Sysco Corp. (NYSE:SYY)

Net Operating Profit After Taxes (NOPAT)

The NOPAT experienced a significant decline from 1850 million USD in June 2019 to 665 million USD in June 2020, reflecting a sharp downturn. Following this low point, there was a gradual recovery with values rising to 861 million USD in July 2021 and 1757 million USD in July 2022. The upward trend continued more robustly in the subsequent periods, reaching 2164 million USD in July 2023 and further increasing to 2500 million USD by June 2024.

Invested Capital

Invested capital showed an upward trajectory from 12842 million USD in June 2019 to a peak of 18092 million USD in June 2020. This was followed by a reduction to 14339 million USD in July 2021 and a relatively stable period hovering around the 14000 million USD mark through July 2022 and July 2023. The invested capital then increased again to 16003 million USD in June 2024.

Return on Invested Capital (ROIC)

ROIC reflected similar volatility to NOPAT, decreasing sharply from 14.41% in June 2019 to a low of 3.68% in June 2020. It subsequently improved gradually to 6.01% in July 2021 and saw a marked recovery reaching 12.45% in July 2022. The upward trend continued, with ROIC rising to 15.17% in July 2023 and further to 15.62% by June 2024, slightly surpassing the initial level observed in mid-2019.

The analysis of the financial ratios over the six-year period reveals notable trends in operational efficiency, capital utilization, tax management, and overall profitability.

Operating Profit Margin (OPM)

The operating profit margin experienced a significant decline from 3.97% in 2019 to a low of 1.93% in 2020. This downturn was followed by a steady recovery, with the margin increasing progressively each year to reach 4.08% in 2024, surpassing the initial 2019 level. This pattern suggests an initial period of margin compression, possibly due to adverse conditions, with successful operational improvements or cost control measures implemented subsequently.

Turnover of Capital (TO)

Capital turnover demonstrated considerable volatility. The ratio fell sharply from 4.68 in 2019 to 2.92 in 2020, indicating reduced efficiency in capital utilization during that year. Afterwards, there was a marked improvement, peaking at 5.35 in 2023 before slightly declining to 4.93 in 2024. The overall trend points to enhanced efficiency in using capital to generate sales, especially notable after the 2020 dip.

Effective Cash Tax Rate (CTR)

The effective cash tax rate ratio, calculated as one minus the cash tax rate, decreased from 77.47% in 2019 to 65.00% in 2020, indicating a relatively higher cash tax expense in 2020. The ratio then gradually increased each year, approaching 77.64% in 2024, closely aligning with the 2019 level. This trend suggests some fluctuation in tax efficiency or liability, with a return to the initial range in recent years.

Return on Invested Capital (ROIC)

Return on invested capital shows a pronounced dip from 14.41% in 2019 to 3.68% in 2020, reflecting diminished profitability relative to capital invested during that year. Subsequently, ROIC increased continuously, reaching 15.62% in 2024, the highest observed in the period analyzed. This growth implies improved effectiveness in generating returns from invested capital, indicating strong operational or strategic improvements following the 2020 low point.

In summary, the financial ratios depict a challenging year in 2020 across all key indicators, likely reflecting external or internal adverse factors. However, the subsequent years show a consistent recovery and strengthening in profitability, capital efficiency, and tax optimization, culminating in performance metrics in 2024 that surpass those at the beginning of the period.

Net operating profit before taxes (NOPBT)

The net operating profit before taxes showed a significant decline from 2,388 million USD in 2019 to 1,023 million USD in 2020, indicating a considerable reduction in profitability. This decline was followed by a modest recovery in 2021 to 1,269 million USD. From 2022 onward, the profit increased substantially, reaching 2,345 million USD, and continued to grow steadily to 2,812 million USD in 2023 and further to 3,220 million USD in 2024, suggesting a strong upward trend in operating profitability in the latter years.

Sales

Sales declined from 60,114 million USD in 2019 to 52,893 million USD in 2020, continuing to decrease in 2021 to 51,298 million USD. However, there was a significant rebound in sales in 2022, rising sharply to 68,636 million USD. This positive trend persisted with sales increasing to 76,325 million USD in 2023 and 78,844 million USD in 2024, reflecting a robust recovery and growth in revenue generation after the initial downturn.

Operating profit margin (OPM)

The operating profit margin declined sharply from 3.97% in 2019 to 1.93% in 2020, paralleling the drop in net operating profit before taxes. A slight improvement was noted in 2021 with the margin increasing to 2.47%. From 2022 onward, the margin improved consistently, reaching 3.42% in 2022, 3.68% in 2023, and 4.08% in 2024. This upward trend suggests enhanced operational efficiency and profitability relative to sales over the most recent three years.

Overall Analysis

The financial data reflects a pronounced downturn in 2020, likely influenced by broader market conditions, with declines in both sales and profitability metrics. Following this period, there is clear evidence of recovery and growth from 2022 through 2024. Sales and net operating profit have both increased substantially, and improvements in operating profit margin indicate strengthened operational performance. These trends collectively suggest the company has successfully navigated previous challenges and achieved enhanced profitability and revenue growth in the most recent years.

Sales Trend

Sales showed a declining trend from 2019 to 2021, decreasing from 60,114 million US dollars in mid-2019 to 51,298 million in mid-2021. However, a significant recovery is evident starting in 2022, with sales rising sharply to 68,636 million and continuing to increase through 2023 and 2024, reaching 78,844 million. This pattern suggests a rebound after a dip, possibly influenced by external factors affecting sales during 2020 and 2021.

Invested Capital Trend

Invested capital increased notably from 12,842 million US dollars in 2019 to a peak of 18,092 million in 2020, followed by a reduction to 14,339 million in 2021. The value remained relatively stable through 2022 and 2023 before rising again to 16,003 million in 2024. The initial spike and subsequent decline indicate fluctuating capital deployment, while the recent increase may reflect renewed investment activity.

Turnover of Capital (TO) Trend

The turnover of capital ratio declined sharply from 4.68 in 2019 to 2.92 in 2020, signifying decreased efficiency in generating sales from invested capital. This was followed by an improvement to 3.58 in 2021 and a further increase to 4.86 in 2022. The ratio peaked at 5.35 in 2023 before slightly declining to 4.93 in 2024. Overall, the data reveals a trend toward improved capital efficiency after the low point in 2020, aligning with the recovery observed in sales.

Summary

The data exhibits a decline in sales and capital turnover efficiency in the initial years, with 2020 being a notable low point. Subsequent years show recovery and growth in both sales and capital turnover, while invested capital displays more moderate fluctuations with a recent upward trend. These patterns suggest that the company has strengthened its operational efficiency and sales performance following a period of contraction or external challenges.

The analysis of the financial data over the six-year period reveals several trends and key observations related to cash operating taxes, net operating profit before taxes (NOPBT), and the effective cash tax rate (CTR).

Net Operating Profit Before Taxes (NOPBT)

The NOPBT shows significant fluctuation throughout the period. Starting at $2,388 million in 2019, there is a sharp decline to $1,023 million in 2020, indicating a considerable drop likely due to adverse business conditions or external factors impacting operations. Subsequently, the NOPBT recovers gradually, increasing to $1,269 million in 2021, then experiencing a marked rise to $2,345 million in 2022, followed by continuous growth to $2,812 million in 2023 and reaching $3,220 million in 2024. This recovery and growth pattern suggest improving operational efficiencies or favorable market conditions in the latter years.

Cash Operating Taxes

Cash operating taxes have generally increased over the years. Beginning at $538 million in 2019, there is a decline to $358 million in 2020, aligning with the decrease in NOPBT for the same year. From 2020 onwards, cash operating taxes trend upwards, rising to $408 million in 2021, increasing more substantially to $588 million in 2022, and continuing this trajectory to $648 million in 2023 and $720 million in 2024. This increase in tax payments corresponds with the improved profitability observed, reflecting higher taxable income.

Effective Cash Tax Rate (CTR)

The effective cash tax rate exhibits volatility but shows a declining trend in the final years. Initially, the CTR is 22.53% in 2019, increasing sharply to 35% in 2020, possibly due to lower pre-tax profits or changes in tax liabilities that year. In 2021, the CTR decreases to 32.13%, then drops more significantly to 25.07% in 2022, followed by further declines to 23.03% in 2023 and 22.36% in 2024. This downward trend may indicate improved tax planning, utilization of tax credits, or changes in tax regulations benefiting the company.

In summary, the financial data reveals a strong recovery in operating profit after a downturn in 2020, accompanied by a corresponding increase in cash operating taxes. Meanwhile, the effective cash tax rate, after peaking in 2020, has steadily decreased, potentially enhancing net profitability through reduced tax burdens relative to income. These trends suggest improved operational performance and effective tax management in recent years.