Sysco(SYY) - 2025 Q4 - Annual Results

Financial Performance Overview Sysco's financial performance in FY2025 showed mixed results, with adjusted growth in Q4 and full year, alongside strategic capital allocation and future guidance Fourth Quarter (Q4) FY2025 Performance Sysco's Q4 FY2025 results exceeded expectations with sales up 2.8% to $21.1 billion, and adjusted net earnings growing 3.3% despite a goodwill impairment - Q4 results exceeded expectations, driven by Sysco-specific initiatives and improved restaurant industry traffic. U.S. Foodservice (USFS) local volumes improved sequentially by 200 bps, with momentum continuing into July[2] Q4 FY2025 Key Financial Results (vs Q4 FY2024) | Metric | Q4 FY2025 | Change (YoY) | | :--- | :--- | :--- | | Sales | $21.1 billion | +2.8% | | Gross Profit | $4.0 billion | +3.9% | | Operating Income (GAAP) | $889 million | -9.0% | | Adjusted Operating Income | $1.1 billion | +1.1% | | Net Earnings (GAAP) | $531 million | -13.2% | | Adjusted Net Earnings | $716 million | +3.3% | | EPS (GAAP) | $1.10 | -10.6% | | Adjusted EPS | $1.48 | +6.5% | - The company recorded a $92 million non-cash goodwill impairment charge related to its Guest Worldwide business, which impacted GAAP results. This charge amounted to $0.17 per share[8] Full Fiscal Year (FY) 2025 Performance Full fiscal year 2025 sales increased 3.2% to $81.4 billion, with adjusted net earnings up 0.8% to $2.2 billion despite GAAP declines Full Year FY2025 Key Financial Results (vs FY2024) | Metric | FY2025 | Change (YoY) | | :--- | :--- | :--- | | Sales | $81.4 billion | +3.2% | | Gross Profit | $15.0 billion | +2.5% | | Operating Income (GAAP) | $3.1 billion | -3.6% | | Adjusted Operating Income | $3.5 billion | +1.2% | | Net Earnings (GAAP) | $1.8 billion | -6.5% | | Adjusted Net Earnings | $2.2 billion | +0.8% | | EPS (GAAP) | $3.73 | -4.1% | | Adjusted EPS | $4.46 | +3.5% | - Product cost inflation for the full year was 2.5% at the enterprise level, primarily in the dairy and poultry categories[15] Fiscal Year (FY) 2026 Guidance Sysco projects FY2026 sales growth of 3% to 5% to $84-85 billion, with adjusted EPS growth of 1% to 3%, or 5% to 7% excluding a $100 million headwind FY2026 Financial Outlook | Metric | Guidance | | :--- | :--- | | Sales Growth | 3% to 5% | | Sales | ~$84 billion to $85 billion | | Adjusted EPS Growth | 1% to 3% | | Adjusted EPS | ~$4.50 to $4.60 | | Adjusted EPS Growth (Ex-Incentive Comp Headwind) | 5% to 7% | - The FY26 outlook includes an approximate $100 million (or $0.16 per diluted share) headwind from lapping lower incentive compensation from FY25[3] Capital Allocation Sysco returned $2.3 billion to shareholders in FY2025 and plans to return approximately $2 billion in FY2026 through dividends and share repurchases - For FY2026, the company plans to return capital to shareholders with approximately $1 billion in dividends and $1 billion in share repurchases[3] - In FY2025, the company returned a total of $2.3 billion to shareholders, consisting of $1.3 billion in share repurchases and $1.0 billion in dividends[12][21] Segment Performance Analysis Sysco's segments showed varied performance, with strong international growth offsetting U.S. Foodservice volume pressures and an impairment in other segments U.S. Foodservice Operations U.S. Foodservice Operations saw modest sales growth but faced volume pressures and decreased adjusted operating income in FY2025 due to industry traffic and investments U.S. Foodservice Q4 FY2025 Performance (vs Q4 FY2024) | Metric | Q4 FY2025 | Change (YoY) | | :--- | :--- | :--- | | Sales | $14.8 billion | +2.4% | | Local Case Volume | - | -1.5% | | Gross Profit | $2.9 billion | +2.8% | | Adjusted Operating Income | $1.1 billion | -0.8% | U.S. Foodservice Full Year FY2025 Performance (vs FY2024) | Metric | FY2025 | Change (YoY) | | :--- | :--- | :--- | | Sales | $57.0 billion | +2.9% | | Total Case Volume | - | +0.5% | | Local Case Volume | - | -1.4% | | Adjusted Operating Income | $3.6 billion | -3.0% | International Foodservice Operations International Foodservice Operations delivered strong double-digit adjusted operating income growth in FY2025, driven by effective margin management and local volume expansion International Foodservice Q4 FY2025 Performance (vs Q4 FY2024) | Metric | Q4 FY2025 | Change (YoY) | | :--- | :--- | :--- | | Sales | $3.9 billion | +3.6% | | Sales (Constant Currency) | $3.8 billion | +1.0% | | Adjusted Operating Income | $197 million | +20.1% | | Adj. Op. Income (Constant Currency) | $193 million | +17.7% | International Foodservice Full Year FY2025 Performance (vs FY2024) | Metric | FY2025 | Change (YoY) | | :--- | :--- | :--- | | Sales | $14.9 billion | +2.4% | | Sales (Constant Currency) | $14.9 billion | +2.6% | | Adjusted Operating Income | $585 million | +18.9% | | Adj. Op. Income (Constant Currency) | $585 million | +18.9% | - Excluding the impact of the Mexico joint venture divestiture, sales grew 8.3% in Q4 and 4.8% for the full fiscal year for the International segment[13][20] Other Segments (SYGMA & Other) SYGMA segment showed solid growth, while the 'Other' segment incurred a significant operating loss due to a $92 million goodwill impairment charge SYGMA Segment Performance FY2025 (vs FY2024) | Metric | FY2025 | Change (YoY) | | :--- | :--- | :--- | | Sales | $8.41 billion | +8.3% | | Operating Income | $81 million | +12.5% | Other Segment Performance FY2025 (vs FY2024) | Metric | FY2025 | Change (YoY) | | :--- | :--- | :--- | | Sales | $1.09 billion | -7.3% | | Operating (Loss) Income | ($73 million) | Not Meaningful | | Adjusted Operating Income | $19 million | -62.0% | - The 'Other' segment's GAAP operating loss was driven by a $92 million goodwill impairment charge in Q4[46][49] Financial Statements & Condition Sysco maintained a strong financial position in FY2025 with solid liquidity, increased assets, and managed debt, despite a decrease in operating cash flow Balance Sheet and Liquidity As of June 28, 2025, Sysco maintained strong liquidity with $1.1 billion cash and $3.8 billion total liquidity, alongside increased assets and a Net Debt to Adjusted EBITDA ratio of 2.9 times Key Balance Sheet Items (as of June 28, 2025) | Item | June 28, 2025 | June 29, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,071 million | $696 million | | Total current assets | $11,968 million | $11,043 million | | Total assets | $26,774 million | $24,917 million | | Total debt (Current + Long-term) | $13,309 million | $11,982 million | | Total liabilities | $24,917 million | $23,026 million | | Total shareholders' equity | $1,830 million | $1,860 million | - The company's Net Debt to Adjusted EBITDA ratio was approximately 2.9 times at the end of the fiscal year[21][23] Cash Flow In FY2025, operating cash flow decreased to $2.5 billion, resulting in free cash flow of $1.8 billion, primarily due to working capital changes Consolidated Cash Flows (FY2025 vs FY2024) | Cash Flow Activity | FY2025 | FY2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,510 million | $2,989 million | | Net cash used for investing activities | ($717 million) | ($1,962 million) | | Net cash (used for) provided by financing activities | ($1,412 million) | ($1,038 million) | - Free cash flow for FY2025 was $1.8 billion, a decrease of $418 million from the prior year[22][52] Non-GAAP Reconciliations & Other Disclosures This section clarifies Sysco's use of non-GAAP financial measures, provides reconciliations, and outlines forward-looking statements with associated risks Explanation of Non-GAAP Measures Sysco utilizes non-GAAP measures like adjusted operating income and EPS to present underlying business trends by excluding specific non-recurring or non-operational items - Non-GAAP measures are used to provide perspective on underlying business trends by removing certain items[36] - Key adjustments include: restructuring/severance costs, transformation project costs, acquisition-related costs, and a goodwill impairment charge in FY2025[36] Reconciliation of GAAP to Non-GAAP Results In FY2025, GAAP operating income of $3.1 billion was adjusted to $3.5 billion, and GAAP net earnings of $1.8 billion to $2.2 billion, primarily due to restructuring, acquisition, and impairment charges FY2025 Reconciliation of GAAP Operating Income to Adjusted Operating Income | Description | Amount (in millions) | | :--- | :--- | | Operating Income (GAAP) | $3,088 | | Impact of restructuring and transformational project costs | +$183 | | Impact of acquisition-related costs | +$160 | | Impact of goodwill impairment | +$92 | | Operating Income Adjusted for Certain Items (Non-GAAP) | $3,523 | FY2025 Reconciliation of GAAP Net Earnings to Adjusted Net Earnings | Description | Amount (in millions) | | :--- | :--- | | Net Earnings (GAAP) | $1,828 | | Pre-tax adjustments (total) | +$435 | | Tax impact of adjustments | -$89 | | Other non-routine tax adjustments | +$10 | | Net Earnings Adjusted for Certain Items (Non-GAAP) | $2,184 | Forward-Looking Statements The report includes forward-looking statements on future performance and strategies, which are subject to various risks including economic conditions, inflation, and supply chain disruptions - Forward-looking statements cover expectations for productivity, growth strategies, inflation, capital allocation, and overall financial outlook[26] - Actual results could differ materially due to risks such as geopolitical and economic conditions, inflation, supply chain risks, and changes in consumer eating habits[27]