01—Abstract
Summary
Summary of the 10-Q filed October 30, 2024. Cited figures are marked; the original filing is the authoritative source.
Sysco Corporation's Form 10-Q for the first 13 weeks of fiscal 2025 (period ended September 28, 2024) reports sales of $20.48 billiona, up 4.4% from $19.62 billion a year earlier, driven primarily by U.S. Foodservice Operations volume growth and higher inflation.
Gross profit rose 2.9% to $3.75 billionb, but operating income increased only 0.5% to $808 million and net earnings decreased 2.6% to $490 million, reflecting higher operating expenses and interest expense. Diluted earnings per share were $0.99, unchanged from the prior year. On an adjusted basis, which excludes Certain Items such as restructuring, transformation, and acquisition-related costs, operating income rose 2.2% to $873 million and adjusted diluted earnings per share increased 1.9% to $1.09.
Cash generation was weak in the quarter, with net cash provided by operating activities of $53 million compared to $87 millionc a year earlier, and free cash flow of $8 million (a non-GAAP measure) versus negative $73 million in the prior-year period. Total debt carrying value rose to $12.4 billion from $12.0 billion at June 29, 2024, driven by new commercial paper issuances and new leases. Management noted that foot traffic to restaurants declined 3.6% in the quarter, though traffic improved as the quarter progressed, and expects to grow both sales and net earnings in fiscal 2025.
The company repurchased 1,439,652 shares for $108 milliond during the quarter and intends to repurchase $1.0 billion of stock in fiscal 2025, with approximately $2.7 billion remaining under its authorization at quarter end. Quarterly dividends paid totaled $251 million, or $0.51 per share. The filing states that management does not believe pending legal proceedings will have a material adverse effect on the company.
02—Key points
Key Highlights
- Sales increased 4.4% to $20.48 billion, driven mainly by U.S. Foodservice Operations case volume growth of 2.7% and inflation of 2.2% at the enterprise level.
- Gross margin declined 27 basis points to 18.32%, attributed to customer mix shifts, lower Sysco brand penetration, and timing of strategic sourcing benefits.
- Operating income rose 0.5% to $808 million; adjusted operating income increased 2.2% to $873 million, with adjusted operating expenses at 14.06% of sales.
- Net earnings fell 2.6% to $490 million; diluted EPS was $0.99, flat year over year, while adjusted diluted EPS rose 1.9% to $1.09.
- Free cash flow was $8 million versus negative $73 million a year earlier, though operating cash flow declined to $53 million from $87 million.
- Interest expense increased $26 million to $160 million, due to senior notes issued in fiscal 2024 and higher commercial paper borrowings.
- The company repurchased $108 million of stock and paid $251 million in dividends; it intends to repurchase $1.0 billion in fiscal 2025 with about $2.7 billion of authorization remaining.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2025, Sysco kept $0.02.
- Revenue$20.48B100.0%
- Cost of revenue−$16.73B81.7%
- Gross profit$3.75B18.3%
- Operating costs−$2.94B14.4%
- Operating income$808.0M3.9%
- Interest, other & tax−$318.0M1.6%
- Net income$490.0M2.4%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed October 30, 2024Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $20.48B$19.62B | +4.4% |
| Cost of Revenue | $16.73B$15.97B | +4.8% |
| Gross Profit | $3.75B$3.65B | +2.9% |
| Operating Expenses | $2.94B$2.84B | +3.6% |
| Operating Income | $808.00M$804.00M | +0.5% |
| Net Income | $490.00M$503.00M | −2.6% |
| EPS (Basic) | $1.00$1.00 | 0.0% |
| EPS (Diluted) | $0.99$0.99 | 0.0% |
| Shares Outstanding (Basic) | 492.02M505.13M | −2.6% |
| Shares Outstanding (Diluted) | 493.79M507.07M | −2.6% |
05—Questions
Frequently Asked Questions
How did Sysco's sales and profitability perform in the first quarter of fiscal 2025?
Sales rose 4.4% to $20.48 billion, led by U.S. Foodservice Operations volume growth and inflation. Gross profit grew 2.9%, but operating income increased only 0.5% to $808 million and net earnings declined 2.6% to $490 million. Excluding Certain Items, adjusted operating income rose 2.2% to $873 million.
Why did net earnings decline despite sales growth?
The filing attributes the decline primarily to higher operating expenses, which increased 3.6% to $2.95 billion, and to interest expense, which rose $26 million to $160 million. Items affecting income taxes also contributed, with the effective tax rate at 23.7% compared with 24.0% a year earlier.
How strong was Sysco's cash flow and balance sheet position?
Operating cash flow was $53 million, down from $87 million, and free cash flow was $8 million. Total debt carrying value increased to $12.4 billion from $12.0 billion, driven by commercial paper issuances and new leases. Cash and cash equivalents were $733 million, and the company stated it expects liquidity to be sufficient for more than the next 12 months.
What did management say about demand and the outlook for fiscal 2025?
Restaurant foot traffic declined 3.6% in the quarter, improving from about 5% decline in July to about 3% in September. Management expects modest industry traffic improvements in the second half of fiscal 2025 and expects to grow both sales and net earnings in fiscal 2025.
What shareholder return actions did Sysco take during the quarter?
Sysco repurchased 1,439,652 shares for $108 million and paid $251 million in dividends, or $0.51 per share. The company intends to repurchase $1.0 billion of stock in fiscal 2025 and had approximately $2.7 billion remaining under its $5.0 billion authorization at September 28, 2024.
06—Continue