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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 December 30, 2023
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 FilerAccelerated Filer
Non-accelerated FilerSmaller 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

497,829,748 shares of common stock were outstanding as of January 12, 2024.

1


TABLE OF CONTENTS







PART I – FINANCIAL INFORMATION
Item 1. Financial Statements

Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share data)
 Dec. 30, 2023Jul. 1, 2023
 (unaudited)
ASSETS
Current assets
Cash and cash equivalents$962,165 $745,201 
Accounts receivable, less allowances of $79,179 and $45,599
5,291,552 5,091,970 
Inventories4,722,499 4,480,812 
Prepaid expenses and other current assets327,569 284,566 
Income tax receivable5,815 5,815 
Total current assets11,309,600 10,608,364 
Plant and equipment at cost, less accumulated depreciation5,157,150 4,915,049 
Other long-term assets
Goodwill5,255,010 4,645,754 
Intangibles, less amortization1,174,151 859,530 
Deferred income taxes444,180 420,450 
Operating lease right-of-use assets, net824,390 731,766 
Other assets576,120 640,232 
Total other long-term assets8,273,851 7,297,732 
Total assets$24,740,601 $22,821,145 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable$5,737,726 $6,025,757 
Accrued expenses2,266,062 2,251,181 
Accrued income taxes46,772 101,894 
Current operating lease liabilities119,397 99,051 
Current maturities of long-term debt84,513 62,550 
Total current liabilities8,254,470 8,540,433 
Long-term liabilities
Long-term debt12,028,122 10,347,997 
Deferred income taxes303,878 302,904 
Long-term operating lease liabilities737,354 656,269 
Other long-term liabilities979,376 931,708 
Total long-term liabilities14,048,730 12,238,878 
Noncontrolling interest33,367 33,212 
Shareholders’ equity
Preferred stock, par value $1 per share Authorized 1,500,000 shares, issued none
  
Common stock, par value $1 per share Authorized 2,000,000,000 shares, issued 765,174,900 shares
765,175 765,175 
Paid-in capital1,877,201 1,814,681 
Retained earnings11,724,251 11,310,664 
Accumulated other comprehensive loss(1,189,753)(1,252,590)
Treasury stock at cost, 261,472,819 and 260,062,834 shares
(10,772,840)(10,629,308)
Total shareholders’ equity2,404,034 2,008,622 
Total liabilities and shareholders’ equity$24,740,601 $22,821,145 
Note: The July 1, 2023 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 thousands, except for share and per share data)
 13-Week Period Ended26-Week Period Ended
 Dec. 30, 2023Dec. 31, 2022Dec. 30, 2023Dec. 31, 2022
Sales$19,287,942 $18,593,953 $38,908,396 $37,720,783 
Cost of sales15,774,309 15,244,337 31,746,991 30,882,312 
Gross profit3,513,633 3,349,616 7,161,405 6,838,471 
Operating expenses2,813,590 2,708,793 5,657,780 5,460,847 
Operating income700,043 640,823 1,503,625 1,377,624 
Interest expense149,680 132,042 284,014 256,192 
Other expense (income), net (1) (2)
5,245 330,305 11,885 348,054 
Earnings before income taxes545,118 178,476 1,207,726 773,378 
Income taxes129,876 37,260 289,092 166,594 
Net earnings$415,242 $141,216 $918,634 $606,784 
  
Net earnings:  
Basic earnings per share$0.82 $0.28 $1.82 $1.20 
Diluted earnings per share0.82 0.28 1.81 1.19 
Average shares outstanding504,312,633 507,609,696 504,719,562 507,594,137 
Diluted shares outstanding505,929,342 510,145,794 506,499,390 510,264,473 
(1)
Gains and losses related to the disposition of fixed assets have been recognized within operating expenses. Prior year amounts have been reclassified to conform to this presentation.
(2)
Sysco’s second quarter of fiscal 2023 included a charge of $315.4 million in other expense related to pension settlement charges. See Note 9, “Company-Sponsored Employee Benefit Plans.”

See Notes to Consolidated Financial Statements
2


Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(In thousands)
 13-Week Period Ended26-Week Period Ended
 Dec. 30, 2023Dec. 31, 2022Dec. 30, 2023Dec. 31, 2022
Net earnings$415,242 $141,216 $918,634 $606,784 
Other comprehensive income (loss):
Foreign currency translation adjustment163,084 241,814 54,890 9,632 
Items presented net of tax:
Amortization of cash flow hedges2,170 2,170 4,340 4,325 
Change in net investment hedges(16,741)(33,749)(16,741)(10,240)
Change in cash flow hedges(20,225)203 6,923 (26,187)
Changes in excluded components of fair value hedge158  138  
Amortization of prior service cost146 74 292 148 
Amortization of actuarial loss5,011 5,628 9,993 12,519 
Pension settlement charge 236,591  236,591 
Net actuarial (loss) gain arising in current year (67,388)503 (67,388)
Change in marketable securities3,444 1,194 2,499 (2,134)
Total other comprehensive income137,047 386,537 62,837 157,266 
Comprehensive income$552,289 $527,753 $981,471 $764,050 

See Notes to Consolidated Financial Statements
3


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

Quarter to Date

Accumulated
Other Comprehensive
Loss
 Common StockPaid-in
Capital
Retained
Earnings
Treasury Stock 
 SharesAmountSharesAmountsTotals
Balance as of September 30, 2023765,174,900 $765,175 $1,838,986 $11,560,924 $(1,326,800)260,971,761 $(10,712,486)$2,125,799 
Net earnings415,242 415,242 
Foreign currency translation adjustment163,084 163,084 
Amortization of cash flow hedges, net of tax2,170 2,170 
Change in cash flow hedges, net of tax(20,225)(20,225)
Changes in excluded components of fair value hedge, net of tax158 158 
Change in net investment hedges, net of tax(16,741)(16,741)
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax5,157 5,157 
Change in marketable securities, net of tax3,444 3,444 
Dividends declared ($0.50 per common share)
(251,915)(251,915)
Treasury stock purchases1,479,720 (99,973)(99,973)
Share-based compensation awards38,215 (978,662)39,619 77,834 
Balance as of December 30, 2023765,174,900 $765,175 $1,877,201 $11,724,251 $(1,189,753)261,472,819 $(10,772,840)$2,404,034 
Accumulated
Other Comprehensive
Loss
 Common StockPaid-in
Capital
Retained
Earnings
Treasury Stock 
 SharesAmountSharesAmountsTotals
Balance as of October 1, 2022765,174,900 $765,175 $1,754,409 $10,757,136 $(1,711,325)258,414,989 $(10,450,054)$1,115,341 
Net earnings141,216 141,216 
Foreign currency translation adjustment241,814 241,814 
Amortization of cash flow hedges, net of tax2,170 2,170 
Change in cash flow hedges, net of tax203 203 
Change in net investment hedges, net of tax(33,749)(33,749)
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax5,702 5,702 
Pension settlement charge, net of tax236,591 236,591 
Net actuarial loss arising in current year, net of tax(67,388)(67,388)
Change in marketable securities, net of tax1,194 1,194 
Dividends declared ($0.49 per common share)(249,014)(249,014)
Increase in ownership interest in subsidiaries(2,077)(2,077)
Share-based compensation awards21,809 (568,017)22,777 44,586 
Balance as of December 31, 2022765,174,900 $765,175 $1,774,141 $10,649,338 $(1,324,788)257,846,972 $(10,427,277)$1,436,589 

See Notes to Consolidated Financial Statements
4


Year to Date
Accumulated
Other Comprehensive
Loss
 Common StockPaid-in
Capital
Retained
Earnings
Treasury Stock 
 SharesAmountSharesAmountsTotals
Balance as of July 1, 2023765,174,900 $765,175 $1,814,681 $11,310,664 $(1,252,590)260,062,834 $(10,629,308)$2,008,622 
Net earnings   918,634    918,634 
Foreign currency translation adjustment    54,890   54,890 
Amortization of cash flow hedges, net of tax    4,340   4,340 
Change in cash flow hedges, net of tax6,923 6,923 
Change in net investment hedges, net of tax(16,741)(16,741)
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax    10,285   10,285 
Net actuarial gain arising in current year, net of tax503 503 
Change in marketable securities, net of tax2,499 2,499 
Changes in excluded components of fair value hedge, net of tax138 138 
Dividends declared ($1.00 per common share)
   (505,047)   (505,047)
Treasury stock purchases2,862,667 (199,947)(199,947)
Share-based compensation awards  62,520   (1,452,682)56,415 118,935 
Balance as of December 30, 2023765,174,900 $765,175 $1,877,201 $11,724,251 $(1,189,753)261,472,819 $(10,772,840)$2,404,034 
Accumulated
Other Comprehensive
Loss
 Common StockPaid-in
Capital
Retained
Earnings
Treasury Stock 
 SharesAmountSharesAmountsTotals
Balance as of July 2, 2022765,174,900 $765,175 $1,766,305 $10,539,722 $(1,482,054)256,531,543 $(10,206,888)$1,382,260 
Net earnings   606,784    606,784 
Foreign currency translation adjustment    9,632   9,632 
Amortization of cash flow hedges, net of tax    4,325   4,325 
Change in cash flow hedges, net of tax    (26,187)  (26,187)
Change in net investment hedges, net of tax(10,240)(10,240)
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax    12,667   12,667 
Pension settlement charge, net of tax236,591 236,591 
Net actuarial loss arising in current year, net of tax(67,388)(67,388)
Change in marketable securities, net of tax(2,134)(2,134)
Dividends declared ($0.98 per common share)
   (497,168)   (497,168)
Treasury stock purchases3,099,268 (267,727)(267,727)
Increase in ownership interest in subsidiaries(2,077)(2,077)
Share-based compensation awards  9,913   (1,783,839)47,338 57,251 
Balance as of December 31, 2022765,174,900 $765,175 $1,774,141 $10,649,338 $(1,324,788)257,846,972 $(10,427,277)$1,436,589 

See Notes to Consolidated Financial Statements
5


Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED CASH FLOWS (Unaudited)
(In thousands)
 26-Week Period Ended
 Dec. 30, 2023Dec. 31, 2022
Cash flows from operating activities:
Net earnings$918,634 $606,784 
Adjustments to reconcile net earnings to cash provided by operating activities:
Pension settlement charge 315,354 
Share-based compensation expense52,821 52,679 
Depreciation and amortization425,465 378,949 
Operating lease asset amortization59,127 55,884 
Amortization of debt issuance and other debt-related costs9,117 10,315 
Deferred income taxes(28,689)(123,187)
Provision for losses on receivables29,784 9,732 
Other non-cash items(3,782)11,525 
Additional changes in certain assets and liabilities, net of effect of businesses acquired:
Increase in receivables(25,431)(87,190)
Increase in inventories(98,047)(222,650)
Decrease (increase) in prepaid expenses and other current assets3,362 (8,915)
Decrease in accounts payable(404,411)(390,124)
Increase (decrease) in accrued expenses17,033 (62,779)
Decrease in operating lease liabilities(64,112)(57,234)
(Decrease) increase in accrued income taxes(55,123)3,108 
Decrease in other assets21,942 22,156 
Decrease in other long-term liabilities(1,793)(10,941)
Net cash provided by operating activities855,897 503,466 
Cash flows from investing activities:
Additions to plant and equipment(346,797)(309,664)
Proceeds from sales of plant and equipment18,347 25,493 
Acquisition of businesses, net of cash acquired(1,174,608)(37,699)
Purchase of marketable securities(1,878)(14,019)
Proceeds from sales of marketable securities 11,641 
Other investing activities 4,840 
Net cash used for investing activities(1,504,936)(319,408)
Cash flows from financing activities:
Bank and commercial paper borrowings, net500,000 155,000 
Other debt borrowings including senior notes1,132,475 140,024 
Other debt repayments including senior notes(187,720)(57,270)
Debt issuance costs(13,035) 
Proceeds from stock option exercises57,347 47,339 
Stock repurchases(199,947)(267,727)
Dividends paid(505,588)(498,323)
Other financing activities(5,775)(46,517)
Net cash provided by (used for) financing activities777,757 (527,474)
Effect of exchange rates on cash, cash equivalents and restricted cash905 (2,314)
Net increase (decrease) in cash, cash equivalents and restricted cash129,623 (345,730)
Cash, cash equivalents and restricted cash at beginning of period966,033 931,376 
Cash, cash equivalents and restricted cash at end of period$1,095,656 $585,646 
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest$266,002 $244,530 
Income taxes, net of refunds371,855 289,413 

See Notes to Consolidated Financial Statements
6


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 July 1, 2023. 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 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:
Dec. 30, 2023Dec. 31, 2022
(In thousands)
Cash and cash equivalents$962,165 $500,340 
Restricted cash (1)
133,491 85,306 
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows$1,095,656 $585,646 
(1)
Restricted cash primarily represents cash and cash equivalents of Sysco’s wholly owned captive insurance subsidiary, restricted for use to secure the insurer’s obligations for workers’ compensation, general liability and auto liability programs. Restricted cash is located within other assets in each consolidated balance sheet.

The following table sets forth our non-cash investing and financing activities:
Dec. 30, 2023Dec. 31, 2022
(In thousands)
Non-cash investing and financing activities:
Plant and equipment acquired through financing programs$158,454 $52,360 
Assets obtained in exchange for finance lease obligations52,367 81,799 

7


2. NEW ACCOUNTING STANDARDS

Recently Adopted Accounting Guidance

Liabilities – Supplier Financing Programs

In September 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2022-04, Liabilities—Supplier Finance Programs, Subtopic 405-50, that requires entities to disclose in the annual financial statements the key terms of the supplier finance program they use in connection with the purchase of goods and services, along with information about their obligations under such programs, including a roll forward of those obligations. Additionally, the guidance requires disclosure of the outstanding amount of the obligations as of the end of each interim period. The guidance does not affect the recognition, measurement, or financial statement presentation of supplier finance program obligations.

The guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2022, which is the first quarter of fiscal 2024 for Sysco, except for the roll forward requirement, which is effective annually for fiscal years beginning after December 15, 2023, which is fiscal year 2025 for Sysco. Early adoption is permitted. The guidance requires retrospective application to all periods in which a balance sheet is presented, except for the roll forward requirement, which will be applied prospectively.

Sysco completed its assessment of the disclosures required under ASU 2022-04 and adopted the standard, with the exception of the roll forward requirement, in the first quarter of fiscal 2024 on a retrospective basis. The company has 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.

The company’s outstanding payment obligations that suppliers financed to participating financial institutions, which are included in accounts payable on the consolidated balance sheets, are as follows:
Dec. 30, 2023Jul. 1, 2023Dec. 31, 2022Jul. 2, 2022
(In thousands)
Financed payment obligations$83,528 $99,606 $81,018 $90,267 


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, which is fiscal 2025 for Sysco, and interim periods for our fiscal years beginning after December 15, 2024, which is the first quarter of fiscal 2026 for Sysco, 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, which is fiscal 2026 for Sysco, on a prospective basis. Early adoption is permitted. We are currently evaluating the effect of adopting ASU 2023-09 on our disclosures.

8


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 $5.0 billion and $4.7 billion as of December 30, 2023 and July 1, 2023, respectively.

Sysco has certain customer contracts in which upfront monies are paid to its customers. These payments have become industry practice and are not related to financing of the customer’s business. They are not associated with any distinct good or service to be received from the customer and, therefore, are treated as a reduction of transaction prices. All upfront payments are capitalized in other assets and amortized over the life of the contract or the expected life of the relationship with the customer on a straight-line basis. As of December 30, 2023, our contract assets were not significant. We have no significant commissions paid that are directly attributable to obtaining a particular contract.

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 Dec. 30, 2023
US Foodservice OperationsInternational Foodservice OperationsSYGMAOtherTotal
(In thousands)
Principal Product Categories
Canned and dry products$2,601,298 $801,170 $228,632 $ $3,631,100 
Fresh and frozen meats2,574,453 503,387 504,102  3,581,942 
Frozen fruits, vegetables, bakery and other1,996,667 682,027 315,778  2,994,472 
Dairy products1,448,604 388,401 141,137  1,978,142 
Poultry1,340,095 285,312 261,300  1,886,707 
Fresh produce1,308,581 265,417 65,891  1,639,889 
Paper and disposables971,489 129,881 188,075 14,099 1,303,544 
Seafood507,958 110,121 44,056  662,135 
Beverage products335,748 164,368 139,137 21,330 660,583 
Other (1)
409,550 266,374 25,607 247,897 949,428 
Total Sales$13,494,443 $3,596,458 $1,913,715 $283,326 $19,287,942 
(1)
Other sales relate to non-food products, including textiles and amenities for our hotel supply business, equipment, and other janitorial products, medical supplies and smallwares.

9


13-Week Period Ended Dec. 31, 2022
US Foodservice OperationsInternational Foodservice OperationsSYGMAOtherTotal
(In thousands)
Principal Product Categories
Canned and dry products$2,502,665 $700,622 $236,726 $ $3,440,013 
Fresh and frozen meats2,390,929 445,018 452,370  3,288,317 
Frozen fruits, vegetables, bakery and other1,851,344 596,100 338,379  2,785,823 
Dairy products1,498,039 358,639 160,753  2,017,431 
Poultry1,329,071 285,343 265,269  1,879,683 
Fresh produce1,385,083 257,641 66,099  1,708,823 
Paper and disposables976,231 134,507 210,691 13,484 1,334,913 
Seafood547,760 109,290 37,810  694,860 
Beverage products303,789 133,515 136,668 21,318 595,290 
Other (1)
292,143 261,736 28,771 266,150 848,800 
Total Sales$13,077,054 $3,282,411 $1,933,536 $300,952 $18,593,953 
(1)
Other sales relate to non-food products, including textiles and amenities for our hotel supply business, equipment, and other janitorial products, medical supplies and smallwares.


26-Week Period Ended Dec. 30, 2023
US Foodservice OperationsInternational Foodservice OperationsSYGMAOtherTotal
(In thousands)
Principal Product Categories
Canned and dry products$5,285,985 $1,632,713 $461,617 $ $7,380,315 
Fresh and frozen meats5,143,634 1,023,128 984,691  7,151,453 
Frozen fruits, vegetables, bakery and other4,024,601 1,355,575 621,077  6,001,253 
Dairy products2,902,553 802,572 282,568  3,987,693 
Poultry2,701,790 576,635 535,008  3,813,433 
Fresh produce2,669,938 540,135 136,209  3,346,282 
Paper and disposables1,965,326 304,206 374,618 30,380 2,674,530 
Seafood1,085,593 235,145 87,572  1,408,310 
Beverage products698,413 334,921 285,359 45,196 1,363,889 
Other (1)
740,409 474,638 51,010 515,181 1,781,238 
Total Sales$27,218,242 $7,279,668 $3,819,729 $590,757 $38,908,396 
(1)
Other sales relate to non-food products, including textiles and amenities for our hotel supply business, equipment, and other janitorial products, medical supplies and smallwares.

10


26-Week Period Ended Dec. 31, 2022
US Foodservice OperationsInternational Foodservice OperationsSYGMAOtherTotal
(In thousands)
Principal Product Categories
Canned and dry products$5,079,917 $1,391,996 $472,894 $1,931 $6,946,738 
Fresh and frozen meats4,856,379 898,382 915,810  6,670,571 
Frozen fruits, vegetables, bakery and other3,694,811 1,176,132 647,576 149 5,518,668 
Dairy products3,023,521 725,486 325,401  4,074,408 
Poultry2,903,321 578,193 542,733  4,024,247 
Fresh produce2,723,003 512,378 131,343  3,366,724 
Paper and disposables1,999,135 278,574 420,049 28,541 2,726,299 
Seafood1,186,165 230,491 77,934  1,494,590 
Beverage products619,407 269,991 274,835 45,974 1,210,207 
Other (1)
593,877 504,523 58,418 531,513 1,688,331 
Total Sales$26,679,536 $6,566,146 $3,866,993 $608,108 $37,720,783 
(1)
Other sales relate to non-food products, including textiles and amenities for our hotel supply business, equipment, and other janitorial products, medical supplies and smallwares.

11


4.  ACQUISITIONS

During the first 26 weeks of fiscal 2024, we paid cash of $1.2 billion for several acquisitions.

Edward Don & Company

On November 27, 2023, Sysco consummated its acquisition of Edward Don & Company (Edward Don or the acquiree) through a merger between Edward Don and a wholly owned subsidiary of Sysco Corporation, in which Sysco acquired 100% of the members’ equity of the acquiree for cash consideration of $969.4 million. Edward Don is a leading distributor of foodservice equipment, supplies and disposables and has a robust supply chain that is expected to enable cost effective distribution of restaurant equipment and supplies across the Sysco network. The acquisition allows Sysco to add strategic capabilities and diversified offerings to complement its existing business and create a specialty equipment and supplies platform that will provide better selection and service to customers.

The assets, liabilities and operating results of Edward Don are reflected in our consolidated financial statements in accordance with ASC Topic No. 805, Business Combinations, commencing from the acquisition date. The purchase price was allocated based on the company’s preliminary estimated fair value of the assets acquired and liabilities assumed, and the excess was assigned to goodwill and intangibles. Goodwill of $447.6 million is assigned to the U.S. Foodservice Operations reportable segment and represents synergies and disposable, supply and foodservice equipment capabilities and offerings expected to benefit Sysco’s existing business.

In certain circumstances, purchase price allocations may be based upon preliminary estimates and assumptions. Accordingly, allocations are subject to revision until Sysco receives final information and completes its analysis during the measurement period. This includes finalizing the valuation of acquired tangible and intangible assets and related tax attributes.

5.  FAIR VALUE MEASUREMENTS

Sysco’s policy is to invest in only 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 6, “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 7, “Derivative Financial Instruments.”

12


The following tables present the company’s assets measured at fair value on a recurring basis as of December 30, 2023 and July 1, 2023:
 Assets Measured at Fair Value as of Dec. 30, 2023
 Level 1Level 2Level 3Total
 (In thousands)
Assets:
Cash equivalents
Cash and cash equivalents$573,597 $3 $ $573,600 
Other assets (1)
133,491   133,491 
Total assets at fair value$707,088 $3 $ $707,091 
(1)
Represents restricted cash balance recorded within other assets in the consolidated balance sheet.

 Assets Measured at Fair Value as of Jul. 1, 2023
 Level 1Level 2Level 3Total
 (In thousands)
Assets:
Cash equivalents
Cash and cash equivalents$308,952 $10,021 $ $318,973 
Other assets (1)
220,831   220,831 
Total assets at fair value$529,783 $10,021 $ $539,804 
(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 $11.9 billion as of December 30, 2023 and $9.8 billion as of July 1, 2023, while the carrying value was $12.1 billion as of December 30, 2023 and $10.4 billion as of July 1, 2023.

13


6. 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 26 weeks of fiscal 2024.

The following table presents our available-for-sale marketable securities as of December 30, 2023 and July 1, 2023:
Dec. 30, 2023
Amortized Cost BasisGross Unrealized GainsGross Unrealized LossesFair ValueShort-Term Marketable SecuritiesLong-Term Marketable Securities
(In thousands)
Fixed income securities:
Corporate bonds$100,865 $523 $(4,585)$96,803 $23,032 $73,771 
Government bonds29,628  (1,368)28,260  28,260 
Total marketable securities$130,493 $523 $(5,953)$125,063 $23,032 $102,031 
Jul. 1, 2023
Amortized Cost BasisGross Unrealized GainsGross Unrealized LossesFair ValueShort-Term Marketable SecuritiesLong-Term Marketable Securities
(In thousands)
Fixed income securities:
Corporate bonds$99,501 $96 $(6,777)$92,820 $12,767 $80,053 
Government bonds29,777  (1,913)27,864  27,864 
Total marketable securities$129,278 $96 $(8,690)$120,684 $12,767 $107,917 

As of December 30, 2023, 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.

Dec. 30, 2023
(In thousands)
Due in one year or less$23,032 
Due after one year through five years62,334 
Due after five years 39,697 
Total$125,063 

There were no significant realized gains or losses in marketable securities in the first 26 weeks of fiscal 2024.

7. DERIVATIVE FINANCIAL INSTRUMENTS

Sysco uses derivative financial instruments to enact hedging strategies for risk mitigation purposes; however, the company does 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.

14


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. In the second quarter of fiscal 2024, we entered into forward swap agreements to trade the fixed interest rate on $500 million of 6.00% senior notes with variable rates, starting in November 2024. The interest rate swap agreements are designated as fair value hedges and valued based on an income approach using observable market inputs including Secured Overnight Financing Rate (SOFR) yield curves. The company has incorporated credit valuation adjustments to appropriately reflect the risk of default in the fair value measurements. Changes in the fair value of the hedge and the carrying value of the hedged item attributable to changes in the benchmark interest rates being hedged are recognized in interest expense.

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.

In the second quarter of fiscal 2024, Sysco entered into a cross-currency swap to hedge 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).

Cross-currency swaps are valued based on an income approach using observable market inputs including foreign currency rates and interest rates in both countries subject to the swap.

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.

15


None of our hedging instruments contain credit-risk-related contingent features. Details of outstanding hedging instruments as of December 30, 2023 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 (January 2024)Swedish Krona101
Various (January 2024 to April 2024)British Pound Sterling17
May 2024Mexican Peso439
April 2025Canadian Dollar180
January 2029Euro470
Hedging of fuel risk
Various (January 2024 to March 2026)Gallons57

The location and the fair value of derivative instruments designated as hedges in the consolidated balance sheet as of December 30, 2023 and July 1, 2023 are as follows:
 Derivative Fair Value
 Balance Sheet locationDec. 30, 2023Jul. 1, 2023
(In thousands)
Fair Value Hedges:
Cross currency swapsOther assets$1,198 $ 
Interest rate swapsOther assets24,557  
Cross currency swapsOther current liabilities1,497 1,262 
Cash Flow Hedges:
Fuel swapsOther current assets$168 $102 
Foreign currency forwardsOther current assets74 624 
Fuel swapsOther assets136 40 
Fuel swapsOther current liabilities10,372 17,932 
Foreign currency forwardsOther current liabilities642 404 
Fuel swapsOther long-term liabilities2,794 5,637 
Net Investment Hedges:
Cross currency swapsOther current assets$3,377 $ 
Cross currency swapsOther long-term liabilities25,738  

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:
16


13-Week Period Ended26-Week Period Ended
Dec. 30, 2023Dec. 31, 2022Dec. 30, 2023Dec. 31, 2022
(In thousands)
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$154,925 $132,042 $295,899 $256,192 
Gain or (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items$(30,298)$(2,685)$(30,298)$(309)
Derivatives designated as hedging instruments22,066 742 22,066 (5,501)
Cross currency swaps:
Hedged items$(2,711)$ $285 $ 
Derivatives designated as hedging instruments2,711  (285) 

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 Ended26-Week Period Ended
Dec. 30, 2023Dec. 31, 2022Dec. 30, 2023Dec. 31, 2022
(In thousands)
Interest expense$(3,250)$(1,940)$(3,250)$(3,879)
Decrease in fair value of debt27,048 745 27,048 (3,570)
Foreign currency gain (loss)(2,711) 285  
Hedged items$(33,009)$(2,685)$(30,013)$(309)

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 December 30, 2023 and December 31, 2022, presented on a pretax basis, are as follows:
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13-Week Period Ended Dec. 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 thousands)(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps$(24,524)Operating expense$669 
Foreign currency contracts(507)Cost of sales / Other income 
Total$(25,031)$669 
Derivatives in net investment hedging relationships:
Cross currency contracts$(22,361)N/A$ 
Derivatives in fair value hedging relationships:
Change in excluded component of fair value hedge$210 Other expense (income)$ 
13-Week Period Ended Dec. 31, 2022
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on 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 thousands)(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps$1,140 Operating expense$12,377 
Foreign currency contracts49 Cost of sales / Other income 
Total$1,189 $12,377 
Derivatives in net investment hedging relationships:
Foreign denominated debt$(44,999)N/A$ 

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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 26-week periods ended December 30, 2023 and December 31, 2022, presented on a pretax basis, are as follows:

26-Week Period Ended Dec. 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 thousands)(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps$9,975 Operating expense$3,003 
Foreign currency contracts(791)Cost of sales / Other income 
Total$9,184 $3,003 
Derivatives in net investment hedging relationships:
Cross currency contracts$(22,361)N/A$ 
Derivatives in fair value hedging relationships:
Change in excluded component of fair value hedge$184 Other expense (income)$ 
26-Week Period Ended Dec. 31, 2022
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 thousands)(In thousands)
Derivatives in cash flow hedging relationships:
Fuel swaps$(35,155)Operating expense$25,362 
Foreign currency contracts335 Cost of sales / Other income 
Total$(34,820)$25,362 
Derivatives in net investment hedging relationships:
Foreign denominated debt$(13,653)N/A$ 
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The location and carrying amount of hedged liabilities in the consolidated balance sheet as of December 30, 2023 are as follows:
Dec. 30, 2023
Carrying Amount of Hedged Assets (Liabilities)Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets (Liabilities)
(In thousands)
Balance sheet location:
Long-term debt$(518,622)$(27,048)

The carrying amount of hedged liabilities in the consolidated balance sheet as of July 1, 2023 is zero.

8. 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 December 30, 2023, 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 December 30, 2023, there were $500.0 million in commercial paper issuances outstanding under this program.

On November 17, 2023, Sysco issued senior notes (the Notes) totaling $1.0 billion. Details of the Notes are as follows:

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

The Notes initially are fully and unconditionally guaranteed by Sysco’s direct and indirect wholly owned subsidiaries that guarantee Sysco’s other senior notes issued under the indenture governing the Notes or any of Sysco’s other indebtedness. Interest on the Notes will be paid semi-annually in arrears on July 17 and January 17, beginning July 17, 2024. At Sysco’s option, any or all of the Notes may be redeemed, in whole or in part, at any time prior to maturity. If Sysco elects to redeem (i) the 2029 Notes before the date that is one month prior to the maturity date, or (ii) the 2034 Notes before the date that is three months prior to the maturity date, Sysco will pay an amount equal to the greater of 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest or the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed that would be due if such senior notes matured on the applicable date described above. If Sysco elects to redeem a series of Notes on or after the applicable date described in the preceding sentence, Sysco will pay an amount equal to 100% of the principal amount of the Notes to be redeemed. Sysco will pay accrued and unpaid interest on the Notes redeemed to the redemption date.

The total carrying value of our debt was $12.1 billion as of December 30, 2023 and $10.4 billion as of July 1, 2023. The increase in the carrying value of our debt from the prior year was due to the issuance of senior notes, new borrowings under our commercial paper program and new financing leases in support of equipment.

On October 17, 2023, we entered into a new commercial paper dealer agreement in Europe for a commercial paper program with borrowings not to exceed €250 million. As of December 30, 2023, there were no commercial paper issuances outstanding under this program.

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.

9. COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS

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Sysco has company-sponsored defined benefit and defined contribution retirement plans for its employees. We also provide certain health care benefits to eligible retirees and their dependents.

On October 25, 2022, the Sysco Corporation Retirement Plan (the Plan) executed an agreement with Massachusetts Mutual Life Insurance Company (the Insurer). Under this agreement, the Plan purchased a nonparticipating single premium group annuity contract using Plan assets that transferred to the Insurer $695.0 million of the Plan’s defined benefit pension obligations related to certain pension benefits. The contract covers approximately 10,000 Sysco participants and beneficiaries (the Transferred Participants) in the U.S. pension plan (the U.S. Retirement Plan). Under the group annuity contract, the Insurer made an unconditional and irrevocable commitment to pay the pension benefits of each Transferred Participant that were due on or after January 1, 2023. The transaction resulted in no changes to the amount of benefits payable to the Transferred Participants.

As a result of the transaction, we recognized a one-time, non-cash pre-tax pension settlement charge of $315.4 million in the second quarter of fiscal 2023 primarily related to the accelerated recognition of actuarial losses included within accumulated other comprehensive loss in the statement of changes in consolidated shareholders’ equity. The transaction also required us to remeasure the benefit obligations and plan assets of the U.S. Retirement Plan. The remeasurement reflected the use of an updated discount rate and an expected rate of return on plan assets as of October 31, 2022, applying the practical expedient to remeasure plan assets and obligations as of the nearest calendar month-end date.

Components of Net Benefit Costs

The components of net company-sponsored benefit cost for the U.S. Retirement Plan are as follows:

 13-Week Period26-Week Period
   Ended (1)
   Ended (1)
 Dec. 31, 2022Dec. 31, 2022
(In thousands)(In thousands)
Service cost$2,034 $4,357 
Interest cost38,103 80,604 
Expected return on plan assets(36,957)(76,977)
Amortization of prior service cost98 197 
Amortization of actuarial loss7,661 16,609 
Settlement loss recognized315,354 315,354 
Net pension costs$326,293 $340,144 
(1)
Net pension costs were not material for the second quarter and first 26 weeks of fiscal 2024.

The components of net company-sponsored benefit costs other than the service cost component are reported in other expense (income), net within the consolidated results of operations.
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10.  EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share:
 13-Week Period Ended26-Week Period Ended
 Dec. 30, 2023Dec. 31, 2022Dec. 30, 2023Dec. 31, 2022
 (In thousands, except for share
and per share data)
(In thousands, except for share
and per share data)
Numerator:  
Net earnings$415,242 $141,216 $918,634 $606,784 
Denominator:
Weighted-average basic shares outstanding504,312,633 507,609,696 504,719,562 507,594,137 
Dilutive effect of share-based awards1,616,709 2,536,098 1,779,828 2,670,336 
Weighted-average diluted shares outstanding505,929,342 510,145,794 506,499,390 510,264,473 
Basic earnings per share$0.82 $0.28 $1.82 $1.20 
Diluted earnings per share$0.82 $0.28 $1.81 $1.19 

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 6,451,000 and 1,848,000 for the second quarter of fiscal 2024 and 2023, respectively, and approximately 6,219,000 and 1,620,000 for the first 26 weeks of fiscal 2024 and 2023, respectively.

Accelerated Share Repurchase Program

On December 15, 2023, we entered into a Master Confirmation and Supplemental Confirmation (collectively, the ASR Agreement) with Goldman, Sachs & Co. (Goldman) relating to an accelerated share repurchase program (the ASR Program). Pursuant to the terms of the ASR Agreement, effective January 3, 2024, we agreed to repurchase $500 million of our common stock from Goldman under the share repurchase program authorized by our Board of Directors in May 2021.

In connection with the ASR Program, we paid $500 million to Goldman on January 11, 2024, in exchange for 6,026,110 shares of Sysco’s outstanding common stock, which represents a substantial majority of the shares owed to Sysco by Goldman; however, the number of shares ultimately delivered to us by Goldman is subject to adjustment based on the volume-weighted average share price of Sysco’s common stock during the term of the ASR Agreement, less an agreed discount. We expect all purchases under the ASR Program to be completed by the end of March 2024, although the exact date of completion will depend on whether or when Goldman exercises an acceleration option that it has under the ASR Agreement. At settlement, we may be entitled to receive additional shares of common stock from Goldman or, under certain circumstances, may be required to issue additional shares or make a payment to Goldman at our option. In the third quarter of fiscal 2024, the shares received will be recognized in treasury stock and reduce the number of weighted average shares outstanding. The incremental consideration to be received or issued upon settlement of the ASR Program was evaluated as an unsettled forward contract indexed to our common stock and will be classified within stockholders’ equity in the third quarter of fiscal 2024, if the ASR Program has not concluded by the end of the third quarter of fiscal 2024.

The ASR Agreement contains the principal terms and provisions governing the ASR Program, including, but not limited to, the mechanism used to determine the number of shares that will be delivered, the required timing of delivery of the shares, the specific circumstances under which Goldman may delay any date of valuation or settlement under the ASR Program (such as upon the occurrence of certain market disruptions), the specific circumstances under which Goldman is permitted to make adjustments to the terms of the ASR Program or to terminate the ASR Program (such as upon the announcement of certain fundamental transactions affecting Sysco), and various acknowledgments, representations and warranties made by Sysco and Goldman to one another.

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11.  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, changes in marketable securities, amounts related to certain hedging arrangements and amounts related to pension and other postretirement plans. Comprehensive income was $552.3 million and $527.8 million for the second quarter of fiscal 2024 and fiscal 2023, respectively. Comprehensive income was $981.5 million and $764.1 million for the first 26 weeks of fiscal 2024 and fiscal 2023, 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:
  13-Week Period Ended Dec. 30, 2023
 Location of
Expense (Income) Recognized in
Net Earnings
Before Tax
Amount
TaxNet of Tax
Amount
  (In thousands)
Pension and other postretirement benefit plans:    
Reclassification adjustments:    
Amortization of prior service costOther expense, net$195 $49 $146 
Amortization of actuarial loss, netOther expense, net6,676 1,665 5,011 
Total reclassification adjustments6,871 1,714 5,157 
Foreign currency translation:
Foreign currency translation adjustmentN/A163,084  163,084 
Marketable securities:
   Change in marketable securities (1)
N/A4,359 915 3,444 
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in excluded component of fair value
  hedge
Other expense, net210 52 158 
Change in cash flow hedges
Operating expenses (2)
(25,031)(4,806)(20,225)
Change in net investment hedges N/A(22,361)(5,620)(16,741)
Total other comprehensive (loss) before reclassification adjustments(47,182)(10,374)(36,808)
Reclassification adjustments:    
Amortization of cash flow hedgesInterest expense2,893 723 2,170 
Total other comprehensive income (loss)$130,025 $(7,022)$137,047 
(1)
Realized gains or losses on marketable securities are presented within other (income) expense, net in the consolidated results of operations; however, there were no significant gains or losses realized in the second quarter of fiscal 2024.
(2)
Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.





23


  13-Week Period Ended Dec. 31, 2022
 Location of
Expense (Income) Recognized in
Net Earnings
Before Tax
Amount
TaxNet of Tax
Amount
  (In thousands)
Pension and other postretirement benefit plans:    
Other comprehensive income before reclassification adjustments:
Net actuarial gain, arising in the current yearOther expense, net$(89,851)$(22,463)$(67,388)
SettlementsOther expense, net315,455 78,864 236,591 
Total other comprehensive income before reclassification adjustments225,604 56,401 169,203 
Reclassification adjustments:    
Amortization of prior service costOther expense, net99 25 74 
Amortization of actuarial loss, netOther expense, net7,500 1,872 5,628 
Total reclassification adjustments7,599 1,897 5,702 
Foreign currency translation:
Foreign currency translation adjustmentN/A241,814  241,814 
Marketable securities:
Change in marketable securities (1)
N/A1,511 317 1,194 
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in cash flow hedges
Operating expenses (2)
1,189 986 203 
Change in net investment hedgesN/A(44,999)(11,250)(33,749)
Total other comprehensive (loss) before reclassification adjustments(43,810)(10,264)(33,546)
Reclassification adjustments:
Amortization of cash flow hedgesInterest expense2,893 723 2,170 
Total other comprehensive income$435,611 $49,074 $386,537 
(1)
Realized gains or losses on marketable securities are presented within other (income) expense, net in the consolidated results of operations; however, there were no significant gains or losses realized in the second quarter of fiscal 2023.
(2)
Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.

24


  26-Week Period Ended Dec. 30, 2023
 Location of
Expense (Income) Recognized in
Net Earnings
Before Tax
Amount
TaxNet of Tax
Amount
  (In thousands)
Pension and other postretirement benefit plans:
Other comprehensive income before reclassification adjustments:
Net actuarial loss, arising in the current yearOther expense, net$672 $169 $503 
Reclassification adjustments:
Amortization of prior service costOther expense, net390 98 292 
Amortization of actuarial loss, netOther expense, net13,317 3,324 9,993 
Total reclassification adjustments13,707 3,422 10,285 
Foreign currency translation:
Foreign currency translation adjustmentN/A54,890  54,890 
Marketable securities:
Change in marketable securities (1)
N/A3,163 664 2,499 
Hedging instruments:
Other comprehensive income (loss) before reclassification adjustments:
Change in excluded component of fair value
  hedge
Other expense, net184 46 138 
Change in cash flow hedges
Operating expenses (2)
9,184 2,261 6,923 
Change in net investment hedges N/A(22,361)(5,620)(16,741)
Total other comprehensive (loss) before reclassification adjustments(12,993)(3,313)(9,680)
Reclassification adjustments:
Amortization of cash flow hedgesInterest expense5,786 1,446 4,340 
Total other comprehensive income$65,225 $2,388 $62,837 
(1)
Realized gains or losses on marketable securities are presented within other (income) expense, net in the consolidated results of operations; however, there were no significant gains or losses realized in the first 26 weeks of fiscal 2024.
(2)
Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.

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  26-Week Period Ended Dec. 31, 2022
 Location of
Expense (Income) Recognized in
Net Earnings
Before Tax
Amount
TaxNet of Tax
Amount
  (In thousands)
Pension and other postretirement benefit plans:
Other comprehensive income before reclassification adjustments:
Net actuarial loss, arising in the current yearOther expense, net$(89,851)$(22,463)$(67,388)
SettlementsOther expense, net315,455 78,864 236,591 
Total other comprehensive income before reclassification adjustments225,604 56,401 169,203 
Reclassification adjustments:
Amortization of prior service costOther expense, net198 50 148 
Amortization of actuarial loss, netOther expense, net16,686 4,167 12,519 
Total reclassification adjustments16,884 4,217 12,667 
Foreign currency translation:
Foreign currency translation adjustmentN/A9,632  9,632 
Marketable securities:
Change in marketable securities (1)
N/A(2,701)(567)(2,134)
Hedging instruments:
Other comprehensive (loss) before reclassification adjustments:
Change in cash flow hedges
Operating expenses (2)
(34,820)(8,633)(26,187)
   Change in net investment hedges N/A(13,653)(3,413)(10,240)
Total other comprehensive (loss) before reclassification adjustments(48,473)(12,046)(36,427)
Reclassification adjustments:
Amortization of cash flow hedgesInterest expense5,767 1,442 4,325 
Total other comprehensive income$206,713 $49,447 $157,266 
(1)
Realized gains or losses on marketable securities are presented within other (income) expense, net in the consolidated results of operations; however, there were no significant gains or losses realized in the first 26 weeks of fiscal 2023.
(2)
Amount partially impacts operating expense for fuel swaps accounted for as cash flow hedges.
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The following tables provide a summary of the changes in accumulated other comprehensive (loss) income for the periods presented:
 26-Week Period Ended Dec. 30, 2023
 Pension and Other Postretirement Benefit Plans,
net of tax
Foreign Currency TranslationHedging,
net of tax
Marketable Securities,
net of tax
Total
 (In thousands)
Balance as of Jul. 1, 2023$(839,541)$(374,290)$(31,966)$(6,793)$(1,252,590)
Net actuarial loss arising in the current year503 — — — 503 
Equity adjustment from foreign currency translation— 54,890 — — 54,890 
Amortization of cash flow hedges— — 4,340 — 4,340 
Change in net investment hedges(16,741)(16,741)
Change in excluded component of fair value hedge— — 138 — 138 
Change in cash flow hedge— — 6,923 — 6,923 
Amortization of unrecognized prior service cost292 — — — 292 
Amortization of unrecognized net actuarial losses9,993 — — — 9,993 
Change in marketable securities— — — 2,499 2,499 
Balance as of Dec. 30, 2023$(828,753)$(319,400)$(37,306)$(4,294)$(1,189,753)

 26-Week Period Ended Dec. 31, 2022
 Pension and Other Postretirement Benefit Plans,
net of tax
Foreign Currency TranslationHedging,
net of tax
Marketable SecuritiesTotal
 (In thousands)
Balance as of Jul. 2, 2022$(1,011,335)$(501,517)$35,770 $(4,972)$(1,482,054)
Net actuarial loss arising in the current year(67,388)— — — (67,388)
Settlements236,591 — — — 236,591 
Equity adjustment from foreign currency translation— 9,632 — — 9,632 
Amortization of cash flow hedges— — 4,325 — 4,325 
Change in net investment hedges— — (10,240)— (10,240)
Change in cash flow hedges— — (26,187)— (26,187)
Amortization of unrecognized prior service cost148 — — — 148 
Amortization of unrecognized net actuarial losses12,519 — — — 12,519 
Change in marketable securities— — — (2,134)(2,134)
Balance as of Dec. 31, 2022$(829,465)$(491,885)$3,668 $(7,106)$(1,324,788)

12.  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).

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Stock Incentive Plans

In the first 26 weeks of fiscal 2024, options to purchase 808,279 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 26 weeks of fiscal 2024 was $19.27.

In the first 26 weeks of fiscal 2024, employees were granted 521,082 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 26 weeks of fiscal 2024 was $73.58. 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 26 weeks of fiscal 2024, employees were granted 366,883 restricted stock units. The weighted average grant-date fair value per restricted stock unit granted during the first 26 weeks of fiscal 2024 was $71.93.

Employee Stock Purchase Plan

Plan participants purchased 594,056 shares of common stock under the ESPP during the first 26 weeks of fiscal 2024. The weighted average fair value per employee stock purchase right issued pursuant to the ESPP was $10.33 during the first 26 weeks of fiscal 2024. 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 $52.8 million and $52.7 million for the first 26 weeks of fiscal 2024 and fiscal 2023, respectively.

As of December 30, 2023, there was $143.6 million of total unrecognized compensation cost related to share-based compensation arrangements. This cost is expected to be recognized over a weighted-average period of 1.95 years.

13.  INCOME TAXES

Effective Tax Rate

The effective tax rates for the second quarter and first 26 weeks of fiscal 2024 were 23.83% and 23.94%, respectively. These rates are higher than the company’s 21.00% statutory tax rate primarily because of state income taxes. The rates are partially offset by a foreign income tax benefit and the equity-based compensation excess tax benefits.

The effective tax rates for the second quarter and first 26 weeks of fiscal 2023 were 20.88% and 21.54%, respectively. The second quarter was favorably impacted by the benefit of the pension buyout of $4.9 million and excess benefits of equity-based compensation, which totaled $1.4 million. The first 26 weeks of fiscal 2023 were favorably impacted by excess tax benefits of equity-based compensation, which totaled $10.3 million.

Uncertain Tax Positions

As of December 30, 2023, the gross amount of unrecognized tax benefit and related accrued interest was $32.4 million and $9.7 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 $131.0 million attributable to its
28


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%. The OECD continues to release additional guidance on the two-pillar framework, with widespread implementation anticipated by 2024. We are continuing to evaluate the potential impact on future periods of the Pillar Two Framework, pending legislation adoption and/or guidance by individual countries, with the rules being effective for tax years beginning on or after January 1, 2024. For Sysco, Pillar Two will be effective in fiscal 2025.

The determination of the company’s provision for income taxes requires judgment, the use of estimates and the interpretation and application of complex tax laws. The company’s 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 the company’s change in the mix of earnings from these taxing jurisdictions all affect the overall effective tax rate.

14.  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.

15.  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 & Sons, Edward Don, acquired in the second quarter of fiscal 2024, which distributes restaurant equipment and supplies, 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.
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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.

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

 13-Week Period Ended26-Week Period Ended
 Dec. 30, 2023Dec. 31, 2022Dec. 30, 2023Dec. 31, 2022
Sales:(In thousands)(In thousands)
U.S. Foodservice Operations$13,494,443 $13,077,054 $27,218,242 $26,679,536 
International Foodservice Operations3,596,458 3,282,411 7,279,668 6,566,146 
SYGMA1,913,715 1,933,536 3,819,729 3,866,993 
Other283,326 300,952 590,757 608,108 
Total$19,287,942 $18,593,953 $38,908,396 $37,720,783 
 13-Week Period Ended26-Week Period Ended
 Dec. 30, 2023Dec. 31, 2022Dec. 30, 2023Dec. 31, 2022
Operating income (loss):(In thousands)(In thousands)
U.S. Foodservice Operations$839,036 $780,968 $1,780,007 $1,686,679 
International Foodservice Operations82,930 57,413 176,413 144,393 
SYGMA16,346 6,847 29,113 12,544 
Other8,387 9,870 20,210 21,408 
Total segments946,699 855,098 2,005,743 1,865,024 
Global Support Center(246,656)(214,275)(502,118)(487,400)
Total operating income700,043 640,823 1,503,625 1,377,624 
Interest expense149,680 132,042 284,014 256,192 
Other expense, net5,245 330,305 11,885 348,054 
Earnings before income taxes$545,118 $178,476 $1,207,726 $773,378 

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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 July 1, 2023, 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 July 1, 2023 (our fiscal 2023 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 improved second quarter of fiscal 2024 results were attributable to sales growth that surpassed second quarter of fiscal 2023 levels by 3.7%. The increase in sales was driven by a combination of positive case volume growth and product cost inflation. Our gross profit growth this quarter outpaced operating expense due to effective management of product cost fluctuations, strategic sourcing, progress achieved in improving the performance of our supply chain, and delivery of our cost-out measures. See below for a comparison of our fiscal 2024 results to our fiscal 2023 results, both including and excluding Certain Items (as defined below).

Comparisons of results from the second quarter of fiscal 2024 to the second quarter of fiscal 2023 are presented below:

Sales:
increased 3.7%, or $694.0 million, to $19.3 billion;
Operating income:
increased 9.2%, or $59.2 million, to $700.0 million;
adjusted operating income increased 9.2%, or $62.6 million, to $744.9 million;
Net earnings:
increased 194.0%, or $274.0 million, to $415.2 million;
adjusted net earnings increased 10.1%, or $41.1 million, to $449.0 million;
Basic earnings per share:
increased 192.9%, or $0.54, to $0.82 per share;
Diluted earnings per share:
increased 192.9%, or $0.54, to $0.82 per share;
adjusted diluted earnings per share increased 11.3%, or $0.09, to $0.89;
EBITDA:
increased 82.7%, or $413.7 million, to $914.3 million; and
adjusted EBITDA increased 11.6%, or $96.2 million, to $927.5 million.

Comparisons of results from the first 26 weeks of fiscal 2024 to the first 26 weeks of fiscal 2023 are presented below:

Sales:
increased 3.1%, or $1.2 billion, to $38.9 billion;
Operating income:
increased 9.1%, or $126.0 million, to $1.5 billion;
adjusted operating income increased 9.9%, or $144.2 million, to $1.6 billion;
Net earnings:
increased 51.4%, or $311.9 million, to $918.6 million;
adjusted net earnings increased 10.0%, or $90.1 million, to $1.0 billion;
Basic earnings per share:
increased 51.7%, or $0.62, to $1.82 per share;
Diluted earnings per share:
increased 52.1%, or $0.62, to $1.81 per share;
adjusted diluted earnings per share increased 11.4%, or $0.20, to $1.96;
EBITDA:
increased 36.1%, or $508.7 million, to $1.9 billion; and
adjusted EBITDA increased 11.7%, or $203.7 million, to $2.0 billion.

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The discussion of our results includes certain non-GAAP financial measures, including EBITDA and adjusted EBITDA, that we believe provide important perspective with respect to underlying business trends. Other than EBITDA and free cash flow, any non-GAAP financial measures will be denoted as adjusted measures to remove (1) restructuring charges; (2) expenses associated with our various transformation initiatives; (3) severance charges; and (4) acquisition-related costs consisting of: (a) intangible amortization expense and (b) acquisition costs and due diligence costs related to our acquisitions. Our results for fiscal 2023 were also impacted by adjustments to a product return allowance pertaining to COVID-related personal protection equipment inventory, a pension settlement charge that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer and the reduction of bad debt expense previously recognized in fiscal 2020 due to the impact of the COVID-19 pandemic on the collectability of our pre-pandemic trade receivable balances.

The fiscal 2024 and fiscal 2023 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

Sysco continues to outperform the foodservice market. The food-away-from-home sector is a healthy, long-term growth market. Sysco is diversified and well positioned as a market leader in food service. We expect slightly positive rates of industry volume growth for fiscal 2024.

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. The most significant factor affecting performance in the second quarter and first 26 weeks of fiscal 2024 was volume growth. We experienced a 3.4% and 2.5% improvement in U.S. Foodservice case volume in the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023. Local case volume within our U.S. Foodservice segment increased 2.9% and 1.3% in the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023. This volume reflects our broadline and specialty businesses, except for our specialty meats and equipment businesses which are measured in different units.

We experienced inflation at a rate of 1.1% in the second quarter of fiscal 2024, at the total enterprise level, primarily driven by inflation in the meat and frozen categories. We continued to be successful in managing our inflation, resulting in an increase in gross profit dollars. Gross margin increased 21 and 28 basis points in the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023. This was primarily driven by higher volumes, the effective management of product cost fluctuations and progress from our strategic sourcing efforts. We expect total enterprise level inflation to be slightly positive in fiscal 2024.

Operating Expense Trends

Total operating expenses increased 3.9% and 3.6% during the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023, driven by increased volumes. We continued to improve the performance of our supply chain, while investing in colleague retention and training. These efficiency efforts are expected to continue to improve in fiscal 2024. We believe the advancements we are making in our physical capabilities, and the investments we are making in improved training, will provide higher service levels to our customers and strengthen Sysco’s ability to profitably increase market share.

Interest Expense Trends

Interest expense for fiscal 2024 is expected to increase by approximately $70 million, as compared to fiscal 2023, primarily due to higher debt associated with our acquisition of Edward Don.

Mergers and Acquisitions

We continue to focus on mergers and acquisitions as a part of our growth strategy, where we plan to reinforce our existing businesses, while cultivating new channels, new segments and new capabilities.

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In the first quarter of fiscal 2024, we acquired BIX Produce Company, a leading produce specialty distributor based in Minnesota. This acquisition is expected to provide a strategic opportunity for specialty produce operations to expand its geographic footprint in an area of the country where it does not currently have operations. This company’s results are included within U.S. Foodservice Operations and were not material to our results for the second quarter and first 26 weeks of fiscal 2024.

In the second quarter of fiscal 2024, we acquired Edward Don, one of the largest kitchen equipment and supplies distributors, based out of Chicago. Edward Don has a robust supply chain that is expected to enable cost effective distribution of restaurant equipment and supplies. This acquisition further demonstrates our Recipe for Growth strategy of focusing on building strategic specialty platforms that help us better support restaurant and hospitality customers. This company’s results are included within the U.S. Foodservice Operations segment and were not material to our results for the second quarter and first 26 weeks of fiscal 2024.


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.

Our various business transformation initiatives remain on track, including promoting our specialty programs for produce, protein and Italian products and our customer growth initiatives. Our strategic initiative to enable omni-channel inventory fulfillment is operating in our first test region, and we have made progress in expanding to deliveries six days a week. From these actions as a part of our Recipe for Growth, the benefits of our developing capabilities are apparent in the new customers we are winning and in the progress we are making toward increasing market share. We expect that, as our Recipe for Growth matures, the impact on our top-line growth will deliver profitable and consistent growth.

Results of Operations

The following table sets forth the components of our consolidated results of operations expressed as a percentage of sales for the periods indicated:
 13-Week Period Ended26-Week Period Ended
 Dec. 30, 2023Dec. 31, 2022Dec. 30, 2023Dec. 31, 2022
Sales100.0 %100.0 %100.0 %100.0 %
Cost of sales81.8 82.0 81.6 81.9 
Gross profit18.2 18.0 18.4 18.1 
Operating expenses14.6 14.6 14.5 14.5 
Operating income3.6 3.4 3.9 3.6 
Interest expense0.8 0.7 0.8 0.7 
Other expense (income), net— 1.7 — 0.8 
Earnings before income taxes2.8 1.0 3.1 2.1 
Income taxes0.6 0.2 0.7 0.5 
Net earnings2.2 %0.8 %2.4 %1.6 %

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The following table sets forth the change in the components of our consolidated results of operations expressed as a percentage increase or decrease over the comparable period in the prior year:
 13-Week Period Ended26-Week Period Ended
Dec. 30, 2023Dec. 30, 2023
Sales3.7 %3.1 %
Cost of sales3.5 2.8 
Gross profit4.9 4.7 
Operating expenses3.9 3.6 
Operating income9.2 9.1 
Interest expense13.4 10.9 
Other expense (income), net (1) (2)
(98.4)(96.6)
Earnings before income taxes205.4 56.2 
Income taxes248.6 73.5 
Net earnings194.0 %51.4 %
Basic earnings per share192.9 %51.7 %
Diluted earnings per share192.9 52.1 
Average shares outstanding(0.6)(0.6)
Diluted shares outstanding(0.8)(0.7)
(1)
Other expense (income), net was expense of $5.2 million and $330.3 million in the second quarter of fiscal 2024 and fiscal 2023, respectively.
(2)
Other expense (income), net was expense of $11.9 million and $348.1 million in the first 26 weeks of fiscal 2024 and fiscal 2023, respectively.

The following tables represent our results by reportable segments:
 13-Week Period Ended Dec. 30, 2023
 U.S. Foodservice OperationsInternational Foodservice OperationsSYGMAOtherGlobal Support CenterConsolidated
Totals
 (In thousands)
Sales$13,494,443 $3,596,458 $1,913,715 $283,326 $— $19,287,942 
Sales increase (decrease)3.2 %9.6 %(1.0)%(5.9)%3.7 %
Percentage of total70.0 %18.6 %9.9 %1.5 %100.0 %
Operating income (loss)$839,036 $82,930 $16,346 $8,387 $(246,656)$700,043 
Operating income (loss) increase (decrease)7.4 %44.4 %NM(15.0)%15.1 %9.2 %
Percentage of total segments 88.6 %8.8 %1.7 %0.9 %100.0 %
Operating income as a percentage of sales6.2 %2.3 %0.9 %3.0 %3.6 %

 13-Week Period Ended Dec. 31, 2022
 U.S. Foodservice OperationsInternational Foodservice OperationsSYGMAOtherGlobal Support CenterConsolidated
Totals
 (In thousands)
Sales$13,077,054 $3,282,411 $1,933,536 $300,952 $— $18,593,953 
Percentage of total70.3 %17.7 %10.4 %1.6 %100.0 %
Operating income (loss)$780,968 $57,413 $6,847 $9,870 $(214,275)$640,823 
Percentage of total segments91.3 %6.7 %0.8 %1.2 %100.0 %
Operating income as a percentage of sales6.0 %1.7 %0.4 %3.3 %3.4 %
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 26-Week Period Ended Dec. 30, 2023
 U.S. Foodservice OperationsInternational Foodservice OperationsSYGMAOtherGlobal Support CenterConsolidated
Totals
 (In thousands)
Sales$27,218,242 $7,279,668 $3,819,729 $590,757 $— $38,908,396 
Sales increase (decrease)2.0 %10.9 %(1.2)%(2.9)%3.1 %
Percentage of total70.0 %18.7 %9.8 %1.5 %100.0 %
Operating income (loss)$1,780,007 $176,413 $29,113 $20,210 $(502,118)$1,503,625 
Operating income (loss) increase (decrease)5.5 %22.2 %NM(5.6)%3.0 %9.1 %
Percentage of total segments 88.7 %8.8 %1.5 %1.0 %100.0 %
Operating income as a percentage of sales6.5 %2.4 %0.8 %3.4 %3.9 %
 26-Week Period Ended Dec. 31, 2022
 U.S. Foodservice OperationsInternational Foodservice OperationsSYGMAOtherGlobal Support CenterConsolidated
Totals
 (In thousands)
Sales$26,679,536 $6,566,146 $3,866,993 $608,108 $— $37,720,783 
Percentage of total70.7 %17.4 %10.3 %1.6 %100.0 %
Operating income (loss)$1,686,679 $144,393 $12,544 $21,408 $(487,400)$1,377,624 
Percentage of total segments90.4 %7.8 %0.7 %1.1 %100.0 %
Operating income as a percentage of sales6.3 %2.2 %0.3 %3.5 %3.7 %

Based on information in Note 15, “Business Segment Information,” in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q, in the second quarter and first 26 weeks of fiscal 2024, U.S. Foodservice Operations and International Foodservice Operations, collectively, represented approximately 88.6% and 88.7% of Sysco’s overall sales and 97.4% and 97.5% of total segment operating income, respectively. This illustrates that these segments represent a substantial majority of our total segment results when compared to other reportable segments.

Results of U.S. Foodservice Operations

The following tables set forth a summary of the components of operating income expressed as a percentage increase or decrease over the comparable period in the prior year:

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 13-Week Period Ended Dec. 30, 202313-Week Period Ended Dec. 31, 2022Change in Dollars% Change
 (Dollars in thousands)
Sales$13,494,443 $13,077,054 $417,389 3.2 %
Gross profit2,577,694 2,493,089 84,605 3.4 
Operating expenses1,738,658 1,712,121 26,537 1.5 
Operating income$839,036 $780,968 $58,068 7.4 %
Gross profit$2,577,694 $2,493,089 $84,605 3.4 %
Adjusted operating expenses (Non-GAAP)1,726,568 1,702,173 24,395 1.4 
Adjusted operating income (Non-GAAP)$851,126 $790,916 $60,210 7.6 %
 26-Week Period Ended Dec. 30, 202326-Week Period Ended Dec. 31, 2022Change in Dollars % Change
 (Dollars in thousands)
Sales$27,218,242 $26,679,536 $538,706 2.0 %
Gross profit5,262,469 5,105,432 157,037 3.1 
Operating expenses3,482,462 3,418,753 63,709 1.9 
Operating income$1,780,007 $1,686,679 $93,328 5.5 %
Gross profit$5,262,469 $5,105,432 $157,037 3.1 %
Adjusted operating expenses (Non-GAAP)3,457,770 3,398,859 58,911 1.7 
Adjusted operating income (Non-GAAP)$1,804,699 $1,706,573 $98,126 5.7 %

Sales

The following table sets forth the percentage and dollar value increase or decrease in the major factors impacting sales as compared to the corresponding prior year period in order to demonstrate the cause and magnitude of change:
Increase (Decrease)Increase (Decrease)
13-Week Period26-Week Period
(Dollars in millions)(Dollars in millions)
Cause of changePercentageDollarsPercentageDollars
Case volume (1)
4.2 %$541.4 2.7 %$728.9 
Deflation(0.7)(94.2)(0.5)(139.3)
Other (2)
(0.3)(29.8)(0.2)(50.9)
Total change in sales3.2 %$417.4 2.0 %$538.7 
(1)
Case volumes increased 3.4% and 2.5% compared to the second quarter and first 26 weeks of fiscal 2023, respectively. This volume increase resulted in a 4.2% and 2.7% increase in the dollar value of sales compared to the second quarter and first 26 weeks of fiscal 2023, respectively.
(2)
Case volume reflects our broadline and specialty businesses, with the exception of our specialty meats business, which measures its volume in pounds, and Edward Don. Any impact in volumes from these operations are included within “Other.”

The sales growth in our U.S. Foodservice Operations was fueled by volume growth. Case volumes from our U.S. Foodservice Operations increased 3.4% and 2.5% in the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023. This included a 2.9% increase in local customer case volume in the second quarter of fiscal 2024 and a 1.3% increase in the first 26 weeks of fiscal 2024.

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Operating Income

The increase in operating income for the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023, was driven by gross profit dollar growth and case volume growth, partially offset by an increase in operating expenses.

Gross profit dollar growth in the second quarter and first 26 weeks of fiscal 2024, as compared to the second quarter and first 26 weeks of fiscal 2023, was driven primarily by case volume growth, improvements in supply chain productivity and our strategic sourcing efforts. The estimated change in product costs, an internal measure of inflation or deflation, decreased in the second quarter and first 26 weeks of fiscal 2024. Gross margin, which is gross profit as a percentage of sales, was 19.1% and 19.3% in the second quarter and first 26 weeks of fiscal 2024, respectively, for our U.S. Foodservice Operations, which was an increase of 4 basis points compared to gross margin of 19.1% in the second quarter of fiscal 2023, and an increase of 19 basis points compared to gross margin of 19.1% in the first 26 weeks of fiscal 2023.

The increase in operating expenses for the second quarter and first 26 weeks of fiscal 2024, as compared to the second quarter and first 26 weeks of fiscal 2023, was primarily driven by increased volumes.

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Results of International Foodservice Operations

The following table sets forth a summary of the components of operating income and adjusted operating income expressed as a percentage increase or decrease over the comparable period in the prior year:
 13-Week Period Ended Dec. 30, 202313-Week Period Ended Dec. 31, 2022Change in Dollars% Change
 (Dollars in thousands)
Sales$3,596,458 $3,282,411 $314,047 9.6 %
Gross profit708,100 624,460 83,640 13.4 
Operating expenses625,170 567,047 58,123 10.3 
Operating income$82,930 $57,413 $25,517 44.4 %
Gross profit$708,100 $624,460 $83,640 13.4 %
Adjusted operating expenses (Non-GAAP)605,720 545,789 59,931 11.0 
Adjusted operating income (Non-GAAP)$102,380 $78,671 $23,709 30.1 %
Sales on a constant currency basis (Non-GAAP)$3,491,860 $3,282,411 $209,449 6.4 %
Gross profit on a constant currency basis (Non-GAAP)683,974 624,460 59,514 9.5 
Adjusted operating expenses on a constant currency basis (Non-GAAP)583,393 545,789 37,604 6.9 
Adjusted operating income on a constant currency basis (Non-GAAP)$100,581 $78,671 $21,910 27.9 %
 26-Week Period Ended Dec. 30, 202326-Week Period Ended Dec. 31, 2022Change in Dollars % Change
 (Dollars in thousands)
Sales$7,279,668 $6,566,146 $713,522 10.9 %
Gross profit1,440,139 1,273,725 166,414 13.1 
Operating expenses1,263,726 1,129,332 134,394 11.9 
Operating income$176,413 $144,393 $32,020 22.2 %
Gross profit$1,440,139 $1,273,725 $166,414 13.1 %
Adjusted operating expenses (Non-GAAP)1,221,576 1,088,153 133,423 12.3 
Adjusted operating income (Non-GAAP)$218,563 $185,572 $32,991 17.8 %
Sales on a constant currency basis (Non-GAAP)$7,069,567 $6,566,146 $503,421 7.7 %
Gross profit on a constant currency basis (Non-GAAP)1,389,302 1,273,725 115,577 9.1 
Adjusted operating expenses on a constant currency basis (Non-GAAP)1,173,833 1,088,153 85,680 7.9 
Adjusted operating income on a constant currency basis (Non-GAAP)$215,469 $185,572 $29,897 16.1 %

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Sales

The following tables set forth the percentage and dollar value increase or decrease in the major components impacting sales as compared to the corresponding prior year period in order to demonstrate the cause and magnitude of change.
Increase (Decrease)Increase (Decrease)
13-Week Period26-Week Period
(Dollars in millions)(Dollars in millions)
Cause of changePercentageDollarsPercentageDollars
Inflation3.7 %$122.4 5.6 %$370.6 
Foreign currency3.2 104.6 3.2 210.1 
Other (1)
2.7 87.0 2.1 132.8 
Total change in sales9.6 %$314.0 10.9 %$713.5 
(1)
The impact of volumes as a component of sales growth from international operations are included within “Other.” Volume in our foreign operations includes volume metrics that differ from country to country and cannot be aggregated on a consistent, comparable basis.

Sales for the second quarter and first 26 weeks of fiscal 2024 were higher, as compared to the second quarter and first 26 weeks of fiscal 2023, due to inflation, a positive impact of foreign currency translation, and an improvement in volume primarily attributable to our Recipe for Growth initiatives.

Operating Income

The increase in operating income for the second quarter and first 26 weeks of fiscal 2024, as compared to the second quarter and first 26 weeks of fiscal 2023, was due to the continuing increase in sales volumes, along with specific efforts to optimize our gross profit, including the ability to effectively manage product cost fluctuations, incremental progress from our strategic sourcing efforts and local case volume growth.

The increase in gross profit dollars in the second quarter and first 26 weeks of fiscal 2024, as compared to the second quarter and first 26 weeks of fiscal 2023, was attributable to the increase in sales volume and the management of inflation, along with specific efforts to optimize our gross profit dollars.

The increase in operating expenses for the second quarter and first 26 weeks of fiscal 2024, as compared to the second quarter and first 26 weeks of fiscal 2023, was primarily due to increased volumes, colleague-related costs and the impact of foreign currency translation.

Results of SYGMA and Other Segment

For SYGMA, sales were 1.0% and 1.2% lower in the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023, primarily driven by the planned exit of customers that did not meet our disciplined profit thresholds. Operating income increased by $9.5 million and $16.6 million in the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023, due to decreases in operating expenses driven by the planned exit of customers.

For the operations that are grouped within Other, operating income decreased $1.5 million and $1.2 million in the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023. The operations of this group mainly consist of our hospitality business, Guest Worldwide.

Global Support Center Expenses

Our Global Support Center generally includes all expenses of the corporate office and Sysco’s shared service operations. These expenses in the second quarter of fiscal 2024 increased $34.4 million, or 15.7%, as compared to the second quarter of fiscal 2023, primarily due to increases in self-insurance reserves and colleague-related costs. These expenses in the first 26 weeks of fiscal 2024 increased $24.4 million, or 5.0%, as compared to the first 26 weeks of fiscal 2023, primarily due to increases in self-insurance reserves, colleague-related costs, and depreciation expense, partially offset by decreases in fuel hedging program expenses.

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Included in Global Support Center expenses are Certain Items that totaled $13.3 million and $28.7 million in the second quarter and first 26 weeks of fiscal 2024, as compared to $10.2 million and $16.3 million in the second quarter and first 26 weeks of fiscal 2023, respectively. Certain Items impacting the second quarter and first 26 weeks of fiscal 2024 were primarily expenses associated with our business technology transformation initiatives and expenses associated with acquisitions. Certain Items impacting the second quarter and the first 26 weeks of fiscal 2023 were primarily expenses associated with our business technology transformation initiatives.

Interest Expense

Interest expense increased $17.6 million and $27.8 million for the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023. The increase was primarily due to new issuances of senior notes, an increase in commercial paper borrowing activity and increased interest rates on borrowings.

Other income and expense

Other expense, net decreased $325.1 million and $336.2 million for the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023, primarily due to a one-time pension settlement charge that was incurred in the second quarter and first 26 weeks of fiscal 2023 and an increase in interest income earned in the second quarter and first 26 weeks of fiscal 2024.

Net Earnings

Net earnings increased 194.0% and 51.4% in the second quarter and first 26 weeks of fiscal 2024, respectively, as compared to the second quarter and first 26 weeks of fiscal 2023, primarily due to the items noted above for operating income and other expense, as well as items impacting our income taxes that are discussed in Note 13, “Income Taxes,” in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q. Adjusted net earnings, excluding Certain Items, increased 10.1% and 10.0% in the second quarter and first 26 weeks of fiscal 2024, respectively, primarily due to an increase in sales volume.

Earnings Per Share

Basic earnings per share in the second quarter of fiscal 2024 were $0.82, a 192.9% increase from the comparable prior year amount of $0.28 per share. Diluted earnings per share in the second quarter of fiscal 2024 were $0.82, a 192.9% increase from the comparable prior year period amount of $0.28 per share. Adjusted diluted earnings per share, excluding Certain Items, in the second quarter of fiscal 2024 were $0.89, an 11.3% increase from the comparable prior year amount of $0.80 per share.

Basic earnings per share in the first 26 weeks of fiscal 2024 were $1.82, a 51.7% increase from the comparable prior year amount of $1.20 per share. Diluted earnings per share in the first 26 weeks of fiscal 2024 were $1.81, a 52.1% increase from the comparable prior year amount of $1.19 per share. Adjusted diluted earnings per share, excluding Certain Items, in the first 26 weeks of fiscal 2024 were $1.96, an 11.4% increase from the comparable prior year amount of $1.76 per share.


40


Non-GAAP Reconciliations

The discussion of our results includes certain non-GAAP financial measures, including EBITDA and adjusted EBITDA, that we believe provide important perspective with respect to underlying business trends. Other than EBITDA and free cash flow, any non-GAAP financial measures will be denoted as adjusted measures to remove (1) restructuring charges; (2) expenses associated with our various transformation initiatives; (3) severance charges; and (4) acquisition-related costs consisting of: (a) intangible amortization expense and (b) acquisition costs and due diligence costs related to our acquisitions. Our results for fiscal 2023 were also impacted by adjustments to a product return allowance pertaining to COVID-related personal protection equipment inventory, a pension settlement charge that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer and the reduction of bad debt expense previously recognized in fiscal 2020 due to the impact of the COVID-19 pandemic on the collectability of our pre-pandemic trade receivable balances.
The results of our operations can be impacted due to changes in exchange rates applicable in converting local currencies to U.S. dollars. We measure our results on a constant currency basis. Constant currency operating results are calculated by translating current-period local currency operating results with the currency exchange rates used to translate the financial statements in the comparable prior-year period to determine what the current-period U.S. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior-year period.
Management believes that adjusting its operating expenses, operating income, net earnings and diluted earnings per share to remove these Certain Items and presenting its results on a constant currency basis provides an important perspective with respect to our underlying business trends and results. It provides meaningful supplemental information to both management and investors that (1) is indicative of the performance of the company’s underlying operations and (2) facilitates comparisons on a year-over-year basis.
Sysco has a history of growth through acquisitions and excludes from its non-GAAP financial measures the impact of acquisition-related intangible amortization, acquisition costs and due-diligence costs for those acquisitions. We believe this approach significantly enhances the comparability of Sysco’s results for fiscal year 2024 and fiscal year 2023.
Set forth on the following page is a reconciliation of sales, operating expenses, operating income, other (income) expense, net earnings and diluted earnings per share to adjusted results for these measures for the periods presented. Individual components of diluted earnings per share may not be equal to the total presented when added due to rounding. Adjusted diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.
41


13-Week Period Ended Dec. 30, 202313-Week Period Ended Dec. 31, 2022Change in Dollars%/bps Change
Sales (GAAP)$19,287,942 $18,593,953 $693,989 3.7 %
Impact of currency fluctuations (1)
(104,758)— (104,758)(0.5)
Comparable sales using a constant currency basis (Non-GAAP)$19,183,184 $18,593,953 $589,231 3.2 %
Cost of sales (GAAP)$15,774,309 $15,244,337 $529,972 3.5 %
Gross profit (GAAP)$3,513,633 $3,349,616 $164,017 4.9 %
Impact of currency fluctuations (1)
(24,183)— (24,183)(0.7)
Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP)$3,489,450 $3,349,616 $139,834 4.2 %
Gross margin (GAAP)18.22 %18.01 %21 bps
Impact of currency fluctuations (1)
(0.03)— -3 bps
Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP)18.19 %18.01 %18 bps
Operating expenses (GAAP)$2,813,590 $2,708,793 $104,797 3.9 %
Impact of restructuring and transformational project costs (2)
(13,500)(14,388)888 6.2 
Impact of acquisition-related costs (3)
(31,341)(28,960)(2,381)(8.2)
Impact of bad debt reserve adjustments (4)
— 1,923 (1,923)NM
Operating expenses adjusted for Certain Items (Non-GAAP)2,768,749 2,667,368 101,381 3.8 
Impact of currency fluctuations (1)
(23,102)— (23,102)(0.9)
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)$2,745,647 $2,667,368 $78,279 2.9 %
Operating expense as a percentage of sales (GAAP)14.59 %14.57 %2 bps
Impact of certain item adjustments(0.24)(0.22)-2 bps
Adjusted operating expense as a percentage of sales (Non-GAAP)14.35 %14.35 %0 bps
Operating income (GAAP)$700,043 $640,823 $59,220 9.2 %
Impact of restructuring and transformational project costs (2)
13,500 14,388 (888)(6.2)
Impact of acquisition-related costs (3)
31,341 28,960 2,381 8.2 
Impact of bad debt reserve adjustments (4)
— (1,923)1,923 NM
Operating income adjusted for Certain Items (Non-GAAP)744,884 682,248 62,636 9.2 
Impact of currency fluctuations (1)
(1,081)— (1,081)(0.2)
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)$743,803 $682,248 $61,555 9.0 %
Operating margin (GAAP)3.63 %3.45 %18 bps
Operating margin adjusted for Certain Items (Non-GAAP)3.86 %3.67 %19 bps
Operating margin adjusted for Certain Items using a constant currency basis (Non-GAAP)3.88 %3.67 %21 bps
Other expense (GAAP)$5,245 $330,305 $(325,060)(98.4)%
Impact of other non-routine gains and losses (5)
— (314,878)314,878 NM
Other expense adjusted for Certain Items (Non-GAAP)$5,245 $15,427 $(10,182)(66.0)%
42


13-Week Period Ended Dec. 30, 202313-Week Period Ended Dec. 31, 2022Change in Dollars%/bps Change
Net earnings (GAAP)$415,242 $141,216 $274,026 NM
Impact of restructuring and transformational project costs (2)
13,500 14,388 (888)(6.2)
Impact of acquisition-related costs (3)
31,341 28,960 2,381 8.2 
Impact of bad debt reserve adjustments (4)
— (1,923)1,923 NM
Impact of other non-routine gains and losses (5)
— 314,878 (314,878)NM
Tax impact of restructuring and transformational project costs (6)
(3,335)(3,618)283 7.8 
Tax impact of acquisition-related costs (6)
(7,744)(7,283)(461)(6.3)
Tax impact of bad debt reserves adjustments (6)
— 484 (484)NM
Tax impact of other non-routine gains and losses (6)
— (79,185)79,185 NM
Net earnings adjusted for Certain Items (Non-GAAP)$449,004 $407,917 $41,087 10.1 %
Diluted earnings per share (GAAP)$0.82 $0.28 $0.54 NM
Impact of restructuring and transformational project costs (2)
0.03 0.03 — — 
Impact of acquisition-related costs (3)
0.06 0.06 — — 
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)
(0.02)(0.01)(0.01)(100.0)
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)
$0.89 $0.80 $0.09 11.3 %
43


(1)
Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on the current year results.
(2)
Fiscal 2024 includes $2 million related to restructuring and severance charges and $11 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2023 includes $5 million related to restructuring and severance charges and $9 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(3)
Fiscal 2024 includes $29 million of intangible amortization expense and $2 million in acquisition and due diligence costs. Fiscal 2023 includes $26 million of intangible amortization expense and $3 million in acquisition and due diligence costs.
(4)
Fiscal 2023 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(5)
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 equal the total presented when added due to rounding. Total diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.
NMRepresents that the percentage change is not meaningful.
44



26-Week Period Ended Dec. 30, 202326-Week Period Ended Dec. 31, 2022Change in Dollars%/bps Change
Sales (GAAP)$38,908,396 $37,720,783 $1,187,613 3.1 %
Impact of currency fluctuations (1)
(208,824)— (208,824)(0.5)
Comparable sales using a constant currency basis (Non-GAAP)$38,699,572 $37,720,783 $978,789 2.6 %
Cost of sales (GAAP)$31,746,991 $30,882,312 $864,679 2.8 %
Impact of inventory valuation adjustment (2)
— 2,571 (2,571)— 
Cost of sales adjusted for Certain Items (Non-GAAP)$31,746,991 $30,884,883 $862,108 2.8 %
Gross profit (GAAP)$7,161,405 $6,838,471 $322,934 4.7 %
Impact of inventory valuation adjustment (2)
— (2,571)2,571 0.1 
Gross profit adjusted for Certain Items (Non-GAAP)7,161,405 6,835,900 325,505 4.8 
Impact of currency fluctuations (1)
(50,367)— (50,367)(0.8)
Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP)$7,111,038 $6,835,900 $275,138 4.0 %
Gross margin (GAAP)18.41 %18.13 %28 bps
Impact of inventory valuation adjustment (2)
— (0.01)1 bps
Gross margin adjusted for Certain Items (Non-GAAP)18.41 18.12 29 bps
Impact of currency fluctuations (1)
(0.04)— -4 bps
Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP)18.37 %18.12 %25 bps
Operating expenses (GAAP)$5,657,780 $5,460,847 $196,933 3.6 %
Impact of restructuring and transformational project costs (3)
(33,175)(26,034)(7,141)(27.4)
Impact of acquisition-related costs (4)
(62,379)(58,415)(3,964)(6.8)
Impact of bad debt reserve adjustments (5)
— 4,515 (4,515)NM
Operating expenses adjusted for Certain Items (Non-GAAP)5,562,226 5,380,913 181,313 3.4 
Impact of currency fluctuations (1)
(48,940)— (48,940)(0.9)
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)$5,513,286 $5,380,913 $132,373 2.5 %
Operating expense as a percentage of sales (GAAP)14.54 %14.48 %6 bps
Impact of certain item adjustments(0.24)(0.21)-3 bps
Adjusted operating expense as a percentage of sales (Non-GAAP)14.30 %14.27 %3 bps
Operating income (GAAP)$1,503,625 $1,377,624 $126,001 9.1 %
Impact of inventory valuation adjustment (2)
— (2,571)2,571 NM
Impact of restructuring and transformational project costs (3)
33,175 26,034 7,141 27.4 
Impact of acquisition-related costs (4)
62,379 58,415 3,964 6.8 
Impact of bad debt reserve adjustments (5)
— (4,515)4,515 NM
Operating income adjusted for Certain Items (Non-GAAP)1,599,179 1,454,987 144,192 9.9 
Impact of currency fluctuations (1)
(1,427)— (1,427)(0.1)
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)$1,597,752 $1,454,987 $142,765 9.8 %
45


26-Week Period Ended Dec. 30, 202326-Week Period Ended Dec. 31, 2022Change in Dollars%/bps Change
Other expense (GAAP)$11,885 $348,054 $(336,169)(96.6)%
Impact of other non-routine gains and losses (6)
— (314,878)314,878 NM
Other expense adjusted for Certain Items (Non-GAAP)$11,885 $33,176 $(21,291)(64.2)%
Net earnings (GAAP)$918,634 $606,784 $311,850 51.4 %
Impact of inventory valuation adjustment (2)
— (2,571)2,571 NM
Impact of restructuring and transformational project costs (3)
33,175 26,034 7,141 27.4 
Impact of acquisition-related costs (4)
62,379 58,415 3,964 6.8 
Impact of bad debt reserve adjustments (5)
— (4,515)4,515 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)
(8,184)(6,538)(1,646)(25.2)
Tax impact of acquisition-related costs (7)
(15,388)(14,670)(718)(4.9)
Tax impact of bad debt reserves adjustments (7)
— 1,134 (1,134)NM
Tax impact of other non-routine gains and losses (7)
— (79,075)79,075 NM
Net earnings adjusted for Certain Items (Non-GAAP)$990,616 $900,522 $90,094 10.0 %
Diluted earnings per share (GAAP)$1.81 $1.19 $0.62 52.1 %
Impact of inventory valuation adjustment (2)
— (0.01)0.01 NM
Impact of restructuring and transformational project costs (3)
0.07 0.05 0.02 40.0 
Impact of acquisition-related costs (4)
0.12 0.11 0.01 9.1 
Impact of bad debt reserve adjustments (5)
— (0.01)0.01 NM
Impact of other non-routine gains and losses (6)
— 0.62 (0.62)NM
Tax impact of restructuring and transformational project costs (7)
(0.02)(0.01)(0.01)(100.0)
Tax impact of acquisition-related costs (7)
(0.03)(0.03)— — 
Tax impact of other non-routine gains and losses (7)
— (0.15)0.15 NM
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (8)
$1.96 $1.76 $0.20 11.4 %
(1)
Represents a constant currency adjustment which eliminates the impact of foreign currency fluctuations on the current year results.
(2)
Fiscal 2023 represents an adjustment to a product return allowance related to COVID-related personal protection equipment inventory.
(3)
Fiscal 2024 includes $8 million related to restructuring and severance charges and $25 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2023 includes $10 million related to restructuring and severance charges and $16 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(4)
Fiscal 2024 includes $57 million of intangible amortization expense and $5 million in acquisition and due diligence costs. Fiscal 2023 includes $52 million of intangible amortization expense and $6 million in acquisition and due diligence costs.
(5)
Fiscal 2023 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(6)
Fiscal 2023 primarily includes a pension settlement charge of $315 million that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer.
(7)
The tax impact of adjustments for Certain Items is calculated by multiplying the pretax impact of each Certain Item by the statutory rates in effect for each jurisdiction where the Certain Item was incurred.
(8)
Individual components of diluted earnings per share may not add up to the total presented due to rounding. Total diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.
NMRepresents that the percentage change is not meaningful.

46



13-Week Period Ended Dec. 30, 202313-Week Period Ended Dec. 31, 2022Change in Dollars%/bps Change
U.S. FOODSERVICE OPERATIONS
Operating expenses (GAAP)$1,738,658 $1,712,121 $26,537 1.5 %
Impact of restructuring and transformational project costs (65)(92)27 29.3 
Impact of acquisition-related costs (1)
(12,025)(11,514)(511)(4.4)
Impact of bad debt reserve adjustments (2)
— 1,658 (1,658)NM
Operating expenses adjusted for Certain Items (Non-GAAP)$1,726,568 $1,702,173 $24,395 1.4 %
Operating income (GAAP)$839,036 $780,968 $58,068 7.4 %
Impact of restructuring and transformational project costs 65 92 (27)(29.3)
Impact of acquisition-related costs (1)
12,025 11,514 511 4.4 
Impact of bad debt reserve adjustments (2)
— (1,658)1,658 NM
Operating income adjusted for Certain Items (Non-GAAP)$851,126 $790,916 $60,210 7.6 %
INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP)$3,596,458 $3,282,411 $314,047 9.6 %
Impact of currency fluctuations (3)
(104,598)— (104,598)(3.2)
Comparable sales using a constant currency basis (Non-GAAP)$3,491,860 $3,282,411 $209,449 6.4 %
Gross profit (GAAP)$708,100 $624,460 $83,640 13.4 %
Impact of currency fluctuations (3)
(24,126)— (24,126)(3.9)
Comparable gross profit using a constant currency basis (Non-GAAP)$683,974 $624,460 $59,514 9.5 %
Gross margin (GAAP)19.69 %19.02 %67 bps
Impact of currency fluctuations (3)
(0.10)— -10 bps
Comparable gross margin using a constant currency basis (Non-GAAP)19.59 %19.02 %57 bps
Operating expenses (GAAP)$625,170 $567,047 $58,123 10.3 %
Impact of restructuring and transformational project costs (4)
(2,603)(5,588)2,985 53.4 
Impact of acquisition-related costs (5)
(16,847)(15,935)(912)(5.7)
Impact of bad debt reserve adjustments (2)
— 265 (265)NM
Operating expenses adjusted for Certain Items (Non-GAAP)605,720 545,789 59,931 11.0 
Impact of currency fluctuations (3)
(22,327)— (22,327)(4.1)
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)$583,393 $545,789 $37,604 6.9 %
Operating income (GAAP)$82,930 $57,413 $25,517 44.4 %
Impact of restructuring and transformational project costs (4)
2,603 5,588 (2,985)(53.4)
Impact of acquisition-related costs (5)
16,847 15,935 912 5.7 
Impact of bad debt reserve adjustments (2)
— (265)265 NM
Operating income adjusted for Certain Items (Non-GAAP)102,380 78,671 23,709 30.1 
Impact of currency fluctuations (3)
(1,799)— (1,799)(2.2)
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)$100,581 $78,671 $21,910 27.9 %
SYGMA
Operating expenses (GAAP)$132,161 $143,614 $(11,453)(8.0)%
Operating income (GAAP)16,346 6,847 9,499 NM
OTHER
Operating expenses (GAAP)$64,620 $67,441 $(2,821)(4.2)%
Operating income (GAAP)8,387 9,870 (1,483)(15.0)
47


13-Week Period Ended Dec. 30, 202313-Week Period Ended Dec. 31, 2022Change in Dollars%/bps Change
GLOBAL SUPPORT CENTER
Gross profit (GAAP)$6,325 $4,295 $2,030 47.3 %
Operating expenses (GAAP)$252,981 $218,570 $34,411 15.7 %
Impact of restructuring and transformational project costs (6)
(10,832)(8,708)(2,124)(24.4)
Impact of acquisition-related costs (7)
(2,469)(1,511)(958)(63.4)
Operating expenses adjusted for Certain Items (Non-GAAP)$239,680 $208,351 $31,329 15.0 %
Operating loss (GAAP)$(246,656)$(214,275)$(32,381)(15.1)%
Impact of restructuring and transformational project costs (6)
10,832 8,708 2,124 24.4 
Impact of acquisition-related costs (7)
2,469 1,511 958 63.4 
Operating loss adjusted for Certain Items (Non-GAAP)$(233,355)$(204,056)$(29,299)(14.4)%
(1)
Fiscal 2024 and fiscal 2023 include intangible amortization expense and acquisition costs.
(2)
Fiscal 2023 represents 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 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.
NMRepresents that the percentage change is not meaningful.

48



26-Week Period Ended Dec. 30, 202326-Week Period Ended Dec. 31, 2022Change in Dollars%/bps Change
U.S. FOODSERVICE OPERATIONS
Operating expenses (GAAP)$3,482,462 $3,418,753 $63,709 1.9 %
Impact of restructuring and transformational project costs (120)(44)(76)NM
Impact of acquisition-related costs (1)
(24,572)(24,100)(472)(2.0)
Impact of bad debt reserve adjustments (2)
— 4,250 (4,250)NM
Operating expenses adjusted for Certain Items (Non-GAAP)$3,457,770 $3,398,859 $58,911 1.7 %
Operating income (GAAP)$1,780,007 $1,686,679 $93,328 5.5 %
Impact of restructuring and transformational project costs 120 44 76 NM
Impact of acquisition-related costs (1)
24,572 24,100 472 2.0 
Impact of bad debt reserve adjustments (2)
— (4,250)4,250 NM
Operating income adjusted for Certain Items (Non-GAAP)$1,804,699 $1,706,573 $98,126 5.7 %
INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP)$7,279,668 $6,566,146 $713,522 10.9 %
Impact of currency fluctuations (3)
(210,101)— (210,101)(3.2)
Comparable sales using a constant currency basis (Non-GAAP)$7,069,567 $6,566,146 $503,421 7.7 %
Gross profit (GAAP)$1,440,139 $1,273,725 $166,414 13.1 %
Impact of currency fluctuations (3)
(50,837)— (50,837)(4.0)
Comparable gross profit using a constant currency basis (Non-GAAP)$1,389,302 $1,273,725 $115,577 9.1 %
Gross margin (GAAP)19.78 %19.40 %38 bps
Impact of currency fluctuations (3)
(0.13)— -13 bps
Comparable gross margin using a constant currency basis (Non-GAAP)19.65 %19.40 %25 bps
Operating expenses (GAAP)$1,263,726 $1,129,332 $134,394 11.9 %
Impact of restructuring and transformational project costs (4)
(8,406)(9,495)1,089 11.5 
Impact of acquisition-related costs (5)
(33,744)(31,949)(1,795)(5.6)
Impact of bad debt reserve adjustments (2)
— 265 (265)NM
Operating expenses adjusted for Certain Items (Non-GAAP)1,221,576 1,088,153 133,423 12.3 
Impact of currency fluctuations (3)
(47,743)— (47,743)(4.4)
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)$1,173,833 $1,088,153 $85,680 7.9 %
Operating income (GAAP)$176,413 $144,393 $32,020 22.2 %
Impact of restructuring and transformational project costs (4)
8,406 9,495 (1,089)(11.5)
Impact of acquisition-related costs (5)
33,744 31,949 1,795 5.6 
Impact of bad debt reserve adjustments (2)
— (265)265 NM
Operating income adjusted for Certain Items (Non-GAAP)218,563 185,572 32,991 17.8 
Impact of currency fluctuations (3)
(3,094)— (3,094)(1.7)
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)$215,469 $185,572 $29,897 16.1 %
49


26-Week Period Ended Dec. 30, 202326-Week Period Ended Dec. 31, 2022Change in Dollars%/bps Change
SYGMA
Sales (GAAP)$3,819,729 $3,866,993 $(47,264)(1.2)%
Gross profit (GAAP)301,317 304,354 (3,037)(1.0)
Gross margin (GAAP)7.89 %7.87 %2 bps
Operating expenses (GAAP)$272,204 $291,810 $(19,606)(6.7)%
Operating income (GAAP)29,113 12,544 16,569 NM
OTHER
Operating expenses (GAAP)$130,772 $136,741 $(5,969)(4.4)%
Operating income (GAAP)20,210 21,408 (1,198)(5.6)
GLOBAL SUPPORT CENTER
Gross profit (loss) (GAAP)$6,498 $(3,189)$9,687 NM
Impact of inventory valuation adjustment (6)
— (2,571)2,571 NM
Comparable gross profit (loss) adjusted for Certain Items (Non-GAAP)$6,498 $(5,760)$12,258 NM
Operating expenses (GAAP)$508,616 $484,211 $24,405 5.0 %
Impact of restructuring and transformational project costs (7)
(24,649)(16,495)(8,154)(49.4)
Impact of acquisition-related costs (8)
(4,063)(2,365)(1,698)(71.8)
Operating expenses adjusted for Certain Items (Non-GAAP)$479,904 $465,351 $14,553 3.1 %
Operating loss (GAAP)$(502,118)$(487,400)$(14,718)(3.0)%
Impact of inventory valuation adjustment (6)
— (2,571)2,571 NM
Impact of restructuring and transformational project costs (7)
24,649 16,495 8,154 49.4 
Impact of acquisition-related costs (8)
4,063 2,365 1,698 71.8 
Operating loss adjusted for Certain Items (Non-GAAP)$(473,406)$(471,111)$(2,295)(0.5)%
(1)
Fiscal 2024 and fiscal 2023 include intangible amortization expense and acquisition costs.
(2)
Fiscal 2023 represents 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 severance 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.
NMRepresents that the percentage change is not meaningful.

EBITDA and Adjusted EBITDA

EBITDA and adjusted EBITDA should not be used as a substitute for the most comparable GAAP measure in assessing Sysco’s overall 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. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Key Performance Indicators” contained in our fiscal 2023 Form 10-K for discussions regarding this non-GAAP performance metric. Set forth below is a reconciliation of actual net earnings to EBITDA and to adjusted EBITDA results for the periods presented (dollars in thousands):
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13-Week Period Ended Dec. 30, 202313-Week Period Ended Dec. 31, 2022Change in Dollars% Change
Net earnings (GAAP)$415,242 $141,216 $274,026 NM
Interest (GAAP)149,680 132,042 17,638 13.4 
Income taxes (GAAP)129,876 37,260 92,616 NM
Depreciation and amortization (GAAP)219,458 190,025 29,433 15.5 
EBITDA (Non-GAAP)$914,256 $500,543 $413,713 82.7 %
Certain Item adjustments:
Impact of restructuring and transformational project costs (1)
10,910 14,793 (3,883)(26.2)
Impact of acquisition-related costs (2)
2,332 3,049 (717)(23.5)
Impact of bad debt reserve adjustments (3)
— (1,923)1,923 NM
Impact of other non-routine gains and losses (4)
— 314,878 (314,878)NM
EBITDA adjusted for Certain Items (Non-GAAP) (5)
$927,498 $831,340 $96,158 11.6 %
Other expense (income), net, as adjusted (Non-GAAP) (6)
5,245 15,427 (10,182)(66.0)
Depreciation and amortization, as adjusted (Non-GAAP) (7)
(187,859)(164,519)(23,340)(14.2)
Operating income adjusted for Certain Items (Non-GAAP) $744,884 $682,248 $62,636 9.2 %
(1)
Fiscal 2024 and fiscal 2023 include charges related to restructuring and severance, as well as various transformation initiative costs, primarily consisting of changes to our business technology strategy, excluding charges related to accelerated depreciation.
(2)
Fiscal 2024 and fiscal 2023 include acquisition and due diligence costs.
(3)
Fiscal 2023 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(4)
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 $9 million and $5 million or non-cash stock compensation expense of $29 million and $24 million in fiscal 2024 and fiscal 2023, respectively.
(6)
Fiscal 2024 represents $5 million in GAAP other expense (income), net. Fiscal 2023 represents $330 million in GAAP other expense (income), net less $315 million due to the certain items impact of a pension settlement charge that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer.
(7)
Fiscal 2024 includes $219 million in GAAP depreciation and amortization expense, less $32 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions. Fiscal 2023 includes $190 million in GAAP depreciation and amortization expense, less $26 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions.
NMRepresents that the percentage change is not meaningful.

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26-Week Period Ended Dec. 30, 202326-Week Period Ended Dec. 31, 2022Change in Dollars% Change
Net earnings (GAAP)$918,634 $606,784 $311,850 51.4 %
Interest (GAAP)284,014 256,192 27,822 10.9 
Income taxes (GAAP)289,092 166,594 122,498 73.5 
Depreciation and amortization (GAAP)425,465 378,949 46,516 12.3 
EBITDA (Non-GAAP)$1,917,205 $1,408,519 $508,686 36.1 %
Certain Item adjustments:
Impact of inventory valuation adjustment (1)
$— $(2,571)$2,571 NM
Impact of restructuring and transformational project costs (2)
29,743 25,302 4,441 17.6 
Impact of acquisition-related costs (3)
4,961 6,595 (1,634)(24.8)
Impact of bad debt reserve adjustments (4)
— (4,515)4,515 NM
Impact of other non-routine gains and losses (5)
— 314,878 (314,878)NM
EBITDA adjusted for Certain Items (Non-GAAP) (6)
$1,951,909 $1,748,208 $203,701 11.7 %
Other expense (income), net, as adjusted (Non-GAAP) (7)
11,885 33,176 (21,291)(64.2)
Depreciation and amortization, as adjusted (Non-GAAP) (8)
(364,615)(326,397)(38,218)(11.7)
Operating income adjusted for Certain Items (Non-GAAP) $1,599,179 $1,454,987 $144,192 9.9 %
(1)
Fiscal 2023 represents an adjustment to a product return allowance related to COVID-related personal protection equipment inventory.
(2)
Fiscal 2024 and 2023 include charges related to restructuring and severance, as well as various transformation initiative costs, primarily consisting of changes to our business technology strategy and exclude charges related to accelerated depreciation.
(3)
Fiscal 2024 and 2023 include acquisition and due diligence costs.
(4)
Fiscal 2023 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(5)
Fiscal 2023 primarily represents a pension settlement charge of $315 million that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer.
(6)
In arriving at adjusted EBITDA, Sysco does not exclude interest income of $20 million and $8 million or non-cash stock compensation expense of $53 million and $52 million for fiscal 2024 and fiscal 2023, respectively.
(7)
Fiscal 2024 represents $12 million in GAAP other expense (income), net. Fiscal 2023 represents $348 million in GAAP other expense (income), net less $315 million due to the certain items impact of a pension settlement charge that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer.
(8)
Fiscal 2024 includes $425 million in GAAP depreciation and amortization expense, less $61 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions. Fiscal 2023 includes $379 million in GAAP depreciation and amortization expense, less $53 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions.
NMRepresents that the percentage change is not meaningful.

Liquidity and Capital Resources

Highlights

We produced positive free cash flow, impacted by higher capital expenditures, timing and historical seasonality, and investments toward our Recipe for Growth strategy. In the table that follows, free cash flow for each period presented is reconciled to net cash provided by operating activities and comparisons of the significant cash flows from the first 26 weeks of fiscal 2024 to the first 26 weeks of fiscal 2023 are provided.

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 26-Week Period Ended Dec. 30, 202326-Week Period Ended Dec. 31, 2022
Source of cash (use of cash)(In thousands)
Net cash provided by operating activities (GAAP)$855,897 $503,466 
Additions to plant and equipment(346,797)(309,664)
Proceeds from sales of plant and equipment18,347 25,493 
Free Cash Flow (Non-GAAP) (1)
$527,447 $219,295 
Acquisition of businesses, net of cash acquired$(1,174,608)$(37,699)
Debt borrowings (repayments), net1,444,755 237,754 
Stock repurchases(199,947)(267,727)
Dividends paid(505,588)(498,323)
(1)
Free cash flow should not be used as a substitute for the most comparable GAAP 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. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Key Performance Indicators” contained in our fiscal 2023 Form 10-K for discussions regarding this non-GAAP performance metric.

We are increasing our share repurchase expectations from the prior guidance of $750.0 million to $1.25 billion for fiscal 2024. Including both share repurchases and dividends, Sysco is expected to return $2.25 billion to its shareholders in fiscal 2024.

Sources and Uses of Cash

Sysco generates cash in the U.S. and internationally. As of December 30, 2023, we had $962.2 million in cash and cash equivalents, approximately 57% of which was held by our international subsidiaries. Sysco’s strategic objectives are funded primarily by cash from operations and external borrowings. Traditionally, our operations have produced significant cash flow. Due to our strong financial position, we believe we will continue to be able to effectively access capital markets, as needed. Cash is generally allocated to working capital requirements, investments compatible with our overall growth strategy (organic and inorganic), debt management, and shareholder return. The remaining cash balances are invested in high-quality, short-term instruments.

We believe our cash flow from operations, the availability of liquidity under our commercial paper programs and our revolving credit facility, and our ability to access capital from financial markets will be sufficient to meet our anticipated cash requirements for more than the next 12 months, while maintaining sufficient liquidity for normal operating purposes.

Cash Flows

Operating Activities

We generated $855.9 million in cash flows from operations in the first 26 weeks of fiscal 2024, compared to cash flows from operations of $503.5 million in the first 26 weeks of fiscal 2023. In the first 26 weeks of fiscal 2024, these amounts included year-over-year favorable comparisons on working capital of $172.1 million due to a favorable comparison on inventory and accounts receivable, partially offset by an unfavorable comparison on accounts payable. Accrued expenses also had a favorable comparison, primarily from accrued payroll in the first 26 weeks of fiscal 2024 in comparison to the first 26 weeks of fiscal 2023. Income taxes negatively impacted cash flows from operations, as estimated payments made in the first 26 weeks of fiscal 2024 increased compared to the first 26 weeks of fiscal 2023.

Investing Activities

Our capital expenditures in the first 26 weeks of fiscal 2024 consisted primarily of investments in buildings and building improvements, technology equipment, warehouse equipment, and fleet. Our capital expenditures in the first 26 weeks of fiscal 2024 were $37.1 million higher than in the first 26 weeks of fiscal 2023, as we made investments to advance our Recipe for Growth strategy.
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During the first 26 weeks of fiscal 2024, we paid $1.2 billion, net of cash acquired, for acquisitions compared to $37.7 million in acquisitions made in the first 26 weeks of fiscal 2023. These payments increased in the first 26 weeks of fiscal 2024 compared to the first 26 weeks of fiscal 2023 primarily due to the acquisition of Edward Don.

Financing Activities

Equity Transactions

Proceeds from exercises of share-based compensation awards were $57.3 million in the first 26 weeks of fiscal 2024, as compared to $47.3 million in the first 26 weeks of fiscal 2023. The level of option exercises, and thus proceeds, will vary from period to period and is largely dependent on movements in our stock price and the time remaining before option grants expire.

In May 2021, our Board of Directors approved a share repurchase program to authorize the repurchase of up to $5.0 billion of the company’s common stock, which will remain available until fully utilized. We repurchased 2,862,667 shares for $199.9 million during the first 26 weeks of fiscal 2024, and intend to repurchase $1.25 billion in fiscal 2024. As of December 30, 2023, we had a remaining authorization of approximately $3.8 billion. We repurchased 6,026,110 additional shares for $500.0 million under our authorization through January 12, 2024.

Dividends paid in the first 26 weeks of fiscal 2024 were $505.6 million, or $1.00 per share, as compared to $498.3 million, or $0.98 per share, in the first 26 weeks of fiscal 2023. In November 2023, we declared our regular quarterly dividend for the second quarter of fiscal 2024 of $0.50 per share, which was paid in January 2024.

Debt Activity and Borrowing Availability

Our debt activity, including issuances and repayments, if any, and our borrowing availability are described in Note 8, “Debt,” in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q. Our outstanding borrowings as of December 30, 2023 are disclosed within that note.

Guarantor Summarized Financial Information

On January 19, 2011, the wholly owned U.S. Broadline subsidiaries of Sysco Corporation, which distribute a full line of food products and a wide variety of non-food products, entered into full and unconditional guarantees of all outstanding senior notes and debentures of Sysco Corporation. All subsequent issuances of senior notes and debentures in the U.S. and borrowings under the company’s $3.0 billion long-term revolving credit facility have also been guaranteed by these subsidiaries. As of December 30, 2023, Sysco had a total of $10.5 billion in senior notes, debentures and borrowings under the long-term revolving credit facility that were guaranteed by these subsidiary guarantors. Our remaining consolidated subsidiaries (non-guarantor subsidiaries) are not obligated under the senior notes indenture, debentures indenture or our long-term revolving credit facility. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” contained in our fiscal 2023 Form 10-K for additional information regarding the terms of the guarantees.

Basis of Preparation of the Summarized Financial Information

The summarized financial information of Sysco Corporation (issuer), and certain wholly owned U.S. Broadline subsidiaries (guarantors) (together, the obligor group) is presented on a combined basis with intercompany balances and transactions between entities in the obligor group eliminated. Investments in and equity in the earnings of our non-guarantor subsidiaries, which are not members of the obligor group, have been excluded from the summarized financial information. The obligor group’s amounts due to, amounts due from and transactions with non-guarantor subsidiaries have been presented in separate line items, if they are material to the obligor financials. The following tables include summarized financial information of the obligor group for the periods presented.

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Combined Parent and Guarantor Subsidiaries Summarized Balance SheetDec. 30, 2023Jul. 1, 2023
(In thousands)
ASSETS
Receivables due from non-obligor subsidiaries$190,948 $321,476 
Current assets5,761,746 5,149,509 
Total current assets$5,952,694 $5,470,985 
Notes receivable from non-obligor subsidiaries $94,103 $108,380 
Other noncurrent assets4,442,629 4,254,145 
Total noncurrent assets$4,536,732 $4,362,525 
LIABILITIES
Payables due to non-obligor subsidiaries $200,696 $71,175 
Other current liabilities 2,019,075 2,305,435 
Total current liabilities$2,219,771 $2,376,610 
Notes payable to non-obligor subsidiaries$239,035 $240,874 
Long-term debt11,452,539 9,793,541 
Other noncurrent liabilities1,187,496 1,121,884 
Total noncurrent liabilities$12,879,070 $11,156,299 

Combined Parent and Guarantor Subsidiaries Summarized Results of Operations26-Week Period Ended Dec. 30, 2023
(In thousands)
Sales$24,197,326 
Gross profit4,380,114 
Operating income1,235,310 
Interest expense from non-obligor subsidiaries11,781 
Net earnings699,757 

Critical Accounting Policies and Estimates

Critical accounting policies and estimates are those that are most important to the portrayal of our financial position and results of operations. These policies require our most subjective or complex judgments, often employing the use of estimates about the effect of matters that are inherently uncertain. We have reviewed with the Audit Committee of the Board of Directors the development and selection of the critical accounting policies and estimates and this related disclosure. Our most critical accounting policies and estimates pertain to goodwill and intangible assets, income taxes, company-sponsored pension plans and inventory valuation, which are described in Item 7 of our fiscal 2023 Form 10-K.

Forward-Looking Statements

Certain statements made herein that look forward in time or express management’s expectations or beliefs with respect to the occurrence of future events are forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” “projected,” “continues,” “continuously,” variations of such terms, and similar terms and phrases denoting anticipated or expected occurrences or results. Examples of forward-looking statements include, but are not limited to, statements about:

our expectations of an improving market over the course of fiscal 2024;
our expectations regarding the ability of our supply chain and facilities to remain in place and operational;
55


our plans regarding our transformation initiatives and the expected effects from such initiatives, including the Sysco Driver Academy;
statements regarding uncollectible accounts, including that if collections continue to improve, additional reductions in bad debt expense could occur;
our expectations that our Recipe for Growth strategy will allow us to better serve our customers and differentiate Sysco from our competition;
our expectations regarding our fiscal 2024 sales and our rate of sales growth in fiscal 2024 and the three years of our long-range plan;
our expectations regarding the impact of inflation on sales, gross margin rates and gross profit dollars;
our expectations regarding gross margins in fiscal 2024;
our plans regarding cost savings, including our target for cost savings through fiscal 2024 and the impact of costs savings on the company;
our belief that our purpose will allow us to grow substantially faster than the foodservice distribution industry and deliver profitable growth through our Recipe for Growth transformation, and statements regarding our plans with respect to our strategic pillars that support this growth transformation;
our expectations regarding the use and investment of remaining cash generated from operations;
the implications of the COVID-19 pandemic and any expectations we may have with respect thereto, including our ability to withstand and recover from the crisis;
the expected long-term rate of return on plan assets of the U.S. Retirement Plan;
the sufficiency of our available liquidity to sustain our operations for multiple years;
estimates regarding the outcome of legal proceedings;
the impact of seasonal trends on our free cash flow;
estimates regarding our capital expenditures and the sources of financing for our capital expenditures;
our expectations regarding the impact of potential acquisitions and sales of assets on our liquidity, borrowing capacity, leverage ratios and capital availability;
our expectations regarding real sales growth in the U.S. foodservice market and trends in produce markets;
our expectations regarding the calculation of adjusted return on invested capital, adjusted operating income, adjusted net earnings and adjusted diluted earnings per share;
our expectations regarding the impact of future Certain Items on our projected future non-GAAP and GAAP results;
our expectations regarding our effective tax rate in fiscal 2024;
the sufficiency of our mechanisms for managing working capital and competitive pressures, and our beliefs regarding the impact of these mechanisms;
our ability to meet future cash requirements, including the ability to access financial markets effectively, including issuances of debt securities, and maintain sufficient liquidity;
our expectations regarding the payment of dividends, and the growth of our dividend, in the future;
our expectations regarding future activity under our share repurchase program;
future compliance with the covenants under our revolving credit facility;
our ability to effectively access the commercial paper market and long-term capital markets; and
our intention to repay our long-term debt with cash on hand, cash flow from operations, issuances of commercial paper, issuances of senior notes, or a combination thereof.
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These statements are based on management’s current expectations and estimates; actual results may differ materially due in part to the risk factors set forth below, those within Part II, Item 1A of this Form 10-Q and those discussed in Item 1A of our fiscal 2023 Form 10-K:

the risk that if sales from our locally managed customers do not grow at the same rate as sales from multi-unit customers, our gross margins may decline;
periods of significant or prolonged inflation or deflation and their impact on our product costs and profitability generally;
the risk that we are unlikely to be able to predict inflation over the long term, and lower inflation is likely to produce lower gross profit;
the risk that our efforts to modify truck routing, including our small truck initiative, in order to reduce outbound transportation costs may be unsuccessful;
the risk that we may not be able to accelerate and/or identify additional administrative cost savings in order to compensate for any gross profit or supply chain cost leverage challenges;
risks related to unfavorable conditions in the Americas and Europe and the impact on our results of operations and financial condition;
the risks related to our efforts to implement our transformation initiatives and meet our other long-term strategic objectives, including the risk that these efforts may not provide the expected benefits in our anticipated time frame, if at all, and may prove costlier than expected;
the impact of unexpected future changes to our business initiatives based on management’s subjective evaluation of our overall business needs;
the risk that the actual costs of any business initiatives may be greater or less than currently expected;
the risk that competition in our industry and the impact of GPOs may adversely impact our margins and our ability to retain customers and make it difficult for us to maintain our market share, growth rate and profitability;
the risk that our relationships with long-term customers may be materially diminished or terminated;
the risk that changes in consumer eating habits could materially and adversely affect our business, financial condition, or results of operations;
the impact and effects of public health crises, pandemics and epidemics, such as the outbreak of COVID-19, and the adverse impact thereof on our business, financial condition and results of operations;
the risk that changes in applicable tax laws or regulations and the resolution of tax disputes could negatively affect our financial results;
the risk that we may not be able to fully compensate for increases in fuel costs, and forward purchase commitments intended to contain fuel costs could result in above market fuel costs;
the risk of interruption of supplies and increase in product costs as a result of conditions beyond our control;
the potential impact on our reputation and earnings of adverse publicity or lack of confidence in our products;
risks related to unfavorable changes to the mix of locally managed customers versus corporate-managed customers;
the risk that we may not realize anticipated benefits from our operating cost reduction efforts;
difficulties in successfully expanding into international markets and complimentary lines of business;
the potential impact of product liability claims;
the risk that we fail to comply with requirements imposed by applicable law or government regulations;
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risks related to our ability to effectively finance and integrate acquired businesses;
risks related to our access to borrowed funds in order to grow and any default by us under our indebtedness that could have a material adverse impact on cash flow and liquidity;
our level of indebtedness and the terms of our indebtedness could adversely affect our business and liquidity position;
the risk that the implementation of various initiatives, the timing and successful completion of acquisitions, construction schedules and the possibility that other cash requirements could result in delays or cancellations of capital spending;
the risk that divestiture of one or more of our businesses may not provide the anticipated effects on our operations;
the risk that future labor disruptions or disputes could disrupt the integration of Brakes France and Davigel into Sysco France and our operations in France and the European Union generally;
the risk that factors beyond management’s control, including fluctuations in the stock market, as well as management’s future subjective evaluation of the company’s needs, would impact the timing of share repurchases;
due to our reliance on technology, any technology disruption or delay in implementing new technology could have a material negative impact on our business;
the risk of negative impacts to our business and our relationships with customers from a cybersecurity incident and/or other technology disruptions;
the risk that changes in the method of determining LIBOR, or the replacement of LIBOR with an alternative reference rate, may adversely affect interest expense related to outstanding debt;
the potential requirement to pay material amounts under our multiemployer defined benefit pension plans;
our funding requirements for our company-sponsored qualified pension plan may increase should financial markets experience future declines;
labor issues, including the renegotiation of union contracts and shortage of qualified labor;
capital expenditures may vary based on changes in business plans and other factors, including risks related to the implementation of various initiatives, the timing and successful completion of acquisitions, construction schedules and the possibility that other cash requirements could result in delays or cancellations of capital spending;
the risk that the anti-takeover benefits provided by our preferred stock may not be viewed as beneficial to stockholders; and
the risk that the exclusive forum provisions in our amended and restated bylaws could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

For a more detailed discussion of factors that could cause actual results to differ from those contained in the forward-looking statements, see the risk factors discussion contained in Item 1A of our fiscal 2023 Form 10-K and in Item 1A of Part II of this Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our market risks consist of interest rate risk, foreign currency exchange rate risk, fuel price risk and investment risk. For a discussion on our exposure to market risk, see Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risks” in our fiscal 2023 Form 10-K. There have been no significant changes to our market risks since July 1, 2023.


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Item 4.  Controls and Procedures

Sysco’s management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of December 30, 2023. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding the required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Sysco’s disclosure controls and procedures have been designed to provide reasonable assurance of achieving their objectives. Based on the evaluation of our disclosure controls and procedures as of December 30, 2023, our chief executive officer and chief financial officer concluded that, as of such date, Sysco’s disclosure controls and procedures were effective at the reasonable assurance level.

There have been no changes in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the fiscal quarter ended December 30, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION

Item 1.  Legal Proceedings

Environmental Matters

Item 103 of SEC Regulation S-K requires disclosure of certain environmental matters in which a governmental authority is a party to the proceedings and when such proceedings involve the potential for monetary sanctions that Sysco’s management reasonably believes will exceed a specified threshold. Pursuant to recent SEC amendments to this item, Sysco has chosen a reporting threshold for such proceedings of $1 million. Applying this threshold, there are no material environmental matters to disclose for this period.

From time to time, we may be party to legal proceedings that arise in the ordinary course of our business. We do not believe there are any pending legal proceedings that, individually or in the aggregate, will have a material adverse effect on the company’s financial condition, results of operations or cash flows.

Item 1A.  Risk Factors

For a discussion of our risk factors, see the section entitled “Risk Factors” in our 2023 Annual Report on Form 10-K.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Securities

None

Issuer Purchases of Equity Securities

We made the following share repurchases during the second quarter of fiscal 2024:

ISSUER PURCHASES OF EQUITY SECURITIES
Period
Total Number of Shares Purchased (1)
Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
Month #1    
October 1 - October 28569,405 $64.48 569,405 — 
Month #2
October 29 - November 25574,847 67.62 574,847 — 
Month #3
November 26 - December 30338,707 72.61 338,707 — 
Totals1,482,959 $67.56 1,482,959 — 
(1)
The total number of shares purchased includes 0, 1,637 and 1,602 shares tendered by individuals in connection with stock option exercises in Month #1, Month #2 and Month #3, respectively.
(2)
See the discussion in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Equity Transactions” for additional information regarding Sysco’s share repurchase program.

In May 2021, our Board of Directors approved a share repurchase program to authorize the repurchase of up to $5.0 billion of the company’s common stock, which will remain available until fully utilized.

We repurchased 2,862,667 shares for $199.9 million during fiscal 2024. As of December 30, 2023, we had a remaining authorization of approximately $3.8 billion. We purchased 6,026,110 additional shares under our authorization through January 12, 2024.

Item 3.  Defaults Upon Senior Securities

None
60



Item 4.  Mine Safety Disclosures

Not applicable

Item 5.  Other Information

Insider Trading Arrangements and Policies

The table below shows the plans or other arrangements (each, a (Plan)) adopted or terminated during the quarter ended December 30, 2023 providing for the purchase and/or sale of Sysco securities by Sysco’s directors and Section 16 officers:
NameTitleActionDateTrading ArrangementNumber of Securities Covered
Expiration Date (3)
Rule 10b5-1 (1)
Non-Rule 10b5-1 (2)
Kevin HouricanPresident and Chief Executive OfficerAdoptDecember 13, 2023X
75,019 shares to be sold
December 31, 2024
Neil RussellSenior Vice President,
Corporate Affairs and Chief Administrative Officer
AdoptDecember 7, 2023X
5,129 shares to be sold
December 31, 2024
Chris JasperSenior Vice President and President, U.S. Broadline and Foodservice OperationsAdoptDecember 13, 2023X
4,000 shares to be sold
December 31, 2024
(1)
Intended to satisfy the affirmative defense conditions of SEC Rule 10b5-1(c).
(2)
Non-Rule Rule 10b5-1 trading arrangement as defined in Item 408 of Regulation S-K.
(3)
Each Plan terminates on the earlier of: (i) the expiration date listed in the table above; (ii) the first date on which all trades set forth in the Plan have been executed; or (iii) such date the Plan is otherwise terminated according to its terms.

Item 6.  Exhibits

The exhibits listed on the Exhibit Index below are filed as a part of this Quarterly Report on Form 10-Q.
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EXHIBIT INDEX
3.1
   
3.2
   
3.3
   
3.4
4.1
4.2
10.1†#
10.2†#
10.3†#
22.1Subsidiary Guarantors and Issuers of Guaranteed Securities, incorporated by reference to Exhibit 22.1 to the Form 10-K for the year ended July 1, 2023 filed on August 25, 2023 (File No. 1-6544).
31.1#
   
31.2#
   
32.1#
   
32.2#
   
101.SCH#Inline XBRL Taxonomy Extension Schema Document
101.CAL#Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF#Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB#Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE#Inline XBRL Taxonomy Extension Presentation Linkbase Document
62


104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
___________
† Executive Compensation Arrangement pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K
# Filed herewith
63

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Sysco Corporation
(Registrant)
Date: January 30, 2024By:/s/ KEVIN P. HOURICAN
 Kevin P. Hourican
  President and Chief Executive Officer
Date: January 30, 2024By:/s/ KENNY K. CHEUNG
 Kenny K. Cheung
  Executive Vice President and
Chief Financial Officer
Date: January 30, 2024By:/s/ JENNIFER L. JOHNSON
 Jennifer L. Johnson
 Senior Vice President and
 Chief Accounting Officer