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Tyson Foods (TSN) Q4 Earnings Top Estimates, Sales Up Y/Y

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  • TSN
  • SJM
  • HRL

Tyson Foods, Inc. TSN posted impressive fourth-quarter fiscal 2021 results, with the top and the bottom line increasing year over year. Sales and earnings surpassed the Zacks Consensus Estimate.

Quarter in Detail

Adjusted earnings came in at $2.30 per share, which beat the Zacks Consensus Estimate of $2.20. The bottom line rallied 35% year over year.

Total sales came in at $12,811 million, up 11.8% from $11,460 million reported in the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $12,559.2 million. Gains from average price change were 22.5%, while total volumes declined 10.7%.

Gross profit in the quarter came in at $2,476 million, up from $1,610 million reported in the prior-year quarter. Gross profit, as a percentage of sales, came in at 19.3%, up from 14% reported in the year-ago quarter. Tyson Foods’ adjusted operating income increased 26% to $1,152 million. Adjusted operating margin expanded from 8.6% to 9% in the quarter.

Tyson Foods, Inc. Price, Consensus and EPS Surprise

Tyson Foods, Inc. Price, Consensus and EPS Surprise
Tyson Foods, Inc. Price, Consensus and EPS Surprise

Tyson Foods, Inc. price-consensus-eps-surprise-chart | Tyson Foods, Inc. Quote

During the quarter, the company incurred nearly $65 million as direct incremental expenses associated with COVID-19, which put pressure on results to an extent. These include team member costs, production facility sanitization, testing for coronavirus, donations, product downgrades and rendered products among others. Apart from these factors, indirect COVID-19 costs included expenses associated with raw materials, transportation, underutilization and reconfiguration of plant, premiums offered to cattle producers and discounts on pricing.

Segment Details

Beef: Sales in the segment increased to $5,012 million from $4,272 million reported in the year-ago quarter. Volume declined 15.4% due to adverse impact related to challenging labor environment which was somewhat offset by solid global demand. Average price increased 32.7% on the back of input cost increases like live cattle, labor, freight and transportation costs as well as solid demand for beef products.

Pork: Sales in the segment increased to $1,646 million from $1,368 million reported in the year-ago quarter. Sales volume fell 17.7%,owing to reduced hog supplies and tough labor environment. These were somewhat offset by solid global demand. Average price increased 38% as input costs like live hog, labor, freight and transportation expenses increased along with solid pork products demand.

Chicken: Sales in the segment increased to $3,873 million from $3,433 million reported in the year-ago quarter. Sales volume declined 5.9% mainly due to higher demand in the foodservice channel. Average price increased 18.7% due to favorable sales mix and inflationary market conditions.

Prepared Foods: Sales in the segment fell to $2,253 million from $2,277 million reported in the year-ago quarter. Prepared Foods’ sales volume declined 12.5%, thanks to reduced production throughput stemming from tough labor and supply environment. Average price increased 11.4%, due to favorable product mix and inflation-justified pricing.

International/Other: Sales in the segment were $546 million, up from $491 million reported in the year-ago quarter. Sales volume moved up 3.2%, while average sales price jumped 8%.

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Zacks Investment Research

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Other Financial Updates

The company exited the quarter with cash and cash equivalents of $2,507 million, long-term debt of $8,281 million and total shareholders’ equity (including non-controlling interests) of $17,854 million. In 12 months ended Oct 2, 2021, cash provided by operating activities amounted to $3,840 million.

Liquidity was $4.8 billion as of Oct 2, 2021. Management expects liquidity to remain more than the company’s minimum target of $1 billion. The company projects capital expenditures to be nearly of $2 billion for fiscal 2022.

Effective Nov 12, 2021, Tyson foods increased quarterly dividend earlier declared on Aug 12, 2021, to 46 cents per share on Class A common stock and 41.4 cents per share on Class B common stock, payable on Dec 15, 2021, to shareholders on record as of Dec 1, 2021.

In addition, the company declared a dividend of 46 cents per share on Class A common stock and 41.4 cents per share on Class B common stock, payable on Mar 15, 2022, to shareholders record as of Mar 1, 2022.

The company concluded the sale of Pet Treats business for $1.2 billion during the quarter.

Outlook

For fiscal 2022, the United States Department of Agriculture (“USDA”) projects domestic protein production (beef, pork, chicken and turkey) to improve slightly compared with fiscal 2021 levels.

Starting from fiscal 2022, management is launching a new productivity program to drive better, faster and more agile organization. The company is projecting to achieve $1 billion in productivity savings by the end of fiscal 2024 and $300-$400 million in fiscal 2022, relative to a fiscal 2021 cost baseline. Management anticipates sales in the bracket of $49-$51 billion in fiscal 2022.

Segment-Wise Guidance for Fiscal 2022

For the Beef segment, USDA projects domestic production to decline nearly 2% year over year in fiscal 2022. For Pork, domestic production is projected to decline almost 2% year over year in fiscal 2022, per the USDA. USDA forecasts domestic production in the Chicken segment to improve slightly in fiscal 2022. The company expects better results from its operations in the International/Other segment.

Shares of this Zacks Rank #1 (Strong Buy) company have gained 26.1% so far this year compared with the industry’s rise of 6.5%.

Upcoming Earning Releases in the Sector

Hormel Foods Corporation HRL is slated to report earnings on Dec 9, 2021. The company is likely to register a bottom-line increase when it reports fourth-quarter fiscal 2021 results. The Zacks Consensus Estimate for quarterly earnings per share (EPS) has remained unchanged in the past 30 days at 50 cents. The figure suggests a jump of 16.3% from the year-ago quarter’s reported number.

Hormel Foods’ top line is also expected to grow year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $3,216 million, which suggests an increase of 32.9% from the figure reported in the prior-year quarter. HRL presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

Post Holdings, Inc. POST is slated to report earnings on Nov 18, 2021. The company is likely to register an increase in the bottom line when it reports fourth-quarter fiscal 2021 numbers. Although the Zacks Consensus Estimate for quarterly EPS has moved down 4.6% in the past 30 days to 83 cents, the figure suggests an increase of 43.1% from the year-ago quarter’s reported number.

Post Holdings’ top line is also expected to grow year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $1,661 million, which suggests an increase of 17.7% from the figure reported in the prior-year quarter. POST presently carries a Zacks Rank #4 (Sell).

The J. M. Smucker Company SJM is slated to report earnings on Nov 23, 2021. The company is likely to register a decline in the bottom line when it reports second-quarter fiscal 2022 results. The Zacks Consensus Estimate for quarterly EPS has remained unchanged in the past 30 days at $2.04. The figure suggests a slump of 14.6% from the year-ago quarter’s reported number.

The J. M. Smucker’s top line is also expected to decline year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $1,966 million, which suggests a decline of 3.4% from the figure reported in the prior-year quarter. SJM presently carries a Zacks Rank #4.


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