01—Abstract
Summary
Summary of the 10-K filed August 26, 2022. Cited figures are marked; the original filing is the authoritative source.
Sysco Corporation (SYY) reported a strong fiscal 2022 (52 weeks ended July 2, 2022), with sales rising 33.8% to $68.6 billiona, an all-time record.
Growth was driven mainly by volume: U.S. Broadline case volume increased 15.4%b, and the company said it gained market share at over 1.3 times the industry rate. Product cost inflation was elevated, with U.S. Broadline inflation of 15.0% for the year, which the company said it managed while growing gross profit dollars. Gross margin declined 29 basis points to 17.95% on a GAAP basis, largely due to inflation.
Profitability improved significantly. GAAP operating income rose 62.7% to $2.34 billionc and GAAP net earnings rose 159.2% to $1.36 billion, or $2.64 diluted EPS. Adjusted diluted EPS, which excludes Certain Items, was $3.25, up from $1.44.
Operating expenses rose 26.0% on volume-related costs, business recovery investments of $193 milliond, and $183 million of Recipe for Growth investments. Free cash flow fell to $1.18 billion from $1.49 billion, reflecting working capital investment and higher capital expenditures of $632.8 million. The company repurchased $499.8 million of stock and paid $958.9 million in dividends.
Management expects top-line growth of at least 10% in fiscal 2023. Balance-sheet items to note include total debt of $10.6 billion, cash of $867.1 million at year end, and approximately $3.2 billion of cash and available liquidity as of August 9, 2022. The company also disclosed a $156.2 million estimated share of multiemployer pension withdrawal liability and a $1.0 billion after-tax charge in accumulated other comprehensive loss from pension funded status.
02—Key points
Key Highlights
- Record sales of $68.6 billion, up 33.8% from $51.3 billion in fiscal 2021 (fiscal 2021 had 53 weeks).
- GAAP net earnings of $1.36 billion, up 159.2%; diluted EPS of $2.64 versus $1.02; adjusted diluted EPS of $3.25 versus $1.44.
- U.S. Broadline total case volume up 15.4% and local case volume up 10.3%; company reports gaining market share at over 1.3 times industry growth.
- U.S. Broadline product cost inflation of 15.0% for fiscal 2022, with GAAP gross margin down 29 basis points to 17.95%.
- Free cash flow of $1.18 billion, down from $1.49 billion, due to working capital investment and capital expenditures of $632.8 million.
- Capital returns of $958.9 million in dividends and $499.8 million in share repurchases; approximately $4.5 billion remaining under the $5.0 billion authorization.
- Total debt of $10.6 billion; new $3.0 billion revolving credit facility entered April 29, 2022, maturing in April 2027; Moody's Baa1, S&P BBB, Fitch BBB.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Sysco kept $0.02.
- Revenue$68.64B100.0%
- Cost of revenue−$56.32B82.1%
- Gross profit$12.32B17.9%
- Operating costs−$9.97B14.5%
- Operating income$2.35B3.4%
- Interest, other & tax−$987.0M1.4%
- Net income$1.36B2.0%
Where FY2022 revenue went
$68.64B- Cost of revenue: $56.32B, 82% of revenue
- Operating costs: $9.97B, 15% of revenue
- Net income: $1.36B, 2.0% of revenue
- Interest, other & tax: $987.0M, 1.4% of revenue
Kept 2.0% as net incomeNet income $1.36B · 2.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed August 26, 2022Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $68.64B$51.30B | +33.8% |
| Cost of Revenue | $56.32B$41.94B | +34.3% |
| Gross Profit | $12.32B$9.36B | +31.7% |
| Operating Expenses | $9.97B$7.91B | +26.1% |
| Operating Income | $2.35B$1.45B | +62.1% |
| Net Income | $1.36B$524.21M | +159.2% |
| EPS (Basic) | $2.66$1.03 | +158.3% |
| EPS (Diluted) | $2.64$1.02 | +158.8% |
| Shares Outstanding (Basic) | 510.63M510.70M | 0.0% |
| Shares Outstanding (Diluted) | 514.01M513.56M | +0.1% |
05—Questions
Frequently Asked Questions
How did Sysco's profitability change in fiscal 2022?
GAAP operating income rose 62.7% to $2.34 billion and GAAP net earnings rose 159.2% to $1.36 billion. Interest expense fell $256.5 million to $623.6 million, though this included a $115.6 million loss on debt extinguishment. Adjusted operating income rose 80.3% to $2.63 billion.
What drove the sales increase?
The primary driver was case volume growth in U.S. Broadline operations, which contributed $6.3 billion of the $12.8 billion U.S. Foodservice sales increase. Product cost inflation contributed $5.1 billion, and acquisitions contributed $1.3 billion. The company attributed the volume growth to the COVID-19 business recovery and its Recipe for Growth initiatives.
What risks did the company highlight?
Key risks include persistent product cost inflation and deflation, labor shortages and wage increases, fuel price volatility, competition and GPO pressure, cybersecurity incidents, and the COVID-19 pandemic. The company also flagged a potential $156.2 million share of multiemployer pension withdrawal liability and a funded-status pension obligation of $3.5 billion against plan assets of $3.6 billion.
What is the outlook for fiscal 2023?
Management expects top-line growth of at least 10% over fiscal 2022, mid-single-digit inflation on an enterprise basis, and elevated operating expenses as hiring recovers and transformation investments continue, partially offset by cost-out efforts. It also expects $517.8 million of debt maturing within the next 12 months.
06—Continue