Sysco Reports Second Quarter Fiscal Year 2025 Results

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HOUSTON, Jan. 28, 2025 (GLOBE NEWSWIRE) -- Sysco Corporation (NYSE: SYY) ("Sysco” or the "company”) today announced financial results for its 13-week second fiscal quarter ended December 28, 2024.

Key financial results for the second quarter of fiscal year 2025 include the following (comparisons are to the same period in fiscal year 2024):

• Sales increased 4.5%; U.S. Foodservice volume increased 1.4%;
• Gross profit increased 3.9% to $3.7 billion;
• Operating income increased 1.7% to $712 million, and adjusted operating income increased 5.1% to $783 million¹;
• EBITDA increased 1.9% to $931 million, and adjusted EBITDA increased 4.4% to $969 million^1,2;
• EPS³ was $0.82, in-line with the same period last year, and adjusted EPS¹ increased 4.5% to $0.93;
• Reiterating FY25 guidance, with sales growth of 4-5% and adjusted EPS growth of 6-7%; and
• Increasing cash return to shareholders to approximately $2.25 billion in fiscal year 2025, with share repurchase now expected at $1.25 billion, along with dividends at $1 billion.

"Sysco delivered another quarter of disciplined financial performance fueled by top and bottom line growth that was consistent with expectations. We delivered compelling results in our International, SYGMA, and National sales businesses. Our International business was particularly strong, delivering a 14.5% increase in operating income, and a 26.5% increase in adjusted operating income. Our local business is beginning to show signs of progress, with improvements to our new customer win rate and our Net Promoter Scores. These outcomes, coupled with investments in sales professionals and our expanding specialty offerings, provide the pathway to increased local case volume performance in the second half of 2025. When combined with the strong success in our other three major business segments, we are confident in our ability to deliver our full year fiscal 2025 guidance,” said Kevin Hourican, Sysco's Chair of the Board and Chief Executive Officer.

"Second quarter results included improvements across the company's core financial drivers. Combined, our efforts generated positive operating leverage and sequential improvements to gross profits and our continued operating expense control delivered margin expansion. We are encouraged by the momentum in our business and are reiterating our full year guidance including sales growth of 4%-5% and adjusted EPS growth of 6%-7%. Consistent with our efforts to drive compelling returns on invested capital and total shareholder return for our investors, I am pleased to announce the upsizing of our share repurchase plan for the year to $1.25 billion, up from our prior plan of $1 billion,” said Kenny Cheung, Sysco's Chief Financial Officer.

_{¹ Adjusted financial results, including adjusted operating expense, adjusted operating income (loss), adjusted earnings per share (EPS) and adjusted EBITDA, among others, are non-GAAP financial measures that exclude certain items, which primarily include acquisition-related costs, restructuring and severance costs, and transformational project costs. Reconciliations of all non-GAAP financial measures to the nearest corresponding GAAP financial measure are included at the end of this release.}

_{² Earnings before interest, taxes, depreciation and amortization (EBITDA) 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.}

Second Quarter Fiscal Year 2025 Results (comparisons are to the same period in fiscal year 2024)

Total Sysco

Sales for the second quarter increased 4.5% to $20.2 billion.

Gross profit increased 3.9% to $3.7 billion, and gross margin decreased 11 basis points to 18.1%. Product cost inflation was 2.1% at the total enterprise level, as measured by the estimated change in Sysco's product costs, primarily in the dairy and poultry categories. The increase in gross profit for the second quarter was primarily driven by positive volumes and effective management of product cost inflation.

Operating expenses increased 4.4%, driven by increased volumes, cost inflation, and higher business investments, partially offset by gains from sale leaseback transactions. Adjusted operating expenses increased 3.5%.

Operating income increased 1.7% to $712 million, and adjusted operating income increased 5.1% to $783 million.

U.S. Foodservice Operations

The U.S. Foodservice Operations segment results were positively impacted by higher volumes and gains from sale leaseback transactions, partially offset by customer mix shift and investments in our business.

Sales for the second quarter increased 4.1% to $14.0 billion. Total case volume within U.S. Foodservice grew 1.4% for the second quarter, while local case volume within U.S. Foodservice decreased 0.9%.

Gross profit increased 2.9% to $2.7 billion, and gross margin decreased 20 basis points to 18.9%.

Operating expenses increased 4.7%, and adjusted operating expenses increased 3.9%.

Operating income decreased 0.6% to $834 million, and adjusted operating income increased 0.9% to $859 million.

International Foodservice Operations

The International Foodservice Operations segment delivered continued sales growth, effective margin management, and outsized profit growth.

Sales for the second quarter increased 3.6% to $3.7 billion. On a constant currency basis⁴, sales for the second quarter increased 4.2% to $3.7 billion. Foreign exchange rates decreased both International Foodservice Operations sales by $20 million and total Sysco sales by $21 million during the quarter.

Gross profit increased 7.3% to $760 million, and gross margin increased 71 basis points to 20.4%. On a constant currency basis⁴, gross profit increased 7.3% to $760 million. Foreign exchange rates had no impact on International Foodservice Operations gross profit and decreased total Sysco gross profit by $1 million during the quarter.

Operating expenses increased 6.4%, and adjusted operating expenses increased 4.1%. On a constant currency basis⁴, adjusted operating expenses increased 4.0%. Foreign exchange rates increased both International Foodservice Operations operating expenses by $1 million and total Sysco operating expenses by $1 million during the quarter.

Operating income increased 14.5% to $95 million, and adjusted operating income increased 26.5% to $129 million. On a constant currency basis⁴, adjusted operating income increased 27.5% to $130 million. Foreign exchange rates decreased both International Foodservice Operations operating income by 1.0% and total Sysco operating income by 0.3% during the quarter.

Balance Sheet, Cash Flow and Capital Spending

As of the end of the quarter, the company had a cash balance of $793 million.

During the first 26 weeks of fiscal year 2025, Sysco returned $803 million to shareholders via $300 million of share repurchases and $503 million of dividends.

Cash flow from operations was $498 million for the first 26 weeks of fiscal year 2025, which was a decrease of $358 million compared to the prior year period.

Capital expenditures, net of proceeds from sales of plant and equipment, for the first 26 weeks of fiscal year 2025 were $167 million.

Free cash flow⁵ for the first 26 weeks of fiscal year 2025 was $331 million, which was a $196 million decrease compared to the prior year period.

_{⁴ Represents 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.}

_{⁵ 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 second quarter fiscal year 2025 financial results on Tuesday, January 28, 2025, 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.

Forward-Looking Statements

Statements made in this press release or in our earnings call for the second quarter of fiscal year 2025 that look forward in time or that express management's beliefs, expectations or hopes are forward-looking statements under the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the views of management at the time such statements are made and are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ materially from current expectations. These statements include statements concerning: our expectations regarding future improvements in productivity; our belief that improvements in our organizational capabilities will deliver compelling outcomes in future periods; our expectations regarding improvements in international volume; our expectations that our transformational agenda will drive long-term growth; our expectations regarding volume growth and benefits to gross margins; our expectations regarding the continuation of an inflationary environment; our expectations regarding improvements in the efficiency of our supply chain; our expectations regarding the impact of our Recipe for Growth strategy and the pace of progress in implementing the initiatives under that strategy; our expectations regarding Sysco's ability to outperform the market in future periods; our expectations that our strategic priorities will enable us to grow faster than the market; our expectations regarding our efforts to reduce overtime rates and the incremental investments in hiring; our expectations regarding the benefits of the six-day delivery and last mile distribution models; our plans to improve the capabilities of our sales team; our plans to refine our engineering labor standards; our expectations to exceed our growth target by the end of fiscal 2025; our ability to deliver against our strategic priorities, including strategic sourcing efforts; economic trends in the United States and abroad; our belief that there is further opportunity for profit in the future; our future growth, including growth in sales and earnings per share; the pace of implementation of our business transformation initiatives; our expectations regarding our ability to execute our balanced approach to capital allocation and rewarding our shareholders, including the size and timing of our share repurchase plan; our plans to improve colleague hiring, retention, training and productivity; our expectations regarding our long-term financial outlook; our expectations of the effects labor harmony will have on sales and case volume, as well as mitigation expenses; our expectations for customer acquisition and retention; our expectations regarding the effectiveness of our Global Support Center expense control measures; and our expectations regarding the growth and resilience of our food away from home market.

It is important to note that actual results could differ materially from those projected in such forward-looking statements based on numerous factors, including those outside of Sysco's control. Therefore, you should not place undue reliance on any of the forward-looking statements contained herein. For more information concerning factors that could cause actual results to differ from those expressed or forecasted, see our Annual Report on Form 10-K for the year ended June 29, 2024, as filed with the SEC, and our subsequent filings with the SEC. We do not undertake to update our forward-looking statements, except as required by applicable law.

About Sysco

Sysco is the global leader in selling, marketing and distributing food and related products to customers who prepare meals away from home. This includes restaurants, healthcare and educational facilities, lodging establishments, entertainment venues, and more. Sysco operates 340 distribution centers, in 10 countries, with 76,000 colleagues serving approximately 730,000 customer locations. The company generated sales of more than $78 billion in fiscal year 2024 that ended June 29, 2024.

As the world's largest food-away-from-home distributor, Sysco offers customized supply chain solutions, bespoke specialty product offerings, and culinary support to drive customers to innovate and optimize their operations. We act as a trusted business partner to our customers, helping them grow through our industry-leading portfolio that includes fresh produce, premium proteins, specialty products, sustainably focused items, equipment and supplies, and innovative culinary solutions.

For more information, visit www.sysco.com. For important news and key information for Sysco investors, visit the Investor Relations section of the company's website at investors.sysco.com.