Food Industry Financials: Inflation, TSN, ARMK, and more

Here are trending economic and food industry data points, as well as major economic and company earnings releases for the coming week: CPI, PPI, small business optimism, Tyson Foods, Inc. (TSN), Aramark (ARMK), Utz Brands, Inc. (UTZ), and more

Trending Economic News

U.S. inflation accelerated at the fastest pace since 2008. Overall CPI increased 0.8% in April, four times analysts’ expectations. Over the last 12 months, CPI rose 4.9%.

1-Month Change

• The index for used cars and trucks surged 10.0% in April.
• The food price index climbed 0.5%, with incremental gains across most categories. The largest increases were reported for pork (+2.4%) and beef & veal (+1.4%).

12-Month Change

• Gasoline prices have surpassed pre-pandemic levels. The energy index rose 25.1% over the past 12 months, boosted by gasoline (+49.6%) and natural gas (+12.1%). High energy prices roused mounting inflation worries throughout the financial markets.
• Food-away-from-home recovered significantly since summer 2020 with a 3.8% gain. The limited-service-meals index, which includes pickup, take-out, and delivery restaurants, jumped 6.2%.

PPI rose 0.6% in April, double market projections.

The pricing pressure in commodities (e.g. lumber, steel, corn, etc.), can have a ripple effect throughout the supply chain. While some companies are passing along higher labor and materials costs to customers, other may not have that flexibility. The NFIB small business optimism index shows that many small businesses remain cautiously optimistic about the outlook for 2021.

Upcoming Economic Releases

Source: Bloomberg, CNBC, Trading Economics, Food Institute

>> For more information on CPI/PPI and Retail Sales, go to Food Institute Economic Benchmarking.

Select Food & Beverage Industry Data Points

Foodservice – Restaurants

• OpenTable restaurant diner growth data (2019 baseline): U.S. = -22% as of May 12, 2021

Foodservice

Aramark (ARMK) reported Q2 2021 results

• Total Revenues: $2.82 billion (-24.4%)
• Cash Flow from Operations: $337 million vs. $119 million last year
• Free Cash Flow: $259 million vs. $151 million last year
• Business Segment Performance:
  1. FSS U.S.: $1.55 billion (-30%)
  2. FSS International: $678 million (-21%)
  3. Uniform & Career Apparel: $591 million (-9%)

Key Takeaways:

• ARMK’s growth is contingent on continued recovery in the foodservice sector
• The Company’s focus on culinary services to the education, sports & leisure, and business sectors should result in accelerated growth vs. the broader market in the second half of 2021
• ARMK’s acquisition of Next Level Hospitality provides an additional revenue stream related to the senior healthcare services market

Food Manufacturing

Tyson (TSN) reported Q2 2021 results

• Total Revenues: $11.3 billion (+3.8%)
• Operating Income: $720 million (+39.8%)
• Adjusted Operating Margin: 6.5%
• Business Segment Performance:

Key Takeaways:

• Management sees “substantial inflation” across the supply chain, causing potential margin pressure in second half of 2021
• Expected revenues of $44 billion to $46 billion in FY 2021
• Plant-based product innovation a key management focus (e.g., Raised & Rooted brand) as the company competes with Impossible and Beyond Meat products

Food Manufacturing – CPG

Utz Brands (UTZ) reported Q1 2021 results

• Net Sales: $269.2 million (+18.0% vs. last year)
• Gross Profit: $104.5 million (+22.5% vs. last year)
• Gross Margin: 38.8% (+140 bps)
• Business Segment Performance (IRI Data):
  1. Utz Total: -2.3% YoY (+5.9% 2yr CAGR)
  2. Utz Power Brands: -2.3% YoY (+7.6% 2yr CAGR)
  3. Utz Foundation Brands: -1.1% YoY (-4.2% 2yr CAGR)

Key Takeaways:

• 2021 outlook consistent with 2020 pro forma figures
  1. Net Sales: $1.16 billion (estimate)
  2. EBITDA: $180 to $190 million (estimate)
• UTZ continues to prioritize its investments in the Power Brands and reduce emphasis on Foundation Brands
• Acquisitions of Truco Enterprises / Vitner’s, and recent announcement of Festida Foods highlights the focus on growth through investments

Earnings Calendar of Select Companies

Source: Bloomberg, CNBC, Yahoo Finance, Food Institute