Tyson Foods' 1Q EPS Beat Expectations

by Lance Turner  on Thursday, Feb. 7, 2019 6:47 am   2 min read

Tyson Foods Inc. of Springdale on Thursday reported fiscal first-quarter net income of $551 million, down 66 percent from the same quarter last year. But earnings per share beat analysts' expectations.

On a per-share basis, the meat processor said it had profit of $1.50. Earnings, adjusted for non-recurring costs and restructuring costs, came to $1.58 per share.

The results exceeded Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of $1.55 per share.

In a separate announcement, the company announced it had reached an agreement to buy the Thai and European operations of BRF S.A. for $340 million. The deal includes four processing facilities in Thailand, one in the Netherlands and one in the United Kingdom.

"Our diversified business model continues to set Tyson Foods apart," President and CEO Noel White said in a news release. "The Prepared Foods and Beef segments delivered strong results in our fiscal first quarter, while the Pork and Chicken segments performed well given market conditions.

"We're proud of the growth Prepared Foods has achieved in the past five years and the role it has played in stabilizing volatility while growing earnings. Moving forward, we will remain focused on growing Prepared Foods as well as our value-added and international businesses."

The company posted revenue of $10.19 billion in the period, missing Wall Street forecasts. Three analysts surveyed by Zacks expected $10.36 billion.

Tyson expects full-year earnings in the range of $5.75 to $6.10 per share. For fiscal 2019, it expects sales to reach $43 billion "due to volume growth and mix, as well as the impact of the Keystone acquisition." Most of the sales growth is expected in its Chicken segment and Other, as well as expected growth in its Prepared Foods segment.

The company's outlook does not include the pending acquisition of the BRF S.A. facilities, which is expected to close in the third quarter.

During the quarter, the company's Beef segment posted revenue of $3.9 billion, up from $3.8 billion in the same quarter last year, and operating income of $305 million, up from $256 million in the same quarter last year. 

The Prepared Foods segment posted revenue of $2.1 billion, down from $2.3 billion in the same quarter last year, and operating income of $265 million, up from $256 million in the same quarter last year. Tyson reported record operating margins for the segment of 12.3 percent.

During the quarter, the company completed its $2.16 billion cash acquisition of Keystone Foods from Marfrig Global Foods of São Paulo, Brazil. Keystone is a leading supplier of chicken, beef, fish and pork to the global foodservice industry, including quick-service restaurant chains and retail and convenience stores. Products include chicken nuggets, wings and tenders; beef patties; and breaded fish fillets. Clients include McDonald's Corp.

Tyson shares (NYSE: TSN) have increased 14 percent since the beginning of the year, while the Standard & Poor's 500 index has risen 9 percent. The stock has declined 18 percent in the last 12 months.

(The Associated Press contributed to this article.)



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