HOUSTON, Feb. 02, 2021 (GLOBE NEWSWIRE) -- Sysco Corporation (NYSE: SYY) today announced financial results for its 13-week second fiscal quarter ended December 26, 2020.

Second Quarter Fiscal 2021 Highlights

• Sales decreased 23.1% to $11.6 billion
• Gross profit decreased 25.8% to $2.1 billion; gross margin decreased 67 basis points
• Operating income decreased 61.6% to $212.1 million; adjusted¹ operating income decreased 62.7% to $234.1 million
• Earnings per share (“EPS”) decreased $0.61 to $0.13; adjusted¹ EPS decreased $0.68 to $0.17

First Half Fiscal 2021 Highlights

• Sales decreased 23.1% to $23.3 billion
• Gross profit decreased 25.2% to $4.3 billion; gross margin decreased 53 basis points
• Operating income decreased 48.3% to $631.6 million; adjusted¹ operating income decreased 56.3% to $598.7 million
• EPS decreased $1.06 to $0.56; adjusted¹ EPS decreased $1.32 to $0.51

“We are making bold progress against our transformation agenda, while managing our business in a complex climate, and enabling accelerated growth by improving how we serve our customers and differentiate ourselves from competitors. Additionally, with a COVID business recovery in sight, we are preparing for the upcoming increase in demand, and Sysco will be best positioned for a strong rebound due to our industry-leading financial strength and ability to invest in inventory, staffing and service levels,” said Kevin Hourican, Sysco’s president and chief executive officer. “I am immensely proud of the Sysco team for all of the work they are doing to support our customers during this crisis. Our recent Restaurants Rising program is a prime example of the difference we make in the success of those that we serve.”

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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 first half 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.}

Second Quarter Fiscal 2021 Results

U.S. Foodservice Operations

Sales for the second quarter were $7.9 billion, a decrease of 23.9% compared to the same period last year. Local case volume within U.S. Broadline operations decreased 19.7% for the second quarter, of which a decrease of 19.7% was organic, while total case volume within U.S. Broadline operations decreased 23.7%, of which a decrease of 23.7% was organic.

Gross profit decreased 23.9% to $1.6 billion, and gross margin remained relatively unchanged at 19.7%, compared in each case to the same period last year. Product cost inflation was 1.6% in U.S. Broadline, as measured by the estimated change in Sysco’s product costs, primarily in the paper and disposables, poultry, and dairy categories.

Operating expenses decreased $270.0 million, or 20.1%, compared to the same period last year. Adjusted operating expenses decreased $252.9 million, or 18.9%, compared to the same period last year.

Operating income was $485.3 million, a decrease of $219.6 million, or 31.2%, compared to the same period last year. Adjusted operating income was $471.8 million, a decrease of $236.7 million, or 33.4%, compared to the same period last year.

International Foodservice Operations

Sales for the second quarter were $2.0 billion, a decrease of 31.9% compared to the same period last year. On a constant currency basis, sales for the second quarter were $1.9 billion, a decrease of 33.8% compared to the same period last year. Foreign exchange rates increased International Foodservice Operations sales by 1.8% and total Sysco sales by 0.4% during the quarter.

Gross profit decreased 36.2% to $373.8 million, and gross margin decreased 128 basis points to 19.0%, compared in each case to the same period last year. On a constant currency basis, gross profit decreased 38.2% to $362.4 million. Foreign exchange rates increased International Foodservice Operations gross profit by 2.0% and total Sysco gross profit by 0.4% during the quarter.

Operating expenses decreased $97.4 million, or 17.7%, compared to the same period last year. Adjusted operating expenses decreased $82.9 million, or 16.2%, compared to the same period last year. On a constant currency basis, adjusted operating expenses decreased $98.1 million, or 19.2%, compared to the same period last year. Foreign exchange rates increased International Foodservice Operations operating expense by 3.0% and total Sysco operating expense by 0.8% during the quarter.

The International Foodservice Operations segment delivered an operating loss of $79.9 million, a decrease of $114.8 million compared to the same period last year. Adjusted operating loss was $55.2 million, a decrease of $129.3 million compared to the same period last year. On a constant currency basis, adjusted operating loss was $51.6 million, a decrease of $125.6 million, or 169.6%, compared to the same period last year. Foreign exchange rates reduced International Foodservice Operations operating loss by 4.9% and total Sysco operating income by 0.6% during the quarter.

First Half Fiscal 2021 Results

U.S. Foodservice Operations

Sales for the first 26 weeks of fiscal 2021 were $15.8 billion, a decrease of 24.8% compared to the same period last year. Local case volume within U.S. Broadline operations decreased 20.6% for the first 26 weeks of fiscal 2021, of which a decrease of 20.7% was organic, while total case volume within U.S. Broadline operations decreased 24.8%, of which a decrease of 24.8% was organic.

Gross profit decreased 24.7% to $3.2 billion, and gross margin increased 3 basis points to 19.9%, compared in each case to the same period last year. Product cost inflation was 1.3% in U.S. Broadline, as measured by the estimated change in Sysco’s product costs, primarily in the paper and disposables, dairy, and poultry categories.

Operating expenses decreased $610.0 million, or 22.6%, compared to the same period last year. Adjusted operating expenses decreased $503.4 million, or 18.7%, compared to the same period last year.

Operating income was $1.1 billion, a decrease of $424.8 million, or 28.3%, compared to the same period last year. Adjusted operating income was $974.8 million, a decrease of $531.4 million, or 35.3%, compared to the same period last year.

International Foodservice Operations

Sales for the first 26 weeks of fiscal 2021 were $4.1 billion, a decrease of $1.7 billion, or 28.8%, compared to the same period last year. On a constant currency basis, sales for the second quarter were $4.0 billion, a decrease of 30.4% compared to the same period last year. Foreign exchange rates increased International Foodservice Operations sales by 1.6% and total Sysco sales by 0.3% during the first 26 weeks of fiscal 2021.

Gross profit decreased 30.8% to $824.2 million, and gross margin decreased 58 basis points to 20.0%, compared in each case to the same period last year. On a constant currency basis, gross profit decreased 32.7% to $801.3 million, as compared to the same period last year. Foreign exchange rates increased International Foodservice Operations gross profit by 1.9% and total Sysco gross profit by 0.4% during the first 26 weeks of fiscal 2021.

Operating expenses decreased $196.8 million, or 17.9%, compared to the same period last year. Adjusted operating expenses decreased $157.5 million, or 15.5%, compared to the same period last year. On a constant currency basis, adjusted operating expenses decreased $185.0 million, or 18.2%, compared to the same period last year. Foreign exchange rates increased International Foodservice Operations operating expense by 2.7% and total Sysco operating expense by 0.7% during the first 26 weeks of fiscal 2021.

The International Foodservice Operations segment delivered an operating loss of $80.5 million, a decrease of $170.2 million compared to the same period last year. Adjusted operating loss was $36.4 million, a decrease of $209.5 million, or 121.1%, compared to the same period last year. On a constant currency basis, adjusted operating loss was $32.0 million, a decrease of $205.0 million, or 118.5%, compared to the same period last year. Foreign exchange rates reduced International Foodservice Operations operating loss by 2.6% and total Sysco operating income by 0.3% during the first 26 weeks of fiscal 2021.

Balance Sheet, Capital Spending and Cash Flow

Capital expenditures, net of proceeds from sales of plant and equipment, for the first 26 weeks of fiscal 2021 were $234.7 million lower compared to the prior year period.

Cash flow from operations was $936.7 million for the first 26 weeks of fiscal 2021, which was $182.2 million higher compared to the prior year period. Free cash flow² for the first 26 weeks of fiscal 2021 was $788.2 million, which was $416.9 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.

For more information, visit www.sysco.com or connect with Sysco on Facebook at www.facebook.com/SyscoCorporation. For important news and information regarding Sysco, visit the Investor Relations section of the company’s Internet home page at investors.sysco.com, which Sysco plans to use as a primary channel for publishing key information to its investors, some of which may contain material and previously non-public information. In addition, investors should continue to review our news releases and filings with the SEC. It is possible that the information we disclose through any of these channels of distribution could be deemed to be material information.