SYY Financial Analysis

Analysis Date: 1/29/2025

Business Model

Sysco generates revenue primarily through foodservice distribution to restaurants, healthcare facilities, educational institutions, lodging establishments and other customers who prepare meals away from home

Revenue Sources

• U.S. Foodservice Operations (69.7% of revenue)
• International Foodservice Operations (18.5% of revenue)
• SYGMA (10.5% of revenue)
• Other (1.3% of revenue)

Revenue Distribution by Channel

• Local customers (independent restaurants)
• National customers (chain restaurants, healthcare, education)

Income Statement Analysis

• Sales grew 4.5% driven by 1.4% case volume growth in US Foodservice
• Gross margin declined 11 bps to 18.1% due to product cost inflation of 2.1%
• Operating expenses increased 4.4% due to higher volumes and business investments

Balance Sheet Analysis

• Strong liquidity position with $793M cash and $3.1B total liquidity
• Net debt to adjusted EBITDA ratio of 2.76x, slightly above target range of 2.5-2.75x

Cash Flow Analysis

• Operating cash flow decreased $358M year-over-year
• Free cash flow declined 37.2% to $331M

Capital Allocation

Planning to return $2.25B to shareholders in FY25 through $1B dividends and $1.25B share repurchases (increased from $1B). Maintaining investment grade credit rating with 2.76x net debt/adjusted EBITDA ratio.

Management Commentary

Delivered disciplined financial performance with top and bottom line growth

International business particularly strong with 26.5% adjusted operating income growth

Local business showing signs of progress with improved customer win rates

Reiterating full year guidance of 4-5% sales growth and 6-7% adjusted EPS growth

Overall Sentiment: Positive with confidence in meeting full year targets despite some industry headwinds

Recommendation

Rating: Buy

Reason for Rating: Strong market position, consistent execution and shareholder returns

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/29/2025, 8:24:11 AM