Sysco(SYY) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Sysco reported sales of $19.6 billion, an increase of 1.1$773 million, down 3.3% year-over-year, while adjusted EPS remained flat at $0.96 [9][34] - Gross profit was$3.6 billion, down 0.8%, with a gross margin of 18.3% [37][41] Business Line Data and Key Metrics Changes - The USFS national sales business experienced flat volume growth and 2.3% sales growth, both below expectations [11] - Local business volume declined by 3.5%, a step down from Q2 performance [11] - The Sigma segment achieved 9.5% sales growth, driven by strong customer wins [12] Market Data and Key Metrics Changes - Foot traffic to restaurants decreased by 3.1% overall, with January down 1.3%, February down 5.7%, and March down 2.3% [5] - The International segment posted double-digit profit growth for the sixth consecutive quarter, with local volume increasing by 4.5% [22][36] Company Strategy and Development Direction - Sysco is focused on improving local business performance through hiring and retention of sales consultants, with a target of 4% growth in headcount by the end of Q4 [56][64] - The company is expanding fulfillment capacity with new facilities in key markets, including a new distribution center in Tampa [19][31] - A pilot program for cash and carry stores, called Sysco To Go, is being introduced to capture the growing market segment [29][31] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment with Q3 performance due to adverse weather and declining consumer confidence, but noted stronger performance in April compared to March [7][9] - The company is cautiously optimistic about Q4, expecting improved volume performance and continued momentum from cost-saving initiatives [46][51] - Management highlighted the importance of maintaining a strong balance sheet to navigate uncertain macroeconomic conditions [28][42] Other Important Information - Sysco's tariff management task force is actively working to mitigate the impact of tariffs on costs and supply chain [25][27] - The company has repurchased $700 million in shares and paid out$752 million in dividends year-to-date, with a 6% increase in the quarterly cash dividend [33][34] Q&A Session Summary Question: Local business sales headcount investments and their impact - Sysco expects to end the year with approximately 4% growth in sales consultant headcount, with strong performance from new hiring cohorts [56][58] Question: Local restaurant industry performance compared to national - National restaurants faced a tough quarter, with local performance consistent with industry trends, but certain sectors like food service management remained stable [68][70] Question: Clarification on local case growth and EPS guidance - Sysco's local case growth was consistent with market performance, and the company is confident in its guidance despite recent challenges [79][81]