Tyson Foods Q3 Conference Call Highlights

Benzinga

Tyson Foods (NYSE: TSN) reported its third quarter earnings on Monday. Shares of the company are up 3.6 percent.

Below are some key highlights and takeaways from its conference call:

• We had a record third quarter with an adjusted $0.75 a share.

Hillshire Acquisition:

• Will be more about $225 million in fiscal 2015 and should exceed $500 million by the end of year three.
• We expect the acquisition to be accretive in fiscal 2015 and substantially accretive thereafter as we generate synergies.
• We plan to continue delivering on our 10 percent EPS growth target in 2015.
• We want to use our strong cash flows to deliver the balance sheet quickly.

Individual Segments:

• The chicken segment has a 6.9 percent return on sales in Q3.
• Pricing was down 1 percent due to the untimely and unfortunate events.
• In February of this year, we experienced a fire at one of our fully-cooked processing plants.
• The mechanical repairs are now complete and the plant is back to producing normal volumes.
• Additionally, in Q3, a segment sizable fully-cooked processing plant experienced a series of operational issues.
• New equipment has been ordered and is being installed.
• These temporary disruptions and the resulting actions we took with customers have and will cost us between 1.5 percent and 2 percent return on sales in Q3 and Q4.
• In FY 2015, we'll be back to our full productive capability and we'll have additional fully cooked capacity coming on line in the spring.
• Chicken segment is expected to fully recover and deliver a 10 percent return on sales in 2015.
• Beef segment which had a 2.4 percent return on sales.
• Prepared Foods segment negative return on sales of 5.5 percent.

Results:
• Believe we'll still generate an adjusted EPS of at least $2.78 a share in FY 2014, which is more than a 20 percent growth over last year.
• FY 2015 is setting up to be another record year for sales, operating income and EPS.
• Prepared Food margins should be much stronger as we round up sound legacy business and integrate Hillshire.
• We're excited about the synergy prospect as we execute our prepared food strategy and anticipate more than $225 million in synergies in 2015 and $500 million.
• Our top line revenue growth was 11 percent over Q3 a year ago and quarterly sales again surpassed the $9 billion mark.
• Our adjusted earnings of $0.75 per share is a record for our third quarter and represents a 9 percent increase over adjusted EPS of $0.69 in Q3 of 2013.
• We spent $144 million on capital expenditures for the third quarter and $437 million for the first nine months of fiscal 2014.
• Our effective tax rate in Q3 was 16.8 percent.
• The adjusted effective tax rate should be around 34.5 percent for fiscal 2014 and is expected to be around 36 percent for fiscal 2015.

See more from Benzinga

View Comments (0)