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TYSON FOODS, INC. (TSN)·Q2 2025 Earnings Summary

Executive Summary

  • Tyson delivered its fourth consecutive quarter of year-over-year improvement in sales, adjusted operating income, and adjusted EPS; adjusted EPS beat consensus while revenue was slightly below consensus (see tables). Management kept full‑year guidance unchanged, citing a dynamic macro, tariff risk and beef headwinds offset by Chicken strength and Prepared Foods execution .
  • Mix was the story: strong Chicken (best Q2 AOI in 9 years), resilient Prepared Foods margins, improving International, and Pork AOI up year over year, offset by compressed Beef spreads; a $343M legal contingency accrual (primarily Pork) reduced reported sales by 2.6% and boosted non‑GAAP adjustments materially this quarter .
  • Balance sheet/cash: liquidity $3.2B, net leverage ~2.3x (after paying off $750M term loan post-Q1 and reducing total debt $738M in Q2), YTD free cash flow $382M with FY25 FCF guidance maintained at $1.0–$1.6B .
  • Catalysts: sustained Chicken AOI momentum and network/logistics optimization (targeting ~$200M annual savings over 3–5 years), plus unchanged FY25 AOI guidance despite an EPS beat, frame the near‑term setup; continuing Beef pressure and tariff/trade dynamics remain key watch‑items for the stock narrative .

What Went Well and What Went Wrong

  • What Went Well

    • Chicken outperformance: “best second quarter adjusted operating income in 9 years,” driven by operational execution, lower grain costs, and >98% fill rates; segment adjusted AOI up 95% YoY with margin expansion (see segment tables) .
    • Prepared Foods resiliency: delivered double‑digit margins with ~50 bps YoY expansion; efficiency in SG&A/MAP and ops improvements offset raw material inflation; management targets structural margin uplift over time .
    • International/Other improvement: strongest on record with better operational fundamentals and commercial execution; management still flags macro sensitivity but expects performance to remain favorable vs prior year .

  • What Went Wrong

    • Beef spread compression: limited cattle availability pressured spreads; Beef reported an adjusted operating loss and margin contraction despite resilient demand, with management continuing to navigate the cycle .
    • Legal contingency accrual: $343M reduced reported sales by 2.6% (primarily Pork), depressed GAAP optics (GAAP EPS $0.02) and required significant non‑GAAP adjustments (e.g., ~$0.73 EPS impact) .
    • Macro/tariff uncertainty: management kept FY25 guidance unchanged, explicitly embedding tariff and consumer headwinds; reiterated dynamic environment and the need for back‑half brand investments in Chicken .

Financial Results

Overall revenue, EPS, margins trajectory (oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Sales ($USD Billions)$13.565 $13.623 $13.074
GAAP EPS ($)$1.00 $1.01 $0.02
Adjusted EPS ($, non‑GAAP)$0.92 $1.14 $0.92
GAAP Operating Margin (%)3.9% 4.3% 0.8%
Adjusted Operating Margin (%)3.8% 4.8% 3.8%

Q2 2025 actuals vs S&P Global consensus

MetricQ2 2025 ConsensusQ2 2025 Actual
Adjusted EPS ($)0.82*0.92
Revenue ($USD Billions)13.137*13.074
EPS – # of Estimates9*—
Revenue – # of Estimates8*—

Values with asterisks (*) retrieved from S&P Global.

Segment performance – Sales and Operating Income (YoY, Q2 2024 → Q2 2025)

SegmentSales Q2’24 ($MM)Sales Q2’25 ($MM)Op Inc Q2’24 ($MM)Op Inc Q2’25 ($MM)Op Margin Q2’24Op Margin Q2’25
Beef4,954 5,196 (35) (258) (0.7%) (5.0%)
Pork1,486 1,244 (1) (195) (0.1%) (15.7%)
Chicken4,065 4,141 158 262 3.9% 6.3%
Prepared Foods2,404 2,396 230 244 9.6% 10.2%
International/Other580 566 (40) 47 n/an/a
Total13,072 13,074 312 100 2.4% 0.8%

Adjusted operating income by segment (YoY, Q2 2024 → Q2 2025)

SegmentAdj. Op Inc Q2’24 ($MM)Adj. Op Inc Q2’25 ($MM)Adj. Op Margin Q2’24Adj. Op Margin Q2’25
Beef(34) (149) (0.7%) (2.8%)
Pork33 55 2.2% 3.7%
Chicken160 312 3.9% 7.5%
Prepared Foods233 244 9.7% 10.2%
International/Other14 53 n/an/a
Total406 515 3.1% 3.8%

Q2 2025 operating KPIs (YoY)

SegmentVolume ChangeAvg Price Change
Beef(1.4%) +8.2%
Pork(3.8%) +4.3%
Chicken+3.0% (1.1%)
Prepared Foods(2.6%) +2.3%
International/Other(1.5%) (0.9%)

Non‑GAAP adjustments – Q2 2025

ItemEPS ImpactAmount ($MM)
Legal contingency accruals (sales reduction; primarily Pork)~$0.73 $343
Network optimization plan charges~$0.10 $43
Plant closures and disposals~$0.05 $23
Brand discontinuation~$0.02 $6

Balance sheet and cash flow (as of/for YTD Q2)

MetricValue
Liquidity$3.2B
Total gross debt (TTM context shown)$9.068B (Mar 29, 2025)
Net debt / Adjusted EBITDA (TTM)2.3x
Cash from operations (YTD)$846M
Free cash flow (YTD)$382M

Guidance Changes

(Unchanged from Q1 2025; company embeds tariff/consumer headwinds)

MetricPeriodPrevious Guidance (Q1’25)Current Guidance (Q2’25)Change
Total Company Adjusted Operating IncomeFY2025$1.9B–$2.3B $1.9B–$2.3B Maintained
RevenueFY2025Flat to +1% YoY Flat to +1% YoY (includes $343M sales reduction) Maintained
Chicken AOIFY2025$1.0B–$1.3B $1.0B–$1.3B Maintained
Beef AOI (loss)FY2025$(0.4)B–$(0.2)B $(0.4)B–$(0.2)B Maintained
Pork AOIFY2025$0.1B–$0.2B $0.1B–$0.2B Maintained
Prepared Foods AOIFY2025$0.9B–$1.1B $0.9B–$1.1B Maintained
CapExFY2025$1.0B–$1.2B $1.0B–$1.2B Maintained
Net Interest ExpenseFY2025~$375M ~$375M Maintained
Free Cash FlowFY2025$1.0B–$1.6B $1.0B–$1.6B Maintained
Adjusted Effective Tax RateFY2025~25% ~25% Maintained
DividendFY2025$0.50 Class A / $0.45 Class B per quarter $0.50 Class A / $0.45 Class B (declared Feb 6 payable Jun 13) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current (Q2’25)Trend
AI/Technology initiativesQ1: Using generative AI to improve digital discovery and insights in foodservice .Continued data/digital emphasis; logistics automation planned via fully automated next‑gen cold storage facilities .Expanding digital enablement to supply chain automation.
Supply chain/networkQ1: New network optimization plan disclosed in 10‑Q .Selling smaller conventional cold storage sites; anchor partner in automated facilities; targeting ~$200M annual savings over 3–5 years; $250–$300M gross proceeds .Structural simplification, cost take‑out underway.
Tariffs/macroQ1: Guidance incorporated tariff risk; contingency planning; diversified export options .Guidance again embeds tariff/consumer pressure; expect global protein consumption unchanged; monitoring trade flow shifts .Risk managed; watch for trade flow adjustments.
Product performanceQ1: Chicken best quarterly AOI in 8 years; Prepared Foods pressured by inputs but on plan .Chicken best Q2 AOI in 9 years; Prepared Foods margins +50 bps YoY; Pork AOI improved YoY .Chicken momentum sustained; Prepared Foods stable.
Regional/internationalQ1: International record AOI on ops + raw cost tailwinds .Strongest quarter on record; some one‑time benefits; macro sensitivity remains .Improved baseline, macro watch.
Regulatory/legalFY24/Q1 highlighted legal contingencies; Q1 maintained guidance; dividend increased .$343M legal accrual reduced Q2 sales 2.6% and drove significant non‑GAAP EPS add‑back .Elevated adjustments, transparency provided.

Management Commentary

  • “Our strong results underscore the consistent execution of our strategic priorities… fourth consecutive quarter of year‑over‑year growth across sales, adjusted operating income and adjusted EPS” – Donnie King, CEO .
  • “Adjusted operating income increased by 27% to $515 million… strong Chicken and solid contributions from International and Other, Pork and Prepared Foods helped offset the decline in Beef” – Curt Calaway, CFO .
  • “We will sell multiple smaller conventional cold storage warehouses… transition into several large‑scale fully automated next‑generation cold storage facilities… around $200 million of annual savings” – Donnie King .
  • “We did beat profit expectations this quarter but did not raise guidance… our guidance considers risks including tariffs and consumer pressure” – Donnie King .
  • “In Chicken, we delivered our second consecutive quarter of year‑over‑year volume growth… best second quarter performance since fiscal 2016” – Curt Calaway .

Q&A Highlights

  • Guidance stance: Analysts pressed on why not raise FY25 after a profit beat; management reiterated dynamic macro and embedded tariff/consumer risks, keeping segment and total AOI ranges unchanged .
  • Chicken outlook: Management reaffirmed $1.0–$1.3B AOI with stronger H1, back‑half investments (~$100M incremental in FY25, weighted to H2) and diversified pricing models (including grain and cost‑plus) .
  • Logistics optimization: Plan to monetize smaller cold storage assets and become anchor partner in automated facilities; targeted ~$200M annual savings over 3–5 years; segment benefit largely in Poultry and Prepared Foods .
  • Beef cycle: Signs of bottoming in cow inventories and heifer retention; still near trough spreads; management executing on mix and value‑added to mitigate .
  • Free cash flow/capital returns: FY25 FCF $1.0–$1.6B maintained; dividend remains primary return vehicle as leverage trends toward ~2x target .

Estimates Context

  • Q2 2025 adjusted EPS beat: $0.92 vs $0.82 consensus, driven by Chicken execution and SG&A/ops discipline across segments; GAAP EPS was $0.02 due to sizable non‑GAAP adjustments (notably $343M legal accrual) . Consensus EPS: 0.81966*.
  • Q2 2025 revenue slightly below consensus: $13.074B vs $13.137B consensus; the legal accrual reduced reported sales by ~2.6% (primarily Pork), masking underlying growth ex‑accrual . Consensus revenue: 13,137,384,660*.
  • Estimate path: With guidance unchanged and management planning back‑half Chicken investments, Street models may modestly lift Chicken AOI trajectories while holding consolidated AOI within the existing $1.9–$2.3B range pending visibility on tariffs and Beef spreads .

Values with asterisks (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Chicken engine remains robust with sustained execution, volume growth, and pricing model diversification; management still plans increased brand/investment spend in H2 while reaffirming $1.0–$1.3B AOI range .
  • Prepared Foods is showing structural progress (double‑digit margins, +50 bps YoY) with an innovation and distribution pipeline; management is targeting sustained margin uplift via operational systems and MAP efficiency .
  • Beef headwinds persist given spread compression; management notes early cycle bottoming indicators but continues to lean on mix/value‑added to mitigate losses within the $(0.4)–$(0.2)B AOI loss range .
  • Legal contingency accrual significantly impacted reported sales/GAAP results, highlighting the importance of focusing on adjusted metrics and underlying run‑rate trends this quarter .
  • Network/logistics transformation is a medium‑term cost catalyst (target ~$200M annual savings, $250–$300M gross proceeds), primarily benefiting Chicken and Prepared Foods over 3–5 years .
  • Balance sheet resilience (liquidity $3.2B, leverage trending toward ~2x, dividend maintained) provides flexibility to navigate macro/tariff uncertainty while funding brand/ops investments .
  • Near‑term stock narrative hinges on: sustaining Chicken AOI momentum, visibility on tariff/trade flow impacts, and any signals of improving Beef spreads; unchanged FY25 guidance despite the EPS beat keeps focus on execution against back‑half investment and logistics savings plans .