-- 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