01—Abstract
Summary
Summary of the 10-Q filed April 30, 2025. Cited figures are marked; the original filing is the authoritative source.
Sysco Corporation's 10-Q for the third quarter of fiscal 2025 (quarter ended March 29, 2025) shows sales of $19.6 billiona, up 1.1% from $19.38 billion a year earlier, while operating income fell 5.7% to $681 million and net earnings fell 5.6% to $401 million.
Diluted earnings per share were $0.82b, down from $0.85. Adjusted diluted EPS was unchanged at $0.96. For the first 39 weeks, sales rose 3.3% to $60.2 billion, but net earnings declined 3.4% to $1.3 billion and diluted EPS declined 0.8% to $2.64.
Adjusted diluted EPS rose 2.1% to $2.98c. U.S. Foodservice Operations case volume decreased 2.0% in the quarter, with local customer case volume down 3.5%, which management attributes to weaker restaurant foot traffic, weather, and natural disasters. Sales growth was driven mainly by inflation of 2.7% in the U.S. segment.
Management now expects fiscal 2025 net sales growth of approximately 3%, versus a prior target of 4-5%, and EPS and adjusted EPS growth of approximately 1%, versus a prior target of 6-7%, citing lower-than-expected volume. Cash flow remained solid, with free cash flow of $954 milliond for the first 39 weeks.
Total debt carrying value rose to $13.5 billion from $12.0 billion, reflecting $1.25 billion of senior notes issued in February 2025. Sysco repurchased $700 million of stock in the first 39 weeks and declared a quarterly dividend of $0.54 per share for the fourth quarter, up $0.03.
02—Key points
Key Highlights
- Sales of $19.6 billion in the third quarter rose 1.1%, while operating income fell 5.7% to $681 million and net earnings fell 5.6% to $401 million.
- Diluted EPS was $0.82 versus $0.85 a year earlier; adjusted diluted EPS was flat at $0.96.
- U.S. Foodservice Operations case volume decreased 2.0% in the quarter, with local case volume down 3.5%; management cited restaurant foot traffic declines of 3.1%.
- Full-year fiscal 2025 guidance was lowered: net sales growth of approximately 3% (previously 4-5%) and EPS and adjusted EPS growth of approximately 1% (previously 6-7%).
- Free cash flow was $954 million for the first 39 weeks, up from $864 million, aided by $169 million of proceeds from plant and equipment sales.
- Sysco issued $1.25 billion of senior notes in February 2025; total debt carrying value rose to $13.5 billion from $12.0 billion.
- The quarterly dividend was raised to $0.54 per share from $0.51, and $700 million of stock was repurchased in the first 39 weeks.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2025, Sysco kept $0.02.
- Revenue$19.60B100.0%
- Cost of revenue−$16.02B81.7%
- Gross profit$3.58B18.3%
- Operating costs−$2.90B14.8%
- Operating income$681.0M3.5%
- Interest, other & tax−$280.0M1.4%
- Net income$401.0M2.0%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2025filed April 30, 2025Financial Statements
Q3 FY2025 against Q3 FY2024
| Line item | Q3 FY2025Q3 FY2024 | Change |
|---|---|---|
| Revenue | $19.60B$19.38B | +1.1% |
| Cost of Revenue | $16.02B$15.77B | +1.6% |
| Gross Profit | $3.58B$3.61B | −0.8% |
| Operating Expenses | $2.90B$2.89B | +0.5% |
| Operating Income | $681.00M$722.00M | −5.7% |
| Net Income | $401.00M$425.00M | −5.6% |
| EPS (Basic) | $0.82$0.85 | −3.5% |
| EPS (Diluted) | $0.82$0.85 | −3.5% |
| Shares Outstanding (Basic) | 487.52M499.64M | −2.4% |
| Shares Outstanding (Diluted) | 489.33M501.92M | −2.5% |
05—Questions
Frequently Asked Questions
Why did Sysco lower its fiscal 2025 outlook?
Management now expects net sales growth of approximately 3%, down from a prior target of 4-5%, and EPS and adjusted EPS growth of approximately 1%, down from 6-7%. The filing attributes the reduction to lower-than-expected volume growth amid an uncertain macroeconomic environment and concerns about consumer confidence.
How did sales volume and inflation contribute to growth in U.S. Foodservice Operations?
In the third quarter, U.S. Foodservice Operations sales rose 0.7%, with inflation contributing 2.7% and case volume reducing sales by 1.6%. Case volume fell 2.0% overall, and local customer case volume fell 3.5%. Management cited restaurant foot traffic, winter storms, and wildfires as contributing factors.
What drove the decline in operating income?
Operating income fell 5.7% to $681 million in the third quarter, mainly because operating expenses rose 0.5% to $2.9 billion while gross margin declined 35 basis points. Gross margin pressure reflected a shift in customer mix toward national volumes and lower Sysco brand penetration. Lower annual bonus compensation partly offset these effects.
How is Sysco funding its operations, capital spending, and shareholder returns?
Sysco generated $1.3 billion of operating cash flow in the first 39 weeks and free cash flow of $954 million. It issued $1.25 billion of senior notes in February 2025, and total debt carrying value reached $13.5 billion. Sysco repurchased $700 million of stock and paid $752 million in dividends during the period, with $2.1 billion of remaining repurchase authorization as of March 29, 2025.
Are there any material pending legal proceedings or tax disputes?
The filing states that management does not believe any pending legal proceedings will have a material adverse effect. Separately, Sysco is challenging IRS notices related to foreign tax credits in U.S. Tax Court, and if unsuccessful, it may reverse some or all of a $131 million tax benefit previously recorded.
06—Continue