Tyson Foods Inc. of Springdale on Monday reported a record 51 percent increase in earnings per share because of strong third-quarter results across all of its divisions.
The nation's largest meat processor reported an adjusted net income per share of $1.21, up from 80 cents a year ago. It reported a net income of $484 million, up from $343 million the same quarter last year.
The company's share price has grown by nearly 40 percent this year and has outperformed the S&P 500 by more than 31 percent. Tyson shares rose 43 cents to close Monday at $74.07.
Nearly every facet of the report released Monday beat analysts' average earnings projections of $1.06 per share and revenue of $9.33 billion. Zacks Consensus Estimate had forecast earnings of $1.07 a share.
The company reported operating income of $767 million, compared with $563 million for the same quarter a year ago, a 35 percent increase.
In a conference call with analysts and reporters, Tyson officials predicted records this year in sales, income and earnings per share despite an overall decline in sales this quarter. Sales hit $9.4 billion, down about 7 percent from $10.07 billion a year ago.
Chief Executive Officer Donnie Smith attributed the earnings increase to strong consumer demand for the company's prepared foods and packaged-food products and lower prices for animal feed.
"We again demonstrated our ability to deliver higher, more stable earnings" with growth in prepared foods and value-added products, Smith said.
Chicken segments of Tyson delivered a record 13.9 percent return on sales; prepared foods, a 10.9 percent return, and pork at 9.6 percent. Chicken sales came to $2.74 billion, nearly a 1 percent increase over the third quarter a year ago. Pork sales were $1.2 billion, about the same as a year ago.
Tyson reported $150 million in "synergies," or savings, with $116 million of that coming in the prepared foods division since its purchase two years ago of Hillshire Brands. Total prepared food sales for the quarter were $1.8 billion, nearly the same as the year-ago quarter.
Beef had an increase in sales volume, but prices were lower for the quarter. Tyson's beef segment lost $7 million in the third quarter last year but made $91 million this quarter on sales of $3.7 billion.
Looking forward, Smith predicted a strong fiscal 2017 because of stronger employment numbers nationwide, low gasoline prices and slight increases in the nation's gross domestic product and in disposable personal income. As long as cattle herds expand and if there is no drought, he said he expected earnings per share to grow by a "high single digit" for the coming in the next fiscal year, which will begin in October.
Full-year earnings-per-share expectations were raised from $4.47 to $4.57. Tyson predicted sales this fiscal year of $37 billion and a 1 percent increase in sales for fiscal 2017. Smith said sales in the next fiscal year will be helped by Tyson Naturals, a new chicken line that will be introduced later this month.
The company expects another $700 million in savings related to the acquisition of Hillshire.
The company also said it repurchased 6.6 million shares for $425 million during the quarter, bringing the repurchase total to 31 million shares, worth $380 million, over the past 12 months. Another 49 million shares remain authorized for repurchase.
Business on 08/09/2016