Sysco Reports Fourth Quarter and Full Year 2019 Results

The Company exceeds $60B in revenue for FY19

 

Source: Sysco Corporation

via Globe Newswire - August 12, 2019

 

HOUSTON, Aug. 12, 2019 (GLOBE NEWSWIRE) -- Sysco Corporation (NYSE: SYY) today announced financial results for its 13-week fourth fiscal quarter and its fiscal year ended June 29, 2019.

 

Fourth Quarter Fiscal 2019 Highlights

 

    Sales increased 1.0% to $15.5 billion

    Gross profit increased 2.1% to $3.0 billion; gross margin increased 21 basis points

    Operating income increased 5.4% to $720.5 million; adjusted¹ operating income increased 6.6% to $818.1 million

    EPS increased $0.18 to $1.03; adjusted¹ EPS increased $0.16 to $1.10

 

Fiscal 2019 Highlights

 

    Sales increased 2.4% to $60.1 billion

    Gross profit increased 2.9% to $11.4 billion; gross margin increased 10 basis points

    Operating income increased 0.7% to $2.3 billion; adjusted¹ operating income increased 7.9% to $2.7 billion

    EPS increased $0.50 to $3.20; adjusted¹ EPS increased $0.41 to $3.55

 

“Sysco saw improved year-over-year performance in the fourth quarter and fiscal year 2019,” said Tom Bené, Sysco’s chairman, president and chief executive officer. “We continue to focus on our customers and are furthering the progress of our transformative initiatives, which we believe will increase the ease of doing business with Sysco, position us well for the long-term and create value for our shareholders in fiscal year 2020 and beyond.”

 

¹Earnings Per Share (EPS) are shown on a diluted basis unless otherwise specified. Adjusted financial results exclude certain items, which primarily include restructuring costs, acquisition-related costs, and transformational project costs. Specific to EPS, this year’s Certain Items include a gain on sale of Iowa Premium and foreign tax credits generated as a result of distributions to the U.S. from our foreign operations in fiscal year 2018 and last year’s Certain Items include tax benefits from a retirement plan contribution and certain impacts of tax law changes. Reconciliations of all non-GAAP measures are included in this release.

 

Fourth Quarter Fiscal 2019 Results

 

U.S. Foodservice Operations

 

Sales for the fourth quarter were $10.7 billion, an increase of 2.8% compared to the same period last year. Local case volume within U.S. Broadline operations grew 1.4% for the fourth quarter, of which 1.3% was organic, while total case volume within U.S. Broadline operations grew 0.4%, of which 0.3% was organic.

 

Gross profit increased 2.9% to $2.1 billion, and gross margin increased 3 basis points to 20.1%, compared to the same period last year. Food cost inflation was 2.5% in U.S. Broadline, as measured by the estimated change in Sysco’s product costs, primarily in the poultry, meat, and produce categories.

 

Operating expenses increased $57.4 million, or 4.7%, compared to the same period last year. Adjusted operating expenses increased $60.1 million, or 4.9%, due mainly to labor and supply chain costs in both warehouse and transportation.

 

Operating income was $874.2 million, an increase of $3.7 million, or 0.4%, compared to the same period last year. Adjusted operating income was $871.4 million, an increase of $0.9 million, or 0.1%, compared to the same period last year.

 

International Foodservice Operations

 

Sales for the fourth quarter were $2.9 billion, a decrease of 0.8% compared to the same period last year. Foreign exchange rates negatively affected total Sysco sales during the quarter by 0.8%.

 

Gross profit decreased 2.7% to $621.6 million, and gross margin decreased 42 basis points to 21.3%, compared to the same period last year, due mainly to both the integration of businesses and the macro environment in France.

 

Operating expenses decreased $35.8 million, or 6.0%, compared to the same period last year. Adjusted operating expenses decreased $33.9 million, or 6.3%, compared to the same period last year, due mainly to regionalization and expense management efforts, which was partially offset by business integration costs.

 

Operating income was $63.4 million, an increase of $18.5 million, or 41.0%, compared to the same period last year. Adjusted operating income was $118.1 million, an increase of $16.5 million, or 16.2%, compared to the same period last year. Foreign exchange rates negatively affected total Sysco operating income during the quarter by 0.6%.

 

Fiscal 2019 Results

 

U.S. Foodservice Operations

 

Sales for fiscal 2019 were $41.3 billion, an increase of 4.2% compared to the prior year. Local case volume within U.S. Broadline operations grew 3.1% for fiscal 2019, of which 2.2% was organic, while total case volume within U.S. Broadline operations grew 2.7%, of which 2.0% was organic.

 

Gross profit increased 4.4% to $8.2 billion, and gross margin increased 5 basis points to 20.0%, compared to the prior year. Food cost inflation was 1.5% in U.S. Broadline, as measured by the estimated change in Sysco’s product costs, primarily in the frozen potato, canned and dry, paper and disposable and produce categories.

 

Operating expenses increased $212.8 million, or 4.4%, compared to the prior year. Adjusted operating expenses increased $214.5 million, or 4.4%, compared to the same period last year, due mainly to supply chain costs in both warehouse and transportation.

 

Operating income was $3.2 billion, an increase of $136.0 million, or 4.4%, compared to the same period last year. Adjusted operating income was $3.2 billion, an increase of $134.3 million, or 4.4%, compared to the prior year.

 

International Foodservice Operations

 

Sales for fiscal 2019 were $11.5 billion, a decrease of $25.5 million, or 0.2% compared to the prior year. Foreign exchange rates negatively affected total Sysco sales during the year by 0.8%.

 

Gross profit decreased 1.8% to $2.4 billion, and gross margin decreased 34 basis points to 20.8%, compared to the prior year, due mainly to both the integration of businesses and the macro environment in France.

 

Operating expenses increased $23.6 million, or 1.1%, compared to the prior year. Adjusted operating expenses decreased $79.1 million, or 3.7%, compared to the prior year, due mainly to realized efficiencies from investments in supply chain transformation and business integration.

 

Operating income was $125.4 million, a decrease of $68.4 million, or 35.3%, compared to the prior year. Adjusted operating income was $354.8 million, an increase of $34.3 million, or 10.7%, compared to the prior year. Foreign exchange rates negatively affected total Sysco operating income during fiscal 2019 by 0.5%.

 

Capital Spending and Cash Flow

 

Cash flow from operations was $2.4 billion for fiscal 2019, which was $255.8 million higher compared to the prior year. Free cash flow¹ for fiscal 2019 was $1.7 billion, which was $249.9 million higher compared to the prior year.

 

Capital expenditures, net of proceeds from sales of plant and equipment, totaled $671.5 million for fiscal 2019, which was $5.9 million higher compared to the prior year.

 

Conference Call & Webcast

 

Sysco will host a conference call to review the Company’s fourth quarter fiscal 2019 financial results on Monday, August 12, 2019, at 10:00 a.m. Eastern. A live webcast of the call, accompanying slide presentation and a copy of this news release will be available online at investors.sysco.com.

 

¹Free cash flow is a non-GAAP measure that represents net cash provided from operating activities less purchases of plant and equipment and includes proceeds from sales of plant and equipment. Reconciliations for all non-GAAP measures are included in this release.

 

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