Tyson Foods (TSN), a leading producer of beef, chicken, and pork, surpassed EPS estimates in Q3. More notably, sales increased by 1.6% to $13.35 billion, marking the first quarterly beat since 4Q22. This growth was driven by TSN's Beef and Pork segments, which saw increases of 5.6% and 10.6%, respectively, as more people opted to eat at home and cut discretionary spending.
- Increasing volumes highlighted the eat-at-home trend. Beef volume rose by 4.4%, Prepared Foods by 2%, and Pork by 1.2%.
- Chicken volumes declined by 0.4%, a significant improvement from last quarter's 6.0% drop. TSN has reduced production and closed some chicken processing plants to better match supply with demand.
- Lower grain and chicken feed costs boosted margins and profits. Despite a 3.2% drop in Chicken sales to $4.08 billion, operating income rose to $244 million from a loss of ($314) million a year ago.
- Beef's operating income fell to ($69) million from $66 million a year earlier due to limited cattle supplies and spread compression, despite solid sales growth.
- Prepared Foods, including brands like Jimmy Dean, Hillshire Farm, and Ball Park, saw net sales rise by 2.1%, with operating income remaining flat at $203 million year-over-year.
Overall, TSN's results showed improvement after several mixed quarters. The company maintained a conservative FY24 revenue outlook, forecasting relatively flat sales. However, with the growing trend of home-cooked meals, TSN could outperform this guidance. If demand continues to rise, the revised FY24 adjusted operating income guidance of $1.6-$1.8 billion (up from $1.4-$1.8 billion) might also be modest.
