Tyson Foods : Second Quarter 2024 Earnings Release

TYSON FOODS REPORTS SECOND QUARTER 2024 RESULTS

Year-Over-Year Growth in Operating Income Highlights Progress on Strategic Initiatives

Springdale, Arkansas - May 6, 2024 - 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:

(in millions, except per share data)		Second Quarter			Six Months Ended
		2024			2023			2024			2023
Sales	$	13,072	$	13,133	$	26,391	$	26,393
Operating Income (Loss)	$	312	$	(49)	$	543	$	418
Adjusted1 Operating Income (non-GAAP)	$	406	$	65	$	817	$	518
Net Income (Loss) Per Share Attributable to Tyson	$	0.41	$	(0.28)	$	0.71	$	0.61
Adjusted1 Net Income (Loss) Per Share Attributable to Tyson (non-GAAP)	$	0.62	$	(0.04)	$	1.31	$	0.82

• 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.

First Six Months Highlights

• Sales of $26,391 million, flat from prior year
• GAAP operating income of $543 million, up 30% from prior year
• Adjusted operating income of $817 million, up 58% from prior year
• GAAP EPS of $0.71, up 16% from prior year
• Adjusted EPS of $1.31, up 60% from prior year
• Total Company GAAP operating margin of 2.1%
• Total Company adjusted operating margin (non-GAAP) of 3.1%
• Cash provided by operating activities of $1,177 million, up 53% from prior year
• Free cash flow (non-GAAP) of $556 million, up $884 million from prior year

Second Quarter Highlights

• Sales of $13,072 million, down 0.5% from prior year
• GAAP operating income of $312 million, up 737% from prior year
• Adjusted operating income of $406 million, up 525% from prior year
• GAAP EPS of $0.41, up $0.69 from prior year
• Adjusted EPS of $0.62, up $0.66 from prior year
• Total Company GAAP operating margin of 2.4%
• Total Company adjusted operating margin (non-GAAP) of 3.1%
• Liquidity of approximately $4.4 billion as of March 30, 2024; issued $1.5 billion senior notes

"During the second quarter, we continued our positive momentum and made progress on our key initiatives. The strategies we have implemented are delivering tangible results, as evidenced by our return to year-over-year bottom line growth," said Donnie King, President & CEO of Tyson Foods. "Looking to the back half of the year, we will continue to focus on executing the fundamentals and leveraging our multi-protein portfolio. We are energized by our progress to-date and laser-focused on driving long-term value."

1

SEGMENT RESULTS (in millions)

						Sales
	(for the second quarter and six months ended March 30, 2024, and April 1, 2023)
					Second Quarter					Six Months Ended
						Volume	Avg. Price					Volume	Avg. Price
			2024		2023	Change	Change		2024		2023	Change	Change
Beef		$	4,954	$	4,617	2.8 %	4.5 %	$	9,977	$	9,340	(0.8) %	7.6 %
Pork			1,486		1,421	2.9 %	1.7 %		3,003		2,950	5.3 %	(3.5) %
Chicken			4,065		4,430	(6.1) %	(2.1) %		8,098		8,693	(3.8) %	(3.0) %
Prepared Foods			2,404		2,422	0.7 %	(1.4) %		4,947		4,960	1.6 %	(1.9) %
International/Other			580		634	3.0 %	(11.5) %		1,162		1,246	2.7 %	(9.4) %
Intersegment Sales			(417)		(391)	n/a	n/a		(796)		(796)	n/a	n/a
Total		$	13,072	$	13,133	(1.5)%	1.0 %	$	26,391	$	26,393	(0.7)%	0.7 %
					Operating Income (Loss)
	(for the second quarter and six months ended March 30, 2024, and April 1, 2023)
					Second Quarter					Six Months Ended
						Operating Margin					Operating Margin
			2024		2023	2024	2023		2024		2023	2024	2023
Beef
	$	(35)	$	-	(0.7) %	- %	$	(241)	$	166	(2.4) %	1.8 %
Pork			(1)		(33)	(0.1) %	(2.3) %		38		(54)	1.3 %	(1.8) %
Chicken			158		(258)	3.9 %	(5.8) %		335		(189)	4.1 %	(2.2) %
Prepared Foods			230		241	9.6 %	10.0 %		473		499	9.6 %	10.1 %
International/Other			(40)		1	n/a	n/a		(62)		(4)	n/a	n/a
Total		$	312	$	(49)	2.4 %	(0.4)%	$	543	$	418	2.1 %	1.6 %
ADJUSTED SEGMENT RESULTS (in millions)
			Adjusted Operating Income (Loss) (Non-GAAP)1
	(for the second quarter and six months ended March 30, 2024, and April 1, 2023)
					Second Quarter					Six Months Ended
						Adjusted Operating					Adjusted Operating
						Margin (Non-GAAP)					Margin (Non-GAAP)
			2024		2023	2024	2023		2024		2023	2024	2023
Beef
	$	(34)	$	8	(0.7) %	0.2 %	$	(151)	$	137	(1.5) %	1.5 %
Pork			33		(31)	2.2 %	(2.2) %		101		(50)	3.4 %	(1.7) %
Chicken			160		(166)	3.9 %	(3.7) %		352		(89)	4.3 %	(1.0) %
Prepared Foods			233		252	9.7 %	10.4 %		497		518	10.0 %	10.4 %
International/Other			14		2	n/a	n/a		18		2	n/a	n/a
Total		$	406	$	65	3.1 %	0.5 %	$	817	$	518	3.1 %	2.0 %

2

OUTLOOK

For fiscal 2024, the United States Department of Agriculture (USDA) indicates domestic protein production (beef, pork, chicken and turkey) should increase 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 and tax rate for fiscal 2024. Certain of the outlook numbers include adjusted operating income (loss) (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-lookingnon-GAAP measures without unreasonable effort. Adjusted operating income (loss) should not be considered a substitute for operating income (loss) 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 2% in fiscal 2024 as compared to fiscal 2023. We anticipate adjusted operating loss between ($400) million and ($100) million in fiscal 2024.

Pork

USDA projects domestic production will increase approximately 3% in fiscal 2024 as compared to fiscal 2023. We anticipate adjusted operating income of $50 million to $150 million in fiscal 2024.

Chicken

USDA projects chicken production will increase approximately 1% in fiscal 2024 as compared to fiscal 2023. We anticipate adjusted operating income of $700 million to $900 million for fiscal 2024.

Prepared Foods

We anticipate adjusted operating income of $850 million to $950 million in fiscal 2024.

International/Other

We anticipate improved results from our foreign operations in fiscal 2024 on an adjusted basis.

Total Company

We anticipate total company adjusted operating income of $1.4 billion to $1.8 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 $1.2 billion and $1.4 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 $4.4 billion as of March 30, 2024, to remain above our minimum liquidity target of $1.0 billion. We anticipate using existing liquidity to retire the $1.25 billion senior notes due August 2024.

Tax Rate

We currently expect our adjusted effective tax rate to be around 24% for fiscal 2024.

3

TYSON FOODS, INC.

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(In millions, except per share data)

(Unaudited)

		Three Months Ended			Six Months Ended
		March 30, 2024			April 1, 2023			March 30, 2024			April 1, 2023
Sales	$	13,072		$	13,133		$	26,391		$	26,393
Cost of Sales		12,206			12,606			24,702			24,898
Gross Profit		866			527			1,689			1,495
Selling, General and Administrative		554			576			1,146			1,077
Operating Income (Loss)		312			(49)			543			418
Other (Income) Expense:
Interest income		(14)			(7)			(24)			(16)
Interest expense		111			89			216			173
Other, net		12			(1)			(13)			(43)
Total Other (Income) Expense		109			81			179			114
Income (Loss) before Income Taxes		203			(130)			364			304
Income Tax Expense (Benefit)		55			(39)			102			75
Net Income (Loss)		148			(91)			262			229
Less: Net Income Attributable to Noncontrolling Interests		3			6			10			10
Net Income (Loss) Attributable to Tyson	$	145		$	(97)		$	252		$	219
Net Income (Loss) Per Share Attributable to Tyson:
Class A Basic	$	0.42	$	(0.28)	$	0.73	$	0.63
Class B Basic	$	0.37	$	(0.25)	$	0.65	$	0.56
Diluted	$	0.41	$	(0.28)	$	0.71	$	0.61
Dividends Declared Per Share:
Class A	$	0.490	$	0.480	$	0.990	$	0.980
Class B	$	0.441	$	0.432	$	0.891	$	0.882
Sales Growth		(0.5)%						- %
Margins: (Percent of Sales)
Gross Profit		6.6 %			4.0 %			6.4 %			5.7 %
Operating Income (Loss)		2.4 %			(0.4)%			2.1 %			1.6 %
Net Income (Loss) Attributable to Tyson		1.1 %			(0.7)%			1.0 %			0.8 %
Effective Tax Rate		26.9 %			29.4 %			28.0 %			24.7 %

4

TYSON FOODS, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(In millions) (Unaudited)

		March 30, 2024		September 30, 2023
Assets
Current Assets:
Cash and cash equivalents	$	2,182	$	573
Accounts receivable, net		2,358			2,476
Inventories		5,056			5,328
Other current assets		370			345
Total Current Assets		9,966			8,722
Net Property, Plant and Equipment		9,593			9,634
Goodwill		9,878			9,878
Intangible Assets, net		5,985			6,098
Other Assets		2,043			1,919
Total Assets	$	37,465	$	36,251
Liabilities and Shareholders' Equity
Current Liabilities:
Current debt	$	1,315	$	1,895
Accounts payable		2,244			2,594
Other current liabilities		2,074			2,010
Total Current Liabilities		5,633			6,499
Long-Term Debt		9,645			7,611
Deferred Income Taxes		2,292			2,308
Other Liabilities		1,672			1,578
Total Tyson Shareholders' Equity		18,089			18,133
Noncontrolling Interests		134			122
Total Shareholders' Equity		18,223			18,255
Total Liabilities and Shareholders' Equity
$	37,465		$	36,251

5

TYSON FOODS, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In millions) (Unaudited)

		Six Months Ended
		March 30, 2024			April 1, 2023
Cash Flows From Operating Activities:
Net income	$	262	$	229
Depreciation and amortization		722			620
Deferred income taxes		(21)			(29)
Other, net		142			191
Net changes in operating assets and liabilities		72			(242)
Cash Provided by Operating Activities		1,177			769
Cash Flows From Investing Activities:
Additions to property, plant and equipment		(621)			(1,097)
Purchases of marketable securities		(13)			(15)
Proceeds from sale of marketable securities		12			14
Acquisition, net of cash acquired		-			(39)
Acquisition of equity investments		(26)			(37)
Other, net		27			(2)
Cash Used for Investing Activities		(621)			(1,176)
Cash Flows From Financing Activities:
Proceeds from issuance of debt		2,327			88
Payments on debt		(308)			(121)
Proceeds from issuance of commercial paper		1,649			4,773
Repayments of commercial paper		(2,240)			(4,182)
Purchases of Tyson Class A common stock		(31)			(332)
Dividends		(342)			(336)
Stock options exercised		8			8
Other, net		(12)			1
Cash Provided by (Used for) Financing Activities		1,051			(101)
Effect of Exchange Rate Changes on Cash		2			20
Increase (Decrease) in Cash and Cash Equivalents and Restricted Cash		1,609			(488)
Cash and Cash Equivalents and Restricted Cash at Beginning of Year		573			1,031
Cash and Cash Equivalents and Restricted Cash at End of Period		2,182			543
Less: Restricted Cash at End of Period		-			-
Cash and Cash Equivalents at End of Period	$	2,182	$	543

6

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, net debt to Adjusted EBITDA and Free Cash Flow 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, income taxes (benefits), 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.

Free Cash Flow is defined as Cash Provided by Operating Activities minus payments for Property, Plant and Equipment.

7

TYSON FOODS, INC.

GAAP Results to Non-GAAP Results Reconciliations

(In millions, except per share data)

(Unaudited)

Results for the second quarter ended March 30, 2024

		Cost	Selling,	Operating	Other	Income (Loss)	Income Tax	Net Income (Loss)		EPS
	Sales	of	General and		Income	(Income)	before Income		Expense		Attributable to
	Sales	Administrative		(Loss)	Expense		Taxes		(Benefit)		Tyson		Impact
GAAP Results				$	312		$	203	$	55	$	145	$	0.41
Restructuring and related charges	-	(3)	4		1	-		1		-		1		-
Plant closures	-	39	-		39	-		39		19		20		0.06
The Netherlands facility4	-	54	-		54	-		54		-		54		0.15
Adjusted Non-GAAP Results				$	406		$	297	$	74	$	220	$	0.62

Results for the second quarter ended April 1, 2023

		Cost	Selling,	Operating	Other	Income (Loss)	Income Tax	Net Income (Loss)		EPS
	Sales	of	General and		Income	(Income)	before Income		Expense		Attributable to
	Sales	Administrative		(Loss)	Expense		Taxes		(Benefit)		Tyson		Impact
GAAP Results				$	(49)		$	(130)	$	(39)	$	(97)	$	(0.28)
Restructuring and related charges	-	(4)	26		22	-		22		5		17		0.05
Plant closures	-	92	-		92	-		92		24		68		0.19
Adjusted Non-GAAP Results				$	65		$	(16)	$	(10)	$	(12)	$	(0.04)

Results for the six months ended March 30, 2024

		Cost	Selling,	Operating	Other	Income (Loss)	Income Tax	Net Income (Loss)		EPS
	Sales	of	General and		Income	(Income)	before Income		Expense		Attributable to
	Sales	Administrative		(Loss)	Expense		Taxes		(Benefit)		Tyson		Impact
GAAP Results				$	543		$	364	$	102	$	252	$	0.71
Production facility fire insurance proceeds, net	-	(24)	-		(24)	(3)		(27)		(6)		(21)		(0.06)
of costs3
Restructuring and related charges	-	-	31		31	-		31		8		23		0.06
Plant closures	-	114	-		114	-		114		38		76		0.22
Legal contingency accruals	-	73	-		73	-		73		18		55		0.16
The Netherlands facility4	-	80	-		80	-		80		-		80		0.22
Adjusted Non-GAAP Results				$	817		$	635	$	160	$	465	$	1.31

Results for the six months ended April 1, 2023

		Cost	Selling,	Operating	Other	Income (Loss)	Income Tax	Net Income (Loss)		EPS
	Sales	of	General and		Income	(Income)	before Income		Expense		Attributable to
	Sales	Administrative		(Loss)	Expense		Taxes		(Benefit)		Tyson		Impact
GAAP Results				$	418		$	304	$	75	$	219	$	0.61
Production facilities fire insurance proceeds,
net of costs3	-	(35)	-		(35)	-		(35)		(8)		(27)		(0.07)
Restructuring and related charges	-	4	39		43	-		43		10		33		0.09
Plant closures	-	92	-		92	-		92		24		68		0.19
Adjusted Non-GAAP Results				$	518		$	404	$	101	$	293	$	0.82

8

TYSON FOODS, INC.

Adjusted Operating Income (Loss) Non-GAAP Reconciliations

(In millions) (Unaudited)

Adjusted Operating Income (Loss)

(for the second quarter ended March 30, 2024)

Reported operating income (loss)

Add: Restructuring and related charges

Add: Plant closures

Add: the Netherlands facility4 Adjusted operating income (loss)

	Beef		Pork		Chicken	Prepared	International		Total
				Foods		/Other
$	(35)	$	(1)	$	158	$	230	$	(40)	$	312
	-		-		(2)		3		-		1
	1		34		4		-		-		39
	-		-		-		-		54		54
$	(34)	$	33	$	160	$	233	$	14	$	406

Adjusted Operating Income (Loss)

(for the second quarter ended April 1, 2023)

	Beef			Pork		Chicken	Prepared	International		Total
					Foods		/Other
Reported operating income (loss)	$	-	$	(33)	$	(258)	$	241	$	1	$	(49)
Add: Restructuring and related charges		8		2		-		11		1		22
Add: Plant closures		-		-		92		-		-		92
Adjusted operating income (loss)	$	8	$	(31)	$	(166)	$	252	$	2	$	65

Adjusted Operating Income (Loss)

(for the six months ended March 30, 2024)

Reported operating income (loss)

Less: Production facility fire insurance proceeds, net of costs3

Add: Restructuring and related charges

Add: Plant closures

Add: Legal contingency accruals

Add: the Netherlands facility4 Adjusted operating income (loss)

	Beef		Pork		Chicken	Prepared	International		Total
				Foods		/Other
$	(241)	$	38	$	335	$	473	$	(62)	$	543
	-		-		(24)		-		-		(24)
	4		1		2		24		-		31
	41		34		39		-		-		114
	45		28		-		-		-		73
	-		-		-		-		80		80
$	(151)	$	101	$	352	$	497	$	18	$	817

Adjusted Operating Income (Loss) (for the six months ended April 1, 2023)

Reported operating income (loss)

(Less)/Add: Production facilities fire insurance proceeds, net of costs3

Add: Restructuring and related charges

Add: Plant closures Adjusted operating income (loss)

	Beef		Pork		Chicken	Prepared	International		Total
				Foods		/Other
$	166	$	(54)	$	(189)	$	499	$	(4)	$	418
	(42)		-		7		-		-		(35)
	13		4		1		19		6		43
	-		-		92		-		-		92
$	137	$	(50)	$	(89)	$	518	$	2	$	518

9

TYSON FOODS, INC.

EBITDA and Adjusted EBITDA Non-GAAP Reconciliations

(In millions) (Unaudited)

		Six Months Ended		Fiscal Year Ended		Twelve Months Ended
		March 30, 2024			April 1, 2023		September 30, 2023			March 30, 2024
Net income (loss)	$	262	$	229	$	(649)	$	(616)
Less: Interest income		(24)			(16)			(30)			(38)
Add: Interest expense		216			173			355			398
Add/(Less): Income tax expense		102			75			(29)			(2)
(benefit)
Add: Depreciation		602			500			1,100			1,202
Add: Amortization2		115			115			229			229
EBITDA	$	1,273	$	1,076	$	976	$	1,173
Adjustments to EBITDA:
Less: Production facilities fire	$	(27)	$	(35)	$	(75)	$	(67)
insurance proceeds, net of costs3
Add: Restructuring and related charges		31			43			124			112
Add: Plant closures		114			92			322			344
Add: Legal contingency accruals		73			-			156			229
Add: The Netherlands facility4		80			-			-			80
Add: Goodwill impairment		-			-			781			781
Less: China plant relocation		-			-			(19)			(19)
remuneration
Add: Product line discontinuation		-			-			17			17
Less: Depreciation included in		(92)			(19)			(133)			(206)
EBITDA adjustments5
Total Adjusted EBITDA	$	1,452		$	1,157		$	2,149		$	2,444
Total gross debt						$	9,506	$	10,960
Less: Cash and cash equivalents								(573)			(2,182)
Less: Short-term investments								(15)			(16)
Total net debt						$	8,918	$	8,762
Ratio Calculations:
Gross debt/EBITDA								9.7x			9.3x
Net debt/EBITDA								9.1x			7.5x
Gross debt/Adjusted EBITDA								4.4x			4.5x
Net debt/Adjusted EBITDA								4.1x			3.6x

• Excludes the amortization of debt issuance and debt discount expense of $5 million for the six months ended March 30, 2024 and April 1, 2023, and $10 million for the fiscal year ended September 30, 2023 and the twelve months ended March 30, 2024 as it is included in interest expense.

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

• Relates to a fire at our production facility in the Netherlands in the first quarter of fiscal 2024 and current intention to discontinue the use of certain productive assets.

• Removal of accelerated depreciation of $92 million related to plant closures for the six months ended March 30, 2024; $10 million related to restructuring and related charges and $9 million related to plant closures for the six months ended April 1, 2023; $19 million related to restructuring and related charges and $114 million related to plant closures for the twelve months ended September 30, 2023; and $9 million related to restructuring and related charges and $197 million related to plant closures for the twelve months ended March 30, 2024 as they are already included in depreciation expense.

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