Tyson Foods (TSN) Tops Q1 EPS by 26c
Tyson Foods (NYSE: TSN) reported Q1 EPS of $1.15, $0.26 better than the analyst estimate of $0.89. Revenue for the quarter came in at $9.15 billion versus the consensus estimate of $10.1 billion.
SEGMENT RESULTS (in millions)
| Sales | ||||||||||
| (for the first quarter ended January 2, 2016, and December 27, 2014) | ||||||||||
| First Quarter | ||||||||||
| Volume | Avg. Price | |||||||||
| 2016 | 2015 | Change | Change | |||||||
| Chicken | $ | 2,636 | $ | 2,780 | (0.5 | )% | (4.7 | )% | ||
| Beef | 3,614 | 4,391 | (3.8 | )% | (14.4 | )% | ||||
| Pork | 1,213 | 1,540 | (2.2 | )% | (19.5 | )% | ||||
| Prepared Foods | 1,896 | 2,133 | (7.7 | )% | (3.6 | )% | ||||
| Other | 99 | 305 | (67.8 | )% | 0.6 | % | ||||
| Intersegment Sales | (306 | ) | (332 | ) | n/a | n/a | ||||
| Total | $ | 9,152 | $ | 10,817 | (6.8 | )% | (9.2 | )% | ||
Note: Excluding the fiscal 2015 divestitures of our chicken operations in Brazil and Mexico, along with our Heinold Hog Markets business, total company volume declined 1.1%.
Adjusted Segment Results (in millions)
| Adjusted Operating Income (Loss) | ||||||||||
| (for the first quarter ended January 2, 2016, and December 27, 2014) | ||||||||||
| First Quarter | ||||||||||
| Adjusted Operating Margin | ||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||
| Chicken | $ | 358 | $ | 351 | 13.6 | % | 12.6 | % | ||
| Beef | 71 | (6 | ) | 2.0 | % | (0.1 | )% | |||
| Pork | 158 | 122 | 13.0 | % | 7.9 | % | ||||
| Prepared Foods | 207 | 111 | 10.9 | % | 5.2 | % | ||||
| Other | (18 | ) | (14 | ) | n/a | n/a | ||||
| Total | $ | 776 | $ | 564 | 8.5 | % | 5.2 | % | ||
Adjustments to Segments for the first quarter of fiscal 2015
- Prepared Foods operating income was adjusted for the following:
- Increase of $36 million of ongoing costs related to a legacy Hillshire Brands plant fire.
- Increase of $4 million related to merger and integration costs.
- Other operating income was adjusted for the following:
- Increase of $15 million related to merger and integration costs.
Guidance:
- Chicken – USDA data shows an increase in chicken production around 1-2% in fiscal 2016 compared to fiscal 2015. Based on current futures prices, we expect lower feed costs in fiscal 2016 compared to fiscal 2015 of approximately $200 million. Many of our sales contracts are formula based or shorter-term in nature, but there may be a lag time for price changes to take effect. For fiscal 2016, we now believe our Chicken segment's operating margin should be more than 11%, up from our previous estimate of more than 10%.
- Beef – We expect industry fed cattle supplies to be slightly higher in fiscal 2016 compared to fiscal 2015. Although we generally expect adequate supplies in regions we operate our plants, there may be periods of imbalance of fed cattle supply and demand. For fiscal 2016, we believe our Beef segment's operating margin should be at or above the low end of its normalized range of 1.5-3.0%.
- Pork – We expect industry hog supplies to increase around 2-3% in fiscal 2016 compared to fiscal 2015. For fiscal 2016, we now believe our Pork segment's operating margin should be above its normalized range of 6-8%, up from our previous estimate of within the range.
- Prepared Foods – We expect lower raw material costs of approximately $250 million in fiscal 2016. As we continue to invest heavily in innovation, new product launches and the strengthening of our brands, we believe the operating margin of our Prepared Foods segment should be near the low-end of its normalized range of 10-12% in fiscal 2016.
For earnings history and earnings-related data on Tyson Foods (TSN) click here.