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Key Highlights: | |||||||||||
| 13-Week Period Ended | |||||||||||
| Financial Comparison: | October 1, 2022 | October 2, 2021 | Change | ||||||||
| GAAP: | |||||||||||
| Sales | $19.1 billion | $16.5 billion | 16.2% | ||||||||
| Gross profit | $3.5 billion | $3.0 billion | 17.4% | ||||||||
| Gross Margin | 18.2% | 18.1% | 18 bps | ||||||||
| Operating expenses | $2.8 billion | $2.3 billion | 17.7% | ||||||||
| Operating Income | $734.3 million | $631.7 million | 16.3% | ||||||||
| Operating Margin | 3.8% | 3.8% | 0 bps | ||||||||
| Net Earnings | $465.6 million | $378.0 million | 23.2% | ||||||||
| Diluted Earnings Per Share | $0.91 | $0.73 | 24.7% | ||||||||
Non-GAAP (1): | |||||||||||
| Gross profit | $3.5 billion | $3.0 billion | 17.3% | ||||||||
| Gross Margin | 18.2% | 18.1% | 17 bps | ||||||||
| Operating Expenses | $2.7 billion | $2.3 billion | 18.8% | ||||||||
| Operating Income | $770.3 million | $685.1 million | 12.4% | ||||||||
| Operating Margin | 4.0% | 4.2% | -13 bps | ||||||||
| EBITDA | $908.0 million | $821.4 million | 10.5% | ||||||||
| Adjusted EBITDA | $916.9 million | $852.8 million | 7.5% | ||||||||
| Net Earnings | $492.6 million | $429.9 million | 14.6% | ||||||||
Diluted Earnings Per Share (2) | $0.97 | $0.83 | 16.9% | ||||||||
| Case Growth: | |||||||||||
| U.S. Foodservice | 7.3% | 30.5% | |||||||||
| Local | 5.4% | 26.7% | |||||||||
| Sysco Brand Sales as a % of Cases: | |||||||||||
| U.S. Broadline | 37.3% | 36.9% | 44 bps | ||||||||
| Local | 46.7% | 45.3% | 137 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 first 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 associates and improve associate retention; our expectations regarding the benefits of the six-day delivery model; 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 Coastal Companies 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 plans to make continued capital investments over the next three fiscal years in our technology, fleet and buildings; 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 associate 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; and our expectations regarding additional improvements from snap-back costs and productivity expenses during the fiscal first 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. | ||
| Sysco Corporation and its Consolidated Subsidiaries CONSOLIDATED RESULTS OF OPERATIONS (Unaudited) (In Thousands, Except for Share and Per Share Data) | |||||||||||
| Quarter Ended | |||||||||||
| Oct. 1, 2022 | Oct. 2, 2021 | ||||||||||
| Sales | $ | 19,126,830 | $ | 16,456,546 | |||||||
| Cost of sales | 15,637,975 | 13,484,838 | |||||||||
| Gross profit | 3,488,855 | 2,971,708 | |||||||||
| Operating expenses | 2,754,522 | 2,340,026 | |||||||||
| Operating income | 734,333 | 631,682 | |||||||||
| Interest expense | 124,150 | 128,214 | |||||||||
| Other expense (income), net | 15,281 | (3,252) | |||||||||
| Earnings before income taxes | 594,902 | 506,720 | |||||||||
| Income taxes | 129,334 | 128,707 | |||||||||
| Net earnings | $ | 465,568 | $ | 378,013 | |||||||
| Net earnings: | |||||||||||
| Basic earnings per share | $ | 0.92 | $ | 0.74 | |||||||
| Diluted earnings per share | 0.91 | 0.73 | |||||||||
| Average shares outstanding | 507,578,576 | 512,516,067 | |||||||||
| Diluted shares outstanding | 510,383,149 | 515,782,928 | |||||||||
Sysco Corporation and its Consolidated Subsidiaries CONSOLIDATED BALANCE SHEETS (Unaudited) (In Thousands, Except for Share Data) | |||||||||||
| Oct. 1, 2022 | Jul. 2, 2022 | ||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 437,670 | $ | 867,086 | |||||||
| Accounts receivable, less allowances of $74,002 and $70,790 | 5,336,857 | 4,838,912 | |||||||||
| Inventories | 4,682,609 | 4,437,498 | |||||||||
| Prepaid expenses and other current assets | 310,131 | 303,789 | |||||||||
| Income tax receivable | — | 35,934 | |||||||||
| Total current assets | 10,767,267 | 10,483,219 | |||||||||
| Plant and equipment at cost, less accumulated depreciation | 4,462,608 | 4,456,420 | |||||||||
| Other long-term assets | |||||||||||
| Goodwill | 4,434,476 | 4,542,315 | |||||||||
| Intangibles, less amortization | 906,385 | 952,683 | |||||||||
| Deferred income taxes | 382,778 | 377,604 | |||||||||
| Operating lease right-of-use assets, net | 704,664 | 723,297 | |||||||||
| Other assets | 552,765 | 550,150 | |||||||||
| Total other long-term assets | 6,981,068 | 7,146,049 | |||||||||
| Total assets | $ | 22,210,943 | $ | 22,085,688 | |||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | 6,018,227 | $ | 5,752,958 | |||||||
| Accrued expenses | 2,177,793 | 2,270,753 | |||||||||
| Accrued income taxes | 113,388 | 40,042 | |||||||||
| Current operating lease liabilities | 94,027 | 105,690 | |||||||||
| Current maturities of long-term debt | 555,829 | 580,611 | |||||||||
| Total current liabilities | 8,959,264 | 8,750,054 | |||||||||
| Long-term liabilities | |||||||||||
| Long-term debt | 10,263,331 | 10,066,931 | |||||||||
| Deferred income taxes | 241,748 | 250,171 | |||||||||
| Long-term operating lease liabilities | 628,861 | 636,417 | |||||||||
| Other long-term liabilities | 971,190 | 967,907 | |||||||||
| Total long-term liabilities | 12,105,130 | 11,921,426 | |||||||||
| Commitments and contingencies | |||||||||||
| Noncontrolling interest | 31,208 | 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 | 1,754,409 | 1,766,305 | |||||||||
| Retained earnings | 10,757,136 | 10,539,722 | |||||||||
| Accumulated other comprehensive loss | (1,711,325) | (1,482,054) | |||||||||
| Treasury stock at cost, 258,414,989 and 256,531,543 shares | (10,450,054) | (10,206,888) | |||||||||
| Total shareholders’ equity | 1,115,341 | 1,382,260 | |||||||||
| Total liabilities and shareholders’ equity | $ | 22,210,943 | $ | 22,085,688 | |||||||
| Sysco Corporation and its Consolidated Subsidiaries CONSOLIDATED CASH FLOWS (Unaudited) (In Thousands) | |||||||||||
| Year Ended | |||||||||||
| Oct. 1, 2022 | Oct. 2, 2021 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net earnings | $ | 465,568 | $ | 378,013 | |||||||
| Adjustments to reconcile net earnings to cash provided by operating activities: | |||||||||||
| Share-based compensation expense | 27,224 | 29,313 | |||||||||
| Depreciation and amortization | 188,924 | 186,466 | |||||||||
| Operating lease asset amortization | 27,542 | 28,221 | |||||||||
| Amortization of debt issuance and other debt-related costs | 5,435 | 5,577 | |||||||||
| Deferred income taxes | (31,226) | (30,452) | |||||||||
| Provision for losses on receivables | 3,865 | 2,097 | |||||||||
| Other non-cash items | 5,011 | (201) | |||||||||
| Additional changes in certain assets and liabilities, net of effect of businesses acquired: | |||||||||||
| Increase in receivables | (576,585) | (478,671) | |||||||||
| Increase in inventories | (283,252) | (294,517) | |||||||||
| Increase in prepaid expenses and other current assets | (28,372) | (12,528) | |||||||||
| Increase in accounts payable | 288,517 | 329,523 | |||||||||
| Decrease in accrued expenses | (10,893) | (103,483) | |||||||||
| Decrease in operating lease liabilities | (33,319) | (34,146) | |||||||||
| Increase in accrued income taxes | 109,280 | 69,256 | |||||||||
| Decrease (increase) in other assets | 17,627 | (9,345) | |||||||||
| (Decrease) increase in other long-term liabilities | (16,740) | 45,689 | |||||||||
| Net cash provided by operating activities | 158,606 | 110,812 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Additions to plant and equipment | (167,260) | (85,019) | |||||||||
| Proceeds from sales of plant and equipment | 22,448 | 5,627 | |||||||||
| Acquisition of businesses, net of cash acquired | (32,651) | (714,010) | |||||||||
| Purchase of marketable securities | (3,296) | (9,925) | |||||||||
| Proceeds from sales of marketable securities | 2,650 | 8,700 | |||||||||
Other investing activities (1) | 3,274 | 6,022 | |||||||||
| Net cash used for investing activities | (174,835) | (788,605) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Bank and commercial paper borrowings, net | 97,000 | — | |||||||||
| Other debt borrowings including senior notes | 59,063 | 3 | |||||||||
| Other debt repayments including senior notes | (18,104) | (10,051) | |||||||||
| Proceeds from stock option exercises | 24,561 | 17,881 | |||||||||
| Stock repurchases | (267,727) | — | |||||||||
| Dividends paid | (249,294) | (240,561) | |||||||||
Other financing activities (2) | (45,851) | (5,003) | |||||||||
| Net cash used for financing activities | (400,352) | (237,731) | |||||||||
| Effect of exchange rates on cash, cash equivalents and restricted cash | (11,369) | (9,355) | |||||||||
Net decrease in cash and cash equivalents (3) | (427,950) | (924,879) | |||||||||
| 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) | $ | 503,426 | $ | 2,112,221 | |||||||
| Supplemental disclosures of cash flow information: | |||||||||||
| Cash paid during the period for: | |||||||||||
| Interest | $ | 84,010 | $ | 225,031 | |||||||
| Income taxes, net of refunds | 47,985 | 76,712 | |||||||||
(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. | ||||
(3) | Change 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. Our results for fiscal 2022 were also impacted by 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 Oct. 1, 2022 | 13-Week Period Ended Oct. 2, 2021 | Change in Dollars | % Change | ||||||||||||||||||||
| Sales (GAAP) | $ | 19,126,830 | $ | 16,456,546 | $ | 2,670,284 | 16.2 | % | |||||||||||||||
Impact of currency fluctuations (1) | 319,162 | — | 319,162 | 2.0 | |||||||||||||||||||
| Comparable sales using a constant currency basis (Non-GAAP) | $ | 19,445,992 | $ | 16,456,546 | $ | 2,989,446 | 18.2 | % | |||||||||||||||
| Cost of sales (GAAP) | $ | 15,637,975 | $ | 13,484,838 | $ | 2,153,137 | 16.0 | % | |||||||||||||||
Impact of inventory valuation adjustment (2) | 2,571 | — | 2,571 | — | |||||||||||||||||||
| Cost of sales adjusted for Certain Items (Non-GAAP) | $ | 15,640,546 | $ | 13,484,838 | $ | 2,155,708 | 16.0 | % | |||||||||||||||
| Gross profit (GAAP) | $ | 3,488,855 | $ | 2,971,708 | $ | 517,147 | 17.4 | % | |||||||||||||||
Impact of inventory valuation adjustment (2) | (2,571) | — | (2,571) | (0.1) | |||||||||||||||||||
| Comparable gross profit adjusted for Certain Items (Non-GAAP) | 3,486,284 | 2,971,708 | 514,576 | 17.3 | |||||||||||||||||||
Impact of currency fluctuations (1) | 73,035 | — | 73,035 | 2.5 | |||||||||||||||||||
| Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP) | $ | 3,559,319 | $ | 2,971,708 | $ | 587,611 | 19.8 | % | |||||||||||||||
| Gross margin (GAAP) | 18.24 | % | 18.06 | % | 18 bps | ||||||||||||||||||
Impact of inventory valuation adjustment (2) | (0.01) | — | -1 bps | ||||||||||||||||||||
| Comparable gross margin adjusted for Certain Items (Non-GAAP) | 18.23 | 18.06 | 17 bps | ||||||||||||||||||||
Impact of currency fluctuations (1) | 0.07 | — | 7 bps | ||||||||||||||||||||
| Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP) | 18.30 | % | 18.06 | % | 24 bps | ||||||||||||||||||
| Operating expenses (GAAP) | $ | 2,754,522 | $ | 2,340,026 | $ | 414,496 | 17.7 | % | |||||||||||||||
Impact of restructuring and transformational project costs (3) | (11,645) | (24,511) | 12,866 | 52.5 | |||||||||||||||||||
Impact of acquisition-related costs (4) | (29,454) | (35,926) | 6,472 | 18.0 | |||||||||||||||||||
Impact of bad debt reserve adjustments (5) | 2,592 | 7,061 | (4,469) | (63.3) | |||||||||||||||||||
| Operating expenses adjusted for Certain Items (Non-GAAP) | 2,716,015 | 2,286,650 | 429,365 | 18.8 | |||||||||||||||||||
Impact of currency fluctuations (1) | 70,695 | — | 70,695 | 3.1 | |||||||||||||||||||
| Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP) | $ | 2,786,710 | $ | 2,286,650 | $ | 500,060 | 21.9 | % | |||||||||||||||
| Operating expense as a percentage of sales (GAAP) | 14.40 | % | 14.22 | % | 18 bps | ||||||||||||||||||
| Impact of certain item adjustments | (0.20) | (0.32) | 12 bps | ||||||||||||||||||||
| Adjusted operating expense as a percentage of sales (Non-GAAP) | 14.20 | % | 13.90 | % | 30 bps | ||||||||||||||||||
| Operating income (GAAP) | $ | 734,333 | $ | 631,682 | $ | 102,651 | 16.3 | % | |||||||||||||||
Impact of inventory valuation adjustment (2) | (2,571) | — | (2,571) | NM | |||||||||||||||||||
Impact of restructuring and transformational project costs (3) | 11,645 | 24,511 | (12,866) | (52.5) | |||||||||||||||||||
Impact of acquisition-related costs (4) | 29,454 | 35,926 | (6,472) | (18.0) | |||||||||||||||||||
Impact of bad debt reserve adjustments (5) | (2,592) | (7,061) | 4,469 | 63.3 | |||||||||||||||||||
| Operating income adjusted for Certain Items (Non-GAAP) | 770,269 | 685,058 | 85,211 | 12.4 | |||||||||||||||||||
Impact of currency fluctuations (1) | 2,340 | — | 2,340 | 0.4 | |||||||||||||||||||
| Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP) | $ | 772,609 | $ | 685,058 | $ | 87,551 | 12.8 | % | |||||||||||||||
| Operating margin (GAAP) | 3.84 | % | 3.84 | % | 0 bps | ||||||||||||||||||
| Operating margin adjusted for Certain Items (Non-GAAP) | 4.03 | % | 4.16 | % | -13 bps | ||||||||||||||||||
| Operating margin adjusted for Certain Items using a constant currency basis (Non-GAAP) | 3.97 | % | 4.16 | % | -19 bps | ||||||||||||||||||
| Net earnings (GAAP) | $ | 465,568 | $ | 378,013 | $ | 87,555 | 23.2 | % | |||||||||||||||
Impact of inventory valuation adjustment (2) | (2,571) | — | (2,571) | NM | |||||||||||||||||||
Impact of restructuring and transformational project costs (3) | 11,645 | 24,511 | (12,866) | (52.5) | |||||||||||||||||||
Impact of acquisition-related costs (4) | 29,454 | 35,926 | (6,472) | (18.0) | |||||||||||||||||||
Impact of bad debt reserve adjustments (5) | (2,592) | (7,061) | 4,469 | 63.3 | |||||||||||||||||||
Tax impact of inventory valuation adjustment (6) | 637 | — | 637 | NM | |||||||||||||||||||
Tax impact of restructuring and transformational project costs (6) | (2,884) | (6,186) | 3,302 | 53.4 | |||||||||||||||||||
Tax impact of acquisition-related costs (6) | (7,295) | (9,066) | 1,771 | 19.5 | |||||||||||||||||||
Tax impact of bad debt reserves adjustments (6) | 642 | 1,782 | (1,140) | (64.0) | |||||||||||||||||||
| Impact of adjustments to uncertain tax positions | — | 12,000 | (12,000) | NM | |||||||||||||||||||
| Net earnings adjusted for Certain Items (Non-GAAP) | $ | 492,604 | $ | 429,919 | $ | 62,685 | 14.6 | % | |||||||||||||||
| Diluted earnings per share (GAAP) | $ | 0.91 | $ | 0.73 | $ | 0.18 | 24.7 | % | |||||||||||||||
Impact of inventory valuation adjustment (2) | (0.01) | — | (0.01) | NM | |||||||||||||||||||
Impact of restructuring and transformational project costs (3) | 0.02 | 0.05 | (0.03) | (60.0) | |||||||||||||||||||
Impact of acquisition-related costs (4) | 0.06 | 0.07 | (0.01) | (14.3) | |||||||||||||||||||
Impact of bad debt reserve adjustments (5) | (0.01) | (0.01) | — | — | |||||||||||||||||||
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 | |||||||||||||||||||
| Impact of adjustments to uncertain tax positions | — | 0.02 | (0.02) | NM | |||||||||||||||||||
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (7) | $ | 0.97 | $ | 0.83 | $ | 0.14 | 16.9 | % | |||||||||||||||
| Diluted shares outstanding | 510,383,149 | 515,782,928 | |||||||||||||||||||||
(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 2023 includes $4 million related to restructuring, severance, and facility closure charges and $8 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2022 includes $16 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy and $8 million related to restructuring charges. | ||||
(4) | Fiscal 2023 includes $26 million of intangible amortization expense and $4 million in acquisition and due diligence costs. Fiscal 2022 includes $22 million of intangible amortization expense and $14 million in acquisition and due diligence costs, which are primarily included in Global Support Center expenses. | ||||
(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) | 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 Segment Results Non-GAAP Reconciliation (Unaudited) Impact of Certain Items on Applicable Segments (Dollars in Thousands) | |||||||||||||||||||||||
| 13-Week Period Ended Oct. 1, 2022 | 13-Week Period Ended Oct. 2, 2021 | Change in Dollars | %/bps Change | ||||||||||||||||||||
| U.S. FOODSERVICE OPERATIONS | |||||||||||||||||||||||
| Sales (GAAP) | $ | 13,602,482 | $ | 11,602,963 | $ | 1,999,519 | 17.2 | % | |||||||||||||||
| Gross profit (GAAP) | 2,612,343 | 2,185,154 | 427,189 | 19.5 | % | ||||||||||||||||||
| Gross margin (GAAP) | 19.20 | % | 18.83 | % | 37 bps | ||||||||||||||||||
| Operating expenses (GAAP) | $ | 1,708,515 | $ | 1,387,631 | $ | 320,884 | 23.1 | % | |||||||||||||||
| Impact of restructuring and transformational project costs | 48 | (3) | 51 | NM | |||||||||||||||||||
Impact of acquisition-related costs (1) | (12,585) | (4,654) | (7,931) | NM | |||||||||||||||||||
Impact of bad debt reserve adjustments (2) | 2,592 | 6,420 | (3,828) | (59.6) | |||||||||||||||||||
| Operating expenses adjusted for Certain Items (Non-GAAP) | $ | 1,698,570 | $ | 1,389,394 | $ | 309,176 | 22.3 | % | |||||||||||||||
| Operating income (GAAP) | $ | 903,828 | $ | 797,523 | $ | 106,305 | 13.3 | % | |||||||||||||||
| Impact of restructuring and transformational project costs | (48) | 3 | (51) | NM | |||||||||||||||||||
Impact of acquisition-related costs (1) | 12,585 | 4,654 | 7,931 | NM | |||||||||||||||||||
Impact of bad debt reserve adjustments (2) | (2,592) | (6,420) | 3,828 | 59.6 | |||||||||||||||||||
| Operating income adjusted for Certain Items (Non-GAAP) | $ | 913,773 | $ | 795,760 | $ | 118,013 | 14.8 | % | |||||||||||||||
| INTERNATIONAL FOODSERVICE OPERATIONS | |||||||||||||||||||||||
| Sales (GAAP) | $ | 3,283,735 | $ | 2,895,247 | $ | 388,488 | 13.4 | % | |||||||||||||||
Impact of currency fluctuations (3) | 315,451 | — | 315,451 | 10.9 | |||||||||||||||||||
| Comparable sales using a constant currency basis (Non-GAAP) | $ | 3,599,186 | $ | 2,895,247 | $ | 703,939 | 24.3 | % | |||||||||||||||
| Gross profit (GAAP) | $ | 649,265 | $ | 589,134 | $ | 60,131 | 10.2 | % | |||||||||||||||
Impact of currency fluctuations (3) | 71,760 | — | 71,760 | 12.2 | |||||||||||||||||||
| Comparable gross profit using a constant currency basis (Non-GAAP) | $ | 721,025 | $ | 589,134 | $ | 131,891 | 22.4 | % | |||||||||||||||
| Gross margin (GAAP) | 19.77 | % | 20.35 | % | -58 bps | ||||||||||||||||||
Impact of currency fluctuations (3) | 0.26 | — | 26 bps | ||||||||||||||||||||
| Comparable gross margin using a constant currency basis (Non-GAAP) | 20.03 | % | 20.35 | % | -32 bps | ||||||||||||||||||
| Operating expenses (GAAP) | $ | 562,057 | $ | 552,458 | $ | 9,599 | 1.7 | % | |||||||||||||||
Impact of restructuring and transformational project costs (4) | (3,907) | (9,426) | 5,519 | 58.6 | |||||||||||||||||||
Impact of acquisition-related costs (5) | (16,014) | (18,656) | 2,642 | 14.2 | |||||||||||||||||||
Impact of bad debt reserve adjustments (2) | — | 641 | (641) | NM | |||||||||||||||||||
| Operating expenses adjusted for Certain Items (Non-GAAP) | 542,136 | 525,017 | 17,119 | 3.3 | |||||||||||||||||||
Impact of currency fluctuations (3) | 64,707 | — | 64,707 | 12.3 | |||||||||||||||||||
| Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP) | $ | 606,843 | $ | 525,017 | $ | 81,826 | 15.6 | % | |||||||||||||||
| Operating income (GAAP) | $ | 87,208 | $ | 36,676 | $ | 50,532 | NM | ||||||||||||||||
Impact of restructuring and transformational project costs (4) | 3,907 | 9,426 | (5,519) | (58.6) | |||||||||||||||||||
Impact of acquisition-related costs (5) | 16,014 | 18,656 | (2,642) | (14.2) | |||||||||||||||||||
Impact of bad debt reserve adjustments (2) | — | (641) | 641 | NM | |||||||||||||||||||
| Operating income adjusted for Certain Items (Non-GAAP) | 107,129 | 64,117 | 43,012 | 67.1 | |||||||||||||||||||
Impact of currency fluctuations (3) | 7,053 | — | 7,053 | 11.0 | |||||||||||||||||||
| Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP) | $ | 114,182 | $ | 64,117 | $ | 50,065 | 78.1 | % | |||||||||||||||
| SYGMA | |||||||||||||||||||||||
| Sales (GAAP) | $ | 1,933,457 | $ | 1,704,033 | $ | 229,424 | 13.5 | % | |||||||||||||||
| Gross profit (GAAP) | 153,893 | 138,157 | 15,736 | 11.4 | % | ||||||||||||||||||
| Gross margin (GAAP) | 7.96 | % | 8.11 | % | -15 bps | ||||||||||||||||||
| Operating expenses (GAAP) | $ | 148,422 | $ | 140,604 | $ | 7,818 | 5.6 | % | |||||||||||||||
| Operating income (loss) (GAAP) | 5,471 | (2,447) | 7,918 | NM | |||||||||||||||||||
| OTHER | |||||||||||||||||||||||
| Sales (GAAP) | $ | 307,156 | $ | 254,303 | $ | 52,853 | 20.8 | % | |||||||||||||||
| Gross profit (GAAP) | 80,838 | 59,021 | 21,817 | 37.0 | % | ||||||||||||||||||
| Gross margin (GAAP) | 26.32 | % | 23.21 | % | 311 bps | ||||||||||||||||||
| Operating expenses (GAAP) | $ | 69,300 | $ | 52,565 | $ | 16,735 | 31.8 | % | |||||||||||||||
| Operating income (GAAP) | 11,538 | 6,456 | 5,082 | 78.7 | % | ||||||||||||||||||
| GLOBAL SUPPORT CENTER | |||||||||||||||||||||||
| Gross (loss) profit (GAAP) | $ | (7,484) | $ | 242 | $ | (7,726) | NM | ||||||||||||||||
Impact of inventory valuation adjustment (6) | (2,571) | — | (2,571) | NM | |||||||||||||||||||
| Comparable gross profit (loss) adjusted for Certain Items (Non-GAAP) | $ | (10,055) | $ | 242 | $ | (10,297) | NM | ||||||||||||||||
| Operating expenses (GAAP) | $ | 266,228 | $ | 206,768 | $ | 59,460 | 28.8 | % | |||||||||||||||
Impact of restructuring and transformational project costs (7) | (7,786) | (15,082) | 7,296 | 48.4 | |||||||||||||||||||
Impact of acquisition-related costs (8) | (855) | (12,616) | 11,761 | 93.2 | |||||||||||||||||||
| Operating expenses adjusted for Certain Items (Non-GAAP) | $ | 257,587 | $ | 179,070 | $ | 78,517 | 43.8 | % | |||||||||||||||
| Operating loss (GAAP) | $ | (273,712) | $ | (206,526) | $ | (67,186) | (32.5) | % | |||||||||||||||
Impact of inventory valuation adjustment (6) | (2,571) | — | (2,571) | NM | |||||||||||||||||||
Impact of restructuring and transformational project costs (7) | 7,786 | 15,082 | (7,296) | (48.4) | |||||||||||||||||||
Impact of acquisition-related costs (8) | 855 | 12,616 | (11,761) | (93.2) | |||||||||||||||||||
| Operating loss adjusted for Certain Items (Non-GAAP) | $ | (267,642) | $ | (178,828) | $ | (88,814) | (49.7) | % | |||||||||||||||
| TOTAL SYSCO | |||||||||||||||||||||||
| Sales (GAAP) | $ | 19,126,830 | $ | 16,456,546 | $ | 2,670,284 | 16.2 | % | |||||||||||||||
| Gross profit (GAAP) | 3,488,855 | 2,971,708 | 517,147 | 17.4 | % | ||||||||||||||||||
| Gross margin (GAAP) | 18.24 | % | 18.06 | % | 18 bps | ||||||||||||||||||
| Operating expenses (GAAP) | $ | 2,754,522 | $ | 2,340,026 | $ | 414,496 | 17.7 | % | |||||||||||||||
Impact of restructuring and transformational project costs (4) (7) | (11,645) | (24,511) | 12,866 | 52.5 | |||||||||||||||||||
Impact of acquisition-related costs (1) (5) (8) | (29,454) | (35,926) | 6,472 | 18.0 | |||||||||||||||||||
Impact of bad debt reserve adjustments (2) | 2,592 | 7,061 | (4,469) | (63.3) | |||||||||||||||||||
| Operating expenses adjusted for Certain Items (Non-GAAP) | $ | 2,716,015 | $ | 2,286,650 | $ | 429,365 | 18.8 | % | |||||||||||||||
| Operating income (GAAP) | $ | 734,333 | $ | 631,682 | $ | 102,651 | 16.3 | % | |||||||||||||||
Impact of inventory valuation adjustment (6) | (2,571) | — | (2,571) | NM | |||||||||||||||||||
Impact of restructuring and transformational project costs (4) (7) | 11,645 | 24,511 | (12,866) | (52.5) | |||||||||||||||||||
Impact of acquisition-related costs (1) (5) (8) | 29,454 | 35,926 | (6,472) | (18.0) | |||||||||||||||||||
Impact of bad debt reserve adjustments (2) | (2,592) | (7,061) | 4,469 | 63.3 | |||||||||||||||||||
| Operating income adjusted for Certain Items (Non-GAAP) | $ | 770,269 | $ | 685,058 | $ | 85,211 | 12.4 | % | |||||||||||||||
(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) | 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. | |||||
| 13-Week Period Ended Oct. 1, 2022 | 13-Week Period Ended Oct. 2, 2021 | 13-Week Period Change in Dollars | |||||||||||||||
| Net cash provided by operating activities (GAAP) | $ | 158,606 | $ | 110,812 | $ | 47,794 | |||||||||||
| Additions to plant and equipment | (167,260) | (85,019) | (82,241) | ||||||||||||||
| Proceeds from sales of plant and equipment | 22,448 | 5,627 | 16,821 | ||||||||||||||
| Free Cash Flow (Non-GAAP) | $ | 13,794 | $ | 31,420 | $ | (17,626) | |||||||||||
| 13-Week Period Ended Oct. 1, 2022 | 13-Week Period Ended Oct. 2, 2021 | Change in Dollars | % Change | ||||||||||||||||||||
| Net earnings (GAAP) | $ | 465,568 | $ | 378,013 | $ | 87,555 | 23.2 | % | |||||||||||||||
| Interest (GAAP) | 124,150 | 128,214 | (4,064) | (3.2) | |||||||||||||||||||
| Income taxes (GAAP) | 129,334 | 128,707 | 627 | 0.5 | |||||||||||||||||||
| Depreciation and amortization (GAAP) | 188,924 | 186,466 | 2,458 | 1.3 | |||||||||||||||||||
| EBITDA (Non-GAAP) | $ | 907,976 | $ | 821,400 | $ | 86,576 | 10.5 | % | |||||||||||||||
| Certain Item adjustments: | |||||||||||||||||||||||
Impact of inventory valuation adjustment (1) | (2,571) | — | (2,571) | NM | |||||||||||||||||||
Impact of restructuring and transformational project costs (2) | 10,509 | 24,247 | (13,738) | (56.7) | |||||||||||||||||||
Impact of acquisition-related costs (3) | 3,546 | 14,221 | (10,675) | (75.1) | |||||||||||||||||||
Impact of bad debt reserve adjustments (4) | (2,592) | (7,061) | 4,469 | 63.3 | |||||||||||||||||||
EBITDA adjusted for Certain Items (Non-GAAP) (5) | $ | 916,868 | $ | 852,807 | $ | 64,061 | 7.5 | % | |||||||||||||||
(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) | In arriving at adjusted EBITDA, Sysco does not adjust out interest income of $3 million and $2 million or non-cash stock compensation expense of $27 million and $29 million in fiscal 2023 and fiscal 2022, respectively. | ||||
| NM represents that the percentage change is not meaningful. | |||||
