Sysco Corporation (SYY - Free Report) posted first-quarter fiscal 2023 results, wherein the top and bottom lines grew year over year and the former came ahead of the Zacks Consensus Estimate.

The company saw a double-digit rise in earnings and sales as it efficiently managed inflation and witnessed a case volume increase and higher market share. Sysco is progressing well with its Recipe for Growth plan and remains on track to grow 1.35 times the market in the year.

Management remains optimistic about its business while remaining cautious of the macroeconomic landscape. The company reiterated its adjusted earnings per share (EPS) guidance range of $4.09-$4.39 for fiscal 2023, suggesting 26-35% growth from the year-ago period.

The company expects to return $1.5 billion to its stockholders in the fiscal.
 

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 97 cents per share fell short of the Zacks Consensus Estimate of 99 cents. However, the bottom line increased from the year-ago period’s earnings of 83 cents per share.

The global food product maker and distributor reported sales of $19,126.8 million, which jumped 16.2% year over year and beat the Zacks Consensus Estimate of $18,634 million. However, foreign currency had an adverse impact of 2% on the top line.

The gross profit surged 17.4% to $3,488.9 million, and the gross margin expanded 18 basis points (bps) to 18.2%. This year-over-year growth in gross profit was fueled by elevated volumes, efficient inflation management, and progress in the company’s partnership growth management efforts.

SYY witnessed product cost inflation of 9.7%, which was measured by estimated changes in product costs, mainly in the dairy and frozen categories. Foreign currency had a negative impact of 2.5% on gross profit.

The adjusted operating income of $770.3 million grew by $85.2 million from the year-ago period.
 

Segment Details

U.S. Foodservice Operations: In the reported quarter, the segment witnessed robust sales growth, overall share gains, and higher profitability. Sales jumped 17.2% to $13,602.5 million. Local case volumes within U.S. Broadline operations rose 5.4%, and total case volumes increased by 7.3%.

The gross profit escalated by 19.5% to $2,612.3 million, and the gross margin rose 37 bps to 19.2%. The U.S. Broadline saw 12% product cost inflation, which was measured by estimated changes in product costs, mainly in the dairy and frozen categories.

International Foodservice Operations: The segment’s sales advanced 13.4% to $3,283.7 million in the quarter. However, foreign-exchange fluctuations adversely impacted the segment’s sales by 10.9%.

On a constant-currency (cc) basis, sales advanced by 24.3%. The gross profit jumped 10.2% to $649.3 million, but the gross margin contracted 58 bps to 19.77%. At cc, the gross profit increased by 22.4%. Currency movements hurt the segment’s gross profit by 12.2%.

SYGMA’s sales advanced 13.5% to $1,933.5 million. The gross profit rose 11.4% to $153.9 million, while the gross margin contracted 15 bps to 7.96%.

The Other segment’s sales jumped 20.8% to $307.2 million.
 

Other Updates

Sysco ended the quarter with cash and cash equivalents of $437.7 million, long-term debt of $10,263.3 million, and total shareholders’ equity of $1,115.3 million. In the first 13 weeks of fiscal 2023, the company generated cash flow from operations of $158.6 million, and free cash flow amounted to $13.8 million.

During the quarter, Sysco returned $517 million to shareholders through share buybacks worth $267.7 million and dividends of $249.3 million.

Shares of this Zacks Rank #3 (Hold) company have risen 1.4% in the past three months compared with the industry’s growth of 0.4%.

More By This Author: