01—Abstract
Summary
Summary of the 10-K filed November 15, 2021. Cited figures are marked; the original filing is the authoritative source.
Tyson Foods, Inc. (NYSE: TSN) reported fiscal 2021 (year ended October 2, 2021) with sales of $47.0 billiona, up 9% from $43.2 billion in fiscal 2020, driven mainly by a 13.0% increase in average sales price, partially offset by a 2.8% decline in sales volume.
Operating income rose to $4.40 billionb from $3.01 billion, and net income attributable to Tyson was $3.05 billion, or $8.34 per diluted share, versus $5.64 in fiscal 2020. Results were shaped by large items: $626 million of legal contingency accruals (mainly broiler antitrust and wage rate litigation) and a $784 million pretax gain on the sale of the pet treats business. Segment performance was uneven.
Beef operating income rose to $3.24 billionc (18.0% margin) and Prepared Foods to $1.46 billion (16.4%), while Chicken swung to an operating loss of $625 million (a -4.6% margin) and Pork margin fell to 5.2%. Cash generation and balance sheet strength improved. Operating cash flow was $3.84 billion, and cash and cash equivalents were $2.51 billion at year-end.
Total debt fell to $9.35 billiond from $11.34 billion, and net debt to EBITDA improved to 1.2x from 2.3x. The company had $4.8 billion of liquidity and a $2.25 billion revolving credit facility, and it expects fiscal 2022 capital spending of about $2 billion. Management is launching a productivity program targeting $1 billion in savings by fiscal 2024 relative to a fiscal 2021 cost baseline, and it raised the quarterly dividend to $0.46 per Class A share.
Investors should also note governance and risk factors. The Tyson Limited Partnership controls approximately 71.04% of total voting power, and Walmart Inc. accounted for 18.3% of fiscal 2021 consolidated sales.
Goodwill and indefinite-life intangibles totaled $14.6 billion, about 40% of total assets, and the Chicken segment's goodwill passed impairment testing only under normalized margin assumptions. COVID-19 related direct incremental expenses were approximately $335 million in fiscal 2021.
02—Key points
Key Highlights
- Sales rose 9% to $47.0 billion, with average sales price up 13.0% while sales volume declined 2.8%.
- Operating income increased to $4.40 billion from $3.01 billion, including a $784 million gain on the pet treats business sale and $626 million of legal contingency charges.
- Net income attributable to Tyson was $3.05 billion, or $8.34 per diluted share, compared with $5.64 per diluted share in fiscal 2020.
- Segment results diverged: Beef operating income reached $3.24 billion (18.0% margin), while Chicken posted an operating loss of $625 million (-4.6% margin).
- Total debt declined to $9.35 billion from $11.34 billion, and net debt to EBITDA improved to 1.2x from 2.3x.
- Operating cash flow was $3.84 billion, and capital spending for fiscal 2022 is expected to be about $2 billion.
- The Tyson Limited Partnership holds approximately 71.04% of total voting power, and Walmart Inc. accounted for 18.3% of fiscal 2021 consolidated sales.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Tyson Foods kept $0.06.
- Revenue$47.05B100.0%
- Cost of revenue−$40.52B86.1%
- Gross profit$6.53B13.9%
- Operating costs−$2.13B4.5%
- Operating income$4.40B9.3%
- Interest, other & tax−$1.35B2.9%
- Net income$3.05B6.5%
Where FY2021 revenue went
$47.05B- Cost of revenue: $40.52B, 86% of revenue
- Net income: $3.05B, 6.5% of revenue
- R&D: $114.0M, 0.2% of revenue
- SG&A: $2.13B, 4.5% of revenue
- Interest, other & tax: $1.35B, 2.9% of revenue
Kept 6.5% as net incomeNet income $3.05B · 6.5%R&D $114.0M · 0.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed November 15, 2021Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $47.05B$43.19B | +8.9% |
| Cost of Revenue | $40.52B$37.80B | +7.2% |
| Gross Profit | $6.53B$5.38B | +21.2% |
| R&D Expenses | $114.00M$98.00M | +16.3% |
| SG&A Expenses | $2.13B$2.38B | −10.4% |
| Operating Income | $4.40B$3.01B | +46.1% |
| Net Income | $3.05B$2.06B | +47.8% |
| EPS (Diluted) | $8.34$5.64 | +47.9% |
| Shares Outstanding (Diluted) | 365.00M365.00M | 0.0% |
05—Questions
Frequently Asked Questions
What drove the increase in Tyson's fiscal 2021 sales and operating income?
Sales grew 9% to $47.0 billion, primarily due to a $5.6 billion increase from higher average sales prices, partially offset by a $1.19 billion decline from lower volume. Operating income rose to $4.40 billion, helped by the $784 million pet treats gain and strong Beef results, partly offset by $626 million of legal contingency accruals and a decline in Chicken and Pork.
Why did the Chicken segment post an operating loss?
Chicken's operating loss of $625 million was driven primarily by the $626 million legal contingency accrual, $735 million of higher feed ingredient costs compared with fiscal 2020, and increased supply chain costs, a decline in hatch rate, and severe weather disruptions. These were partly offset by favorable product mix and $65 million of net derivative gains.
How much legal exposure does Tyson disclose?
At October 2, 2021, the accrued current legal contingencies totaled $567 million on the balance sheet. The broiler antitrust litigation accrual was $465 million at year-end. The company also disclosed pending matters, including the DOJ antitrust investigation, state attorney general complaints, pork and beef antitrust suits, and a Philippines labor matter, for which it did not record liabilities in some cases because losses were not considered probable or estimable.
How does control by the Tyson family affect public shareholders?
The Tyson Limited Partnership owned 99.985% of Class B stock, and together with Tyson family members held 2.28% of Class A stock, giving them approximately 71.04% of total voting power. The filing states this concentration may delay or prevent a change in control favored by other shareholders, and that Tyson is eligible for controlled company exemptions from certain NYSE governance requirements.
What are Tyson's capital return and cash position plans for fiscal 2022?
Tyson paid $636 million in dividends in fiscal 2021 and increased the quarterly dividend to $0.46 per Class A share and $0.414 per Class B share, which the company expects to represent a 3% increase in the annual dividend rate for fiscal 2022. Year-end cash and cash equivalents were $2.51 billion, total liquidity was $4.8 billion, and the company expects to repay its $1.07 billion of current debt from operating cash flow and other liquidity sources.
06—Continue