Beef prices keep rising, while chicken and pork prices fell, Tyson Foods said

By Tomi Kilgore

Tyson Foods' stock seesaws into the red, after revenue miss and downbeat outlook

Shares of Tyson Foods Inc. seesawed back into the red Monday, after the meats company missed sales expectations again, as prices fell and volume declined for the first time in a year.

While profit beat expectations to snap a five-quarter streak of misses, the company, with food brands including Tyson, Hillshire Farm, Jimmy Dean and Ball Park, provided a full-year sales outlook that was below Wall Street expectations.

"While we foresee more typical seasonality in our business for next year, things like startup costs and prepared foods and rising cattle costs will impact Q1 and Q2 and generally shift profitability to the back half of fiscal 2024," said Chief Financial Officer John Tyson in a conference call with analysts, according to an AlphaSense transcript. "In addition, we are monitoring potential impacts to the consumer of higher interest rates and inflation which could create some volatility."

The stock (TSN) had dropped as much as 7.3% in the premarket after results were released, then sprung to a gain of as much as 4.3% after the open, before falling back into the red mid-morning.

The stock was down 3.3% in recent afternoon trading. It was holding just above the 3 1/2-year closing low of $45.17. The selloff also put the stock on track for a fourth straight monthly decline, which would be the longest such stretch since the six-month loss streak that ended May 2018.

For the quarter to Sept. 30, the company swung to a net loss of $450 million, or $1.31 a share, from income of $538 million, or $1.50 a share, in the same period a year ago.

Excluding nonrecurring items, such as plant closures and goodwill impairment, adjusted earnings per share of 37 cents beat the FactSet consensus of 29 cents.

That was the first bottom-line beat for the company since fiscal second-quarter 2022 results were reported in May 2022.

Adjusted operating income, which excludes some recurring and one-time costs, fell 71% from a year ago to $236 million, but as Chief Executive Donnie King noted on the post-earnings conference call, that AOI improved sequentially for a second-consecutive quarter, from $179 in Q3 and $65 million in Q2.

Sales fell 2.8% to $13.35 billion, below the FactSet consensus of $13.73 billion, to mark a fourth straight top-line miss.

Overall, average prices declined 1.4% from a year ago and volume was down 0.6%. That was the third-straight quarter of price declines and the first drop in volume since the fiscal third-quarter of 2022.

Within Tyson's businesses, beef prices rose 10.2% while volume declined 6.7% in the latest quarter, following a 5.2% rise in prices and a 5.3% drop in volume in the sequential third quarter.

For chicken, prices tanked 9.2% while volume ticked up 1.7%, after prices rose 6.3% but volume was down 7.5% in the previous quarter. Pork prices declined 6.7% and volume dipped 0.2%, following declines of 16.4% in price and 1.8% in volume in the previous quarter.

For prepared foods, prices were down 1.6% while volume rose 1.0%, compared with increases of 7.6% in price and 8.6% in volume in the third quarter.

For fiscal 2024, the company expects sales to be "relatively flat" with 2023, while the FactSet consensus of $54.37 billion implies 2.8% growth from the $52.88 billion in 2023 sales.

"While we foresee more typical seasonality in our business for next year, things like startup costs and prepared foods and rising cattle costs will impact Q1 and Q2 and generally shift profitability to the back half of fiscal 2024," said CFO Tyson. "In addition, we are monitoring potential impacts to the consumer of higher interest rates and inflation which could create some volatility."

Meanwhile, the U.S. Department of Agriculture indicated fiscal 2024 protein production will "decrease slightly" from 2023 levels, with beef production down 5% while production of pork increases 2% and of chicken increases "slightly."

Tyson's stock has dropped 17.8% over the past three months and has tumbled 27.1% year to date, while the S&P 500 index SPX has slipped 1.1% the past three months but has rallied 15.1% this year.

-Tomi Kilgore

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11-13-23 1352ET

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