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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Tyson Foods | NYSE:TSN | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
1.38 | 2.26% | 62.33 | 62.04 | 60.80 | 61.21 | 3,879,709 | 01:00:00 |
(in millions, except per share data) | Second Quarter | Six Months Ended | |||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Sales | $ | 9,773 | $ | 9,083 | $ | 20,002 | $ | 18,265 | |||||||
Operating Income | 498 | 571 | 1,425 | 1,553 | |||||||||||
Net Income | 316 | 341 | 1,948 | 935 | |||||||||||
Less: Net Income Attributable to Noncontrolling Interests | 1 | 1 | 2 | 2 | |||||||||||
Net Income Attributable to Tyson | $ | 315 | $ | 340 | $ | 1,946 | $ | 933 | |||||||
Net Income Per Share Attributable to Tyson | $ | 0.85 | $ | 0.92 | $ | 5.25 | $ | 2.51 | |||||||
Adjusted¹ Operating Income | $ | 694 | $ | 623 | $ | 1,644 | $ | 1,605 | |||||||
Adjusted¹ Net Income Per Share Attributable to Tyson | $ | 1.27 | $ | 1.01 | $ | 3.08 | $ | 2.60 | |||||||
1 Adjusted operating income and adjusted net income per share attributable to Tyson, or Adjusted EPS, are non-GAAP financial measures and are explained and reconciled to a comparable GAAP measure at the end of this release. Adjusted net income per share attributable to Tyson guidance is provided on a non-GAAP basis because certain information necessary to calculate such measure on a GAAP basis is unavailable, dependent on future events outside of our control and cannot be predicted without unreasonable efforts by the Company. A further explanation of providing non-GAAP guidance is included at the end of this release.
First Six Months Highlights
Second Quarter Highlights
Tax Reform Impact
Guidance
"We are continuing to grow our business as we create a modern food company focused on protein,” said Tom Hayes, president and chief executive officer of Tyson Foods. “Sales, volume, adjusted operating income and adjusted EPS all increased in the fiscal second quarter vs. the same period last year. Up against challenging conditions, we delivered solid results in all four of our segments.
“We’ve built a strong foundation of sustainable growth that positions us well for the second half of the fiscal year and beyond. We’re outpacing the food and beverage industry today - and looking ahead, we'll keep challenging the status quo and drive growth across our iconic brands.”
SEGMENT RESULTS (in millions)
Sales | ||||||||||||||||||||
(for the second quarter ended March 31, 2018, and April 1, 2017) | ||||||||||||||||||||
Second Quarter | Six Months Ended | |||||||||||||||||||
Volume | Avg. Price | Volume | Avg. Price | |||||||||||||||||
2018 | 2017 | Change | Change | 2018 | 2017 | Change | Change | |||||||||||||
Beef | $ | 3,681 | $ | 3,487 | 1.8 | % | 3.7 | % | $ | 7,567 | $ | 7,015 | 3.2 | % | 4.5 | % | ||||
Pork | 1,265 | 1,302 | (1.1 | )% | (1.8 | )% | 2,548 | 2,554 | (1.9 | )% | 1.6 | % | ||||||||
Chicken | 2,959 | 2,798 | 2.0 | % | 3.6 | % | 5,956 | 5,504 | 4.6 | % | 3.4 | % | ||||||||
Prepared Foods | 2,147 | 1,751 | 10.9 | % | 10.6 | % | 4,439 | 3,646 | 11.3 | % | 9.4 | % | ||||||||
Other | 82 | 82 | (7.1 | )% | 8.9 | % | 170 | 172 | (5.3 | )% | 4.7 | % | ||||||||
Intersegment Sales | (361 | ) | (337 | ) | n/a | n/a | (678 | ) | (626 | ) | n/a | n/a | ||||||||
Total | $ | 9,773 | $ | 9,083 | 1.9 | % | 5.6 | % | $ | 20,002 | $ | 18,265 | 3.5 | % | 5.8 | % |
Operating Income (Loss) | ||||||||||||||||||||
(for the second quarter ended March 31, 2018, and April 1, 2017) | ||||||||||||||||||||
Second Quarter | Six Months Ended | |||||||||||||||||||
Operating Margin | Operating Margin | |||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||||||||||||
Beef | $ | 92 | $ | 126 | 2.5 | % | 3.6 | % | $ | 348 | $ | 425 | 4.6 | % | 6.1 | % | ||||
Pork | 67 | 141 | 5.3 | % | 10.8 | % | 218 | 388 | 8.6 | % | 15.2 | % | ||||||||
Chicken | 231 | 233 | 7.8 | % | 8.3 | % | 503 | 496 | 8.4 | % | 9.0 | % | ||||||||
Prepared Foods | 123 | 87 | 5.7 | % | 5.0 | % | 384 | 277 | 8.7 | % | 7.6 | % | ||||||||
Other | (15 | ) | (16 | ) | n/a | n/a | (28 | ) | (33 | ) | n/a | n/a | ||||||||
Total | $ | 498 | $ | 571 | 5.1 | % | 6.3 | % | $ | 1,425 | $ | 1,553 | 7.1 | % | 8.5 | % | ||||
Note: On June 7, 2017, we acquired and consolidated AdvancePierre Foods Holdings, Inc. ("AdvancePierre"), a producer and distributor of value-added, convenient, ready-to-eat sandwiches, sandwich components and other entrées and snacks. AdvancePierre's results from operations subsequent to the acquisition closing are included in the Prepared Foods and Chicken segments.
Adjusted Segment Results (in millions)
Adjusted Operating Income (Loss) (Non-GAAP) | ||||||||||||||||||||
(for the second quarter ended March 31, 2018, and April 1, 2017) | ||||||||||||||||||||
Second Quarter | Six Months Ended | |||||||||||||||||||
Adjusted Operating Margin (Non-GAAP) | Adjusted Operating Margin (Non-GAAP) | |||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||||||||||||
Beef | $ | 120 | $ | 126 | 3.3 | % | 3.6 | % | $ | 377 | $ | 425 | 5.0 | % | 6.1 | % | ||||
Pork | 79 | 141 | 6.2 | % | 10.8 | % | 231 | 388 | 9.1 | % | 15.2 | % | ||||||||
Chicken | 288 | 233 | 9.7 | % | 8.3 | % | 569 | 496 | 9.6 | % | 9.0 | % | ||||||||
Prepared Foods | 222 | 139 | 10.3 | % | 7.9 | % | 495 | 329 | 11.2 | % | 9.0 | % | ||||||||
Other | (15 | ) | (16 | ) | n/a | n/a | (28 | ) | (33 | ) | n/a | n/a | ||||||||
Total | $ | 694 | $ | 623 | 7.1 | % | 6.9 | % | $ | 1,644 | $ | 1,605 | 8.2 | % | 8.8 | % | ||||
Note: Adjusted operating income is a non-GAAP financial measure and is explained and reconciled to a comparable GAAP measure at the end of this release.
Adjusted operating income and adjusted operating margin are presented as supplementary measures in the evaluation of our business that are not required by, or presented in accordance with, GAAP. We use adjusted operating income and adjusted operating margin as internal performance measurements and as two criteria for evaluating our performance relative to that of our peers. We believe adjusted operating income and adjusted operating margin are meaningful to our investors to enhance their understanding of our financial performance and are frequently used by securities analysts, investors and other interested parties to compare our performance with the performance of other companies that report adjusted operating income and adjusted operating margin. Further, we believe that adjusted operating income and adjusted operating margin are useful measures because they improve comparability of results of operations from period to period. Adjusted operating income and adjusted operating margin should not be considered as substitutes for operating income, operating margin or any other measure of operating performance reported in accordance with GAAP. Investors should rely primarily on our GAAP results and use non-GAAP financial measures only supplementally in making investment decisions. Our calculation of adjusted operating income and adjusted operating margin may not be comparable to similarly titled measures reported by other companies.
Summary of Segment Results
OutlookIn fiscal 2018, USDA indicates domestic protein production (beef, pork, chicken and turkey) should increase approximately 3% from fiscal 2017 levels, but strong export markets should partially absorb the increase. As previously announced, in the fourth quarter of fiscal 2017, our Board of Directors approved a multi-year restructuring program (the “Financial Fitness Program”), that is expected to contribute to the Company’s overall strategy of financial fitness through increased operational effectiveness and overhead reduction. Through a combination of synergies from the integration of AdvancePierre and additional elimination of non-value added costs, the program is estimated to result in net savings of $200 million in fiscal 2018, $400 million in fiscal 2019 including new savings of $200 million, and $600 million in fiscal 2020 including additional savings of $200 million. The majority of these savings, which are focused on supply chain, procurement, and overhead improvements, are expected to be realized in the Prepared Foods and Chicken segments. The following is a summary of the outlook for each of our segments, as well as an outlook for sales, capital expenditures, net interest expense, liquidity, tax rate impact due to tax reform and share repurchases for fiscal 2018.
Adjusted operating margin guidance is provided below on a non-GAAP basis. The Company is not able to reconcile its full-year fiscal 2018 adjusted operating margin guidance to its full-year fiscal 2018 projected GAAP operating margin guidance because certain information necessary to calculate such measure on a GAAP basis is unavailable or dependent on the timing of future events outside of our control. Therefore, because of the uncertainty and variability of the nature of the amount of future adjustments, which could be significant, the Company is unable to provide a reconciliation of this measure without unreasonable effort. Adjusted operating margin should not be considered a substitute for operating margin or any other measure of financial performance reported in accordance with GAAP. Investors should rely primarily on the Company’s GAAP results and use non-GAAP financial measures only supplementally in making investment decisions.
TYSON FOODS, INC.CONSOLIDATED CONDENSED STATEMENTS OF INCOME(In millions, except per share data)(Unaudited)
Three Months Ended | Six Months Ended | ||||||||||||||
March 31, 2018 | April 1, 2017 | March 31, 2018 | April 1, 2017 | ||||||||||||
Sales | $ | 9,773 | $ | 9,083 | $ | 20,002 | $ | 18,265 | |||||||
Cost of Sales | 8,753 | 8,036 | 17,531 | 15,735 | |||||||||||
Gross Profit | 1,020 | 1,047 | 2,471 | 2,530 | |||||||||||
Selling, General and Administrative | 522 | 476 | 1,046 | 977 | |||||||||||
Operating Income | 498 | 571 | 1,425 | 1,553 | |||||||||||
Other (Income) Expense: | |||||||||||||||
Interest income | (2 | ) | (1 | ) | (4 | ) | (3 | ) | |||||||
Interest expense | 86 | 56 | 174 | 114 | |||||||||||
Other, net | (9 | ) | (3 | ) | (10 | ) | 11 | ||||||||
Total Other (Income) Expense | 75 | 52 | 160 | 122 | |||||||||||
Income before Income Taxes | 423 | 519 | 1,265 | 1,431 | |||||||||||
Income Tax Expense (Benefit) | 107 | 178 | (683 | ) | 496 | ||||||||||
Net Income | 316 | 341 | 1,948 | 935 | |||||||||||
Less: Net Income Attributable to Noncontrolling Interests | 1 | 1 | 2 | 2 | |||||||||||
Net Income Attributable to Tyson | $ | 315 | $ | 340 | $ | 1,946 | $ | 933 | |||||||
Weighted Average Shares Outstanding: | |||||||||||||||
Class A Basic | 296 | 295 | 296 | 296 | |||||||||||
Class B Basic | 70 | 70 | 70 | 70 | |||||||||||
Diluted | 370 | 370 | 371 | 371 | |||||||||||
Net Income Per Share Attributable to Tyson: | |||||||||||||||
Class A Basic | $ | 0.88 | $ | 0.95 | $ | 5.42 | $ | 2.59 | |||||||
Class B Basic | $ | 0.78 | $ | 0.86 | $ | 4.87 | $ | 2.35 | |||||||
Diluted | $ | 0.85 | $ | 0.92 | $ | 5.25 | $ | 2.51 | |||||||
Dividends Declared Per Share: | |||||||||||||||
Class A | $ | 0.300 | $ | 0.225 | $ | 0.675 | $ | 0.525 | |||||||
Class B | $ | 0.270 | $ | 0.203 | $ | 0.608 | $ | 0.473 | |||||||
Sales Growth | 7.6 | % | 9.5 | % | |||||||||||
Margins: (Percent of Sales) | |||||||||||||||
Gross Profit | 10.4 | % | 11.5 | % | 12.4 | % | 13.9 | % | |||||||
Operating Income | 5.1 | % | 6.3 | % | 7.1 | % | 8.5 | % | |||||||
Net Income Attributable to Tyson | 3.2 | % | 3.7 | % | 9.7 | % | 5.1 | % | |||||||
Effective Tax Rate | 25.3 | % | 34.3 | % | -54.0 | % | 34.7 | % | |||||||
TYSON FOODS, INC.CONSOLIDATED CONDENSED BALANCE SHEETS(In millions)(Unaudited)
March 31, 2018 | September 30, 2017 | ||||||
Assets | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 198 | $ | 318 | |||
Accounts receivable, net | 1,594 | 1,675 | |||||
Inventories | 3,328 | 3,239 | |||||
Other current assets | 228 | 219 | |||||
Assets held for sale | 642 | 807 | |||||
Total Current Assets | 5,990 | 6,258 | |||||
Net Property, Plant and Equipment | 5,755 | 5,568 | |||||
Goodwill | 9,404 | 9,324 | |||||
Intangible Assets, net | 6,231 | 6,243 | |||||
Other Assets | 711 | 673 | |||||
Total Assets | $ | 28,091 | $ | 28,066 | |||
Liabilities and Shareholders’ Equity | |||||||
Current Liabilities: | |||||||
Current debt | $ | 1,128 | $ | 906 | |||
Accounts payable | 1,485 | 1,698 | |||||
Other current liabilities | 1,217 | 1,424 | |||||
Liabilities held for sale | 8 | 4 | |||||
Total Current Liabilities | 3,838 | 4,032 | |||||
Long-Term Debt | 8,872 | 9,297 | |||||
Deferred Income Taxes | 2,039 | 2,979 | |||||
Other Liabilities | 1,186 | 1,199 | |||||
Total Tyson Shareholders’ Equity | 12,136 | 10,541 | |||||
Noncontrolling Interests | 20 | 18 | |||||
Total Shareholders’ Equity | 12,156 | 10,559 | |||||
Total Liabilities and Shareholders’ Equity | $ | 28,091 | $ | 28,066 | |||
TYSON FOODS, INC.CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS(In millions)(Unaudited)
Six Months Ended | |||||||
March 31, 2018 | April 1, 2017 | ||||||
Cash Flows From Operating Activities: | |||||||
Net income | $ | 1,948 | $ | 935 | |||
Depreciation and amortization | 459 | 356 | |||||
Deferred income taxes | (938 | ) | (28 | ) | |||
Other, net | 132 | 88 | |||||
Net changes in operating assets and liabilities | (462 | ) | (369 | ) | |||
Cash Provided by Operating Activities | 1,139 | 982 | |||||
Cash Flows From Investing Activities: | |||||||
Additions to property, plant and equipment | (559 | ) | (467 | ) | |||
Purchases of marketable securities | (22 | ) | (30 | ) | |||
Proceeds from sale of marketable securities | 21 | 29 | |||||
Acquisition, net of cash acquired | (226 | ) | — | ||||
Proceeds from sale of business | 125 | — | |||||
Other, net | (25 | ) | (10 | ) | |||
Cash Used for Investing Activities | (686 | ) | (478 | ) | |||
Cash Flows From Financing Activities: | |||||||
Payments on debt | (432 | ) | (45 | ) | |||
Borrowings on revolving credit facility | 1,420 | 1,680 | |||||
Payments on revolving credit facility | (1,420 | ) | (1,977 | ) | |||
Proceeds from issuance of commercial paper | 10,837 | 725 | |||||
Repayments of commercial paper | (10,615 | ) | (225 | ) | |||
Purchases of Tyson Class A common stock | (237 | ) | (733 | ) | |||
Dividends | (216 | ) | (158 | ) | |||
Stock options exercised | 87 | 83 | |||||
Other, net | — | 41 | |||||
Cash Used for Financing Activities | (576 | ) | (609 | ) | |||
Effect of Exchange Rate Changes on Cash | 3 | (1 | ) | ||||
Decrease in Cash and Cash Equivalents | (120 | ) | (106 | ) | |||
Cash and Cash Equivalents at Beginning of Year | 318 | 349 | |||||
Cash and Cash Equivalents at End of Period | $ | 198 | $ | 243 | |||
TYSON FOODS, INC.EBITDA Reconciliations(In millions)(Unaudited)
Six Months Ended | Fiscal Year Ended | Twelve Months Ended | ||||||||||||
March 31, 2018 | April 1, 2017 | September 30, 2017 | March 31, 2018 | |||||||||||
Net income | $ | 1,948 | $ | 935 | $ | 1,778 | $ | 2,791 | ||||||
Less: Interest income | (4 | ) | (3 | ) | (7 | ) | (8 | ) | ||||||
Add: Interest expense | 174 | 114 | 279 | 339 | ||||||||||
Add: Income tax expense (benefit) | (683 | ) | 496 | 850 | (329 | ) | ||||||||
Add: Depreciation | 353 | 314 | 642 | 681 | ||||||||||
Add: Amortization (a) | 101 | 38 | 106 | 169 | ||||||||||
EBITDA | $ | 1,889 | $ | 1,894 | $ | 3,648 | $ | 3,643 | ||||||
Adjustments to EBITDA: | ||||||||||||||
Add: One-time cash bonus to frontline employees | $ | 109 | $ | — | $ | — | $ | 109 | ||||||
Add: AdvancePierre purchase accounting and acquisition related costs (b) | — | — | 103 | 103 | ||||||||||
Add: Impairments net of realized gain associated with the divestiture of non-protein businesses (c) | 79 | — | 45 | 124 | ||||||||||
Add: Restructuring and related charges | 31 | — | 150 | 181 | ||||||||||
Add: San Diego Prepared Foods operation impairment | — | 52 | 52 | 52 | ||||||||||
Total Adjusted EBITDA | $ | 2,108 | $ | 1,946 | $ | 3,998 | $ | 4,212 | ||||||
Pro forma Adjustments to EBITDA: | ||||||||||||||
Add: AdvancePierre adjusted EBITDA (prior to acquisition) (d) | $ | 193 | $ | 48 | ||||||||||
Total Pro forma adjusted EBITDA | $ | 4,191 | $ | 4,260 | ||||||||||
Total gross debt | $ | 10,203 | $ | 10,000 | ||||||||||
Less: Cash and cash equivalents | (318 | ) | (198 | ) | ||||||||||
Less: Short-term investments | (3 | ) | (2 | ) | ||||||||||
Total net debt | $ | 9,882 | $ | 9,800 | ||||||||||
Ratio Calculations: | ||||||||||||||
Gross debt/EBITDA | 2.8x | 2.7x | ||||||||||||
Net debt/EBITDA | 2.7x | 2.7x | ||||||||||||
Gross debt/Adjusted EBITDA | 2.6x | 2.4x | ||||||||||||
Net debt/Adjusted EBITDA | 2.5x | 2.3x | ||||||||||||
Gross debt/Pro forma Adjusted EBITDA | 2.4x | 2.3x | ||||||||||||
Net debt/Pro forma Adjusted EBITDA | 2.4x | 2.3x | ||||||||||||
EBITDA is defined as net income before interest, income taxes, depreciation and amortization. Net debt to EBITDA (Adjusted EBITDA and Pro forma Adjusted EBITDA) represents the ratio of our debt, net of cash and short-term investments, to EBITDA (and to Adjusted EBITDA and Pro forma Adjusted EBITDA). EBITDA, Adjusted EBITDA, net debt to EBITDA and net debt to Adjusted EBITDA (and to Pro forma Adjusted EBITDA) are presented as supplemental financial measurements in the evaluation of our business. Adjusted EBITDA is a tool intended to assist our management and investors in comparing our performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect our core operations on an ongoing basis.
We believe the presentation of these financial measures helps management and investors to assess our operating performance from period to period, including our ability to generate earnings sufficient to service our debt, enhances understanding of our financial performance and highlights operational trends. These measures are widely used by investors and rating agencies in the valuation, comparison, rating and investment recommendations of companies; however, the measurements of EBITDA (and Adjusted EBITDA and Pro forma Adjusted EBITDA) and net debt to EBITDA (and to Adjusted EBITDA and Pro forma Adjusted EBITDA) may not be comparable to those of other companies, which limits their usefulness as comparative measures. EBITDA (and Adjusted EBITDA and Pro forma Adjusted EBITDA) and net debt to EBITDA (and to Adjusted EBITDA and Pro forma Adjusted EBITDA) are not measures required by or calculated in accordance with generally accepted accounting principles (GAAP) and should not be considered as substitutes for net income or any other measure of financial performance reported in accordance with GAAP or as a measure of operating cash flow or liquidity. EBITDA (and Adjusted EBITDA and Pro forma Adjusted EBITDA) is a useful tool for assessing, but is not a reliable indicator of, our ability to generate cash to service our debt obligations because certain of the items added to net income to determine EBITDA (and Adjusted EBITDA and Pro forma Adjusted EBITDA) involve outlays of cash. As a result, actual cash available to service our debt obligations will be different from EBITDA (and Adjusted EBITDA and Pro forma Adjusted EBITDA). Investors should rely primarily on our GAAP results and use non-GAAP financial measures only supplementally in making investment decisions.
TYSON FOODS, INC.EPS Reconciliations(In millions, except per share data)(Unaudited)
Second Quarter | Six Months Ended | ||||||||||||||||||||||||||||||
Pretax Impact | EPS Impact | Pretax Impact | EPS Impact | ||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||
Reported net income per share attributable to Tyson | $ | 0.85 | $ | 0.92 | $ | 5.25 | $ | 2.51 | |||||||||||||||||||||||
Add: One-time cash bonus to frontline employees | $ | 109 | $ | — | 0.22 | — | $ | 109 | $ | — | 0.22 | — | |||||||||||||||||||
Add: Restructuring and related charges | $ | 12 | $ | — | 0.02 | — | $ | 31 | $ | — | 0.06 | — | |||||||||||||||||||
Add: Impairment net of a realized gain associated with the divestiture of non-protein businesses (a) | $ | 75 | $ | — | 0.21 | — | $ | 79 | $ | — | 0.26 | — | |||||||||||||||||||
Add: San Diego Prepared Foods operation impairment | $ | — | $ | 52 | — | 0.09 | $ | — | $ | 52 | — | 0.09 | |||||||||||||||||||
Less: Tax benefit from remeasurement of net deferred tax liabilities at lower enacted tax rates | $ | — | $ | — | (0.03 | ) | — | $ | — | $ | — | (2.71 | ) | — | |||||||||||||||||
Adjusted net income per share attributable to Tyson | $ | 1.27 | $ | 1.01 | $ | 3.08 | $ | 2.60 | |||||||||||||||||||||||
(a) EPS impact for the six months of fiscal 2018 includes $101 million of impairments related to the expected sale of a non-protein business net of a $22 million realized pretax gain associated with the sale of a non-protein business, which combined on an after-tax basis resulted in a $0.26 impact to EPS.
Adjusted net income per share attributable to Tyson (Adjusted EPS) is presented as a supplementary measure of our financial performance that is not required by, or presented in accordance with, GAAP. We use Adjusted EPS as an internal performance measurement and as one criterion for evaluating our performance relative to that of our peers. We believe Adjusted EPS is meaningful to our investors to enhance their understanding of our financial performance and is frequently used by securities analysts, investors and other interested parties to compare our performance with the performance of other companies that report Adjusted EPS. Further, we believe that Adjusted EPS is a useful measure because it improves comparability of results of operations from period to period. Adjusted EPS should not be considered a substitute for net income per share attributable to Tyson or any other measure of financial performance reported in accordance with GAAP. Investors should rely primarily on our GAAP results and use non-GAAP financial measures only supplementally in making investment decisions. Our calculation of Adjusted EPS may not be comparable to similarly titled measures reported by other companies.
Adjusted EPS guidance is provided on a non-GAAP basis. The Company is not able to reconcile its full-year fiscal 2018 Adjusted EPS guidance to its full-year fiscal 2018 projected GAAP EPS guidance because certain information necessary to calculate such measure on a GAAP basis is unavailable or dependent on the timing of future events outside of our control. Therefore, because of the uncertainty and variability of the nature of the amount of future adjustments, which could be significant, the Company is unable to provide a reconciliation of this measure without unreasonable effort.
TYSON FOODS, INC.Operating Income Reconciliation(In millions)(Unaudited)
Adjusted Operating Income (Loss) | ||||||||||||||||||
(for the Second quarter ended March 31, 2018) | ||||||||||||||||||
Beef | Pork | Chicken | Prepared Foods | Other | Total | |||||||||||||
Reported operating income (loss) | $ | 92 | $ | 67 | $ | 231 | $ | 123 | $ | (15 | ) | $ | 498 | |||||
Add: One-time cash bonus to frontline employees | 27 | 12 | 51 | 19 | — | 109 | ||||||||||||
Add: Restructuring and related charges | 1 | — | 6 | 5 | — | 12 | ||||||||||||
Add: Impairment associated with the divestiture of a non-protein business | — | — | — | 75 | — | 75 | ||||||||||||
Adjusted operating income (loss) | $ | 120 | $ | 79 | $ | 288 | $ | 222 | $ | (15 | ) | $ | 694 | |||||
Adjusted Operating Income (Loss) | ||||||||||||||||||
(for the Second quarter ended April 1, 2017) | ||||||||||||||||||
Beef | Pork | Chicken | Prepared Foods | Other | Total | |||||||||||||
Reported operating income (loss) | $ | 126 | $ | 141 | $ | 233 | $ | 87 | $ | (16 | ) | $ | 571 | |||||
Add: San Diego Prepared Foods operation impairment | — | — | — | 52 | — | 52 | ||||||||||||
Adjusted operating income (loss) | $ | 126 | $ | 141 | $ | 233 | $ | 139 | $ | (16 | ) | $ | 623 | |||||
Adjusted Operating Income (Loss) | ||||||||||||||||||
(for the Six months ended March 31, 2018) | ||||||||||||||||||
Beef | Pork | Chicken | Prepared Foods | Other | Total | |||||||||||||
Reported operating income (loss) | $ | 348 | $ | 218 | $ | 503 | $ | 384 | $ | (28 | ) | $ | 1,425 | |||||
Add: One-time cash bonus to frontline employees | 27 | 12 | 51 | 19 | — | 109 | ||||||||||||
Add: Restructuring and related charges | 2 | 1 | 15 | 13 | — | 31 | ||||||||||||
Add: Impairment net of a realized gain associated with the divestiture of non-protein businesses (a) | — | — | — | 79 | — | 79 | ||||||||||||
Adjusted operating income (loss) | $ | 377 | $ | 231 | $ | 569 | $ | 495 | $ | (28 | ) | $ | 1,644 | |||||
(a) Operating income impact for the six months of fiscal 2018 includes $101 million of impairments related to the expected sale of a non-protein business net of a $22 million realized pretax gain associated with the sale of a non-protein business.
Adjusted Operating Income (Loss) | ||||||||||||||||||
(for the Six months ended April 1, 2017) | ||||||||||||||||||
Beef | Pork | Chicken | Prepared Foods | Other | Total | |||||||||||||
Reported operating income (loss) | $ | 425 | $ | 388 | $ | 496 | $ | 277 | $ | (33 | ) | $ | 1,553 | |||||
Add: San Diego Prepared Foods operation impairment | — | — | — | 52 | — | 52 | ||||||||||||
Adjusted operating income (loss) | $ | 425 | $ | 388 | $ | 496 | $ | 329 | $ | (33 | ) | $ | 1,605 | |||||
Adjusted operating income is presented as a supplementary measure of our operating performance that is not required by, or presented in accordance with, GAAP. We use adjusted operating income as an internal performance measurement and as one criterion for evaluating our performance relative to that of our peers. We believe adjusted operating income is meaningful to our investors to enhance their understanding of our operating performance and is frequently used by securities analysts, investors and other interested parties to compare our performance with the performance of other companies that report adjusted operating income. Further, we believe that adjusted operating income is a useful measure because it improves comparability of results of operations from period to period. Adjusted operating income should not be considered as a substitute for operating income or any other measure of operating performance reported in accordance with GAAP. Investors should rely primarily on our GAAP results and use non-GAAP financial measures only supplementally in making investment decisions. Our calculation of adjusted operating income may not be comparable to similarly titled measures reported by other companies.
Tyson Foods Inc. (NYSE:TSN) is one of the world’s largest food companies and a recognized leader in protein. Founded in 1935 by John W. Tyson and grown under three generations of family leadership, the company has a broad portfolio of products and brands like Tyson®, Jimmy Dean®, Hillshire Farm®, Ball Park®, Wright®, Aidells®, ibp® and State Fair®. Tyson Foods innovates continually to make protein more sustainable, tailor food for everywhere it’s available and raise the world’s expectations for how much good food can do. Headquartered in Springdale, Arkansas, the company had 122,000 team members at September 30, 2017. Through its Core Values, Tyson Foods strives to operate with integrity, create value for its shareholders, customers, communities and team members and serve as a steward of the animals, land and environment entrusted to it. Visit www.tysonfoods.com.
A conference call to discuss the Company's financial results will be held at 9 a.m. Eastern Monday, May 7, 2018. Participants may pre-register for the call at http://dpregister.com/10119631. Callers who pre-register will be given a conference passcode and unique PIN to gain immediate access to the call and bypass the live operator. Participants may pre-register at any time, including up to and after the call start time. Those without internet access or who are unable to pre-register may dial-in by calling toll free 1-844-890-1795 or international toll 1-412-717-9589.
A live webcast, including slides, will be available on the Tyson Foods Investor Relations website at http://ir.tyson.com. The webcast also can be accessed by using the direct link https://event.on24.com/wcc/r/1628033/522F15434B76C9B8CC93847A78A80430. A replay of the call will be available until June 7, 2018, toll free at 1-877-344-7529, international toll 1-412-317-0088 or Canada toll free 855-669-9658. The replay access code is 10119631. Financial information, such as this news release, as well as other supplemental data, can be accessed from the Company's web site at http://ir.tyson.com.
To download TSN’s free investor relations app, which offers access to SEC filings, news releases, transcripts, webcasts and presentations, please visit the App Store or https://itunes.apple.com/us/app/tyson-foods-investor-relations/id924277754?ls=1&mt=8 for iPhone, and iPad or Google Play for Android mobile devices at https://play.google.com/store/apps/details?id=com.theirapp.tyson.
Forward-Looking StatementsCertain information contained in the press release may constitute forward-looking statements, including but not limited to statements relating to expected performance, statements appearing in the “Outlook” section and statements relating to adjusted EPS guidance and synergies estimates. 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) 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; (ii) 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; (iii) 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; (iv) the integration of AdvancePierre Foods Holdings, Inc.; (v) the effectiveness of our financial fitness program; (vi) the implementation of an enterprise resource planning system; (vii) access to foreign markets together with foreign economic conditions, including currency fluctuations, import/export restrictions and foreign politics; (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) effectiveness of advertising and marketing programs; (xii) our ability to leverage brand value propositions; (xiii) risks associated with leverage, including cost increases due to rising interest rates or changes in debt ratings or outlook; (xiv) impairment in the carrying value of our goodwill or indefinite life intangible assets; (xv) 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; (xvi) adverse results from litigation; (xvii) cyber incidents, security breaches or other disruptions of our information technology systems; (xviii) our ability to make effective acquisitions or joint ventures and successfully integrate newly acquired businesses into existing operations; (xix) risks associated with our commodity purchasing activities; (xx) the effect of, or changes in, general economic conditions; (xxi) significant marketing plan changes by large customers or loss of one or more large customers; (xxii) impacts on our operations caused by factors and forces beyond our control, such as natural disasters, fire, bioterrorism, pandemics or extreme weather; (xxiii) failure to maximize or assert our intellectual property rights; (xxiv) our participation in a multiemployer pension plan; (xxv) the Tyson Limited Partnership’s ability to exercise significant control over the Company; (xxvi) effects related to changes in tax rates, valuation of deferred tax assets and liabilities, or tax laws and their interpretation; (xxvii) volatility in capital markets or interest rates; and (xxviii) those factors listed under Item 1A. “Risk Factors” included in our Annual Report filed on Form 10-K for the period ended September 30, 2017.
Media Contact: Gary Mickelson, 479-290-6111Investor Contact: Jon Kathol, 479-290-4235
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