Tyson Foods Q1 Results Top Estimates, Provides Rosy Revenue Outlook

(RTTNews) - Meat products provider Tyson Foods, Inc. (TSN) reported Friday a profit for the first quarter that increased from last year, reflecting improved margins and revenue growth, amid increased volume and pricing. The results were boosted by primarily chicken and beef operations.

Earnings per share and quarterly sales topped analysts' expectations. The company also provided sales guidance for the full-year 2014, just above Street view.

"I'm very pleased with our strong first quarter results, and I'm confident in my expectations for the full year. We're growing sales and earnings and executing our strategy - including making our third prepared foods acquisition in less than a year - while reinvesting in our existing businesses and buying back shares," President and CEO Donnie Smith said.

The Springdale, Arkansas-based company reported net income of $254 million or $0.72 per share for the first quarter, higher than $173 million or $0.48 per share in the prior-year quarter. Net income from continuing operations for the year-ago quarter was $0.49 per share.

On average, 11 analysts polled by Thomson Reuters expected the company to report earnings of $0.63 per share for the quarter. Analysts' estimates typically exclude special items.

Sales for the quarter increased 4.7 percent to $8.76 billion from $8.37 billion in the same quarter last year, and topped nine Wall Street analysts' consensus estimate of $8.75 billion by a whisker. Total volume grew 2.5 percent and average prices increased 2.4 percent.

Chicken sales grew to $2.98 billion from $2.92 billion, with volume growth of 3.6 percent, but average price decline 1.4 percent. Beef sales also increased to $3.73 billion from $3.49 billion last year, with volume growth of 4.1 percent and average price increase of 2.9 percent.

Pork sales improved to $1.42 billion from $1.36 billion, with average price increase of 6.7 percent, but volumes declined 2.1 percent. Prepared Foods sales also grew to $907 million from $841 million, with volume growth of 3.5 percent and average price increase of 4.2 percent.

Operating margin for the quarter expanded 110 basis points to 4.7 percent, as gross margin improved 140 basis points to 7.8 percent from last year. Margins improved in chicken and beef segments, partially offset by a drop in pork and prepared foods segments.

Looking ahead to fiscal 2014, Tyson Foods expects sales of about $36 billion as it continues to execute its strategy of accelerating growth in domestic value-added chicken sales, prepared food sales and international chicken production. Street is currently looking for full-year 2014 sales of $35.75 billion.

The company also expects full year capital expenditures to about $700 million.

"We're in a position any company wants to be in, which is being able to make deliberate, long-term decisions to create shareholder value," Smith said. "But we're maintaining our sense of urgency, our flexibility and our opportunistic mindset. We're generating momentum that will take us into 2015, 2016 and beyond," Smith added.

TSN closed Thursday's regular trading session at $34.49, down $0.03 on a volume of 3.77 million shares.