Sysco Corp 10-Q for FY2024 Q2

Sysco Corp (SYY)

10-Q 2024-01-31 For: 2023-12-30

Added on April 08, 2026

About this 10-Q

Sysco Corp filed this 10-Q on January 31, 2024, covering the quarter ended December 30, 2023 (FY2024 Q2).

Headline figures

Quarter ended December 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $19.29B; up 3.7% from $18.59B a year earlier
Net income: $415.24M; up 194.0% from net income of $141.22M a year earlier
Diluted EPS: $0.82; up 192.9% from $0.28 a year earlier

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Delaware						74-1648137
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)


Large Accelerated Filer	☑	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
(Do not check if a smaller reporting company)		Emerging growth company	☐



	PART I – FINANCIAL INFORMATION	Page No.
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	57
Item 4.	Controls and Procedures	58
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	59
Item 1A.	Risk Factors	59
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59
Item 3.	Defaults Upon Senior Securities	59
Item 4.	Mine Safety Disclosures	60
Item 5.	Other Information	60
Item 6.	Exhibits	60

Signatures		63


	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

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


	13-Week Period Ended				26-Week Period 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


(Mark One)
☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


(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. See Note 9, “Company-Sponsored Employee Benefit Plans.”


								Accumulated Other Comprehensive Loss
	Common Stock			Paid-in Capital		Retained Earnings				Treasury Stock
	Shares	Amount								Shares	Amounts		Totals
Balance as of September 30, 2023	765,174,900	$	765,175	$	1,838,986	$	11,560,924	$	(1,326,800)	260,971,761	$	(10,712,486)	$	2,125,799
Net earnings						415,242							415,242



Foreign currency translation adjustment								163,084					163,084
Amortization of cash flow hedges, net of tax								2,170					2,170
Change in cash flow hedges, net of tax								(20,225)					(20,225)
Changes in excluded components of fair value hedge, net of tax								158					158
Change in net investment hedges, net of tax								(16,741)					(16,741)
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax								5,157					5,157


Change in marketable securities, net of tax								3,444					3,444

Dividends declared ($0.50 per common share)						(251,915)							(251,915)
Treasury stock purchases										1,479,720	(99,973)		(99,973)

Share-based compensation awards				38,215						(978,662)	39,619		77,834
Balance as of December 30, 2023	765,174,900	$	765,175	$	1,877,201	$	11,724,251	$	(1,189,753)	261,472,819	$	(10,772,840)	$	2,404,034

								Accumulated Other Comprehensive Loss
	Common Stock			Paid-in Capital		Retained Earnings				Treasury Stock
	Shares	Amount								Shares	Amounts		Totals
Balance as of October 1, 2022	765,174,900	$	765,175	$	1,754,409	$	10,757,136	$	(1,711,325)	258,414,989	$	(10,450,054)	$	1,115,341
Net earnings						141,216							141,216
Foreign currency translation adjustment								241,814					241,814
Amortization of cash flow hedges, net of tax								2,170					2,170
Change in cash flow hedges, net of tax								203					203
Change in net investment hedges, net of tax								(33,749)					(33,749)
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax								5,702					5,702
Pension settlement charge, net of tax								236,591					236,591
Net actuarial loss arising in current year, net of tax								(67,388)					(67,388)
Change in marketable securities, net of tax								1,194					1,194
Dividends declared ($0.49 per common share)						(249,014)							(249,014)
Increase in ownership interest in subsidiaries				(2,077)									(2,077)

Share-based compensation awards				21,809						(568,017)	22,777		44,586
Balance as of December 31, 2022	765,174,900	$	765,175	$	1,774,141	$	10,649,338	$	(1,324,788)	257,846,972	$	(10,427,277)	$	1,436,589


	Dec. 30, 2023		Dec. 31, 2022
	(In thousands)
Cash and cash equivalents	$	962,165	$	500,340
Restricted cash (1)	133,491		85,306
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows	$	1,095,656	$	585,646


(1)			Restricted cash primarily represents cash and cash equivalents of Sysco’s wholly owned captive insurance subsidiary, restricted for use to secure the insurer’s obligations for workers’ compensation, general liability and auto liability programs. Restricted cash is located within other assets in each consolidated balance sheet.


	13-Week Period Ended Dec. 30, 2023
	US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
	(In thousands)
Principal Product Categories
Canned and dry products	$	2,601,298	$	801,170	$	228,632	$	—	$	3,631,100
Fresh and frozen meats	2,574,453		503,387		504,102		—		3,581,942
Frozen fruits, vegetables, bakery and other	1,996,667		682,027		315,778		—		2,994,472
Dairy products	1,448,604		388,401		141,137		—		1,978,142
Poultry	1,340,095		285,312		261,300		—		1,886,707
Fresh produce	1,308,581		265,417		65,891		—		1,639,889
Paper and disposables	971,489		129,881		188,075		14,099		1,303,544
Seafood	507,958		110,121		44,056		—		662,135
Beverage products	335,748		164,368		139,137		21,330		660,583



Other (1)	409,550		266,374		25,607		247,897		949,428
Total Sales	$	13,494,443	$	3,596,458	$	1,913,715	$	283,326	$	19,287,942


(1)			Other sales relate to non-food products, including textiles and amenities for our hotel supply business, equipment, and other janitorial products, medical supplies and smallwares.


	13-Week Period Ended Dec. 31, 2022
	US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
	(In thousands)
Principal Product Categories
Canned and dry products	$	2,502,665	$	700,622	$	236,726	$	—	$	3,440,013
Fresh and frozen meats	2,390,929		445,018		452,370		—		3,288,317
Frozen fruits, vegetables, bakery and other	1,851,344		596,100		338,379		—		2,785,823
Dairy products	1,498,039		358,639		160,753		—		2,017,431
Poultry	1,329,071		285,343		265,269		—		1,879,683

Fresh produce	1,385,083		257,641		66,099		—		1,708,823
Paper and disposables	976,231		134,507		210,691		13,484		1,334,913


Seafood	547,760		109,290		37,810		—		694,860
Beverage products	303,789		133,515		136,668		21,318		595,290



Other (1)	292,143		261,736		28,771		266,150		848,800
Total Sales	$	13,077,054	$	3,282,411	$	1,933,536	$	300,952	$	18,593,953


	26-Week Period Ended Dec. 30, 2023
	US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
	(In thousands)
Principal Product Categories
Canned and dry products	$	5,285,985	$	1,632,713	$	461,617	$	—	$	7,380,315
Fresh and frozen meats	5,143,634		1,023,128		984,691		—		7,151,453
Frozen fruits, vegetables, bakery and other	4,024,601		1,355,575		621,077		—		6,001,253
Dairy products	2,902,553		802,572		282,568		—		3,987,693
Poultry	2,701,790		576,635		535,008		—		3,813,433

Fresh produce	2,669,938		540,135		136,209		—		3,346,282
Paper and disposables	1,965,326		304,206		374,618		30,380		2,674,530
Seafood	1,085,593		235,145		87,572		—		1,408,310

Beverage products	698,413		334,921		285,359		45,196		1,363,889
Other (1)	740,409		474,638		51,010		515,181		1,781,238

Total Sales	$	27,218,242	$	7,279,668	$	3,819,729	$	590,757	$	38,908,396


	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	—		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


	Dec. 30, 2023		Dec. 31, 2022
	(In thousands)
Non-cash investing and financing activities:
Plant and equipment acquired through financing programs	$	158,454	$	52,360
Assets obtained in exchange for finance lease obligations	52,367		81,799


	Dec. 30, 2023
	Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Short-Term Marketable Securities		Long-Term Marketable Securities
	(In thousands)
Fixed income securities:
Corporate bonds	$	100,865	$	523	$	(4,585)	$	96,803	$	23,032	$	73,771
Government bonds	29,628		—		(1,368)		28,260		—		28,260
Total marketable securities	$	130,493	$	523	$	(5,953)	$	125,063	$	23,032	$	102,031

	Jul. 1, 2023
	Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Short-Term Marketable Securities		Long-Term Marketable Securities
	(In thousands)
Fixed income securities:
Corporate bonds	$	99,501	$	96	$	(6,777)	$	92,820	$	12,767	$	80,053
Government bonds	29,777		—		(1,913)		27,864		—		27,864
Total marketable securities	$	129,278	$	96	$	(8,690)	$	120,684	$	12,767	$	107,917


	Dec. 30, 2023
	(In thousands)
Due in one year or less	$	23,032
Due after one year through five years	62,334
Due after five years	39,697

Total	$	125,063


	26-Week Period Ended Dec. 31, 2022
	US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
	(In thousands)
Principal Product Categories
Canned and dry products	$	5,079,917	$	1,391,996	$	472,894	$	1,931	$	6,946,738
Fresh and frozen meats	4,856,379		898,382		915,810		—		6,670,571
Frozen fruits, vegetables, bakery and other	3,694,811		1,176,132		647,576		149		5,518,668
Dairy products	3,023,521		725,486		325,401		—		4,074,408
Poultry	2,903,321		578,193		542,733		—		4,024,247

Fresh produce	2,723,003		512,378		131,343		—		3,366,724
Paper and disposables	1,999,135		278,574		420,049		28,541		2,726,299
Seafood	1,186,165		230,491		77,934		—		1,494,590
Beverage products	619,407		269,991		274,835		45,974		1,210,207



Other (1)	593,877		504,523		58,418		531,513		1,688,331
Total Sales	$	26,679,536	$	6,566,146	$	3,866,993	$	608,108	$	37,720,783


	Assets Measured at Fair Value as of Dec. 30, 2023
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash equivalents
Cash and cash equivalents	$	573,597	$	3	$	—	$	573,600

Other assets (1)	133,491		—		—		133,491







Total assets at fair value	$	707,088	$	3	$	—	$	707,091


(1)			Represents restricted cash balance recorded within other assets in the consolidated balance sheet.


	Assets Measured at Fair Value as of Jul. 1, 2023
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash equivalents
Cash and cash equivalents	$	308,952	$	10,021	$	—	$	318,973



Other assets (1)	220,831		—		—		220,831

Total assets at fair value	$	529,783	$	10,021	$	—	$	539,804


		Derivative Fair Value
	Balance Sheet location	Dec. 30, 2023		Jul. 1, 2023
		(In thousands)
Fair Value Hedges:

Cross currency swaps	Other assets	$	1,198	$	—
Interest rate swaps	Other assets	24,557		—


Cross currency swaps	Other current liabilities	1,497		1,262


Cash Flow Hedges:
Fuel swaps	Other current assets	$	168	$	102
Foreign currency forwards	Other current assets	74		624

Fuel swaps	Other assets	136		40

Fuel swaps	Other current liabilities	10,372		17,932
Foreign currency forwards	Other current liabilities	642		404
Fuel swaps	Other long-term liabilities	2,794		5,637

Net Investment Hedges:
Cross currency swaps	Other current assets	$	3,377	$	—
Cross currency swaps	Other long-term liabilities	25,738		—


	13-Week Period Ended Dec. 30, 2023
	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives		Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
	(In thousands)			(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps	$	(24,524)	Operating expense	$	669
Foreign currency contracts	(507)		Cost of sales / Other income	—

Total	$	(25,031)		$	669

Derivatives in net investment hedging relationships:
Cross currency contracts	$	(22,361)	N/A	$	—




Derivatives in fair value hedging relationships:
Change in excluded component of fair value hedge	$	210	Other expense (income)	$	—

	13-Week Period Ended Dec. 31, 2022
	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives		Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
	(In thousands)			(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps	$	1,140	Operating expense	$	12,377
Foreign currency contracts	49		Cost of sales / Other income	—

Total	$	1,189		$	12,377

Derivatives in net investment hedging relationships:

Foreign denominated debt	$	(44,999)	N/A	$	—


	Dec. 30, 2023
	Carrying Amount of Hedged Assets (Liabilities)		Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities)
	(In thousands)
Balance sheet location:

Long-term debt	$	(518,622)	$	(27,048)


Maturity Date	Par Value (in millions)		Coupon Rate		Pricing (percentage of par)
January 17, 2029 (the 2029 Notes)	$	500	5.75	%	99.784	%
January 17, 2034 (the 2034 Notes)	500		6.00		99.037


	13-Week Period			26-Week Period
		Ended (1)		Ended (1)
		Dec. 31, 2022		Dec. 31, 2022
	(In thousands)			(In thousands)
Service cost		$	2,034	$	4,357
Interest cost		38,103		80,604
Expected return on plan assets		(36,957)		(76,977)
Amortization of prior service cost		98		197
Amortization of actuarial loss		7,661		16,609
Settlement loss recognized		315,354		315,354
Net pension costs		$	326,293	$	340,144



(1)			Net pension costs were not material for the second quarter and first 26 weeks of fiscal 2024.


		13-Week Period Ended Dec. 30, 2023
	Location of Expense (Income) Recognized in Net Earnings	Before Tax Amount		Tax		Net of Tax Amount
		(In thousands)
Pension and other postretirement benefit plans:







Reclassification adjustments:
Amortization of prior service cost	Other expense, net	$	195	$	49	$	146
Amortization of actuarial loss, net	Other expense, net	6,676		1,665		5,011
Total reclassification adjustments		6,871		1,714		5,157
Foreign currency translation:

Foreign currency translation adjustment	N/A	163,084		—		163,084
Marketable securities:
Change in marketable securities (1)	N/A	4,359		915		3,444
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in excluded component of fair value hedge	Other expense, net	210		52		158
Change in cash flow hedges	Operating expenses (2)	(25,031)		(4,806)		(20,225)
Change in net investment hedges	N/A	(22,361)		(5,620)		(16,741)

Total other comprehensive (loss) before reclassification adjustments		(47,182)		(10,374)		(36,808)
Reclassification adjustments:
Amortization of cash flow hedges	Interest expense	2,893		723		2,170

Total other comprehensive income (loss)		$	130,025	$	(7,022)	$	137,047


(1)			Realized gains or losses on marketable securities are presented within other (income) expense, net in the consolidated results of operations; however, there were no significant gains or losses realized in the second quarter of fiscal 2024.
(2)			Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.


	26-Week Period Ended Dec. 30, 2023
	Pension and Other Postretirement Benefit Plans, net of tax		Foreign Currency Translation		Hedging, net of tax		Marketable Securities, net of tax		Total
	(In thousands)
Balance as of Jul. 1, 2023	$	(839,541)	$	(374,290)	$	(31,966)	$	(6,793)	$	(1,252,590)

Net actuarial loss arising in the current year	503		—		—		—		503

Equity adjustment from foreign currency translation	—		54,890		—		—		54,890
Amortization of cash flow hedges	—		—		4,340		—		4,340

Change in net investment hedges					(16,741)				(16,741)
Change in excluded component of fair value hedge	—		—		138		—		138
Change in cash flow hedge	—		—		6,923		—		6,923


Amortization of unrecognized prior service cost	292		—		—		—		292
Amortization of unrecognized net actuarial losses	9,993		—		—		—		9,993
Change in marketable securities	—		—		—		2,499		2,499
Balance as of Dec. 30, 2023	$	(828,753)	$	(319,400)	$	(37,306)	$	(4,294)	$	(1,189,753)


(1)			Other expense (income), net was expense of $5.2 million and $330.3 million in the second quarter of fiscal 2024 and fiscal 2023, respectively.
(2)			Other expense (income), net was expense of $11.9 million and $348.1 million in the first 26 weeks of fiscal 2024 and fiscal 2023, respectively.


	13-Week Period Ended Dec. 30, 2023
	U.S. Foodservice Operations			International Foodservice Operations			SYGMA			Other			Global Support Center			Consolidated Totals
	(In thousands)
Sales	$	13,494,443		$	3,596,458		$	1,913,715		$	283,326		$	—		$	19,287,942
Sales increase (decrease)	3.2		%	9.6		%	(1.0)		%	(5.9)		%				3.7		%
Percentage of total	70.0		%	18.6		%	9.9		%	1.5		%				100.0		%

Operating income (loss)	$	839,036		$	82,930		$	16,346		$	8,387		$	(246,656)		$	700,043
Operating income (loss) increase (decrease)	7.4		%	44.4		%	NM			(15.0)		%	15.1		%	9.2		%
Percentage of total segments	88.6		%	8.8		%	1.7		%	0.9		%				100.0		%
Operating income as a percentage of sales	6.2		%	2.3		%	0.9		%	3.0		%				3.6		%


	13-Week Period Ended Dec. 30, 2023		13-Week Period Ended Dec. 31, 2022		Change in Dollars		% Change
	(Dollars in thousands)
Sales	$	13,494,443	$	13,077,054	$	417,389	3.2	%
Gross profit	2,577,694		2,493,089		84,605		3.4
Operating expenses	1,738,658		1,712,121		26,537		1.5
Operating income	$	839,036	$	780,968	$	58,068	7.4	%

Gross profit	$	2,577,694	$	2,493,089	$	84,605	3.4	%
Adjusted operating expenses (Non-GAAP)	1,726,568		1,702,173		24,395		1.4
Adjusted operating income (Non-GAAP)	$	851,126	$	790,916	$	60,210	7.6	%

	26-Week Period Ended Dec. 30, 2023		26-Week Period Ended Dec. 31, 2022		Change in Dollars		% Change
	(Dollars in thousands)
Sales	$	27,218,242	$	26,679,536	$	538,706	2.0	%
Gross profit	5,262,469		5,105,432		157,037		3.1
Operating expenses	3,482,462		3,418,753		63,709		1.9
Operating income	$	1,780,007	$	1,686,679	$	93,328	5.5	%

Gross profit	$	5,262,469	$	5,105,432	$	157,037	3.1	%
Adjusted operating expenses (Non-GAAP)	3,457,770		3,398,859		58,911		1.7
Adjusted operating income (Non-GAAP)	$	1,804,699	$	1,706,573	$	98,126	5.7	%


	Increase (Decrease)				Increase (Decrease)
	13-Week Period				26-Week Period
	(Dollars in millions)				(Dollars in millions)
Cause of change	Percentage		Dollars		Percentage		Dollars
Case volume (1)	4.2	%	$	541.4	2.7	%	$	728.9
Deflation	(0.7)		(94.2)		(0.5)		(139.3)

Other (2)	(0.3)		(29.8)		(0.2)		(50.9)
Total change in sales	3.2	%	$	417.4	2.0	%	$	538.7




(1)			Case volumes increased 3.4% and 2.5% compared to the second quarter and first 26 weeks of fiscal 2023, respectively. This volume increase resulted in a 4.2% and 2.7% increase in the dollar value of sales compared to the second quarter and first 26 weeks of fiscal 2023, respectively.
(2)			Case volume reflects our broadline and specialty businesses, with the exception of our specialty meats business, which measures its volume in pounds, and Edward Don. Any impact in volumes from these operations are included within “Other.”


(1)			The impact of volumes as a component of sales growth from international operations are included within “Other.” Volume in our foreign operations includes volume metrics that differ from country to country and cannot be aggregated on a consistent, comparable basis.


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.