01—Abstract
Summary
Summary of the 8-K filed July 30, 2024. Cited figures are marked; the original filing is the authoritative source.
Sysco Corporation (NYSE: SYY) furnished an 8-K on July 30, 2024 attaching its press release (Exhibit 99.1) reporting results for the fourth quarter and fiscal year ended June 29, 2024.
For the 13-week fourth quarter, sales rose 4.2% to $20.6 billiona, operating income rose 1.2% to $977 million, and GAAP diluted EPS fell 14.6% to $1.23, while adjusted operating income rose 6.4% to $1.1 billion and adjusted EPS rose 3.7% to $1.39. The company cited positive volumes and seventh consecutive quarter of positive operating leverage, and U.S. Foodservice local case volume grew 0.7%. For fiscal 2024, sales increased 3.3% to $78.8 billion, operating income increased 5.4% to $3.2 billion, and GAAP diluted EPS increased 12.1% to $3.89, with adjusted EPS up 7.5% to $4.31.
Net debt to adjusted EBITDA improved to 2.7 times, and the company returned about $2.2 billionb to shareholders through $1.2 billion of share repurchases and $1.0 billion of dividends. International Foodservice operating income rose 19.4% to $375 million. Free cash flow was $2.2 billion, up $119 million.
Management stated that fiscal 2025 begins the first year of a three-year financial growth algorithm, targeting compounded annual growth of 4%c-6% for net sales, 6%-8% for adjusted EPS, and 9%-11% total shareholder returns. The information in Item 2.02 is furnished, not filed, under the Form 8-K.
02—Key points
Key Highlights
- Q4 FY2024 sales rose 4.2% to $20.6 billion; U.S. Foodservice local case volume grew 0.7% and total case volume grew 3.5%.
- Q4 GAAP diluted EPS declined 14.6% to $1.23 (vs. $1.44), while adjusted diluted EPS rose 3.7% to $1.39.
- Fiscal 2024 GAAP diluted EPS rose 12.1% to $3.89; adjusted EPS rose 7.5% to $4.31.
- Fiscal 2024 operating income rose 5.4% to $3.2 billion; adjusted operating income rose 8.4% to $3.5 billion.
- International Foodservice operating income rose 19.4% to $375 million for the year, and adjusted operating income rose 23.6% to $492 million.
- Net debt to adjusted EBITDA improved to 2.7 times; the company returned about $2.2 billion to shareholders in fiscal 2024.
- Management set a three-year growth algorithm starting fiscal 2025: 4%-6% net sales CAGR, 6%-8% adjusted EPS CAGR, and 9%-11% total shareholder returns.
03—Questions
Frequently Asked Questions
How did Sysco perform in the fourth quarter of fiscal 2024?
Sales rose 4.2% to $20.6 billion and gross profit rose 4.2% to $3.8 billion. Operating income rose 1.2% to $977 million, and adjusted operating income rose 6.4% to $1.1 billion. GAAP diluted EPS fell 14.6% to $1.23, while adjusted EPS rose 3.7% to $1.39.
Why did GAAP EPS decline in the fourth quarter while adjusted EPS grew?
The filing attributes the gap to Certain Items excluded from adjusted results, which primarily include acquisition-related costs, restructuring and severance costs, and transformational project costs. The prior-year quarter also included $121 million of other non-routine gains, which made the year-over-year GAAP comparison weaker.
What did Sysco return to shareholders and how is its leverage?
For fiscal 2024, Sysco returned about $2.2 billion to shareholders through $1.2 billion of share repurchases and $1.0 billion of dividends. Net debt to adjusted EBITDA improved to 2.7 times, which the company describes as within its target ratio.
What financial targets did management provide for fiscal 2025 onward?
Management described fiscal 2025 as the first year of a three-year financial growth algorithm, with expected compounded annual growth of 4%-6% for net sales, 6%-8% for adjusted EPS, and 9%-11% total shareholder returns.
How did the International segment perform?
For fiscal 2024, International Foodservice sales rose 7.4% to $14.6 billion and operating income rose 19.4% to $375 million. Adjusted operating income rose 23.6% to $492 million, and the segment's gross margin increased 76 basis points to 20.2%.
04—Continue