(in millions, except per share data) | First Quarter | ||||
2024 | 2023 | ||||
Sales | $ | 13,319 | $ | 13,260 | |
Operating Income | $ | 231 | $ | 467 | |
Adjusted1 Operating Income (non-GAAP) | $ | 411 | $ | 453 | |
Net Income Per Share Attributable to | $ | 0.30 | $ | 0.88 | |
Adjusted1 Net Income Per Share Attributable to | $ | 0.69 | $ | 0.85 |
1 The Company reports its financial results in accordance with
First Quarter Highlights
- Sales of
$13,319 million , up 0.4% from prior year - GAAP operating income of
$231 million , down 51% from prior year - Adjusted operating income of
$411 million , down 9% from prior year - GAAP EPS of
$0.30 , down 66% from prior year - Adjusted EPS of
$0.69 , down 19% from prior year - Total Company GAAP operating margin of 1.7%
Total Company adjusted operating margin (non-GAAP) of 3.1%- Liquidity of approximately
$3.7 billion as ofDecember 30, 2023
"Our team executed well in the quarter and delivered tangible results, including our third sequential quarter of adjusted operating income growth," said
"Although we still have work to do, I am pleased with our first quarter results and am confident we are on the right path to deliver long-term shareholder value," King concluded. "Going forward, we will continue to prioritize our liquidity and financial health, our focus on operational excellence, and our relentless pursuit to win with customers and consumers."
SEGMENT RESULTS (in millions)
Sales | ||||||||||
(for the first quarter ended | ||||||||||
First Quarter | ||||||||||
Volume | Avg. Price | |||||||||
2024 | 2023 | Change | Change | |||||||
Beef | $ | 5,023 | $ | 4,723 | (4.1)% | 10.5 | % | |||
Pork | 1,517 | 1,529 | 7.7 | % | (8.5)% | |||||
Chicken | 4,033 | 4,263 | (1.5)% | (3.9)% | ||||||
2,543 | 2,538 | 2.5 | % | (2.3)% | ||||||
International/Other | 582 | 612 | 2.2 | % | (7.1)% | |||||
Intersegment Sales | (379 | ) | (405 | ) | n/a | n/a | ||||
Total | $ | 13,319 | $ | 13,260 | — | % | 0.4 | % |
Operating Income (Loss) | ||||||||||
(for the first quarter ended | ||||||||||
First Quarter | ||||||||||
Operating Margin | ||||||||||
2024 | 2023 | 2024 | 2023 | |||||||
Beef | $ | (206 | ) | $ | 166 | (4.1)% | 3.5 | % | ||
Pork | 39 | (21 | ) | 2.6 | % | (1.4)% | ||||
Chicken | 177 | 69 | 4.4 | % | 1.6 | % | ||||
243 | 258 | 9.6 | % | 10.2 | % | |||||
International/Other | (22 | ) | (5 | ) | n/a | n/a | ||||
Total | $ | 231 | $ | 467 | 1.7 | % | 3.5 | % |
ADJUSTED SEGMENT RESULTS (in millions)
Adjusted Operating Income (Loss) (Non-GAAP)1 | ||||||||||
(for the first quarter ended | ||||||||||
First Quarter | ||||||||||
Adjusted Operating Margin (Non-GAAP) | ||||||||||
2024 | 2023 | 2024 | 2023 | |||||||
Beef | $ | (117 | ) | $ | 129 | (2.3)% | 2.7 | % | ||
Pork | 68 | (19 | ) | 4.5 | % | (1.2)% | ||||
Chicken | 192 | 77 | 4.8 | % | 1.8 | % | ||||
264 | 266 | 10.4 | % | 10.5 | % | |||||
International/Other | 4 | — | n/a | n/a | ||||||
Total | $ | 411 | $ | 453 | 3.1 | % | 3.4 | % |
OUTLOOK
For fiscal 2024, the
Beef
Pork
Chicken
We anticipate adjusted operating income of
International/Other
We anticipate improved results from our foreign operations in fiscal 2024 on an adjusted basis.
We anticipate total company adjusted operating income of
Revenue
We expect sales to be relatively flat in fiscal 2024 as compared to fiscal 2023.
Capital Expenditures
We expect capital expenditures between
Net Interest Expense
We expect net interest expense to approximate
Liquidity
We expect total liquidity, which was approximately
Tax Rate
We currently expect our adjusted effective tax rate to be 23% to 24% for fiscal 2024.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (In millions, except per share data) (Unaudited) | |||||||
Three Months Ended | |||||||
Sales | $ | 13,319 | $ | 13,260 | |||
Cost of Sales | 12,496 | 12,292 | |||||
Gross Profit | 823 | 968 | |||||
Selling, General and Administrative | 592 | 501 | |||||
Operating Income | 231 | 467 | |||||
Other (Income) Expense: | |||||||
Interest income | (10 | ) | (9 | ) | |||
Interest expense | 105 | 84 | |||||
Other, net | (25 | ) | (42 | ) | |||
Total Other (Income) Expense | 70 | 33 | |||||
Income before Income Taxes | 161 | 434 | |||||
Income Tax Expense | 47 | 114 | |||||
Net Income | 114 | 320 | |||||
Less: Net Income Attributable to Noncontrolling Interests | 7 | 4 | |||||
Net Income Attributable to | $ | 107 | $ | 316 | |||
Net Income Per Share Attributable to | |||||||
Class A Basic | $ | 0.31 | $ | 0.91 | |||
Class | $ | 0.28 | $ | 0.81 | |||
Diluted | $ | 0.30 | $ | 0.88 | |||
Dividends Declared Per Share: | |||||||
Class A | $ | 0.500 | $ | 0.500 | |||
Class B | $ | 0.450 | $ | 0.450 | |||
Sales Growth | 0.4 | % | |||||
Margins: (Percent of Sales) | |||||||
Gross Profit | 6.2 | % | 7.3 | % | |||
Operating Income | 1.7 | % | 3.5 | % | |||
Net Income Attributable to | 0.8 | % | 2.4 | % | |||
Effective Tax Rate | 29.4 | % | 26.1 | % |
CONSOLIDATED CONDENSED BALANCE SHEETS (In millions) (Unaudited) | |||||
Assets | |||||
Current Assets: | |||||
Cash and cash equivalents | $ | 1,484 | $ | 573 | |
Accounts receivable, net | 2,263 | 2,476 | |||
Inventories | 5,087 | 5,328 | |||
Other current assets | 382 | 345 | |||
Total Current Assets | 9,216 | 8,722 | |||
Net Property, Plant and Equipment | 9,672 | 9,634 | |||
9,885 | 9,878 | ||||
Intangible Assets, net | 6,046 | 6,098 | |||
Other Assets | 1,927 | 1,919 | |||
Total Assets | $ | 36,746 | $ | 36,251 | |
Liabilities and Shareholders’ Equity | |||||
Current Liabilities: | |||||
Current debt | $ | 1,308 | $ | 1,895 | |
Accounts payable | 2,623 | 2,594 | |||
Other current liabilities | 2,241 | 2,010 | |||
Total Current Liabilities | 6,172 | 6,499 | |||
Long-Term Debt | 8,370 | 7,611 | |||
Deferred Income Taxes | 2,302 | 2,308 | |||
Other Liabilities | 1,614 | 1,578 | |||
Total | 18,150 | 18,133 | |||
Noncontrolling Interests | 138 | 122 | |||
Total Shareholders’ Equity | 18,288 | 18,255 | |||
Total Liabilities and Shareholders’ Equity | $ | 36,746 | $ | 36,251 |
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In millions) (Unaudited) | |||||||
Three Months Ended | |||||||
Cash Flows From Operating Activities: | |||||||
Net income | $ | 114 | $ | 320 | |||
Depreciation and amortization | 373 | 303 | |||||
Deferred income taxes | (14 | ) | 8 | ||||
Other, net | 129 | 68 | |||||
Net changes in operating assets and liabilities | 698 | 63 | |||||
Cash Provided by Operating Activities | 1,300 | 762 | |||||
Cash Flows From Investing Activities: | |||||||
Additions to property, plant and equipment | (354 | ) | (589 | ) | |||
Purchases of marketable securities | (7 | ) | (7 | ) | |||
Proceeds from sale of marketable securities | 6 | 7 | |||||
Acquisitions, net of cash acquired | — | (39 | ) | ||||
Acquisition of equity investments | (26 | ) | (36 | ) | |||
Other, net | 3 | (5 | ) | ||||
Cash Used for Investing Activities | (378 | ) | (669 | ) | |||
Cash Flows From Financing Activities: | |||||||
Proceeds from issuance of debt | 771 | 54 | |||||
Payments on debt | (32 | ) | (58 | ) | |||
Proceeds from issuance of commercial paper | 1,649 | — | |||||
Repayments of commercial paper | (2,240 | ) | — | ||||
Purchases of | (13 | ) | (313 | ) | |||
Dividends | (171 | ) | (169 | ) | |||
Stock options exercised | 7 | 4 | |||||
Other, net | 3 | — | |||||
Cash Used for Financing Activities | (26 | ) | (482 | ) | |||
Effect of Exchange Rate Changes on Cash | 15 | 12 | |||||
Increase (Decrease) in Cash and Cash Equivalents and Restricted Cash | 911 | (377 | ) | ||||
Cash and Cash Equivalents and Restricted Cash at Beginning of Year | 573 | 1,031 | |||||
Cash and Cash Equivalents and Restricted Cash at End of Period | 1,484 | 654 | |||||
Less: Restricted Cash at End of Period | — | — | |||||
Cash and Cash Equivalents at End of Period | $ | 1,484 | $ | 654 | |||
Non-GAAP Financial Measures
Adjusted Operating Income (Loss), Adjusted Income before Income Taxes, Adjusted Income Tax Expense, Adjusted Net Income Attributable to
Definitions
EBITDA is defined as net income (loss) before interest, income taxes, depreciation and amortization. Net debt to EBITDA (Adjusted EBITDA) represents the ratio of our debt, net of cash, cash equivalents and short-term investments, to EBITDA (and to Adjusted EBITDA). EBITDA, Adjusted EBITDA, net debt to EBITDA and net debt to Adjusted EBITDA are presented as supplemental financial measurements in the evaluation of our business.
Adjusted EBITDA, Adjusted Operating Income, Adjusted Income before Income Taxes, Adjusted Income Tax Expense, Adjusted Net Income Attributable to
GAAP Results to Non-GAAP Results Reconciliations (In millions, except per share data) (Unaudited) | |||||||||||||||||||||
Results for the first quarter ended | |||||||||||||||||||||
Sales | Cost of Sales | Selling, General and Administrative | Operating Income | Other (Income) Expense | Income before Income Taxes | Income Tax Expense | Net Income Attributable to | EPS Impact | |||||||||||||
GAAP Results | $ | 231 | $ | 161 | $ | 47 | $ | 107 | $ | 0.30 | |||||||||||
Production facilities fire costs, net of insurance proceeds3 | — | 2 | — | 2 | (3 | ) | (1 | ) | (6 | ) | 5 | 0.01 | |||||||||
Restructuring and related charges | — | 3 | 27 | 30 | — | 30 | 8 | 22 | 0.06 | ||||||||||||
Plant closures | — | 75 | — | 75 | — | 75 | 19 | 56 | 0.16 | ||||||||||||
Legal contingency accruals | — | 73 | — | 73 | — | 73 | 18 | 55 | 0.16 | ||||||||||||
Adjusted Non-GAAP Results | $ | 411 | $ | 338 | $ | 86 | $ | 245 | $ | 0.69 | |||||||||||
Results for the first quarter ended | |||||||||||||||||||||
Sales | Cost of Sales | Selling, General and Administrative | Operating Income | Other (Income) Expense | Income before Income Taxes | Income Tax Expense | Net Income Attributable to | EPS Impact | |||||||||||||
GAAP Results | $ | 467 | $ | 434 | $ | 114 | $ | 316 | $ | 0.88 | |||||||||||
Production facilities fire insurance proceeds, net of costs3 | — | (35 | ) | — | (35 | ) | — | (35 | ) | (8 | ) | (27 | ) | (0.07 | ) | ||||||
Restructuring and related charges | — | 8 | 13 | 21 | — | 21 | 5 | 16 | 0.04 | ||||||||||||
Adjusted Non-GAAP Results | $ | 453 | $ | 420 | $ | 111 | $ | 305 | $ | 0.85 |
Adjusted Operating Income (Loss) Non-GAAP Reconciliations (In millions) (Unaudited) | |||||||||||||||
Adjusted Operating Income (Loss) | |||||||||||||||
(for the first quarter ended | |||||||||||||||
Beef | Pork | Chicken | International/Other | Total | |||||||||||
Reported operating income (loss) | $ | (206 | ) | $ | 39 | $ | 177 | $ | 243 | $ | (22 | ) | $ | 231 | |
Add/(Less): Production facilities fire insurance costs, net of proceeds3 | — | — | (24 | ) | — | 26 | 2 | ||||||||
Add: Restructuring and related charges | 4 | 1 | 4 | 21 | — | 30 | |||||||||
Add: Plant closures | 40 | — | 35 | — | — | 75 | |||||||||
Add: Legal contingency accruals | 45 | 28 | — | — | — | 73 | |||||||||
Adjusted operating income (loss) | $ | (117 | ) | $ | 68 | $ | 192 | $ | 264 | $ | 4 | $ | 411 |
Adjusted Operating Income (Loss) | ||||||||||||||||
(for the first quarter ended | ||||||||||||||||
Beef | Pork | Chicken | International/Other | Total | ||||||||||||
Reported operating income (loss) | $ | 166 | $ | (21 | ) | $ | 69 | $ | 258 | $ | (5 | ) | $ | 467 | ||
(Less)/Add: Production facilities fire insurance proceeds, net of costs3 | (42 | ) | — | 7 | — | — | (35 | ) | ||||||||
Add: Restructuring and related charges | 5 | 2 | 1 | 8 | 5 | 21 | ||||||||||
Adjusted operating income (loss) | $ | 129 | $ | (19 | ) | $ | 77 | $ | 266 | $ | — | $ | 453 |
EBITDA and Adjusted EBITDA Non-GAAP Reconciliations (In millions) (Unaudited) | |||||||||||||||
Three Months Ended | Fiscal Year Ended | Twelve Months Ended | |||||||||||||
Net income (loss) | $ | 114 | $ | 320 | $ | (649 | ) | $ | (855 | ) | |||||
Less: Interest income | (10 | ) | (9 | ) | (30 | ) | (31 | ) | |||||||
Add: Interest expense | 105 | 84 | 355 | 376 | |||||||||||
Add/(Less): Income tax expense (benefit) | 47 | 114 | (29 | ) | (96 | ) | |||||||||
Add: Depreciation | 312 | 243 | 1,100 | 1,169 | |||||||||||
Add: Amortization2 | 59 | 58 | 229 | 230 | |||||||||||
EBITDA | $ | 627 | $ | 810 | $ | 976 | $ | 793 | |||||||
Adjustments to EBITDA: | |||||||||||||||
Less: Production facilities fire insurance proceeds, net of costs3 | $ | (1 | ) | $ | (35 | ) | $ | (75 | ) | $ | (41 | ) | |||
Add: Restructuring and related charges | 30 | 21 | 124 | 133 | |||||||||||
Add: Plant closures | 75 | — | 322 | 397 | |||||||||||
Add: Legal contingency accruals | 73 | — | 156 | 229 | |||||||||||
Add: | — | — | 781 | 781 | |||||||||||
Less: | — | — | (19 | ) | (19 | ) | |||||||||
Add: Product line discontinuation | — | — | 17 | 17 | |||||||||||
Less: Depreciation included in EBITDA adjustments4 | (60 | ) | (6 | ) | (133 | ) | (187 | ) | |||||||
Total Adjusted EBITDA | $ | 744 | $ | 790 | $ | 2,149 | $ | 2,103 | |||||||
Total gross debt | $ | 9,506 | $ | 9,678 | |||||||||||
Less: Cash and cash equivalents | (573 | ) | (1,484 | ) | |||||||||||
Less: Short-term investments | (15 | ) | (15 | ) | |||||||||||
Total net debt | $ | 8,918 | $ | 8,179 | |||||||||||
Ratio Calculations: | |||||||||||||||
Gross debt/EBITDA | 9.7x | 12.2x | |||||||||||||
Net debt/EBITDA | 9.1x | 10.3x | |||||||||||||
Gross debt/Adjusted EBITDA | 4.4x | 4.6x | |||||||||||||
Net debt/Adjusted EBITDA | 4.1x | 3.9x |
2 Excludes the amortization of debt issuance and debt discount expense of
3 Relates to fires at production facilities in International/Other in the first quarter of fiscal 2024, Chicken in the fourth quarter of fiscal 2021 and Beef in the fourth quarter of fiscal 2019.
4 Removal of accelerated depreciation of
About
Conference Call Information and Other Selected Data
A conference call to discuss the Company's financial results will be held at
Forward-Looking Statements
Certain information in this release constitutes forward-looking statements as contemplated by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, current views and estimates of our outlook for fiscal 2024, other future economic circumstances, industry conditions in domestic and international markets, our performance and financial results (e.g., debt levels, return on invested capital, value-added product growth, capital expenditures, tax rates, access to foreign markets and dividend policy). These forward-looking statements are subject to a number of factors and uncertainties that could cause our actual results and experiences to differ materially from anticipated results and expectations expressed in such forward-looking statements. We wish to caution readers not to place undue reliance on any forward-looking statements, which are expressly qualified in their entirety by this cautionary statement and speak only as of the date made. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Among the factors that may cause actual results and experiences to differ from anticipated results and expectations expressed in such forward-looking statements are the following: (i) global pandemics have had, and may in the future have, an adverse impact on our business and operations; (ii) the effectiveness of restructuring or financial excellence programs; (iii) access to foreign markets together with foreign economic conditions, including currency fluctuations, import/export restrictions and foreign politics; (iv) cyberattacks, other cyber incidents, security breaches or other disruptions of our information technology systems; (v) risks associated with our failure to consummate favorable acquisition transactions or integrate certain acquisitions’ operations; (vi) the
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