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Sysco's (SYY) Earnings Miss Estimates in Q3, Sales Down
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Sysco Corporation (SYY - Free Report) reported third-quarter fiscal 2020 results, with the top and the bottom lines declining year over year. Further, earnings missed the Zacks Consensus Estimate, while sales beat the same.
In an attempt to remain financially flexible amid the coronavirus crisis, the company has been undertaking a number of cost-control measures. These include decisions to temporarily furlough workers as well as permanently reduce labors. Apart from these, Sysco has undertaken steps to enhance operational efficiencies. Consequently, management has removed more than $500 million of expenses from the business for the fiscal fourth quarter. Moreover, the company has seen some improvement in its business in April and expects this trend to continue in May.
Sysco Corporation Price, Consensus and EPS Surprise
Adjusted earnings of 45 cents per share fell 43% year over year and lagged the Zacks Consensus Estimate of 53 cents. The year-over-year upside can be attributed to reduced sales and margins.
This global food products maker and distributor reported sales of $13,699 million, which declined 6.5% year over year thanks to the coronavirus outbreak. Nevertheless, the figure surpassed the Zacks Consensus Estimate of $13,606 million. Foreign currency headwinds had an adverse impact of about 0.2% on the top line.
Gross profit in the quarter declined 6.9% to $2,564.2 million, owing to the coronavirus pandemic. Further, gross margin contracted 7 basis points (bps) to 18.72%. Foreign currency headwinds had an adverse impact of about 0.3% on the gross profit.
Adjusted operating income fell 39.2% to $377 million, while adjusted operating margin contracted 148 bps to 2.75%.
Segment Details
U.S. Foodservice Operations: During the quarter, segment sales declined 5.1% to $9,587 million. Local case volumes within U.S. Broadline operations fell 4.1% (including organic sales decline of 5.2%) and total case volumes dropped 5.2% (wherein organic sales declined 5.8%). Gross profit rose 5.7% to $1,895.4 million, while gross margin contracted 11 bps to 19.8%.
Results were negatively impacted by food-cost inflation of 1.3% in U.S. Broadline, particularly in categories like meat and dairy. Adjusted operating expenses increased 1.4% while the adjusted operating income declined 17.1% to $636.7 million.
International Foodservice Operations: Segment sales declined 9% to $2,508.6 million in the quarter. Foreign exchange fluctuations hurt segment sales by 1.3% during the quarter. On a constant-currency (cc) basis, sales fell 7.8%.
At cc, gross profit declined 10% to $508.5 million and gross margin fell 50 bps to 19.99%. Currency headwinds put pressure on the segment’s gross profit by 1.3%.
Adjusted operating expense declined 2.2% and the adjusted operating income decreased 91.4% to $5 million. Operating income in the segment was positively impacted by currency movements to the tune of 2.1%. At cc, adjusted operating income declined 93.5% to $3.8 million.
Other Updates
Sysco ended the quarter with cash and cash equivalents of $2,240.8million, long-term debt of $10,023.3 million and total shareholders’ equity of $2,028.9 million.
During 39-Week ended Mar 28, the company generated cash flow from operations of $1,078.5 million and incurred net capital expenditures of $224.1 million. Free cash flow amounted to $487.8 million.
Price Performance
This Zacks Rank #4 (Sell) stock has lost 32.6% in the past six months compared with the industry’s decline of 8.4%.
General Mills (GIS - Free Report) has a long-term earnings growth rate of 7.5% and a Zacks Rank #2.
Conagra Brands (CAG - Free Report) has a long-term earnings growth rate of 7% and a Zacks Rank #2.
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Sysco's (SYY) Earnings Miss Estimates in Q3, Sales Down
Sysco Corporation (SYY - Free Report) reported third-quarter fiscal 2020 results, with the top and the bottom lines declining year over year. Further, earnings missed the Zacks Consensus Estimate, while sales beat the same.
In an attempt to remain financially flexible amid the coronavirus crisis, the company has been undertaking a number of cost-control measures. These include decisions to temporarily furlough workers as well as permanently reduce labors. Apart from these, Sysco has undertaken steps to enhance operational efficiencies. Consequently, management has removed more than $500 million of expenses from the business for the fiscal fourth quarter. Moreover, the company has seen some improvement in its business in April and expects this trend to continue in May.
Sysco Corporation Price, Consensus and EPS Surprise
Sysco Corporation price-consensus-eps-surprise-chart | Sysco Corporation Quote
Quarter in Detail
Adjusted earnings of 45 cents per share fell 43% year over year and lagged the Zacks Consensus Estimate of 53 cents. The year-over-year upside can be attributed to reduced sales and margins.
This global food products maker and distributor reported sales of $13,699 million, which declined 6.5% year over year thanks to the coronavirus outbreak. Nevertheless, the figure surpassed the Zacks Consensus Estimate of $13,606 million. Foreign currency headwinds had an adverse impact of about 0.2% on the top line.
Gross profit in the quarter declined 6.9% to $2,564.2 million, owing to the coronavirus pandemic. Further, gross margin contracted 7 basis points (bps) to 18.72%. Foreign currency headwinds had an adverse impact of about 0.3% on the gross profit.
Adjusted operating income fell 39.2% to $377 million, while adjusted operating margin contracted 148 bps to 2.75%.
Segment Details
U.S. Foodservice Operations: During the quarter, segment sales declined 5.1% to $9,587 million. Local case volumes within U.S. Broadline operations fell 4.1% (including organic sales decline of 5.2%) and total case volumes dropped 5.2% (wherein organic sales declined 5.8%). Gross profit rose 5.7% to $1,895.4 million, while gross margin contracted 11 bps to 19.8%.
Results were negatively impacted by food-cost inflation of 1.3% in U.S. Broadline, particularly in categories like meat and dairy. Adjusted operating expenses increased 1.4% while the adjusted operating income declined 17.1% to $636.7 million.
International Foodservice Operations: Segment sales declined 9% to $2,508.6 million in the quarter. Foreign exchange fluctuations hurt segment sales by 1.3% during the quarter. On a constant-currency (cc) basis, sales fell 7.8%.
At cc, gross profit declined 10% to $508.5 million and gross margin fell 50 bps to 19.99%. Currency headwinds put pressure on the segment’s gross profit by 1.3%.
Adjusted operating expense declined 2.2% and the adjusted operating income decreased 91.4% to $5 million. Operating income in the segment was positively impacted by currency movements to the tune of 2.1%. At cc, adjusted operating income declined 93.5% to $3.8 million.
Other Updates
Sysco ended the quarter with cash and cash equivalents of $2,240.8million, long-term debt of $10,023.3 million and total shareholders’ equity of $2,028.9 million.
During 39-Week ended Mar 28, the company generated cash flow from operations of $1,078.5 million and incurred net capital expenditures of $224.1 million. Free cash flow amounted to $487.8 million.
Price Performance
This Zacks Rank #4 (Sell) stock has lost 32.6% in the past six months compared with the industry’s decline of 8.4%.
Don’t Miss These Solid Food Stocks
Campbell Soup Company (CPB - Free Report) has a long-term earnings growth rate of 7.2% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
General Mills (GIS - Free Report) has a long-term earnings growth rate of 7.5% and a Zacks Rank #2.
Conagra Brands (CAG - Free Report) has a long-term earnings growth rate of 7% and a Zacks Rank #2.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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