Tyson Foods (NYSE: TSN) reported Q1 EPS of $1.94, $0.45 better than the analyst estimate of $1.49. Revenue for the quarter came in at $10.46 billion versus the consensus estimate of $10.84 billion.

GUIDANCE:

Tyson Foods sees FY2021 revenue of $42-44 billion.

• COVID-19 – We continue to proactively manage the Company and its operations through this global pandemic. Given the nature of our business, demand for food and protein may shift amongst sales channels and experience disruptions, but over time we expect worldwide demand to continue to increase. We are experiencing multiple challenges related to the pandemic. These challenges are anticipated to increase our operating costs and negatively impact our volumes in fiscal 2021. We cannot currently predict the ultimate impact that COVID-19 will have on our short- and long-term demand, as it will depend on, among other things, the severity and duration of the COVID-19 crisis. Our liquidity is expected to be adequate to continue to run our operations and meet our obligations as they become due. For fiscal 2021, we estimate that we will incur approximately $440 million of direct incremental expenses associated with the impact of COVID-19; however, some of these incremental expenses may become permanent over time.
• Beef – USDA projects domestic production will increase between 1% and 2% in fiscal 2021 as compared to fiscal 2020.
• Pork – USDA projects domestic production will increase approximately 1% in fiscal 2021 as compared to fiscal 2020.
• Chicken – USDA projects a slightly lower outlook for chicken production in fiscal 2021 as compared to fiscal 2020. Based on current futures prices, we expect feed costs to increase in fiscal 2021 as compared to fiscal 2020.
• Prepared Foods – We will continue to be responsive to rising raw material costs and changes in consumer behavior as a result of the impacts of COVID-19 as we move through fiscal 2021.
• International/Other – We expect improved results from our foreign operations in fiscal 2021.
• Revenue – We expect sales to be near the upper end of $42 billion to $44 billion for fiscal 2021.
• Capital Expenditures – For fiscal 2021, we expect capital expenditures to be approximately $1.3 billion to $1.5 billion. Capital expenditures include spending for capacity expansion, growth, safety, animal well-being, infrastructure replacements and upgrades, and operational improvements that are expected to result in production and labor efficiencies, yield improvements and sales channel flexibility.
• Net Interest Expense – We expect net interest expense to approximate $430 million for fiscal 2021, which includes repayment of $750 million of our $1.5 billion term loan in February.
• Liquidity – We expect total liquidity, which was approximately $4.2 billion at January 2, 2021, to remain above our minimum liquidity target of $1.0 billion.
• Tax Rate – We currently expect our adjusted effective tax rate to be around 23% in fiscal 2021.

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