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Tyson Foods (TSN) Q3 Earnings Miss Estimates, Sales Down Y/Y
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Tyson Foods, Inc. (TSN - Free Report) posted soft results for third-quarter fiscal 2023, with the top and the bottom line declining year over year. Earnings and total sales declined year over year on tough market dynamics.
During the quarter, management announced the closure of four Chicken facilities, which is expected to reduce costs and improve capacity utilization. The company also concluded the acquisition of Williams Sausage Company.
Quarter in Detail
The company has posted adjusted earnings of 15 cents per share, lagging the Zacks Consensus Estimate of earnings of 34 cents. The bottom line significantly declined from earnings of $1.94 reported in the year-ago period.
Total sales were $13,140 million, down 3% compared with the year-ago quarter figure. The top line lagged the Zacks Consensus Estimate of $13,776.4 million. Average price changes had a 2.6% adverse impact on the top line, while total volumes rose 0.3%.
Tyson Foods, Inc. Price, Consensus and EPS Surprise
The gross profit in the quarter came in at $677 million, down from the $1,611 million reported in the prior-year quarter. As a percentage of sales, the gross profit came in at 5.2%, down from the 11.9% reported in the year-ago quarter.
Tyson Foods’ adjusted operating income plunged 82% to $179 million. The adjusted operating margin contracted to 1.4% from the 7.4% reported in the year-ago quarter.
Segmental Details
Beef: Sales in the segment declined to $4,956 million from the $4,959 million reported in the year-ago quarter. Volumes dropped 5.3% and the average price increased 5.2% in the segment.
Pork: Sales in the segment declined to $1,324 million from the $1,619 million reported in the year-ago quarter. Volumes fell 1.8%, while the average price tumbled 16.4%.
Chicken: Sales in the segment declined to $4,212 million from the $4,366 million reported in the year-ago quarter. Sales volumes rose 2.8% and the average price decreased 5.5%.
Prepared Foods: Sales in the segment fell to $2,383 million from the $2,447 million reported in the year-ago quarter. Prepared Foods’ sales volumes dropped 0.7% and the average price decreased 1.9%.
International/Other: Sales in the segment were $633 million, up from the $602 million reported in the year-ago quarter. Volumes inched up 0.5% and the average sales price jumped 4.6%.
Other Financial Updates
The Zacks Rank #3 (Hold) company exited the quarter with cash and cash equivalents of $699 million, long-term debt of $8,863 million and total shareholders’ equity (including non-controlling interests) of $18,910 million. For the nine months ended Jul 1, 2023, cash provided by operating activities amounted to $1,429 million.
Liquidity was $3.7 billion as of Jul 1, 2023. The company entered new term-loan facilities worth $1.75 billion. Management expects liquidity to exceed the company’s minimum target of $1 billion.
In the first nine months of fiscal 2023, the company repurchased 5.4 million shares for $343 million.
Tyson Foods projects capital expenditure of nearly $2.1 billion for fiscal 2023. These include expenditures related to capacity expansion and utilization, automation to battle labor-related hurdles, and product and brand innovation.
Image Source: Zacks Investment Research
Guidance
For fiscal 2023, the United States Department of Agriculture (“USDA”) projects domestic protein production (beef, pork, chicken and turkey) to increase slightly from the fiscal 2022 level.
Starting fiscal 2022, management launched a productivity program to drive a better, faster and more agile organization. The company generated productivity savings of more than $700 million in fiscal 2022. It already exceeded its aggregate target of $1 billion by the end of the second quarter of fiscal 2023, more than a year ahead of its schedule.
Management anticipates sales of $53-$54 billion for fiscal 2023.
Net interest expenses are expected to be $340 million. The adjusted tax rate is likely to be nearly 22% in fiscal 2023.
Segment-Wise Guidance for FY23
For the Beef segment, USDA projects domestic production to fall nearly 3% year over year. For Pork, domestic production is projected to remain nearly flat. Per USDA forecasts, production in the Chicken segment will likely improve by almost 3% in fiscal 2023. For the fiscal, the company expects better results from its foreign operations in the International/Other segment.
TSN’s shares have gained 11.3% in the past three months compared with the industry’s growth of 4.4%.
Some Better-Ranked Staple Bets
Here, we have highlighted three better-ranked stocks, namely TreeHouse Foods, Inc. (THS - Free Report) , Post Holdings (POST - Free Report) and Utz Brands Inc. (UTZ - Free Report) .
The Zacks Consensus Estimate for TreeHouse Foods’ current financial year’s sales suggests a decline of 12.4% from the year-ago reported numbers.
Post Holdings, a consumer-packaged goods holding company, currently has a Zacks Rank #2. POST has a trailing four-quarter earnings surprise of 59.6% on average.
The Zacks Consensus Estimate for Post Holdings’ current fiscal year sales and earnings suggests growth of 13% and 141.1%, respectively, from the corresponding year-ago reported figures.
Utz Brands, which manufactures a diverse portfolio of salty snacks, currently has a Zacks Rank #2. UTZ’s expected EPS growth rate for three to five years is 10.4%.
The Zacks Consensus Estimate for Utz Brands’ current fiscal-year sales suggests growth of 3.5% from the year-ago reported numbers. UTZ has a trailing four-quarter earnings surprise of 16.9% on average.
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Tyson Foods (TSN) Q3 Earnings Miss Estimates, Sales Down Y/Y
Tyson Foods, Inc. (TSN - Free Report) posted soft results for third-quarter fiscal 2023, with the top and the bottom line declining year over year. Earnings and total sales declined year over year on tough market dynamics.
During the quarter, management announced the closure of four Chicken facilities, which is expected to reduce costs and improve capacity utilization. The company also concluded the acquisition of Williams Sausage Company.
Quarter in Detail
The company has posted adjusted earnings of 15 cents per share, lagging the Zacks Consensus Estimate of earnings of 34 cents. The bottom line significantly declined from earnings of $1.94 reported in the year-ago period.
Total sales were $13,140 million, down 3% compared with the year-ago quarter figure. The top line lagged the Zacks Consensus Estimate of $13,776.4 million. Average price changes had a 2.6% adverse impact on the top line, while total volumes rose 0.3%.
Tyson Foods, Inc. Price, Consensus and EPS Surprise
Tyson Foods, Inc. price-consensus-eps-surprise-chart | Tyson Foods, Inc. Quote
The gross profit in the quarter came in at $677 million, down from the $1,611 million reported in the prior-year quarter. As a percentage of sales, the gross profit came in at 5.2%, down from the 11.9% reported in the year-ago quarter.
Tyson Foods’ adjusted operating income plunged 82% to $179 million. The adjusted operating margin contracted to 1.4% from the 7.4% reported in the year-ago quarter.
Segmental Details
Beef: Sales in the segment declined to $4,956 million from the $4,959 million reported in the year-ago quarter. Volumes dropped 5.3% and the average price increased 5.2% in the segment.
Pork: Sales in the segment declined to $1,324 million from the $1,619 million reported in the year-ago quarter. Volumes fell 1.8%, while the average price tumbled 16.4%.
Chicken: Sales in the segment declined to $4,212 million from the $4,366 million reported in the year-ago quarter. Sales volumes rose 2.8% and the average price decreased 5.5%.
Prepared Foods: Sales in the segment fell to $2,383 million from the $2,447 million reported in the year-ago quarter. Prepared Foods’ sales volumes dropped 0.7% and the average price decreased 1.9%.
International/Other: Sales in the segment were $633 million, up from the $602 million reported in the year-ago quarter. Volumes inched up 0.5% and the average sales price jumped 4.6%.
Other Financial Updates
The Zacks Rank #3 (Hold) company exited the quarter with cash and cash equivalents of $699 million, long-term debt of $8,863 million and total shareholders’ equity (including non-controlling interests) of $18,910 million. For the nine months ended Jul 1, 2023, cash provided by operating activities amounted to $1,429 million.
Liquidity was $3.7 billion as of Jul 1, 2023. The company entered new term-loan facilities worth $1.75 billion. Management expects liquidity to exceed the company’s minimum target of $1 billion.
In the first nine months of fiscal 2023, the company repurchased 5.4 million shares for $343 million.
Tyson Foods projects capital expenditure of nearly $2.1 billion for fiscal 2023. These include expenditures related to capacity expansion and utilization, automation to battle labor-related hurdles, and product and brand innovation.
Image Source: Zacks Investment Research
Guidance
For fiscal 2023, the United States Department of Agriculture (“USDA”) projects domestic protein production (beef, pork, chicken and turkey) to increase slightly from the fiscal 2022 level.
Starting fiscal 2022, management launched a productivity program to drive a better, faster and more agile organization. The company generated productivity savings of more than $700 million in fiscal 2022. It already exceeded its aggregate target of $1 billion by the end of the second quarter of fiscal 2023, more than a year ahead of its schedule.
Management anticipates sales of $53-$54 billion for fiscal 2023.
Net interest expenses are expected to be $340 million. The adjusted tax rate is likely to be nearly 22% in fiscal 2023.
Segment-Wise Guidance for FY23
For the Beef segment, USDA projects domestic production to fall nearly 3% year over year. For Pork, domestic production is projected to remain nearly flat. Per USDA forecasts, production in the Chicken segment will likely improve by almost 3% in fiscal 2023. For the fiscal, the company expects better results from its foreign operations in the International/Other segment.
TSN’s shares have gained 11.3% in the past three months compared with the industry’s growth of 4.4%.
Some Better-Ranked Staple Bets
Here, we have highlighted three better-ranked stocks, namely TreeHouse Foods, Inc. (THS - Free Report) , Post Holdings (POST - Free Report) and Utz Brands Inc. (UTZ - Free Report) .
TreeHouse Foods, a packaged food and beverage manufacturer, currently carries a Zacks Rank #2 (Buy). THS has a trailing four-quarter earnings surprise of 49.3% on average. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for TreeHouse Foods’ current financial year’s sales suggests a decline of 12.4% from the year-ago reported numbers.
Post Holdings, a consumer-packaged goods holding company, currently has a Zacks Rank #2. POST has a trailing four-quarter earnings surprise of 59.6% on average.
The Zacks Consensus Estimate for Post Holdings’ current fiscal year sales and earnings suggests growth of 13% and 141.1%, respectively, from the corresponding year-ago reported figures.
Utz Brands, which manufactures a diverse portfolio of salty snacks, currently has a Zacks Rank #2. UTZ’s expected EPS growth rate for three to five years is 10.4%.
The Zacks Consensus Estimate for Utz Brands’ current fiscal-year sales suggests growth of 3.5% from the year-ago reported numbers. UTZ has a trailing four-quarter earnings surprise of 16.9% on average.