter levels.

  --  Prepared Foods -- We expect operational improvements and increased
      pricing to offset the likely increase in raw material costs in fiscal
      2011. Because many of our sales contracts are formula based or
      shorter-term in nature, we are typically able to offset rising input
      costs through increased pricing. However, there is a lag time for price
      increases to take effect, which is what we experienced during the first
      quarter of fiscal 2011.


Fiscal 2011 Outlook continued

  --  Capital Expenditures -- We expect fiscal 2011 capital expenditures to be
      approximately $700 million.

  --  Net Interest Expense -- We expect fiscal 2011 net interest expense will
      be approximately $245 million, down nearly $90 million compared to
      fiscal 2010.

  --  Debt -- We will continue to use our available cash to repurchase notes
      when available at attractive rates. The only significant maturities of
      debt coming due over the next three fiscal years (2011-2013) are our
      8.25% Notes due October 1, 2011, of which the balance was $315 million
      at January 1, 2011. We plan to retire these notes with current cash on
      hand and/or cash flows from operations.


  Segment Performance
   Review
  ------------------------


  Chicken Segment Results
  --------------------------------------------------

  in millions                  Three Months Ended
  ------------------------  ------------------------

                            January  January
                            1, 2011  2, 2010  Change
  ------------------------  -------  -------  ------
  Sales                      $2,619   $2,425    $194
  Sales Volume Change                           8.4%
  Average Sales Price
   Change                                     (0.4)%

  Operating Income             $181      $78    $103

  Operating Margin             6.9%     3.2%
  ------------------------  -------  -------  ------

First quarter -- Fiscal 2011 vs Fiscal 2010

  --  Operating Income --


  --  Operational Improvements -- Operating results were positively impacted
      by an increase in sales volume and operational improvements, which
      included: yield, mix and live production performance improvements;
      additional processing flexibility; and reduced interplant product
      movement.

  --  Derivative Activities -- Operating results included the following
      amounts for commodity risk management activities related to grain and
      energy purchases. These amounts exclude the impact from related physical
      purchase transactions, which impact current and future period operating
      results.


  Income - in millions  Qtr
                        ---
                  2011  $51

                  2010    1
                        ---
  Improvement in
  operating results     $50

  Beef Segment Results
  --------------------------------------------------

  in millions                  Three Months Ended
  ------------------------  ------------------------

                            January  January
                            1, 2011  2, 2010  Change
  ------------------------  -------  -------  ------
  Sales                      $3,185   $2,717    $468
  Sales Volume Change                           0.7%
  Average Sales Price
   Change                                      16.4%

  Operating Income             $116     $119    $(3)

  Operating Margin             3.6%     4.4%
  ------------------------  -------  -------  ------

First quarter -- Fiscal 2011 vs Fiscal 2010

  --  Sales and Operating Income --


  --  We have sustained our operating income by maximizing our revenues
      relative to the rising live cattle markets, partially attributable to
      strong export sales. This was partially offset by an increase in
      operating costs.


  --  Derivative Activities -- Operating results included the following
      amounts for commodity risk management activities related to forward
      futures contracts for live cattle. These amounts exclude the impact from
      related physical sale and purchase transactions, which impact current
      and future period operating results.


  Income /
  (Loss) -
  in
  millions    Qtr
             -----
       2011   $(9)

       2010      6
             -----
  Decline
  in
  operating
  results    $(15)

  Pork Segment Results
  --------------------------------------------------

  in millions                  Three Months Ended
  ------------------------  ------------------------

                            January  January
                            1, 2011  2, 2010  Change
  ------------------------  -------  -------  ------
  Sales                      $1,238     $947    $291
  Sales Volume Change                           5.8%
  Average Sales Price
   Change                                      23.5%

  Operating Income             $177      $62    $115

  Operating Margin            14.3%     6.5%
  ------------------------  -------  -------  ------

First quarter -- Fiscal 2011 vs Fiscal 2010

  --  Sales and Operating Income --


  --  We increased our operating margins by maximizing our revenues relative
      to the live hog markets, partially attributable to strong export sales
      and operational and mix performance.


  --  Derivative Activities -- Operating results included the following
      amounts for commodity risk management activities related to forward
      futures contracts for live hogs. These amounts exclude the impact from
      related physical sale and purchase transactions, which impact current
      and future period operating results.


  Income/(Loss) - in millions  Qtr
                               ---
                         2011  $13

                         2010  (7)
                               ---
  Improvement in operating
  results                      $20

  Prepared Foods Segment Results
  --------------------------------------------------

  in millions                  Three Months Ended
  ------------------------  ------------------------

                            January  January
                            1, 2011  2, 2010  Change
  ------------------------  -------  -------  ------
  Sales                        $806     $713     $93
  Sales Volume Change                           0.3%
  Average Sales Price
   Change                                      12.6%

  Operating Income              $28      $55   $(27)

  Operating Margin             3.5%     7.7%
  ------------------------  -------  -------  ------

First quarter -- Fiscal 2011 vs Fiscal 2010

  --  Operating income declined due to an increase in raw material costs that
      exceeded the increase in our average sales prices. In the first quarter
      of fiscal 2010, we received $8 million in insurance proceeds related to
      the flood damage at our Jefferson, Wisconsin, plant.



             TYSON FOODS, INC.
   CONSOLIDATED CONDENSED STATEMENTS OF
                   INCOME
   (In millions, except per share data)
                (Unaudited)

                           Three Months
                              Ended
  ---------------------  ----------------

                         January  January
                         1, 2011  2, 2010
  ---------------------  -------  -------

  Sales                   $7,615   $6,635

  Cost of Sales            6,871    6,106
  ---------------------  -------  -------
  Gross Profit               744      529


  Selling, General and
   Administrative            246      215
  ---------------------  -------  -------
  Operating Income           498      314
  Other (Income)
   Expense:
   Interest income           (3)      (3)
   Interest expense           66       80

   Other, net               (10)        1
  ---------------------  -------  -------

  Total Other (Income)
   Expense                    53       78
  ---------------------  -------  -------
  Income before Income
   Taxes                     445      236

  Income Tax Expense         151       77
  ---------------------  -------  -------
  Net Income                 294      159

  Less: Net Loss
   Attributable to
   Noncontrolling
   Interest                  (4)      (1)
  ---------------------  -------  -------

  Net Income
   Attributable to
   Tyson                    $298     $160
  ---------------------  -------  -------

  Weighted Average
   Shares Outstanding:
   Class A Basic             304      303
   Class B Basic              70       70
   Diluted                   379      377
  Net Income Per Share
   Attributable to
   Tyson:
   Class A Basic           $0.81    $0.44
   Class B Basic           $0.73    $0.39
   Diluted                 $0.78    $0.42
  Cash Dividends Per
   Share:
   Class A                $0.040   $0.040
   Class B                $0.036   $0.036

  Sales Growth             14.8%
  Margins: (Percent of
   Sales)
   Gross Profit             9.8%     8.0%
   Operating Income         6.5%     4.7%
   Net Income
    Attributable to
    Tyson                   3.9%     2.4%

  Effective Tax Rate       34.0%    32.9%
  ---------------------  -------  -------

               TYSON FOODS, INC.
     CONSOLIDATED CONDENSED BALANCE SHEETS
                 (In millions)
                  (Unaudited)

                             January  October
                             1, 2011  2, 2010
  -------------------------  -------  -------
  Assets
  Current Assets:
   Cash and cash
    equivalents               $1,122     $978
   Accounts receivable, net    1,180    1,198
   Inventories, net            2,489    2,274

   Other current assets          162      168
  -------------------------  -------  -------
  Total Current Assets         4,953    4,618
  Net Property, Plant and
   Equipment                   3,714    3,674
  Goodwill                     1,894    1,893
  Intangible Assets              163      166

  Other Assets                   466      401
  -------------------------  -------  -------

  Total Assets               $11,190  $10,752
  -------------------------  -------  -------

  Liabilities and
   Shareholders' Equity
  Current Liabilities:
   Current debt                 $424     $401
   Accounts payable            1,212    1,110

   Other current
    liabilities                1,009    1,034
  -------------------------  -------  -------
  Total Current Liabilities    2,645    2,545
  Long-Term Debt               2,124    2,135
  Deferred Income Taxes          354      321
  Other Liabilities              520      486
  Redeemable Noncontrolling
   Interest                       63       64

  Total Tyson Shareholders'
   Equity                      5,445    5,166

  Noncontrolling Interest         39       35
  -------------------------  -------  -------
  Total Shareholders'
   Equity                      5,484    5,201


  -------------------------  -------  -------

  Total Liabilities and
   Shareholders' Equity      $11,190  $10,752
  -------------------------  -------  -------

                      TYSON FOODS, INC.
       CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                        (In millions)
                         (Unaudited)

                                             Three Months
                                                Ended
  ---------------------------------------  ----------------

                                           January  January
                                           1, 2011  2, 2010
  ---------------------------------------  -------  -------
  Cash Flows From Operating Activities:
   Net income                                 $294     $159
   Depreciation and amortization               128      123
   Deferred income taxes                        39        3
   Other, net                                   20        5

   Net changes in working capital            (110)      257
  ---------------------------------------  -------  -------

  Cash Provided by Operating Activities        371      547
  ---------------------------------------  -------  -------

  Cash Flows From Investing Activities:
   Additions to property, plant and
    equipment                                (158)    (113)
   Purchases of marketable securities         (92)     (10)
   Proceeds from sale of marketable
    securities                                  13        9

   Other, net                                   23       18
  ---------------------------------------  -------  -------

  Cash Used for Investing Activities         (214)     (96)
  ---------------------------------------  -------  -------

  Cash Flows From Financing Activities:
   Payments on debt                           (45)     (76)
   Net proceeds from borrowings                 44        9
   Purchases of treasury shares                (7)     (17)
   Dividends                                  (15)     (15)

   Other, net                                   10        3
  ---------------------------------------  -------  -------

  Cash Used for Financing Activities          (13)     (96)
  ---------------------------------------  -------  -------


  Effect of Exchange Rate Change on Cash         0        5
  ---------------------------------------  -------  -------

  Increase in Cash and Cash Equivalents        144      360

  Cash and Cash Equivalents at Beginning
   of Year                                     978    1,004
  ---------------------------------------  -------  -------

  Cash and Cash Equivalents at End of
   Period                                   $1,122   $1,364
  ---------------------------------------  -------  -------

Tyson Foods, Inc., founded in 1935 with headquarters in Springdale, Arkansas, is one of the world's largest processors and marketers of chicken, beef and pork, the second-largest food production company in the Fortune 500 and a member of the S&P 500. The company produces a wide variety of protein-based and prepared food products and is the recognized market leader in the retail and foodservice markets it serves. Tyson provides products and service to customers throughout the United States and more than 100 countries. The company has approximately 115,000 Team Members employed at more than 400 facilities and offices in the United States and around the world. Through its Core Values, Code of Conduct and Team Member Bill of Rights, Tyson strives to operate with integrity and trust and is committed to creating value for its shareholders, customers and Team Members. The company also strives to be faith-friendly, provide a safe work environment and serve as stewards of the animals, land and environment entrusted to it.

The Tyson Foods, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3224

A conference call to discuss the Company's financial results will be held at 9 a.m. Eastern Friday, February 4, 2011. To listen live via telephone, call 888-957-9823. A pass code will be required to join the call. The pass code is Tyson Foods. International callers dial 630-395-0355. The call also will be webcast live on the Internet at http://ir.tyson.com. Financial information, such as this news release, as well as other supplemental data, including Company distribution channel information, can be accessed from the Company's web site at http://ir.tyson.com. A telephone replay will be available through March 4, 2011 at 800-253-1054.

Forward-Looking Statements

Certain information contained in the press release may constitute forward-looking statements, such as statements relating to expected earnings and results. These forward-looking statements are subject to a number of factors and uncertainties which could cause our actual results and experiences to differ materially from the anticipated results and expectations, expressed in such forward-looking statements. We wish to caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date made. Among the factors that may cause actual results and experiences to differ from anticipated results and expectations expressed in such forward-looking statements are the following: (i) the effect of, or changes in, general economic conditions; (ii) fluctuations in the cost and availability of inputs and raw materials, such as live cattle, live swine, feed grains (including corn and soybean meal) and energy; (iii) market conditions for finished products, including competition from other global and domestic food processors, supply and pricing of competing products and alternative proteins and demand for alternative proteins; (iv) successful rationalization of existing facilities and operating efficiencies of the facilities; (v) risks associated with our commodity purchasing activities; (vi) access to foreign markets together with foreign economic conditions, including currency fluctuations, import/export restrictions and foreign politics; (vii) outbreak of a livestock disease (such as avian influenza (AI) or bovine spongiform encephalopathy (BSE)), which could have an adverse effect on livestock we own, the availability of livestock we purchase, consumer perception of certain protein products or our ability to access certain domestic and foreign markets; (viii) changes in availability and relative costs of labor and contract growers and our ability to maintain good relationships with employees, labor unions, contract growers and independent producers providing us livestock; (ix) issues related to food safety, including costs resulting from product recalls, regulatory compliance and any related claims or litigation; (x) changes in consumer preference and diets and our ability to identify and react to consumer trends; (xi) significant marketing plan changes by large customers or loss of one or more large customers; (xii) adverse results from litigation; (xiii) risks associated with leverage, including cost increases due to rising interest rates or changes in debt ratings or outlook; (xiv) compliance with and changes to regulations and laws (both domestic and foreign), including changes in accounting standards, tax laws, environmental laws, agricultural laws and occupational, health and safety laws; (xv) our ability to make effective acquisitions or joint ventures and successfully integrate newly acquired businesses into existing operations; (xvi) effectiveness of advertising and marketing programs; and (xvii) those factors listed under Item 1A. "Risk Factors" included in our October 2, 2010, Annual Report filed on Form 10-K.


Q1 2011 Supplemental Information

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Tyson Foods, Inc.

CONTACT: Media Contact:  Gary Mickelson, 479-290-6111
Investor Contact:  Ruth Ann Wisener, 479-290-4235
Categories: Press Releases
View all news