Insights from Sysco Earnings Announcement February 2021

Posted on February 16, 2021

Sysco Earnings Announcement Insights - Transaction Advsiory Services

Emerging Themes from Sysco’s Quarterly Earnings Call

Sysco kicked off the quarterly earnings broadline food distributor parade on February 2, 2021.

We wanted to share the several key themes that emerged from the call:

  1. Sysco is winning new business.  Sysco’s CEO, Kevin Hourican indicated that both national and local new business wins were strong.  On the national sales side, Sysco has won a net of $1.5 billion of new business.  This is demonstrated through the growth experienced by the company’s SYGMA segment.  Additionally, Mr. Hourican indicated that Sysco won more new customers at the independent local level in the most recent quarter than at any point in time over the last five years.
  2. Preparing for the Financial Requirements of a Rebound.  Sysco is anticipating the coming rebound and believes that its financial strength will allow it to invest in the needed inventory to handle growth.  The company believes this will be a differentiator as volume returns to restaurants.
  3. Delivery Minimums Waived and No Reduced Delivery Days. For regularly scheduled delivery days, Sysco is continuing its pandemic policy of waiving delivery minimums.  Additionally, Sysco highlighted that there were no reductions in delivery service days during the second COVID wave in the fourth calendar quarter (2nd quarter for Sysco).  It was also noted that competitors had reduced delivery days during the COVID second wave.
  4. Cost Reductions Made by Sysco.  Sysco has eliminated approximately $350 million of annual costs out of its operations and stated that those will become more visible as volume recovers.  Sysco also highlighted that its employee count, at the time of the earnings release, was lower by approximately 15,100 than they had a year ago.  Note that as of June 29, 2019, Sysco reported 69,000 employees on its 10-K.  This would be an estimated reduction of ~22% from that value.

Our Keiter Advisors team will continue to monitor the broadline food distributors trends and share our insights on other large distributors as they are released.


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