Tyson Foods(TSN) - 2023 Q4 - Annual Report

Financial Performance - Sales decreased slightly to $52.9 billion in fiscal 2023 compared to$53.3 billion in fiscal 2022, reflecting a 0.8% decline[151]. - The company incurred an operating loss of $395 million in fiscal 2023, down from an operating income of$4.41 billion in fiscal 2022[151]. - Total operating margin was (0.7)% in fiscal 2023, with the Prepared Foods segment being the only one to report positive operating income[154]. - The company recorded a net income loss of $648 million in 2023, compared to a net income of$3,238 million in 2022, resulting in a loss of $1.87 per diluted share[175]. - The company reported a net loss of$649 million for 2023, compared to a net income of $3,249 million in 2022[223]. Sales and Segment Performance - Total sales for 2023 were$52,881 million, a decrease from $53,282 million in 2022, with a notable decline in the Beef segment sales to$19,325 million from $19,854 million[177]. - The Beef segment faced reduced supply of market-ready cattle and increased live cattle costs, while the Pork segment saw reduced live hog costs but softening global demand[152]. - The Chicken segment reported sales of$17,060 million in 2023, a slight increase from $16,961 million in 2022, but operating income dropped to a loss of$770 million[183]. - The Pork segment's sales decreased to $5,768 million in 2023 from$6,414 million in 2022, with an operating loss of $139 million[182]. - Prepared Foods segment sales reached$9,845 million in fiscal 2023, a 1.6% increase from $9,689 million in fiscal 2022, with operating income rising to$823 million[187]. - International segment sales increased to $2,515 million in fiscal 2023, up$160 million from $2,355 million in fiscal 2022, but operating income fell to a loss of$218 million[190]. Costs and Expenses - Cost of sales increased to $50.25 billion in fiscal 2023, representing 95.0$6,091 million increase in the cost of sales, driven by higher input costs, particularly in the Beef segment, which saw a $1,950 million increase in live cattle costs[28]. - Operating income for fiscal 2023 decreased significantly, impacted by$300 million in higher feed ingredient costs and $80 million in net derivative losses, compared to$195 million in net derivative gains in fiscal 2022[186]. - The average sales price decreased by 1.5% in fiscal 2023, driven by lower prices in the Pork and Chicken segments[158]. Restructuring and Charges - Restructuring charges amounted to $124 million in fiscal 2023, compared to$66 million in fiscal 2022, with cumulative pretax charges expected to reach approximately $224 million[156]. - The company executed two new term loan facilities totaling$1.75 billion in fiscal 2023 to refinance short-term promissory notes and for general corporate purposes[200]. - The company recorded a $448 million goodwill impairment charge in Q3 2023, followed by an additional$333 million charge in Q4 2023 due to increased discount rates[169]. - A goodwill impairment charge of $448 million was recognized, including$210 million for a Chicken segment reporting unit and $238 million for two International/Other reporting units[251]. Liquidity and Debt - The company had$3.0 billion in liquidity and $1.9 billion in current debt as of September 30, 2023, indicating a strong liquidity position[153]. - As of September 30, 2023, total liquidity was$2,996 million, including cash and cash equivalents, short-term investments, and available credit facilities[198]. - The current ratio decreased to 1.3 to 1 as of September 30, 2023, down from 1.8 to 1 a year earlier, primarily due to decreased cash and increased current debt[200]. - The company's total gross debt increased to $9,506 million in 2023 from$8,321 million in 2022, while total net debt rose to $8,918 million from$7,289 million[223]. - As of September 30, 2023, the company's net debt to EBITDA ratio increased to 9.1x from 1.3x in the previous year, due to a net debt increase of $1,629 million and a decrease in EBITDA of$4,712 million[205]. Pension and Benefits - The company expects to contribute approximately $15 million to its pension plans in fiscal 2024, following a contribution of$13 million in fiscal 2023[214]. - The funded status of the company's defined benefit pension plans showed an underfunded position of $149 million at the end of fiscal 2023, an improvement from$159 million at the end of fiscal 2022[214]. - The projected benefit obligation for the defined benefit pension plans was $176 million at the end of fiscal 2023, with net periodic benefit cost of$6 million[243]. - The company expects net periodic benefit cost associated with pension plans to be approximately $7 million in fiscal 2024[243]. Risk Management - The company is exposed to interest rate risk related to pension and post-retirement benefit obligations, which can affect liabilities and cash contribution requirements[280]. - Foreign currency exposure arises from fluctuations in exchange rates, with a hypothetical 10$17 million and $25 million at September 30, 2023, and October 1, 2022, respectively[281]. - The company utilizes foreign exchange forward and option contracts to hedge some of its foreign currency exposure[281]. - The financial instruments exposed to credit risk primarily consist of cash equivalents and trade receivables, with cash equivalents held in high-quality securities[282]. - The company performs periodic credit evaluations of customers' financial conditions and generally does not require collateral[282]. Customer Concentration - As of September 30, 2023, 15.9% of net accounts receivable was due from Walmart Inc., compared to 16.4% on October 1, 2022, indicating a slight decrease in concentration risk[282]. - No single customer or customer group, apart from Walmart Inc., represented 10% or greater of net accounts receivable, indicating a diversified customer base[282].