Tyson Foods Inc., one of the world’s largest food companies with brands including Tyson, Jimmy Dean, Hillshire Farm, Ball Park, Wright, Aidells, ibp and State Fair, reported their third quarter 2023 results.

In the third quarter, Tyson Foods closed on the acquisition of Williams Sausage Co. and recorded a goodwill impairment charge of $210 million in Tyson Foods' Chicken segment. They also announced the closure of four additional Chicken facilities, which is expected to reduce costs and improve capacity utilization.

“While current market dynamics remain challenging, Tyson Foods is fully committed to our vision of delivering sustainable, top line growth and margin improvement,” said Donnie King, president and CEO, Tyson Foods. “I’m encouraged by the improvements we made this quarter, including our Tyson Core Business lines that continue to outpace our peers in volume growth.”

“The difficult decision to close four chicken facilities in North Little Rock, Arkansas, Corydon, Indiana, Dexter, Missouri and Noel, Missouri, demonstrates our commitment to bold action and operational excellence as we drive performance, including lower costs and improving capacity utilization, and build on our strategy of making Tyson Foods stronger in the long-term[,]” King said.

The company reports its financial results in accordance with U.S. generally accepted accounting principles, or GAAP. Throughout this earnings release, adjusted operating income (loss) and adjusted net income (loss) per share attributable to Tyson (Adjusted EPS) are non-GAAP financial measures. 

Segment results (in millions)

Adjusted segment results (in millions)

The average price change and adjusted operating margin for the Chicken segment and total company exclude $38 million for the three and nine months ended July 1, 2023, of legal contingency accrual recognized as a reduction to sales.

Outlook

For fiscal 2023, the United States Department of Agriculture indicates domestic protein production — beef, pork, chicken and turkey — should increase slightly compared to fiscal 2022 levels. The following is a summary of the updated outlook for each of Tyson Foods' segments. Certain of the outlook numbers include adjusted operating margin, a non-GAAP metric, for each segment. The company is not able to reconcile its full-year fiscal 2023 projected adjusted results to its fiscal 2023 projected GAAP results because certain information necessary to calculate such measures on a GAAP basis is unavailable or dependent on the timing of future events outside of Tyson Foods' control. Therefore, because of the uncertainty and variability of the nature of and the amount of any potential applicable future adjustments, which could be significant, the company is unable to provide a reconciliation for these forward-looking non-GAAP measures without unreasonable effort. Adjusted operating margin should not be considered a substitute for operating margin or any other measures of financial performance reported in accordance with GAAP. Investors should rely primarily on the company’s GAAP results and use non-GAAP financial measures only supplementally in making investment decisions.

Beginning in fiscal 2022, Tyson Foods launched a new productivity program, which is designed to drive a better, faster and more agile organization that is supported by a culture of continuous improvement and faster decision making. Tyson Foods targeted an aggregate $1 billion in productivity savings by the end of fiscal 2024 relative to a fiscal 2021 cost baseline. The company realized more than $700 million of productivity savings in fiscal 2022, which partially offset the impacts of inflationary market conditions, and Tyson Foods surpassed their aggregate $1 billion target in the second quarter of fiscal 2023, which is more than a year ahead of their plan.

Beef

USDA projects domestic production will decrease approximately 3% in fiscal 2023 as compared to fiscal 2022. Tyson Foods anticipates an adjusted operating margin of (1)% to 1% in fiscal 2023 as margins are expected to decrease.

Pork

USDA projects domestic production will be relatively flat in fiscal 2023 as compared to fiscal 2022. Tyson Foods anticipates an adjusted operating margin of (4)% to (2)% in fiscal 2023.

Chicken

USDA projects chicken production will increase approximately 3% in fiscal 2023 as compared to fiscal 2022. Tyson Foods anticipates an adjusted operating margin of (1)% to 1% for fiscal 2023.

Additionally, Tyson Foods announced the closure of four Chicken segment processing facilities, all located in Corydon, Ind., Dexter, Mo., Noel, Mo., and North Little Rock, Ark., to further optimize network asset utilization. Tyson Foods expects to shift production to other facilities and cease operations at the impacted locations in their first two quarters of fiscal 2024. Tyson Foods' continues to evaluate the financial statement impact of the closures for charges related to contract terminations, impairments, accelerated depreciation, severance and retention. Based on the company's preliminary analysis, they currently estimate total charges of $300 million to $400 million, which will be recorded through the planned closure dates.

Source: Tyson Foods Inc.