Sysco Delivers Over 1.3 Times U.S. Market Share Growth and Strong Profit; Positive Momentum for Fiscal Year 2023

HOUSTON, Aug. 09, 2022 (GLOBE NEWSWIRE) -- Sysco Corporation (NYSE: SYY) today announced financial results for its 13-week fourth fiscal quarter and its 52-week fiscal year ended July 2, 2022. In fiscal year 2021, the fourth quarter included 14 weeks, and the year included 53 weeks.1

Key highlights for the fourth quarter and full year of fiscal year 2022 include:

• Sysco growth outpaced the U.S. market by more than 1.3 times for the full year;
• Recipe For Growth advanced as planned;
• Volume growth for the quarter and year;
• Effective pass-through of rising product costs;
• Continued operating income recovery for the International segment;
• Profitable growth, strong fourth quarter results; and
• Capital allocation strategy executed, with significant investment in business, debt paid down during the quarter, and $500 million in shares repurchased for the year.
  

“Sysco generated another quarter of top-line and bottom-line improvements, topping off a strong year of financial performance, especially given the environmental conditions. This included growing more than 1.3 times the market for the year and exceeding fiscal 2019 operating income for the quarter by 6.4 percent. The strong financial performance was delivered while simultaneously investing in our Recipe For Growth strategy. We are delivering new commercial capabilities and accelerating growth in a way which will pay long-term returns for Sysco and our investors,” said Kevin Hourican, Sysco’s President and Chief Executive Officer. “I want to thank our associates around the world for their continued hard work and customer centricity.”

Key financial results for the fourth quarter of fiscal year 2022 include:

• Sales increased 17.5% versus the same period in fiscal year 2021 and, on a comparable 13-week basis, increased 26.5% to $19.0 billion. Sales increased 22.5% versus the same period in fiscal year 2019;
• U.S. Broadline volume decreased 2.1% versus the same period in fiscal year 2021 and, on a comparable 13-week basis, increased 5.4%. U.S. Broadline volume decreased 2.2% versus the same period in fiscal year 2019;
• Gross profit increased 18.1% to $3.4 billion, as compared to the same period last year, and increased 15.6%, as compared to the same period in fiscal year 2019;
• Operating income increased 34.6% to $766.7 million, and adjusted1 operating income increased to $876.8 million, as compared to the same period last year, while operating income increased 6.4% and adjusted1 operating income increased 7.2%, as compared to the same period in fiscal year 2019;
• Earnings before interest, taxes, depreciation and amortization (“EBITDA”) increased to $971.7 million, and adjusted EBITDA increased to $1.0 billion, in each case as compared to the same period last year. On a comparable 13-week basis, EBITDA increased 34.4% and adjusted EBITDA increased 44.5%, in each case as compared to the same period last year. EBITDA increased 1.3% and adjusted EBITDA increased 8.7%, in each case as compared to the same period in fiscal year 2019;2 and
• EPS3 increased to $0.99 compared to $0.29 in the same period last year. Adjusted1 EPS increased to $1.15 compared to $0.71 in the same period last year, and on a comparable 13-week basis, increased $0.49 or 74.2%. EPS decreased $0.04 and adjusted EPS increased $0.05, in each case as compared to the same period in fiscal year 2019.

_______________________
1 Adjusted financial results, including adjusted operating income (loss), adjusted earnings per share (EPS) and adjusted EBITDA, 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. Specific to adjusted EPS, last year’s fourth quarter and fiscal 2021 Certain Items include the impact of a gain on sale of property and the impact of a U.K. tax law change. The fiscal 2021 Certain Items include the impact of a loss on the sale of Cake Corporation and our Spain operations. Results shown on a comparable 13 or 52 week basis are non-GAAP numbers and have been further adjusted to remove dollar amounts equal to 1/14 of the comparable 13 or 52 week basis are non-GAAP numbers and have been further adjusted to remove dollar amounts equal to 1/14 of the comparable fourth quarter non-GAAP results. Reconciliations of all non-GAAP financial measures to the nearest corresponding GAAP financial measure are included at the end of this release.
2 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.

Key financial results for fiscal year 2022 included:

• Sales increased 33.8% versus fiscal year 2021 and, on a comparable 52-week basis, increased 36.9% to $68.6 billion. Sales increased 14.2% versus fiscal year 2019;
• U.S. Broadline volume increased 15.4% versus fiscal year 2021 and, on a comparable 52-week basis, increased 17.9%. U.S. Broadline volume decreased 3.7% versus fiscal year 2019;
• Gross profit increased 31.7% to $12.3 billion, as compared to the prior year, and increased 8.0%, as compared to fiscal year 2019;
• Operating income increased 62.7% to $2.3 billion, and adjusted1 operating income increased to $2.6 billion, as compared to the prior year, while operating income increased 0.4%, and adjusted1 operating income decreased 3.7%, as compared to fiscal year 2019;
• EBITDA increased to $3.1 billion, and adjusted EBITDA increased to $3.3 billion, in each case as compared to the prior year. On a comparable 52-week basis, EBITDA increased 46.4% and adjusted EBITDA increased 58.5%, in each case as compared to the prior year. EBITDA increased 0.4% and adjusted EBITDA decreased 0.7%, in each case as compared to fiscal year 2019;2 and
• EPS3 increased to $2.64 compared to $1.02 in the prior year. Adjusted1 EPS increased to $3.25 compared to $1.44 in the prior year and, on a comparable 52-week basis, increased $1.86, or 133.8%. EPS decreased $0.56, and adjusted EPS decreased $0.30, in each case as compared to fiscal year 2019.

“Sysco delivered strong financial results, growing volumes and sales, effectively managing double-digit inflation and improving profitability, all while also strengthening our balance sheet and returning $1.5 billion to our shareholders. We have many reasons to be upbeat about our business. While keeping a careful eye on macro-economic developments, we expect to grow adjusted EPS by 26% - 35%, or $4.09 - $4.394, for fiscal year 2023,” said Aaron Alt, Sysco’s Chief Financial Officer.

________________________
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.

Fourth Quarter Fiscal Year 2022 Results

Total Sysco

Sales for the fourth quarter were $19.0 billion, an increase of 17.5% compared to the same period last year.

Gross profit increased 18.1% to $3.4 billion, gross margin increased 10 basis points to 18.2% and adjusted gross margin increased 33 basis points to 18.4%, compared in each case to the same period last year. The increase in gross profit for the fourth quarter was primarily driven by higher volumes and high rates of inflation that were effectively managed.

Operating expenses increased $331.5 million, or 14.1%, compared to the same period last year, driven by increased volumes and continued investments to drive our transformation initiatives. Adjusted operating expenses increased $300.5 million, or 13.0%, compared to the same period last year.

Operating income was $766.7 million, an increase of $197.0 million, or 34.6%, compared to the same period last year. Adjusted operating income was $876.8 million, an increase of $271.6 million compared to the same period last year.

U.S. Foodservice Operations

The U.S. Foodservice Operations segment generated strong sales growth, overall share gains and increased profitability.

Sales for the fourth quarter were $13.4 billion, an increase of 16.4% compared to the same period last year. Local case volume within U.S. Broadline operations decreased 7.8% for the fourth quarter, while total case volume within U.S. Broadline operations decreased 2.1%, in each case as compared to the same period last year.

Gross profit increased 17.5% to $2.6 billion, and gross margin increased 17 basis points to 19.4%, compared in each case to the same period last year. Product cost inflation was 15.3% in U.S. Broadline, as measured by the estimated change in Sysco’s product costs, primarily in the dairy, poultry and fresh produce categories.

Operating expenses increased $272.3 million, or 19.8%, compared to the same period last year. Adjusted operating expenses increased $244.9 million, or 17.5%, compared to the same period last year.

Operating income was $952.0 million, an increase of $114.6 million compared to the same period last year. Adjusted operating income was $959.5 million, an increase of $141.9 million compared to the same period last year.

International Foodservice Operations

The International Foodservice Operations segment delivered another quarter of strong sales and operating leverage, driving significant profit growth.

Sales for the fourth quarter were $3.3 billion, an increase of 30.3% compared to the same period last year. On a constant currency basis5, sales for the fourth quarter were $3.5 billion, an increase of 40.4% compared to the same period last year. Foreign exchange rates decreased both International Foodservice Operations sales by 10.1% and total Sysco sales by 1.6% during the quarter.

Gross profit increased 31.4% to $651.8 million, and gross margin increased 17 basis points to 20.0%, compared in each case to the same period last year. On a constant currency basis5, gross profit increased 42.9% to $708.9 million. Foreign exchange rates decreased both International Foodservice Operations gross profit by 11.5% and total Sysco gross profit by 2.0% during the quarter.

Operating expenses increased $78.2 million, or 14.9%, compared to the same period last year. Adjusted operating expenses increased $61.3 million, or 12.4%, compared to the same period last year. On a constant currency basis5, adjusted operating expenses increased $112.7 million, or 22.7%, compared to the same period last year. Foreign exchange rates decreased both International Foodservice Operations operating expenses by 10.3% and total Sysco operating expenses by 2.4% during the quarter.

Operating income was $47.1 million, an improvement of $77.6 million compared to the same period last year. Adjusted operating income increased $94.5 million compared to the same period last year. On a constant currency basis5, adjusted operating income was $100.3 million, an increase of $100.2 million compared to the same period last year. Foreign exchange rates decreased both International Foodservice Operations operating income by $5.8 million and total Sysco operating income by $3.2 million during the quarter.

________________________
5 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.

Fiscal Year 2022 Results

Total Sysco

Sales for fiscal year 2022 were $68.6 billion, an increase of 33.8% compared to the prior year.

Gross profit increased 31.7% to $12.3 billion, and gross margin decreased 29 basis points to 18.0%, compared in each case to the prior year. The increase in gross profit for the year was primarily driven by higher volumes and high rates of inflation that were effectively managed.

Operating expenses increased $2.1 billion, or 26.0%, compared to the prior year, driven by increased volumes, expenses associated with investments to drive our transformation initiatives, and snap-back and productivity related costs. Adjusted operating expenses increased $1.9 billion, or 23.6%, compared to the prior year.

Operating income was $2.3 billion, an increase of $901.8 million, or 62.7%, compared to the prior year. Adjusted operating income was $2.6 billion, an increase of $1.2 billion, or 80.3%, compared to the prior year.

U.S. Foodservice Operations

Sales for fiscal year 2022 were $48.5 billion, an increase of 35.8% compared to the prior year. Local case volume within U.S. Broadline operations increased 10.3% for fiscal year 2022, while total case volume within U.S. Broadline operations increased 15.4%, in each case as compared to the prior year. Both increases represent organic growth.

Gross profit increased 31.2% to $9.2 billion, and gross margin decreased 67 basis points to 19.0%, compared in each case to the prior year. Product cost inflation was 15.0% in U.S. Broadline, as measured by the estimated change in Sysco’s product costs, primarily in the poultry, meat and seafood categories.

Operating expenses increased $1.5 billion, or 32.3%, compared to the prior year. Adjusted operating expenses increased $1.3 billion, or 28.0%, compared to the prior year.

Operating income was $3.2 billion, an increase of $716.2 million, or 29.2%, compared to the prior year. Adjusted operating income was $3.2 billion, an increase of $871.8 million, or 37.6%, compared to the prior year.

International Foodservice Operations

Sales for fiscal year 2022 were $11.8 billion, an increase of $3.4 billion, or 41.2%, compared to the prior year. On a constant currency basis5, sales for fiscal year 2022 were $12.0 billion, an increase of 43.3% compared to the prior year. Foreign exchange rates decreased both International Foodservice Operations sales by 2.1% and total Sysco sales by 0.3% during the year.

Gross profit increased 44.5% to $2.4 billion, and gross margin increased 47 basis points to 20.2%, compared in each case to the prior year. On a constant currency basis5, gross profit increased 47.5% to $2.4 billion, as compared to the prior year. Foreign exchange rates decreased both International Foodservice Operations gross profit by 3.0% and total Sysco gross profit by 0.5% during the year.

Operating expenses increased $396.9 million, or 21.1%, compared to the prior year. Adjusted operating expenses increased $370.0 million, or 20.9%, compared to the prior year. On a constant currency basis5, adjusted operating expenses increased $420.9 million, or 23.7%, compared to the prior year. Foreign exchange rates decreased both International Foodservice Operations operating expense by 2.8% and total Sysco operating expense by 0.7% during the year.

Operating income was $102.3 million, an improvement of $334.7 million compared to the prior year. Adjusted operating income increased $361.7 million compared to the prior year. On a constant currency basis5, adjusted operating income was $236.4 million, an increase of $365.2 million compared to the prior year. Foreign exchange rates decreased International Foodservice Operations operating income by 2.7% and increased total Sysco operating income by $0.8 million during the year.

Balance Sheet, Cash Flow and Capital Spending

As of the end of the quarter, the company had a cash balance of $867.1 million and approximately $10.6 billion of debt outstanding.

During the year, Sysco returned $1.5 billion to shareholders via $500 million of share repurchases and $959 million of dividends.

Cash flow from operations was $1.8 billion for fiscal year 2022. During the year, the company made purposeful investments in working capital to drive increased sales and profitability, 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 fiscal year 2022 were $608.7 million.

Free cash flow6 for fiscal year 2022 was $1.2 billion.

________________________
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 fourth quarter and full fiscal year 2022 financial results on Tuesday, August 9, 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.

Forward-Looking Statements

Statements made in this press release or in our earnings call for the fourth quarter of fiscal year 2022 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: the effect, impact, potential duration or other implications of the COVID-19 pandemic and any expectations we may have with respect thereto; 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 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 expansion of our driver academy and our belief that the academy will enable us to provide upward career path mobility for our warehouse associates and improve associate retention; our expectations regarding the benefits of the six-day delivery model; our plans to improve the capabilities of our sales team; our expectations regarding the impact of our growth initiatives and their ability to enable Sysco to consistently outperform the market; our expectations regarding the impact of the Coastal Companies acquisition on our business; our expectations regarding our ability to grow faster than the total market in fiscal 2023 and to exceed our growth target by the end of fiscal 2024; our ability to deliver against our strategic priorities; economic trends in the United States and abroad; our plans to make continued capital investments over the next three fiscal years in our technology, fleet and buildings; our belief that there is further opportunity for profit in the future; our future growth, including growth in sales and earnings per share; our expectations regarding profits and sales in fiscal 2023; the pace of implementation of our business transformation initiatives; our expectations regarding our balanced approach to capital allocation and rewarding our shareholders; our plans to improve associate retention, training and productivity; our belief that our Recipe for Growth transformation is creating capabilities that will help us profitably grow for the long term; our expectations regarding our long-term financial outlook; and our expectations regarding additional improvements from snap-back costs and productivity expenses during the fiscal fourth quarter.

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. 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 July 3, 2021, 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 products to restaurants, healthcare and educational facilities, lodging establishments and other customers who prepare meals away from home. Its family of products also includes equipment and supplies for the foodservice and hospitality industries. With more than 71,000 associates, the company operates 333 distribution facilities worldwide and serves approximately 700,000 customer locations. For fiscal year 2022 that ended July 2, 2022, the company generated sales of more than $68 billion. Information about our CSR program, including Sysco’s 2021 Corporate Social Responsibility Report, can be found at sysco.com/csr2021report.

For more information, visit www.sysco.com or connect with Sysco on Facebook at www.facebook.com/SyscoFoods. For important news and information regarding Sysco, visit the Investor Relations section of the company’s Internet home page at investors.sysco.com, which Sysco plans to use as a primary channel for publishing key information to its investors, some of which may contain material and previously non-public information. In addition, investors should continue to review our news releases and filings with the SEC. It is possible that the information we disclose through any of these channels of distribution could be deemed to be material information.