Sysco(SYY) - 2024 Q4 - Annual Results

Sales Performance - Sales increased 4.2% to $20.6 billion in Q4 FY2024, with U.S. Foodservice volume up 3.5% and U.S. local volumes growing 0.7%[2][30] - U.S. Foodservice Operations sales increased 3.1% to $55.3 billion in FY2024, with total case volume growing 3.1% and local case volume up 1.1%[15] - Sales for the 13-week period ended June 29, 2024, were $20.556 billion, a 4.2% increase from $19.728 billion in the same period last year[58] - Sales for the 13-week period ended June 29, 2024, were $20.6 billion, a 4.2% increase year-over-year[59] - Sysco generated sales of more than $78 billion for the fiscal year 2024 ended June 29, 2024[62] - Sales (GAAP) increased by $2.519 billion (3.3%) to $78.844 billion for the 52-week period ended June 29, 2024, compared to $76.325 billion in the previous year[72] - Comparable sales using a constant currency basis (Non-GAAP) grew by $2.266 billion (3.0%) to $78.591 billion[72] - U.S. Foodservice Operations sales increased by 4.9% to $14,413 million compared to $13,746 million in the previous year[76] - International Foodservice Operations sales grew by 3.8% to $3,789 million, with a 4.5% increase on a constant currency basis[76] - SYGMA sales rose by 2.0% to $2,044 million, with gross profit increasing by 1.2% to $163 million[76] - Total Sysco sales increased by 4.2% to $20,556 million, with gross profit up by 4.2% to $3,838 million[77] - U.S. Foodservice Operations sales increased by 3.1% to $55,339 million, with gross profit rising by 3.4% to $10,709 million[91] - International Foodservice Operations sales increased by 7.4% to $14,561 million, with gross profit rising by 11.6% to $2,947 million[91] - Comparable sales for International Foodservice Operations using a constant currency basis increased by 5.5% to $14,305 million[91] - Total Sysco sales (GAAP) for fiscal 2024 are $78,844 million, a 3.3% increase from fiscal 2023[100] Profitability and Margins - Gross profit increased 4.2% to $3.8 billion in Q4 FY2024, driven by positive volumes and effective management of product cost inflation[2][9] - Adjusted operating income increased 6.4% to $1.1 billion in Q4 FY2024, while adjusted EBITDA rose 5.4% to $1.3 billion[2][31] - Gross profit for the 13-week period ended June 29, 2024, was $3.838 billion, up 4.2% from $3.685 billion in the previous year[58] - Gross profit for the 13-week period ended June 29, 2024, was $3.8 billion, a 4.2% increase year-over-year[59] - Gross profit (GAAP) rose by $653 million (4.7%) to $14.608 billion, with gross margin increasing by 25 bps to 18.53%[72] - Operating income (GAAP) increased by $163 million (5.4%) to $3.202 billion, with operating margin up by 8 bps to 4.06%[72] - Operating income adjusted for Certain Items (Non-GAAP) grew by $271 million (8.4%) to $3.481 billion, with operating margin up by 21 bps to 4.42%[72] - Operating income adjusted for Certain Items (Non-GAAP) for Total Sysco increased by 6.4% to $1,083 million[77] - International Foodservice Operations gross margin improved by 90 basis points to 20.74% on a constant currency basis[76] - U.S. Foodservice Operations operating income adjusted for Certain Items (Non-GAAP) increased by 1.1% to $1,066 million[76] - Global Support Center operating loss adjusted for Certain Items (Non-GAAP) improved by 12.1% to $196 million[77] - Other segment sales decreased by 5.8% to $310 million, with gross margin improving by 67 basis points to 27.42%[77] - Operating income adjusted for Certain Items (Non-GAAP) for U.S. Foodservice Operations increased by 3.2% to $3,745 million[91] - Operating income adjusted for Certain Items (Non-GAAP) for International Foodservice Operations increased by 23.6% to $492 million[91] - EBITDA adjusted for Certain Items (Non-GAAP) for fiscal 2024 is $1,263 million, a 5.4% increase from fiscal 2023[104] - Operating income adjusted for Certain Items (Non-GAAP) grew by $271 million, an 8.4% increase[105] Cash Flow and Debt - Free cash flow for FY2024 increased 5.6% to $2.2 billion, with cash flow from operations up 4.2% to $3.0 billion[30][20] - Net Debt to adjusted EBITDA improved to 2.7 times, within the company's target ratio, with $2.2 billion returned to shareholders via share repurchases and dividends[30] - Sysco returned $2.2 billion to shareholders, including $1.2 billion in share repurchases and $1.0 billion in dividends[44] - Capital expenditures for fiscal year 2024 were $753 million, net of proceeds from sales of plant and equipment[45] - Free Cash Flow (Non-GAAP) for the 52-week period ended Jun. 29, 2024, is $2,236 million, a $119 million increase from the previous year[102] - Net Debt/Adjusted EBITDA Ratio is 2.69[99] Earnings and EPS - Adjusted EPS increased 3.7% to $1.39 in Q4 FY2024, compared to $1.44 in the same period last year[2] - Net earnings for the year ended June 29, 2024, were $1.955 billion, compared to $1.770 billion in the previous year[54] - Net earnings (GAAP) for the 13-week period ended June 29, 2024, were $612 million, a 16.5% decrease from $733 million in the same period last year[58] - Net earnings for the 13-week period ended June 29, 2024, were $612 million, a 16.5% decrease year-over-year[59] - Diluted earnings per share for the 13-week period ended June 29, 2024, were $1.23, a 14.6% decrease year-over-year[59] - Net earnings adjusted for Certain Items (Non-GAAP) increased by $123 million (6.0%) to $2.167 billion[73] - Diluted EPS (GAAP) rose by $0.42 (12.1%) to $3.89, while adjusted diluted EPS (Non-GAAP) increased by $0.30 (7.5%) to $4.31[73] - Diluted earnings per share (GAAP) decreased by 14.6% to $1.23 compared to $1.44 in the previous year[85] - Diluted earnings per share adjusted for Certain Items (Non-GAAP) increased by 3.7% to $1.39 compared to $1.34 in the previous year[85] - Net earnings (GAAP) increased by $185 million, a 10.5% growth compared to the previous year[105] Operational Metrics - U.S. Foodservice case growth for the 13-week period ended June 29, 2024, was 3.5%[59] - Sysco Brand Sales as a percentage of cases for U.S. Broadline was 36.6%, a decrease of 51 basis points year-over-year[59] - Sysco operates 340 distribution facilities worldwide and serves approximately 730,000 customer locations[62] - Operating expenses (GAAP) for the 13-week period ended June 29, 2024, were $2.861 billion, up 5.2% from $2.720 billion in the previous year[58] - Adjusted operating expense as a percentage of sales (Non-GAAP) was 13.40%, a decrease of 12 basis points from 13.52% in the prior year[58] - Operating margin adjusted for certain items (Non-GAAP) was 5.27%, an increase of 11 basis points from 5.16% in the previous year[58] - Operating income for the 13-week period ended June 29, 2024, was $977 million, a 1.2% increase year-over-year[59] - Adjusted EBITDA for the 13-week period ended June 29, 2024, was $1.3 billion, a 5.4% increase year-over-year[59] - Operating expenses adjusted for Certain Items (Non-GAAP) for Total Sysco increased by 3.3% to $2,755 million[77] - Diluted shares outstanding decreased by 6,623,670 to 503,096,086[75] Costs and Expenses - Product cost inflation was 1.6% at the total enterprise level in Q4 FY2024, primarily in the poultry and meat categories[9] - Fiscal 2024 includes $28 million in restructuring and severance charges and $33 million in transformation initiative costs, primarily related to business technology strategy changes[85] - Fiscal 2024 includes $37 million of intangible amortization expense and $8 million in acquisition and due diligence costs[85] - Fiscal 2024 includes $56 million related to restructuring and severance charges and $64 million related to various transformation initiative costs, primarily consisting of changes to the business technology strategy[87] - Fiscal 2024 includes $226 million in GAAP depreciation and amortization expense, less $38 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions[96] - Fiscal 2023 includes $201 million in GAAP depreciation and amortization expense, less $28 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions[96] - Fiscal 2024 represents $8 million in GAAP other expense (income), net, while fiscal 2023 represents $128 million in GAAP other expense (income), net less $122 million in income from a litigation financing agreement[96] - Fiscal 2023 includes a pension settlement charge of $315 million and $122 million in income from a litigation financing agreement[97] - Fiscal 2024 includes $873 million in GAAP depreciation and amortization expense, less $132 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions[97] - Fiscal 2023 includes $776 million in GAAP depreciation and amortization expense, less $107 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions[97] - Depreciation and amortization (GAAP) increased by $97 million, up 12.5% from the previous year[105] - Interest expenses (GAAP) rose by $80 million, a 15.2% increase compared to the prior year[105] - Income taxes (GAAP) increased by $95 million, an 18.4% rise year-over-year[105] - Restructuring and transformational project costs increased by $55 million, a 90.2% jump from the previous year[105] - Acquisition-related costs surged by $21 million, a significant increase compared to the prior year[105] - Other expense (income), net, as adjusted (Non-GAAP) decreased by $3 million, a 9.1% reduction[105] International Operations - International Foodservice Operations saw a 19.4% increase in operating income and a 23.6% rise in adjusted operating income for FY2024[29][18] - International Foodservice Operations sales grew by 3.8% to $3,789 million, with a 4.5% increase on a constant currency basis[76] - International Foodservice Operations sales increased by 7.4% to $14,561 million, with gross profit rising by 11.6% to $2,947 million[91] - Comparable sales for International Foodservice Operations using a constant currency basis increased by 5.5% to $14,305 million[91] - Operating income adjusted for Certain Items (Non-GAAP) for International Foodservice Operations increased by 23.6% to $492 million[91] Shareholder Returns and Future Outlook - The company expects a compounded annual growth rate of 4%-6% for net sales, 6%-8% for adjusted EPS, and 9-11% total shareholder returns over the next three years[8] - Sysco returned $2.2 billion to shareholders, including $1.2 billion in share repurchases and $1.0 billion in dividends[44] - Adjusted EBITDA for the previous 12 months reached $4,192 million, a 9.0% increase from the prior period[105] - EBITDA (Non-GAAP) rose by $457 million, representing a 12.7% increase year-over-year[105]