In a press release dated May 10th Tyson Foods Inc. (TSN) announced results for the 2nd Quarter of Fiscal 2021 ending April 3rd.
The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as $ x 1,000 except EPS)
|
2nd Quarter Ending
|
April 3rd 2021
|
March 28th 2020
|
Difference (%)
|
|
Sales:
|
$11,300,000
|
$10,800,000
|
+3.8
|
|
Gross profit:
|
$1,253,000
|
$1,021,000
|
+22.7
|
|
Operating income:
|
$720,000
|
$515,000
|
+39.8
|
|
Pre-tax Income
Net Income
|
$624,000
$476,000
|
$505,000
$376,000
|
+23.6
+26.6
|
|
Diluted earnings per share:
|
$1.30
|
$1.03
|
+26.2
|
|
Gross Margin (%)
|
11.0
|
9.4
|
+17.0
|
|
Operating Margin (%)
|
6.4
|
4.7
|
+36.1
|
|
Profit Margin (%)
|
4.2
|
3.5
|
+20.0
|
|
Long-term Debt:
|
$9,784,000
|
$10,791,000
|
-9.3
|
|
12 Months Trailing:
|
|
|
|
|
Return on Assets
|
6.7
|
|
|
|
Return on Equity
|
13.4
|
|
|
|
Operating Margin
|
8.7
|
|
|
|
Profit Margin
|
4.7
|
|
|
|
Total Assets
|
$34,474,000
|
$34,456,000
|
<0.1
|
|
Market Capitalization
|
$28,280,000
|
|
|
52-Week Range in Share Price $55.28 to $79.77 50-day moving average $76.97
Market Close: May 7th pre-release $78.78. May 10th 13H00 post release $77.57
Forward PE: 13.8 Beta 0.8
The Chicken Segment generated 31 percent of sales revenue but contributed 0.9 percent to operating margin. Low operating margin was attributed to legal settlements, COVID expenses, weather disruptions and escalation in feed cost.
In commenting on Q2 results Dean Banks, President and CEO stated “We’re grateful for our team members’ continuing efforts and resilience, and for the collaboration and support we’ve received from our customers as we navigate these challenging times,” He added “We delivered a very strong performance in a complex operating environment with continued success in retail and improvements in foodservice as the industry is recovering. We generated adjusted operating income growth of 32 percent for the first half of fiscal 2021, driven by solid results in Beef and Prepared Foods.
Banks noted “substantial inflation across our supply chain, which will likely create margin pressure during the back half of the year. We will remain focused on the factors we can control and will continue to work diligently for a full recovery of our Chicken business, while delivering strong results in other areas of our company. Our long-term outlook is bright as global protein consumption continues to grow, and we expect our investments in capacity expansion, product innovation and technology to create sustainable shareholder value.”
In reviewing performance in the Chicken Segment over the half-year, Banks clarified “Sales volume decreased during the second quarter and first six months of fiscal 2021 due to lower production throughput associated with COVID-19, disruptions due to severe winter weather, decline in hatch rate and a challenging labor environment. Average sales price increased in the second quarter and first six months of fiscal 2021 due to favorable sales mix and overall market conditions. Operating income decreased in the second quarter and first six months of fiscal 2021 primarily due to a $320 million loss from the recognition of a legal contingency accrual in the first quarter as well as $125 million and $140 million of higher feed ingredient costs in the second quarter and first six months of fiscal 2021, respectively. Operating income was further impacted in the second quarter and first six months of fiscal 2021 by production inefficiencies and direct incremental expenses related to COVID-19 and disruptions due to severe winter weather. Additionally, operating income in the second quarter and first six months of fiscal 2021 was impacted by $40 million and $110 million, respectively, of incremental net derivative gains as compared to the second quarter and first six months of fiscal 2020.