01—Abstract
Summary
Summary of the 10-Q filed May 6, 2024. Cited figures are marked; the original filing is the authoritative source.
Tyson Foods, Inc. reported second-quarter fiscal 2024 sales of $13.07 billiona (vs. $13.13 billion a year earlier), with operating income of $312 million compared with an operating loss of $49 million in the prior-year quarter.
Net income attributable to Tyson was $145 millionb, or $0.41 per diluted share, versus a net loss of $97 million, or $(0.28) per diluted share, in the second quarter of fiscal 2023. For the first six months, sales were $26.39 billion and operating income was $543 million, compared with $418 million a year earlier. Chicken operating income improved to $158 million from an operating loss of $258 million, helped by lower feed ingredient costs, while Beef swung to an operating loss of $35 million in the quarter and $241 million for the six months, reflecting higher cattle costs and compressed beef margins.
The second quarter also absorbed $54 millionc of costs related to a production facility fire and planned discontinuation of productive assets in the Netherlands, and $39 million of plant closure charges. Balance sheet and liquidity changed meaningfully during the period. Cash and cash equivalents rose to $2.18 billion from $573 million at fiscal year-end 2023, and total debt increased to $10.96 billion from $9.51 billion, largely due to $1.5 billion of senior notes issued in March 2024 and a new $750 million term loan.
The company reported $4.4 billiond of liquidity at March 30, 2024, and stated it was in compliance with all debt covenants. Cash provided by operating activities for the first six months was $1.18 billion, compared with $769 million a year earlier, while capital expenditures fell to $621 million from $1.10 billion. The filing also details ongoing antitrust litigation in the broiler, pork and beef businesses, including a $72.5 million proposed settlement in the wage rate litigation, and states the company does not expect the outcome of other matters to have a material adverse effect.
02—Key points
Key Highlights
- Second-quarter sales were $13.07 billion, down slightly from $13.13 billion, with sales volume decreasing 1.5% and average sales price increasing 1.0%.
- Operating income rose to $312 million from an operating loss of $49 million a year earlier, driven by Chicken segment operating income of $158 million versus a $258 million loss.
- Beef segment posted an operating loss of $35 million in the quarter and $241 million for the six months, citing compressed beef margins and higher cattle costs of approximately $900 million for the six months.
- Net income attributable to Tyson was $145 million, or $0.41 per diluted share, compared with a net loss of $97 million, or $(0.28) per diluted share, in the prior-year quarter.
- Total debt increased to $10.96 billion from $9.51 billion, including $1.5 billion of senior notes issued in March 2024; cash and cash equivalents reached $2.18 billion.
- Second-quarter results included $54 million of Netherlands facility fire and asset discontinuation costs and $39 million of plant closure charges.
- Cash provided by operating activities was $1.18 billion for the six months, up from $769 million, while capital expenditures declined to $621 million from $1.10 billion.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2024, Tyson Foods kept $0.01.
- Revenue$13.07B100.0%
- Cost of revenue−$12.21B93.4%
- Gross profit$866.0M6.6%
- Operating costs−$554.0M4.2%
- Operating income$312.0M2.4%
- Interest, other & tax−$167.0M1.3%
- Net income$145.0M1.1%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed May 6, 2024Financial Statements
| Revenue | $13.07B |
| Cost of Revenue | $12.21B |
| Gross Profit | $866.00M |
| SG&A Expenses | $554.00M |
| Operating Income | $312.00M |
| Interest Expense | $111.00M |
| Net Income | $145.00M |
| EPS (Diluted) | $0.41 |
| Shares Outstanding (Diluted) | 355.00M |
05—Questions
Frequently Asked Questions
How did Tyson's profitability change in the second quarter of fiscal 2024?
Operating income was $312 million, compared with an operating loss of $49 million in the second quarter of fiscal 2023. Net income attributable to Tyson was $145 million, or $0.41 per diluted share, versus a net loss of $97 million, or $(0.28) per diluted share, a year earlier. The improvement was led by the Chicken segment, which benefited from lower feed ingredient costs and improved operational efficiencies.
Why did the Beef segment underperform?
The Beef segment recorded an operating loss of $35 million in the second quarter and $241 million for the first six months of fiscal 2024. The filing attributes this to compressed beef margins, limited supply of market-ready cattle, and increased cattle costs of approximately $900 million for the six months. The six-month results also included a $45 million legal contingency accrual and $41 million of plant closure costs.
How did Tyson's debt and liquidity position change?
Total debt rose to $10.96 billion at March 30, 2024, from $9.51 billion at September 30, 2023. In March 2024 the company issued $1.5 billion of senior notes and drew $750 million on a term loan due May 2028. Cash and cash equivalents increased to $2.18 billion, and total liquidity was $4.4 billion. The company said it intends to use remaining note proceeds to retire the August 2024 notes and said it was in compliance with all debt covenants.
What significant legal matters did Tyson disclose?
Tyson continues to face broiler, pork and beef antitrust litigation, as well as a wage rate litigation matter. The company recorded a $72.5 million accrual for a proposed settlement of the wage rate class action, which remains subject to court approval. The broiler antitrust accrual was $103 million at March 30, 2024, down from $184 million, due to payments. The filing also notes a Mexican tax assessment of approximately $528 million, for which no liability has been recorded because management believes it has no merit.
What is management's outlook on capital spending and interest expense?
Tyson expects fiscal 2024 capital expenditures between $1.2 billion and $1.4 billion and net interest expense of approximately $400 million. The company also expects to continue plant closure activity, with the Perry, Iowa pork facility expected to cease operations in the third quarter of fiscal 2024.
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