HOUSTON, Nov. 03, 2020 (GLOBE NEWSWIRE) -- Sysco Corporation (NYSE: SYY) today announced financial results for its 13-week first fiscal quarter ended September 26, 2020.

First Quarter Fiscal 2021 Highlights

• Sales decreased 23.0% to $11.8 billion
• Gross profit decreased 24.6% to $2.2 billion; gross margin decreased 39 basis points
• Operating income decreased 37.2% to $419.6 million; adjusted¹ operating income decreased 50.8% to $364.7 million
• Earnings per share (“EPS”) decreased $0.45 to $0.42; adjusted¹ EPS decreased $0.64 to $0.34

“Although our first quarter 2021 results continue to be impacted by the pandemic, we are pleased with our overall expense management and our ability to produce positive free cash flow and a profitable quarter despite a 23% reduction in sales. We saw improvement in the overall sales environment throughout the quarter and remain resolutely focused upon serving our customers. We are confident that Sysco’s business transformation will accelerate profitable growth as we differentiate our business from our competition to better serve the evolving needs of our customers,” said Kevin Hourican, Sysco’s president and chief executive officer. “I am pleased with the focus and agility of Sysco’s associates as we work to transform the company and manage the complexities of the COVID-19 pandemic.”

Our business transformation is on track as Sysco continues to manage through the COVID-19 pandemic and is using the crisis as an opportunity to accelerate our strategic transformation, which will help improve how we serve our customers and differentiate ourselves from the competition. Our strategic transformation priorities include acceleration of our work across our customer-facing tools and technology, sales transformation to improve selling effectiveness and provide a more customer-centric structure, regionalization of our U.S. Broadline business, and becoming a more efficient company -- all of which will enable us to improve profitability and fund new sources of business growth. Our success comes from the success of our customers, and our transformation initiatives will improve how we serve those customers, both big and small.

¹ Earnings Per Share (EPS) are shown on a diluted basis unless otherwise specified. Adjusted financial results exclude certain items, which primarily include adjustments to our bad debt reserve specific to aged receivables existing prior to the COVID-19 pandemic, restructuring costs, transformational project costs and acquisition-related costs. Specific to EPS, this year’s Certain Items include the impact of a loss on the sale of Cake Corporation and the impact of a new U.K. tax law change. Reconciliations of all non-GAAP measures are included at the end of this release.
² Free cash flow is a non-GAAP measure that represents net cash provided from operating activities less purchases of plant and equipment and includes proceeds from sales of plant and equipment. Reconciliations for all non-GAAP measures are included at the end of this release.

First Quarter Fiscal 2021 Results

U.S. Foodservice Operations

Sales for the first quarter were $7.9 billion, a decrease of 25.7% compared to the same period last year. Local case volume within U.S. Broadline operations decreased 21.6% for the first quarter, of which a decrease of 21.7% was organic, while total case volume within U.S. Broadline operations decreased 25.8%, of which a decrease of 25.9% was organic.

Gross profit decreased 25.4% to $1.6 billion, and gross margin increased 7 basis points to 20.2%, compared to the same period last year. Product cost inflation was 1.0% in U.S. Broadline, as measured by the estimated change in Sysco’s product costs, primarily in the dairy, paper and disposables, and meat categories.

Operating expenses decreased $340.0 million, or 25.2%, compared to the same period last year. Adjusted operating expenses decreased $250.5 million, or 18.6%, compared to the same period last year.

Operating income was $588.4 million, a decrease of $205.2 million, or 25.9%, compared to the same period last year. Adjusted operating income was $503.0 million, a decrease of $294.7 million, or 36.9%, compared to the same period last year.

International Foodservice Operations

Sales for the first quarter were $2.2 billion, a decrease of 25.7% compared to the same period last year. On a constant currency basis, sales for the first quarter were $2.1 billion, a decrease of 27.1% compared to the same period last year. Foreign exchange rates positively affected International Foodservice Operations sales by 1.4% and total Sysco sales by 0.3% during the quarter.

Gross profit decreased 25.6% to $450.4 million, and gross margin increased 4 basis points to 20.8%, in each case as compared to the same period last year. On a constant currency basis, gross profit decreased 27.5% to $438.9 million. Foreign exchange rates positively affected International Foodservice Operations gross profit by 1.9% and total Sysco gross profit by 0.4% during the quarter.

Operating expenses decreased $99.5 million, or 18.1%, compared to the same period last year. Adjusted operating expenses decreased $74.6 million, or 14.7%, compared to the same period last year. On a constant currency basis, adjusted operating expenses decreased $86.9 million, or 17.2%, compared to the same period last year. Foreign exchange rates negatively affected International Foodservice Operations operating expense by 2.4% and total Sysco operating expense by 0.6% during the quarter.

The International Foodservice Operations segment delivered an operating loss of $0.5 million, a decrease of $55.3 million compared to the same period last year. Adjusted operating income was $18.8 million, a decrease of $80.2 million compared to the same period last year. Foreign exchange rates did not have a meaningful impact on International Foodservice Operations operating income during the quarter.

Balance Sheet, Capital Spending and Cash Flow

Capital expenditures, net of proceeds from sales of plant and equipment, for the first 13 weeks of fiscal 2021 were $102.4 million lower compared to the prior year period.

Cash flow from operations was $930.9 million for the first 13 weeks of fiscal 2021, which was $759.3 million higher compared to the prior year period. Free cash flow² for the first 13 weeks of fiscal 2021 was $862.4 million, which was $861.7 million higher compared to the prior year.

About Sysco

Sysco is the global leader in selling, marketing and distributing food products to restaurants, healthcare and educational facilities, lodging establishments and other customers who prepare meals away from home. Its family of products also includes equipment and supplies for the foodservice and hospitality industries. With more than 57,000 associates, the company operates 326 distribution facilities worldwide and serves more than 625,000 customer locations. For fiscal 2020 that ended June 27, 2020, the company generated sales of more than $52 billion. Information about our CSR program, including Sysco’s 2020 Corporate Social Responsibility Report, can be found at sysco.com/csr2020report.