SYSCO CORP
For the period ended Sep 28, 2024. Filed Oct 30, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 28, 2024 · Filed Oct 30, 2024
SYY$76.86+2.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-30; filed 2024-05-01.
0000096021-24-000043
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-28; filed 2024-10-30.
0000096021-24-000186
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 201 previous paragraphs and 174 current paragraphs.
121 unchanged; 33 reworded; 19 added; 45 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 33 previous and 23 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
Our first quarter of fiscal 2025 results were driven by sales growth of 4.4% as compared to the first quarter of fiscal 2024 primarily due to U.S. Foodservice Operations volume growth and higher inflation. Our gross profit grew 2.9% compared to the first quarter of fiscal 2024, due to volume growth and margin management. Operating income increased 0.5% as compared to the first quarter of fiscal 2024. Adjusted operating income increased 2.2% due to sales growth and expense controls. See below for a comparison of our fiscal 2025 results to our fiscal 2024 results, both including and excluding “Certain Items” (as defined below).
Current report
◦increased 4.4%, or $864 million, to $20.5 billion;
Current report
◦increased 0.5%, or $4 million, to $808 million;
Current report
◦adjusted operating income increased 2.2%, or $19 million, to $873 million;
Current report
◦decreased 2.6%, or $13 million, to $490 million;
Current report
◦adjusted net earnings decreased 0.4%, or $2 million, to $540 million;
Current report
◦unchanged, at $1.00 per share;
Current report
◦unchanged, at $0.99 per share;
Current report
◦adjusted diluted earnings per share increased 1.9%, or $0.02, to $1.09;
Current report
◦increased 3.4%, or $34 million, to $1.0 billion; and
Current report
◦adjusted EBITDA increased 4.4%, or $45 million, to $1.1 billion.
Current report
Foot traffic to restaurants decreased 3.6% for the first quarter of fiscal 2025; however, traffic trends did improve as the quarter progressed. Foot traffic declined approximately 5% in July, approximately 4% in August, and approximately 3% in September. We expect modest industry traffic improvements in the second half of fiscal 2025. Despite the current macroeconomic landscape, we expect to grow both sales and net earnings in fiscal 2025. We believe the food-away-from-home sector is a healthy long-term market, and Sysco is diversified and well positioned as a market leader in food service.
Current report
Total operating expenses were $2.9 billion in the first quarter of fiscal 2025, a 3.6% increase compared to the first quarter of fiscal 2024. Total adjusted operating expenses were $2.9 billion in the first quarter of fiscal 2025, a 3.1% increase as compared to the first quarter of fiscal 2024. Operating expenses increased primarily due to an increase in volumes. In addition, higher selling expenses, which includes sales professional hires, and depreciation expense related to new facilities also resulted in an increase in operating expenses in the first quarter of fiscal 2025. Adjusted operating expenses were 14.1% of sales, which is an 18-basis point improvement from the first quarter of fiscal 2024, due to supply chain and Global Support Center efficiencies.
Current report
For SYGMA, sales were 7.3% higher in the first quarter of fiscal 2025, as compared to the first quarter of fiscal 2024, primarily driven by profit enhancements and growth resulting from the recent addition of new customers. Operating income increased by $5 million in the first quarter of fiscal 2025 as compared to the first quarter of fiscal 2024.
Current report
Tax relief provided by the IRS related to the effects of Hurricane Beryl that began on July 5, 2024 resulted in the deferral of approximately $28 million of fiscal 2024 U.S. federal extension payments to the third quarter of fiscal 2025. Our first and second quarter U.S. estimated payments will also be deferred to the third quarter of fiscal 2025.
Current report
The first 13 weeks of fiscal 2024 includes $219 million of cash paid for the acquisition of BIX Produce Company.
Current report
Critical Accounting Estimates
Current report
•the impact of geopolitical, economic and market conditions and developments, including the outcome of the U.S. presidential election;
Current report
•the impact and effects of natural disasters or adverse weather conditions, such as Hurricanes Helene and Milton;
Removed paragraphs (45)
Previous report
Our third quarter of fiscal 2024 results were driven by sales growth that surpassed third quarter of fiscal 2023 levels by 2.7%. The increase in sales was driven by inflation at the enterprise level and sales from recent acquisitions. Our gross profit growth this quarter outpaced adjusted operating expense growth due to effective management of product cost fluctuations through margin management, incremental progress from our strategic sourcing efforts, disciplined and rational pricing, 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).
Previous report
◦increased 2.7%, or $503.8 million, to $19.4 billion;
Previous report
◦increased 3.8%, or $26.3 million, to $722.0 million;
Previous report
◦adjusted operating income increased 8.4%, or $62.2 million, to $799.3 million;
Previous report
◦decreased 1.1%, or $4.9 million, to $424.7 million;
Previous report
◦adjusted net earnings increased 5.0%, or $22.9 million, to $483.4 million;
Previous report
◦unchanged, at $0.85 per share;
Previous report
◦increased 1.2%, or $0.01, to $0.85 per share;
Previous report
◦adjusted diluted earnings per share increased 6.7%, or $0.06, to $0.96;
Previous report
◦increased 5.4%, or $48.1 million, to $933.0 million; and
Previous report
◦adjusted EBITDA increased 8.5%, or $76.9 million, to $976.6 million.
Previous report
◦increased 3.0%, or $1.7 billion, to $58.3 billion;
Previous report
◦increased 7.3%, or $152.3 million, to $2.2 billion;
Previous report
◦adjusted operating income increased 9.4%, or $206.4 million, to $2.4 billion;
Previous report
◦increased 29.6%, or $306.9 million, to $1.3 billion;
Previous report
◦adjusted net earnings increased 8.3%, or $113.0 million, to $1.5 billion;
Previous report
•Basic earnings per share:
Previous report
◦increased 30.9%, or $0.63, to $2.67 per share;
Previous report
•Diluted earnings per share:
Previous report
◦increased 31.0%, or $0.63, to $2.66 per share;
Previous report
◦adjusted diluted earnings per share increased 9.4%, or $0.25, to $2.92;
Previous report
•EBITDA:
Previous report
◦increased 24.3%, or $556.8 million, to $2.9 billion; and
Previous report
◦adjusted EBITDA increased 10.6%, or $280.6 million, to $2.9 billion.
Previous report
Sysco continues to outperform the foodservice market and successfully grew its market share in the third quarter of fiscal 2024. 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. Softer industry trends during the quarter were impacted by unfavorable weather in January across the U.S and restaurant traffic that was lower in the most recent quarter as compared to fiscal 2023.
Previous report
Total operating expenses increased 5.5% and 4.2% during the third quarter and first 39 weeks of fiscal 2024, respectively, as compared to the third quarter and first 39 weeks of fiscal 2023, primarily due to volumes and recent costs associated with severances, transformation projects, and acquisitions. We have been successful in managing expenses through supply chain improvements, continued improvements with retention and productivity, successful labor planning, and delivery of our cost-out measures.
Previous report
Interest Expense Trends
Previous report
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 and share repurchases.
Previous report
Mergers and Acquisitions
Previous report
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 growth opportunities.
Previous report
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 the U.S. Foodservice Operations.
Previous report
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.
Previous report
In the third quarter of fiscal 2024, we acquired Ready Chef, a fresh produce distributor in Ireland. This company’s results are included within the International Foodservice Operations segment.
Previous report
The results of our acquired companies in fiscal 2024 were not material to our results for the third quarter and first 39 weeks of fiscal 2024.
Previous report
Sales
Previous report
Operating Income
Previous report
For SYGMA, sales were 3.5% and 2.0% lower in the third quarter and first 39 weeks of fiscal 2024, respectively, as compared to the third quarter and first 39 weeks of fiscal 2023, primarily driven by negative traffic trends across the industry and the planned exit of customers that did not meet our disciplined profit thresholds. Operating income decreased by $8.8 million in the third quarter of fiscal 2024 as compared to the third quarter of fiscal 2023. Operating income increased by $7.8 million in the first 39 weeks of fiscal 2024 as compared to the first 39 weeks of fiscal 2023, due to decreases in operating expenses driven by the planned exit of customers.
Previous report
Other income and expense
Previous report
Other expense, net decreased $332.5 million in the first 39 weeks of fiscal 2024 as compared to the first 39 weeks of fiscal 2023, primarily due to a one-time pension settlement charge that was incurred in the first 39 weeks of fiscal 2023 and an increase in interest income earned in the first 39 weeks of fiscal 2024.
Showing the first 40 of 45 passages. Open the source sections for the rest.
Reworded paragraphs (33)
Previous wording
Comparisons of results from the third quarter of fiscal 2024 to the third quarter of fiscal 2023 are presented below:
Current wording
Comparisons of results from the first quarter of fiscal 2025 to the first quarter of fiscal 2024 are presented below:
Previous wording
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.
Current wording
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.
Previous wording
Our sales and gross profit performance are influenced by multiple factors, including price, volume, inflation, customer mix and product mix. We experienced a 2.9% and 3.0% improvement in U.S. Foodservice case volume in the third quarter and first 39 weeks of fiscal 2024, respectively, as compared to the third quarter and first 39 weeks of fiscal 2023. Local case volume within our U.S. Foodservice Operations segment increased 0.4% and 1.3% in the third quarter and first 39 weeks of fiscal 2024, respectively, as compared to the third quarter and first 39 weeks of fiscal 2023. Our volume growth for the third quarter was primarily from acquisitions. Our volume reflects our broadline and specialty businesses, except for our specialty meats business, which measures its volume in pounds.
Current wording
Our sales and gross profit performance are influenced by multiple factors, including price, volume, inflation, customer mix and product mix. We experienced a 2.7% improvement in U.S. Foodservice Operations case volume in the first quarter of fiscal 2025, as compared to the first quarter of fiscal 2024. Our volume growth was generated by 5.5% national volume growth and 0.2% local volume growth. Our volume reflects our broadline and specialty businesses, except for our specialty meats business, which measures its volume in pounds.
Previous wording
We experienced inflation at a rate of 1.9% in the third 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 44 and 33 basis points in the third quarter and first 39 weeks of fiscal 2024, respectively, as compared to the third quarter and first 39 weeks of fiscal 2023. This was primarily driven by effective management of product cost fluctuations, progress from our strategic sourcing efforts, disciplined and rational pricing, and improved penetration from Sysco Brand products within our local customer base.
Current wording
We experienced inflation at a rate of 2.2% in the first quarter of fiscal 2025, at the total enterprise level, primarily driven by inflation in the poultry and dairy categories. We continued to be successful in managing this inflation, resulting in an increase in gross profit dollars. Gross margin decreased 27 basis points in the first quarter of fiscal 2025, as compared to the first quarter of fiscal 2024, primarily due to a shift in our customer mix driven by national volume growth, a decrease in Sysco brand penetration, and the timing of benefits from strategic sourcing initiatives.
Previous wording
Our various business transformation initiatives remain on track, including promoting our specialty programs for produce, protein and Italian products and our customer growth initiatives. 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.
Current wording
Our business transformation initiatives remain on track, which include promoting our specialty programs for produce, protein and Italian products and our customer growth initiatives. 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.
Previous wording
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, U.S. Foodservice Operations and International Foodservice Operations, collectively, represented approximately 88.7% of Sysco’s overall sales in both the third quarter and first 39 weeks of fiscal 2024. U.S. Foodservice Operations and International Foodservice Operations, collectively, represented approximately 97.5% and 97.6% of total segment operating income, in the third quarter and first 39 weeks of fiscal 2024, respectively. This illustrates that these segments represent a substantial majority of our total segment results when compared to other reportable segments.
Current wording
Our U.S. Foodservice Operations and our International Foodservice Operations segments represent a substantial majority of our total segment results when compared to our other reportable segments. U.S. Foodservice Operations and International Foodservice Operations, collectively, represented approximately 88.6% of Sysco’s overall sales in the first 13 weeks of fiscal 2025. U.S. Foodservice Operations and International Foodservice Operations, collectively, represented approximately 97.4% of total segment operating income in the first 13 weeks of fiscal 2025.
Previous wording
The sales growth in our U.S. Foodservice Operations was fueled by inflation and by volume growth, inclusive of benefits from acquisitions. Case volumes from our U.S. Foodservice Operations increased 2.9% and 3.0% in the third quarter and first 39 weeks of fiscal 2024, respectively, as compared to the third quarter and first 39 weeks of fiscal 2023. This included a 0.4% increase in local customer case volume in the third quarter of fiscal 2024 and a 1.3% increase in the first 39 weeks of fiscal 2024. Our volume growth for the third quarter was primarily from acquisitions.
Current wording
The sales growth in our U.S. Foodservice Operations was driven by higher inflation and volume growth, inclusive of benefits from acquisitions. Case volumes from our U.S. Foodservice Operations increased 2.7% in the first quarter of fiscal 2025, as compared to the first quarter of fiscal 2024. This included a 0.2% increase in local customer case volume in the first quarter of fiscal 2025. Our Edward Don acquisition, completed in the second quarter of fiscal 2024, positively impacted volumes by 2.6% and local volumes by 1.6%. Our national customer volume has grown faster than local customer volume and is the result of contract renewals with existing customers and the addition of new customers.
Previous wording
The decrease in operating income for the third quarter fiscal 2024 as compared to the third quarter of fiscal 2023 was driven by an increase in operating expenses, partially offset by gross profit dollar growth and case volume growth, inclusive of benefits from acquisitions. On an adjusted basis, the increase in operating income for the third quarter fiscal 2024 as compared to the third quarter of fiscal 2023 was driven by gross profit dollar growth and case volume growth as a result of acquisitions. The increase in operating income in the first 39 weeks of fiscal 2024 as compared to the first 39 weeks of fiscal 2023 was driven by gross profit dollar growth and case volume growth as a result of acquisitions, partially offset by an increase in operating expenses.
Current wording
The decrease in operating income for the first quarter of fiscal 2025 as compared to the first quarter of fiscal 2024 was driven by an increase in operating expenses, partially offset by gross profit dollar growth and case volume growth, inclusive of benefits from acquisitions.
Previous wording
Gross profit dollar growth in the third quarter and first 39 weeks of fiscal 2024, as compared to the third quarter and first 39 weeks of fiscal 2023, was driven primarily by case volume growth as a result of acquisitions, effective management of product cost fluctuations, and progress from our strategic sourcing efforts. The estimated change in product costs, an internal measure of inflation or deflation, increased in the third quarter and first 39 weeks of fiscal 2024. Gross margin, which is gross profit as a percentage of sales, was 19.4% and 19.3% in the third quarter and first 39 weeks of fiscal 2024, respectively, for our U.S. Foodservice Operations, which was an increase of 15 basis points compared to gross margin of 19.2% in the third quarter of fiscal 2023, and an increase of 18 basis points compared to gross margin of 19.2% in the first 39 weeks of fiscal 2023.
Current wording
Gross profit dollar growth in the first quarter of fiscal 2025, as compared to the first quarter of fiscal 2024, was driven primarily by case volume growth as a result of acquisitions and effective management of product cost fluctuations. The estimated change in product costs, an internal measure of inflation or deflation, increased in the first quarter of fiscal 2025. Gross margin, which is gross profit as a percentage of sales, was 19.1% in the first quarter of fiscal 2025 for our U.S. Foodservice Operations, which was a decrease of 43 basis points compared to the first quarter of fiscal 2024, primarily due to a change in customer mix, a decrease in Sysco brand penetration, and timing of benefits from strategic sourcing initiatives.
Previous wording
The increase in operating expenses for the third quarter and first 39 weeks of fiscal 2024, as compared to the third quarter and first 39 weeks of fiscal 2023, was primarily driven by increased volumes and recent costs associated with severances, transformation projects, and acquisitions.
Current wording
The increase in operating expenses for the first quarter of fiscal 2025, as compared to the first quarter of fiscal 2024, was primarily driven by increased volumes.
Previous wording
Sales for the third quarter and first 39 weeks of fiscal 2024 were higher, as compared to the third quarter and first 39 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.
Current wording
Sales increased in the first quarter of fiscal 2025, as compared to the first quarter of fiscal 2024, due to higher inflation and an improvement in volume, primarily attributable to our Recipe for Growth initiatives.
Previous wording
The increase in operating income for the third quarter and first 39 weeks of fiscal 2024, as compared to the third quarter and first 39 weeks of fiscal 2023, was due to an increase in sales, which is mainly attributable to inflation and the impact of changes in foreign exchange rates, along with specific efforts to optimize our gross profit. This includes the ability to effectively manage product cost fluctuations, progress from our strategic sourcing efforts, and local case volume growth.
Current wording
The increase in operating income for the first quarter of fiscal 2025, as compared to the first quarter of fiscal 2024, was due to growth in local case volumes and the ability to effectively manage product cost fluctuations.
Previous wording
The increase in gross profit dollars in the third quarter and first 39 weeks of fiscal 2024, as compared to the third quarter and first 39 weeks of fiscal 2023, was attributable to the effective management of inflation and progress from our strategic sourcing efforts.
Current wording
The increase in gross profit dollars in the first quarter of fiscal 2025, as compared to the first quarter of fiscal 2024, was attributable to increases in sales volumes and the effective management of inflation.
Previous wording
The increase in operating expenses for the third quarter and first 39 weeks of fiscal 2024, as compared to the third quarter and first 39 weeks of fiscal 2023, was primarily due to increases in colleague-related costs and the impact of foreign currency translation.
Current wording
The increase in operating expenses for the first quarter of fiscal 2025, as compared to the first quarter of fiscal 2024, was primarily due to increases in colleague-related costs and the impact of foreign currency translation.
Previous wording
For the operations that are grouped within Other, operating income decreased $5.5 million and $6.7 million in the third quarter and first 39 weeks of fiscal 2024, respectively, as compared to the third quarter and first 39 weeks of fiscal 2023. The operations of this group mainly consist of our hospitality business, Guest Worldwide.
Current wording
For the operations that are grouped within Other, operating income decreased $3 million in the first quarter of fiscal 2025 as compared to the first quarter of fiscal 2024. The operations of this group primarily consist of our hospitality business, Guest Worldwide.
Previous wording
Our Global Support Center generally includes all expenses of the corporate office and Sysco’s shared service operations. These expenses in the third quarter of fiscal 2024 increased $5.6 million, or 2.3%, as compared to the third quarter of fiscal 2023, primarily due to increases in self-insurance reserves, partially offset by decreases in colleague-related costs, professional fees, and fuel hedging program expenses. These expenses in the first 39 weeks of fiscal 2024 increased $30.0 million, or 4.1%, as compared to the first 39 weeks of fiscal 2023, primarily due to increases in self-insurance reserves, depreciation expense, and colleague-related costs, partially offset by decreases in fuel hedging program expenses and professional fees.
Current wording
Our Global Support Center generally includes all expenses of the corporate office and Sysco’s shared service operations. These expenses in the first quarter of fiscal 2025 decreased $30 million, or 11.8%, as compared to the first quarter of fiscal 2024, primarily due to decreases in colleague-related costs, fuel hedging program expenses, and other miscellaneous costs.
Previous wording
Included in Global Support Center expenses are Certain Items that totaled $29.4 million and $58.1 million in the third quarter and first 39 weeks of fiscal 2024, as compared to $10.9 million and $27.2 million in the third quarter and first 39 weeks of fiscal 2023, respectively. Certain Items impacting the third quarter and first 39 weeks of fiscal 2024 were primarily expenses associated with severances, our business technology transformation initiatives, and expenses associated with acquisitions. Certain Items impacting the third quarter and the first 39 weeks of fiscal 2023 were primarily expenses associated with our business technology transformation initiatives.
Current wording
Included in Global Support Center expenses are Certain Items that totaled $19 million in the first quarter of fiscal 2025, as compared to $14 million in the first quarter of fiscal 2024. Certain Items impacting the first quarter of fiscal 2025 were primarily expenses associated with our business technology transformation initiatives and expenses associated with acquisitions. Certain Items impacting the first quarter of fiscal 2024 were primarily expenses associated with our business technology transformation initiatives and expenses associated with acquisitions.
Previous wording
Interest expense increased $22.9 million and $50.7 million for the third quarter and first 39 weeks of fiscal 2024, respectively, as compared to the third quarter and first 39 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. This higher debt is primarily associated with our acquisition of Edward Don and share repurchases.
Current wording
Interest expense increased $26 million for the first quarter of fiscal 2025, as compared to the first quarter of fiscal 2024. The increase was primarily due to interest on new senior notes that were issued in the second quarter of fiscal 2024, as well as an increase in commercial paper borrowing activity.
Previous wording
Net earnings decreased 1.1% and increased 29.6% in the third quarter and first 39 weeks of fiscal 2024, respectively, as compared to the third quarter and first 39 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 5.0% and 8.3% in the third quarter and first 39 weeks of fiscal 2024, respectively, primarily due to an increase in sales volume as a result of acquisitions.
Current wording
Net earnings decreased 2.6% in the first quarter of fiscal 2025, as compared to the first quarter of fiscal 2024, primarily due to the items noted above for operating income, and interest expense, as well as items impacting our income taxes that are discussed in Note 11, “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, decreased 0.4% in the first quarter of fiscal 2025.
Previous wording
Basic earnings per share in the third quarter of fiscal 2024 were $0.85, which is unchanged from the comparable prior year amount of $0.85 per share. Diluted earnings per share in the third quarter of fiscal 2024 were $0.85, a 1.2% increase from the comparable prior year period amount of $0.84 per share. Adjusted diluted earnings per share, excluding Certain Items, in the third quarter of fiscal 2024 were $0.96, a 6.7% increase from the comparable prior year amount of $0.90 per share.
Current wording
Basic earnings per share in the first quarter of fiscal 2025 were $1.00, which is unchanged from the comparable prior year amount of $1.00 per share. Diluted earnings per share in the first quarter of fiscal 2025 were $0.99, which is unchanged from the comparable prior year period amount of $0.99 per share. Adjusted diluted earnings per share, excluding Certain Items, in the first quarter of fiscal 2025 were $1.09, a 1.9% increase from the comparable prior year amount of $1.07 per share.
Previous wording
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.
Current wording
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.
Previous wording
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.
Current wording
Management believes that adjusting its operating expenses, operating income, operating margin, 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.
Previous wording
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.
Current wording
Set forth on the following page is a reconciliation of sales, operating expenses, operating income, net earnings and diluted earnings per share to adjusted results for these measures for the periods presented. Individual components of diluted earnings per share may not 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.
Previous wording
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):
Current wording
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 2024 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 millions):
Previous wording
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 39 weeks of fiscal 2024 to the first 39 weeks of fiscal 2023 are provided.
Current wording
We produced positive free cash flow of $8 million in the first 13 weeks of fiscal 2025, as compared to negative free cash flow of $73 million in the first 13 weeks of fiscal 2024. The improvement in free cash flow is attributable to an increase in proceeds from sales of plant and equipment and a decrease in capital expenditures, partially offset by a decrease in cash provided by operating activities. 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 13 weeks of fiscal 2025 to the first 13 weeks of fiscal 2024 are provided.
Previous wording
Sysco generates cash in the U.S. and internationally. As of March 30, 2024, we had $598.3 million in cash and cash equivalents, approximately 83% 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.
Current wording
Sysco generates cash in the U.S. and internationally. As of September 28, 2024, we had $733 million in cash and cash equivalents, approximately 85% 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.
Previous wording
We generated $1.37 billion in cash flows from operations in the first 39 weeks of fiscal 2024, compared to cash flows from operations of $1.43 billion in the first 39 weeks of fiscal 2023. In the first 39 weeks of fiscal 2024, these amounts included year-over-year unfavorable comparisons on working capital of $244.0 million due to an unfavorable comparison on accounts payable, partially offset by favorable comparisons on accounts receivable and inventory. Accrued expenses also had a favorable comparison, primarily from accrued payroll in the first 39 weeks of fiscal 2024 in comparison to the first 39 weeks of fiscal 2023. Income taxes negatively impacted cash flows from operations, as estimated payments made in the first 39 weeks of fiscal 2024 increased compared to the first 39 weeks of fiscal 2023.
Current wording
We generated $53 million in cash flows from operations in the first 13 weeks of fiscal 2025, compared to cash flows from operations of $87 million in the first 13 weeks of fiscal 2024. In the first 13 weeks of fiscal 2025, these amounts included year-over-year unfavorable comparisons on working capital of $29 million due to unfavorable comparisons on accounts receivable and inventory, partially offset by a favorable comparison on accounts payable. Accrued expenses also had an unfavorable comparison, primarily related to accrued payroll in the first 13 weeks of fiscal 2025 in comparison to the first 13 weeks of fiscal 2024. Income taxes positively impacted cash flows from operations, as estimated payments made in the first 13 weeks of fiscal 2025 were lower compared to the first 13 weeks of fiscal 2024. Our first quarter is typically our lowest cash flow quarter of the fiscal year due to seasonality.
Previous wording
Our capital expenditures in the first 39 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 39 weeks of fiscal 2024 were $55.7 million higher than in the first 39 weeks of fiscal 2023, as we made investments to advance our Recipe for Growth strategy.
Current wording
Our capital expenditures in the first 13 weeks of fiscal 2025 consisted primarily of investments in buildings and building improvements, technology equipment, warehouse equipment, and fleet. Our capital expenditures in the first 13 weeks of fiscal 2025 were $49 million lower than in the first 13 weeks of fiscal 2024 due to reduced spending in investments to advance our Recipe for Growth strategy.
Previous wording
Proceeds from exercises of share-based compensation awards were $103.5 million in the first 39 weeks of fiscal 2024, as compared to $67.1 million in the first 39 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.
Current wording
Proceeds from exercises of share-based compensation awards were $29 million in the first 13 weeks of fiscal 2025, as compared to $17 million in the first 13 weeks of fiscal 2024. 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.
Previous wording
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 8,888,777 shares for $699.9 million during the first 39 weeks of fiscal 2024, and intend to repurchase $1.25 billion in fiscal 2024. As of March 30, 2024, we had a remaining authorization of approximately $3.3 billion. We repurchased 1,092,409 additional shares for $85.0 million under our authorization and received 323,109 incremental shares from the ASR Program through April 12, 2024.
Current wording
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 1,439,652 shares for $108 million during the first 13 weeks of fiscal 2025 and intend to repurchase $1.0 billion in fiscal 2025. As of September 28, 2024, we had a remaining authorization of approximately $2.7 billion. We repurchased 20,413 additional shares for $2 million under our authorization through October 11, 2024.
Previous wording
Dividends paid in the first 39 weeks of fiscal 2024 were $758.1 million, or $1.50 per share, as compared to $747.4 million, or $1.47 per share, in the first 39 weeks of fiscal 2023. In February 2024, we declared our regular quarterly dividend for the third quarter of fiscal 2024 of $0.50 per share, which was paid in April. In April 2024, we declared our regular quarterly dividend for the fourth quarter of fiscal 2024 of $0.51 per share, representing an increase of $0.01 per share. This dividend will be payable in July 2024.
Current wording
Dividends paid in the first 13 weeks of fiscal 2025 were $251 million, or $0.51 per share, as compared to $253 million, or $0.50 per share, in the first 13 weeks of fiscal 2024. In August 2024, we declared our regular quarterly dividend for the first quarter of fiscal 2025 of $0.51 per share, which was paid in October 2024.
Previous wording
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 March 30, 2024 are disclosed within that note.
Current wording
Our debt activity, including issuances and repayments, if any, and our borrowing availability are described in Note 7, “Debt,” in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q. Our outstanding borrowings as of September 28, 2024 are also disclosed within that note.
Previous wording
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.
Current wording
Critical accounting estimates are those that are most important to the portrayal of our financial position and results of operations. These 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 estimates and this related disclosure. Our most critical accounting estimates pertain to goodwill and intangible assets, income taxes and company-sponsored pension plans, which are described in Item 7 of our fiscal 2024 Form 10-K.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
See Note 13, “Business Segment Information,” in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for additional information.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Previous report — wording carried elsewhere
Comparisons of results from the first 39 weeks of fiscal 2024 to the first 39 weeks of fiscal 2023 are presented below: