01—Abstract
Summary
Summary of the 10-Q filed August 5, 2024. Cited figures are marked; the original filing is the authoritative source.
Tyson Foods, Inc. reported third-quarter fiscal 2024 (ended June 29, 2024) sales of $13.35 billiona, up from $13.14 billion a year earlier, and operating income of $341 million versus an operating loss of $350 million in the prior-year quarter, which included a $448 million goodwill impairment.
For the first nine months, sales were $39.74 billionb and operating income was $884 million, compared with $68 million a year earlier. Net income attributable to Tyson was $191 million ($0.54 per diluted share) for the quarter and $443 million ($1.25 per diluted share) for the nine months. Results were pressured by $101 million of legal contingency accruals and $41 million of plant closure charges in the quarter, and by $174 million of legal accruals and $155 million of plant closure charges for the nine months.
Beef segment operating results were a loss of $69 millionc in the quarter, driven by compressed beef margins, while Chicken operating income rose to $244 million from a loss of $314 million a year earlier. Cash flow and liquidity improved. Cash provided by operating activities was $1.97 billion for the nine months, up from $1.43 billion.
Cash and cash equivalents were $2.57 billiond at June 29, 2024, and total liquidity was $4.83 billion. Total debt rose to $11.02 billion from $9.51 billion at September 30, 2023, mainly due to $1.5 billion of senior notes issued in March 2024 and a new $750 million term loan. Current debt of $1.32 billion is to be repaid with the remaining note proceeds and existing resources.
The company expects capital expenditures of $1.2 billion to $1.3 billion for fiscal 2024 and net interest expense of approximately $395 million. The filing also details ongoing antitrust and wage-related litigation, including a $115.5 million agreement in principle to settle a wage rate class action and a $72.5 million proposed settlement in a separate wage matter, as well as an unaccrued Mexican tax assessment of approximately $481 million that the company disputes. Tyson states it was in compliance with all debt covenants at June 29, 2024.
02—Key points
Key Highlights
- Third-quarter sales of $13.35 billion rose from $13.14 billion, and operating income improved to $341 million from an operating loss of $350 million that included a $448 million goodwill impairment in the prior year.
- Chicken segment operating income reached $244 million in the quarter versus a $314 million loss a year earlier, while Beef segment posted a $69 million operating loss on compressed beef margins.
- Legal contingency accruals of $101 million and plant closure charges of $41 million weighed on third-quarter results; nine-month legal accruals totaled $174 million.
- Diluted earnings per share were $0.54 for the quarter and $1.25 for the nine months, compared with losses of $1.18 and $0.56 in the prior-year periods.
- Operating cash flow for the first nine months was $1.97 billion, up from $1.43 billion, and cash and equivalents increased to $2.57 billion.
- Total debt increased to $11.02 billion from $9.51 billion after issuing $1.5 billion of senior notes in March 2024 and drawing a $750 million term loan; the company reports $4.83 billion of total liquidity.
- Fiscal 2024 guidance includes capital expenditures of $1.2 billion to $1.3 billion and net interest expense of approximately $395 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Tyson Foods kept $0.01.
- Revenue$13.35B100.0%
- Cost of revenue−$12.47B93.4%
- Gross profit$878.0M6.6%
- Operating costs−$537.0M4.0%
- Operating income$341.0M2.6%
- Interest, other & tax−$150.0M1.1%
- Net income$191.0M1.4%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed August 5, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $13.35B$13.13B | +1.7% |
| Cost of Revenue | $12.47B$12.61B | −1.0% |
| Gross Profit | $878.00M$527.00M | +66.6% |
| SG&A Expenses | $537.00M$576.00M | −6.8% |
| Operating Income | $341.00M-$49.00M | +795.9% |
| Net Income | $191.00M-$97.00M | +296.9% |
| EPS (Diluted) | $0.54$-0.28 | +292.9% |
| Shares Outstanding (Diluted) | 356.00M284.00M | +25.4% |
05—Questions
Frequently Asked Questions
How did Tyson's profitability change in the third quarter of fiscal 2024?
Operating income was $341 million compared with an operating loss of $350 million in the third quarter of fiscal 2023, which had included a $448 million goodwill impairment. Net income attributable to Tyson was $191 million, or $0.54 per diluted share, versus a loss of $417 million a year earlier. Chicken's improved results were the main driver, partly offset by a Beef segment loss.
What legal and restructuring charges affected results?
The third quarter included $101 million of pretax legal contingency accruals, including $56 million in the Chicken segment and $45 million in the Pork segment, and $41 million of plant closure charges. For the nine months, legal contingency accruals totaled $174 million and plant closure charges totaled $155 million. Restructuring charges under the 2022 Program were $31 million for the nine months and none in the third quarter.
How much debt does Tyson have and how is it being managed?
Total debt was $11.02 billion at June 29, 2024, up from $9.51 billion at September 30, 2023. The increase reflects $1.5 billion of senior notes issued in March 2024, of which a portion repaid $250 million of a term loan, and a $750 million term loan due May 2028. Current debt of $1.32 billion is expected to be repaid with existing cash, operating cash flow and other liquidity sources. The company stated it was in compliance with all debt covenants.
What are the notable legal matters disclosed in the filing?
Tyson disclosed a wage rate class action for which it reached an agreement in principle to settle for $115.5 million, subject to court approval, and a separate wage matter with a proposed $72.5 million settlement. It also reported ongoing broiler, pork and beef antitrust litigation and government investigations, with accruals recorded for some matters. A Mexican tax assessment of approximately $481 million has not been accrued because the company believes it has no merit.
06—Continue