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Tyson Foods Management Discusses Q3 2012 Results - Earnings Call Transcript

On today's call is Donnie Smith, President and Chief Executive Officer; Jim Lochner, Chief Operating Officer; and Dennis Leatherby, Chief Financial Officer. [Operator Instructions] I'll now turn the call over to Donnie Smith.

Donnie Smith

Thanks, Jon. Good morning, everyone, and thanks for joining us today. Earnings for our fiscal third quarter were $0.21 a share, compared to $0.51 in Q3 of last year. Now keep in mind, earnings were impacted by $167 million or $0.29 a share for the early extinguishment of the 2014 notes. Adjusted EPS was $0.50 for the quarter.

I'm very pleased we were able to pay off that debt early, which strengthened an already strong balance sheet, lowered our interest expense in upcoming quarters and helped us get back to investment grade with all 3 rating agencies. This was an important milestone for our team, and I'm proud of them for accomplishing this goal.

Sales rose slightly to $8.3 billion, compared to $8.2 billion in Q3 of '11. For the quarter, Chicken sales were up 3.6%, in large part due to an 8% increase in pricing. Even though Beef pricing was up over 15% versus a year ago, sales dollars were down slightly due to a 14% decrease in volume. Both Pork and Prepared Foods sales were down by about 4.5% to 5%, driven largely by softer pricing, although let me hasten on to add that year-to-date, our pricing is higher in all segments, driving sales growth of 4.4% across the entire portfolio.

Operating income for the quarter was $336 million compared to $312 million in the same quarter last year.

The Prepared Foods segment was above its normalized range, with a 6.2% operating margin. The Chicken segment was within its range at 5.3%. Our international Chicken operations faced significant headwinds in Q3, including start-up issues in China and Brazil. Excluding these start-up-related losses, our Chicken segment had a 6.7% return on sales.

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