Tyson Foods Reports Fourth Quarter and Fiscal 2023 Results

November 13, 2023

Tyson Foods Sees Another Quarter of Sequential Adjusted Operating Income Growth with Continued Focus on Operational Excellence

Springdale, Arkansas – November 13, 2023 – Tyson Foods, Inc. (NYSE: TSN), one of the world’s largest food companies and a recognized leader in protein with leading brands including Tyson, Jimmy Dean, Hillshire Farm, Ball Park, Wright, Aidells, ibp and State Fair, reported the following results:

Third Quarter

1 The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). As used in this table and 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. Refer to the end of this release for an explanation and reconciliation of these and other non-GAAP financial measures used in this release to comparable GAAP measures.

Fourth Quarter Highlights

Sales of $13,348 million, down 2.8% from prior year
GAAP operating loss of ($463) million, down 160% from prior year
Adjusted operating income of $236 million, down 71% from prior year
GAAP EPS of ($1.31), down 187% from prior year
Adjusted EPS of $0.37, down 77% from prior year
Total Company GAAP operating margin of (3.5%)
Total Company adjusted operating margin (non-GAAP) of 1.8%
Liquidity of approximately $3.0 billion as of September 30, 2023
Recorded a goodwill impairment charge of $333 million in our Beef segment

Fiscal 2023 Highlights

Sales of $52,881 million, down 0.8% from prior year
GAAP operating loss of ($395) million, down 109% from prior year
Adjusted operating income of $933 million, down 79% from prior year
GAAP EPS of ($1.87), down 121% from prior year
Adjusted EPS of $1.34, down 85% from prior year
Total Company GAAP operating margin of (0.7%)
Total Company adjusted operating margin (non-GAAP) of 1.8%
Announced the closure of six Chicken facilities expected to reduce costs and improve capacity utilization

"While economic headwinds persist, we are moving in the right direction and managing what we can control," said Donnie King, President & CEO, Tyson Foods. "The decisions we have taken have made us more operationally efficient and aided a second quarter of sequential improvement in adjusted operating income. The strategy and leadership team we have in place will allow us to take advantage of the long-term opportunities in front of us and drive shareholder value."

earnings-2

²Average Price Change and Adjusted Operating Margin for the Chicken segment and Total Company exclude $118 million and $156 million for the three and twelve months ended September 30, 2023, respectively, of legal contingency accruals recognized as a reduction to Sales.

OUTLOOK

For fiscal 2024, the United States Department of Agriculture (USDA) indicates domestic protein production (beef, pork, chicken and turkey) should decrease slightly compared to fiscal 2023 levels. The following is a summary of the updated outlook for each of our segments, as well as an outlook for revenues, capital expenditures, net interest expense, liquidity, tax rate and dividends for fiscal 2024. 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 2024 projected adjusted results to its fiscal 2024 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 our 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.

Beef

USDA projects domestic production will decrease approximately 5% in fiscal 2024 as compared to fiscal 2023. We anticipate adjusted operating income (loss) between ($400) million and breakeven in fiscal 2024.

Pork

USDA projects domestic production will increase approximately 2% in fiscal 2024 as compared to fiscal 2023. We anticipate adjusted operating income to approximate breakeven in fiscal 2024.

Chicken

USDA projects chicken production will increase slightly in fiscal 2024 as compared to fiscal 2023. We anticipate adjusted operating income of $400 million to $700 million for fiscal 2024.

Prepared Foods

We anticipate adjusted operating income of $800 million to $1 billion in fiscal 2024.

International/Other

We anticipate improved results from our foreign operations in fiscal 2024.

Total Company

We anticipate total company adjusted operating income of $1.0 billion to $1.5 billion for fiscal 2024.

Revenue

We expect sales to be relatively flat in fiscal 2024 as compared to fiscal 2023.

Capital Expenditures

We expect capital expenditures between $1.0 billion and $1.5 billion for fiscal 2024. Capital expenditures include investments in profit improvement projects as well as projects for maintenance and repair. This includes completion of capacity expansion projects as well as new equipment; automation technology; and processes for product innovation.

Net Interest Expense

We expect net interest expense to approximate $400 million for fiscal 2024.

Liquidity

We expect total liquidity, which was approximately $3.0 billion as of September 30, 2023, 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% for fiscal 2024.

Dividends

Effective November 10, 2023, the Board of Directors increased the quarterly dividend previously declared on August 10, 2023, to $0.49 per share on our Class A common stock and $0.441 per share on our Class B common stock. The increased quarterly dividend is payable on December 15, 2023, to shareholders of record at the close of business on December 1, 2023. The Board also declared on November 10, 2023 a quarterly dividend of $0.49 per share on our Class A common stock and $0.441 per share on our Class B common stock, payable on March 15, 2024, to shareholders of record at the close of business on March 1, 2024. We anticipate the remaining quarterly dividends in fiscal 2024 will be $0.49 and $0.441 per share of our Class A and Class B common stock, respectively. This results in an annual dividend rate in fiscal 2024 of $1.96 for Class A shares and $1.764 for Class B shares, or a 2% increase compared to the fiscal 2023 annual dividend rate.

earnings-3

³The effective tax rate for the three and twelve months ended September 30, 2023 is impacted by a $333 million and $781 million goodwill impairment, respectively, as the impairment charge is non-deductible for income tax purposes.

earnings-5

Non-GAAP Financial Measures

Adjusted Operating Income (Loss), Adjusted Income (Loss) before Income Taxes, Adjusted Income Tax Expense (Benefit), Adjusted Net Income (Loss) Attributable to Tyson and Adjusted EPS, EBITDA, Adjusted EBITDA, net debt to EBITDA and net debt to Adjusted EBITDA are presented as supplemental financial measures in the evaluation of our business that are not required by, or presented in accordance with GAAP. The non-GAAP financial measures are tools intended to assist our management and investors in comparing our performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect our core operations on an ongoing basis. These non-GAAP measures should not be a substitute for their comparable GAAP financial measures. Investors should rely primarily on our GAAP results and use non-GAAP financial measures only supplementally in making investment decisions. We believe the presentation of these non-GAAP financial measures helps management and investors to assess our operating performance from period to period, including our ability to generate earnings sufficient to service our debt, enhances understanding of our financial performance and highlights operational trends. These measures are widely used by investors and rating agencies in the valuation, comparison, rating and investment recommendations of companies. Our calculation of non-GAAP measures may not be comparable to similarly titled measures reported by other companies and other companies may not define these non-GAAP financial measures in the same way, which may limit their usefulness of comparative measures.

Definitions

EBITDA is defined as net income (loss) before interest, incomes taxes, depreciation and amortization. Net debt to EBITDA (Adjusted EBITDA) represents the ratio of our debt, net of cash, cash equivalents and short-term investments, to EBITDA (and to Adjusted EBITDA). EBITDA, Adjusted EBITDA, net debt to EBITDA and net debt to Adjusted EBITDA are presented as supplemental financial measurements in the evaluation of our business.

Adjusted EBITDA, Adjusted Operating Income (Loss), Adjusted Income (Loss) before Income Taxes, Adjusted Income Tax Expense (Benefit), Adjusted Net Income (Loss) Attributable to Tyson and Adjusted EPS are defined as EBITDA, Operating Income (Loss), Income (Loss) before Income Taxes, Income Tax Expense (Benefit), Net Income (Loss) Attributable to Tyson and diluted earnings per share, respectively, excluding the impacts of any items that management believes do not directly reflect our core operations on an ongoing basis.

earnings-6

earnings-7

earnings-8

⁴Excludes the amortization of debt issuance and discount expense of $10 million and $11 million for the twelve months ended September 30, 2023 and October 1, 2022, respectively, as it is included in interest expense.

⁵Relates to fires at production facilities in Chicken in the fourth quarter of fiscal 2021 and Beef in the fourth quarter of fiscal 2019.

⁶Removal of accelerated depreciation of $19 million related to restructuring and related charges and $114 million related to plant closures for the twelve months ended September 30, 2023 as it is already included in depreciation expense.

⁷Goodwill impairment is non-deductible for income tax purposes and the EPS impact is net of $24 million associated with Net Income (Loss) Attributable to Noncontrolling Interests.

⁸The China plant relocation remuneration EPS impact is net of $3 million associated with Net Income (Loss) Attributable to Noncontrolling Interests.

⁹GAAP EPS, Net Income (Loss) Per Share Attributable to Tyson, excluded the impact of certain antidilutive securities given the Company incurring a net loss for fiscal 2023. Adjusted Non-GAAP EPS is in a net income position, and thus, the impact of the otherwise antidilutive securities under GAAP EPS were added back in the calculation of Adjusted Non-GAAP EPS.

About Tyson Foods, Inc.

Tyson Foods, Inc. (NYSE: TSN) is one of the world’s largest food companies and a recognized leader in protein. Founded in 1935 by John W. Tyson and grown under four generations of family leadership, the Company has a broad portfolio of products and brands like Tyson^®, Jimmy Dean^®, Hillshire Farm^®, Ball Park^®, Wright^®, Aidells^®, ibp^® and State Fair^®. Headquartered in Springdale, Arkansas, the Company had approximately 139,000 team members on September 30, 2023. Through its Core Values, Tyson Foods strives to operate with integrity, create value for its shareholders, customers, communities and team members and serve as a steward of the animals, land and environment entrusted to it. Visit www.tysonfoods.com.

Conference Call Information and Other Selected Data

A conference call to discuss the Company's financial results will be held at 9 a.m. Eastern Monday, November 13, 2023. A link for the webcast of the conference call is available on the Tyson Investor Relations website at http://ir.tyson.com. The webcast also can be accessed by the following direct link: https://events.q4inc.com/attendee/104152249. For those who cannot participate at the scheduled time, a replay of the live webcast and the accompanying slides will be available at http://ir.tyson.com. A telephone replay will also be available until Wednesday, December 13, 2023, toll free at 1-877-344-7529, international toll 1-412-317-0088 or Canada toll free 855-669-9658. The replay access code is 3023146. Financial information, such as this news release, as well as other supplemental data, can be accessed from the Company's web site at http://ir.tyson.com.

Forward-Looking Statements

Certain information in this release constitutes forward-looking statements as contemplated by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, current views and estimates of our outlook for fiscal 2024, other future economic circumstances, industry conditions in domestic and international markets, our performance and financial results (e.g., debt levels, return on invested capital, value-added product growth, capital expenditures, tax rates, access to foreign markets and dividend policy). These forward-looking statements are subject to a number of factors and uncertainties that could cause our actual results and experiences to differ materially from anticipated results and expectations expressed in such forward-looking statements. We wish to caution readers not to place undue reliance on any forward-looking statements, which are expressly qualified in their entirety by this cautionary statement and speak only as of the date made. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Among the factors that may cause actual results and experiences to differ from anticipated results and expectations expressed in such forward-looking statements are the following: (i) global pandemics have had, and may in the future have, an adverse impact on our business and operations; (ii) the effectiveness of our financial excellence programs; (iii) access to foreign markets together with foreign economic conditions, including currency fluctuations, import/export restrictions and foreign politics; (iv) cyberattacks, other cyber incidents, security breaches or other disruptions of our information technology systems; (v) risks associated with our failure to consummate favorable acquisition transactions or integrate certain acquisitions’ operations; (vi) the Tyson Limited Partnership’s ability to exercise significant control over the Company; (vii) fluctuations in the cost and availability of inputs and raw materials, such as live cattle, live swine, feed grains (including corn and soybean meal) and energy; (viii) market conditions for finished products, including competition from other global and domestic food processors, supply and pricing of competing products and alternative proteins and demand for alternative proteins; (ix) outbreak of a livestock disease (such as African swine fever (ASF), avian influenza (AI) or bovine spongiform encephalopathy (BSE)), which could have an adverse effect on livestock we own, the availability of livestock we purchase, consumer perception of certain protein products or our ability to conduct our operations; (x) changes in consumer preference and diets and our ability to identify and react to consumer trends; (xi) effectiveness of advertising and marketing programs; (xii) significant marketing plan changes by large customers or loss of one or more large customers; (xiii) our ability to leverage brand value propositions; (xiv) changes in availability and relative costs of labor and contract farmers and our ability to maintain good relationships with team members, labor unions, contract farmers and independent producers providing us livestock, including as a result of our plan to relocate certain corporate team members to our world headquarters in Springdale, Arkansas; (xv) issues related to food safety, including costs resulting from product recalls, regulatory compliance and any related claims or litigation; (xvi) the effect of climate change and any legal or regulatory response thereto; (xvii) compliance with and changes to regulations and laws (both domestic and foreign), including changes in accounting standards, tax laws, environmental laws, agricultural laws and occupational, health and safety laws; (xviii) adverse results from litigation; (xix) risks associated with leverage, including cost increases due to rising interest rates or changes in debt ratings or outlook; (xx) impairment in the carrying value of our goodwill or indefinite life intangible assets; (xxi) our participation in a multiemployer pension plan; (xxii) volatility in capital markets or interest rates; (xxiii) risks associated with our commodity purchasing activities; (xxiv) the effect of, or changes in, general economic conditions; (xxv) impacts on our operations caused by factors and forces beyond our control, such as natural disasters, fire, bioterrorism, pandemics, armed conflicts or extreme weather; (xxvi) failure to maximize or assert our intellectual property rights; (xxvii) effects related to changes in tax rates, valuation of deferred tax assets and liabilities, or tax laws and their interpretation; and (xxviii) the other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission, including those included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our most recent Annual Report on Form 10-K and Quarterly reports on Form 10-Q.

Media Contact: Laura Burns | 479-713-9890

Investor Contact: Sean Cornett | 479-466-0401

Source: Tyson Foods, Inc.