Sysco Reports Second Quarter Results

HOUSTON, Jan. 31, 2023 (GLOBE NEWSWIRE) -- Sysco Corporation (NYSE: SYY) (“Sysco” or the “company”) today announced financial results for its 13-week second fiscal quarter ended December 31, 2022.

Key financial results for the second quarter of fiscal year 2023 include:

  • Sales increased 13.9% versus the same period in fiscal year 2022;
  • U.S. Foodservice volume increased 5.2% versus the same period in fiscal year 2022;
  • Gross profit increased 15.9% to $3.3 billion, as compared to the same period last year;
  • Operating income increased 44.0% to $640.6 million, and adjusted1 operating income increased to $682.1 million, as compared to the same period last year;
  • Earnings before interest, taxes, depreciation and amortization (“EBITDA”) decreased 22.6% to $500.5 million, and adjusted EBITDA increased 23.9% to $831.3 million, in each case as compared to the same period last year.2 During the quarter, GAAP earnings included a pension liability transfer, resulting in a non-cash charge of $315.4 million;
  • Earnings per share (“EPS”)3 decreased 15.2% to $0.28, as compared to $0.33 in the same period last year. Adjusted1 EPS increased 40.4% to $0.80, as compared to $0.57 in the same period last year; and
  • Net Debt to adjusted EBITDA4 of 3.0x times and returned over $249 million of capital to shareholders.

“Sysco results this quarter included double-digit top-line and bottom-line growth, ongoing market share gains and continued advancement of our Recipe For Growth strategy. This includes improvements in our digital tools, supply chain investments, and sales and merchandising initiatives. We remain fully staffed, and we are resolute on continuing to drive profitable share gains and operating efficiency improvements in the second half of the year,” said Kevin Hourican, Sysco’s President and Chief Executive Officer.

“We achieved solid financial results for the second quarter, including strong top-line growth and expanded gross profit dollar growth. Sequential improvements in operating expense helped drive meaningful profit growth. We remain focused on exceeding our customers’ expectations, while continuing to manage costs, and anticipate seeing additional benefit from our Recipe For Growth strategy in the second half of this fiscal year and into next fiscal year,” said Neil Russell, Sysco’s Interim Chief Financial Officer.

_______________________

1 Adjusted financial results, including adjusted operating expense, adjusted operating income (loss), adjusted other expense (income), adjusted earnings per share (EPS) and adjusted EBITDA, are non-GAAP financial measures that exclude certain items, which primarily include acquisition-related costs, restructuring costs, transformational project costs, 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. Specific to adjusted EPS, this 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. Last year’s Certain Items include the impact of losses on the extinguishment of long-term debt and an increase in reserves for uncertain tax positions.
2 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.
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.

Second Quarter Fiscal Year 2023 Results

Total Sysco

Sales for the second quarter were $18.6 billion, an increase of 13.9% compared to the same period last year.

Gross profit increased 15.9% to $3.3 billion, and gross margin increased 29 basis points to 18.0%, compared in each case to the same period last year. Product cost inflation was 8.3% at the total enterprise level, as measured by the estimated change in Sysco’s product costs, primarily in the dairy, fresh produce and frozen food 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 partnership growth management initiatives.

Operating expenses increased $262.7 million, or 10.7%, compared to the same period last year, driven by increased volumes, cost inflation, operational pressures from the operating environment and our planned investments to drive our transformation initiatives. Adjusted operating expenses increased $272.1 million, or 11.4%, compared to the same period last year.

Operating income was $640.6 million, an increase of $195.7 million, or 44.0%, compared to the same period last year. Adjusted operating income was $682.1 million, an increase of $186.4 million compared to the same period last year.

Other expense (income), net was $330.1 million, and included a pension liability transfer, resulting in a non-cash charge of $315.4 million. Adjusted other expense (income), net was $15.2 million, an increase of $25.9 million, compared to the same period last year, primarily due to increased pension expenses.

U.S. Foodservice Operations

The U.S. Foodservice Operations segment generated strong sales growth, overall share gains and improved profitability.

Sales for the second quarter were $13.1 billion, an increase of 13.7% compared to the same period last year. Local case volume within U.S. Foodservice grew 3.2% for the second quarter, while total case volume within U.S. Foodservice grew 5.2%, in each case as compared to the same period last year.

Gross profit increased 16.5% to $2.5 billion, and gross margin increased 45 basis points to 19.1%, compared in each case to the same period last year.

Operating expenses increased $249.7 million, or 17.1%, compared to the same period last year. Adjusted operating expenses increased $247.6 million, or 17.0%, compared to the same period last year.

Operating income increased 15.4% to $781.0 million, an increase of $104.1 million compared to the same period last year. Adjusted operating income increased 15.5% to $790.9 million, an increase of $106.2 million compared to the same period last year.

International Foodservice Operations

The International Foodservice Operations segment continued to deliver positive results, with strong sales and significant profit growth.

Sales for the second quarter were $3.3 billion, an increase of 17.0% compared to the same period last year. On a constant currency basis5, sales for the second quarter were $3.6 billion, an increase of 28.6% compared to the same period last year. Foreign exchange rates decreased both International Foodservice Operations sales by 11.6% and total Sysco sales by 2.1% during the quarter.

Gross profit increased 10.3% to $624.5 million, and gross margin decreased 115 basis points to 19.0%, compared in each case to the same period last year. On a constant currency basis5, gross profit increased 22.0% to $690.3 million. Foreign exchange rates decreased both International Foodservice Operations gross profit by 11.7% and total Sysco gross profit by 2.3% during the quarter.

Operating expenses increased $11.9 million, or 2.1%, compared to the same period last year. Adjusted operating expenses increased $19.5 million, or 3.7%, compared to the same period last year. On a constant currency basis5, adjusted operating expenses increased $80.8 million, or 15.3%, compared to the same period last year. Foreign exchange rates decreased both International Foodservice Operations operating expenses by 11.6% and total Sysco operating expenses by 2.8% during the quarter.

Operating income was $57.4 million, an improvement of $46.6 million compared to the same period last year. Adjusted operating income increased $39.0 million compared to the same period last year. On a constant currency basis5, adjusted operating income was $83.3 million, an increase of $43.6 million compared to the same period last year. Foreign exchange rates decreased both International Foodservice Operations operating income by $4.6 million and total Sysco operating income by $0.9 million during the quarter.

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.

Balance Sheet, Cash Flow and Capital Spending

As of the end of the quarter, the company had a cash balance of $500.3 million and approximately $11.1 billion of debt outstanding.

During the first 26 weeks of fiscal 2023, Sysco returned $766.0 million to shareholders via $267.7 million of share repurchases and $498.3 million of dividends.

Cash flow from operations was $503.5 million for the first 26 weeks of fiscal 2023, which was an increase of $126.4 million over the prior year period.

Capital expenditures, net of proceeds from sales of plant and equipment, for the first 26 weeks of fiscal 2023 were $284.2 million.

Free cash flow6 for the first 26 weeks of fiscal 2023 was $219.3 million, which was an increase of $18.2 million over the prior year period.

________________________

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 second quarter fiscal 2023 financial results on Tuesday, January 31, 2023, 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 31, 2022ChangeDecember 31, 2022Change
GAAP:    
Sales$18.6 billion13.9%$37.7 billion15.1%
Gross profit$3.3 billion15.9%$6.8 billion16.6%
Gross Margin18.0%29 bps18.1%24 bps
Operating expenses$2.7 billion10.7%$5.5 billion14.1%
Operating Income$640.6 million44.0%$1.4 billion27.7%
Operating Margin3.5%72 bps3.7%37 bps
Net Earnings$141.2 million-15.7%$606.8 million11.2%
Diluted Earnings Per Share$0.28-15.2%$1.1912.3%
     
Non-GAAP (1):    
Gross profit$3.3 billion15.9%$6.8 billion16.6%
Gross Margin18.0%29 bps18.1%23 bps
Operating Expenses$2.7 billion11.4%$5.4 billion15.0%
Operating Income$682.1 million37.6%$1.5 billion23.0%
Operating Margin3.7%63 bps3.9%25 bps
EBITDA$500.5 million-22.6%$1.4 billion-4.1%
Adjusted EBITDA$831.3 million23.9%$1.7 billion14.7%
Net Earnings$407.9 million39.7%$900.5 million24.8%
Diluted Earnings Per Share (2)$0.8040.4%$1.7625.7%
     
Case Growth:    
U.S. Foodservice5.2% 6.3% 
Local3.2% 4.3% 
     
Sysco Brand Sales as a % of Cases:    
U.S. Broadline37.1%65 bps37.2%57 bps
Local46.4%157 bps46.6%153 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 2023 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 effect, impact, potential duration or other 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 expectations regarding the impact of our growth initiatives and their ability to enable Sysco to consistently outperform the market; our expectations regarding the impact of the Concord Foods acquisition on our business; our expectations regarding our ability to grow faster than the total market in fiscal 2023 and 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; our expectations regarding profits and sales in fiscal 2023; 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 GSC expense control measures; our expectations regarding the growth and resilience of our Food Away From Home market; and our expectations regarding additional improvements from snap-back costs and productivity expenses during the fiscal third quarter.
 
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 2, 2022, 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 71,000 colleagues, the company operates 333 distribution facilities worldwide and serves approximately 700,000 customer locations. For fiscal year 2022 that ended July 2, 2022, the company generated sales of more than $68 billion. Information about our Sustainability program, including Sysco’s 2022 Sustainability Report and 2022 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
  Dec. 31, 2022  Jan. 1, 2022   Dec. 31, 2022  Jan. 1, 2022 
              
Sales$18,593,953 $16,320,203  $37,720,783 $32,776,749 
Cost of sales 15,244,337  13,429,053   30,882,312  26,913,891 
Gross profit 3,349,616  2,891,150   6,838,471  5,862,858 
Operating expenses 2,708,974  2,446,241   5,463,496  4,786,267 
Operating income 640,642  444,909   1,374,975  1,076,591 
Interest expense 132,042  242,899   256,192  371,113 
Other expense (income), net (1) 330,124  (10,676)  345,405  (13,928)
Earnings before income taxes 178,476  212,686   773,378  719,406 
Income taxes 37,260  45,245   166,594  173,952 
Net earnings$141,216 $167,441  $606,784 $545,454 
              
Net earnings:             
Basic earnings per share$0.28 $0.33  $1.20 $1.07 
Diluted earnings per share 0.28  0.33   1.19  1.06 
              
Average shares outstanding 507,609,696  511,044,400   507,594,137  511,780,234 
Diluted shares outstanding 510,145,794  514,574,889   510,264,473  515,178,910 


(1Sysco’s second quarter of fiscal 2023 included a charge for $315.4 million in other expense related to pension settlement charges.


Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In Thousands, Except for Share Data)
  Dec. 31, 2022   Jul. 2, 2022 
ASSETS
Current assets       
Cash and cash equivalents$500,340  $867,086 
Accounts receivable, less allowances of $84,646 and $70,790 4,907,836   4,838,912 
Inventories 4,661,516   4,437,498 
Prepaid expenses and other current assets 300,513   303,789 
Income tax receivable 25,801   35,934 
Total current assets 10,396,006   10,483,219 
Plant and equipment at cost, less accumulated depreciation 4,562,435   4,456,420 
Other long-term assets       
Goodwill 4,576,898   4,542,315 
Intangibles, less amortization 911,196   952,683 
Deferred income taxes 435,183   377,604 
Operating lease right-of-use assets, net 708,535   723,297 
Other assets 496,978   550,150 
Total other long-term assets 7,128,790   7,146,049 
Total assets$22,087,231  $22,085,688 
        
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities       
Accounts payable$5,420,422  $5,752,958 
Accrued expenses 2,128,945   2,270,753 
Accrued income taxes 33,017   40,042 
Current operating lease liabilities 104,070   105,690 
Current maturities of long-term debt 702,067   580,611 
Total current liabilities 8,388,521   8,750,054 
Long-term liabilities       
Long-term debt 10,349,913   10,066,931 
Deferred income taxes 232,444   250,171 
Long-term operating lease liabilities 633,824   636,417 
Other long-term liabilities 1,012,634   967,907 
Total long-term liabilities 12,228,815   11,921,426 
Commitments and contingencies       
Noncontrolling interest 33,306   31,948 
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 1,774,141   1,766,305 
Retained earnings 10,649,338   10,539,722 
Accumulated other comprehensive loss (1,324,788)  (1,482,054)
Treasury stock at cost, 257,846,972 and 256,531,543 shares (10,427,277)  (10,206,888)
Total shareholders’ equity 1,436,589   1,382,260 
Total liabilities and shareholders’ equity$22,087,231  $22,085,688 


Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED CASH FLOWS (Unaudited)
(In Thousands)
 Year Ended
  Dec. 31, 2022   Jan. 1, 2022 
Cash flows from operating activities:       
Net earnings$606,784  $545,454 
Adjustments to reconcile net earnings to cash provided by operating activities:       
Pension settlement charge 315,354    
Share-based compensation expense 52,679   60,254 
Depreciation and amortization 378,949   377,763 
Operating lease asset amortization 55,884   54,856 
Amortization of debt issuance and other debt-related costs 10,315   11,014 
Deferred income taxes (123,187)  (72,892
Provision for losses on receivables 9,732   1,508 
Loss on extinguishment of debt    115,603 
Other non-cash items 11,525   1,103 
Additional changes in certain assets and liabilities, net of effect of businesses acquired:       
Increase in receivables (87,190  (385,179
Increase in inventories (222,650  (357,908
Increase in prepaid expenses and other current assets (8,915  (12,560
(Decrease) increase in accounts payable (390,124  83,214 
(Decrease) increase in accrued expenses (62,779  95,388 
Decrease in operating lease liabilities (57,234  (65,123
Increase (decrease) in accrued income taxes 3,108   (111,227
Decrease (increase) in other assets 22,156   (4,255
(Decrease) increase in other long-term liabilities (10,941)  40,034 
Net cash provided by operating activities 503,466   377,047 
Cash flows from investing activities:       
Additions to plant and equipment (309,664  (181,374
Proceeds from sales of plant and equipment 25,493   5,450 
Acquisition of businesses, net of cash acquired (37,699  (769,658
Purchase of marketable securities (14,019  (18,539
Proceeds from sales of marketable securities 11,641   16,648 
Other investing activities (1) 4,840   6,651 
Net cash used for investing activities (319,408)  (940,822
Cash flows from financing activities:       
Bank and commercial paper borrowings, net 155,000    
Other debt borrowings including senior notes 140,024   1,249,995 
Other debt repayments including senior notes (57,270)  (23,050
Redemption premiums and repayments for senior notes    (1,395,668
Debt issuance costs    (15,547
Cash received from termination of interest rate swap agreements    23,127 
Proceeds from stock option exercises 47,339   36,083 
Stock repurchases (267,727)  (415,824
Dividends paid (498,323)  (481,386
Other financing activities (2) (46,517)  (5,297
Net cash used for financing activities (527,474)  (1,027,567
Effect of exchange rates on cash, cash equivalents and restricted cash (2,314)  (10,868
Net decrease in cash and cash equivalents (3) (345,730)  (1,602,210
Cash, cash equivalents and restricted cash at beginning of period 931,376   3,037,100 
Cash, cash equivalents and restricted cash at end of period (3)$585,646  $1,434,890 
Supplemental disclosures of cash flow information:       
Cash paid during the period for:       
Interest$244,530  $258,436 
Income taxes, net of refunds 289,413   342,628 


(1Change primarily includes proceeds from the settlement of corporate-owned life insurance policies.
(2Change includes cash paid for shares withheld to cover taxes, settlement of interest rate hedges and other financing activities.
(3Change includes restricted cash included within other assets in the Consolidated Balance Sheet.


Sysco Corporation and its Consolidated Subsidiaries
Non-GAAP Reconciliation (Unaudited)
Impact of Certain Items
 
Our discussion of our results includes certain non-GAAP financial measures, such as EBITDA and adjusted EBITDA, that we believe provide important perspective with respect to underlying business trends. Other than free cash flow and EBITDA, any non-GAAP financial measures will be denoted as adjusted measures to remove the impact of: (1) restructuring and transformational project costs consisting of: (a) restructuring charges, (b) expenses associated with our various transformation initiatives and (c) facility closure and severance charges; (2) acquisition-related costs consisting of: (a) intangible amortization expense and (b) acquisition costs and due diligence costs related to our acquisitions; and (3) 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. Our results for fiscal 2023 were also impacted by adjustments to a product return allowance related to COVID-related personal protection equipment inventory and 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. Our results for fiscal 2022 were also impacted by debt extinguishment costs and an increase in reserves for uncertain tax positions.
 
The results of our foreign operations can be impacted due to changes in exchange rates applicable in converting local currencies to U.S. dollars. We measure our total Sysco and our International Foodservice Operations 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 International Foodservice Operations results on a constant currency basis, provides an important perspective with respect to our underlying business trends and results and 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 2023 and fiscal 2022.
 
Set forth below is a reconciliation of sales, operating expenses, operating income, 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 add up to the total presented 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
Dec. 31, 2022
   13-Week
Period Ended
Jan. 1, 2022
   Change in
Dollars
  % Change 
Sales (GAAP)$
18,593,953  $16,320,203  $2,273,750  13.9 %
Impact of currency fluctuations (1) 332,426      332,426  2.1 
Comparable sales using a constant currency basis (Non-GAAP)$18,926,379  $16,320,203  $2,606,176  16.0 % 
               
Cost of sales (GAAP)$15,244,337  $13,429,053  $1,815,284  13.5 % 
               
Gross profit (GAAP)$3,349,616  $2,891,150  $458,466  15.9 % 
Impact of currency fluctuations (1) 67,898      67,898  2.3 
Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP)$
3,417,514  $2,891,150  $526,364  18.2 % 
               
Gross margin (GAAP) 18.01 %  17.72 %     29 bps 
Impact of currency fluctuations (1) 0.05         5 bps 
Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP) 18.06 %  17.72 %     34 bps 
               
Operating expenses (GAAP)$2,708,974  $2,446,241  $262,733  10.7 %
Impact of restructuring and transformational project costs (2) (14,388)  (23,469)  9,081  38.7 
Impact of acquisition-related costs (3) (28,960)  (33,732)  4,772  14.1 
Impact of bad debt reserve adjustments (4) 1,923   6,438   (4,515) (70.1)
Operating expenses adjusted for Certain Items (Non-GAAP) 2,667,549   2,395,478   272,071  11.4 
Impact of currency fluctuations (1) 66,976      66,976  2.8 
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)$2,734,525  $2,395,478  $339,047  14.2 %
               
Operating expense as a percentage of sales (GAAP) 14.57 %  14.99  %     -42 bps 
Impact of certain item adjustments (0.22)  (0.31)     9 bps 
Adjusted operating expense as a percentage of sales (Non-GAAP) 14.35 %  14.68 %      -33 bps 
               
Operating income (GAAP)$640,642  $444,909  $195,733  44.0 %
Impact of restructuring and transformational project costs (2) 14,388   23,469   (9,081) (38.7)
Impact of acquisition-related costs (3) 28,960   33,732   (4,772) (14.1)
Impact of bad debt reserve adjustments (4) (1,923)  (6,438)  4,515  70.1 
Operating income adjusted for Certain Items (Non-GAAP) 682,067   495,672   186,395  37.6 
Impact of currency fluctuations (1) 922      922  0.2 
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)$682,989  $495,672  $187,317  37.8 %
               
Operating margin (GAAP) 3.45  2.73 %     72 bps 
Operating margin adjusted for Certain Items (Non-GAAP) 3.67  3.04 %     63 bps 
Operating margin adjusted for Certain Items using a constant currency basis (Non-GAAP) 3.61  3.04 %     57 bps 
               
Interest expense (GAAP)$132,042  $242,899  $(110,857) (45.6) %
Impact of loss on extinguishment of debt    (115,603)  115,603  NM 
Interest expense adjusted for Certain Items (Non-GAAP)$132,042  $127,296  $4,746  3.7 %
               
Other expense (income) (GAAP)$330,124  $(10,676) $340,800  NM 
Impact of other non-routine gains and losses (5) (314,878)     (314,878) NM 
Other expense (income) adjusted for Certain Items (Non-GAAP)$15,246  $(10,676) $25,922  NM 
               
Net earnings (GAAP)$141,216  $167,441  $(26,225) (15.7) %
Impact of restructuring and transformational project costs (2) 14,388   23,469   (9,081) (38.7)
Impact of acquisition-related costs (3) 28,960   33,732   (4,772) (14.1)
Impact of bad debt reserve adjustments (4) (1,923)  (6,438)  4,515  70.1 
Impact of loss on extinguishment of debt    115,603   (115,603) NM 
Impact of other non-routine gains and losses (5) 314,878      314,878  NM 
Tax impact of restructuring and transformational project costs (6) (3,618)  (5,897)  2,279  38.6 
Tax impact of acquisition-related costs (6) (7,283)  (8,475)  1,192  14.1 
Tax impact of bad debt reserves adjustments (6) 484   1,617   (1,133) (70.1)
Tax impact of loss on extinguishment of debt (6)    (29,111)  29,111  NM 
Tax impact of other non-routine gains and losses (6) (79,185)     (79,185) NM 
Net earnings adjusted for Certain Items (Non-GAAP)$407,917  $291,941  $115,976  39.7 %
               
Diluted earnings per share (GAAP)$0.28  $0.33  $(0.05) (15.2) %
Impact of restructuring and transformational project costs (2) 0.03   0.05   (0.02) (40.0)
Impact of acquisition-related costs (3) 0.06   0.07   (0.01) (14.3)
Impact of bad debt reserve adjustments (4)    (0.01)  0.01  NM 
Impact of loss on extinguishment of debt    0.22   (0.22) NM 
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) (0.01)  (0.02)  0.01  50.0 
Tax impact of loss on extinguishment of debt (6)    (0.06)  0.06  NM 
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)$0.80  $0.57  $0.23  40.4 % 
               
Diluted shares outstanding 510,145,794   514,574,889        


(1) Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on the current year results.
(2) Fiscal 2023 includes $5 million related to restructuring, severance, and facility closure charges and $9 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2022 includes $12 million related to restructuring, severance, and facility closure charges and $12 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy
(3) Fiscal 2023 includes $26 million of intangible amortization expense and $3 million in acquisition and due diligence costs. Fiscal 2022 includes $27 million of intangible amortization expense and $7 million in acquisition and due diligence costs.
(4) Fiscal 2023 and fiscal 2022 represent 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 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.
 NM represents 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)
 26-Week
Period Ended
Dec. 31, 2022
 26-Week
Period Ended
Jan. 1, 2022
 Change in
Dollars
 % Change
Sales (GAAP)$37,720,783  $32,776,749  $4,944,034  15.1 %
Impact of currency fluctuations (1) 651,588      651,588  2.0 
Comparable sales using a constant currency basis (Non-GAAP)$38,372,371  $32,776,749  $5,595,622  17.1 %
        
Cost of sales (GAAP)$30,882,312  $26,913,891  $3,968,421  14.7 %
Impact of inventory valuation adjustment (2) 2,571      2,571  0.1 
Cost of sales adjusted for Certain Items (Non-GAAP)$30,884,883  $26,913,891  $3,970,992  14.8 %
        
Gross profit (GAAP)$6,838,471  $5,862,858  $975,613  16.6 %
Impact of inventory valuation adjustment (2) (2,571)     (2,571)  
Comparable gross profit adjusted for Certain Items (Non-GAAP) 6,835,900   5,862,858   973,042  16.6 
Impact of currency fluctuations (1) 140,932      140,932  2.4 
Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP)$6,976,832  $5,862,858  $1,113,974  19.0 %
        
Gross margin (GAAP) 18.13 %  17.89 %   24 bps
Impact of inventory valuation adjustment (2) (0.01)      -1 bps
Comparable gross margin adjusted for Certain Items (Non-GAAP) 18.12   17.89    23 bps
Impact of currency fluctuations (1) 0.06       6 bps
Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP) 18.18 %  17.89 %   29 bps
        
Operating expenses (GAAP)$5,463,496  $4,786,267  $677,229  14.1 %
Impact of restructuring and transformational project costs (3) (26,034)  (47,980)  21,946  45.7 
Impact of acquisition-related costs (4) (58,415)  (69,658)  11,243  16.1 
Impact of bad debt reserve adjustments (5) 4,515   13,499   (8,984) (66.6)
Operating expenses adjusted for Certain Items (Non-GAAP) 5,383,562   4,682,128   701,434  15.0 
Impact of currency fluctuations (1) 137,670      137,670  2.9 
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)$5,521,232  $4,682,128  $839,104  17.9 %
        
Operating expense as a percentage of sales (GAAP) 14.48 %  14.60 %   -12 bps
Impact of certain item adjustments (0.21)  (0.32)   11 bps
Adjusted operating expense as a percentage of sales (Non-GAAP) 14.27 %  14.28 %   -1 bps
        
Operating income (GAAP)$1,374,975  $1,076,591  $298,384  27.7 %
Impact of inventory valuation adjustment (2) (2,571)     (2,571) NM
Impact of restructuring and transformational project costs (3) 26,034   47,980   (21,946) (45.7)
Impact of acquisition-related costs (4) 58,415   69,658   (11,243) (16.1)
Impact of bad debt reserve adjustments (5) (4,515)  (13,499)  8,984  66.6 
Operating income adjusted for Certain Items (Non-GAAP) 1,452,338   1,180,730   271,608  23.0 
Impact of currency fluctuations (1) 3,262      3,262  0.3 
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)$1,455,600  $1,180,730  $274,870  23.3 %
        
Operating margin (GAAP) 3.65 %  3.28 %   37 bps
Operating margin adjusted for Certain Items (Non-GAAP) 3.85 %  3.60 %   25 bps
Operating margin adjusted for Certain Items using a constant currency basis (Non-GAAP) 3.79 %  3.60 %   19 bps
        
Interest expense (GAAP)$256,192  $371,113  $(114,921) (31.0) %
Impact of loss on extinguishment of debt    (115,603)  115,603  NM
Interest expense adjusted for Certain Items (Non-GAAP)$256,192  $255,510  $682  0.3 %
        
Other expense (income) (GAAP)$345,405  $(13,928) $359,333  NM
Impact of other non-routine gains and losses (6) (314,878)     (314,878) NM
Other expense (income) adjusted for Certain Items (Non-GAAP)$30,527  $(13,928) $44,455  NM
        
Net earnings (GAAP)$606,784  $545,454  $61,330  11.2 %
Impact of inventory valuation adjustment (2) (2,571)     (2,571) NM
Impact of restructuring and transformational project costs (3) 26,034   47,980   (21,946) (45.7)
Impact of acquisition-related costs (4) 58,415   69,658   (11,243) (16.1)
Impact of bad debt reserve adjustments (5) (4,515)  (13,499)  8,984  66.6 
Impact of loss on extinguishment of debt    115,603   (115,603) 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) (6,538)  (12,082)  5,544  45.9 
Tax impact of acquisition-related costs (7) (14,670)  (17,541)  2,871  16.4 
Tax impact of bad debt reserves adjustments (7) 1,134   3,399   (2,265) (66.6)
Tax impact of loss on extinguishment of debt (7)    (29,111)  29,111  NM
Tax impact of other non-routine gains and losses (7) (79,075)     (79,075) NM
Impact of adjustments to uncertain tax positions    12,000   (12,000) NM
Net earnings adjusted for Certain Items (Non-GAAP)$900,522  $721,861  $178,661  24.8 %
        
Diluted earnings per share (GAAP)$1.19  $1.06  $0.13  12.3 %
Impact of inventory valuation adjustment (2) (0.01)     (0.01) NM
Impact of restructuring and transformational project costs (3) 0.05   0.09   (0.04) (44.4)
Impact of acquisition-related costs (4) 0.11   0.14   (0.03) (21.4)
Impact of bad debt reserve adjustments (5) (0.01)  (0.03)  0.02  66.7 
Impact of loss on extinguishment of debt    0.22   (0.22) NM
Impact of other non-routine gains and losses (6) 0.62      0.62  NM
Tax impact of restructuring and transformational project costs (7) (0.01)  (0.02)  0.01  50.0 
Tax impact of acquisition-related costs (7) (0.03)  (0.03)     
Tax impact of bad debt reserves adjustments (7)    0.01   (0.01) NM
Tax impact of loss on extinguishment of debt (7)    (0.06)  0.06  NM
Tax impact of other non-routine gains and losses (7) (0.15)     (0.15) NM
Impact of adjustments to uncertain tax positions    0.02   (0.02) NM
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (8)$1.76  $1.40  $0.36  25.7 %
        
Diluted shares outstanding 510,264,473   515,178,910     


(1Represents 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 2023 includes $10 million related to restructuring, severance, and facility closure charges and $16 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2022 includes $28 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy and $20 million related to restructuring charges, severance and facility closure charges.
(4)Fiscal 2023 includes $52 million of intangible amortization expense and $6 million in acquisition and due diligence costs. Fiscal 2022 includes $48 million of intangible amortization expense and $21 million in acquisition and due diligence costs.
(5)Fiscal 2023 and fiscal 2022 represent the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(6)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.
(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.
 NM represents 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
Dec. 31, 2022
 13-Week
Period Ended
Jan. 1, 2022
 Change in
Dollars
 %/bps
Change
U.S. FOODSERVICE OPERATIONS       
Sales (GAAP)$13,077,054  $11,498,155  $1,578,899  13.7 %
Gross profit (GAAP) 2,493,089   2,139,278   353,811  16.5 %
Gross margin (GAAP) 19.06 %  18.61 %   45 bps
        
Operating expenses (GAAP)$1,712,128  $1,462,456  $249,672  17.1 %
Impact of restructuring and transformational project costs (92)  (16)  (76) NM
Impact of acquisition-related costs (1) (11,514)  (13,131)  1,617  12.3 
Impact of bad debt reserve adjustments (2) 1,658   5,249   (3,591) (68.4)
Operating expenses adjusted for Certain Items (Non-GAAP)$1,702,180  $1,454,558  $247,622  17.0 %
        
Operating income (GAAP)$780,961  $676,822  $104,139  15.4%
Impact of restructuring and transformational project costs 92   16   76  NM
Impact of acquisition-related costs (1) 11,514   13,131   (1,617) (12.3)
Impact of bad debt reserve adjustments (2) (1,658)  (5,249)  3,591  68.4 
Operating income adjusted for Certain Items (Non-GAAP)$790,909  $684,720  $106,189  15.5 %
        
INTERNATIONAL FOODSERVICE OPERATIONS       
Sales (GAAP)$3,282,411  $2,806,272  $476,139  17.0 %
Impact of currency fluctuations (3) 326,054      326,054  11.6 
Comparable sales using a constant currency basis (Non-GAAP)$3,608,465  $2,806,272  $802,193  28.6 %
        
Gross profit (GAAP)$624,460  $565,931  $58,529  10.3 %
Impact of currency fluctuations (3) 65,849      65,849  11.7 
Comparable gross profit using a constant currency basis (Non-GAAP)$690,309  $565,931  $124,378  22.0 %
        
Gross margin (GAAP) 19.02 %  20.17 %   -115 bps
Impact of currency fluctuations (3) 0.11       11 bps
Comparable gross margin using a constant currency basis (Non-GAAP) 19.13 %  20.17 %   -104 bps
        
Operating expenses (GAAP)$567,075  $555,186  $11,889  2.1 %
Impact of restructuring and transformational project costs (4) (5,588)  (11,621)  6,033  51.9 
Impact of acquisition-related costs (5) (15,935)  (18,475)  2,540  13.7 
Impact of bad debt reserve adjustments (2) 265   1,191   (926) (77.7)
Operating expenses adjusted for Certain Items (Non-GAAP) 545,817   526,281   19,536  3.7 
Impact of currency fluctuations (3) 61,228      61,228  11.6 
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)$607,045  $526,281  $80,764  15.3 %
        
Operating income (GAAP)$57,385  $10,745  $46,640  NM
Impact of restructuring and transformational project costs (4) 5,588   11,621   (6,033) (51.9)
Impact of acquisition-related costs (5) 15,935   18,475   (2,540) (13.7)
Impact of bad debt reserve adjustments (2) (265)  (1,191)  926  77.7 
Operating income adjusted for Certain Items (Non-GAAP) 78,643   39,650   38,993  98.3 
Impact of currency fluctuations (3) 4,622      4,622  NM
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)$83,265  $39,650  $43,615  NM
        
SYGMA       
Sales (GAAP)$1,933,536  $1,771,323  $162,213  9.2 %
Gross profit (GAAP) 150,461   136,952   13,509  9.9 %
Gross margin (GAAP) 7.78 %  7.73 %   5 bps
        
Operating expenses (GAAP)$143,656  $143,681  $(25)  %
Operating income (loss) (GAAP) 6,805   (6,729)  13,534  NM
        
OTHER       
Sales (GAAP)$300,952  $244,453  $56,499  23.1 %
Gross profit (GAAP) 77,311   54,809   22,502  41.1 %
Gross margin (GAAP) 25.69 %  22.42 %   327 bps
        
Operating expenses (GAAP)$67,430  $54,626  $12,804  23.4 %
Impact of bad debt reserve adjustments (2)    (2)  2  NM
Operating expenses adjusted for Certain Items (Non-GAAP)$67,430  $54,624  $12,806  23.4 %
        
Operating income (GAAP)$9,881  $183  $9,698  NM
Impact of bad debt reserve adjustments (2)    2   (2) NM
Operating income adjusted for Certain Items (Non-GAAP)$9,881  $185  $9,696  NM
        
GLOBAL SUPPORT CENTER       
Gross profit (loss) (GAAP)$4,295  $(5,820) $10,115  NM
        
Operating expenses (GAAP)$218,685  $230,292  $(11,607) (5.0) %
Impact of restructuring and transformational project costs (6) (8,708)  (11,832)  3,124  26.4 
Impact of acquisition-related costs (7) (1,511)  (2,126)  615  28.9 
Operating expenses adjusted for Certain Items (Non-GAAP)$208,466  $216,334  $(7,868) (3.6) %
        
Operating loss (GAAP)$(214,390) $(236,112) $21,722  9.2 %
Impact of restructuring and transformational project costs (6) 8,708   11,832   (3,124) (26.4)
Impact of acquisition-related costs (7) 1,511   2,126   (615) (28.9)
Operating loss adjusted for Certain Items (Non-GAAP)$(204,171) $(222,154) $17,983  8.1 %
        
TOTAL SYSCO       
Sales (GAAP)$18,593,953  $16,320,203  $2,273,750  13.9 %
Gross profit (GAAP) 3,349,616   2,891,150   458,466  15.9 %
Gross margin (GAAP) 18.01 %  17.72 %   29 bps
        
Operating expenses (GAAP)$2,708,974  $2,446,241  $262,733  10.7 %
Impact of restructuring and transformational project costs (4) (6) (14,388)  (23,469)  9,081  38.7 
Impact of acquisition-related costs (1) (5) (7) (28,960)  (33,732)  4,772  14.1 
Impact of bad debt reserve adjustments (2) 1,923   6,438   (4,515) (70.1)
Operating expenses adjusted for Certain Items (Non-GAAP)$2,667,549  $2,395,478  $272,071  11.4 %
        
Operating income (GAAP)$640,642  $444,909  $195,733  44.0 %
Impact of restructuring and transformational project costs (4) (6) 14,388   23,469   (9,081) (38.7)
Impact of acquisition-related costs (1) (5) (7) 28,960   33,732   (4,772) (14.1)
Impact of bad debt reserve adjustments (2) (1,923)  (6,438)  4,515  70.1 
Operating income adjusted for Certain Items (Non-GAAP)$682,067  $495,672  $186,395  37.6 %


(1)  Fiscal 2023 and fiscal 2022 include intangible amortization expense and acquisition costs.
(2)Fiscal 2023 and fiscal 2022 represent 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 facility closure 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.
 NM represents 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)
 26-Week
Period Ended
Dec. 31, 2022
 26-Week
Period Ended
Jan. 1, 2022
 Change in Dollars %/bps
Change
U.S. FOODSERVICE OPERATIONS       
Sales (GAAP)$26,679,536  $23,101,118  $3,578,418  15.5 %
Gross profit (GAAP) 5,105,432   4,324,432   781,000  18.1 %
Gross margin (GAAP) 19.14%  18.72%   42 bps
        
Operating expenses (GAAP)$3,420,643  $2,850,087  $570,556  20.0%
Impact of restructuring and transformational project costs (44)  (19)  (25) NM
Impact of acquisition-related costs (1) (24,100)  (17,785)  (6,315) (35.5)
Impact of bad debt reserve adjustments (2) 4,250   11,669   (7,419) (63.6)
Operating expenses adjusted for Certain Items (Non-GAAP)$3,400,749  $2,843,952  $556,797  19.6%
        
Operating income (GAAP)$1,684,789  $1,474,345  $210,444  14.3 %
Impact of restructuring and transformational project costs 44   19   25  NM
Impact of acquisition-related costs (1) 24,100   17,785   6,315  35.5 
Impact of bad debt reserve adjustments (2) (4,250)  (11,669)  7,419  63.6 
Operating income adjusted for Certain Items (Non-GAAP)$1,704,683  $1,480,480  $224,203  15.1 %
        
INTERNATIONAL FOODSERVICE OPERATIONS       
Sales (GAAP)$6,566,146  $5,701,519  $864,627  15.2 %
Impact of currency fluctuations (3) 641,505      641,505  11.2 
Comparable sales using a constant currency basis (Non-GAAP)$7,207,651  $5,701,519  $1,506,132  26.4 %
        
Gross profit (GAAP)$1,273,725  $1,155,065  $118,660  10.3 %
Impact of currency fluctuations (3) 137,609      137,609  11.9 
Comparable gross profit using a constant currency basis (Non-GAAP)$1,411,334  $1,155,065  $256,269  22.2 %
        
Gross margin (GAAP) 19.40 %  20.26 %   -86 bps
Impact of currency fluctuations (3) 0.18       18 bps
Comparable gross margin using a constant currency basis (Non-GAAP) 19.58 %  20.26 %   -68 bps
        
Operating expenses (GAAP)$1,129,132  $1,107,644  $21,488  1.9 %
Impact of restructuring and transformational project costs (4) (9,495)  (21,047)  11,552  54.9 
Impact of acquisition-related costs (5) (31,949)  (37,131)  5,182  14.0 
Impact of bad debt reserve adjustments (2) 265   1,831   (1,566) (85.5)
Operating expenses adjusted for Certain Items (Non-GAAP) 1,087,953   1,051,297   36,656  3.5 
Impact of currency fluctuations (3) 125,934      125,934  12.0 
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)$1,213,887  $1,051,297  $162,590  15.5 %
        
Operating income (GAAP)$144,593  $47,421  $97,172  NM
Impact of restructuring and transformational project costs (4) 9,495   21,047   (11,552) (54.9)
Impact of acquisition-related costs (5) 31,949   37,131   (5,182) (14.0)
Impact of bad debt reserve adjustments (2) (265)  (1,831)  1,566  85.5 
Operating income adjusted for Certain Items (Non-GAAP) 185,772   103,768   82,004  79.0 
Impact of currency fluctuations (3) 11,675      11,675  11.3 
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)$197,447  $103,768  $93,679  90.3 %
        
SYGMA       
Sales (GAAP)$3,866,993  $3,475,356  $391,637  11.3 %
Gross profit (GAAP) 304,354   275,109   29,245  10.6 %
Gross margin (GAAP) 7.87 %  7.92 %   -5 bps
Operating expenses (GAAP)$292,078  $284,285  $7,793  2.7 %
Operating income (loss) (GAAP) 12,276   (9,176)  21,452  NM
        
OTHER       
Sales (GAAP)$608,108  $498,756  $109,352  21.9 %
Gross profit (GAAP) 158,149   113,830   44,319  38.9 %
Gross margin (GAAP) 26.01 %  22.82 %   319 bps
        
Operating expenses (GAAP)$136,730  $107,191  $29,539  27.6 %
Impact of bad debt reserve adjustments (2)    (1)  1  NM
Operating expenses adjusted for Certain Items (Non-GAAP)$136,730  $107,190  $29,540  27.6 %
        
Operating income (GAAP)$21,419  $6,639  $14,780  NM
Impact of bad debt reserve adjustments (2)    1   (1) NM
Operating income adjusted for Certain Items (Non-GAAP)$21,419  $6,640  $14,779  NM
        
GLOBAL SUPPORT CENTER       
Gross loss (GAAP)$(3,189) $(5,578) $2,389  42.8 %
Impact of inventory valuation adjustment (6) (2,571)     (2,571) NM
Comparable gross loss adjusted for Certain Items (Non-GAAP)$(5,760) $(5,578) $(182) (3.3) %
        
Operating expenses (GAAP)$484,913  $437,060  $47,853  10.9 %
Impact of restructuring and transformational project costs (7) (16,495)  (26,914)  10,419  38.7 
Impact of acquisition-related costs (8) (2,365)  (14,742)  12,377  84.0 
Operating expenses adjusted for Certain Items (Non-GAAP)$466,053  $395,404  $70,649  17.9 %
        
Operating loss (GAAP)$(488,102) $(442,638) $(45,464) (10.3) %
Impact of inventory valuation adjustment (6) (2,571)     (2,571) NM
Impact of restructuring and transformational project costs (7) 16,495   26,914   (10,419) (38.7)
Impact of acquisition-related costs (8) 2,365   14,742   (12,377) (84.0)
Operating loss adjusted for Certain Items (Non-GAAP)$(471,813) $(400,982) $(70,831) (17.7) %
        
TOTAL SYSCO       
Sales (GAAP)$37,720,783  $32,776,749  $4,944,034  15.1 %
Gross profit (GAAP) 6,838,471   5,862,858   975,613  16.6 %
Gross margin (GAAP) 18.13 %  17.89%   24 bps
        
Operating expenses (GAAP)$5,463,496  $4,786,267  $677,229  14.1 %
Impact of restructuring and transformational project costs (4) (7) (26,034)  (47,980)  21,946  45.7 
Impact of acquisition-related costs (1) (5) (8) (58,414)  (69,658)  11,244  16.1 
Impact of bad debt reserve adjustments (2) 4,515   13,499   (8,984) (66.6)
Operating expenses adjusted for Certain Items (Non-GAAP)$5,383,563  $4,682,128  $701,435  15.0 %
        
Operating income (GAAP)$1,374,975  $1,076,591  $298,384  27.7 %
Impact of inventory valuation adjustment (6) (2,571)     (2,571) NM
Impact of restructuring and transformational project costs (4) (7) 26,034   47,980   (21,946) (45.7)
Impact of acquisition-related costs (1) (5) (8) 58,414   69,658   (11,244) (16.1)
Impact of bad debt reserve adjustments (2) (4,515)  (13,499)  8,984  66.6 
Operating income adjusted for Certain Items (Non-GAAP)$1,452,337  $1,180,730  $271,607  23.0 %


(1Fiscal 2023 and fiscal 2022 include intangible amortization expense and acquisition costs.
(2)Fiscal 2023 and fiscal 2022 represent 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, severance and facility closure 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.
 NM represents 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.

 26-Week
Period Ended
Dec. 31, 2022
 26-Week
Period Ended
Jan. 1, 2022
 26-Week
Period Change
in Dollars
Net cash provided by operating activities (GAAP)$503,466  $377,047  $126,419 
Additions to plant and equipment (309,664)  (181,374)  (128,290)
Proceeds from sales of plant and equipment 25,493   5,450   20,043 
Free Cash Flow (Non-GAAP)$219,295  $201,123  $18,172 


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
Dec. 31, 2022
 13-Week
Period Ended
Jan. 1, 2022
 Change in
Dollars
 % Change
Net earnings (GAAP)$141,216  $167,441  $(26,225) (15.7) %
Interest (GAAP) 132,042   242,899   (110,857) (45.6)
Income taxes (GAAP) 37,260   45,245   (7,985) (17.6)
Depreciation and amortization (GAAP) 190,025   191,297   (1,272) (0.7)
EBITDA (Non-GAAP)$500,543  $646,882  $(146,339) (22.6) %
Certain Item adjustments:       
Impact of restructuring and transformational project costs (1) 14,793   23,193   (8,400) (36.2)
Impact of acquisition-related costs (2) 3,049   7,085   (4,036) (57.0)
Impact of bad debt reserve adjustments (3) (1,923)  (6,438)  4,515  70.1 
Impact of other non-routine gains and losses (4) 314,878      314,878  NM
EBITDA adjusted for Certain Items (Non-GAAP) (5)$831,340  $670,722  $160,618  23.9 %


(1Fiscal 2023 and fiscal 2022 include charges related to restructuring, severance, and facility closures, as well as various transformation initiative costs, primarily consisting of changes to our business technology strategy, excluding charges related to accelerated depreciation.
(2)Fiscal 2023 and fiscal 2022 include acquisition and due diligence costs.
(3)Fiscal 2023 and fiscal 2022 represent 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 $5 million and $1 million or non-cash stock compensation expense of $24 million and $31 million in fiscal 2023 and fiscal 2022, respectively.
 NM represents that the percentage change is not meaningful.


 26-Week
Period Ended
Dec. 31, 2022
 26-Week
Period Ended
Jan. 1, 2022
 Change in
Dollars
 % Change
Net earnings (GAAP)$606,784  $545,454  $61,330  11.2 %
Interest (GAAP) 256,192   371,113   (114,921) (31.0)
Income taxes (GAAP) 166,594   173,952   (7,358) (4.2)
Depreciation and amortization (GAAP) 378,949   377,763   1,186  0.3 
EBITDA (Non-GAAP)$1,408,519  $1,468,282  $(59,763) (4.1) %
Certain Item adjustments:       
Impact of inventory valuation adjustment (1) (2,571)     (2,571) NM
Impact of restructuring and transformational project costs (2) 25,302   47,440   (22,138) (46.7)
Impact of acquisition-related costs (3) 6,595   21,306   (14,711) (69.0)
Impact of bad debt reserve adjustments (4) (4,515)  (13,499)  8,984  66.6 
Impact of other non-routine gains and losses (5) 314,878      314,878  NM
EBITDA adjusted for Certain Items (Non-GAAP) (6)$1,748,208  $1,523,529  $224,679  14.7 %


(1)  Fiscal 2023 represents an adjustment to a product return allowance, related to COVID-related personal protection equipment inventory.
(2)Fiscal 2023 and fiscal 2022 include charges related to restructuring, severance, and facility closures, as well as various transformation initiative costs, primarily consisting of changes to our business technology strategy, excluding charges related to accelerated depreciation.
(3)Fiscal 2023 and fiscal 2022 include acquisition and due diligence costs.
(4)Fiscal 2023 and fiscal 2022 represent 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 adjust out interest income of $8 million and $3 million or non-cash stock compensation expense of $52 million and $60 million for fiscal 2023 and fiscal 2022, respectively.
 NM represents 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.

  Dec. 31, 2022
Current Maturities of long-term debt $702,067 
Long-term debt  10,349,913 
Total Debt  11,051,980 
Cash & Cash Equivalents  (500,340)
Net Debt $10,551,640 
   
Adjusted EBITDA for the previous 12 months $3,552,029 
   
Debt/Adjusted EBITDA Ratio  3.1 
Net Debt/Adjusted EBITDA Ratio  3.0 


For more information contact:

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

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