01—Abstract
Summary
Summary of the 10-Q filed May 1, 2024. Cited figures are marked; the original filing is the authoritative source.
Sysco Corporation's 10-Q for the third quarter of fiscal 2024 (quarter ended March 30, 2024) shows sales of $19.38 billiona, up 2.7%, or $503.8 million, from the prior-year quarter.
Operating income rose 3.8% to $722.0 millionb, while net earnings fell 1.1% to $424.7 million, and diluted EPS was $0.85. On an adjusted basis, which excludes Certain Items such as restructuring, transformation costs and acquisition-related costs, adjusted diluted EPS rose 6.7% to $0.96 and adjusted EBITDA rose 8.5% to $976.6 million. For the first 39 weeks, sales were $58.29 billion, up 3.0%, and net earnings rose 29.6% to $1.34 billion, though that comparison benefited from a $315.4 million pension settlement charge in the prior-year period.
The balance sheet grew notably over the period. Total assets were $24.71 billionc versus $22.82 billion at fiscal year-end 2023, and long-term debt increased to $12.11 billion from $10.35 billion. The filing attributes the debt increase to new senior notes totaling $1.0 billion issued in November 2023 and to share repurchases.
Cash paid for the Edward Don & Company acquisition, completed November 27, 2023, was $969.4 milliond, and total acquisition payments for the 39 weeks were $1.2 billion. Free cash flow for the 39 weeks was $863.7 million, compared with $979.6 million a year earlier, and operating cash flow was $1.37 billion. Management cites case volume growth of 2.9% in U.S. Foodservice for the quarter, with local case volume up 0.4%, and inflation of 1.9% at the enterprise level.
Interest expense rose $22.9 million in the quarter, and management expects fiscal 2024 interest expense to rise by approximately $70 million. Sysco raised its fiscal 2024 share repurchase expectation to $1.25 billion from $750.0 million, and the quarterly dividend declared in April 2024 was $0.51 per share, up $0.01.
02—Key points
Key Highlights
- Sales of $19.38 billion in the third quarter, up 2.7%, or $503.8 million; first 39 weeks sales of $58.29 billion, up 3.0%.
- GAAP diluted EPS of $0.85 (up 1.2%) and adjusted diluted EPS of $0.96 (up 6.7%) in the third quarter, with adjusted operating income up 8.4% to $799.3 million.
- First 39-week net earnings of $1.34 billion, up 29.6%, but the prior-year period included a $315.4 million pension settlement charge.
- Long-term debt rose to $12.11 billion from $10.35 billion, driven by $1.0 billion of senior notes issued in November 2023 and share repurchases.
- Edward Don & Company acquired for $969.4 million in cash on November 27, 2023; total acquisition payments for the 39 weeks were $1.2 billion.
- Free cash flow of $863.7 million for the 39 weeks, down from $979.6 million, reflecting higher capital expenditures and investments in the Recipe for Growth strategy.
- Fiscal 2024 share repurchase expectation increased to $1.25 billion from $750.0 million; the April 2024 dividend was $0.51 per share, up $0.01.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Sysco kept $0.02.
- Revenue$19.38B100.0%
- Cost of revenue−$15.77B81.4%
- Gross profit$3.61B18.6%
- Operating costs−$2.89B14.9%
- Operating income$722.0M3.7%
- Interest, other & tax−$297.0M1.5%
- Net income$425.0M2.2%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed May 1, 2024Financial Statements
| Revenue | $19.38B |
| Cost of Revenue | $15.77B |
| Gross Profit | $3.61B |
| Operating Expenses | $2.89B |
| Operating Income | $722.00M |
| Net Income | $425.00M |
| EPS (Basic) | $0.85 |
| EPS (Diluted) | $0.85 |
| Shares Outstanding (Basic) | 499.64M |
| Shares Outstanding (Diluted) | 501.92M |
05—Questions
Frequently Asked Questions
How did Sysco perform in the third quarter of fiscal 2024?
Sales rose 2.7% to $19.38 billion and operating income rose 3.8% to $722.0 million. Net earnings fell 1.1% to $424.7 million, and diluted EPS was $0.85. Adjusted diluted EPS, which excludes Certain Items, increased 6.7% to $0.96.
Why did net earnings increase so much for the first 39 weeks?
Net earnings rose 29.6% to $1.34 billion, primarily because the prior-year period included a one-time pension settlement charge of $315.4 million. Operating income also increased 7.3%, and interest expense and income taxes rose.
How much debt did Sysco take on, and why?
Long-term debt increased to $12.11 billion from $10.35 billion. The filing attributes the increase to $1.0 billion of senior notes issued in November 2023, commercial paper borrowings, and share repurchases, and it notes that much of the new debt is associated with the Edward Don acquisition.
What acquisitions did Sysco complete in fiscal 2024?
Sysco acquired BIX Produce Company in the first quarter, Edward Don & Company on November 27, 2023 for $969.4 million in cash, and Ready Chef in the third quarter. Total cash paid for acquisitions in the first 39 weeks was $1.2 billion.
What are Sysco's capital return plans for fiscal 2024?
Sysco increased its fiscal 2024 share repurchase expectation to $1.25 billion from $750.0 million. Including dividends, the company expects to return $2.25 billion to shareholders in fiscal 2024. The remaining authorization under the May 2021 program was approximately $3.3 billion as of March 30, 2024.
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