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Sysco (SYY) Q2 Earnings Top Estimates, Volume Gains a Driver
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Sysco Corporation (SYY - Free Report) reported second-quarter fiscal 2024 results, with the top and the bottom line increasing year over year. Earnings surpassed the Zacks Consensus Estimate, while sales missed the same. Results were backed by improvements in volume growth, supply chain productivity and efficient implementation of structural cost-out action.
For fiscal 2024, management still 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 89 cents per share surpassed the Zacks Consensus Estimate of 88 cents. The bottom line rose 11.3% from the year-ago quarter’s figure.
The global food product maker and distributor reported sales of $19,287.9 million, which jumped 3.7% year over year, though it fell short of the Zacks Consensus Estimate of $19,295.4 million. Sales growth was driven by improving volumes and favorable operating leverage.
The gross profit jumped 4.9% to $3,513.6 million and the gross margin expanded 21 basis points (bps) to 18.2%. The upside 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 1.1%, measured by the estimated change in product costs, mainly in the meat and frozen categories.
Operating expenses rose 3.9% year over year due to cost inflation and increased volumes. These were somewhat offset by greater productivity. Adjusted operating expenses rose 3.8% year over year. The adjusted operating income of $744.9 million increased 9.2% from the year-ago period’s levels. The adjusted operating margin increased 19 bps to 3.9%.
Segment Details
U.S. Foodservice Operations: In the reported quarter, sales rose 3.2% to $13,494.4 million. The upside can be attributed to improved volumes and effective margin management. Local case volumes within U.S. Foodservice grew 2.9%, while total case volumes within U.S. Foodservice increased 3.4%.
International Foodservice Operations: The segment’s sales advanced 9.6% to $3,596.5 million in the quarter. Foreign exchange fluctuations positively impacted the segment’s sales by 3.2%. On a constant-currency (cc) basis, sales advanced 6.4%.
SYGMA’s sales declined 1% to $1,913.7 million.
Meanwhile, the Other segment’s sales declined 5.9% to $283.3 million.
Other Updates
Sysco ended the quarter with cash and cash equivalents of $962.2 million, long-term debt of almost $12,028.1 million and total shareholders’ equity of $2,404 million. For the first 26 weeks of the fiscal 2024, the company generated cash flow from operations of $855.9 million and free cash flow amounted to $527.4 million.
During this time, Sysco returned $705.5 million to shareholders through share buybacks worth $199.9 million and dividends of $505.6 million. For the fiscal 2024, management expects to return nearly $2.25 billion to shareholders.
Capital expenditures, net of proceeds from sales of plant and equipment, amounted to $328.5 million.
Shares of this Zacks Rank #2 (Buy) company have increased 13.1% in the past three months compared with the industry’s 10.9% growth.
3 Appetizing Food Bets
Ingredion Incorporated (INGR - Free Report) , which produces and sells sweeteners, starches, nutrition ingredients and biomaterial solutions, carries a Zacks Rank #2. INGR delivered a positive earnings surprise of 23.9% in the last reported quarter. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for Ingredion Incorporated’s current financial-year sales and earnings suggests growth of around 5% and 24.8%, respectively, from the year-ago reported numbers.
Flowers Food (FLO - Free Report) produces and markets packaged bakery food products. FLO currently has a Zacks Rank #2. Flowers Food has a trailing four-quarter earnings surprise of 6.8%, on average.
The Zacks Consensus Estimate for FLO’s current financial-year sales suggests growth of 5.9% from the year-ago reported figure.
Lamb Weston (LW - Free Report) , which offers frozen potato products, currently carries a Zacks Rank #2. LW delivered an earnings surprise of 3.6% in the last reported quarter.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings implies growth of 28.3% and 26.9%, respectively, from the year-ago reported numbers.
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Sysco (SYY) Q2 Earnings Top Estimates, Volume Gains a Driver
Sysco Corporation (SYY - Free Report) reported second-quarter fiscal 2024 results, with the top and the bottom line increasing year over year. Earnings surpassed the Zacks Consensus Estimate, while sales missed the same. Results were backed by improvements in volume growth, supply chain productivity and efficient implementation of structural cost-out action.
For fiscal 2024, management still 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 89 cents per share surpassed the Zacks Consensus Estimate of 88 cents. The bottom line rose 11.3% from the year-ago quarter’s figure.
The global food product maker and distributor reported sales of $19,287.9 million, which jumped 3.7% year over year, though it fell short of the Zacks Consensus Estimate of $19,295.4 million. Sales growth was driven by improving volumes and favorable operating leverage.
The gross profit jumped 4.9% to $3,513.6 million and the gross margin expanded 21 basis points (bps) to 18.2%. The upside 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 1.1%, measured by the estimated change in product costs, mainly in the meat and frozen categories.
Operating expenses rose 3.9% year over year due to cost inflation and increased volumes. These were somewhat offset by greater productivity. Adjusted operating expenses rose 3.8% year over year. The adjusted operating income of $744.9 million increased 9.2% from the year-ago period’s levels. The adjusted operating margin increased 19 bps to 3.9%.
Segment Details
U.S. Foodservice Operations: In the reported quarter, sales rose 3.2% to $13,494.4 million. The upside can be attributed to improved volumes and effective margin management. Local case volumes within U.S. Foodservice grew 2.9%, while total case volumes within U.S. Foodservice increased 3.4%.
International Foodservice Operations: The segment’s sales advanced 9.6% to $3,596.5 million in the quarter. Foreign exchange fluctuations positively impacted the segment’s sales by 3.2%. On a constant-currency (cc) basis, sales advanced 6.4%.
SYGMA’s sales declined 1% to $1,913.7 million.
Meanwhile, the Other segment’s sales declined 5.9% to $283.3 million.
Other Updates
Sysco ended the quarter with cash and cash equivalents of $962.2 million, long-term debt of almost $12,028.1 million and total shareholders’ equity of $2,404 million. For the first 26 weeks of the fiscal 2024, the company generated cash flow from operations of $855.9 million and free cash flow amounted to $527.4 million.
During this time, Sysco returned $705.5 million to shareholders through share buybacks worth $199.9 million and dividends of $505.6 million. For the fiscal 2024, management expects to return nearly $2.25 billion to shareholders.
Capital expenditures, net of proceeds from sales of plant and equipment, amounted to $328.5 million.
Shares of this Zacks Rank #2 (Buy) company have increased 13.1% in the past three months compared with the industry’s 10.9% growth.
3 Appetizing Food Bets
Ingredion Incorporated (INGR - Free Report) , which produces and sells sweeteners, starches, nutrition ingredients and biomaterial solutions, carries a Zacks Rank #2. INGR delivered a positive earnings surprise of 23.9% in the last reported quarter. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for Ingredion Incorporated’s current financial-year sales and earnings suggests growth of around 5% and 24.8%, respectively, from the year-ago reported numbers.
Flowers Food (FLO - Free Report) produces and markets packaged bakery food products. FLO currently has a Zacks Rank #2. Flowers Food has a trailing four-quarter earnings surprise of 6.8%, on average.
The Zacks Consensus Estimate for FLO’s current financial-year sales suggests growth of 5.9% from the year-ago reported figure.
Lamb Weston (LW - Free Report) , which offers frozen potato products, currently carries a Zacks Rank #2. LW delivered an earnings surprise of 3.6% in the last reported quarter.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings implies growth of 28.3% and 26.9%, respectively, from the year-ago reported numbers.