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TYSON FOODS, INC. (TSN)·Q1 2025 Earnings Summary

Executive Summary

  • Tyson Foods delivered year-over-year top- and bottom-line growth: Sales $13.62B (+2.3% YoY), GAAP Operating Income $580M (+151%), Adjusted Operating Income $659M (+60%), GAAP EPS $1.01 (+237%), Adjusted EPS $1.14 (+65%). Management characterized it as “our best quarterly performance in more than two years” and the third consecutive quarter of YoY growth .
  • Chicken segment was the standout: GAAP Operating Income $351M (8.6% margin) and Adjusted Operating Income $368M (9.1% margin), the best adjusted operating income of any quarter in the last 8 years per management .
  • Guidance raised: FY25 Total Company Adjusted Operating Income to $1.9–$2.3B (from $1.8–$2.2B), Sales flat to +1% (from down 1% to flat), Chicken AOI to $1.0–$1.3B (from $1.0–$1.2B); capex, tax, interest unchanged; FCF updated to $1.0–$1.6B .
  • Balance sheet and cash: Liquidity $4.5B; CFO generated $1.03B; Free cash flow $760M; Net leverage at 2.3x (sequential improvement), with $750M term loan repayment in January per call commentary .
  • Near-term stock catalysts: guidance raise driven by chicken execution, continued margin expansion, and disciplined cash flow; watch tariff developments (Mexico/Canada), beef cycle headwinds, and Prepared Foods input cost inflation impacting margins .

What Went Well and What Went Wrong

What Went Well

  • Record Chicken profitability and execution: “best adjusted operating income of any quarter over the past 8 years,” driven by lower grain costs, live ops and plant performance, and improved order fill (>98%) .
  • Enterprise momentum: “third consecutive quarter of year-over-year increases in sales, adjusted operating income and adjusted EPS,” with total adjusted operating margin up to 4.8% .
  • Guidance raise and cash discipline: Total Company AOI raised to $1.9–$2.3B; FCF guided to $1.0–$1.6B; maintained capex at $1.0–$1.2B; net leverage down to 2.3x and $750M term loan repaid in January .

What Went Wrong

  • Prepared Foods margin pressure from input costs (belly and sow): AOI down QoQ and YoY; segment GAAP margin 8.5% (vs 9.6% prior-year); management expects price pass-through and operational improvements to offset over the year .
  • Pork spreads compressed: GAAP operating margin 3.6% (vs 2.6% prior-year), adjusted AOI down YoY, with haul/cutout dynamics cited; management still expects FY AOI $0.1–$0.2B .
  • Beef still in loss due to cattle cycle: GAAP operating loss $(64)M (−1.2% margin), adjusted loss $(32)M; FY25 guidance unchanged at $(0.4)–$(0.2)B adjusted loss; typical Q2 seasonality expected .

Financial Results

Consolidated Results vs Prior Periods and Prior Year

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$13.353 $13.565 $13.623
GAAP Operating Income ($USD Millions)$341 $525 $580
Adjusted Operating Income ($USD Millions)$491 $512 $659
GAAP Diluted EPS ($)$0.54 $1.00 $1.01
Adjusted EPS ($)$0.87 $0.92 $1.14
Gross Margin (%)6.6% 7.8% 8.0%
Operating Margin (%)2.6% 3.9% 4.3%
Net Income Margin (%) (Attributable to Tyson)1.4% 2.6% 2.6%

Segment Breakdown – Q1 2025 (GAAP and Adjusted)

SegmentSales ($USD Millions)GAAP Operating Income ($USD Millions)GAAP Operating Margin (%)Adjusted Operating Income ($USD Millions)Adjusted Operating Margin (%)
Beef$5,335 $(64) (1.2)% $(32) (0.6)%
Pork$1,617 $59 3.6% $59 3.6%
Chicken$4,065 $351 8.6% $368 9.1%
Prepared Foods$2,473 $209 8.5% $234 9.5%
International/Other$584 $25 n/a $30 n/a
Total Company$13,623 $580 4.3% $659 4.8%

KPIs and Balance Sheet – Q1 2025

KPIQ1 2025
Cash from Operations ($USD Millions)$1,031
Free Cash Flow ($USD Millions)$760
Liquidity ($USD Billions)$4.5
Net Debt / Adjusted EBITDA (LTM) (x)2.3x
Cash and Equivalents ($USD Millions)$2,292
Total Debt ($USD Millions)$9,806 gross / Net debt $7,513 (LTM basis)

Guidance Changes

MetricPeriodPrevious Guidance (Q4 2024)Current Guidance (Q1 2025)Change
Total Company Adjusted Operating Income ($B)FY 2025$1.8–$2.2 $1.9–$2.3 Raised
Sales Growth (%) vs FY 2024FY 2025Down 1% to Flat Flat to +1% Raised
Chicken Adjusted Operating Income ($B)FY 2025$1.0–$1.2 $1.0–$1.3 Raised (upper bound)
Prepared Foods Adjusted Operating Income ($B)FY 2025$0.9–$1.1 $0.9–$1.1 Maintained
Beef Adjusted Operating Income ($B)FY 2025$(0.4)–$(0.2) $(0.4)–$(0.2) Maintained
Pork Adjusted Operating Income ($B)FY 2025$0.1–$0.2 $0.1–$0.2 Maintained
Net Interest Expense ($M)FY 2025~380 ~375 Slightly Lower
Capex ($B)FY 2025$1.0–$1.2 $1.0–$1.2 Maintained
Free Cash Flow ($B)FY 2025> dividends $1.0–$1.6 Clarified/Higher specificity
Adjusted Tax Rate (%)FY 202524–25 ~25 Maintained
DividendsFY 2025$2.00 Class A / $1.80 Class B annualized Not updated in Q1 2025 PR (ongoing) Maintained (per Q4 declaration)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q4 2024; Q-1: Q3 2024)Current Period (Q1 2025)Trend
AI/Technology initiativesFY25 priorities explicitly include “Investing in big data, analytics, and AI to improve operational decision-making and drive consumer insights” .Highlighted generative AI enhancements to foodservice browsing/search to improve relevance and insight capture .Building and operationalizing AI capabilities.
Supply chain / S&OP / Order fillQ4 FY24 emphasized operational excellence, S&OP discipline . Q3 FY24 free cash flow improved with efficiency .Best order fill in 8 years (>98%); improved demand planning, forecast accuracy, plant scheduling and execution .Strengthening execution; sustained improvements.
Tariffs / MacroLimited explicit mention in prior press releases.Detailed discussion on potential Mexico tariffs (pork, chicken leg quarters), Canada trade flows; contingency planning; guidance risk-adjusted .Emerging headwind; monitored, risk-adjusted into outlook.
Beef cycle / cattle supplyQ3 and Q4 FY24 recognized tight cattle supply, spread compression .Better-than-expected Q1 results; management asserts cycle at near-bottom; indicators (pasture conditions, cow harvest down ~19%) suggest future herd rebuild .Near-cycle bottom; cautious near-term but constructive medium-term.
Prepared Foods product performanceQ3/Q4: consistent profitability; AOI best full year since FY18 .Margin pressure from belly/sow costs; growing distribution, innovation pipeline (Jimmy Dean Griddle Cakes >$100M L52W; chicken biscuit) .Short-term cost headwinds; medium-term supported by innovation/efficiency.
Labor/ImmigrationNot a focal point in Q3/Q4 PR.No ICE visits; fully compliant hiring; absenteeism stable; scenario-planning for policy changes .Stable operations; monitoring policy environment.
InternationalQ3 FY24: International/Other improving .Record adjusted operating income, strong Asia results and favorable raw material costs .Improving profitability momentum.

Management Commentary

  • “Fiscal year 2025 is off to a strong start… best quarterly performance in more than two years… exceptional results in chicken.” – Donnie King, President & CEO .
  • “Adjusted operating income increased by $248 million… margin expanded by 170 bps… adjusted EPS grew by 65%… net leverage at 2.3x… building financial strength.” – Donnie King .
  • “In chicken, we achieved the best adjusted operating income of any quarter over the past 8 years… evolution of commercial relationships… improved order fill rates for the second consecutive year.” – Donnie King .
  • “We are raising our sales guidance (flat to +1%) and total company adjusted operating income to $1.9–$2.3 billion; interest ~$375M; tax ~25%; capex $1.0–$1.2B; FCF $1.0–$1.6B.” – Curt Calaway, CFO .
  • “International delivered record quarterly adjusted operating income, supported by strong results in Asia.” – Curt Calaway .

Q&A Highlights

  • Tariffs: Management confirmed contingency planning to re-route pork and chicken products if Mexico imposes tariffs; guidance incorporates risk adjustments; Canada flows small for chicken but noted for feeder cattle and hogs .
  • Beef cadence and cycle: Seasonality expected to challenge Q2; cycle viewed near trough with improving pasture conditions and cow harvest down ~19% YoY; guidance unchanged at $(0.4)–$(0.2)B adjusted loss .
  • Prepared Foods margin recovery: Input cost spikes pressured Q1 margins; plan relies on distribution growth, innovation (Griddle Cakes >$100M L52W), and operational efficiencies to meet AOI guidance ($0.9–$1.1B) .
  • Chicken guidance lower bound: Top end raised; lower bound unchanged due to external risks (weather, bird health); fundamentals solid; supply/demand balanced .
  • Capital allocation & leverage: Net leverage improved to 2.3x; $750M term loan repaid in January; priorities: financial strength, invest for growth/profit, return cash via dividends (13th consecutive annual increase) .
  • Leadership: Announcement of forthcoming poultry leadership transition later in FY25; succession plan in place .

Estimates Context

  • SPGI/Capital IQ consensus for Q1 2025 EPS and revenue was unavailable due to S&P Global daily request limit at the time of retrieval; as such, specific consensus values and beats/misses vs estimates cannot be provided. Values would normally be retrieved from S&P Global.
  • Implications: Given actual Adjusted EPS $1.14 and AOI strength, sell-side models may raise FY25 Chicken and Total AOI assumptions; Prepared Foods margin trajectory may be smoothed for Q2–Q4 to reflect pass-through and productivity; Beef likely maintained at the guided loss range .

Key Takeaways for Investors

  • Chicken profitability inflection is durable, supported by operational execution and commercial alignment; sustained high single-digit adjusted margins and volume growth in foodservice are supportive of multiple expansion within protein peers .
  • The guidance raise (Total AOI, Sales) aligns with continued enterprise margin expansion; cash generation supports deleveraging and dividend continuity .
  • Watch for Q2 seasonality (weather, beef spreads) and Prepared Foods input costs; management expects a more balanced first/second half with improvements ramping through the year .
  • Tariff risk is present but contingency planning and diversified markets mitigate impact; guidance already risk-adjusted .
  • International/Other is turning from headwind to contributor, particularly in Asia, offering incremental margin support .
  • Non-GAAP adjustments (network optimization $73M, brand discontinuation $6M, Netherlands-related items) boosted adjusted results; continued network optimization should aid efficiency but monitor one-time effects .
  • Near-term trading: Positive catalyst from guidance raise and Chicken momentum; potential volatility around tariff headlines and beef cycle prints; medium-term thesis hinges on operational excellence, innovation in Prepared Foods, and disciplined capital allocation .