Sysco Corp. (NYSE:SYY)

The financial data reveals several noteworthy trends over the analyzed periods. The Net Operating Profit After Taxes (NOPAT) exhibited significant fluctuations, starting at 1,850 million USD in mid-2019 and sharply declining to 665 million USD in mid-2020. This decline may reflect adverse conditions impacting profitability during that period. Subsequently, NOPAT gradually recovered, reaching 861 million USD in mid-2021, and demonstrating substantial growth thereafter, peaking at 2,500 million USD by mid-2024.

Cost of capital percentages showed moderate variability, ranging from a low of 11.1% in mid-2020 to a peak of 13.19% in mid-2019. From mid-2021 onwards, the cost of capital stabilized around 12.7% to 13.1%, indicating relatively steady capital costs despite the profitability fluctuations.

Invested capital experienced considerable changes as well. It increased notably from 12,842 million USD in mid-2019 to 18,092 million USD by mid-2020, suggesting enhanced investment or asset base expansion during that period. A reduction followed in mid-2021 to 14,339 million USD; thereafter, invested capital slightly rose and stabilized around 14,000 to 16,000 million USD towards mid-2024, indicating a normalization of investment levels.

Economic profit, which considers both NOPAT and the cost of capital applied to invested capital, reflected the impact of the aforementioned trends. Initially positive at 156 million USD in mid-2019, it turned substantially negative in mid-2020 (-1,343 million USD) and remained negative, though less severely, in mid-2021 (-937 million USD) and mid-2022 (-92 million USD). From mid-2023 onward, economic profit returned to positive territory, reaching 464 million USD by mid-2024, aligning with improved NOPAT performance and more stable invested capital levels.

Overall, the data indicates a period of financial strain around 2020 with reduced profitability and negative economic profit, accompanied by increased invested capital and fluctuating cost of capital. The subsequent years show a recovery trajectory with improving profitability metrics, normalization of invested capital, and a return to positive economic value creation.

The financial data reveals significant fluctuations in the profitability metrics over the examined periods. Net earnings decreased sharply from 1674 million USD in June 2019 to 215 million USD in June 2020, reflecting a substantial decline likely influenced by external challenges. This was followed by a partial recovery to 524 million USD in July 2021 and a more pronounced increase to 1359 million USD in July 2022. The upward trend continued with net earnings reaching 1770 million USD in July 2023 and further rising to 1955 million USD by June 2024, indicating a steady restoration and growth in earnings performance.

Similarly, Net Operating Profit After Taxes (NOPAT) demonstrated a comparable trajectory. It declined from 1850 million USD in June 2019 to 665 million USD in June 2020, evidencing a significant contraction in operating profitability. Subsequently, NOPAT showed a moderate increase to 861 million USD in July 2021, followed by a substantial recovery and growth to 1757 million USD in July 2022. This positive momentum persisted with NOPAT rising to 2164 million USD in July 2023 and reaching 2500 million USD by June 2024.

Overall, the data indicates that while profitability metrics experienced a notable downturn around mid-2020, the company has since achieved a strong and consistent rebound in operating and net earnings. The improvement in NOPAT outpaces the growth in net earnings, suggesting enhanced operational efficiency or favorable tax impacts in the more recent periods. The upward trajectory in both measures over the last few reported years points to robust financial recovery and strengthening profitability.

The analysis of the annual financial data reveals significant fluctuations and trends in both the income tax provision and cash operating taxes over the six-year period.

Income Tax Provision

The income tax provision exhibits a notable decline from 332 million USD in 2019 to 78 million USD in 2020, followed by a further decrease to 61 million USD in 2021. However, there is a marked reversal in this trend starting in 2022, with the provision rising sharply to 388 million USD, and continuing to increase in subsequent years, reaching 515 million USD in 2023 and 610 million USD in 2024. This pattern suggests an initial reduction in tax obligations or tax-related benefits during the 2020 and 2021 periods, potentially related to external economic factors or tax law changes, followed by a substantial increase in tax liability or accrual in more recent years.

Cash Operating Taxes

Cash operating taxes show a different trajectory. Beginning at 538 million USD in 2019, these amounts decline to 358 million USD in 2020, indicating a reduction in actual tax payments. However, starting in 2021, cash operating taxes increase to 408 million USD, continuing an upward trend to 588 million USD in 2022, 648 million USD in 2023, and reaching 720 million USD in 2024. This consistent rise from 2021 onwards points to increasing cash tax outflows, which may be linked to higher taxable income, changes in tax regulations, or improved cash management strategies aimed at timely tax payments.

Overall, the data suggest a period of reduced income tax provision and cash tax payments during the early years, particularly around 2020 and 2021, possibly reflecting the impact of economic disruptions or tax relief measures during this time. From 2022 onward, both the income tax provision and cash operating taxes have increased significantly, which may indicate recovery and higher profitability, as well as evolving tax obligations. The divergence and subsequent convergence of these two metrics highlight important dynamics in tax accounting and cash flow management over the analyzed period.

The financial data indicates notable fluctuations and trends in the company's capital structure and financial position over the six-year period.

Total Reported Debt & Leases

The company experienced a significant increase in total reported debt and leases from US$8,704 million in 2019 to a peak of US$15,078 million in 2020. This was followed by a declining trend over the next three years, dropping to US$11,166 million by 2023. However, in 2024, debt levels rose again to US$12,945 million. The initial sharp rise may reflect increased borrowing or lease commitments possibly linked to strategic investments or market conditions, while the subsequent decline suggests deleveraging efforts or repayment activities. The rise in 2024 indicates renewed leverage or financing needs.

Shareholders’ Equity

Shareholders' equity displayed considerable volatility during the period. It drastically decreased from US$2,503 million in 2019 to a low of US$1,159 million in 2020. This was followed by a recovery phase with equity rising to US$2,009 million in 2023, before slightly declining to US$1,860 million in 2024. The sharp drop in 2020 could be indicative of losses incurred, dividend distributions exceeding earnings, or other equity-reducing events. The subsequent recovery implies profitability improvements or capital injections, but the decrease in 2024 suggests some reduction in equity possibly due to changes in retained earnings or other comprehensive income.

Invested Capital

Invested capital saw a marked increase from US$12,842 million in 2019 to a high of US$18,092 million in 2020. After this peak, it decreased to around US$14,100-14,300 million in the following three years before increasing again to US$16,003 million in 2024. This pattern mirrors the debt trends, suggesting that invested capital is largely influenced by changes in financing levels, particularly debt components. The peak in 2020 likely reflects significant capital deployment or acquisition activity, while the partial decline afterward suggests consolidation or divestiture activities. The increase in 2024 points to renewed investment or asset growth.

Overall, the data suggest a period of heightened leverage and capital investment around 2020, followed by a phase of stabilization and partial deleveraging. Equity experienced notable volatility, reflecting changes in company profitability and capital management practices. The recent uptick in debt and invested capital in 2024 may indicate strategic initiatives or market responses requiring increased financing.

The financial data indicates several notable trends regarding economic profit, invested capital, and the economic spread ratio over the six-year period from 2019 to 2024.

Economic Profit

The economic profit initially was positive at 156 million USD in 2019 but experienced a significant decline to -1,343 million USD in 2020, indicating a substantial loss. The negative trend continued in 2021 (-937 million USD) and 2022 (-92 million USD), although the magnitude of losses decreased considerably over these two years. Beginning in 2023, economic profit returned to positive territory at 326 million USD and further increased to 464 million USD in 2024, suggesting a recovery and improvement in profitability.

Invested Capital

Invested capital increased noticeably from 12,842 million USD in 2019 to 18,092 million USD in 2020, marking a sharp rise. Afterward, it declined to 14,339 million USD in 2021 and remained relatively stable around 14,100 to 14,300 million USD in 2022 and 2023, respectively. In 2024, invested capital rose again to 16,003 million USD. Overall, invested capital shows volatility with a peak in 2020, a dip in the following years, and a moderate increase by the end of the period.

Economic Spread Ratio

The economic spread ratio, which reflects the profitability relative to invested capital, followed a pattern aligned with economic profit. It started at a positive 1.21% in 2019, plunged into negative figures over the next three years, with the lowest point at -7.42% in 2020 and improving to -0.65% by 2022. Subsequently, it reversed into positive territory reaching 2.29% in 2023 and further increasing to 2.9% in 2024, indicating improved efficiency in generating returns above the cost of capital.

In summary, the period from 2019 to 2024 depicts an initial deterioration in profitability as shown by negative economic profit and spread, coinciding with increased invested capital in 2020. Subsequently, both profitability measures improved substantially, returning to positive levels by 2023 and 2024. Invested capital showed fluctuations, peaking in 2020, then stabilizing before a moderate increase was observed in the final year. The trends suggest a recovery phase following a challenging period, with enhanced economic returns and more effective capital utilization by the most recent financial year.

Sales Trend

Sales exhibited a decline from 60,114 million US dollars in 2019 to 51,298 million US dollars in 2021, marking a significant drop over two years. This was followed by a robust recovery beginning in 2022, with sales increasing sharply to 68,636 million, and continued growth in the subsequent years, reaching 78,844 million in 2024. The overall pattern suggests initial contraction followed by sustained expansion.

Economic Profit Analysis

The economic profit experienced a volatile trajectory. It started with a positive value of 156 million US dollars in 2019, then deteriorated significantly, resulting in large negative values of -1,343 million and -937 million in 2020 and 2021 respectively. Thereafter, the losses narrowed substantially in 2022 to -92 million, and the company returned to positive economic profit margins in 2023 and 2024, reaching 326 million and 464 million respectively. This indicates a recovery in value creation after a period of economic losses.

Economic Profit Margin Pattern

The economic profit margin mirrored the economic profit behavior, starting marginally positive at 0.26% in 2019, then turning negative in the next two years, declining to -2.54% in 2020 and -1.83% in 2021. It improved in 2022 to nearly breakeven at -0.13%, and then moved back into positive territory with 0.43% in 2023 and increasing further to 0.59% in 2024. This signifies an enhanced ability of the company to generate economic profit relative to its sales over the observed period.

Overall Insights

The data illustrates a challenging phase in 2020 and 2021, where both sales and economic profitability were adversely affected. From 2022 onward, there is a clear recovery trend with sales growth and a return to positive economic profitability, suggesting improved operational efficiency or market conditions. The steady increase in economic profit margin toward positive figures indicates strengthening financial health and better value generation capacity in recent years.