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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 10-Q
(Mark One)
☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 2024
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-6544
________________
syylogoa03.jpg
Sysco Corporation
(Exact name of registrant as specified in its charter)
Delaware74-1648137
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)

1390 Enclave Parkway, Houston, Texas                       77077-2099
(Address of principal executive offices)                     (Zip Code)

Registrant’s telephone number, including area code:
(281) 584-1390

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common stock, $1.00 Par ValueSYYNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer☑Accelerated Filer☐
Non-accelerated Filer☐Smaller Reporting Company☐
(Do not check if a smaller reporting company)Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐    No þ

491,226,100 shares of common stock were outstanding as of October 11, 2024.

1

TABLE OF CONTENTS






PART I – FINANCIAL INFORMATION
Item 1. Financial Statements

Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In millions, except for share data)
 Sep. 28, 2024Jun. 29, 2024
 (unaudited)
ASSETS
Current assets
Cash and cash equivalents$733 $696 
Accounts receivable, less allowances of $65 and $54
5,778 5,324 
Inventories4,991 4,678 
Prepaid expenses and other current assets351 323 
Income tax receivable22 22 
Total current assets11,875 11,043 
Plant and equipment at cost, less accumulated depreciation5,558 5,497 
Other long-term assets
Goodwill5,253 5,153 
Intangibles, less amortization1,169 1,188 
Deferred income taxes464 445 
Operating lease right-of-use assets, net1,008 923 
Other assets553 668 
Total other long-term assets8,447 8,377 
Total assets$25,880 $24,917 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable$6,374 $6,290 
Accrued expenses2,141 2,226 
Accrued income taxes271 131 
Current operating lease liabilities126 125 
Current maturities of long-term debt487 469 
Total current liabilities9,399 9,241 
Long-term liabilities
Long-term debt11,869 11,513 
Deferred income taxes333 345 
Long-term operating lease liabilities928 838 
Other long-term liabilities1,115 1,089 
Total long-term liabilities14,245 13,785 
Noncontrolling interest29 31 
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
765 765 
Paid-in capital1,925 1,908 
Retained earnings12,498 12,260 
Accumulated other comprehensive loss(1,166)(1,339)
Treasury stock at cost, 274,104,348 and 273,416,685 shares
(11,815)(11,734)
Total shareholders’ equity2,207 1,860 
Total liabilities and shareholders’ equity$25,880 $24,917 
Note: The June 29, 2024 balance sheet has been derived from the audited financial statements at that date.

See Notes to Consolidated Financial Statements
1

Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)
(In millions, except for share and per share data)
 13-Week Period Ended
 Sep. 28, 2024Sep. 30, 2023
Sales$20,484 $19,620 
Cost of sales16,731 15,972 
Gross profit3,753 3,648 
Operating expenses2,945 2,844 
Operating income808 804 
Interest expense160 134 
Other expense (income), net 6 7 
Earnings before income taxes642 663 
Income taxes152 160 
Net earnings$490 $503 
  
Net earnings:  
Basic earnings per share$1.00 $1.00 
Diluted earnings per share0.99 0.99 
Average shares outstanding492,023,827 505,126,492 
Diluted shares outstanding493,785,973 507,069,435 

See Notes to Consolidated Financial Statements
2

Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(In millions)
 13-Week Period Ended
 Sep. 28, 2024Sep. 30, 2023
Net earnings$490 $503 
Other comprehensive income (loss):
Foreign currency translation adjustment168 (108)
Items presented net of tax:
Amortization of cash flow hedges1 2 
Change in net investment hedges(13)— 
Change in cash flow hedges(14)27 
Amortization of actuarial loss5 5 
Net actuarial gain and other adjustments arising in current year23 1 
Change in marketable securities3 (1)
Total other comprehensive income (loss)173 (74)
Comprehensive income$663 $429 

See Notes to Consolidated Financial Statements
3

Sysco Corporation and its Consolidated Subsidiaries
CHANGES IN CONSOLIDATED SHAREHOLDERS’ EQUITY (Unaudited)
(In millions, except for share data)


Accumulated
Other Comprehensive
Loss
 Common StockPaid-in
Capital		Retained
Earnings		Treasury Stock 
 SharesAmountSharesAmountsTotals
Balance as of June 29, 2024765,174,900 $765 $1,908 $12,260 $(1,339)273,416,685 $(11,734)$1,860 
Net earnings490 490 
Other comprehensive income173 173 
Dividends declared ($0.51 per common share)
(252)(252)
Treasury stock purchases1,460,065 (109)(109)
Share-based compensation awards17 (772,402)28 45 
Balance as of September 28, 2024765,174,900 $765 $1,925 $12,498 $(1,166)274,104,348 $(11,815)$2,207 
Accumulated
Other Comprehensive
Loss
 Common StockPaid-in
Capital		Retained
Earnings		Treasury Stock 
 SharesAmountSharesAmountsTotals
Balance as of July 1, 2023765,174,900 $765 $1,815 $11,311 $(1,253)260,062,834 $(10,629)$2,009 
Net earnings503 503 
Other comprehensive loss(74)(74)
Dividends declared ($0.51 per common share)
(253)(253)
Treasury stock purchases1,382,947 (100)(100)
Share-based compensation awards24 (474,020)17 41 
Balance as of September 30, 2023765,174,900 $765 $1,839 $11,561 $(1,327)260,971,761 $(10,712)$2,126 

See Notes to Consolidated Financial Statements
4


Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED CASH FLOWS (Unaudited)
(In millions)
 13-Week Period Ended
 Sep. 28, 2024Sep. 30, 2023
Cash flows from operating activities:
Net earnings$490 $503 
Adjustments to reconcile net earnings to cash provided by operating activities:
Share-based compensation expense30 24 
Depreciation and amortization235 206 
Operating lease asset amortization34 29 
Amortization of debt issuance and other debt-related costs4 5 
Deferred income taxes(17)(22)
Provision for losses on receivables21 18 
Other non-cash items(40)(2)
Additional changes in certain assets and liabilities, net of effect of businesses acquired:
Increase in receivables(427)(285)
Increase in inventories(287)(185)
Increase in prepaid expenses and other current assets(16)(39)
Increase (decrease) in accounts payable27 (188)
Decrease in accrued expenses(128)(40)
Decrease in operating lease liabilities(42)(27)
Increase in accrued income taxes140 80 
Decrease in other assets2 20 
Increase (decrease) in other long-term liabilities27 (10)
Net cash provided by operating activities53 87 
Cash flows from investing activities:
Additions to plant and equipment(122)(171)
Proceeds from sales of plant and equipment77 11 
Acquisition of businesses, net of cash acquired— (219)
Purchase of marketable securities(12)(1)
Proceeds from sales of marketable securities10 — 
Other investing activities1 — 
Net cash used for investing activities(46)(380)
Cash flows from financing activities:
Bank and commercial paper borrowings, net240 300 
Other debt borrowings including senior notes3 127 
Other debt repayments including senior notes(44)(20)
Proceeds from stock option exercises29 17 
Stock repurchases(108)(100)
Dividends paid(251)(253)
Other financing activities— (5)
Net cash (used for) provided by financing activities(131)66 
Effect of exchange rates on cash, cash equivalents and restricted cash13 (11)
Net decrease in cash, cash equivalents and restricted cash(111)(238)
Cash, cash equivalents and restricted cash at beginning of period945 966 
Cash, cash equivalents and restricted cash at end of period$834 $728 
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest$144 $94 
Income taxes, net of refunds26 103 

See Notes to Consolidated Financial Statements
5

Sysco Corporation and its Consolidated Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Unless this Form 10-Q indicates otherwise or the context otherwise requires, the terms “we,” “our,” “us,” “Sysco,” or the “company” as used in this Form 10-Q refer to Sysco Corporation together with its consolidated subsidiaries and divisions.

1.  BASIS OF PRESENTATION

The consolidated financial statements have been prepared by the company, without an audit. The financial statements include consolidated balance sheets, consolidated results of operations, consolidated statements of comprehensive income, changes in consolidated shareholders’ equity and consolidated cash flows. In the opinion of management, all adjustments, which consist of normal recurring adjustments, except as otherwise disclosed, necessary to present fairly the financial position, results of operations, comprehensive income, cash flows and changes in shareholders’ equity for all periods presented have been made.

These financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended June 29, 2024. Certain footnote disclosures included in annual financial statements prepared in accordance with generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to applicable rules and regulations for interim financial statements.

Supplemental Balance Sheet Information

Supplier Financing Programs

We have agreements with third parties to provide supplier finance programs which facilitate participating suppliers’ ability to finance payment obligations from the company with designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to finance one or more payment obligations of the company prior to their scheduled due dates at a discounted price to participating financial institutions. Obligations of the company that have been confirmed as valid require payment by Sysco upon the due date of the obligation.

Our outstanding payment obligations that suppliers financed to participating financial institutions, which are included in accounts payable on the consolidated balance sheets, are as follows:
Sep. 28, 2024Jun. 29, 2024
(In millions)
Financed payment obligations$102 $102 

Accounts Receivable, Less Allowances

We utilize arrangements to sell portions of our trade accounts receivable to third-party financial institutions on a non-recourse basis in exchange for cash. The arrangements meet the requirements for the receivables transferred to be accounted for as sales and are accounted for as a reduction in trade receivables. Proceeds from the sales are reported net of negotiated discount and are recorded as a reduction to accounts receivable outstanding in the company’s consolidated balance sheets and as cash flows from operating activities in the company’s consolidated statements of cash flows. Accounts receivable sold under these arrangements were $1.9 billion and $1.1 billion for the first 13 weeks of fiscal 2025 and fiscal 2024, respectively.

In certain instances, Sysco has continuing involvement subsequent to the transfer, limited to providing certain servicing and collection actions on behalf of the purchasers of the designated trade receivables. The outstanding aggregate principal amount of receivables that has been derecognized and remain outstanding was $215 million and $173 million at September 28, 2024 and June 29, 2024, respectively. We continue to service the receivables post-transfer on a non-recourse basis with no participating interest.

Supplemental Cash Flow Information

The following table sets forth our reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the amounts shown in the consolidated statement of cash flows:
6

Sep. 28, 2024Sep. 30, 2023
(In millions)
Cash and cash equivalents$733 $569 
Restricted cash (1)
101 159 
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows$834 $728 
(1)
Restricted cash primarily represents cash and cash equivalents of Sysco’s wholly owned captive insurance subsidiary, restricted for use to secure the insurer’s obligations for workers’ compensation, general liability and auto liability programs. Restricted cash is located within other assets in each consolidated balance sheet.

The following table sets forth our non-cash investing and financing activities:
Sep. 28, 2024Sep. 30, 2023
(In millions)
Non-cash investing and financing activities:
Plant and equipment acquired through financing programs$105 $83 
Assets obtained in exchange for finance lease obligations23 27 


2. NEW ACCOUNTING STANDARDS

Recent Accounting Guidance Not Yet Adopted

Segment Reporting

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items and interim disclosures of a reportable segment’s profit or loss and assets. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, (our fiscal 2025), and interim periods for our fiscal years beginning after December 15, 2024, (our first quarter of fiscal 2026), and should be applied on a retrospective basis to all periods presented. Early adoption is permitted. We are currently evaluating the effect of adopting ASU 2023-07 on our disclosures.

Income Taxes

In December 2023, the FASB issued 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures to enhance income tax information primarily through changes in the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, (our fiscal 2026), on a prospective basis. Early adoption is permitted. We are currently evaluating the effect of adopting ASU 2023-09 on our disclosures.

7

3. REVENUE

We recognize revenues when our performance obligations are satisfied in an amount that reflects the consideration Sysco expects to be entitled to receive in exchange for those goods and services. Customer receivables, which are included in accounts receivable, less allowances in the consolidated balance sheet, were $5.3 billion and $5.0 billion as of September 28, 2024 and June 29, 2024, respectively.

The following tables present our sales disaggregated by reportable segment and sales mix for the company’s principal product categories for the periods presented:
13-Week Period Ended Sep. 28, 2024
US Foodservice OperationsInternational Foodservice OperationsSYGMAOtherTotal
(In millions)
Principal Product Categories
Canned and dry products$2,678 $837 $247 $— $3,762 
Fresh and frozen meats2,607 542 535 — 3,684 
Frozen fruits, vegetables, bakery and other2,037 702 331 — 3,070 
Dairy products1,613 432 124 — 2,169 
Poultry1,512 288 296 — 2,096 
Fresh produce1,345 291 72 — 1,708 
Paper and disposables1,047 139 200 14 1,400 
Beverage products384 187 156 21 748 
Seafood547 113 35 — 695 
Equipment and smallwares (1)
310 52 29 122 513 
Other (2)
282 211 21 125 639 
Total Sales$14,362 $3,794 $2,046 $282 $20,484 
(1)
Due to the acquisition of Edward Don & Company (Edward Don), a distributor of foodservice equipment and supplies, “Equipment and smallwares” is now presented as a separate principal product category.
(2)
Other sales relate to certain non-food products, including textiles and amenities for our hotel supply business, other janitorial products, and medical supplies.

13-Week Period Ended Sep. 30, 2023
US Foodservice OperationsInternational Foodservice OperationsSYGMAOtherTotal
(In millions)
Principal Product Categories
Canned and dry products$2,685 $831 $233 $— $3,749 
Fresh and frozen meats2,569 520 481 — 3,570 
Frozen fruits, vegetables, bakery and other2,028 674 305 — 3,007 
Dairy products1,454 414 141 — 2,009 
Poultry1,362 291 274 — 1,927 
Fresh produce1,361 275 70 — 1,706 
Paper and disposables994 141 187 16 1,338 
Seafood577 125 44 — 746 
Beverage products363 170 146 24 703 
Equipment and smallwares (1)
84 48 6 125 263 
Other (2)
247 194 19 142 602 
Total Sales$13,724 $3,683 $1,906 $307 $19,620 
8

(1)
Due to the acquisition of Edward Don & Company (Edward Don), a distributor of foodservice equipment and supplies, “Equipment and smallwares” is now presented as a separate principal product category.
(2)
Other sales relate to certain non-food products, including textiles and amenities for our hotel supply business, other janitorial products, and medical supplies.

4.  FAIR VALUE MEASUREMENTS

Sysco’s policy is to invest only in high-quality investments. The fair values of our cash deposits and money market funds included in cash equivalents are valued using inputs that are considered a Level 1 measurement. Other cash equivalents, such as time deposits and highly liquid instruments with original maturities of three months or less, are valued using inputs that are considered a Level 2 measurement. The fair value of our marketable securities is measured using inputs that are considered a Level 2 measurement, as they rely on quoted prices in markets that are not actively traded or observable inputs over the full term of the asset. The location and the fair value of the company’s marketable securities in the consolidated balance sheet are disclosed in Note 5, “Marketable Securities.” The fair value of our derivative instruments is measured using inputs that are considered a Level 2 measurement, as they are not actively traded and are valued using pricing models that use observable market quotations. The location and the fair values of derivative assets and liabilities designated as hedges in the consolidated balance sheet are disclosed in Note 6, “Derivative Financial Instruments.”

The following tables present our assets measured at fair value on a recurring basis as of September 28, 2024 and June 29, 2024:
 Assets Measured at Fair Value as of Sep. 28, 2024
 Level 1Level 2Level 3Total
 (In millions)
Assets:
Cash equivalents
Cash and cash equivalents$283 $— $— $283 
Other assets (1)
101 — — 101 
Total assets at fair value$384 $— $— $384 
(1)
Represents restricted cash balance recorded within other assets in the consolidated balance sheet.

 Assets Measured at Fair Value as of Jun. 29, 2024
 Level 1Level 2Level 3Total
 (In millions)
Assets:
Cash equivalents
Cash and cash equivalents$269 $— $— $269 
Other assets (1)
249 — — 249 
Total assets at fair value$518 $— $— $518 
(1)
Represents restricted cash balance recorded within other assets in the consolidated balance sheet.

The carrying values of accounts receivable and accounts payable approximated their respective fair values due to their short-term maturities. The fair value of our total debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the company for new debt with the same maturities as existing debt and is considered a Level 2 measurement. The fair value of total debt was approximately $12.2 billion as of September 28, 2024 and $11.4 billion as of June 29, 2024, while the carrying value was $12.4 billion as of September 28, 2024 and $12.0 billion as of June 29, 2024.

9

5. MARKETABLE SECURITIES

Sysco invests a portion of the assets held by its wholly owned captive insurance subsidiary in a restricted investment portfolio of marketable fixed income securities, which have been classified and accounted for as available-for-sale. We include fixed income securities maturing in less than 12 months within prepaid expenses and other current assets. Fixed income securities maturing in more than 12 months are included within other assets in the accompanying consolidated balance sheets. We record the amounts at fair market value, which is determined using quoted market prices at the end of the reporting period.

Unrealized gains and any portion of a security’s unrealized loss attributable to non-credit losses are recorded in accumulated other comprehensive loss. There were no significant credit losses recognized in the first 13 weeks of fiscal 2025.

The following table presents our available-for-sale marketable securities as of September 28, 2024 and June 29, 2024:
Sep. 28, 2024
Amortized Cost BasisGross Unrealized GainsGross Unrealized LossesFair ValueShort-Term Marketable SecuritiesLong-Term Marketable Securities
(In millions)
Fixed income securities:
Corporate bonds$99 $1 $(2)$98 $17 $81 
Government bonds34 — (1)33 — 33 
Total marketable securities$133 $1 $(3)$131 $17 $114 
Jun. 29, 2024
Amortized Cost BasisGross Unrealized GainsGross Unrealized LossesFair ValueShort-Term Marketable SecuritiesLong-Term Marketable Securities
(In millions)
Fixed income securities:
Corporate bonds$98 $— $(4)$94 $24 $70 
Government bonds34 — (2)32 — 32 
Total marketable securities$132 $— $(6)$126 $24 $102 

As of September 28, 2024, the balance of available-for-sale securities by contractual maturity is shown in the following table. Within the table, maturities of fixed income securities have been allocated based upon timing of estimated cash flows. Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.

Sep. 28, 2024
(In millions)
Due in one year or less$17 
Due after one year through five years78 
Due after five years 36 
Total$131 

There were no significant realized gains or losses in marketable securities in the first 13 weeks of fiscal 2025.

6. DERIVATIVE FINANCIAL INSTRUMENTS

Sysco uses derivative financial instruments to enact hedging strategies for risk mitigation purposes; however, we do not use derivative financial instruments for trading or speculative purposes. Hedging strategies are used to manage interest rate risk, foreign currency risk and fuel price risk.

10

Hedging of interest rate risk

Sysco manages its debt portfolio with interest rate swaps from time to time to achieve an overall desired position of fixed and floating rates.

Hedging of foreign currency risk

Sysco’s operations in Europe have inventory purchases denominated in currencies other than their functional currency, such as the euro, U.S. dollar, British pound sterling, Polish zloty and Danish krone. These inventory purchases give rise to foreign currency exposure between the functional currency of each entity and these currencies. The company enters into foreign currency forward swap contracts to sell the applicable entity’s functional currency and buy currencies matching the inventory purchase, which operate as cash flow hedges of the company’s foreign currency-denominated inventory purchases.

Sysco has cross-currency swaps designated as fair value hedges for the purpose of hedging foreign currency risk associated with changes in spot rates on foreign denominated intercompany loans. Sysco has elected to exclude the changes in fair value of the forward points from the assessments of hedge effectiveness. Gains or losses from fair value hedges impact the same category on the consolidated statements of income as the item being hedged, including the earnings impact of the excluded components. Unrealized gains or losses on components excluded from hedge effectiveness are recorded as a component of accumulated other comprehensive income (loss) and recognized into earnings over the life of the hedged instrument. Except for the excluded components, changes in the fair value of the hedge are offset against changes in the fair value of the hedged assets or liabilities through earnings.

Sysco also has a cross-currency swap that hedges the foreign currency exposure of our net investment in certain foreign operations. This cross-currency swap is designated as a net investment hedge with gains and losses recognized within accumulated other comprehensive income (loss).

Hedging of fuel price risk

Sysco uses fuel commodity swap contracts to hedge against the risk of the change in the price of diesel fuel on anticipated future purchases. These swaps have been designated as cash flow hedges.

11

None of our hedging instruments contain credit-risk-related contingent features. Details of outstanding hedging instruments as of September 28, 2024 are presented below:

Maturity Date of the Hedging InstrumentCurrency / Unit of MeasureNotional Value
(In millions)
Hedging of interest rate risk
January 2034U.S. Dollar500
Hedging of foreign currency risk
Various (September 2024 to October 2024)Swedish Krona106
Various (October 2024 to May 2025)British Pound Sterling28
May 2025Mexican Peso439
April 2025Canadian Dollar180
January 2029Euro470
Hedging of fuel risk
Various (September 2024 to June 2026)Gallons63

The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheets as of September 28, 2024 and June 29, 2024 are as follows:
 Derivative Fair Value
 Balance Sheet locationSep. 28, 2024Jun. 29, 2024
(In millions)
Fair Value Hedges:
Interest rate swapsOther current assets$1 $— 
Interest rate swapsOther assets29 6 
Interest rate swapsOther current liabilities— 1 
Cross currency swapsOther current assets4 2 
Cross currency swapsOther current liabilities1 3 
Cash Flow Hedges:
Fuel swapsOther current assets$— $1 
Foreign currency forwardsOther current liabilities1 — 
Fuel swapsOther current liabilities18 2 
Fuel swapsOther assets— 1 
Fuel swapsOther long-term liabilities1 — 
Net Investment Hedges:
Cross currency swapsOther current assets$5 $4 
Cross currency swapsOther long-term liabilities28 10 

Gains or losses recognized in the consolidated results of operations for cash flow hedging relationships are not significant for each of the periods presented. The location and amount of gains or losses recognized in the consolidated results of operations for fair value hedging relationships for each of the periods, presented on a pretax basis, are as follows:
12

13-Week Period Ended
Sep. 28, 2024Sep. 30, 2023
(In millions)
Total amounts of income and expense line items presented in the consolidated results of operations in which the effects of fair value hedges are recorded$166 $7 
Gain or (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items$(33)$— 
Derivatives designated as hedging instruments25 — 
Cross currency swaps:
Hedged items$(4)$3 
Derivatives designated as hedging instruments4 (3)

The gains and losses on the fair value hedging relationships associated with the hedged items as disclosed in the table above consist of the following components for each of the periods presented:
13-Week Period Ended
Sep. 28, 2024Sep. 30, 2023
(In millions)
Interest expense$(8)$— 
Increase in fair value of debt(25)— 
Foreign currency loss(4)(3)
Hedged items$(37)$(3)

The location and effect of cash flow, net investment, and excluded components of fair value hedges on the consolidated statements of comprehensive income for the 13-week periods ended September 28, 2024 and September 30, 2023, presented on a pretax basis, are as follows:

13

13-Week Period Ended Sep. 28, 2024
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on DerivativesLocation of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into IncomeAmount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
(In millions)(In millions)
Derivatives in cash flow hedging relationships:
Fuel swaps$(19)Operating expense$— 
Foreign currency contracts(1)Cost of sales / Other income— 
Total$(20)$— 
Derivatives in net investment hedging relationships:
Cross currency contracts$(18)N/A$— 
13-Week Period Ended Sep. 30, 2023
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on DerivativesLocation of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into IncomeAmount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
(In millions)(In millions)
Derivatives in cash flow hedging relationships:
Fuel swaps$34 Operating expense$2 
Foreign currency contracts— Cost of sales / Other income— 
Total$34 $2 

The location and carrying amount of hedged liabilities in the consolidated balance sheet as of September 28, 2024 are as follows:
Sep. 28, 2024
Carrying Amount of Hedged Assets (Liabilities)Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities)
(In millions)
Balance sheet location:
Long-term debt$(523)$(31)

The carrying amount of hedged liabilities in the consolidated balance sheet as of June 29, 2024 is $498 million.

7. DEBT

Sysco has a long-term revolving credit facility that includes aggregate commitments of the lenders thereunder of $3.0 billion, with an option to increase such commitments to $4.0 billion. As of September 28, 2024, there were no borrowings outstanding under this facility.

We have a U.S. commercial paper program allowing the company to issue short-term unsecured notes in an aggregate amount not to exceed $3.0 billion. Any outstanding amounts are classified within long-term debt, as the program is supported by the long-term revolving credit facility. As of September 28, 2024, there were $325 million in commercial paper issuances outstanding under this program. We also have a commercial paper program in Europe with borrowings not to exceed €250
14

million. As of September 28, 2024, there were €105 million (the equivalent of $117 million) in commercial paper issuances outstanding under this program.

The total carrying value of our debt was $12.4 billion as of September 28, 2024 and $12.0 billion as of June 29, 2024. The increase in the carrying value of our debt during the 13-week period ended September 28, 2024 was due to new commercial paper issuances and new leases in support of plant and equipment.

Information regarding the guarantors of our registered debt securities is contained in the section captioned Guarantor Summarized Financial Information in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this Form 10-Q.


8.  EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share:
 13-Week Period Ended
 Sep. 28, 2024Sep. 30, 2023
 (In millions, except for share
and per share data)
Numerator:  
Net earnings$490 $503 
Denominator:
Weighted-average basic shares outstanding492,023,827 505,126,492 
Dilutive effect of share-based awards1,762,146 1,942,943 
Weighted-average diluted shares outstanding493,785,973 507,069,435 
Basic earnings per share$1.00 $1.00 
Diluted earnings per share$0.99 $0.99 

The number of securities that were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive was approximately 3,338,000 and 5,988,000 for the first quarter of fiscal 2025 and 2024, respectively.


9.  OTHER COMPREHENSIVE INCOME

Comprehensive income is net earnings plus certain other items that are recorded directly to shareholders’ equity, such as foreign currency translation adjustment, amounts related to certain hedging arrangements, amounts related to pension and other postretirement plans and changes in marketable securities. Comprehensive income was $663 million and $429 million for the first quarter of fiscal 2025 and fiscal 2024, respectively.

A summary of the components of other comprehensive income (loss) and the related tax effects for each of the periods presented is as follows:
15

  13-Week Period Ended Sep. 28, 2024
 Location of
Expense (Income) Recognized in
Net Earnings		Before Tax
Amount		TaxNet of Tax
Amount
  (In millions)
Foreign currency translation:
Foreign currency translation adjustmentN/A$168 $— $168 
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedges
Operating expenses (1)
(20)(6)(14)
Change in net investment hedges N/A(18)(5)(13)
Total other comprehensive (loss) before reclassification adjustments(38)(11)(27)
Reclassification adjustments:    
Amortization of cash flow hedgesInterest expense2 1 1 
Pension and other postretirement benefit plans:    
Other comprehensive income before
reclassification adjustments:
Net actuarial gain and other adjustments arising in the current yearOther expense, net31 8 23 
Total other comprehensive income before reclassification adjustments31 8 23 
Reclassification adjustments:    
Amortization of actuarial loss, netOther expense, net7 2 5 
Total reclassification adjustments7 2 5 
Marketable securities:
   Change in marketable securities (2)
N/A4 1 3 
Total other comprehensive income (loss)$174 $1 $173 
(1)
Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.
(2)
Realized gains or losses on marketable securities are presented within other (income) expense, net in the consolidated results of operations; however, there were no significant gains or losses realized in the first quarter of fiscal 2025.





16

  13-Week Period Ended Sep. 30, 2023
 Location of
Expense (Income) Recognized in
Net Earnings		Before Tax
Amount		TaxNet of Tax
Amount
  (In millions)
Foreign currency translation:
Foreign currency translation adjustmentN/A$(108)$— $(108)
Hedging instruments:
Other comprehensive income before reclassification adjustments:
Change in cash flow hedges
Operating expenses (1)
34 7 27 
Total other comprehensive income before reclassification adjustments34 7 27 
Reclassification adjustments:
Amortization of cash flow hedgesInterest expense3 1 2 
Pension and other postretirement benefit plans:    
Other comprehensive income before reclassification adjustments:
Net actuarial gain, arising in the current yearOther expense, net1 — 1 
Total other comprehensive income before reclassification adjustments1 — 1 
Reclassification adjustments:    
Amortization of actuarial loss, netOther expense, net6 1 5 
Marketable securities:
Change in marketable securities (2)
N/A(1)— (1)
Total other comprehensive income (loss)$(65)$9 $(74)
(1)
Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.
(2)
Realized gains or losses on marketable securities are presented within other (income) expense, net in the consolidated results of operations; however, there were no significant gains or losses realized in the first quarter of fiscal 2024.

The following tables provide a summary of the changes in accumulated other comprehensive (loss) income for the periods presented:
 13-Week Period Ended Sep. 28, 2024
 Foreign Currency TranslationHedging,
net of tax		Pension and Other Postretirement Benefit Plans,
net of tax		Marketable Securities, net of taxTotal
 (In millions)
Balance as of June 29, 2024$(407)$(10)$(917)$(5)$(1,339)
Equity adjustment from foreign currency translation168 — — — 168 
Amortization of cash flow hedges— 1 — — 1 
Change in net investment hedges— (13)— — (13)
Change in cash flow hedges— (14)— — (14)
Amortization of unrecognized net actuarial losses— — 5 — 5 
Net actuarial gain and other adjustments arising in the current year— — 23 — 23 
Change in marketable securities— — — 3 3 
Balance as of Sep. 28, 2024$(239)$(36)$(889)$(2)$(1,166)
17


 13-Week Period Ended Sep. 30, 2023
 Foreign Currency TranslationHedging,
net of tax		Pension and Other Postretirement Benefit Plans,
net of tax		Marketable Securities, net of taxTotal
 (In millions)
Balance as of Jul. 1, 2023$(374)$(32)$(840)$(7)$(1,253)
Equity adjustment from foreign currency translation(108)— — — (108)
Amortization of cash flow hedges— 2 — — 2 
Change in cash flow hedges— 27 — — 27 
Amortization of unrecognized net actuarial losses— — 5 — 5 
Net actuarial gain arising in the current year— — 1 — 1 
Change in marketable securities— — — (1)(1)
Balance as of Sep. 30, 2023$(482)$(3)$(834)$(8)$(1,327)



10.  SHARE-BASED COMPENSATION

Sysco provides compensation benefits to employees under several share-based payment arrangements, including various long-term employee stock incentive plans and the 2015 Employee Stock Purchase Plan (ESPP).

Stock Incentive Plans

In the first 13 weeks of fiscal 2025, options to purchase 728,531 shares were granted to employees. The fair value of each option award is estimated as of the date of grant using a Black-Scholes option pricing model. The weighted average grant-date fair value per option granted during the first 13 weeks of fiscal 2025 was $18.50.

In the first 13 weeks of fiscal 2025, employees were granted 461,055 performance share units (PSUs). Based on the jurisdiction in which the employee resides, some of these PSUs were granted with forfeitable dividend equivalents. The fair value of each PSU award granted with a dividend equivalent is based on the company’s stock price as of the date of grant. For PSUs granted without dividend equivalents, the fair value was reduced by the present value of expected dividends during the vesting period. The weighted average grant-date fair value per PSU granted during the first 13 weeks of fiscal 2025 was $82.63. The PSUs will convert into shares of Sysco’s common stock at the end of the three-year performance period based on actual performance targets achieved, as well as the market-based return of Sysco’s common stock relative to that of each company within the S&P 500 index.

In the first 13 weeks of fiscal 2025, employees were granted 341,143 restricted stock units. The weighted average grant-date fair value per restricted stock unit granted during the first 13 weeks of fiscal 2025 was $75.93.

Employee Stock Purchase Plan

Plan participants purchased 304,519 shares of common stock under the ESPP during the first 13 weeks of fiscal 2025. The weighted average fair value per employee stock purchase right issued pursuant to the ESPP was $11.71 during the first 13 weeks of fiscal 2025. The fair value of each stock purchase right is estimated as the difference between the stock price at the date of issuance and the employee purchase price.

All Share-Based Payment Arrangements

The total share-based compensation cost that has been recognized in results of operations was $30 million and $24 million for the first 13 weeks of fiscal 2025 and fiscal 2024, respectively.

As of September 28, 2024, there was a total of $179 million of unrecognized compensation cost related to share-based compensation arrangements. This cost is expected to be recognized over a weighted-average period of 2.10 years.
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11.  INCOME TAXES

Effective Tax Rate

For the first quarter of fiscal 2025, the company’s effective tax rate of 23.7% was higher than the company’s 21.0% statutory tax rate primarily as a result of state income taxes, and partially offset by a foreign income tax benefit and equity-based compensation excess tax benefits.

For the first quarter of fiscal 2024, the company’s effective tax rate of 24.0% was higher than the company’s statutory tax rate as a result of state income taxes, partially offset by a foreign income tax benefit.

Uncertain Tax Positions

As of September 28, 2024, the gross amount of unrecognized tax benefit and related accrued interest was $32 million and $12 million, respectively. It is reasonably possible the amount of the unrecognized tax benefit with respect to certain unrecognized tax positions of the company will increase or decrease in the next 12 months. At this time, an estimate of the range of the reasonably possible change cannot be made.

During the third quarter of fiscal 2023, Sysco received a Statutory Notice of Deficiency from the Internal Revenue Service, mainly related to foreign tax credits generated in fiscal 2018 from repatriated earnings primarily from our Canadian operations. In the fourth quarter of fiscal 2023, the company filed suit in the U.S. Tax Court challenging the validity of certain tax regulations related to the one-time transition tax on unrepatriated foreign earnings, which were enacted as part of the Tax Cuts and Jobs Act of 2017 (TCJA). The lawsuit seeks to have the court invalidate these regulations, which would affirm the company’s position regarding its foreign tax credits. Sysco has previously recorded a benefit of $131 million attributable to its interpretation of the TCJA and the Internal Revenue Code. If we are ultimately unsuccessful in defending our position, we may be required to reverse all, or some portion, of the benefit previously recorded.

Other

On October 8, 2021, the Organization for Economic Co-operation and Development (OECD) announced the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, which provides for a two-pillar solution to address tax challenges arising from the digitalization of the economy. Pillar One expands a country’s authority to tax profits from companies that make sales into their country but do not have a physical location in the country. Pillar Two includes an agreement on international tax reform, including rules to ensure that large corporations pay a minimum rate of corporate income tax. On December 20, 2021, the OECD released Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large corporations at a minimum rate of 15%. Pillar Two became effective for Sysco at the beginning of fiscal 2025.

The determination of our provision for income taxes requires judgment, the use of estimates and the interpretation and application of complex tax laws. Our provision for income taxes reflects income earned and taxed in the various U.S. federal and state, as well as foreign jurisdictions. Tax law changes, increases or decreases in permanent book versus tax basis differences, accruals or adjustments of accruals for unrecognized tax benefits or valuation allowances, and our change in the mix of earnings from these taxing jurisdictions all affect the overall effective tax rate.

12.  COMMITMENTS AND CONTINGENCIES

Legal Proceedings

Sysco is engaged in various legal proceedings that have arisen but have not been fully adjudicated. The likelihood of loss for these legal proceedings, based on definitions within contingency accounting literature, ranges from remote to reasonably possible to probable. When probable and reasonably estimable, the losses have been accrued. Although the final results of legal proceedings cannot be predicted with certainty, based on estimates of the range of potential losses associated with these matters, management does not believe the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect upon the consolidated financial position or results of operations of the company.

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13.  BUSINESS SEGMENT INFORMATION

Sysco distributes food and related products to restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers. Our primary operations are located in North America and Europe. Under the accounting provisions related to disclosures about segments of an enterprise, we have aggregated certain operating segments into three reportable segments. “Other” financial information is attributable to our other operating segments that do not meet the quantitative disclosure thresholds.

•U.S. Foodservice Operations – primarily includes (a) our U.S. Broadline operations, which distribute a full line of food products, including custom-cut meat, seafood, produce, specialty Italian, specialty imports and a wide variety of non-food products and (b) our U.S. Specialty operations, which include our FreshPoint fresh produce distribution business, our Specialty Meats and Seafood Group specialty protein operations, our growing Italian Specialty platform anchored by Greco and Sons, Inc., our Edward Don restaurant equipment and supplies distribution business, our Asian specialty distribution company and a number of other small specialty businesses that are not material to our operations;
•International Foodservice Operations – includes operations outside of the U.S., which distribute a full line of food products and a wide variety of non-food products. The Americas primarily consists of operations in Canada, Bahamas, Mexico, Costa Rica and Panama, as well as our export operations that distribute to international customers. Our European operations primarily consist of operations in the United Kingdom, France, Ireland and Sweden;
•SYGMA – our U.S. customized distribution operations serving quick-service chain restaurant customer locations; and
•Other – primarily our hotel supply operations, Guest Worldwide.
The accounting policies for the segments are the same as those disclosed by Sysco for its consolidated financial statements. Our Global Support Center generally includes all expenses of the corporate office and Sysco’s shared service operations. These also include all U.S. share-based compensation costs.

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The following tables set forth certain financial information for Sysco’s reportable business segments:

 13-Week Period Ended
 Sep. 28, 2024Sep. 30, 2023
Sales:(In millions)
U.S. Foodservice Operations$14,362 $13,724 
International Foodservice Operations3,794 3,683 
SYGMA2,046 1,906 
Other282 307 
Total$20,484 $19,620 
 13-Week Period Ended
 Sep. 28, 2024Sep. 30, 2023
Operating income (loss):(In millions)
U.S. Foodservice Operations$908 $941 
International Foodservice Operations101 93 
SYGMA18 13 
Other9 12 
Total segments1,036 1,059 
Global Support Center(228)(255)
Total operating income808 804 
Interest expense160 134 
Other expense, net6 7 
Earnings before income taxes$642 $663 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion should be read in conjunction with our consolidated financial statements as of June 29, 2024, and for the fiscal year then ended, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, both contained in our Annual Report on Form 10-K for the fiscal year ended June 29, 2024 (our fiscal 2024 Form 10-K), as well as the consolidated financial statements (unaudited) and notes to the consolidated financial statements (unaudited) contained in this report.

Highlights

Our first quarter of fiscal 2025 results were driven by sales growth of 4.4% as compared to the first quarter of fiscal 2024 primarily due to U.S. Foodservice Operations volume growth and higher inflation. Our gross profit grew 2.9% compared to the first quarter of fiscal 2024, due to volume growth and margin management. Operating income increased 0.5% as compared to the first quarter of fiscal 2024. Adjusted operating income increased 2.2% due to sales growth and expense controls. See below for a comparison of our fiscal 2025 results to our fiscal 2024 results, both including and excluding “Certain Items” (as defined below).

Comparisons of results from the first quarter of fiscal 2025 to the first quarter of fiscal 2024 are presented below:

•Sales:
◦increased 4.4%, or $864 million, to $20.5 billion;
•Operating income:
◦increased 0.5%, or $4 million, to $808 million;
◦adjusted operating income increased 2.2%, or $19 million, to $873 million;
•Net earnings:
◦decreased 2.6%, or $13 million, to $490 million;
◦adjusted net earnings decreased 0.4%, or $2 million, to $540 million;
•Basic earnings per share:
◦unchanged, at $1.00 per share;
•Diluted earnings per share:
◦unchanged, at $0.99 per share;
◦adjusted diluted earnings per share increased 1.9%, or $0.02, to $1.09;
•EBITDA:
◦increased 3.4%, or $34 million, to $1.0 billion; and
◦adjusted EBITDA increased 4.4%, or $45 million, to $1.1 billion.

The discussion of our results includes certain non-GAAP financial measures, including EBITDA and adjusted EBITDA, that we believe provide important perspective with respect to underlying business trends. Other than EBITDA and free cash flow, any non-GAAP financial measures will be denoted as adjusted measures to remove (1) restructuring charges; (2) expenses associated with our various transformation initiatives; (3) severance charges; and (4) acquisition-related costs consisting of: (a) intangible amortization expense and (b) acquisition costs and due diligence costs related to our acquisitions.

The fiscal 2025 and fiscal 2024 items discussed above are collectively referred to as “Certain Items.” The results of our operations can be impacted by changes in exchange rates applicable to converting from local currencies to U.S. dollars. We measure our results on a constant currency basis.

Trends

Economic and Industry Trends

Foot traffic to restaurants decreased 3.6% for the first quarter of fiscal 2025; however, traffic trends did improve as the quarter progressed. Foot traffic declined approximately 5% in July, approximately 4% in August, and approximately 3% in September. We expect modest industry traffic improvements in the second half of fiscal 2025. Despite the current macroeconomic landscape, we expect to grow both sales and net earnings in fiscal 2025. We believe the food-away-from-home sector is a healthy long-term market, and Sysco is diversified and well positioned as a market leader in food service.

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Sales and Gross Profit Trends

Our sales and gross profit performance are influenced by multiple factors, including price, volume, inflation, customer mix and product mix. We experienced a 2.7% improvement in U.S. Foodservice Operations case volume in the first quarter of fiscal 2025, as compared to the first quarter of fiscal 2024. Our volume growth was generated by 5.5% national volume growth and 0.2% local volume growth. Our volume reflects our broadline and specialty businesses, except for our specialty meats business, which measures its volume in pounds.

We experienced inflation at a rate of 2.2% in the first quarter of fiscal 2025, at the total enterprise level, primarily driven by inflation in the poultry and dairy categories. We continued to be successful in managing this inflation, resulting in an increase in gross profit dollars. Gross margin decreased 27 basis points in the first quarter of fiscal 2025, as compared to the first quarter of fiscal 2024, primarily due to a shift in our customer mix driven by national volume growth, a decrease in Sysco brand penetration, and the timing of benefits from strategic sourcing initiatives.

Operating Expense Trends

Total operating expenses were $2.9 billion in the first quarter of fiscal 2025, a 3.6% increase compared to the first quarter of fiscal 2024. Total adjusted operating expenses were $2.9 billion in the first quarter of fiscal 2025, a 3.1% increase as compared to the first quarter of fiscal 2024. Operating expenses increased primarily due to an increase in volumes. In addition, higher selling expenses, which includes sales professional hires, and depreciation expense related to new facilities also resulted in an increase in operating expenses in the first quarter of fiscal 2025. Adjusted operating expenses were 14.1% of sales, which is an 18-basis point improvement from the first quarter of fiscal 2024, due to supply chain and Global Support Center efficiencies.


Strategy

Our purpose is “Connecting the World to Share Food and Care for One Another.” Purpose-driven companies are believed to perform better. We believe our purpose will assist us to grow substantially faster than the foodservice distribution industry and deliver profitable growth through our Recipe for Growth transformation. This growth transformation is supported by strategic pillars that we believe will allow us to better serve our customers, including our digital, products and solutions, supply chain, customer teams, and future horizons strategies.