Sysco Corp. (SYY) Sees Short-Term Decrease in Sales Related to COVID-19, Suspends Buyback, Borrows $1.6B Under Revolver
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Sysco Corp. (NYSE: SYY) said the COVID-19 pandemic has resulted in disruption to demand for food-away-from-home and to the foodservice industry. As Sysco Corporation faces the challenges associated with the pandemic, our focus is on the well-being of our associates, customers, suppliers, and communities during this unprecedented time. As a critical infrastructure provider, Sysco plays an important role in the food supply chain in the geographies where we operate, and we continue to provide products and services to our restaurant, healthcare, and government customers. While in-location dining at restaurants in some areas is limited or closed, many restaurant customers remain open with drive-through, takeout and delivery service capabilities. The continuing impacts of the COVID-19 pandemic will result in a short-term decrease in sales to Sysco.
As a result of this challenging business environment, Sysco has prioritized three primary strategies:
1) Taking cost out of our business by adjusting our variable expenses and certain fixed costs to account for volume declines, including recent actions over the past two weeks to reduce the workforce, through the implementation of hiring freezes, furloughs and other headcount reductions, and to achieve other operational efficiencies;
2) Capturing new business opportunities with retail customers and expanding our existing business relationships with healthcare, government and relief organizations; and
3) Preparing the business for the eventual return of demand for food-away-from-home.
In addition, we have taken several meaningful measures to strengthen our liquidity position, including significant reductions in capital spend, suspension of our share repurchase program and $1.6 billion in borrowings under our $2 billion revolving credit facility. Although we cannot estimate the duration of the pandemic, we believe these efforts position Sysco well to manage through the current downturn in our business and capitalize on our position as the industry leader as the global economy recovers.
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