Sysco Reports Third Quarter Operating Income and EPS Growth

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

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

  • Sales increased 2.7%; U.S. Foodservice volume increased 2.9%; U.S. local volumes grew 0.4%;
  • Gross profit increased 5.2% to $3.6 billion;
  • Operating income increased 3.8% to $722.0 million, and adjusted1 operating income increased 8.4% to $799.3 million;
  • EBITDA increased 5.4% to $933.0 million, and adjusted EBITDA increased 8.5% to $976.6 million2;
  • EPS3 increased 1.2% to $0.85, compared to $0.84 in the same period last year, and adjusted1 EPS increased 6.7% to $0.96;
  • Raising cost-out targets from $100 million to $120 million for fiscal year 2024; and
  • Sysco returned approximately $753 million of capital to shareholders via $500 million of share repurchases and $253 million of dividends and remains on target to return approximately $2.25 billion back to shareholders in fiscal year 2024.

“Our third quarter performance demonstrated disciplined efforts to deliver strong profit growth, despite a softer macro backdrop. I am proud of our team for taking actions in the quarter to deliver strong gross profit margins and manage expenses. The agility and accountability of the leadership team enabled us to deliver our profit objectives for the quarter, despite softer sales and case volumes. Lower traffic to restaurants year over year negatively impacted case volumes, but sequentially improved during the quarter. We converted the negative traffic at restaurants into sales and case growth at Sysco by taking market share, profitably. With that said, we are focused upon improving local case volume performance through a set of specific actions, inclusive of continued investments into our people, process, and technology in local sales,” said Kevin Hourican, Sysco’s Chair of the Board 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.

“Our third quarter operating profit included our sixth consecutive quarter of positive operating leverage, as gross profit expanded at a faster rate than operating expenses. Our teams proactively addressed variable and structural operating expenses this quarter, giving us confidence in raising our cost-out targets to $120 million this fiscal year. Additionally, our balanced approach to capital allocation demonstrates the importance of investing in the business and rewarding our shareholders. We continue to re-invest in the business and remain on target to return approximately $2.25 billion back to shareholders in fiscal year 2024, including our recently raised dividend. We remain confident in our fiscal year 2024 guidance of five to ten percent adjusted EPS growth to $4.20 to $4.40,” said Kenny Cheung, Sysco’s Chief Financial Officer.

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

Total Sysco

Sales for the third quarter increased 2.7% to $19.4 billion.

Gross profit increased 5.2% to $3.6 billion, and gross margin increased 44 basis points to 18.6%. Product cost inflation was 1.9% 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 third quarter was primarily driven by positive volumes, as well as continued progress with effective management of product cost inflation and our strategic sourcing initiative.

Operating expenses increased 5.5%, driven by increased volumes and cost inflation. Adjusted operating expenses increased 4.3%.

Operating income increased 3.8% to $722.0 million, and adjusted operating income increased 8.4% to $799.3 million.

U.S. Foodservice Operations

The U.S. Foodservice Operations segment results were driven by higher volumes and effective margin management, which resulted in continued profit growth.

Sales for the third quarter increased 3.4% to $13.7 billion. Total case volume within U.S. Foodservice grew 2.9% for the third quarter, while local case volume within U.S. Foodservice increased 0.4%.

Gross profit increased 4.2% to $2.7 billion, and gross margin increased 15 basis points to 19.4%.

Operating expenses increased 6.6%, and adjusted operating expenses increased 6.0%.

Operating income decreased 0.5% to $852.4 million, and adjusted operating income increased 0.7% to $874.8 million.

International Foodservice Operations

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

Sales for the third quarter increased 4.5% to $3.5 billion. On a constant currency basis4, sales for the third quarter were $3.4 billion, an increase of 2.4%. Foreign exchange rates increased both International Foodservice Operations sales by 2.1% and total Sysco sales by 0.4% during the quarter.

Gross profit increased 12.0% to $719.7 million, and gross margin increased 138 basis points to 20.6%. On a constant currency basis4, gross profit increased 9.5% to $704.0 million. Foreign exchange rates increased both International Foodservice Operations gross profit by 2.5% and total Sysco gross profit by 0.5% during the quarter.

Operating expenses increased 6.9%, and adjusted operating expenses increased 6.0%. On a constant currency basis4, adjusted operating expenses increased 3.6%. Foreign exchange rates increased both International Foodservice Operations operating expenses by 2.4% and total Sysco operating expenses by 0.5% during the quarter.

Operating income increased 73.9% to $83.9 million, and adjusted operating income increased 63.4% to $109.4 million. On a constant currency basis4, adjusted operating income was $107.4 million, an increase of 60.4%. Foreign exchange rates increased both International Foodservice Operations operating income by 3.0% and total Sysco operating income by 0.1% during the quarter.

Balance Sheet, Cash Flow and Capital Spending

As of the end of the quarter, the company had a cash balance of $598.3 million.

During the first 39 weeks of fiscal year 2024, Sysco returned $1.5 billion to shareholders via $699.9 million of share repurchases and $758.1 million of dividends.

Cash flow from operations was $1.4 billion for the first 39 weeks of fiscal year 2024, which was a decrease of $52.6 million over the prior year period.

Capital expenditures, net of proceeds from sales of plant and equipment, for the first 39 weeks of fiscal year 2024 were $509.5 million.

Free cash flow5 for the first 39 weeks of fiscal year 2024 was $863.7 million, which was a decrease of $115.9 million over the prior year period.

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4
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.
5 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.

Conference Call & Webcast

Sysco will host a conference call to review the company’s third quarter fiscal year 2024 financial results on Tuesday, April 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 Ended39-Week Period Ended
     
Financial Comparison:March 30, 2024ChangeMarch 30, 2024Change
GAAP:    
Sales$19.4 billion2.7%$58.3 billion3.0%
Gross Profit$3.6 billion5.2%$10.8 billion4.9%
Gross Margin 18.6%44 bps 18.5%33 bps
Operating Expenses$2.9 billion5.5%$8.5 billion4.2%
Operating Income$722.0 million3.8%$2.2 billion7.3%
Operating Margin 3.7%4 bps 3.8%16 bps
Net Earnings$424.7 million-1.1%$1.3 billion29.6%
Diluted Earnings Per Share$0.85 1.2%$2.66 31.0%
     
Non-GAAP (1):    
Gross Profit$3.6 billion5.2%$10.8 billion4.9%
Gross Margin 18.6%44 bps 18.5%34 bps
Operating Expenses$2.8 billion4.3%$8.4 billion3.7%
Operating Income$799.3 million8.4%$2.4 billion9.4%
Operating Margin 4.1%22 bps 4.1%24 bps
EBITDA$933.0 million5.4%$2.9 billion24.3%
Adjusted EBITDA$976.6 million8.5%$2.9 billion10.6%
Net Earnings$483.4 million5.0%$1.5 billion8.3%
Diluted Earnings Per Share (2)$0.96 6.7%$2.92 9.4%
     
Case Growth:    
U.S. Foodservice 2.9%  3.0% 
Local 0.4%  1.3% 
     
Sysco Brand Sales as a % of Cases:    
U.S. Broadline 36.3%-19 bps 36.8%-6 bps
Local 46.5%3 bps 46.9%26 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.
 
 

Forward-Looking Statements 
Statements made in this press release or in our earnings call for the third 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: 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 Sysco 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 Subsidiaries
CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)
(In Thousands, Except for Share and Per Share Data)
  Quarter Ended Year Ended
  Mar. 30, 2024 Apr. 1, 2023 Mar. 30, 2024 Apr. 1, 2023
         
Sales $19,379,500 $18,875,676 $58,287,896 $56,596,459
Cost of sales  15,770,444  15,444,316  47,517,435  46,326,628
Gross profit  3,609,056  3,431,360  10,770,461  10,269,831
Operating expenses  2,887,010  2,735,633  8,544,790  8,196,480
Operating income  722,046  695,727  2,225,671  2,073,351
Interest expense  157,853  134,931  441,867  391,123
Other expense (income), net (1) (2)  10,380  6,759  22,265  354,813
Earnings before income taxes  553,813  554,037  1,761,539  1,327,415
Income taxes  129,125  124,433  418,217  291,027
Net earnings $424,688 $429,604 $1,343,322 $1,036,388
         
Net earnings:        
Basic earnings per share $0.85 $0.85 $2.67 $2.04
Diluted earnings per share  0.85  0.84  2.66  2.03
         
Average shares outstanding  499,642,505  507,716,975  503,027,209  507,635,083
Diluted shares outstanding  501,921,446  509,842,400  504,973,406  510,123,782


(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 Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except for Share Data)
  Mar. 30, 2024 Jul. 1, 2023
  (Unaudited)  
ASSETS    
Current assets    
Cash and cash equivalents $598,322  $745,201 
Accounts receivable, less allowances of $85,590 and $45,599  5,556,703   5,091,970 
Inventories  4,733,966   4,480,812 
Prepaid expenses and other current assets  310,069   284,566 
Income tax receivable  5,815   5,815 
Total current assets  11,204,875   10,608,364 
Plant and equipment at cost, less accumulated depreciation  5,290,437   4,915,049 
Other long-term assets    
Goodwill  5,220,989   4,645,754 
Intangibles, less amortization  1,136,869   859,530 
Deferred income taxes  442,256   420,450 
Operating lease right-of-use assets, net  882,211   731,766 
Other assets  534,703   640,232 
Total other long-term assets  8,217,028   7,297,732 
Total assets $24,712,340  $22,821,145 
     
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities    
Accounts payable $5,869,479  $6,025,757 
Accrued expenses  2,246,595   2,251,181 
Accrued income taxes  33,988   101,894 
Current operating lease liabilities  122,984   99,051 
Current maturities of long-term debt  93,225   62,550 
Total current liabilities  8,366,271   8,540,433 
Long-term liabilities    
Long-term debt  12,113,205   10,347,997 
Deferred income taxes  312,927   302,904 
Long-term operating lease liabilities  791,007   656,269 
Other long-term liabilities  995,420   931,708 
Total long-term liabilities  14,212,559   12,238,878 
Commitments and contingencies    
Noncontrolling interest  32,557   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  1,846,743   1,814,681 
Retained earnings  11,898,772   11,310,664 
Accumulated other comprehensive loss  (1,231,221)  (1,252,590)
Treasury stock at cost, 266,250,088 and 260,062,834 shares  (11,178,516)  (10,629,308)
Total shareholders’ equity  2,100,953   2,008,622 
Total liabilities and shareholders’ equity $24,712,340  $22,821,145 


Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED CASH FLOWS (Unaudited)
(In Thousands)
  39-Week Period Ended
  Mar. 30, 2024 Apr. 1, 2023
Cash flows from operating activities:    
Net earnings $1,343,322  $1,036,388 
Adjustments to reconcile net earnings to cash provided by operating activities:    
Pension settlement charge     315,354 
Share-based compensation expense  76,688   73,765 
Depreciation and amortization  646,848   574,945 
Operating lease asset amortization  91,694   83,959 
Amortization of debt issuance and other debt-related costs  13,695   15,019 
Deferred income taxes  (25,465)  (163,044)
Provision for losses on receivables  43,409   21,899 
Other non-cash items  (2,488)  2,787 
Additional changes in certain assets and liabilities, net of effect of businesses acquired:    
Increase in receivables  (325,108)  (405,372)
Increase in inventories  (125,859)  (172,117)
Decrease (increase) in prepaid expenses and other current assets  23,267   (6,242)
(Decrease) increase in accounts payable  (281,506)  88,995 
Increase (decrease) in accrued expenses  29,019   (55,162)
Decrease in operating lease liabilities  (102,969)  (100,847)
(Decrease) increase in accrued income taxes  (67,906)  119,784 
Decrease in other assets  25,621   23,843 
Increase (decrease) in other long-term liabilities  10,931   (28,172)
Net cash provided by operating activities  1,373,193   1,425,782 
Cash flows from investing activities:    
Additions to plant and equipment  (530,161)  (474,456)
Proceeds from sales of plant and equipment  20,708   28,313 
Acquisition of businesses, net of cash acquired  (1,181,188)  (37,384)
Purchase of marketable securities  (11,422)  (15,078)
Proceeds from sales of marketable securities     11,641 
Other investing activities (1)  1,414   5,610 
Net cash used for investing activities  (1,700,649)  (481,354)
Cash flows from financing activities:    
Bank and commercial paper borrowings, net  524,593    
Other debt borrowings including senior notes  1,261,208   174,262 
Other debt repayments including senior notes  (338,721)  (81,345)
Debt issuance costs  (13,035)   
Proceeds from stock option exercises  103,496   67,115 
Stock repurchases  (699,947)  (377,800)
Dividends paid  (758,128)  (747,378)
Other financing activities (2)  (19,206)  (57,906)
Net cash provided by (used for) financing activities  60,260   (1,023,052)
Effect of exchange rates on cash, cash equivalents and restricted cash  (6,206)  1,713 
Net decrease in cash, cash equivalents and restricted cash  (273,402)  (76,911)
Cash, cash equivalents and restricted cash at beginning of period  966,033   931,376 
Cash, cash equivalents and restricted cash at end of period $692,631  $854,465 
     
Supplemental disclosures of cash flow information:    
Cash paid during the period for:    
Interest $376,465  $343,402 
Income taxes, net of refunds  510,458   306,174 


(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 Subsidiaries
Non-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 Subsidiaries
Non-GAAP Reconciliation (Unaudited)
Impact of Certain Items
(Dollars in Thousands, Except for Share and Per Share Data)
  13-Week
Period Ended
Mar. 30, 2024
 13-Week
Period Ended
Apr. 1, 2023
 Change in
Dollars
 %/bps
Change
Sales (GAAP) $19,379,500  $18,875,676  $503,824  2.7%
Impact of currency fluctuations (1)  (69,576)     (69,576) (0.4)
Comparable sales using a constant currency basis (Non-GAAP) $19,309,924  $18,875,676  $434,248  2.3%
         
Cost of sales (GAAP) $15,770,444  $15,444,316  $326,128  2.1%
         
Gross profit (GAAP) $3,609,056  $3,431,360  $177,696  5.2%
Impact of currency fluctuations (1)  (15,662)     (15,662) (0.5)
Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP) $3,593,394  $3,431,360  $162,034  4.7%
         
Gross margin (GAAP)  18.62%  18.18%   44 bps
Impact of currency fluctuations (1)  (0.01)      -1 bp  
Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP)  18.61%  18.18%   43 bps
         
Operating expenses (GAAP) $2,887,010  $2,735,633  $151,377  5.5%
Impact of restructuring and transformational project costs (2)  (28,472)  (12,255)  (16,217) NM
Impact of acquisition-related costs (3)  (48,734)  (29,004)  (19,730) (68.0)
Impact of bad debt reserve adjustments (4)     (90)  90  NM
Operating expenses adjusted for Certain Items (Non-GAAP)  2,809,804   2,694,284   115,520  4.3 
Impact of currency fluctuations (1)  (14,433)     (14,433) (0.5)
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP) $2,795,371  $2,694,284  $101,087  3.8%
         
Operating expense as a percentage of sales (GAAP)  14.90%  14.49%   41 bps
Impact of certain item adjustments  (0.40)  (0.22)   -18 bps
Adjusted operating expense as a percentage of sales (Non-GAAP)  14.50%  14.27%   23 bps
         
Operating income (GAAP) $722,046  $695,727  $26,319  3.8%
Impact of restructuring and transformational project costs (2)  28,472   12,255   16,217  NM
Impact of acquisition-related costs (3)  48,734   29,004   19,730  68.0 
Impact of bad debt reserve adjustments (4)     90   (90) NM
Operating income adjusted for Certain Items (Non-GAAP)  799,252   737,076   62,176  8.4 
Impact of currency fluctuations (1)  (1,229)     (1,229) (0.1)
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP) $798,023  $737,076  $60,947  8.3%
         
Operating margin (GAAP)  3.73%  3.69%   4 bps
Operating margin adjusted for Certain Items (Non-GAAP)  4.12%  3.90%   22 bps
Operating margin adjusted for Certain Items using a constant currency basis (Non-GAAP)  4.13%  3.90%   23 bps
         
Other expense (GAAP) $10,380  $6,759  $3,621  53.6%
Impact of other non-routine gains and losses     (448)  448  NM
Other expense adjusted for Certain Items (Non-GAAP) $10,380  $6,311  $4,069  64.5%
         
Net earnings (GAAP) $424,688  $429,604  $(4,916) (1.1)%
Impact of restructuring and transformational project costs (2)  28,472   12,255   16,217  NM
Impact of acquisition-related costs (3)  48,734   29,004   19,730  68.0 
Impact of bad debt reserve adjustments (4)     90   (90) NM
Impact of other non-routine gains and losses     448   (448) NM
Tax impact of restructuring and transformational project costs (5)  (6,826)  (3,190)  (3,636) NM
Tax impact of acquisition-related costs (5)  (11,684)  (7,550)  (4,134) (54.8)
Tax impact of bad debt reserves adjustments (5)     (23)  23  NM
Tax impact of other non-routine gains and losses (5)     (117)  117  NM
Net earnings adjusted for Certain Items (Non-GAAP) $483,384  $460,521  $22,863  5.0%
         
Diluted earnings per share (GAAP) $0.85  $0.84  $0.01  1.2%
Impact of restructuring and transformational project costs (2)  0.06   0.02   0.04  NM
Impact of acquisition-related costs (3)  0.10   0.06   0.04  66.7 
Tax impact of restructuring and transformational project costs (5)  (0.01)  (0.01)     
Tax impact of acquisition-related costs (5)  (0.02)  (0.01)  (0.01) (100.0)
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (6) $0.96  $0.90  $0.06  6.7%
         
Diluted shares outstanding  501,921,446   509,842,400     


(1)Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on the current year results.
(2)Fiscal 2024 includes $13 million related to restructuring and severance charges and $15 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2023 includes $2 million related to restructuring and severance charges and $10 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(3)Fiscal 2024 includes $32 million of intangible amortization expense and $17 million in acquisition and due diligence costs. Fiscal 2023 includes $27 million of intangible amortization expense and $2 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)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.
(6)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 Subsidiaries
Non-GAAP Reconciliation (Unaudited)
Impact of Certain Items
(Dollars in Thousands, Except for Share and Per Share Data)
  39-Week
Period Ended
Mar. 30, 2024
 39-Week
Period Ended
Apr. 1, 2023
 Change in
Dollars
 %/bps
Change
Sales (GAAP) $58,287,896  $56,596,459  $1,691,437  3.0%
Impact of currency fluctuations (1)  (278,400)     (278,400) (0.5)
Comparable sales using a constant currency basis (Non-GAAP) $58,009,496  $56,596,459  $1,413,037  2.5%
         
Cost of sales (GAAP) $47,517,435  $46,326,628  $1,190,807  2.6%
Impact of inventory valuation adjustment (2)     2,571   (2,571)  
Cost of sales adjusted for Certain Items (Non-GAAP) $47,517,435  $46,329,199  $1,188,236  2.6%
         
Gross profit (GAAP) $10,770,461  $10,269,831  $500,630  4.9%
Impact of inventory valuation adjustment (2)     (2,571)  2,571   
Gross profit adjusted for Certain Items (Non-GAAP)  10,770,461   10,267,260   503,201  4.9 
Impact of currency fluctuations (1)  (66,029)     (66,029) (0.6)
Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP) $10,704,432  $10,267,260  $437,172  4.3%
         
Gross margin (GAAP)  18.48%  18.15%   33 bps
Impact of inventory valuation adjustment (2)     (0.01)   1 bp  
Gross margin adjusted for Certain Items (Non-GAAP)  18.48   18.14    34 bps
Impact of currency fluctuations (1)  (0.03)      -3 bps
Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP)  18.45%  18.14%   31 bps
         
Operating expenses (GAAP) $8,544,790  $8,196,480  $348,310  4.2%
Impact of restructuring and transformational project costs (3)  (59,567)  (38,288)  (21,279) (55.6)
Impact of acquisition-related costs (4)  (113,193)  (87,419)  (25,774) (29.5)
Impact of bad debt reserve adjustments (5)     4,425   (4,425) NM
Operating expenses adjusted for Certain Items (Non-GAAP)  8,372,030   8,075,198   296,832  3.7 
Impact of currency fluctuations (1)  (63,371)     (63,371) (0.8)
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP) $8,308,659  $8,075,198  $233,461  2.9%
         
Operating expense as a percentage of sales (GAAP)  14.66%  14.48%   18 bps
Impact of certain item adjustments  (0.30)  (0.21)   -9 bps
Adjusted operating expense as a percentage of sales (Non-GAAP)  14.36%  14.27%   9 bps
         
Operating income (GAAP) $2,225,671  $2,073,351  $152,320  7.3%
Impact of inventory valuation adjustment (2)     (2,571)  2,571  NM
Impact of restructuring and transformational project costs (3)  59,567   38,288   21,279  55.6 
Impact of acquisition-related costs (4)  113,193   87,419   25,774  29.5 
Impact of bad debt reserve adjustments (5)     (4,425)  4,425  NM
Operating income adjusted for Certain Items (Non-GAAP)  2,398,431   2,192,062   206,369  9.4 
Impact of currency fluctuations (1)  (2,658)     (2,658) (0.1)
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP) $2,395,773  $2,192,062  $203,711  9.3%
         
Operating margin (GAAP)  3.82%  3.66%   16 bps
Operating margin adjusted for Certain Items (Non-GAAP)  4.11%  3.87%   24 bps
Operating margin adjusted for Certain Items using a constant currency basis (Non-GAAP)  4.13%  3.87%   26 bps
         
Other expense (GAAP) $22,265  $354,813  $(332,548) (93.7)%
Impact of other non-routine gains and losses (6)     (315,326)  315,326  NM
Other expense adjusted for Certain Items (Non-GAAP) $22,265  $39,487  $(17,222) (43.6)%
         
Net earnings (GAAP) $1,343,322  $1,036,388  $306,934  29.6%
Impact of inventory valuation adjustment (2)     (2,571)  2,571  NM
Impact of restructuring and transformational project costs (3)  59,567   38,288   21,279  55.6 
Impact of acquisition-related costs (4)  113,193   87,419   25,774  29.5 
Impact of bad debt reserve adjustments (5)     (4,425)  4,425  NM
Impact of other non-routine gains and losses (6)     315,326   (315,326) NM
Tax impact of inventory valuation adjustment (7)     648   (648) NM
Tax impact of restructuring and transformational project costs (7)  (14,510)  (9,649)  (4,861) (50.4)
Tax impact of acquisition-related costs (7)  (27,572)  (22,031)  (5,541) (25.2)
Tax impact of bad debt reserves adjustments (7)     1,115   (1,115) NM
Tax impact of other non-routine gains and losses (7)     (79,466)  79,466  NM
Net earnings adjusted for Certain Items (Non-GAAP) $1,474,000  $1,361,042  $112,958  8.3%
         
Diluted earnings per share (GAAP) $2.66  $2.03  $0.63  31.0%
Impact of inventory valuation adjustment (2)     (0.01)  0.01  NM
Impact of restructuring and transformational project costs (3)  0.12   0.08   0.04  50.0 
Impact of acquisition-related costs (4)  0.22   0.17   0.05  29.4 
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)  (0.03)  (0.02)  (0.01) (50.0)
Tax impact of acquisition-related costs (7)  (0.05)  (0.04)  (0.01) (25.0)
Tax impact of other non-routine gains and losses (7)     (0.16)  0.16  NM
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (8) $2.92  $2.67  $0.25  9.4%
         
Diluted shares outstanding  504,973,406   510,123,782     


(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 $22 million related to restructuring and severance charges and $38 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2023 includes $12 million related to restructuring and severance charges and $26 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(4)Fiscal 2024 includes $91 million of intangible amortization expense and $22 million in acquisition and due diligence costs. Fiscal 2023 includes $78 million of intangible amortization expense and $9 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 Subsidiaries
Segment Results
Non-GAAP Reconciliation (Unaudited)
Impact of Certain Items on Applicable Segments
(Dollars in Thousands)
  13-Week
Period Ended
Mar. 30, 2024
 13-Week
Period Ended
Apr. 1, 2023
 Change in
Dollars
 %/bps
Change
U.S. FOODSERVICE OPERATIONS        
Sales (GAAP) $13,707,108  $13,257,519  $449,589  3.4%
Gross profit (GAAP)  2,652,847   2,545,859   106,988  4.2%
Gross margin (GAAP)  19.35%  19.20%   15 bps
         
Operating expenses (GAAP) $1,800,403  $1,688,836  $111,567  6.6%
Impact of restructuring and transformational project costs (1)  (6,134)  (159)  (5,975) NM
Impact of acquisition-related costs (2)  (16,214)  (11,463)  (4,751) (41.4)
Impact of bad debt reserve adjustments (3)     (81)  81  NM
Operating expenses adjusted for Certain Items (Non-GAAP) $1,778,055  $1,677,133  $100,922  6.0%
         
Operating income (GAAP) $852,444  $857,023  $(4,579) (0.5)%
Impact of restructuring and transformational project costs (1)  6,134   159   5,975  NM
Impact of acquisition-related costs (2)  16,214   11,463   4,751  41.4 
Impact of bad debt reserve adjustments (3)     81   (81) NM
Operating income adjusted for Certain Items (Non-GAAP) $874,792  $868,726  $6,066  0.7%
         
INTERNATIONAL FOODSERVICE OPERATIONS        
Sales (GAAP) $3,493,232  $3,344,121  $149,111  4.5%
Impact of currency fluctuations (4)  (69,521)     (69,521) (2.1)
Comparable sales using a constant currency basis (Non-GAAP) $3,423,711  $3,344,121  $79,590  2.4%
         
Gross profit (GAAP) $719,681  $642,778  $76,903  12.0%
Impact of currency fluctuations (4)  (15,637)     (15,637) (2.5)
Comparable gross profit using a constant currency basis (Non-GAAP) $704,044  $642,778  $61,266  9.5%
         
Gross margin (GAAP)  20.60%  19.22%   138 bps
Impact of currency fluctuations (4)  (0.04)      -4 bps
Comparable gross margin using a constant currency basis (Non-GAAP)  20.56%  19.22%   134 bps
         
Operating expenses (GAAP) $635,783  $594,542  $41,241  6.9%
Impact of restructuring and transformational project costs (5)  (6,775)  (2,103)  (4,672) NM
Impact of acquisition-related costs (6)  (18,686)  (16,585)  (2,101) (12.7)
Impact of bad debt reserve adjustments (3)     (9)  9  NM
Operating expenses adjusted for Certain Items (Non-GAAP)  610,322   575,845   34,477  6.0 
Impact of currency fluctuations (4)  (13,641)     (13,641) (2.4)
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP) $596,681  $575,845  $20,836  3.6%
         
Operating income (GAAP) $83,898  $48,236  $35,662  73.9%
Impact of restructuring and transformational project costs (5)  6,775   2,103   4,672  NM
Impact of acquisition-related costs (6)  18,686   16,585   2,101  12.7 
Impact of bad debt reserve adjustments (3)     9   (9) NM
Operating income adjusted for Certain Items (Non-GAAP)  109,359   66,933   42,426  63.4 
Impact of currency fluctuations (4)  (1,996)     (1,996) (3.0)
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP) $107,363  $66,933  $40,430  60.4%
         
SYGMA        
Sales (GAAP) $1,903,922  $1,972,058  $(68,136) (3.5)%
Gross profit (GAAP)  153,258   166,104   (12,846) (7.7)%
Gross margin (GAAP)  8.05%  8.42%   -37 bps
         
Operating expenses (GAAP) $136,453  $140,486  $(4,033) (2.9)%
Operating income (GAAP)  16,805   25,618   (8,813) (34.4)%
          
OTHER         
Sales (GAAP) $275,238  $301,978  $(26,740) (8.9)%
Gross profit (GAAP)  71,030   79,451   (8,421) (10.6)%
Gross margin (GAAP)  25.81%  26.31%   -50 bps
         
Operating expenses (GAAP) $64,659  $67,615  $(2,956) (4.4)%
Operating income (GAAP)  6,371   11,836   (5,465) (46.2)%
         
GLOBAL SUPPORT CENTER        
Gross profit (loss) (GAAP) $12,240  $(2,832) $15,072  NM
         
Operating expenses (GAAP) $249,712  $244,154  $5,558  2.3%
Impact of restructuring and transformational project costs (7)  (15,563)  (9,993)  (5,570) (55.7)
Impact of acquisition-related costs (8)  (13,834)  (956)  (12,878) NM
Operating expenses adjusted for Certain Items (Non-GAAP) $220,315  $233,205  $(12,890) (5.5)%
         
Operating loss (GAAP) $(237,472) $(246,986) $9,514  3.9%
Impact of restructuring and transformational project costs (7)  15,563   9,993   5,570  55.7 
Impact of acquisition-related costs (8)  13,834   956   12,878  NM
Operating loss adjusted for Certain Items (Non-GAAP) $(208,075) $(236,037) $27,962  11.8%
         
TOTAL SYSCO        
Sales (GAAP) $19,379,500  $18,875,676  $503,824  2.7%
Gross profit (GAAP)  3,609,056   3,431,360   177,696  5.2%
Gross margin (GAAP)  18.62%  18.18%   44 bps
         
Operating expenses (GAAP) $2,887,010  $2,735,633  $151,377  5.5%
Impact of restructuring and transformational project costs (1) (5) (7)  (28,472)  (12,255)  (16,217) NM
Impact of acquisition-related costs (2) (6) (8)  (48,734)  (29,004)  (19,730) (68.0)
Impact of bad debt reserve adjustments (3)     (90)  90  NM
Operating expenses adjusted for Certain Items (Non-GAAP) $2,809,804  $2,694,284  $115,520  4.3%
         
Operating income (GAAP) $722,046  $695,727  $26,319  3.8%
Impact of restructuring and transformational project costs (1) (5) (7)  28,472   12,255   16,217  NM
Impact of acquisition-related costs (2) (6) (8)  48,734   29,004   19,730  68.0 
Impact of bad debt reserve adjustments (3)     90   (90) NM
Operating income adjusted for Certain Items (Non-GAAP) $799,252  $737,076  $62,176  8.4%


(1)Primarily represents severance and transformation initiative costs.
(2)Fiscal 2024 and fiscal 2023 include intangible amortization expense and acquisition costs.
(3)Fiscal 2023 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(4)Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on current year results.
(5)Includes restructuring costs primarily in Europe.
(6)Represents intangible amortization expense.
(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 Subsidiaries
Segment Results
Non-GAAP Reconciliation (Unaudited)
Impact of Certain Items on Applicable Segments
(Dollars in Thousands)
  39-Week
Period Ended
Mar. 30, 2024
 39-Week
Period Ended
Apr. 1, 2023
 Change in
Dollars
 %/bps
Change
U.S. FOODSERVICE OPERATIONS        
Sales (GAAP) $40,925,350  $39,937,055  $988,295  2.5%
Gross profit (GAAP)  7,915,316   7,651,291   264,025  3.5%
Gross margin (GAAP)  19.34%  19.16%   18 bps
         
Operating expenses (GAAP) $5,282,865  $5,107,587  $175,278  3.4%
Impact of restructuring and transformational project costs (1)  (6,361)  (203)  (6,158) NM
Impact of acquisition-related costs (2)  (40,680)  (35,563)  (5,117) (14.4)
Impact of bad debt reserve adjustments (3)     4,170   (4,170) NM
Operating expenses adjusted for Certain Items (Non-GAAP) $5,235,824  $5,075,991  $159,833  3.1%
         
Operating income (GAAP) $2,632,451  $2,543,704  $88,747  3.5%
Impact of restructuring and transformational project costs (1)  6,361   203   6,158  NM
Impact of acquisition-related costs (2)  40,680   35,563   5,117  14.4 
Impact of bad debt reserve adjustments (3)     (4,170)  4,170  NM
Operating income adjusted for Certain Items (Non-GAAP) $2,679,492  $2,575,300  $104,192  4.0%
         
INTERNATIONAL FOODSERVICE OPERATIONS        
Sales (GAAP) $10,772,900  $9,910,267  $862,633  8.7%
Impact of currency fluctuations (4)  (279,622)     (279,622) (2.8)
Comparable sales using a constant currency basis (Non-GAAP) $10,493,278  $9,910,267  $583,011  5.9%
         
Gross profit (GAAP) $2,159,820  $1,916,503  $243,317  12.7%
Impact of currency fluctuations (4)  (66,475)     (66,475) (3.5)
Comparable gross profit using a constant currency basis (Non-GAAP) $2,093,345  $1,916,503  $176,842  9.2%
         
Gross margin (GAAP)  20.05%  19.34%   71 bps
Impact of currency fluctuations (4)  (0.10)      -10 bps
Comparable gross margin using a constant currency basis (Non-GAAP)  19.95%  19.34%   61 bps
         
Operating expenses (GAAP) $1,899,509  $1,723,874  $175,635  10.2%
Impact of restructuring and transformational project costs (5)  (15,181)  (11,597)  (3,584) (30.9)
Impact of acquisition-related costs (6)  (52,430)  (48,534)  (3,896) (8.0)
Impact of bad debt reserve adjustments (3)     255   (255) NM
Operating expenses adjusted for Certain Items (Non-GAAP)  1,831,898   1,663,998   167,900  10.1 
Impact of currency fluctuations (4)  (61,384)     (61,384) (3.7)
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP) $1,770,514  $1,663,998  $106,516  6.4%
         
Operating income (GAAP) $260,311  $192,629  $67,682  35.1%
Impact of restructuring and transformational project costs (5)  15,181   11,597   3,584  30.9 
Impact of acquisition-related costs (6)  52,430   48,534   3,896  8.0 
Impact of bad debt reserve adjustments (3)     (255)  255  NM
Operating income adjusted for Certain Items (Non-GAAP)  327,922   252,505   75,417  29.9 
Impact of currency fluctuations (4)  (5,091)     (5,091) (2.0)
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP) $322,831  $252,505  $70,326  27.9%
         
SYGMA        
Sales (GAAP) $5,723,651  $5,839,051  $(115,400) (2.0)%
Gross profit (GAAP)  454,575   470,458   (15,883) (3.4)%
Gross margin (GAAP)  7.94%  8.06%   -12 bps
         
Operating expenses (GAAP) $408,657  $432,297  $(23,640) (5.5)%
Operating income (GAAP)  45,918   38,161   7,757  20.3%
         
OTHER        
Sales (GAAP) $865,995  $910,086  $(44,091) (4.8)%
Gross profit (GAAP)  222,012   237,600   (15,588) (6.6)%
Gross margin (GAAP)  25.64%  26.11%   -47 bps
         
Operating expenses (GAAP) $195,431  $204,356  $(8,925) (4.4)%
Operating income (GAAP)  26,581   33,244   (6,663) (20.0)%
          
GLOBAL SUPPORT CENTER        
Gross profit (loss) (GAAP) $18,738  $(6,021) $24,759  NM
Impact of inventory valuation adjustment (7)     (2,571)  2,571  NM
Gross profit (loss) adjusted for Certain Items (Non-GAAP) $18,738  $(8,592) $27,330  NM
         
Operating expenses (GAAP) $758,328  $728,366  $29,962  4.1%
Impact of restructuring and transformational project costs (8)  (38,025)  (26,488)  (11,537) (43.6)
Impact of acquisition-related costs (9)  (20,083)  (3,322)  (16,761) NM
Operating expenses adjusted for Certain Items (Non-GAAP) $700,220  $698,556  $1,664  0.2%
         
Operating loss (GAAP) $(739,590) $(734,387) $(5,203) (0.7)%
Impact of inventory valuation adjustment (7)     (2,571)  2,571  NM
Impact of restructuring and transformational project costs (8)  38,025   26,488   11,537  43.6 
Impact of acquisition-related costs (9)  20,083   3,322   16,761  NM
Operating loss adjusted for Certain Items (Non-GAAP) $(681,482) $(707,148) $25,666  3.6%
         
TOTAL SYSCO        
Sales (GAAP) $58,287,896  $56,596,459  $1,691,437  3.0%
Gross profit (GAAP)  10,770,461   10,269,831   500,630  4.9%
Gross margin (GAAP)  18.48%  18.15%   33 bps
         
Operating expenses (GAAP) $8,544,790  $8,196,480  $348,310  4.2%
Impact of restructuring and transformational project costs (1) (5) (8)  (59,567)  (38,288)  (21,279) (55.6)
Impact of acquisition-related costs (2) (6) (9)  (113,193)  (87,419)  (25,774) (29.5)
Impact of bad debt reserve adjustments (3)     4,425   (4,425) NM
Operating expenses adjusted for Certain Items (Non-GAAP) $8,372,030  $8,075,198  $296,832  3.7%
         
Operating income (GAAP) $2,225,671  $2,073,351  $152,320  7.3%
Impact of inventory valuation adjustment (7)     (2,571)  2,571  NM
Impact of restructuring and transformational project costs (1) (5) (8)  59,567   38,288   21,279  55.6 
Impact of acquisition-related costs (2) (6) (9)  113,193   87,419   25,774  29.5 
Impact of bad debt reserve adjustments (3)     (4,425)  4,425  NM
Operating income adjusted for Certain Items (Non-GAAP) $2,398,431  $2,192,062  $206,369  9.4%


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

Sysco Corporation and its Consolidated Subsidiaries
Non-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.

  39-Week
Period Ended
Mar. 30, 2024
 39-Week
Period Ended
Apr. 1, 2023
 39-Week
Period Change
in Dollars
Net cash provided by operating activities (GAAP) $1,373,193  $1,425,782  $(52,589)
Additions to plant and equipment  (530,161)  (474,456)  (55,705)
Proceeds from sales of plant and equipment  20,708   28,313   (7,605)
Free Cash Flow (Non-GAAP) $863,740  $979,639  $(115,899)
 
 

Sysco Corporation and its Consolidated Subsidiaries
Non-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
Mar. 30, 2024
 13-Week
Period Ended
Apr. 1, 2023
 Change in
Dollars
 % Change
Net earnings (GAAP) $424,688  $429,604  $(4,916) (1.1)%
Interest (GAAP)  157,853   134,931   22,922  17.0 
Income taxes (GAAP)  129,125   124,433   4,692  3.8 
Depreciation and amortization (GAAP)  221,383   195,996   25,387  13.0 
EBITDA (Non-GAAP) $933,049  $884,964  $48,085  5.4%
Certain Item adjustments:        
Impact of restructuring and transformational project costs (1)  26,538   11,890   14,648  NM
Impact of acquisition-related costs (2)  17,008   2,349   14,659  NM
Impact of bad debt reserve adjustments (3)     90   (90) NM
Impact of other non-routine gains and losses     448   (448) NM
EBITDA adjusted for Certain Items (Non-GAAP) (4) $976,595  $899,741  $76,854  8.5%
Other expense (income), net, as adjusted (Non-GAAP) (5)  10,380   6,311   4,069  64.5 
Depreciation and amortization, as adjusted (Non-GAAP) (6)  (187,723)  (168,976)  (18,747) (11.1)
Operating income adjusted for Certain Items (Non-GAAP)  $799,252  $737,076  $62,176  8.4%


(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)In arriving at adjusted EBITDA, Sysco does not adjust out interest income of $7 million and $7 million or non-cash stock compensation expense of $24 million and $21 million in fiscal 2024 and fiscal 2023, respectively.
(5)Fiscal 2024 and Fiscal 2023 primarily represent $10 million and $7 million, respectively, in GAAP other expense (income), net.
(6)Fiscal 2024 includes $221 million in GAAP depreciation and amortization expense, less $34 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions. Fiscal 2023 includes $196 million in GAAP depreciation and amortization expense, less $27 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions.
NMRepresents that the percentage change is not meaningful.
  
  


  39-Week
Period Ended
Mar. 30, 2024
 39-Week
Period Ended
Apr. 1, 2023
 Change in
Dollars
 % Change
Net earnings (GAAP) $1,343,322  $1,036,388  $306,934  29.6%
Interest (GAAP)  441,867   391,123   50,744  13.0 
Income taxes (GAAP)  418,217   291,027   127,190  43.7 
Depreciation and amortization (GAAP)  646,848   574,945   71,903  12.5 
EBITDA (Non-GAAP) $2,850,254  $2,293,483  $556,771  24.3%
Certain Item adjustments:        
Impact of inventory valuation adjustment (1)     (2,571)  2,571  NM
Impact of restructuring and transformational project costs (2)  56,387   37,192   19,195  51.6 
Impact of acquisition-related costs (3)  21,862   8,944   12,918  NM
Impact of bad debt reserve adjustments (4)     (4,425)  4,425  NM
Impact of other non-routine gains and losses (5)     315,326   (315,326) NM
EBITDA adjusted for Certain Items (Non-GAAP) (6) $2,928,503  $2,647,949  $280,554  10.6%
Other expense (income), net, as adjusted (Non-GAAP) (7)  22,265   39,487   (17,222) (43.6)
Depreciation and amortization, as adjusted (Non-GAAP) (8)  (552,337)  (495,374)  (56,963) (11.5)
Operating income adjusted for Certain Items (Non-GAAP)  $2,398,431  $2,192,062  $206,369  9.4%


(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 $28 million and $15 million or non-cash stock compensation expense of $77 million and $73 million for fiscal 2024 and fiscal 2023, respectively.
(7)Fiscal 2024 represents $22 million in GAAP other expense (income), net. Fiscal 2023 represents $355 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 $647 million in GAAP depreciation and amortization expense, less $95 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions. Fiscal 2023 includes $575 million in GAAP depreciation and amortization expense, less $80 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 Subsidiaries
Non-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.

  Mar. 30, 2024
Current Maturities of long-term debt $93,225 
Long-term debt  12,113,205 
Total Debt  12,206,430 
Cash & Cash Equivalents  (598,322)
Net Debt $11,608,108 
   
Adjusted EBITDA for the previous 12 months $4,127,132 
   
Debt/Adjusted EBITDA Ratio  2.96 
Net Debt/Adjusted EBITDA Ratio  2.81 


For more information contact:
  
Kevin Kim
Investor Contact
kevin.kim@sysco.com
T 281-584-1219
Shannon Mutschler
Media Contact
shannon.mutschler@sysco.com
T 281-584-4059


 


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