Sysco reported Q4 sales of $16.1 billion, an increase of 82.0% year-over-year. Gross profit also rose 86.2% during that time to $2.9 billion, reflecting the current rebound of foodservice as pandemic restrictions were gradually lifted throughout 2021. The overall numbers for fiscal year 2021 show a decrease in sales (-3%) and profits (-5.5%), since foodservice was still struggling to come back from Q1 to Q3 due to shutdowns for most of 2020.
Key highlights for the fourth quarter of fiscal year 2021 included:
- Sales were stronger than expected;
- Share gains continue, driven by new customer wins;
- Sysco’s Recipe for Growth strategy advances;
- Inflation effectively managed;
- Cash flow stronger than expected, even with significant inventory investments;
- International operations show profit improvement;
- Greco and Sons transaction to close imminently;
- Quarterly dividend increased, maintaining Dividend Aristocrat status; and
- Currently no signs of Delta variant impacting demand; strong July sales.
“Sysco’s fourth quarter results were strong, reflecting market share gains and industry demand that has continued to rebound earlier and stronger than expected,” says Kevin Hourican, Sysco’s president and chief executive officer. “While labor and product availability costs are pressuring our industry, we planned ahead to be well-positioned and manage through the demand increase resulting from these transitory pressures. I want to thank all of our Sysco associates for their tireless efforts, in particular those on the frontline who are supporting our customers during one of the most dynamic periods in our history. It is through the collective efforts and commitment of our people that we are advancing our Recipe for Growth strategy, and building important new capabilities that position us to better serve our customers and accelerate profitable growth.”
Key financial results for the fourth quarter of fiscal year 2021 included:
- Sales trends improved as markets reopened; fourth quarter sales increased 82.0% versus the same period in fiscal year 2020 and increased 4.3% versus the same period in fiscal year 2019;
- Gross profit increased 86.2% to $2.9 billion, and gross margin increased 41 basis points to 18.1%, as compared to the same period last year;
- Operating income increased 207.2% to $569.7 million, and adjusted1 operating income increased to $605.2 million, as compared to the same period last year;
- Earnings before interest, taxes, depreciation and amortization (“EBITDA”) increased to $778.6 million, and adjusted EBITDA increased to $781.1 million, as compared to the same period last year.
Key financial results for fiscal year 2021 include:
- Sales decreased 3.0% to $51.3 billion versus fiscal year 2020 and decreased 14.7% versus fiscal year 2019;
- Gross profit decreased 5.5% to $9.4 billion, and gross margin decreased 48 basis points to 18.2%, as compared to the prior year;
- Operating income increased 91.8% to $1.4 billion, and adjusted¹ operating income decreased 14.7% to $1.5 billion, as compared to the prior year;
- EBITDA increased 46.1% to $2.2 billion, and adjusted EBITDA decreased 9.1% to $2.2 billion, as compared to the prior year;2
- EPS increased to $1.02 compared to $0.42 in the prior year; adjusted1 EPS decreased to $1.44 compared to $2.01 in the prior year;
- Cash flow from operations increased 17.6% to $1.9 billion, and free cash flow4 increased 61.0% to $1.5 billion, as compared to the prior year; and
- The company exceeded its cash flow from operations guidance and reduced debt more than planned, totaling $3.4 billion in debt reduction during the year.
“We’re very pleased with our financial results in the fourth quarter, including particularly strong free cash flow performance,” says Aaron Alt, Sysco’s chief financial officer. “Strong sales that surpassed 2019 levels, combined with solid management of inflation and cost, are underpinning our confidence to raise our EPS guidance for fiscal year 2022 to $3.33 to $3.53.”
Fiscal Year 2021: U.S. Foodservice Operations
Sales for fiscal 2021 were $35.7 billion, a decrease of 2.9% compared to the prior year. Local case volume within U.S. Broadline operations decreased 1.1% for fiscal 2021, of which a decrease of 1.2% was organic, while total case volume within U.S. Broadline operations decreased 5.8%, of which a decrease of 5.9% was organic.
Gross profit decreased 3.4% to $7.0 billion, and gross margin decreased 11 basis points to 19.6%, compared in each case to the prior year. Product cost inflation was 4.3% in U.S. Broadline, as measured by the estimated change in Sysco’s product costs, primarily in the paper and disposables, poultry, and meat categories.
Operating expenses decreased $699.4 million, or 13.3%, compared to the prior year. Adjusted operating expenses decreased $319.7 million, or 6.4%, compared to the prior year.
Operating income was $2.5 billion, an increase of $453.4 million, or 22.6%, compared to the prior year. Adjusted operating income was $2.3 billion, an increase of $73.6 million, or 3.3%, compared to the prior year.
Sysco is the global leader in selling, marketing and distributing food products to restaurants, healthcare and educational facilities, lodging establishments and other customers who prepare meals away from home. Its family of products also includes equipment and supplies for the foodservice and hospitality industries. With more than 58,000 associates, the company operates 343 distribution facilities worldwide and serves more than 650,000 customer locations. For fiscal 2021 that ended July 3, 2021, the company generated sales of more than $51 billion.