01—Abstract
Summary
Summary of the 10-K filed August 30, 2021. Cited figures are marked; the original filing is the authoritative source.
Sysco Corporation (SYY) reported fiscal 2021, a 53-week year ended July 3, 2021, with sales of $51.30 billiona, down from $52.89 billion in fiscal 2020.
Operating income rose to $1.44 billionb from $749.5 million, and net earnings increased to $524.2 million from $215.5 million. Diluted EPS was $1.02 versus $0.42. The filing says that excluding Certain Items, adjusted operating income decreased 14.7% to $1.5 billion, adjusted net earnings decreased 28.3% to $740.4 million, and adjusted diluted EPS was $1.44 versus $2.01.
Results were hit by COVID-19 volume declines, partly offset by a $184.8 millionc benefit from reducing reserves on pre-pandemic receivables and cost-out savings that surpassed the $350 million fiscal 2021 goal. Cash flow and balance sheet improved meaningfully. Cash from operations was $1.90 billion and free cash flow was $1.49 billion, compared with $927.0 million the prior year.
Sysco paid down $3.4 billion of debt, and total debt fell to $11.1 billiond from $14.4 billion. Dividends paid were $917.6 million, or $1.80 per share, and the quarterly dividend was raised to $0.47. Share repurchases were suspended in fiscal 2021, but the board approved a new $5.0 billion repurchase program in May 2021.
The company also reported an 8% jump in... [see note below] Looking ahead, management expects fiscal 2022 sales to exceed fiscal 2019 sales by mid-single digits, gross margins to approach fiscal 2019 levels, and an effective tax rate of about 24%. Inflation reached 9.6% combined for the U.S. and Canada in the fourth quarter, and labor and product supply tightness are cited as ongoing pressures. The company also agreed to acquire Greco and Sons, which has approximately $800 million in annual revenue, and closed that acquisition in August 2021.
02—Key points
Key Highlights
- Sales declined 3.0% to $51.30 billion, while operating income rose 91.8% to $1.44 billion on a GAAP basis.
- Adjusted operating income fell 14.7% to $1.46 billion, and adjusted diluted EPS was $1.44 versus $2.01 a year earlier.
- Free cash flow rose to $1.49 billion from $926.97 million, and operating cash flow was $1.90 billion.
- Total debt was reduced to $11.1 billion from $14.4 billion, and $3.4 billion of debt was paid down during the year.
- U.S. Foodservice Operations generated $35.72 billion in sales and $2.46 billion in operating income, while International Foodservice Operations posted an operating loss of $232.4 million.
- Fiscal 2022 outlook calls for sales above fiscal 2019 levels by mid-single digits and an effective tax rate of approximately 24%.
- Fourth-quarter inflation of 9.6% for the U.S. and Canada and a tight labor market for warehouse and driver roles are cited as ongoing pressures.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Sysco kept $0.01.
- Revenue$51.30B100.0%
- Cost of revenue−$41.94B81.8%
- Gross profit$9.36B18.2%
- Operating costs−$7.91B15.4%
- Operating income$1.45B2.8%
- Interest, other & tax−$923.0M1.8%
- Net income$524.2M1.0%
Where FY2021 revenue went
$51.30B- Cost of revenue: $41.94B, 82% of revenue
- Operating costs: $7.91B, 15% of revenue
- Net income: $524.2M, 1.0% of revenue
- Interest, other & tax: $923.0M, 1.8% of revenue
Kept 1.0% as net incomeNet income $524.2M · 1.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed August 30, 2021Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $51.30B$52.89B | −3.0% |
| Cost of Revenue | $41.94B$42.99B | −2.4% |
| Gross Profit | $9.36B$9.90B | −5.5% |
| Operating Expenses | $7.91B$9.15B | −13.6% |
| Operating Income | $1.45B$749.50M | +93.1% |
| Net Income | $524.21M$215.47M | +143.3% |
| EPS (Basic) | $1.03$0.42 | +145.2% |
| EPS (Diluted) | $1.02$0.42 | +142.9% |
| Shares Outstanding (Basic) | 510.70M510.12M | +0.1% |
| Shares Outstanding (Diluted) | 513.56M514.03M | −0.1% |
05—Questions
Frequently Asked Questions
Why did Sysco's GAAP operating income rise while adjusted operating income fell?
GAAP operating income increased 91.8% to $1.44 billion, largely because fiscal 2020 included $371.1 million of restructuring costs, a $323.4 million excess bad debt charge, and a $203.2 million goodwill impairment. Fiscal 2021 instead recorded a $184.8 million benefit from reducing pre-pandemic receivable reserves. Excluding these Certain Items, adjusted operating income fell 14.7% to $1.46 billion, reflecting lower sales volume from COVID-19.
How did the 53-week fiscal 2021 affect comparisons?
Fiscal 2021 contained an extra week. The filing estimates the extra week contributed $822.8 million of U.S. Foodservice sales and $158.2 million of U.S. gross profit, and $58.4 million of adjusted operating income. Because of this, management notes the fiscal 2021 results are not directly comparable to fiscal 2020.
What is the outlook for fiscal 2022?
Management expects fiscal 2022 sales to exceed fiscal 2019 sales by mid-single digits, and expects gross margins to improve over fiscal 2021 and approach fiscal 2019 levels. It targets growth at 1.2 times the industry rate, expects an effective tax rate of about 24%, and aims for over $750 million in cost savings through fiscal 2024.
What risks does the filing highlight for investors?
Key risks include the ongoing COVID-19 pandemic and its variants, inflation that the company may not fully pass through to customers, shortages of qualified labor and product supply, and high leverage relative to prior years at $11.1 billion of total debt. The filing also notes a potential withdrawal liability of up to $170.2 million under multiemployer pension plans and a LIBOR transition risk.
06—Continue