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Tyson Foods Annual Report, Year Ended Sep 30, 2017

Filing Date
Filed November 13, 2017
Period End
September 30, 2017
Security
TSN
One revenue dollarkept$0.05
In the record · 2016–202610-K1110-Q338-K142

TSN filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 142 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Nov ’18Nov ’18
  2. Leadership change8-K · Oct ’20Oct ’20
  3. Leadership change8-K · Sep ’22Sep ’22
  4. Material agreement8-K · Aug ’26Aug ’26

01—Abstract

Summary

Summary of the 10-K filed November 13, 2017. Cited figures are marked; the original filing is the authoritative source.

Tyson Foods, Inc. (NYSE: TSN) reported record fiscal 2017 operating income of $2,931 milliona on sales of $38,260 million, up from $36,881 million in fiscal 2016.

Net income attributable to Tyson was $1,774 millionb, or $4.79 per diluted share, compared with $1,768 million, or $4.53 per diluted share, a year earlier. Results were led by record earnings in the Beef and Pork segments, with Beef operating income rising $530 million to $877 million and Pork rising $117 million to $645 million. Chicken operating income fell to $1,053 million from $1,305 million, and Prepared Foods fell to $462 million from $734 million, reflecting higher operating costs, impairments, restructuring charges and AdvancePierre acquisition costs.

The June 7, 2017 acquisition of AdvancePierre Foods Holdings, Inc. for about $3.2 billionc was the year's defining transaction and was funded largely with new senior notes, a term loan and commercial paper. Total debt rose to $10,203 million from $6,279 million, total debt to capitalization reached 49.1%, and the net debt to EBITDA ratio increased to 2.7x from 1.7x. The company said it does not plan to repurchase shares, other than to fund equity compensation obligations, until that ratio reaches about 2x, which it expects by the third quarter of fiscal 2018.

The Board approved a Financial Fitness Program, expected to produce cumulative net savings of $200 milliond in fiscal 2018, $400 million in fiscal 2019 and $600 million in fiscal 2020, and the quarterly dividend was raised to $0.30 per Class A share. Key risks disclosed include Wal-Mart Stores, Inc., which accounted for 17.3% of fiscal 2017 consolidated sales, and the Tyson Limited Partnership, which controls approximately 70.78% of the total voting power.

The company also cites pending broiler chicken antitrust and grower litigation, and an Oklahoma environmental lawsuit whose district court decision was still pending. Goodwill and indefinite-life intangible assets totaled $13.4 billion, or about 48% of total assets.

02—Key points

Key Highlights

  1. Record fiscal 2017 operating income of $2,931 million on sales of $38,260 million; diluted EPS of $4.79 versus $4.53 in fiscal 2016.
  2. Beef operating income rose $530 million to $877 million, and Pork rose $117 million to $645 million, while Chicken ($1,053 million) and Prepared Foods ($462 million) declined.
  3. AdvancePierre acquisition for approximately $3.2 billion closed June 7, 2017; Prepared Foods and Chicken include its results.
  4. Total debt increased to $10,203 million from $6,279 million; net debt to EBITDA rose to 2.7x from 1.7x, and share buybacks are paused until about 2x.
  5. Financial Fitness Program approved in Q4 2017, with estimated net savings of $200 million in fiscal 2018, $400 million in 2019 and $600 million in 2020, and $215 million of total pretax charges.
  6. Operating cash flow of $2.6 billion and capital expenditures of $1,069 million in fiscal 2017; fiscal 2018 capital spending is expected to be about $1.4 billion.
  7. Wal-Mart Stores, Inc. accounted for 17.3% of consolidated sales, and the Tyson Limited Partnership controls approximately 70.78% of voting power.

03—One dollar

Follow one dollar

Of each $1.00 of revenue in FY2017, Tyson Foods kept $0.05.

  1. Revenue$38.26B100.0%
  2. Cost of revenue−$33.20B86.8%
  3. Gross profit$5.06B13.2%
  4. Operating costs−$2.14B5.6%
  5. Operating income$2.92B7.6%
  6. Interest, other & tax−$1.15B3.0%
  7. Net income$1.77B4.6%
Computed from 10-KFY2017filed November 13, 2017Computed from this filing’s revenue, gross profit, operating income and net income · right columngrey figure: share of revenue

Where FY2017 revenue went

$38.26B
  • Cost of revenue: $33.18B, 87% of revenue
  • Net income: $1.77B, 4.6% of revenue
  • R&D: $113.0M, 0.3% of revenue
  • SG&A: $2.14B, 5.6% of revenue
  • Interest, other & tax: $1.15B, 3.0% of revenue

Kept 4.6% as net incomeNet income $1.77B · 4.6%R&D $113.0M · 0.3%

Full revenue history →

04—Financials

Financial Highlights

Figures from 10-KFY2017filed November 13, 2017
Revenue$38.26B13.2% Gross MarginNet Income$1.77B4.6% Net MarginEPS (Diluted)$4.79Total Assets$28.07BCash & Equivalents$318.00MFree Cash Flow$1.53B

Financial Statements

FY2017 against FY2016

Line itemFY2017FY2016Change
Revenue$38.26B$36.88B+3.7%
Cost of Revenue$33.18B$32.18B+3.1%
Gross Profit$5.06B$4.70B+7.8%
R&D Expenses$113.00M$96.00M+17.7%
SG&A Expenses$2.14B$1.86B+14.9%
Operating Income$2.92B$2.83B+3.1%
Net Income$1.77B$1.77B+0.3%
EPS (Diluted)$4.79$4.53+5.7%
Shares Outstanding (Diluted)370.00M390.00M−5.1%

05—Questions

Frequently Asked Questions

  1. How did Tyson perform in fiscal 2017?

    Sales rose to $38,260 million from $36,881 million, and operating income rose 3% to a record $2,931 million. Net income attributable to Tyson was $1,774 million, or $4.79 per diluted share, compared with $4.53 in fiscal 2016. Beef and Pork drove the gains, while Chicken and Prepared Foods operating income declined.

  2. What was the AdvancePierre acquisition and how was it financed?

    Tyson acquired all outstanding stock of AdvancePierre Foods Holdings, Inc. on June 7, 2017 for $40.25 per share in cash, or about $3.2 billion. It was funded with existing cash, net proceeds from new senior notes, a new term loan facility and commercial paper borrowings. AdvancePierre's results are included in the Prepared Foods and Chicken segments.

  3. How much debt does Tyson carry and when will it resume share repurchases?

    Total debt was $10,203 million at September 30, 2017, up from $6,279 million a year earlier, and net debt to EBITDA was 2.7x. The company does not plan to repurchase shares, other than to fund equity compensation obligations, until that ratio reaches about 2x, which it anticipates reaching by the third quarter of fiscal 2018.

  4. What is the Financial Fitness Program?

    The Board approved this multi-year restructuring program in the fourth quarter of fiscal 2017. It is expected to produce cumulative net savings of $200 million in fiscal 2018, $400 million in fiscal 2019 and $600 million in fiscal 2020. Total pretax charges are estimated at about $215 million, and about 500 positions are expected to be eliminated.

  5. What dividend changes did Tyson announce?

    On November 10, 2017, the Board increased the quarterly dividend to $0.30 per Class A share and $0.27 per Class B share, payable December 15, 2017. The company anticipates that the fiscal 2018 annual dividend rate will be $1.20 for Class A and $1.08 for Class B, a 33% increase over fiscal 2017.

06—Continue

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