Tyson Foods(TSN) - 2025 Q2 - Quarterly Report

Financial Performance - Sales increased by 1.2%, or $306 million, in the first six months of fiscal 2025, driven by higher sales in the Beef and Chicken segments, despite a 2.6$343 million in legal contingency accruals[133] - Operating income for the second quarter of fiscal 2025 was $100 million, down 68$680 million, up 25% compared to the first six months of fiscal 2024, supported by higher income in the Chicken segment[135] - Net income attributable to Tyson for the second quarter of fiscal 2025 was $7 million, down from$145 million in the same period of fiscal 2024, resulting in a diluted earnings per share of $0.02 compared to$0.41[161] - Total sales for the second quarter of fiscal 2025 were $13.074 billion, slightly up from$13.072 billion in the second quarter of fiscal 2024, with total sales for the first six months reaching $26.697 billion, compared to$26.391 billion in the prior year[163] Segment Performance - The Beef segment reported sales of $5.196 billion for the second quarter of fiscal 2025, an increase of 4.9$4.954 billion in the same quarter of fiscal 2024, while the operating loss for this segment was $258 million[170] - The Pork segment experienced a sales decline of 16.3$1.244 billion in the second quarter of fiscal 2025, with an operating loss of $195 million, compared to a loss of$1 million in the same period of fiscal 2024[172] - The Chicken segment's sales increased by 1.9% to $4.141 billion in the second quarter of fiscal 2025, with operating income rising to$262 million from $158 million in the same quarter of fiscal 2024[175] - Prepared Foods segment sales decreased slightly to$2.396 billion in the second quarter of fiscal 2025, down from $2.404 billion in the same period of fiscal 2024, with operating income increasing to$244 million[177] Cost and Expenses - Cost of sales increased by $268 million in the second quarter of fiscal 2025, driven by higher input costs, particularly an increase of approximately$470 million in cattle costs in the Beef segment[146] - Selling, general and administrative expenses decreased by $131 million in the second quarter of fiscal 2025, primarily due to lower marketing and employee costs[149] - The company recognized$343 million pretax related to legal contingency accruals in the second quarter of fiscal 2025, impacting net income significantly[164] Cash Flow and Liquidity - Cash provided by operating activities for the first six months of fiscal 2025 was $846 million, a decrease of$331 million compared to the first six months of fiscal 2024[184] - Net cash used for investing activities was $414 million for the first six months of fiscal 2025, compared to$621 million in the same period of fiscal 2024[187] - At March 29, 2025, total liquidity was $3.242 billion, including cash and cash equivalents of$992 million and a revolving credit facility of $2.25 billion[189] - The company intends to pay current debt of$896 million with existing cash balance and cash generated from operating activities[192] Debt and Interest - The current ratio was 1.7 to 1 at March 29, 2025, down from 2.0 to 1 at September 28, 2024, primarily due to decreased cash and increased current debt[201] - The company had variable rate debt of $781 million with a weighted average interest rate of 6.2$5 million[216] - The company reported fixed-rate debt of $8,287 million with a weighted average interest rate of 4.8$240 million[217] - The company is required to maintain a minimum interest expense coverage ratio as part of its debt covenants[204] - The company is in compliance with all debt covenants as of March 29, 2025, and expects to maintain compliance[204] Market and Economic Conditions - The company plans to continue analyzing the impact of supply chain and tariff changes on pricing and demand for its products in the coming months[137] - The company continuously evaluates macro-economic conditions, including inflationary pressures and rising interest rates, which could impact its operations and financial results[208] - The company has foreign exchange exposure primarily from receivable and payable balances in currencies such as the Brazilian real and the British pound, with a hypothetical 10% change in foreign exchange rates impacting pretax income by $24 million as of March 29, 2025[219] Operational Initiatives - The company initiated a network optimization plan, incurring$43 million in charges in the second quarter and $116 million in the first six months of fiscal 2025, aimed at optimizing global operations[140] - The Beef segment faced limited supply of market-ready cattle and increased costs, while the Chicken segment benefited from reduced feed ingredient costs[136] - The company uses derivative financial instruments to manage commodity price risks, with sensitivity analyses indicating potential changes in fair value due to market price fluctuations[214]