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Sysco (SYY) Q1 Earnings Top Estimates, Volume Gains a Driver
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Sysco Corporation (SYY - Free Report) started fiscal 2024 on a strong note, with the first-quarter top and bottom lines increasing year over year and earnings beating the Zacks Consensus Estimate. Results were aided by higher volumes, robust margin management and efficient productivity enhancements.
Sysco has been focused on enhancing efficiency through supply-chain productivity and structural cost-containment efforts. The company remains on track with its Recipe for Growth strategy, which includes its planned buyout of Edward Don & Company. An impressive first quarter led management to reaffirm its fiscal 2024 targets.
For fiscal 2024, SYY envisions sales to increase in the mid-single digits to roughly $80 billion. Adjusted earnings per share or EPS are expected to grow 5-10% to the $4.20-$4.40 band.
Sysco Corporation Price, Consensus and EPS Surprise
Sysco’s adjusted earnings of $1.07 per share surpassed the Zacks Consensus Estimate of $1.02. The bottom line rose 10.3% from the year-ago period figure.
The global food product maker and distributor reported sales of $19,620.5 million, which jumped 2.6% year over year, though it fell short of the Zacks Consensus Estimate of $19,695 million. Foreign currency had a positive impact of 0.6% on the top line.
The gross profit jumped 4.6% to $3,647.8 million, and the gross margin expanded 35 basis points (bps) to 18.6%. This year-over-year growth in the gross profit was mainly driven by elevated volumes, efficient product cost inflation management and progress in the company’s strategic sourcing efforts.
SYY witnessed product cost inflation of 1.7%, measured by the estimated change in product costs, mainly in the frozen and canned and dry categories.
Operating expenses rose 3.3% year over year due to cost inflation and increased volumes. These were somewhat offset by greater productivity. Adjusted operating expenses grew 2.9% year over year. The adjusted operating income of $854.3 million grew 10.6% from the year-ago period, and the adjusted operating margin increased 31 bps to 4.4%.
Segment Details
U.S. Foodservice Operations: In the reported quarter, sales jumped 0.9% to $13,723.8 million compared with the consensus mark of $13,807 million. Local case volumes within U.S. Foodservice inched down 0.1%, while total case volumes within U.S. Foodservice increased 1.6%.
International Foodservice Operations: The segment’s sales advanced 12.2% to $3,683.2 million in the quarter compared with the Zacks Consensus Estimate of $3,822 million. Foreign exchange fluctuations positively impacted the segment’s sales by 3.2%. On a constant-currency (cc) basis, sales advanced 9%.
SYGMA’s sales declined 1.4% to $1,906 million.
Meanwhile, the Other segment’s sales rose 0.1% to $307.4 million.
Other Updates
Sysco ended the quarter with cash and cash equivalents of $569.1 million, long-term debt of almost $10,703.9 million and total shareholders’ equity of $2,125.8 million. For the first 13 weeks of fiscal 2024, the company generated cash flow from operations of $87.2 million, and free cash flow amounted to negative $73.2 million.
During the quarter, Sysco returned $352.9 million to shareholders through share buybacks worth $100 million and dividends of $252.9 million.
Shares of this Zacks Rank #3 (Hold) company have decreased 11.9% year to date compared with the industry’s decline of 15.6%.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggests growth of 28.3% and 24.8%, respectively, from the year-ago reported numbers.
TreeHouse Foods (THS - Free Report) , a private-label food and beverage company, currently sports a Zacks Rank #1. THS has a trailing four-quarter earnings surprise of 31.4%, on average.
The Zacks Consensus Estimate for TreeHouse Foods’ current fiscal-year earnings suggests growth of almost 112% from the corresponding year-ago reported figure.
Celsius Holdings (CELH - Free Report) , a functional drink and liquid supplement company, currently carries a Zacks Rank #2 (Buy). CELH delivered a positive earnings surprise in the preceding three quarters.
The Zacks Consensus Estimate for Celsius Holdings’ current fiscal-year sales suggests growth of 89.9% from the corresponding year-ago reported figure.
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Sysco (SYY) Q1 Earnings Top Estimates, Volume Gains a Driver
Sysco Corporation (SYY - Free Report) started fiscal 2024 on a strong note, with the first-quarter top and bottom lines increasing year over year and earnings beating the Zacks Consensus Estimate. Results were aided by higher volumes, robust margin management and efficient productivity enhancements.
Sysco has been focused on enhancing efficiency through supply-chain productivity and structural cost-containment efforts. The company remains on track with its Recipe for Growth strategy, which includes its planned buyout of Edward Don & Company. An impressive first quarter led management to reaffirm its fiscal 2024 targets.
For fiscal 2024, SYY envisions sales to increase in the mid-single digits to roughly $80 billion. Adjusted earnings per share or EPS are expected to grow 5-10% to the $4.20-$4.40 band.
Sysco Corporation Price, Consensus and EPS Surprise
Sysco Corporation price-consensus-eps-surprise-chart | Sysco Corporation Quote
Quarter in Detail
Sysco’s adjusted earnings of $1.07 per share surpassed the Zacks Consensus Estimate of $1.02. The bottom line rose 10.3% from the year-ago period figure.
The global food product maker and distributor reported sales of $19,620.5 million, which jumped 2.6% year over year, though it fell short of the Zacks Consensus Estimate of $19,695 million. Foreign currency had a positive impact of 0.6% on the top line.
The gross profit jumped 4.6% to $3,647.8 million, and the gross margin expanded 35 basis points (bps) to 18.6%. This year-over-year growth in the gross profit was mainly driven by elevated volumes, efficient product cost inflation management and progress in the company’s strategic sourcing efforts.
SYY witnessed product cost inflation of 1.7%, measured by the estimated change in product costs, mainly in the frozen and canned and dry categories.
Operating expenses rose 3.3% year over year due to cost inflation and increased volumes. These were somewhat offset by greater productivity. Adjusted operating expenses grew 2.9% year over year. The adjusted operating income of $854.3 million grew 10.6% from the year-ago period, and the adjusted operating margin increased 31 bps to 4.4%.
Segment Details
U.S. Foodservice Operations: In the reported quarter, sales jumped 0.9% to $13,723.8 million compared with the consensus mark of $13,807 million. Local case volumes within U.S. Foodservice inched down 0.1%, while total case volumes within U.S. Foodservice increased 1.6%.
International Foodservice Operations: The segment’s sales advanced 12.2% to $3,683.2 million in the quarter compared with the Zacks Consensus Estimate of $3,822 million. Foreign exchange fluctuations positively impacted the segment’s sales by 3.2%. On a constant-currency (cc) basis, sales advanced 9%.
SYGMA’s sales declined 1.4% to $1,906 million.
Meanwhile, the Other segment’s sales rose 0.1% to $307.4 million.
Other Updates
Sysco ended the quarter with cash and cash equivalents of $569.1 million, long-term debt of almost $10,703.9 million and total shareholders’ equity of $2,125.8 million. For the first 13 weeks of fiscal 2024, the company generated cash flow from operations of $87.2 million, and free cash flow amounted to negative $73.2 million.
During the quarter, Sysco returned $352.9 million to shareholders through share buybacks worth $100 million and dividends of $252.9 million.
Shares of this Zacks Rank #3 (Hold) company have decreased 11.9% year to date compared with the industry’s decline of 15.6%.
3 Solid Consumer Staple Picks
Lamb Weston (LW - Free Report) , which offers frozen potato products, currently sports a Zacks Rank #1 (Strong Buy). LW delivered an earnings surprise of 46.2% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggests growth of 28.3% and 24.8%, respectively, from the year-ago reported numbers.
TreeHouse Foods (THS - Free Report) , a private-label food and beverage company, currently sports a Zacks Rank #1. THS has a trailing four-quarter earnings surprise of 31.4%, on average.
The Zacks Consensus Estimate for TreeHouse Foods’ current fiscal-year earnings suggests growth of almost 112% from the corresponding year-ago reported figure.
Celsius Holdings (CELH - Free Report) , a functional drink and liquid supplement company, currently carries a Zacks Rank #2 (Buy). CELH delivered a positive earnings surprise in the preceding three quarters.
The Zacks Consensus Estimate for Celsius Holdings’ current fiscal-year sales suggests growth of 89.9% from the corresponding year-ago reported figure.