Sysco Reports Second Quarter EPS Growth, Driven By Increasing Volumes and Positive Operating Leverage

Published

HOUSTON, Jan. 30, 2024 (GLOBE NEWSWIRE) -- Sysco Corporation (NYSE: SYY) (“Sysco” or the “company”) today announced financial results for its 13-week second fiscal quarter ended December 30, 2023.

Key financial results for the second quarter of fiscal year 2024 include the following (comparisons are to the same period in fiscal year 2023):

  • Sales increased 3.7%; U.S. Foodservice volume increased 3.4%; U.S. local volumes grew 2.9%;
  • Gross profit increased 4.9% to $3.5 billion;
  • Operating income increased 9.2% to $700.0 million, and adjusted1 operating income increased 9.2% to $744.9 million;
  • EBITDA increased 82.7% to $914.3 million, and adjusted EBITDA increased 11.6% to $927.5 million2;
  • EPS3 increased 192.9% to $0.82, compared to $0.28 in the same period last year, and adjusted1 EPS increased 11.3% to $0.89;
  • First half cash flow from operations increased 70.0% to $855.9 million, and free cash flow4 increased 140.5% to $527.4 million;
  • The company now expects to return approximately $2.25 billion back to shareholders in fiscal year 2024, raising share repurchase expectations from $750 million to $1.25 billion; and
  • Reaffirming fiscal year 2024 guidance expectations for top- and bottom-line growth.

“Second quarter results included adjusted EPS growth of over 11%, fueled by sales and volume growth, combined with positive operating leverage, as we continue to effectively manage margins. Our balanced efforts to deliver compelling top- and bottom-line growth were driven by sequential improvements in volume growth, including local performance, as well as supply chain productivity and implementation of structural cost-out actions. Sysco’s industry leading profitability, size and scale advantages, and strong balance sheet represent a position of strength. Combining our advantages with Sysco’s discipline on profitable growth, we expect to deliver strong results for the remainder of fiscal year 2024 and beyond,” said Kevin Hourican, Sysco’s President and Chief Executive Officer.

1 Adjusted financial results, including adjusted operating expense, adjusted operating income (loss), adjusted earnings per share (EPS) and adjusted EBITDA, are non-GAAP financial measures that exclude certain items, which primarily include acquisition-related costs, restructuring and severance costs, and transformational project costs. Last year’s Certain Items include a pension settlement charge that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer, adjustments to our bad debt reserve specific to aged receivables existing prior to the COVID-19 pandemic and adjustments to a product return allowance related to COVID-related personal protection equipment inventory.2 Earnings before interest, taxes, depreciation and amortization (EBITDA) and adjusted EBITDA are non-GAAP financial measures. Reconciliations of all non-GAAP financial measures to the nearest corresponding GAAP financial measure are included at the end of this release.3 Earnings per share (EPS) are shown on a diluted basis, unless otherwise specified.4 Free cash flow is a non-GAAP financial measure that represents net cash provided from operating activities less purchases of plant and equipment and includes proceeds from sales of plant and equipment. Reconciliations for all non-GAAP financial measures are included at the end of this release.

“Our second quarter operating profit included our fifth consecutive quarter of positive operating leverage, as gross profit expanded at a faster rate than operating expenses. Additionally, our balanced approach to capital allocation demonstrates the importance of investing in the business and rewarding our shareholders, all anchored by our strong balance sheet and consistent cash generation. Looking ahead, we now expect to return approximately $2.25 billion back to shareholders in fiscal year 2024, through meaningful share repurchases and dividends. Our positive momentum through the first half gives us confidence in reiterating our fiscal year 2024 guidance of mid-single digit sales growth to approximately $80 billion and five to ten percent adjusted EPS growth to $4.20 to $4.40,” said Kenny Cheung, Sysco’s Chief Financial Officer.

Second Quarter Fiscal Year 2024 Results (comparisons are to the same period in fiscal year 2023)

Total Sysco

Sales for the second quarter increased 3.7% to $19.3 billion.

Gross profit increased 4.9% to $3.5 billion, and gross margin increased 21 basis points to 18.2%. Product cost inflation was 1.1% at the total enterprise level, as measured by the estimated change in Sysco’s product costs, primarily in the meat and frozen categories. The increase in gross profit for the second quarter was primarily driven by higher volumes, as well as continued progress with effective management of product cost inflation and our strategic sourcing initiative.

Operating expenses increased 3.9%, driven by increased volumes and cost inflation, partially offset by improved productivity. Adjusted operating expenses increased 3.8%.

Operating income increased 9.2% to $700.0 million, and adjusted operating income increased 9.2% to $744.9 million.

U.S. Foodservice Operations

The U.S. Foodservice Operations segment results were driven by improved volumes, including positive local case performance, combined with effective margin management, resulting in continued profit growth.

Sales for the second quarter increased 3.2% to $13.5 billion. Total case volume within U.S. Foodservice grew 3.4% for the second quarter, while local case volume within U.S. Foodservice increased 2.9%.

Gross profit increased 3.4% to $2.6 billion, and gross margin increased 4 basis points to 19.1%.

Operating expenses increased 1.5%, and adjusted operating expenses increased 1.4%.

Operating income increased 7.4% to $839.0 million, and adjusted operating income increased 7.6% to $851.1 million.

International Foodservice Operations

The International Foodservice Operations segment delivered another quarter of sales and profit growth.

Sales for the second quarter increased 9.6% to $3.6 billion. On a constant currency basis5, sales for the second quarter were $3.5 billion, an increase of 6.4%. Foreign exchange rates increased both International Foodservice Operations sales by 3.2% and total Sysco sales by 0.5% during the quarter.

Gross profit increased 13.4% to $708.1 million, and gross margin increased 67 basis points to 19.7%. On a constant currency basis5, gross profit increased 9.5% to $684.0 million. Foreign exchange rates increased both International Foodservice Operations gross profit by 3.9% and total Sysco gross profit by 0.7% during the quarter.

Operating expenses increased 10.3%, and adjusted operating expenses increased 11.0%. On a constant currency basis5, adjusted operating expenses increased 6.9%. Foreign exchange rates increased both International Foodservice Operations operating expenses by 4.1% and total Sysco operating expenses by 0.9% during the quarter.

Operating income increased 44.4% to $82.9 million, and adjusted operating income increased 30.1% to $102.4 million. On a constant currency basis5, adjusted operating income was $100.6 million, an increase of 27.8%. Foreign exchange rates increased both International Foodservice Operations operating income by 2.3% and total Sysco operating income by 0.2% during the quarter.

Balance Sheet, Cash Flow and Capital Spending

As of the end of the quarter, the company had a cash balance of $962.2 million.

During the first 26 weeks of fiscal year 2024, Sysco returned $705.5 million to shareholders via $199.9 million of share repurchases and $505.6 million of dividends.

Cash flow from operations was $855.9 million for the first 26 weeks of fiscal year 2024, which was an increase of $352.4 million over the prior year period.

Capital expenditures, net of proceeds from sales of plant and equipment, for the first 26 weeks of fiscal year 2024 were $328.5 million.

Free cash flow4 for the first 26 weeks of fiscal year 2024 was $527.4 million, which was an increase of $308.2 million over the prior year period.

5 Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on current year results. These adjusted measures are non-GAAP financial measures. Reconciliations of all non-GAAP financial measures to the nearest corresponding GAAP financial measure are included at the end of this release.

Conference Call & Webcast

Sysco will host a conference call to review the company’s second quarter fiscal year 2024 financial results on Tuesday, January 30, 2024, at 10:00 a.m. Eastern Daylight Time. A live webcast of the call, accompanying slide presentation and a copy of this news release will be available online at investors.sysco.com.

Key Highlights:
 13-Week Period Ended26-Week Period Ended
     
Financial Comparison:December 30, 2023ChangeDecember 30, 2023Change
GAAP:    
Sales$19.3 billion3.7%$38.9 billion3.1%
Gross Profit$3.5 billion4.9%$7.2 billion4.7%
Gross Margin18.2%21 bps18.4%28 bps
Operating Expenses$2.8 billion3.9%$5.7 billion3.6%
Operating Income$700.0 million9.2%$1.5 billion9.1%
Operating Margin3.6%18 bps3.9%21 bps
Net Earnings$415.2 millionNM$918.6 million51.4%
Diluted Earnings Per Share$0.82NM$1.8152.1%
     
Non-GAAP (1):    
Gross Profit$3.5 billion4.9%$7.2 billion4.8%
Gross Margin18.2%21 bps18.4%29 bps
Operating Expenses$2.8 billion3.8%$5.6 billion3.4%
Operating Income$744.9 million9.2%$1.6 billion9.9%
Operating Margin3.9%19 bps4.1%25 bps
EBITDA$914.3 million82.7%$1.9 billion36.1%
Adjusted EBITDA$927.5 million11.6%$2.0 billion11.7%
Net Earnings$449.0 million10.1%$990.6 million10.0%
Diluted Earnings Per Share (2)$0.8911.3%$1.9611.4%
     
Case Growth:    
U.S. Foodservice3.4% 2.5% 
Local2.9% 1.3% 
     
Sysco Brand Sales as a % of Cases:    
U.S. Broadline36.8%-5 bps37.0%0 bps
Local46.9%22 bps47.2%38 bps
Note:
(1) Reconciliations of all non-GAAP financial measures to the nearest respective GAAP financial measures are included at the end of this release.
(2) Individual components in the table above may not sum to the totals due to the rounding.
NM Represents that the percentage change is not meaningful.
 

Forward-Looking Statements

Statements made in this press release or in our earnings call for the second quarter of fiscal year 2024 that look forward in time or that express management’s beliefs, expectations or hopes are forward-looking statements under the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the views of management at the time such statements are made and are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ materially from current expectations. These statements include statements concerning: the implications of the COVID-19 pandemic and any expectations we may have with respect thereto; our expectations regarding future improvements in productivity; our belief that improvements in our organizational capabilities will deliver compelling outcomes in future periods; our expectations regarding improvements in international volume; our expectations that our transformational agenda will drive long-term growth; our expectations regarding the continuation of an inflationary environment; our expectations regarding improvements in the efficiency of our supply chain; our expectations regarding the impact of our Recipe for Growth strategy and the pace of progress in implementing the initiatives under that strategy; our expectations regarding Sysco’s ability to outperform the market in future periods; our expectations that our strategic priorities will enable us to grow faster than the market; our expectations regarding our efforts to reduce overtime rates and the incremental investments in hiring; our expectations regarding the expansion of our driver academy and our belief that the academy will enable us to provide upward career path mobility for our warehouse colleagues and improve colleague retention; our expectations regarding the benefits of the six-day delivery and last mile distribution models; our plans to improve the capabilities of our sales team; our plans to refine our engineering labor standards; our expectations regarding the impact of our growth initiatives and their ability to enable Sysco to consistently outperform the market; our expectations to exceed our growth target by the end of fiscal 2024; our ability to deliver against our strategic priorities; economic trends in the United States and abroad; our belief that there is further opportunity for profit in the future; our future growth, including growth in sales and earnings per share; the pace of implementation of our business transformation initiatives; our expectations regarding our balanced approach to capital allocation and rewarding our shareholders; our plans to improve colleague retention, training and productivity; our belief that our Recipe for Growth transformation is creating capabilities that will help us profitably grow for the long term; our expectations regarding our long-term financial outlook; our expectations of the effects labor harmony will have on sales and case volume, as well as mitigation expenses; our expectations for customer acquisition in the local/street space; our expectations regarding the effectiveness of our Global Support Center expense control measures; and our expectations regarding the growth and resilience of our food away from home market.

It is important to note that actual results could differ materially from those projected in such forward-looking statements based on numerous factors, including those outside of Sysco’s control. For more information concerning factors that could cause actual results to differ from those expressed or forecasted, see our Annual Report on Form 10-K for the year ended July 1, 2023, as filed with the SEC, and our subsequent filings with the SEC. We do not undertake to update our forward-looking statements, except as required by applicable law.

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 72,000 colleagues, the company operates 334 distribution facilities worldwide and serves approximately 725,000 customer locations. For fiscal year 2023 that ended July 1, 2023, the company generated sales of more than $76 billion. Information about our Sustainability program, including Sysco’s 2023 Sustainability Report and 2023 Diversity, Equity & Inclusion Report, can be found at www.sysco.com.

For more information, visit www.sysco.com or connect with Sysco on Facebook at www.facebook.com/SyscoFoods. 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.

 
Sysco Corporation and its Consolidated SubsidiariesCONSOLIDATED RESULTS OF OPERATIONS (Unaudited)(In Thousands, Except for Share and Per Share Data)
 Quarter Ended Year Ended
 Dec. 30, 2023 Dec. 31, 2022 Dec. 30, 2023 Dec. 31, 2022
        
Sales$19,287,942 $18,593,953 $38,908,396 $37,720,783
Cost of sales 15,774,309  15,244,337  31,746,991  30,882,312
Gross profit 3,513,633  3,349,616  7,161,405  6,838,471
Operating expenses 2,813,590  2,708,793  5,657,780  5,460,847
Operating income 700,043  640,823  1,503,625  1,377,624
Interest expense 149,680  132,042  284,014  256,192
Other expense (income), net (1) (2) 5,245  330,305  11,885  348,054
Earnings before income taxes 545,118  178,476  1,207,726  773,378
Income taxes 129,876  37,260  289,092  166,594
Net earnings$415,242 $141,216 $918,634 $606,784
        
Net earnings:       
Basic earnings per share$0.82 $0.28 $1.82 $1.20
Diluted earnings per share 0.82  0.28  1.81  1.19
        
Average shares outstanding 504,312,633  507,609,696  504,719,562  507,594,137
Diluted shares outstanding 505,929,342  510,145,794  506,499,390  510,264,473

(1)Gains and losses related to the disposition of fixed assets have been recognized within operating expenses. Prior year amounts have been reclassified to conform to this presentation.
(2)Sysco’s second quarter of fiscal 2023 included a charge of $315.4 million in other expense related to pension settlement charges.
  

Sysco Corporation and its Consolidated SubsidiariesCONSOLIDATED BALANCE SHEETS(In Thousands, Except for Share Data)
 Dec. 30, 2023 Jul. 1, 2023
 (Unaudited)  
ASSETS   
Current assets   
Cash and cash equivalents$962,165  $745,201 
Accounts receivable, less allowances of $79,179 and $45,599 5,291,552   5,091,970 
Inventories 4,722,499   4,480,812 
Prepaid expenses and other current assets 327,569   284,566 
Income tax receivable 5,815   5,815 
Total current assets 11,309,600   10,608,364 
Plant and equipment at cost, less accumulated depreciation 5,157,150   4,915,049 
Other long-term assets   
Goodwill 5,255,010   4,645,754 
Intangibles, less amortization 1,174,151   859,530 
Deferred income taxes 444,180   420,450 
Operating lease right-of-use assets, net 824,390   731,766 
Other assets 576,120   640,232 
Total other long-term assets 8,273,851   7,297,732 
Total assets$24,740,601  $22,821,145 
    
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities   
Accounts payable$5,737,726  $6,025,757 
Accrued expenses 2,266,062   2,251,181 
Accrued income taxes 46,772   101,894 
Current operating lease liabilities 119,397   99,051 
Current maturities of long-term debt 84,513   62,550 
Total current liabilities 8,254,470   8,540,433 
Long-term liabilities   
Long-term debt 12,028,122   10,347,997 
Deferred income taxes 303,878   302,904 
Long-term operating lease liabilities 737,354   656,269 
Other long-term liabilities 979,376   931,708 
Total long-term liabilities 14,048,730   12,238,878 
Commitments and contingencies   
Noncontrolling interest 33,367   33,212 
Shareholders’ equity   
Preferred stock, par value $1 per share Authorized 1,500,000 shares, issued none     
Common stock, par value $1 per share Authorized 2,000,000,000 shares, issued 765,174,900 shares 765,175   765,175 
Paid-in capital 1,877,201   1,814,681 
Retained earnings 11,724,251   11,310,664 
Accumulated other comprehensive loss (1,189,753)  (1,252,590)
Treasury stock at cost, 261,472,819 and 260,062,834 shares (10,772,840)  (10,629,308)
Total shareholders’ equity 2,404,034   2,008,622 
Total liabilities and shareholders’ equity$24,740,601  $22,821,145 

 
Sysco Corporation and its Consolidated SubsidiariesCONSOLIDATED CASH FLOWS (Unaudited)(In Thousands)
 26-Week Period Ended
 Dec. 30, 2023 Dec. 31, 2022
Cash flows from operating activities:   
Net earnings$918,634  $606,784 
Adjustments to reconcile net earnings to cash provided by operating activities:   
Pension settlement charge    315,354 
Share-based compensation expense 52,821   52,679 
Depreciation and amortization 425,465   378,949 
Operating lease asset amortization 59,127   55,884 
Amortization of debt issuance and other debt-related costs 9,117   10,315 
Deferred income taxes (28,689)  (123,187)
Provision for losses on receivables 29,784   9,732 
Other non-cash items (3,782)  11,525 
Additional changes in certain assets and liabilities, net of effect of businesses acquired:   
Increase in receivables (25,431)  (87,190)
Increase in inventories (98,047)  (222,650)
Decrease (increase) in prepaid expenses and other current assets 3,362   (8,915)
Decrease in accounts payable (404,411)  (390,124)
Increase (decrease) in accrued expenses 17,033   (62,779)
Decrease in operating lease liabilities (64,112)  (57,234)
(Decrease) increase in accrued income taxes (55,123)  3,108 
Decrease in other assets 21,942   22,156 
Decrease in other long-term liabilities (1,793)  (10,941)
Net cash provided by operating activities 855,897   503,466 
Cash flows from investing activities:   
Additions to plant and equipment (346,797)  (309,664)
Proceeds from sales of plant and equipment 18,347   25,493 
Acquisition of businesses, net of cash acquired (1,174,608)  (37,699)
Purchase of marketable securities (1,878)  (14,019)
Proceeds from sales of marketable securities    11,641 
Other investing activities(1)    4,840 
Net cash used for investing activities (1,504,936)  (319,408)
Cash flows from financing activities:   
Bank and commercial paper borrowings, net 500,000   155,000 
Other debt borrowings including senior notes 1,132,475   140,024 
Other debt repayments including senior notes (187,720)  (57,270)
Debt issuance costs (13,035)   
Proceeds from stock option exercises 57,347   47,339 
Stock repurchases (199,947)  (267,727)
Dividends paid (505,588)  (498,323)
Other financing activities(2) (5,775)  (46,517)
Net cash provided by (used for) financing activities 777,757   (527,474)
Effect of exchange rates on cash, cash equivalents and restricted cash 905   (2,314)
Net increase (decrease) in cash, cash equivalents and restricted cash 129,623   (345,730)
Cash, cash equivalents and restricted cash at beginning of period 966,033   931,376 
Cash, cash equivalents and restricted cash at end of period$1,095,656  $585,646 
    
Supplemental disclosures of cash flow information:   
Cash paid during the period for:   
Interest$266,002  $244,530 
Income taxes, net of refunds 371,855   289,413 

(1)Change primarily includes proceeds from the settlement of corporate-owned life insurance policies.
(2)Change includes cash paid for shares withheld to cover taxes, settlement of interest rate hedges and other financing activities.
  

Sysco Corporation and its Consolidated SubsidiariesNon-GAAP Reconciliation (Unaudited)Impact of Certain Items

The discussion of our results includes certain non-GAAP financial measures, including EBITDA and adjusted EBITDA, that we believe provide important perspective with respect to underlying business trends. Other than EBITDA and free cash flow, any non-GAAP financial measures will be denoted as adjusted measures to remove (1) restructuring charges; (2) expenses associated with our various transformation initiatives; (3) severance charges; and (4) acquisition-related costs consisting of: (a) intangible amortization expense and (b) acquisition costs and due diligence costs related to our acquisitions. Our results for fiscal 2023 were also impacted by adjustments to a product return allowance pertaining to COVID-related personal protection equipment inventory, a pension settlement charge that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer and the reduction of bad debt expense previously recognized in fiscal 2020 due to the impact of the COVID-19 pandemic on the collectability of our pre-pandemic trade receivable balances.

The results of our operations can be impacted due to changes in exchange rates applicable in converting local currencies to U.S. dollars. We measure our results on a constant currency basis. Constant currency operating results are calculated by translating current-period local currency operating results with the currency exchange rates used to translate the financial statements in the comparable prior-year period to determine what the current-period U.S. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior-year period.

Management believes that adjusting its operating expenses, operating income, net earnings and diluted earnings per share to remove these Certain Items and presenting its results on a constant currency basis provides an important perspective with respect to our underlying business trends and results. It provides meaningful supplemental information to both management and investors that (1) is indicative of the performance of the company’s underlying operations and (2) facilitates comparisons on a year-over-year basis.

Sysco has a history of growth through acquisitions and excludes from its non-GAAP financial measures the impact of acquisition-related intangible amortization, acquisition costs and due-diligence costs for those acquisitions. We believe this approach significantly enhances the comparability of Sysco’s results for fiscal year 2024 and fiscal year 2023.

Set forth on the following page is a reconciliation of sales, operating expenses, operating income, other (income) expense, net earnings and diluted earnings per share to adjusted results for these measures for the periods presented. Individual components of diluted earnings per share may not be equal to the total presented when added due to rounding. Adjusted diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.

 
Sysco Corporation and its Consolidated SubsidiariesNon-GAAP Reconciliation (Unaudited)Impact of Certain Items(Dollars in Thousands, Except for Share and Per Share Data)
 13-Week Period Ended Dec. 30, 2023 13-Week Period Ended Dec. 31, 2022 Change in Dollars %/bps Change
Sales (GAAP)$19,287,942  $18,593,953  $693,989  3.7%
Impact of currency fluctuations(1) (104,758)     (104,758) (0.5)
Comparable sales using a constant currency basis (Non-GAAP)$19,183,184  $18,593,953  $589,231  3.2%
        
Cost of sales (GAAP)$15,774,309  $15,244,337  $529,972  3.5%
        
Gross profit (GAAP)$3,513,633  $3,349,616  $164,017  4.9%
Impact of currency fluctuations(1) (24,183)     (24,183) (0.7)
Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP)$3,489,450  $3,349,616  $139,834  4.2%
        
Gross margin (GAAP) 18.22%  18.01%   21 bps
Impact of currency fluctuations(1) (0.03)      -3 bps
Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP) 18.19%  18.01%   18 bps
        
Operating expenses (GAAP)$2,813,590  $2,708,793  $104,797  3.9%
Impact of restructuring and transformational project costs(2) (13,500)  (14,388)  888  6.2 
Impact of acquisition-related costs(3) (31,341)  (28,960)  (2,381) (8.2)
Impact of bad debt reserve adjustments(4)    1,923   (1,923) NM
Operating expenses adjusted for Certain Items (Non-GAAP) 2,768,749   2,667,368   101,381  3.8 
Impact of currency fluctuations(1) (23,102)     (23,102) (0.9)
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)$2,745,647  $2,667,368  $78,279  2.9%
        
Operating expense as a percentage of sales (GAAP) 14.59%  14.57%   2 bps
Impact of certain item adjustments (0.24)  (0.22)   -2 bps
Adjusted operating expense as a percentage of sales (Non-GAAP) 14.35%  14.35%   0 bps
        
Operating income (GAAP)$700,043  $640,823  $59,220  9.2%
Impact of restructuring and transformational project costs(2) 13,500   14,388   (888) (6.2)
Impact of acquisition-related costs(3) 31,341   28,960   2,381  8.2 
Impact of bad debt reserve adjustments(4)    (1,923)  1,923  NM
Operating income adjusted for Certain Items (Non-GAAP) 744,884   682,248   62,636  9.2 
Impact of currency fluctuations(1) (1,081)     (1,081) (0.2)
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)$743,803  $682,248  $61,555  9.0%
        
Operating margin (GAAP) 3.63%  3.45%   18 bps
Operating margin adjusted for Certain Items (Non-GAAP) 3.86%  3.67%   19 bps
Operating margin adjusted for Certain Items using a constant currency basis (Non-GAAP) 3.88%  3.67%   21 bps
        
Other expense (GAAP)$5,245  $330,305  $(325,060) (98.4)%
Impact of other non-routine gains and losses(5)    (314,878)  314,878  NM
Other expense adjusted for Certain Items (Non-GAAP)$5,245  $15,427  $(10,182) (66.0)%
        
Net earnings (GAAP)$415,242  $141,216  $274,026  NM
Impact of restructuring and transformational project costs(2) 13,500   14,388   (888) (6.2)
Impact of acquisition-related costs(3) 31,341   28,960   2,381  8.2 
Impact of bad debt reserve adjustments(4)    (1,923)  1,923  NM
Impact of other non-routine gains and losses(5)    314,878   (314,878) NM
Tax impact of restructuring and transformational project costs(6) (3,335)  (3,618)  283  7.8 
Tax impact of acquisition-related costs(6) (7,744)  (7,283)  (461) (6.3)
Tax impact of bad debt reserves adjustments(6)    484   (484) NM
Tax impact of other non-routine gains and losses(6)    (79,185)  79,185  NM
Net earnings adjusted for Certain Items (Non-GAAP)$449,004  $407,917  $41,087  10.1%
        
Diluted earnings per share (GAAP)$0.82  $0.28  $0.54  NM
Impact of restructuring and transformational project costs(2) 0.03   0.03      
Impact of acquisition-related costs(3) 0.06   0.06      
Impact of other non-routine gains and losses(5)    0.62   (0.62) NM
Tax impact of restructuring and transformational project costs(6) (0.01)  (0.01)     
Tax impact of acquisition-related costs(6) (0.02)  (0.01)  (0.01) (100.0)
Tax impact of other non-routine gains and losses(6)    (0.16)  0.16  NM
Diluted earnings per share adjusted for Certain Items (Non-GAAP)(7)$0.89  $0.80  $0.09  11.3%
        
Diluted shares outstanding 505,929,342   510,145,794     

(1)Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on the current year results.
(2)Fiscal 2024 includes $2 million related to restructuring and severance charges and $11 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2023 includes $5 million related to restructuring and severance charges and $9 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(3)Fiscal 2024 includes $29 million of intangible amortization expense and $2 million in acquisition and due diligence costs. Fiscal 2023 includes $26 million of intangible amortization expense and $3 million in acquisition and due diligence costs.
(4)Fiscal 2023 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(5)Fiscal 2023 primarily represents a pension settlement charge of $315 million that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer.
(6)The tax impact of adjustments for Certain Items are calculated by multiplying the pretax impact of each Certain Item by the statutory rates in effect for each jurisdiction where the Certain Item was incurred.
(7)Individual components of diluted earnings per share may not equal the total presented when added due to rounding. Total diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.
NMRepresents that the percentage change is not meaningful.
  

Sysco Corporation and its Consolidated SubsidiariesNon-GAAP Reconciliation (Unaudited)Impact of Certain Items(Dollars in Thousands, Except for Share and Per Share Data)
 26-Week Period Ended Dec. 30, 2023 26-Week PeriodEnded Dec. 31, 2022 Change in Dollars %/bps Change
Sales (GAAP)$38,908,396  $37,720,783  $1,187,613  3.1%
Impact of currency fluctuations(1) (208,824)     (208,824) (0.5)
Comparable sales using a constant currency basis (Non-GAAP)$38,699,572  $37,720,783  $978,789  2.6%
        
Cost of sales (GAAP)$31,746,991  $30,882,312  $864,679  2.8%
Impact of inventory valuation adjustment(2)    2,571   (2,571)  
Cost of sales adjusted for Certain Items (Non-GAAP)$31,746,991  $30,884,883  $862,108  2.8%
        
Gross profit (GAAP)$7,161,405  $6,838,471  $322,934  4.7%
Impact of inventory valuation adjustment(2)    (2,571)  2,571  0.1 
Gross profit adjusted for Certain Items (Non-GAAP) 7,161,405   6,835,900   325,505  4.8 
Impact of currency fluctuations(1) (50,367)     (50,367) (0.8)
Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP)$7,111,038  $6,835,900  $275,138  4.0%
        
Gross margin (GAAP) 18.41%  18.13%   28 bps
Impact of inventory valuation adjustment(2)    (0.01)   1 bps
Gross margin adjusted for Certain Items (Non-GAAP) 18.41   18.12    29 bps
Impact of currency fluctuations(1) (0.04)      -4 bps
Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP) 18.37%  18.12%   25 bps
        
Operating expenses (GAAP)$5,657,780  $5,460,847  $196,933  3.6%
Impact of restructuring and transformational project costs(3) (33,175)  (26,034)  (7,141) (27.4)
Impact of acquisition-related costs(4) (62,379)  (58,415)  (3,964) (6.8)
Impact of bad debt reserve adjustments(5)    4,515   (4,515) NM
Operating expenses adjusted for Certain Items (Non-GAAP) 5,562,226   5,380,913   181,313  3.4 
Impact of currency fluctuations(1) (48,940)     (48,940) (0.9)
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)$5,513,286  $5,380,913  $132,373  2.5%
        
Operating expense as a percentage of sales (GAAP) 14.54%  14.48%   6 bps
Impact of certain item adjustments (0.24)  (0.21)   -3 bps
Adjusted operating expense as a percentage of sales (Non-GAAP) 14.30%  14.27%   3 bps
        
Operating income (GAAP)$1,503,625  $1,377,624  $126,001  9.1%
Impact of inventory valuation adjustment(2)    (2,571)  2,571  NM
Impact of restructuring and transformational project costs(3) 33,175   26,034   7,141  27.4 
Impact of acquisition-related costs(4) 62,379   58,415   3,964  6.8 
Impact of bad debt reserve adjustments(5)    (4,515)  4,515  NM
Operating income adjusted for Certain Items (Non-GAAP) 1,599,179   1,454,987   144,192  9.9 
Impact of currency fluctuations(1) (1,427)     (1,427) (0.1)
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)$1,597,752  $1,454,987  $142,765  9.8%
        
Operating margin (GAAP) 3.86%  3.65%   21 bps
Operating margin adjusted for Certain Items (Non-GAAP) 4.11%  3.86%   25 bps
Operating margin adjusted for Certain Items using a constant currency basis (Non-GAAP) 4.13%  3.86%   27 bps
        
Other expense (GAAP)$11,885  $348,054  $(336,169) (96.6)%
Impact of other non-routine gains and losses(6)    (314,878)  314,878  NM
Other expense adjusted for Certain Items (Non-GAAP)$11,885  $33,176  $(21,291) (64.2)
        
Net earnings (GAAP)$918,634  $606,784  $311,850  51.4%
Impact of inventory valuation adjustment(2)    (2,571)  2,571  NM
Impact of restructuring and transformational project costs(3) 33,175   26,034   7,141  27.4 
Impact of acquisition-related costs(4) 62,379   58,415   3,964  6.8 
Impact of bad debt reserve adjustments(5)    (4,515)  4,515  NM
Impact of other non-routine gains and losses(6)    314,878   (314,878) NM
Tax impact of inventory valuation adjustment(7)    646   (646) NM
Tax impact of restructuring and transformational project costs(7) (8,184)  (6,538)  (1,646) (25.2)
Tax impact of acquisition-related costs(7) (15,388)  (14,670)  (718) (4.9)
Tax impact of bad debt reserves adjustments(7)    1,134   (1,134) NM
Tax impact of other non-routine gains and losses(7)    (79,075)  79,075  NM
Net earnings adjusted for Certain Items (Non-GAAP)$990,616  $900,522  $90,094  10.0%
        
Diluted earnings per share (GAAP)$1.81  $1.19  $0.62  52.1%
Impact of inventory valuation adjustment(2)    (0.01)  0.01  NM
Impact of restructuring and transformational project costs(3) 0.07   0.05   0.02  40.0 
Impact of acquisition-related costs(4) 0.12   0.11   0.01  9.1 
Impact of bad debt reserve adjustments(5)    (0.01)  0.01  NM
Impact of other non-routine gains and losses(6)    0.62   (0.62) NM
Tax impact of restructuring and transformational project costs(7) (0.02)  (0.01)  (0.01) (100.0)
Tax impact of acquisition-related costs(7) (0.03)  (0.03)     
Tax impact of other non-routine gains and losses(7)    (0.15)  0.15  NM
Diluted earnings per share adjusted for Certain Items (Non-GAAP)(8)$1.96  $1.76  $0.20  11.4%
        
Diluted shares outstanding 506,499,390   510,264,473     

(1)Represents a constant currency adjustment which eliminates the impact of foreign currency fluctuations on the current year results.
(2)Fiscal 2023 represents an adjustment to a product return allowance related to COVID-related personal protection equipment inventory.
(3)Fiscal 2024 includes $8 million related to restructuring and severance charges and $25 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2023 includes $10 million related to restructuring and severance charges and $16 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(4)Fiscal 2024 includes $57 million of intangible amortization expense and $5 million in acquisition and due diligence costs. Fiscal 2023 includes $52 million of intangible amortization expense and $6 million in acquisition and due diligence costs.
(5)Fiscal 2023 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(6)Fiscal 2023 primarily includes a pension settlement charge of $315 million that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer.
(7)The tax impact of adjustments for Certain Items is calculated by multiplying the pretax impact of each Certain Item by the statutory rates in effect for each jurisdiction where the Certain Item was incurred.
(8)Individual components of diluted earnings per share may not add up to the total presented due to rounding. Total diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.
NMRepresents that the percentage change is not meaningful.
  

Sysco Corporation and its Consolidated SubsidiariesSegment ResultsNon-GAAP Reconciliation (Unaudited)Impact of Certain Items on Applicable Segments(Dollars in Thousands)
 13-Week Period Ended Dec. 30, 2023 13-Week Period Ended Dec. 31, 2022 Change in Dollars %/bps Change
U.S. FOODSERVICE OPERATIONS       
Sales (GAAP)$13,494,443  $13,077,054  $417,389  3.2%
Gross profit (GAAP) 2,577,694   2,493,089   84,605  3.4%
Gross margin (GAAP) 19.10%  19.06%   4 bps
        
Operating expenses (GAAP)$1,738,658  $1,712,121  $26,537  1.5%
Impact of restructuring and transformational project costs (65)  (92)  27  29.3 
Impact of acquisition-related costs(1) (12,025)  (11,514)  (511) (4.4)
Impact of bad debt reserve adjustments(2)    1,658   (1,658) NM
Operating expenses adjusted for Certain Items (Non-GAAP)$1,726,568  $1,702,173  $24,395  1.4%
        
Operating income (GAAP)$839,036  $780,968  $58,068  7.4%
Impact of restructuring and transformational project costs 65   92   (27) (29.3)
Impact of acquisition-related costs(1) 12,025   11,514   511  4.4 
Impact of bad debt reserve adjustments(2)    (1,658)  1,658  NM
Operating income adjusted for Certain Items (Non-GAAP)$851,126  $790,916  $60,210  7.6%
        
INTERNATIONAL FOODSERVICE OPERATIONS       
Sales (GAAP)$3,596,458  $3,282,411  $314,047  9.6%
Impact of currency fluctuations(3) (104,598)     (104,598) (3.2)
Comparable sales using a constant currency basis (Non-GAAP)$3,491,860  $3,282,411  $209,449  6.4%
        
Gross profit (GAAP)$708,100  $624,460  $83,640  13.4%
Impact of currency fluctuations(3) (24,126)     (24,126) (3.9)
Comparable gross profit using a constant currency basis (Non-GAAP)$683,974  $624,460  $59,514  9.5%
        
Gross margin (GAAP) 19.69%  19.02%   67 bps
Impact of currency fluctuations(3) (0.10)      -10 bps
Comparable gross margin using a constant currency basis (Non-GAAP) 19.59%  19.02%   57 bps
        
Operating expenses (GAAP)$625,170  $567,047  $58,123  10.3%
Impact of restructuring and transformational project costs(4) (2,603)  (5,588)  2,985  53.4 
Impact of acquisition-related costs(5) (16,847)  (15,935)  (912) (5.7)
Impact of bad debt reserve adjustments(2)    265   (265) NM
Operating expenses adjusted for Certain Items (Non-GAAP) 605,720   545,789   59,931  11.0 
Impact of currency fluctuations(3) (22,327)     (22,327) (4.1)
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)$583,393  $545,789  $37,604  6.9%
        
Operating income (GAAP)$82,930  $57,413  $25,517  44.4%
Impact of restructuring and transformational project costs(4) 2,603   5,588   (2,985) (53.4)
Impact of acquisition-related costs(5) 16,847   15,935   912  5.7 
Impact of bad debt reserve adjustments(2)    (265)  265  NM
Operating income adjusted for Certain Items (Non-GAAP) 102,380   78,671   23,709  30.1 
Impact of currency fluctuations(3) (1,800)     (1,800) (2.3)
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)$100,580  $78,671  $21,909  27.8%
        
SYGMA       
Sales (GAAP)$1,913,715  $1,933,536  $(19,821) (1.0)%
Gross profit (GAAP) 148,507   150,461   (1,954) (1.3)%
Gross margin (GAAP) 7.76%  7.78%   -2 bps
        
Operating expenses (GAAP)$132,161  $143,614  $(11,453) (8.0)%
Operating income (GAAP) 16,346   6,847   9,499  NM
        
OTHER       
Sales (GAAP)$283,326  $300,952  $(17,626) (5.9)%
Gross profit (GAAP) 73,007   77,311   (4,304) (5.6)%
Gross margin (GAAP) 25.77%  25.69%   8 bps
        
Operating expenses (GAAP)$64,620  $67,441  $(2,821) (4.2)%
Operating income (GAAP) 8,387   9,870   (1,483) (15.0)%
        
GLOBAL SUPPORT CENTER       
Gross profit (GAAP)$6,325  $4,295  $2,030  47.3%
        
Operating expenses (GAAP)$252,981  $218,570  $34,411  15.7%
Impact of restructuring and transformational project costs(6) (10,832)  (8,708)  (2,124) (24.4)
Impact of acquisition-related costs(7) (2,469)  (1,511)  (958) (63.4)
Operating expenses adjusted for Certain Items (Non-GAAP)$239,680  $208,351  $31,329  15.0%
        
Operating loss (GAAP)$(246,656) $(214,275) $(32,381) (15.1)%
Impact of restructuring and transformational project costs(6) 10,832   8,708   2,124  24.4 
Impact of acquisition-related costs(7) 2,469   1,511   958  63.4 
Operating loss adjusted for Certain Items (Non-GAAP)$(233,355) $(204,056) $(29,299) (14.4)%
        
TOTAL SYSCO       
Sales (GAAP)$19,287,942  $18,593,953  $693,989  3.7%
Gross profit (GAAP) 3,513,633   3,349,616   164,017  4.9%
Gross margin (GAAP) 18.22%  18.01%   21 bps
        
Operating expenses (GAAP)$2,813,590  $2,708,793  $104,797  3.9%
Impact of restructuring and transformational project costs(4) (6) (13,500)  (14,388)  888  6.2 
Impact of acquisition-related costs(1) (5) (7) (31,341)  (28,960)  (2,381) (8.2)
Impact of bad debt reserve adjustments(2)    1,923   (1,923) NM
Operating expenses adjusted for Certain Items (Non-GAAP)$2,768,749  $2,667,368  $101,381  3.8%
        
Operating income (GAAP)$700,043  $640,823  $59,220  9.2%
Impact of restructuring and transformational project costs(4) (6) 13,500   14,388   (888) (6.2)
Impact of acquisition-related costs(1) (5) (7) 31,341   28,960   2,381  8.2 
Impact of bad debt reserve adjustments(2)    (1,923)  1,923  NM
Operating income adjusted for Certain Items (Non-GAAP)$744,884  $682,248  $62,636  9.2%

(1)Fiscal 2024 and fiscal 2023 include intangible amortization expense and acquisition costs.
(2)Fiscal 2023 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(3)Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on current year results.
(4)Includes restructuring costs primarily in Europe.
(5)Represents intangible amortization expense.
(6)Includes various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(7)Represents due diligence costs.
NMRepresents that the percentage change is not meaningful.
  

Sysco Corporation and its Consolidated SubsidiariesSegment ResultsNon-GAAP Reconciliation (Unaudited)Impact of Certain Items on Applicable Segments(Dollars in Thousands)
 26-Week Period Ended Dec. 30, 2023 26-Week Period Ended Dec. 31, 2022 Change in Dollars %/bps Change
U.S. FOODSERVICE OPERATIONS       
Sales (GAAP)$27,218,242  $26,679,536  $538,706  2.0%
Gross profit (GAAP) 5,262,469   5,105,432   157,037  3.1%
Gross margin (GAAP) 19.33%  19.14%   19 bps
        
Operating expenses (GAAP)$3,482,462  $3,418,753  $63,709  1.9%
Impact of restructuring and transformational project costs (120)  (44)  (76) NM
Impact of acquisition-related costs(1) (24,572)  (24,100)  (472) (2.0)
Impact of bad debt reserve adjustments(2)    4,250   (4,250) NM
Operating expenses adjusted for Certain Items (Non-GAAP)$3,457,770  $3,398,859  $58,911  1.7%
        
Operating income (GAAP)$1,780,007  $1,686,679  $93,328  5.5%
Impact of restructuring and transformational project costs 120   44   76  NM
Impact of acquisition-related costs(1) 24,572   24,100   472  2.0 
Impact of bad debt reserve adjustments(2)    (4,250)  4,250  NM
Operating income adjusted for Certain Items (Non-GAAP)$1,804,699  $1,706,573  $98,126  5.7%
        
INTERNATIONAL FOODSERVICE OPERATIONS       
Sales (GAAP)$7,279,668  $6,566,146  $713,522  10.9%
Impact of currency fluctuations(3) (210,101)     (210,101) (3.2)
Comparable sales using a constant currency basis (Non-GAAP)$7,069,567  $6,566,146  $503,421  7.7%
        
Gross profit (GAAP)$1,440,139  $1,273,725  $166,414  13.1%
Impact of currency fluctuations(3) (50,837)     (50,837) (4.0)
Comparable gross profit using a constant currency basis (Non-GAAP)$1,389,302  $1,273,725  $115,577  9.1%
        
Gross margin (GAAP) 19.78%  19.40%   38 bps
Impact of currency fluctuations(3) (0.13)      -13 bps
Comparable gross margin using a constant currency basis (Non-GAAP) 19.65%  19.40%   25 bps
        
Operating expenses (GAAP)$1,263,726  $1,129,332  $134,394  11.9%
Impact of restructuring and transformational project costs(4) (8,406)  (9,495)  1,089  11.5 
Impact of acquisition-related costs(5) (33,744)  (31,949)  (1,795) (5.6)
Impact of bad debt reserve adjustments(2)    265   (265) NM
Operating expenses adjusted for Certain Items (Non-GAAP) 1,221,576   1,088,153   133,423  12.3 
Impact of currency fluctuations(3) (47,743)     (47,743) (4.4)
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)$1,173,833  $1,088,153  $85,680  7.9%
        
Operating income (GAAP)$176,413  $144,393  $32,020  22.2%
Impact of restructuring and transformational project costs(4) 8,406   9,495   (1,089) (11.5)
Impact of acquisition-related costs(5) 33,744   31,949   1,795  5.6 
Impact of bad debt reserve adjustments(2)    (265)  265  NM
Operating income adjusted for Certain Items (Non-GAAP) 218,563   185,572   32,991  17.8 
Impact of currency fluctuations(3) (3,094)     (3,094) (1.7)
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)$215,469  $185,572  $29,897  16.1%
        
SYGMA       
Sales (GAAP)$3,819,729  $3,866,993  $(47,264) (1.2)%
Gross profit (GAAP) 301,317   304,354   (3,037) (1.0)%
Gross margin (GAAP) 7.89%  7.87%   2 bps
        
Operating expenses (GAAP)$272,204  $291,810  $(19,606) (6.7)%
Operating income (GAAP) 29,113   12,544   16,569  NM
        
OTHER       
Sales (GAAP)$590,757  $608,108  $(17,351) (2.9)%
Gross profit (GAAP) 150,982   158,149   (7,167) (4.5)%
Gross margin (GAAP) 25.56%  26.01%   -45 bps
        
Operating expenses (GAAP)$130,772  $136,741  $(5,969) (4.4)%
Operating income (GAAP) 20,210   21,408   (1,198) (5.6)%
        
GLOBAL SUPPORT CENTER       
Gross profit (loss) (GAAP)$6,498  $(3,189) $9,687  NM
Impact of inventory valuation adjustment(6)    (2,571)  2,571  NM
Gross profit (loss) adjusted for Certain Items (Non-GAAP)$6,498  $(5,760) $12,258  NM
        
Operating expenses (GAAP)$508,616  $484,211  $24,405  5.0%
Impact of restructuring and transformational project costs(7) (24,649)  (16,495)  (8,154) (49.4)
Impact of acquisition-related costs(8) (4,063)  (2,365)  (1,698) (71.8)
Operating expenses adjusted for Certain Items (Non-GAAP)$479,904  $465,351  $14,553  3.1%
        
Operating loss (GAAP)$(502,118) $(487,400) $(14,718) (3.0)%
Impact of inventory valuation adjustment(6)    (2,571)  2,571  NM
Impact of restructuring and transformational project costs(7) 24,649   16,495   8,154  49.4 
Impact of acquisition-related costs(8) 4,063   2,365   1,698  71.8 
Operating loss adjusted for Certain Items (Non-GAAP)$(473,406) $(471,111) $(2,295) (0.5)%
        
TOTAL SYSCO       
Sales (GAAP)$38,908,396  $37,720,783  $1,187,613  3.1%
Gross profit (GAAP) 7,161,405   6,838,471   322,934  4.7%
Gross margin (GAAP) 18.41%  18.13%   28 bps
        
Operating expenses (GAAP)$5,657,780  $5,460,847  $196,933  3.6%
Impact of restructuring and transformational project costs(4) (7) (33,175)  (26,034)  (7,141) (27.4)
Impact of acquisition-related costs(1) (5) (8) (62,379)  (58,414)  (3,965) (6.8)
Impact of bad debt reserve adjustments(2)    4,515   (4,515) NM
Operating expenses adjusted for Certain Items (Non-GAAP)$5,562,226  $5,380,914  $181,312  3.4%
        
Operating income (GAAP)$1,503,625  $1,377,624  $126,001  9.1%
Impact of inventory valuation adjustment(6)    (2,571)  2,571  NM
Impact of restructuring and transformational project costs(4) (7) 33,175   26,034   7,141  27.4 
Impact of acquisition-related costs(1) (5) (8) 62,379   58,414   3,965  6.8 
Impact of bad debt reserve adjustments(2)    (4,515)  4,515  NM
Operating income adjusted for Certain Items (Non-GAAP)$1,599,179  $1,454,986  $144,193  9.9%

(1)Fiscal 2024 and fiscal 2023 include intangible amortization expense and acquisition costs.
(2)Fiscal 2023 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(3)Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on current year results.
(4)Includes restructuring and severance costs, primarily in Europe.
(5)Represents intangible amortization expense.
(6)Fiscal 2023 represents an adjustment to a product return allowance related to COVID-related personal protection equipment inventory.
(7)Includes various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(8)Represents due diligence costs.
NMRepresents that the percentage change is not meaningful.
  

Sysco Corporation and its Consolidated SubsidiariesNon-GAAP Reconciliation (Unaudited)Free Cash Flow(In Thousands)

Free cash flow represents net cash provided from operating activities less purchases of plant and equipment and includes proceeds from sales of plant and equipment. Sysco considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases and sales of buildings, fleet, equipment and technology, which may potentially be used to pay for, among other things, strategic uses of cash including dividend payments, share repurchases and acquisitions. However, free cash flow may not be available for discretionary expenditures, as it may be necessary that we use it to make mandatory debt service or other payments. Free cash flow should not be used as a substitute for the most comparable GAAP financial measure in assessing the company’s liquidity for the periods presented. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP. In the table that follows, free cash flow for each period presented is reconciled to net cash provided by operating activities.

 
 26-Week Period Ended Dec. 30, 2023 26-Week Period Ended Dec. 31, 2022 26-Week Period Change in Dollars
Net cash provided by operating activities (GAAP)$855,897  $503,466  $352,431 
Additions to plant and equipment (346,797)  (309,664)  (37,133)
Proceeds from sales of plant and equipment 18,347   25,493   (7,146)
Free Cash Flow (Non-GAAP)$527,447  $219,295  $308,152 
 

Sysco Corporation and its Consolidated SubsidiariesNon-GAAP Reconciliation (Unaudited)Impact of Certain Items on Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)(Dollars in Thousands)

EBITDA represents net earnings (loss) plus (i) interest expense, (ii) income tax expense and benefit, (iii) depreciation and (iv) amortization. The net earnings (loss) component of our EBITDA calculation is impacted by Certain Items that we do not consider representative of our underlying performance. As a result, in the non-GAAP reconciliations below for each period presented, adjusted EBITDA is computed as EBITDA plus the impact of Certain Items, excluding certain items related to interest expense, income taxes, depreciation and amortization. Sysco's management considers growth in this metric to be a measure of overall financial performance that provides useful information to management and investors about the profitability of the business, as it facilitates comparison of performance on a consistent basis from period to period by providing a measurement of recurring factors and trends affecting our business. Additionally, it is a commonly used component metric used to inform on capital structure decisions. Adjusted EBITDA should not be used as a substitute for the most comparable GAAP financial measure in assessing the company’s financial performance for the periods presented. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP. In the tables that follow, adjusted EBITDA for each period presented is reconciled to net earnings.

 
 13-Week Period Ended Dec. 30, 2023 13-Week Period Ended Dec. 31, 2022 Change in Dollars % Change
Net earnings (GAAP)$415,242  $141,216  $274,026  NM
Interest (GAAP) 149,680   132,042   17,638  13.4 
Income taxes (GAAP) 129,876   37,260   92,616  NM
Depreciation and amortization (GAAP) 219,458   190,025   29,433  15.5 
EBITDA (Non-GAAP)$914,256  $500,543  $413,713  82.7%
Certain Item adjustments:       
Impact of restructuring and transformational project costs(1) 10,910   14,793   (3,883) (26.2)
Impact of acquisition-related costs(2) 2,332   3,049   (717) (23.5)
Impact of bad debt reserve adjustments(3)    (1,923)  1,923  NM
Impact of other non-routine gains and losses(4)    314,878   (314,878) NM
EBITDA adjusted for Certain Items (Non-GAAP)(5)$927,498  $831,340  $96,158  11.6%
Other expense (income), net, as adjusted (Non-GAAP)(6) 5,245   15,427   (10,182) (66.0)
Depreciation and amortization, as adjusted (Non-GAAP)(7) (187,859)  (164,519)  (23,340) (14.2)
Operating income adjusted for Certain Items (Non-GAAP)$744,884  $682,248  $62,636  9.2%

(1)Fiscal 2024 and fiscal 2023 include charges related to restructuring and severance, as well as various transformation initiative costs, primarily consisting of changes to our business technology strategy, excluding charges related to accelerated depreciation.
(2)Fiscal 2024 and fiscal 2023 include acquisition and due diligence costs.
(3)Fiscal 2023 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(4)Fiscal 2023 primarily represents a pension settlement charge of $315 million that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer.
(5)In arriving at adjusted EBITDA, Sysco does not adjust out interest income of $9 million and $5 million or non-cash stock compensation expense of $29 million and $24 million in fiscal 2024 and fiscal 2023, respectively.
(6)Fiscal 2024 represents $5 million in GAAP other expense (income), net. Fiscal 2023 represents $330 million in GAAP other expense (income), net less $315 million due to the certain items impact of a pension settlement charge that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer.
(7)Fiscal 2024 includes $219 million in GAAP depreciation and amortization expense, less $32 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions. Fiscal 2023 includes $190 million in GAAP depreciation and amortization expense, less $26 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions.
NMRepresents that the percentage change is not meaningful.
  

 26-Week Period Ended Dec. 30, 2023 26-Week Period Ended Dec. 31, 2022 Change in Dollars % Change
Net earnings (GAAP)$918,634  $606,784  $311,850  51.4%
Interest (GAAP) 284,014   256,192   27,822  10.9 
Income taxes (GAAP) 289,092   166,594   122,498  73.5 
Depreciation and amortization (GAAP) 425,465   378,949   46,516  12.3 
EBITDA (Non-GAAP)$1,917,205  $1,408,519  $508,686  36.1%
Certain Item adjustments:       
Impact of inventory valuation adjustment(1)    (2,571)  2,571  NM
Impact of restructuring and transformational project costs(2) 29,743   25,302   4,441  17.6 
Impact of acquisition-related costs(3) 4,961   6,595   (1,634) (24.8)
Impact of bad debt reserve adjustments(4)    (4,515)  4,515  NM
Impact of other non-routine gains and losses(5)    314,878   (314,878) NM
EBITDA adjusted for Certain Items (Non-GAAP)(6)$1,951,909  $1,748,208  $203,701  11.7%
Other expense (income), net, as adjusted (Non-GAAP)(7) 11,885   33,176   (21,291) (64.2)
Depreciation and amortization, as adjusted (Non-GAAP)(8) (364,615)  (326,397)  (38,218) (11.7)
Operating income adjusted for Certain Items (Non-GAAP)$1,599,179  $1,454,987  $144,192  9.9%

(1)Fiscal 2023 represents an adjustment to a product return allowance related to COVID-related personal protection equipment inventory.
(2)Fiscal 2024 and 2023 include charges related to restructuring and severance, as well as various transformation initiative costs, primarily consisting of changes to our business technology strategy and exclude charges related to accelerated depreciation.
(3)Fiscal 2024 and 2023 include acquisition and due diligence costs.
(4)Fiscal 2023 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(5)Fiscal 2023 primarily represents a pension settlement charge of $315 million that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer.
(6)In arriving at adjusted EBITDA, Sysco does not exclude interest income of $20 million and $8 million or non-cash stock compensation expense of $53 million and $52 million for fiscal 2024 and fiscal 2023, respectively.
(7)Fiscal 2024 represents $12 million in GAAP other expense (income), net. Fiscal 2023 represents $348 million in GAAP other expense (income), net less $315 million due to the certain items impact of a pension settlement charge that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer.
(8)Fiscal 2024 includes $425 million in GAAP depreciation and amortization expense, less $61 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions. Fiscal 2023 includes $379 million in GAAP depreciation and amortization expense, less $53 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions.
NMRepresents that the percentage change is not meaningful.
  

Sysco Corporation and its Consolidated SubsidiariesNon-GAAP Reconciliation (Unaudited)Net Debt to Adjusted EBITDA(In Thousands)

Net Debt to Adjusted EBITDA is a non-GAAP financial measure frequently used by investors and credit rating agencies. Our Net Debt to Adjusted EBITDA ratio is calculated using a numerator of our debt minus cash and cash equivalents, divided by the sum of the most recent four quarters of Adjusted EBITDA. In the table that follows, we have provided the calculation of our debt and net debt as a ratio of Adjusted EBITDA.

 
  Dec. 30, 2023
Current Maturities of long-term debt $84,513 
Long-term debt  12,028,122 
Total Debt  12,112,635 
Cash & Cash Equivalents  (962,165)
Net Debt $11,150,470 
   
Adjusted EBITDA for the previous 12 months $4,050,280 
   
Debt/Adjusted EBITDA Ratio  2.99 
Net Debt/Adjusted EBITDA Ratio  2.75 

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Source: Sysco Corporation

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