In this file:

 

·         Sysco 3Q Profit, Sales Rise

·         Sysco Third Quarter Results Delivered Market Share Gains & Growing Profitability; Fiscal Year 2022 Guidance Raised

 

 

Sysco 3Q Profit, Sales Rise

 

By Will Feuer, Dow Jones Newswires

via MarketWatch - May 10, 2022

 

Sysco Corp. said its profit and sales rose for the fiscal third quarter, driven by market share gains.

 

The Houston-based foodservice distributor posted net income of $303.3 million for the quarter, compared with $88.9 million in the year-earlier period. Earnings were 59 cents a share, compared with 17 cents a share in the prior year.

 

Stripping out one-time items like restructuring and acquisition costs, adjusted earnings were 71 cents a share. Analysts polled by FactSet were expecting adjusted earnings of 54 cents a share.

 

Sales for the quarter ended April 2 rose 43% to $16.9 billion. Analysts were looking for $16 billion.

 

Gross profit rose 42% to $3.01 billion, driven by higher volumes and high rates of inflation that were effectively managed, the company said...

 

more

https://www.marketwatch.com/story/sysco-3q-profit-sales-rise-271652184789

 

 

Sysco Third Quarter Results Delivered Market Share Gains & Growing Profitability; Fiscal Year 2022 Guidance Raised

 

Source: Sysco Corporation

May 10, 2022

 

HOUSTON, May 10, 2022 (GLOBE NEWSWIRE) -- Sysco Corporation (NYSE: SYY) today announced financial results for its 13-week third fiscal quarter ended April 2, 2022.

 

Key highlights for the third quarter of fiscal year 2022:

 

    Robust consumer and customer away-from-home demand in late February and March, as Sysco’s resilient business snapped back from the impact of Omicron;

    Meaningful market share gains in the U.S. and International Segments based on Sysco’s Recipe for Growth strategy;

    Significant volume improvements, with U.S. Broadline volume up 18.8% versus the same period in fiscal year 2021, with our U.S. Foodservice segment surpassing fiscal year 2019 total case levels in the comparable quarter;

    Growing gross profit per case across all segments, reflecting successful efforts to manage product and fuel inflation; and

    Growing enterprise profitability, effectively managing costs and continuing to reinvest back into the business.

 

“Sysco delivered strong results this quarter, reflecting sequential top-line improvements and accelerating market share gains. Our share gains in the U.S. and International segments continue to accelerate and demonstrate the impact of our Recipe for Growth strategy on our business. Additionally, our teams made significant improvements in operating expenses leverage, with lower snap back costs, encouraging progress in our operations productivity performance and continued re-investments to drive profitable growth,” said Kevin Hourican, Sysco’s president and chief executive officer. “Our profit performance this quarter exceeded our expectations and demonstrates the progress we are making in advancing our strategy. I want to thank our associates for the change they are driving to enable Sysco to better serve our customers.”

 

Additional key financial results for the third quarter of fiscal year 2022 included:

 

    Sales increased 42.9% versus the same period in fiscal year 2021 and increased 15.3% versus the same period in fiscal year 2019;

    U.S. Broadline volume increased 18.8% versus the same period in fiscal year 2021 and decreased 3.5% versus the same period in fiscal year 2019;

    Gross profit increased 42.0% to $3.0 billion, as compared to the same period last year, and increased 9.4%, as compared to the same period in fiscal year 2019;

    Operating income increased 110.1% to $495.7 million, and adjusted1 operating income increased to $575.4 million, as compared to the same period last year, while operating income decreased 6.4% and adjusted1 operating income decreased 7.2%, as compared to the same period in fiscal year 2019;

    Earnings before interest, taxes, depreciation and amortization (“EBITDA”) increased to $703.3 million, and adjusted EBITDA increased to $755.8 million, in each case as compared to the same period last year, while EBITDA decreased 0.9% and adjusted EBITDA decreased 2.7%, in each case as compared to the same period in fiscal year 2019;2 and

    Earnings per share (“EPS”)3 increased to $0.59 compared to $0.17 in the same period last year; and adjusted1 EPS increased to $0.71 compared to $0.22 in the same period last year, while EPS decreased $0.26 and adjusted EPS decreased $0.08, in each case as compared to the same period in fiscal year 2019.

 

1 Adjusted financial results, including adjusted operating income (loss) and adjusted earnings per share (EPS), are non-GAAP financial measures that exclude certain items, which primarily include acquisition-related costs, restructuring costs, transformational project costs, adjustments to our bad debt reserve specific to aged receivables existing prior to the COVID-19 pandemic and a write-down of COVID-related personal protection equipment inventory due to the reduction in the net realizable value of inventory. Specific to adjusted EPS, this year’s Certain Items include losses on the extinguishment of debt and the impact of an increase in reserves for uncertain tax positions. The fiscal 2021 third quarter and first 39 weeks Certain Items include the impact of a loss on the sale of our Spain operations. Additionally, the first 39 weeks Certain Items include the impact of a loss on the sale of Cake Corporation and the impact of a new U.K. tax law change. Reconciliations of all non-GAAP financial measures to the nearest corresponding GAAP financial measure are included at the end of this release.

2EBITDA and adjusted EBITDA are non-GAAP financial measures. Reconciliations of all non-GAAP financial measures to the nearest corresponding GAAP financial measure are included at the end of this release.

3 Earnings per share (EPS) are shown on a diluted basis unless otherwise specified.

 

“Our financial results this quarter reflect strong demand and excellent progress against our transformation efforts. Notwithstanding double-digit inflation and purposeful snap back and transformation investments, our resilient business generated strong profitability. We are upbeat about our business and are raising our adjusted EPS guidance for fiscal year 2022 from $3.00-$3.10 to $3.16-$3.26.4 During the quarter, we continued our growth investments, maintained our strong balance sheet and, consistent with our status as a Dividend Aristocrat, announced another increase to our dividend,” said Aaron Alt, Sysco’s chief financial officer.

 

Third Quarter Fiscal 2022 Results

 

Total Sysco

 

Sales for the third quarter were $16.9 billion, an increase of 42.9% compared to the same period last year.

 

Gross profit increased 42.0% to $3.0 billion, gross margin decreased 12 basis points to 17.8% and adjusted gross margin increased 5 basis points to 18.0%, compared in each case to the same period last year. The increase in gross profit for the third quarter was primarily driven by higher volumes and high rates of inflation that were effectively managed.

 

Operating expenses increased $630.9 million, or 33.4%, compared to the same period last year, driven by increased volumes, one-time expenses associated with investments to drive our transformation initiatives and the snap-back as the industry continues to recover. Adjusted operating expenses increased $601.1 million, or 32.2%, compared to the same period last year.

 

Operating income was $495.7 million, an increase of $259.8 million, or 110.1%, compared to the same period last year. Adjusted operating income was $575.4 million, an increase of $319.2 million compared to the same period last year.

 

U.S. Foodservice Operations

 

The U.S. Foodservice Operations segment generated sequential top-line performance and overall share gains.

 

Sales for the third quarter were $12.0 billion, an increase of 43.6% compared to the same period last year. Local case volume within U.S. Broadline operations increased 14.1% for the third quarter, while total case volume within U.S. Broadline operations increased 18.8%, in each case as compared to the same period last year. Both increases represent organic growth.

 

Gross profit increased 38.9% to $2.3 billion, and gross margin decreased 64 basis points to 18.9%, compared in each case to the same period last year. Product cost inflation was 15.8% in U.S. Broadline, as measured by the estimated change in Sysco’s product costs, primarily in the poultry, fresh produce, and dairy categories.

 

4 Adjusted earnings per share is a non-GAAP financial measure; however, we cannot predict with certainty the particular certain items that would be excluded from the calculation of this measure for future periods. Due to these uncertainties, we cannot provide a quantitative reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure without unreasonable effort. However, we expect to calculate adjusted earnings per share for future periods in the same manner as the reconciliations provided for the historical periods that are included at the end of this release.

 

Operating expenses increased $434.2 million, or 39.9%, compared to the same period last year. Adjusted operating expenses increased $411.0 million, or 37.0%, compared to the same period last year.

 

Operating income was $746.5 million, an increase of $201.0 million compared to the same period last year. Adjusted operating income was $749.4 million, an increase of $224.3 million compared to the same period last year.

 

International Foodservice Operations

 

The International Foodservice Operations segment continued to generate strong sales and operating leverage, driving significant profit growth.

 

Sales for the third quarter were $2.8 billion, an increase of 64.5% compared to the same period last year. On a constant currency basis5, sales for the third quarter were $2.9 billion, an increase of 69.3% compared to the same period last year. Foreign exchange rates decreased International Foodservice Operations sales by 4.8% and total Sysco sales by 0.7% during the quarter.

 

Gross profit increased 75.4% to $570.2 million, and gross margin increased 125 basis points to 20.1%, compared in each case to the same period last year. On a constant currency basis5, gross profit increased 81.6% to $590.6 million. Foreign exchange rates decreased International Foodservice Operations gross profit by 6.2% and decreased total Sysco gross profit by 0.9% during the quarter.

 

Operating expenses increased $115.8 million, or 25.9%, compared to the same period last year. Adjusted operating expenses increased $118.0 million, or 28.3%, compared to the same period last year, mainly due to increased volume and investments in transformation and snap back costs. On a constant currency basis5, adjusted operating expenses increased $138.1 million, or 33.1%, compared to the same period last year. Foreign exchange rates decreased International Foodservice Operations operating expense by 4.8% and total Sysco operating expense by 1.1% during the quarter.

 

Operating income was $7.8 million, an improvement of $129.2 million compared to the same period last year. Adjusted operating income increased $127.0 million compared to the same period last year. On a constant currency basis5, adjusted operating income was $34.9 million, an increase of $127.2 million compared to the same period last year. Foreign exchange rates decreased International Foodservice Operations operating income by $0.3 million and increased total Sysco operating income by $0.6 million during the quarter.

 

Balance Sheet, Cash Flow and Capital Spending

 

As of the end of the quarter, the company had a cash balance of $876.1 million and approximately $11.1 billion of debt outstanding. The company used cash-on-hand to complete its acquisition of The Coastal Companies.

 

Cash flow from operations was $745.9 million for the first 39 weeks of fiscal 2022. In the year-to-date period, the company made purposeful investments in working capital to compete in the industry snap back, including making significant investments in inventory, with rising sales also contributing to rising accounts receivable, offset by rising accounts payable.

 

Capital expenditures, net of proceeds from sales of plant and equipment, for the first 39 weeks of fiscal 2022 were $311.6 million.

 

Free cash flow6 for the first 39 weeks of fiscal 2022 was $434.3 million.

 

5Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on current year results. These adjusted measures are non-GAAP financial measures. Reconciliations of all non-GAAP financial measures to the nearest corresponding GAAP financial measure are included at the end of this release.

6 Free cash flow is a non-GAAP financial measure that represents net cash provided from operating activities less purchases of plant and equipment and includes proceeds from sales of plant and equipment. Reconciliations for all non-GAAP financial measures are included at the end of this release.

 

Conference Call & Webcast

 

Sysco will host a conference call to review the company’s third quarter fiscal 2022 financial results on Tuesday, May 10, 2022, at 10:00 a.m. Eastern Daylight Time. A live webcast of the call, accompanying slide presentation and a copy of this news release will be available online at investors.sysco.com.

 

Key Highlights:

 

more, including finanical tables

https://investors.sysco.com/annual-reports-and-sec-filings/news-releases/2022/05-10-2022-130447307