Tyson Foods on Monday (Aug. 4) reported better-than-expected third quarter numbers and boosted full-year sales guidance, sending the stock price up more than 4% in early trading.
The Springdale-based meat giant reported net income of $61 million, down from $191 million a year ago. Adjusted earnings per share totaled 91 cents, up 5% from the prior year and better than the consensus estimate of 78 cents.
Total revenue rose 4% to $13.884 billion in the quarter amid strong demand for chicken and higher prices for beef, chicken and prepared foods compared to a year ago.
“Our third quarter results demonstrate the strength of our multi-protein, multi-channel portfolio and our relentless focus on operational excellence,” said Tyson CEO Donnie King. “Looking ahead, we are confident in our ability to meet consumer needs, capitalize on protein demand and deliver long-term value to our shareholders.”
Tyson’s forecast for sales growth for the full year calls for revenue of between $54.38 billion and $54.91 billion, up from its 2024 total of $53.31 billion. The estimates are above the revenue guidance of $54.09 billion from analysts.
SEGMENT NUMBERS
The poultry segment had $4.22 billion in sales for the quarter, up 2.4% on higher volumes and 1.1% in price improvements over a year ago. The chicken breast market has since seen some price pressure because of oversupply. But Tyson expects its operating income in chicken to increase by at least $300,000 for the full year.
Adjusted segment results in the quarter indicated the chicken segment has operating income of $345 million, up 12.37% from a year ago. The operating margin improved to 8.2%, up from 7.5% a year ago.
Tyson’s diverse prepared foods segment posted revenue of $2.515 billion, down 2.3% on volume, but up 5.7% on higher prices. Tyson said ready-to-eat food sales are strong and growing as families consume more meals at home.
Adjusted operating income was $246 million, up 21.2% from a year ago. The segment was helped by a 9.8% operating margin achieved in the quarter, up from 7.5% last year. The segment, which includes the Hillshire Farms brand, is expected to deliver adjusted operating income of $925 million to $1 billion for the full year.
Tyson’s large beef segment continues to struggle amid low herd numbers and record cattle prices. The company rang up $5.603 billion in beef sales for the quarter, down 3.1% on volume and up 10% on price. The beef segment reported adjusted operating losses of $151 million, down from losses of $69 million a year ago. With the full brunt of a $343 million one-time goodwill charge in beef, the segment lost $494 million in the quarter.
Tyson expects an adjusted 2025 operating loss for its beef business of $375 million to $475 million, steeper than its previous projection of $200 million to $400 million.
While Tyson’s pork segment is small compared to its other segments, the pork business is beginning to stabilize. Pork sales totaled $1.506 billion, with volumes running 1.5% higher but offset by 1.6% decline in average pork prices.
Adjusted operating income totaled $36 million, up 63% from a year ago. The adjusted operating margin improved to 2.4%, from 1.5% a year ago. The company expects its pork business to generate between $175 million and $200 million in adjusted operating income for the full year, which ends Oct. 1.
BALANCE SHEET
In the recent quarter, Tyson reported that its free cash flow totaled $929 million, down $160 million from the prior year. The cash provided by the operating segments totaled $1.62 billion, down $355 million from a year ago. Free cash flow is expected to remain between $1 billion and $1.3 billion for the fiscal year.
Tyson increased its liquidity to $4 billion as of June 28. The company said it reduced total debt by $722 million in the quarter. The company said despite expected wider beef segment losses, liquidity should remain above its $1 billion target.
Pooran Sharma, an analyst with Stephens Inc., said Tyson’s troubled beef segment is enough to give him pause with the stock. Stephens has a neutral, or hold, rating on the stock and Sharma said the earnings estimates and target price are under review following the recent earnings report. Nine out of 13 analysts following the company rate the stock a hold.
Shares of Tyson Foods (NYSE: TSN) traded higher on Monday following the report. The stock traded at $54.96, up $2.43 or 4.63% in the morning session. Over the past 52 weeks, the shares have traded between $51.85 and $66.88. Year-to-date the stock price is down 4.29%.