(in millions, except per share data) | Third Quarter | Nine Months | |||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Sales | $ | 9,682 | $ | 8,731 | $ | 27,475 | $ | 25,480 | |||||||
Operating Income | 351 | 419 | 1,124 | 959 | |||||||||||
Income from Continuing Operations | 258 | 249 | 720 | 589 | |||||||||||
Loss from Discontinued Operation, Net of Tax | — | (4 | ) | — | (70 | ) | |||||||||
Net Income | 258 | 245 | 720 | 519 | |||||||||||
Less: Net Income (Loss) Attributable to Noncontrolling Interests | (2 | ) | (4 | ) | (7 | ) | 2 | ||||||||
Net Income Attributable to Tyson | $ | 260 | $ | 249 | $ | 727 | $ | 517 | |||||||
Adjusted¹ Operating Income from Continuing Operations | $ | 407 | $ | 419 | $ | 1,180 | $ | 959 | |||||||
Net Income Per Share from Continuing Operations Attributable to Tyson | $ | 0.73 | $ | 0.69 | $ | 2.05 | $ | 1.61 | |||||||
Adjusted¹ Net Income Per Share from Continuing Operations Attributable to Tyson | $ | 0.75 | $ | 0.69 | $ | 2.07 | $ | 1.56 | |||||||
Net Income Per Share Attributable to Tyson | $ | 0.73 | $ | 0.68 | $ | 2.05 | $ | 1.42 | |||||||
Adjusted¹ Net Income Per Share Attributable to Tyson | $ | 0.75 | $ | 0.68 | $ | 2.07 | $ | 1.52 |
• | Reported EPS was $0.73; Adjusted EPS up 9% to $0.75 compared to EPS from continuing operations of $0.69 in third quarter of fiscal 2013 |
• | Quarterly sales up to $9.7 billion resulting in 11% increase over third quarter of fiscal 2013 |
• | Adjusted operating margin was 4.2% |
• | Acquisition of the Hillshire Brands on track for closing in fourth quarter of fiscal 2014 |
Sales | ||||||||||||||||||||
(for the third quarter and nine months ended June 28, 2014, and June 29, 2013) | ||||||||||||||||||||
Third Quarter | Nine Months | |||||||||||||||||||
Volume | Avg. Price | Volume | Avg. Price | |||||||||||||||||
2014 | 2013 | Change | Change | 2014 | 2013 | Change | Change | |||||||||||||
Chicken | $ | 2,829 | $ | 2,820 | 1.3 | % | (1.0 | )% | $ | 8,327 | $ | 8,148 | 2.7 | % | (0.5 | )% | ||||
Beef | 4,189 | 3,723 | (0.9 | )% | 13.5 | % | 11,748 | 10,655 | 0.4 | % | 9.8 | % | ||||||||
Pork | 1,766 | 1,332 | 5.0 | % | 26.3 | % | 4,677 | 4,006 | 1.1 | % | 15.4 | % | ||||||||
Prepared Foods | 901 | 797 | 4.0 | % | 8.7 | % | 2,669 | 2,441 | 5.2 | % | 4.0 | % | ||||||||
International | 365 | 343 | 17.2 | % | (9.2 | )% | 1,020 | 1,001 | 14.0 | % | (10.6 | )% | ||||||||
Other | — | — | n/a | n/a | — | 47 | n/a | n/a | ||||||||||||
Intersegment Sales | (368 | ) | (284 | ) | n/a | n/a | (966 | ) | (818 | ) | n/a | n/a | ||||||||
Total | $ | 9,682 | $ | 8,731 | 2.2 | % | 8.5 | % | $ | 27,475 | $ | 25,480 | 2.5 | % | 5.4 | % |
Operating Income (Loss) | ||||||||||||||||||||
(for the third quarter and nine months ended June 28, 2014, and June 29, 2013) | ||||||||||||||||||||
Third Quarter | Nine Months | |||||||||||||||||||
Operating Margin | Operating Margin | |||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Chicken | $ | 195 | $ | 215 | 6.9 | % | 7.6 | % | $ | 682 | $ | 471 | 8.2 | % | 5.8 | % | ||||
Beef | 101 | 114 | 2.4 | % | 3.1 | % | 194 | 134 | 1.7 | % | 1.3 | % | ||||||||
Pork | 128 | 67 | 7.2 | % | 5.0 | % | 356 | 264 | 7.6 | % | 6.6 | % | ||||||||
Prepared Foods | (50 | ) | 24 | (5.5 | )% | 3.0 | % | (13 | ) | 85 | (0.5 | )% | 3.5 | % | ||||||
International | (15 | ) | 5 | (4.1 | )% | 1.5 | % | (73 | ) | — | (7.2 | )% | — | % | ||||||
Other | (8 | ) | (6 | ) | n/a | n/a | (22 | ) | 5 | n/a | n/a | |||||||||
Total | $ | 351 | $ | 419 | 3.6 | % | 4.8 | % | $ | 1,124 | $ | 959 | 4.1 | % | 3.8 | % |
• | Operating income was reduced by $49 million in the Prepared Foods segment for impairments related to the closure of three plants. |
• | Operating income was reduced by $7 million in Other for third party transaction fees incurred as part of the Hillshire Brands acquisition. |
• | Chicken - Sales volumes for the third quarter and nine months of fiscal 2014 grew as a result of stronger demand for chicken products and mix of rendered product sales. Average sales price decreased as feed ingredient costs declined, partially offset by mix changes. Operating income for the third quarter of fiscal 2014 was negatively impacted by rapidly rising costs of outside meat purchases as well as operational disruptions at two of our facilities. For the nine months of fiscal 2014, operating income increased due to higher sales volume and lower feed ingredient costs, partially offset by decreased average sales price. Feed costs decreased $120 million and $460 million for the third quarter and nine months of fiscal 2014, respectively. |
• | Beef - Sales volumes decreased for the third quarter of fiscal 2014 due to a reduction in live cattle processed. However, sales volumes were up for the nine months of fiscal 2014 due to better domestic demand for our beef products, partially offset by reduced exports. Average sales price increased due to lower domestic availability of fed cattle supplies, which additionally drove up livestock costs. Operating income decreased for the third quarter of fiscal 2014 due to higher fed cattle costs and periods of reduced demand for beef products, which made it difficult to pass along increased input costs, as well as lower sales volumes and increased operating costs. For the nine months of fiscal 2014, operating income increased due to improved operational execution and maximizing our revenues relative to the rising live cattle markets, partially offset by increased operating costs. |
• | Pork - Sales volumes increased as a result of better domestic demand for our pork products. Average sales price increased due to lower total hog supplies, which additionally resulted in higher input costs. Operating income increased as we maximized our revenues relative to live hog markets, partially attributable to operational and mix performance. |
• | Prepared Foods - Sales volumes increased as a result of improved demand for our prepared foods products and incremental volumes from the purchase of three businesses. Average sales price increased due to better product mix and price increases associated with higher input costs. Operating income decreased as a result of higher raw material and other input costs of approximately $95 million and $160 million for the third quarter and nine months of fiscal 2014, respectively, and additional costs incurred as we invested in our growth platforms. Because many of our sales contracts are formula based or shorter-term in nature, we are typically able to offset rising input costs through pricing. However, there is a lag time for price increases to take effect. Additionally, in the third quarter of fiscal 2014, we incurred a $49 million impairment charge related to the planned closure of three plants, which are expected to cease operation by mid-fiscal 2015. |
• | International - Sales volumes increased as we grew our businesses in Brazil and China. Average sales price decreased due to poor export market conditions in Brazil, supply imbalances associated with weak demand in China and a less favorable pricing environment in Mexico. Operating income decreased due to poor operational execution in Brazil, challenging market conditions in Brazil and China and additional costs incurred as we grew our International operation. |
Three Months Ended | Nine Months Ended | ||||||||||||||
June 28, 2014 | June 29, 2013 | June 28, 2014 | June 29, 2013 | ||||||||||||
Sales | $ | 9,682 | $ | 8,731 | $ | 27,475 | $ | 25,480 | |||||||
Cost of Sales | 9,045 | 8,049 | 25,502 | 23,791 | |||||||||||
Gross Profit | 637 | 682 | 1,973 | 1,689 | |||||||||||
Selling, General and Administrative | 286 | 263 | 849 | 730 | |||||||||||
Operating Income | 351 | 419 | 1,124 | 959 | |||||||||||
Other (Income) Expense: | |||||||||||||||
Interest income | (1 | ) | (2 | ) | (6 | ) | (5 | ) | |||||||
Interest expense | 25 | 36 | 78 | 109 | |||||||||||
Other, net | 17 | — | 18 | (19 | ) | ||||||||||
Total Other (Income) Expense | 41 | 34 | 90 | 85 | |||||||||||
Income from Continuing Operations before Income Taxes | 310 | 385 | 1,034 | 874 | |||||||||||
Income Tax Expense | 52 | 136 | 314 | 285 | |||||||||||
Income from Continuing Operations | 258 | 249 | 720 | 589 | |||||||||||
Loss from Discontinued Operation, Net of Tax | — | (4 | ) | — | (70 | ) | |||||||||
Net Income | 258 | 245 | 720 | 519 | |||||||||||
Less: Net Income (Loss) Attributable to Noncontrolling Interests | (2 | ) | (4 | ) | (7 | ) | 2 | ||||||||
Net Income Attributable to Tyson | $ | 260 | $ | 249 | $ | 727 | $ | 517 | |||||||
Amounts attributable to Tyson: | |||||||||||||||
Net Income from Continuing Operations | 260 | 253 | 727 | 587 | |||||||||||
Net Loss from Discontinued Operation | — | (4 | ) | — | (70 | ) | |||||||||
Net Income Attributable to Tyson | $ | 260 | $ | 249 | $ | 727 | $ | 517 | |||||||
Weighted Average Shares Outstanding: | |||||||||||||||
Class A Basic | 280 | 283 | 275 | 284 | |||||||||||
Class B Basic | 70 | 70 | 70 | 70 | |||||||||||
Diluted | 356 | 369 | 355 | 366 | |||||||||||
Net Income Per Share from Continuing Operations Attributable to Tyson: | |||||||||||||||
Class A Basic | $ | 0.75 | $ | 0.73 | $ | 2.15 | $ | 1.69 | |||||||
Class B Basic | $ | 0.68 | $ | 0.66 | $ | 1.94 | $ | 1.52 | |||||||
Diluted | $ | 0.73 | $ | 0.69 | $ | 2.05 | $ | 1.61 | |||||||
Net Loss Per Share from Discontinued Operation Attributable to Tyson: | |||||||||||||||
Class A Basic | $ | — | $ | (0.01 | ) | $ | — | $ | (0.20 | ) | |||||
Class B Basic | $ | — | $ | (0.02 | ) | $ | — | $ | (0.18 | ) | |||||
Diluted | $ | — | $ | (0.01 | ) | $ | — | $ | (0.19 | ) | |||||
Net Income Per Share Attributable to Tyson: | |||||||||||||||
Class A Basic | $ | 0.75 | $ | 0.72 | $ | 2.15 | $ | 1.49 | |||||||
Class B Basic | $ | 0.68 | $ | 0.64 | $ | 1.94 | $ | 1.34 | |||||||
Diluted | $ | 0.73 | $ | 0.68 | $ | 2.05 | $ | 1.42 | |||||||
Dividends Declared Per Share: | |||||||||||||||
Class A | $ | 0.075 | $ | 0.050 | $ | 0.250 | $ | 0.260 | |||||||
Class B | $ | 0.068 | $ | 0.045 | $ | 0.226 | $ | 0.234 | |||||||
Sales Growth | 10.9 | % | 7.8 | % | |||||||||||
Margins: (Percent of Sales) | |||||||||||||||
Gross Profit | 6.6 | % | 7.8 | % | 7.2 | % | 6.6 | % | |||||||
Operating Income | 3.6 | % | 4.8 | % | 4.1 | % | 3.8 | % | |||||||
Income from Continuing Operations | 2.7 | % | 2.9 | % | 2.6 | % | 2.3 | % | |||||||
Effective Tax Rate for Continuing Operations | 16.8 | % | 35.4 | % | 30.4 | % | 32.6 | % |
June 28, 2014 | September 28, 2013 | ||||||
Assets | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 587 | $ | 1,145 | |||
Accounts receivable, net | 1,624 | 1,497 | |||||
Inventories | 3,061 | 2,817 | |||||
Other current assets | 241 | 145 | |||||
Total Current Assets | 5,513 | 5,604 | |||||
Net Property, Plant and Equipment | 3,941 | 4,053 | |||||
Goodwill | 1,925 | 1,902 | |||||
Intangible Assets | 151 | 138 | |||||
Other Assets | 525 | 480 | |||||
Total Assets | $ | 12,055 | $ | 12,177 | |||
Liabilities and Shareholders’ Equity | |||||||
Current Liabilities: | |||||||
Current debt | $ | 41 | $ | 513 | |||
Accounts payable | 1,496 | 1,359 | |||||
Other current liabilities | 1,075 | 1,138 | |||||
Total Current Liabilities | 2,612 | 3,010 | |||||
Long-Term Debt | 1,784 | 1,895 | |||||
Deferred Income Taxes | 404 | 479 | |||||
Other Liabilities | 545 | 560 | |||||
Total Tyson Shareholders’ Equity | 6,694 | 6,201 | |||||
Noncontrolling Interests | 16 | 32 | |||||
Total Shareholders’ Equity | 6,710 | 6,233 | |||||
Total Liabilities and Shareholders’ Equity | $ | 12,055 | $ | 12,177 |
Nine Months Ended | |||||||
June 28, 2014 | June 29, 2013 | ||||||
Cash Flows From Operating Activities: | |||||||
Net income | $ | 720 | $ | 519 | |||
Depreciation and amortization | 382 | 387 | |||||
Deferred income taxes | (64 | ) | (21 | ) | |||
Convertible debt discount | (92 | ) | — | ||||
Other, net | 76 | 80 | |||||
Net changes in working capital | (479 | ) | (193 | ) | |||
Cash Provided by Operating Activities | 543 | 772 | |||||
Cash Flows From Investing Activities: | |||||||
Additions to property, plant and equipment | (437 | ) | (425 | ) | |||
Purchases of marketable securities | (25 | ) | (123 | ) | |||
Proceeds from sale of marketable securities | 24 | 22 | |||||
Acquisitions, net of cash acquired | (56 | ) | (106 | ) | |||
Other, net | 44 | 36 | |||||
Cash Used for Investing Activities | (450 | ) | (596 | ) | |||
Cash Flows From Financing Activities: | |||||||
Payments on debt | (407 | ) | (69 | ) | |||
Net proceeds from borrowings | 28 | 48 | |||||
Purchases of Tyson Class A common stock | (286 | ) | (298 | ) | |||
Dividends | (76 | ) | (87 | ) | |||
Stock options exercised | 61 | 93 | |||||
Other, net | 26 | 13 | |||||
Cash Used for Financing Activities | (654 | ) | (300 | ) | |||
Effect of Exchange Rate Changes on Cash | 3 | (4 | ) | ||||
Decrease in Cash and Cash Equivalents | (558 | ) | (128 | ) | |||
Cash and Cash Equivalents at Beginning of Year | 1,145 | 1,071 | |||||
Cash and Cash Equivalents at End of Period | $ | 587 | $ | 943 |
Nine Months Ended | Fiscal Year Ended | Twelve Months Ended | ||||||||||||
June 28, 2014 | June 29, 2013 | September 28, 2013 | June 28, 2014 | |||||||||||
Net income | $ | 720 | $ | 519 | $ | 778 | $ | 979 | ||||||
Less: Interest income | (6 | ) | (5 | ) | (7 | ) | (8 | ) | ||||||
Add: Interest expense | 78 | 109 | 145 | 114 | ||||||||||
Add: Income tax expense (a) | 314 | 287 | 409 | 436 | ||||||||||
Add: Depreciation | 362 | 354 | 474 | 482 | ||||||||||
Add: Amortization (b) | 15 | 12 | 17 | 20 | ||||||||||
EBITDA | $ | 1,483 | $ | 1,276 | $ | 1,816 | $ | 2,023 | ||||||
Total gross debt | $ | 2,408 | $ | 1,825 | ||||||||||
Less: Cash and cash equivalents | (1,145 | ) | (587 | ) | ||||||||||
Less: Short-term investments | (1 | ) | (2 | ) | ||||||||||
Total net debt | $ | 1,262 | $ | 1,236 | ||||||||||
Ratio Calculations: | ||||||||||||||
Gross debt/EBITDA | 1.3x | 0.9x | ||||||||||||
Net debt/EBITDA | 0.7x | 0.6x |
(a) | Includes income tax expense of discontinued operation. |
(b) | Excludes the amortization of debt discount expense of $5 million and $21 million for the 9 months ended June 28, 2014, and June 29, 2013, respectively, and $28 million for the fiscal year ended September 28, 2013, as it is included in Interest expense. |
Three Months Ended | Nine Months Ended | ||||||||||||||
June 28, 2014 | June 29, 2013 | June 28, 2014 | June 29, 2013 | ||||||||||||
Reported net income from continuing operations per share attributable to Tyson | $ | 0.73 | $ | 0.69 | $ | 2.05 | $ | 1.61 | |||||||
Less: $19 million recognized currency translation adjustment gain | — | — | — | (0.05 | ) | ||||||||||
Less: $40 million gain on unrecognized tax benefit | (0.11 | ) | — | (0.11 | ) | — | |||||||||
Add: $29 million Hillshire Brands acquisition fees paid to third parties | 0.05 | — | 0.05 | — | |||||||||||
Add: $49 million impairment due to closure of three facilities | 0.08 | — | 0.08 | — | |||||||||||
Adjusted net income from continuing operations per share attributable to Tyson | $ | 0.75 | $ | 0.69 | $ | 2.07 | $ | 1.56 | |||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
June 28, 2014 | June 29, 2013 | June 28, 2014 | June 29, 2013 | ||||||||||||
Reported net income per share attributable to Tyson | $ | 0.73 | $ | 0.68 | $ | 2.05 | $ | 1.42 | |||||||
Less: $19 million recognized currency translation adjustment gain | — | — | — | (0.05 | ) | ||||||||||
Add: $56 million impairment of non-core assets in China | — | — | — | 0.15 | |||||||||||
Less: $40 million gain on unrecognized tax benefit | (0.11 | ) | — | (0.11 | ) | — | |||||||||
Add: $29 million Hillshire Brands acquisition fees paid to third parties | 0.05 | — | 0.05 | — | |||||||||||
Add: $49 million impairment due to closure of three facilities | 0.08 | — | 0.08 | — | |||||||||||
Adjusted net income per share attributable to Tyson | $ | 0.75 | $ | 0.68 | $ | 2.07 | $ | 1.52 |
Three Months Ended | Nine Months Ended | ||||||||||||||
June 28, 2014 | June 29, 2013 | June 28, 2014 | June 29, 2013 | ||||||||||||
Reported from continuing operations | $ | 351 | $ | 419 | $ | 1,124 | $ | 959 | |||||||
Add: Hillshire Brands acquisition fees paid to third parties | 7 | — | 7 | — | |||||||||||
Add: Impairment due to closure of three facilities | 49 | — | 49 | — | |||||||||||
Adjusted from continuing operations | $ | 407 | $ | 419 | $ | 1,180 | $ | 959 | |||||||
(d) | Exhibit |
Exhibit Number | Description |
99.1 | Press Release, dated July 28, 2014, announcing the unaudited results of operations of Tyson Foods, Inc. for its third quarter ended June 28, 2014 |
TYSON FOODS, INC. | |||
Date: July 28, 2014 | By: | /s/ Dennis Leatherby | |
Name: | Dennis Leatherby | ||
Title: | Executive Vice President and | ||
Chief Financial Officer |