Core Insights - Sysco Corporation hosted its 2024 Investor Day to present updates on its growth strategy and initiatives aimed at enhancing customer service while ensuring consistent financial performance [1][2] Growth Strategy - The company is focusing on driving core business performance through local case growth and leveraging its merchandising and supply chain capabilities [2] - Sysco's 'Recipe for Growth' strategy, launched three years ago, aims to drive market growth through five pillars: Digital, Products and Solutions, Supply Chain, Customer Teams, and Future Horizons [2][3] Financial Outlook - Sysco outlined plans for significant top and bottom-line growth over the next three years, targeting sales growth of 4-6% annually, adjusted operating income growth of 6-8%, and adjusted earnings per share growth of 6-8% [3][7] - The company aims for a total return to shareholders of 9-11% per year through a growing dividend [7] Market Share Growth - Sysco plans to accelerate independent market share growth through Total Team Selling, which integrates specialists and sales teams from Broadline and Specialty businesses [3] - The company is leveraging its global footprint to enhance local growth internationally, including deeper penetration of Sysco Brand products and customer-focused programs like Sysco Your Way [3] New Offerings - The launch of Sysco Marketplace allows third-party suppliers to sell products on Sysco's digital platform, providing access to over 15,000 niche products to enhance customer menus [4]

Core Insights - Sysco Corporation hosted its 2024 Investor Day to present updates on growth strategies and initiatives aimed at enhancing customer service and financial performance [1][2] - The company emphasized its 'Recipe for Growth' strategy, which focuses on five pillars: Digital, Products and Solutions, Supply Chain, Customer Teams, and Future Horizons [2][3] Financial Performance and Growth Targets - Sysco outlined plans for significant financial growth over the next three years, targeting sales growth of 4-6% annually, adjusted operating income growth of 6-8%, and adjusted earnings per share growth of 6-8% [7] - The company aims for a total return to shareholders of 9-11% per year through a growing dividend [7] Market Share and Sales Strategy - Sysco plans to accelerate independent market share growth through a collaborative approach called Total Team Selling, integrating specialists from Broadline and Specialty businesses [3] - The launch of Sysco Marketplace will allow third-party suppliers to sell products on Sysco's digital platform, enhancing customer access to over 15,000 niche products [4] Operational Excellence - Sysco's growth algorithm emphasizes sustainable growth, operational excellence, and balanced capital return, maintaining an investment-grade balance sheet while investing in long-term business growth [3][7] - The company is leveraging its global footprint to drive local growth and enhance its merchandising strategies, including deeper penetration of Sysco Brand products [3]

Financial Performance - Net earnings for the 13-week period ended March 30, 2024, were $424.7 million, compared to $429.6 million for the same period in 2023 [66]. - Basic earnings per share for the 39-week period ended March 30, 2024, were $2.67, up from $2.04 for the same period in 2023 [66]. - Comprehensive income for the third quarter of fiscal 2024 was $383.2 million, compared to $473.5 million for the same quarter in fiscal 2023 [69]. - Operating income for the total segments for the 39-week period was $2.97 billion, compared to $2.81 billion in the prior year, marking an increase of 5.6% [101]. Pension and Retirement Obligations - Sysco recognized a one-time, non-cash pre-tax pension settlement charge of $315.4 million in Q2 of fiscal 2023 related to pension obligations [63]. - The U.S. Retirement Plan's net pension costs for the 39-week period ended April 1, 2023, totaled $349.6 million [64]. - The company transferred $695 million of defined benefit pension obligations to Massachusetts Mutual Life Insurance Company, covering approximately 10,000 participants [62]. - The net pension costs were not material for the third quarter and first 39 weeks of fiscal 2024 [64]. - The balance of pension and other postretirement benefit plans as of March 30, 2024, was $(1,231,221,000) [81]. - The company reported a net actuarial loss of $89,851,000 arising in the current year for the 39-week period ended April 1, 2023 [77]. Share Repurchase and Stock Compensation - The company entered into an accelerated share repurchase program to repurchase $500 million of its common stock, completing the program on March 28, 2024 [67][68]. - Share-based compensation costs recognized in operations were $76.7 million for the first 39 weeks of fiscal 2024, compared to $73.8 million in the same period of fiscal 2023 [89]. - A total of 1,135,537 restricted stock units were granted during the first 39 weeks of fiscal 2024, with a weighted average grant-date fair value of $74.50 [87]. - The company granted 524,164 performance share units (PSUs) during the first 39 weeks of fiscal 2024, with a weighted average grant-date fair value of $74.91 [86]. - As of March 30, 2024, there was $164.8 million of unrecognized compensation cost related to share-based compensation arrangements, expected to be recognized over 2.03 years [89]. Sales and Revenue Growth - Total sales for the 39-week period ended April 1, 2023, were $58.29 billion, an increase from $56.60 billion in the prior year, representing a growth of 3.0% [101]. - U.S. Foodservice Operations generated sales of $40.93 billion for the 39-week period, up from $39.94 billion, reflecting a growth of 2.5% [101]. - International Foodservice Operations reported sales of $10.77 billion, an increase of 8.7% compared to $9.91 billion in the previous year [101]. Comprehensive Income and Currency Adjustments - For the 39-week period ended March 30, 2024, the company reported a foreign currency translation adjustment loss of $12,935,000 [75]. - The total other comprehensive income for the same period was $31,277,000, net of tax [75]. - The company experienced a significant loss in cash flow hedges amounting to $24,356,000 before tax, with a net impact of $19,463,000 [75]. - In the previous fiscal year, for the 39-week period ended April 1, 2023, the foreign currency translation adjustment was a gain of $72,403,000 [77]. - The total other comprehensive income for the 39-week period ended April 1, 2023, was $246,279,000, net of tax [77]. Risks and Challenges - The company faces risks related to access to borrowed funds, which could adversely impact cash flow and liquidity [187]. - The level and terms of the company's indebtedness may negatively affect its business and liquidity position [187]. - Future labor disruptions could disrupt the integration of Brakes France and Davigel into Sysco France and operations in the EU [187]. - Technology disruptions or delays in implementing new technology could materially impact the company's business [187]. - Changes in the method of determining LIBOR may adversely affect interest expenses related to outstanding debt [187]. - The company may face increased funding requirements for its multiemployer defined benefit pension plans due to market declines [187]. - Capital expenditures may vary based on changes in business plans and the successful completion of acquisitions [187]. - The anti-takeover benefits of preferred stock may not be viewed as beneficial to stockholders [187]. - Exclusive forum provisions in the company's bylaws could limit stockholders' ability to obtain a favorable judicial forum [187].

Financial Data and Key Metrics Changes - For Q3 2024, Sysco reported a 2.7% growth in enterprise sales, with U.S. Foodservice growing by 3.4% and International by 4.5% [59] - Adjusted operating income increased by 8.4%, and adjusted EPS rose by 6.7%, both exceeding S&P 500 average profit growth for the quarter [15][30] - Gross profit reached $3.6 billion, up 5.2%, with gross margin improving to 18.6%, an increase of 44 basis points [28] Business Line Data and Key Metrics Changes - U.S. Foodservice volumes grew by 2.9%, while local case growth was 0.4%, indicating a need for improvement [14][45] - SYGMA experienced a decline of 3.5% in sales, attributed to exiting an unprofitable customer relationship [59][91] - International local volumes increased over 4%, contributing positively to overall growth [28] Market Data and Key Metrics Changes - Restaurant foot traffic was down year-over-year, with January seeing a high-single-digit decline, but February and March showed improvement to low-single-digit declines [13][14] - The food-away-from-home industry faced a decline in case volumes, contrasting with Sysco's growth, indicating market share gains [14][15] Company Strategy and Development Direction - Sysco is focusing on local case growth and expense management, with plans to hire approximately 400 new sales professionals by year-end [8][46] - The company aims to improve profitability through strategic sourcing and enhancing Sysco brand penetration [75][98] - Sysco's leadership emphasizes the importance of lowering food costs for restaurants to improve menu pricing and drive traffic [38][122] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a softer operating environment but expressed confidence in achieving annual EPS guidance and returning over $2.25 billion to shareholders [62][63] - The company is optimistic about the food-away-from-home industry's long-term growth potential, despite current challenges [52][53] - Management highlighted the importance of agility in operations and expense management to navigate market fluctuations [50][56] Other Important Information - Sysco announced a change in leadership, with Kevin Hourican taking over as Chair of the Board following Ed Shirley's resignation for health reasons [34] - The company is on track to generate over $120 million in cost savings for FY2024, which will help offset current market challenges [25][29] Q&A Session Summary Question: What is Sysco's opportunity to gain market share in the current environment? - Sysco gained market share in the food-away-from-home sector, but volume was less than anticipated. The company is focused on lowering food costs to help restaurants reduce menu prices [36][38] Question: How does Sysco view the expansion of its sales force? - Sysco plans to increase its sales force by a net of 400, which is expected to positively impact local case growth in FY2025 [79][80] Question: What is the current pricing backdrop in the industry? - The restaurant operators are seeking value due to increased labor costs, leading to more price shopping among distributors [85][86] Question: How is Sysco managing its SYGMA business? - SYGMA's sales were down, but profit margins increased by 20% year-on-year, indicating improved supply chain productivity [114] Question: What is Sysco's outlook for the California market? - The impact of recent wage dynamics in California is still being assessed, but there are indications of muted new door openings among national chains [122]

Statements made in this presentation that look forward in time or that express management's beliefs, expectations or hopes are forward-looking statements under the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the views of management at the time such statements are made and are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ materially from current expectations. These statements include statements con ...

[Executive Summary & Third Quarter Fiscal Year 2024 Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Third%20Quarter%20Fiscal%20Year%202024%20Highlights) [CEO & CFO Commentary](index=1&type=section&id=CEO%20%26%20CFO%20Commentary) Sysco's leadership highlighted strong profit growth and operating leverage in Q3 FY2024 despite a softer macro environment - CEO Kevin Hourican emphasized strong profit growth in Q3 FY2024, attributing it to disciplined gross profit margin management and expense control, despite softer sales and case volumes due to lower restaurant traffic[1](index=1&type=chunk) - CFO Kenny Cheung highlighted the **sixth consecutive quarter of positive operating leverage**, with gross profit expanding faster than operating expenses, and raised cost-out targets for fiscal year 2024 from $100 million to $120 million[2](index=2&type=chunk) [Key Financial & Operational Highlights](index=1&type=section&id=Key%20Financial%20%26%20Operational%20Highlights) Sysco's Q3 FY2024 results show increased sales, gross profit, and adjusted EPS, alongside growth in U.S. Foodservice volume Q3 FY2024 Key Financial Highlights (YoY Change) | Metric | Value (Q3 FY2024) | Change (YoY) | | :-------------------------------- | :------------------ | :----------- | | Sales | $19.4 billion | +2.7% | | Gross Profit | $3.6 billion | +5.2% | | Operating Income | $722.0 million | +3.8% | | Adjusted Operating Income | $799.3 million | +8.4% | | EBITDA | $933.0 million | +5.4% | | Adjusted EBITDA | $976.6 million | +8.5% | | EPS | $0.85 | +1.2% | | Adjusted EPS | $0.96 | +6.7% | Q3 FY2024 Key Operational Highlights (YoY Change) | Metric | Change (YoY) | | :-------------------- | :----------- | | U.S. Foodservice volume | +2.9% | | U.S. local volumes | +0.4% | - Sysco returned approximately **$753 million of capital to shareholders** in Q3 FY2024, comprising $500 million in share repurchases and $253 million in dividends[2](index=2&type=chunk) [Fiscal Year 2024 Guidance](index=2&type=section&id=Fiscal%20Year%202024%20Guidance) Sysco reaffirmed its adjusted EPS growth guidance for fiscal year 2024 and raised its annual cost-out targets - Sysco remains confident in its fiscal year 2024 guidance of **five to ten percent adjusted EPS growth**, targeting an adjusted EPS range of $4.20 to $4.40[3](index=3&type=chunk) - The company raised its cost-out targets for fiscal year 2024 from **$100 million to $120 million**[2](index=2&type=chunk) [Third Quarter Fiscal Year 2024 Financial Performance](index=2&type=section&id=Third%20Quarter%20Fiscal%20Year%202024%20Financial%20Performance) [Total Sysco Consolidated Results](index=2&type=section&id=Total%20Sysco%20Consolidated%20Results) Consolidated Q3 FY2024 results feature growth in sales, gross profit, and operating income, with a notable gross margin expansion Total Sysco Q3 FY2024 Financial Performance (YoY) | Metric | Q3 FY2024 Value | YoY Change | | :-------------------- | :---------------- | :--------- | | Sales | $19.4 billion | +2.7% | | Gross Profit | $3.6 billion | +5.2% | | Gross Margin | 18.6% | +44 bps | | Operating Income | $722.0 million | +3.8% | | Adjusted Operating Income | $799.3 million | +8.4% | - Product cost inflation at the total enterprise level was **1.9%**, mainly in the meat and frozen categories[5](index=5&type=chunk) - The increase in gross profit was driven by positive volumes and effective management of product cost inflation and strategic sourcing[5](index=5&type=chunk) [U.S. Foodservice Operations](index=2&type=section&id=U.S.%20Foodservice%20Operations) The U.S. Foodservice segment saw increased sales and gross profit driven by volume growth, though operating income slightly decreased U.S. Foodservice Q3 FY2024 Performance (YoY) | Metric | Q3 FY2024 Value | YoY Change | | :-------------------------- | :---------------- | :--------- | | Sales | $13.7 billion | +3.4% | | Total Case Volume | - | +2.9% | | Local Case Volume | - | +0.4% | | Gross Profit | $2.7 billion | +4.2% | | Gross Margin | 19.4% | +15 bps | | Operating Income | $852.4 million | -0.5% | | Adjusted Operating Income | $874.8 million | +0.7% | [International Foodservice Operations](index=2&type=section&id=International%20Foodservice%20Operations) The International Foodservice segment delivered strong growth in sales, gross profit, and operating income, aided by favorable currency exchange rates International Foodservice Q3 FY2024 Performance (YoY) | Metric | Q3 FY2024 Value | YoY Change | Constant Currency Change | | :-------------------------- | :---------------- | :--------- | :----------------------- | | Sales | $3.5 billion | +4.5% | +2.4% | | Gross Profit | $719.7 million | +12.0% | +9.5% | | Gross Margin | 20.6% | +138 bps | +134 bps | | Operating Income | $83.9 million | +73.9% | - | | Adjusted Operating Income | $109.4 million | +63.4% | +60.4% | - Foreign exchange rates positively impacted International Foodservice Operations sales by **2.1%** and total Sysco sales by **0.4%** during the quarter[10](index=10&type=chunk) [Other Segments and Corporate](index=18&type=section&id=Other%20Segments%20and%20Corporate) Performance varied across other segments, with SYGMA and 'Other' declining while the Global Support Center reduced its operating loss [SYGMA](index=18&type=section&id=SYGMA) SYGMA Q3 FY2024 Performance (YoY) | Metric | Q3 FY2024 Value | YoY Change | | :---------------- | :---------------- | :--------- | | Sales | $1,903.9 million | -3.5% | | Gross Profit | $153.3 million | -7.7% | | Gross Margin | 8.05% | -37 bps | | Operating Income | $16.8 million | -34.4% | [Other](index=18&type=section&id=Other) Other Segment Q3 FY2024 Performance (YoY) | Metric | Q3 FY2024 Value | YoY Change | | :---------------- | :---------------- | :--------- | | Sales | $275.2 million | -8.9% | | Gross Profit | $71.0 million | -10.6% | | Gross Margin | 25.81% | -50 bps | | Operating Income | $6.4 million | -46.2% | [Global Support Center](index=18&type=section&id=Global%20Support%20Center) Global Support Center Q3 FY2024 Performance (YoY) | Metric | Q3 FY2024 Value | YoY Change | | :-------------------- | :---------------- | :--------- | | Gross Profit (loss) | $12.2 million | NM (from loss) | | Operating Expenses | $249.7 million | +2.3% | | Operating Loss | $(237.5) million | +3.9% (reduced loss) | [Balance Sheet, Cash Flow and Capital Allocation](index=4&type=section&id=Balance%20Sheet%2C%20Cash%20Flow%20and%20Capital%20Allocation) [Balance Sheet Overview](index=4&type=section&id=Balance%20Sheet%20Overview) As of March 30, 2024, Sysco maintained a cash balance of $598.3 million Cash Balance (End of Q3 FY2024) | Metric | Value | | :---------- | :---------- | | Cash Balance | $598.3 million | [Cash Flow from Operations and Free Cash Flow](index=4&type=section&id=Cash%20Flow%20from%20Operations%20and%20Free%20Cash%20Flow) For the first 39 weeks of fiscal year 2024, cash flow from operations was $1.4 billion, while free cash flow was $863.7 million Cash Flow Performance (First 39 Weeks FY2024 vs. FY2023) | Metric | FY2024 (39 Weeks) | Change (YoY) | | :-------------------------- | :------------------ | :----------- | | Cash Flow from Operations | $1.4 billion | -$52.6 million | | Capital Expenditures (net) | $509.5 million | - | | Free Cash Flow | $863.7 million | -$115.9 million | [Shareholder Returns](index=1&type=section&id=Shareholder%20Returns) Sysco returned $1.5 billion to shareholders during the first 39 weeks of fiscal year 2024 and is on track to return $2.25 billion for the full year Shareholder Returns (First 39 Weeks FY2024) | Metric | Value | | :----------------- | :-------------- | | Total Returned | $1.5 billion | | Share Repurchases | $699.9 million | | Dividends | $758.1 million | - Sysco is on target to return approximately **$2.25 billion** to shareholders in fiscal year 2024[2](index=2&type=chunk) [Consolidated GAAP Financial Statements](index=8&type=section&id=Consolidated%20GAAP%20Financial%20Statements) [Consolidated Results of Operations (Income Statement)](index=8&type=section&id=Consolidated%20Results%20of%20Operations%20(Income%20Statement)) Sysco's GAAP income statement for Q3 FY2024 shows sales of $19.38 billion and net earnings of $424.7 million Consolidated Results of Operations (GAAP) - Q3 FY2024 | Metric | Mar. 30, 2024 (13-Week) | Apr. 1, 2023 (13-Week) | | :-------------------------- | :---------------------- | :--------------------- | | Sales | $19,379,500 | $18,875,676 | | Cost of sales | $15,770,444 | $15,444,316 | | Gross profit | $3,609,056 | $3,431,360 | | Operating expenses | $2,887,010 | $2,735,633 | | Operating income | $722,046 | $695,727 | | Net earnings | $424,688 | $429,604 | | Diluted earnings per share | $0.85 | $0.84 | Consolidated Results of Operations (GAAP) - 39-Week Period FY2024 | Metric | Mar. 30, 2024 (39-Week) | Apr. 1, 2023 (39-Week) | | :-------------------------- | :---------------------- | :--------------------- | | Sales | $58,287,896 | $56,596,459 | | Cost of sales | $47,517,435 | $46,326,628 | | Gross profit | $10,770,461 | $10,269,831 | | Operating expenses | $8,544,790 | $8,196,480 | | Operating income | $2,225,671 | $2,073,351 | | Net earnings | $1,343,322 | $1,036,388 | | Diluted earnings per share | $2.66 | $2.03 | [Consolidated Balance Sheets](index=9&type=section&id=Consolidated%20Balance%20Sheets) As of March 30, 2024, total assets were $24.71 billion and total liabilities were $22.58 billion Consolidated Balance Sheet (GAAP) - Mar. 30, 2024 vs. Jul. 1, 2023 | Metric | Mar. 30, 2024 | Jul. 1, 2023 | | :--------------------------------- | :-------------- | :------------- | | **ASSETS** | | | | Cash and cash equivalents | $598,322 | $745,201 | | Accounts receivable, net | $5,556,703 | $5,091,970 | | Inventories | $4,733,966 | $4,480,812 | | Total current assets | $11,204,875 | $10,608,364 | | Plant and equipment, net | $5,290,437 | $4,915,049 | | Goodwill | $5,220,989 | $4,645,754 | | Total assets | $24,712,340 | $22,821,145 | | **LIABILITIES & EQUITY** | | | | Accounts payable | $5,869,479 | $6,025,757 | | Total current liabilities | $8,366,271 | $8,540,433 | | Long-term debt | $12,113,205 | $10,347,997 | | Total long-term liabilities | $14,212,559 | $12,238,878 | | Total liabilities | $22,578,830 | $20,779,311 | | Total shareholders' equity | $2,100,953 | $2,008,622 | | Total liabilities and shareholders' equity | $24,712,340 | $22,821,145 | [Consolidated Cash Flows](index=10&type=section&id=Consolidated%20Cash%20Flows) For the 39-week period, net cash from operating activities was $1.37 billion, while investing activities saw a significant use of cash due to acquisitions Consolidated Cash Flows (GAAP) - 39-Week Period FY2024 vs. FY2023 | Metric | Mar. 30, 2024 | Apr. 1, 2023 | | :------------------------------------ | :-------------- | :------------- | | Net cash provided by operating activities | $1,373,193 | $1,425,782 | | Net cash used for investing activities | $(1,700,649) | $(481,354) | | Net cash provided by (used for) financing activities | $60,260 | $(1,023,052) | | Net decrease in cash, cash equivalents and restricted cash | $(273,402) | $(76,911) | | Cash, cash equivalents and restricted cash at end of period | $692,631 | $854,465 | - Acquisition of businesses, net of cash acquired, was a significant use of cash in investing activities, totaling **$1.18 billion** for the 39-week period, compared to $37.4 million in the prior year[23](index=23&type=chunk) - Financing activities saw a shift from net cash used to net cash provided, primarily due to **$1.26 billion in other debt borrowings**, including senior notes[23](index=23&type=chunk) [Non-GAAP Financial Measures and Reconciliations](index=12&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) [Non-GAAP Definitions and Rationale](index=12&type=section&id=Non-GAAP%20Definitions%20and%20Rationale) Sysco utilizes non-GAAP measures to provide a clearer perspective on underlying business trends by excluding certain items and currency impacts - Non-GAAP measures exclude restructuring charges, transformational project costs, severance costs, and acquisition-related costs to provide insight into underlying business trends[25](index=25&type=chunk) - Constant currency results are calculated by translating current-period local currency results using prior-year exchange rates to remove the impact of foreign currency fluctuations[26](index=26&type=chunk) - Management believes these adjusted measures facilitate year-over-year comparisons and are indicative of the company's underlying operational performance[27](index=27&type=chunk) [Consolidated Non-GAAP Reconciliations](index=13&type=section&id=Consolidated%20Non-GAAP%20Reconciliations) This section provides detailed reconciliations of GAAP to non-GAAP financial measures for the consolidated entity [13-Week Period Reconciliation](index=13&type=section&id=13-Week%20Period%20Reconciliation) Consolidated Non-GAAP Reconciliation (13-Week Period) | Metric | GAAP (Mar. 30, 2024) | Adjusted (Non-GAAP) | GAAP % Change | Adjusted % Change | | :------------------------------------ | :------------------- | :------------------ | :------------ | :---------------- | | Sales | $19,379,500 | $19,309,924 (constant currency) | 2.7% | 2.3% | | Gross Profit | $3,609,056 | $3,593,394 (constant currency) | 5.2% | 4.7% | | Operating Expenses | $2,887,010 | $2,809,804 | 5.5% | 4.3% | | Operating Income | $722,046 | $799,252 | 3.8% | 8.4% | | Net Earnings | $424,688 | $483,384 | (1.1)% | 5.0% | | Diluted EPS | $0.85 | $0.96 | 1.2% | 6.7% | - Adjustments for the 13-week period included **$28.5 million for restructuring** and transformational project costs and **$48.7 million for acquisition-related costs**, impacting operating expenses and income[30](index=30&type=chunk) [39-Week Period Reconciliation](index=15&type=section&id=39-Week%20Period%20Reconciliation) Consolidated Non-GAAP Reconciliation (39-Week Period) | Metric | GAAP (Mar. 30, 2024) | Adjusted (Non-GAAP) | GAAP % Change | Adjusted % Change | | :------------------------------------ | :------------------- | :------------------ | :------------ | :---------------- | | Sales | $58,287,896 | $58,009,496 (constant currency) | 3.0% | 2.5% | | Gross Profit | $10,770,461 | $10,770,461 | 4.9% | 4.9% | | Operating Expenses | $8,544,790 | $8,372,030 | 4.2% | 3.7% | | Operating Income | $2,225,671 | $2,398,431 | 7.3% | 9.4% | | Net Earnings | $1,343,322 | $1,474,000 | 29.6% | 8.3% | | Diluted EPS | $2.66 | $2.92 | 31.0% | 9.4% | - Adjustments for the 39-week period included **$59.6 million for restructuring** and transformational project costs and **$113.2 million for acquisition-related costs**[33](index=33&type=chunk) - The prior year's GAAP net earnings and EPS were significantly impacted by a **$315.3 million pension settlement charge**, which is excluded from adjusted figures[33](index=33&type=chunk) [Segment Non-GAAP Reconciliations](index=17&type=section&id=Segment%20Non-GAAP%20Reconciliations) This section provides detailed non-GAAP reconciliations for each operating segment [13-Week Period Segment Data](index=17&type=section&id=13-Week%20Period%20Segment%20Data) Segment Adjusted Operating Income (13-Week Period) | Segment | GAAP Operating Income (Mar. 30, 2024) | Adjusted Operating Income (Non-GAAP) | GAAP % Change | Adjusted % Change | | :-------------------------- | :------------------------------------ | :----------------------------------- | :------------ | :---------------- | | U.S. Foodservice Operations | $852,444 | $874,792 | (0.5)% | 0.7% | | International Foodservice Operations | $83,898 | $109,359 | 73.9% | 63.4% | | SYGMA | $16,805 | $16,805 | (34.4)% | (34.4)% | | Other | $6,371 | $6,371 | (46.2)% | (46.2)% | | Global Support Center | $(237,472) | $(208,075) | 3.9% | 11.8% | - International Foodservice Operations adjusted operating income on a constant currency basis **increased by 60.4%** to $107.4 million[34](index=34&type=chunk) [39-Week Period Segment Data](index=19&type=section&id=39-Week%20Period%20Segment%20Data) Segment Adjusted Operating Income (39-Week Period) | Segment | GAAP Operating Income (Mar. 30, 2024) | Adjusted Operating Income (Non-GAAP) | GAAP % Change | Adjusted % Change | | :-------------------------- | :------------------------------------ | :----------------------------------- | :------------ | :---------------- | | U.S. Foodservice Operations | $2,632,451 | $2,679,492 | 3.5% | 4.0% | | International Foodservice Operations | $260,311 | $327,922 | 35.1% | 29.9% | | SYGMA | $45,918 | $45,918 | 20.3% | 20.3% | | Other | $26,581 | $26,581 | (20.0)% | (20.0)% | | Global Support Center | $(739,590) | $(681,482) | (0.7)% | 3.6% | - International Foodservice Operations adjusted operating income on a constant currency basis **increased by 27.9%** to $322.8 million[36](index=36&type=chunk) [Free Cash Flow Reconciliation](index=22&type=section&id=Free%20Cash%20Flow%20Reconciliation) Free cash flow for the first 39 weeks of fiscal year 2024 was $863.7 million, a decrease of $115.9 million compared to the prior year Free Cash Flow Reconciliation (39-Week Period) | Metric | Mar. 30, 2024 | Apr. 1, 2023 | Change in Dollars | | :------------------------------------ | :-------------- | :------------- | :---------------- | | Net cash provided by operating activities (GAAP) | $1,373,193 | $1,425,782 | $(52,589) | | Additions to plant and equipment | $(530,161) | $(474,456) | $(55,705) | | Proceeds from sales of plant and equipment | $20,708 | $28,313 | $(7,605) | | Free Cash Flow (Non-GAAP) | $863,740 | $979,639 | $(115,899) | - Free cash flow is considered a liquidity measure providing insight into cash generated after capital expenditures, potentially available for strategic uses[39](index=39&type=chunk) [EBITDA and Adjusted EBITDA Reconciliation](index=23&type=section&id=EBITDA%20and%20Adjusted%20EBITDA%20Reconciliation) For Q3 FY2024, adjusted EBITDA grew 8.5% to $976.6 million, while for the 39-week period, it increased 10.6% to $2.93 billion EBITDA and Adjusted EBITDA Reconciliation (13-Week Period) | Metric | GAAP (Mar. 30, 2024) | Adjusted (Non-GAAP) | GAAP % Change | Adjusted % Change | | :------------------------------------ | :------------------- | :------------------ | :------------ | :---------------- | | Net earnings | $424,688 | - | (1.1)% | - | | EBITDA | $933,049 | - | 5.4% | - | | Adjusted EBITDA | - | $976,595 | - | 8.5% | EBITDA and Adjusted EBITDA Reconciliation (39-Week Period) | Metric | GAAP (Mar. 30, 2024) | Adjusted (Non-GAAP) | GAAP % Change | Adjusted % Change | | :------------------------------------ | :------------------- | :------------------ | :------------ | :---------------- | | Net earnings | $1,343,322 | - | 29.6% | - | | EBITDA | $2,850,254 | - | 24.3% | - | | Adjusted EBITDA | - | $2,928,503 | - | 10.6% | - Adjusted EBITDA is considered a measure of overall financial performance and profitability, facilitating consistent period-to-period comparisons[41](index=41&type=chunk) [Net Debt to Adjusted EBITDA](index=25&type=section&id=Net%20Debt%20to%20Adjusted%20EBITDA) As of March 30, 2024, Sysco's Net Debt to Adjusted EBITDA ratio was 2.81 Net Debt to Adjusted EBITDA Ratio (Mar. 30, 2024) | Metric | Value | | :-------------------------------- | :-------------- | | Current Maturities of long-term debt | $93,225 | | Long-term debt | $12,113,205 | | Total Debt | $12,206,430 | | Cash & Cash Equivalents | $(598,322) | | Net Debt | $11,608,108 | | Adjusted EBITDA (previous 12 months) | $4,127,132 | | Net Debt/Adjusted EBITDA Ratio | 2.81 | - Net Debt to Adjusted EBITDA is a non-GAAP financial measure frequently used by investors and credit rating agencies to assess capital structure[45](index=45&type=chunk) [Company Overview](index=7&type=section&id=Company%20Overview) [About Sysco](index=7&type=section&id=About%20Sysco) Sysco is a global leader in distributing food products and related supplies to a wide range of foodservice customers - Sysco is the global leader in selling, marketing, and distributing food products to restaurants, healthcare, educational facilities, lodging establishments, and other away-from-home meal preparers[19](index=19&type=chunk) - The company operates **334 distribution facilities** worldwide, serves approximately **725,000 customer locations**, and generated over **$76 billion in sales** for fiscal year 2023[19](index=19&type=chunk) [Investor Relations Information](index=7&type=section&id=Investor%20Relations%20Information) Sysco's investor relations website serves as a primary channel for publishing key information to investors - Sysco uses the Investor Relations section of its website (investors.sysco.com) as a primary channel for publishing key information to investors[20](index=20&type=chunk) [Forward-Looking Statements](index=6&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements regarding future performance and associated risks and uncertainties - Statements in the press release that look forward in time or express management's beliefs, expectations, or hopes are forward-looking statements under the Private Securities Litigation Reform Act of 1995[17](index=17&type=chunk) - These statements include expectations regarding future productivity, international volume, the 'Recipe for Growth' strategy, supply chain efficiency, and capital allocation[17](index=17&type=chunk) - Actual results could differ materially from projections due to numerous factors, as detailed in the company's Annual Report on Form 10-K and subsequent SEC filings[18](index=18&type=chunk) [Conference Call & Webcast](index=5&type=section&id=Conference%20Call%20%26%20Webcast) Sysco provided details for its Q3 FY2024 earnings conference call and webcast held on April 30, 2024 - Sysco hosted a conference call on **April 30, 2024, at 10:00 a.m. EDT** to review its Q3 FY2024 financial results[15](index=15&type=chunk) - A live webcast, slide presentation, and news release were available online at investors.sysco.com[15](index=15&type=chunk)

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Sysco's unaudited consolidated financial statements for the quarter ended December 30, 2023, including balance sheets, income statements, and cash flows, with detailed accounting policy notes [Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) Consolidated financial statements show total assets increased to **$24.7 billion**, sales grew **3.1%** to **$38.9 billion**, and net earnings rose to **$918.6 million** Consolidated Balance Sheet Highlights (As of Dec 30, 2023 vs. Jul 1, 2023) | Metric | Dec 30, 2023 ($ in millions) | Jul 1, 2023 ($ in millions) | | :--- | :--- | :--- | | **Total Current Assets** | 11,309.6 | 10,608.4 | | **Total Assets** | 24,740.6 | 22,821.1 | | **Total Current Liabilities** | 8,254.5 | 8,540.4 | | **Long-Term Debt** | 12,028.1 | 10,348.0 | | **Total Liabilities** | 22,303.2 | 20,779.3 | | **Total Shareholders' Equity** | 2,404.0 | 2,008.6 | Consolidated Results of Operations Highlights (YoY) | Metric | 26-Week Period Ended Dec 30, 2023 ($ in millions) | 26-Week Period Ended Dec 31, 2022 ($ in millions) | YoY Change | | :--- | :--- | :--- | :--- | | **Sales** | 38,908.4 | 37,720.8 | +3.1% | | **Gross Profit** | 7,161.4 | 6,838.5 | +4.7% | | **Operating Income** | 1,503.6 | 1,377.6 | +9.1% | | **Net Earnings** | 918.6 | 606.8 | +51.4% | | **Diluted EPS** | $1.81 | $1.19 | +52.1% | Consolidated Cash Flow Highlights (26-Week Periods YoY) | Metric | Ended Dec 30, 2023 ($ in millions) | Ended Dec 31, 2022 ($ in millions) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | 855.9 | 503.5 | | **Net cash used for investing activities** | (1,504.9) | (319.4) | | **Net cash provided by (used for) financing activities** | 777.8 | (527.5) | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, acquisitions, and debt, highlighting **$1.2 billion** in H1 FY2024 acquisitions, **$1.0 billion** in new senior notes, and a **$500 million** ASR program - In H1 FY2024, Sysco paid **$1.2 billion** in cash for several acquisitions[32](index=32&type=chunk) - On November 27, 2023, Sysco acquired Edward Don & Company for cash consideration of **$969.4 million**, expected to create a specialty equipment and supplies platform[33](index=33&type=chunk) - On November 17, 2023, Sysco issued **$1.0 billion** in senior notes, consisting of **$500 million** due 2029 at 5.75% and **$500 million** due 2034 at 6.00%[61](index=61&type=chunk) - Subsequent to the quarter end, on January 3, 2024, the company initiated a **$500 million** Accelerated Share Repurchase (ASR) program with Goldman Sachs[72](index=72&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 and H1 FY2024 financial results, highlighting **3.7%** Q2 sales growth to **$19.3 billion**, segment performance, and an increased **$1.25 billion** share repurchase target [Highlights and Results of Operations](index=34&type=section&id=Highlights%20and%20Results%20of%20Operations) Q2 FY2024 sales increased **3.7%** to **$19.3 billion**, with adjusted net earnings up **10.1%** to **$449.0 million**, driven by case volume growth and improved gross margin Q2 FY2024 Financial Highlights (vs. Q2 FY2023) | Metric | Q2 FY2024 ($ in millions) | YoY Change | | :--- | :--- | :--- | | Sales | 19,300.0 | +3.7% | | Operating Income | 700.0 | +9.2% | | Adjusted Operating Income | 744.9 | +9.2% | | Net Earnings | 415.2 | +194.0% | | Adjusted Net Earnings | 449.0 | +10.1% | | Adjusted Diluted EPS | $0.89 | +11.3% | - U.S. Foodservice case volume grew **3.4%** in Q2 and **2.5%** in the first 26 weeks of FY2024 compared to the prior year[109](index=109&type=chunk) - Product cost inflation was **1.1%** at the total enterprise level in Q2 FY2024, primarily in the meat and frozen categories[110](index=110&type=chunk) [Segment Performance](index=38&type=section&id=Segment%20Performance) U.S. Foodservice sales grew **3.2%** with **7.4%** operating income growth, while International sales increased **9.6%** with **44.4%** operating income growth, driven by volume and inflation Q2 FY2024 Segment Operating Income (vs. Q2 FY2023) | Segment | Operating Income ($ in millions) | YoY Change | | :--- | :--- | :--- | | U.S. Foodservice Operations | 839.0 | +7.4% | | International Foodservice Operations | 82.9 | +44.4% | | SYGMA | 16.3 | Not Meaningful | | Other | 8.4 | -15.0% | - The sales growth in U.S. Foodservice Operations was primarily driven by a **3.4%** increase in case volumes in Q2 FY2024[124](index=124&type=chunk) - International Foodservice sales growth was due to inflation (**3.7%**), positive foreign currency impact (**3.2%**), and volume improvements[132](index=132&type=chunk)[134](index=134&type=chunk) [Liquidity and Capital Resources](index=56&type=section&id=Liquidity%20and%20Capital%20Resources) Sysco generated **$855.9 million** in operating cash flow and **$527.4 million** in free cash flow, investing **$1.2 billion** in acquisitions and increasing share repurchase guidance to **$1.25 billion** Cash Flow Summary (First 26 Weeks of FY2024 vs. FY2023) | Metric | FY2024 ($ in millions) | FY2023 ($ in millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | 855.9 | 503.5 | | Free Cash Flow (Non-GAAP) | 527.4 | 219.3 | | Acquisition of businesses, net of cash | (1,174.6) | (37.7) | | Stock repurchases | (199.9) | (267.7) | | Dividends paid | (505.6) | (498.3) | - The company increased its share repurchase guidance for fiscal 2024 to **$1.25 billion**, up from the prior guidance of **$750.0 million**[177](index=177&type=chunk) - As of December 30, 2023, the company had **$962.2 million** in cash and cash equivalents, with approximately **57%** held by international subsidiaries[178](index=178&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=62&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risks include interest rate, foreign currency, fuel price, and investment risks, with no significant changes since July 1, 2023 - There have been no significant changes to the company's market risks (interest rate, foreign currency, fuel price, investment) since July 1, 2023[195](index=195&type=chunk) [Item 4. Controls and Procedures](index=63&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of December 30, 2023, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of December 30, 2023, Sysco's disclosure controls and procedures were effective at the reasonable assurance level[196](index=196&type=chunk) - No material changes to internal control over financial reporting were identified during the fiscal quarter ended December 30, 2023[197](index=197&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=64&type=section&id=Item%201.%20Legal%20Proceedings) Sysco reports no material environmental matters and does not anticipate any pending legal proceedings will materially affect its financial condition or results - The company does not believe there are any pending legal proceedings that will have a material adverse effect on its financial condition, results of operations, or cash flows[201](index=201&type=chunk) [Item 1A. Risk Factors](index=64&type=section&id=Item%201A.%20Risk%20Factors) This section directs readers to the 2023 Annual Report on Form 10-K for a comprehensive discussion of the company's risk factors - The report directs readers to the 2023 Annual Report on Form 10-K for a detailed discussion of risk factors[202](index=202&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=64&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 FY2024, Sysco repurchased **1,482,959 shares** at an average price of **$67.56**, with approximately **$3.8 billion** remaining under its share repurchase authorization Q2 FY2024 Share Repurchases | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Month 1 (Oct) | 569,405 | $64.48 | | Month 2 (Nov) | 574,847 | $67.62 | | Month 3 (Dec) | 338,707 | $72.61 | | **Total** | **1,482,959** | **$67.56** | - As of December 30, 2023, Sysco had a remaining share repurchase authorization of approximately **$3.8 billion**[205](index=205&type=chunk) [Item 5. Other Information](index=65&type=section&id=Item%205.%20Other%20Information) This section discloses the adoption of Rule 10b5-1 trading plans by the President and CEO and two other senior executives during the quarter - During the quarter, President and CEO Kevin Hourican, and two other senior executives, adopted Rule 10b5-1 trading plans for the sale of company securities[207](index=207&type=chunk) [Item 6. Exhibits](index=65&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report on Form 10-Q, including CEO and CFO certifications and various corporate documents

Financial Data and Key Metrics Changes - Sysco reported a sales growth of 3.7% for Q2 2024, showing a sequential improvement from Q1, driven by positive case volume growth and product cost inflation [12][41] - Adjusted EPS grew over 11%, marking the 11th consecutive quarter of double-digit adjusted EPS growth [20][39] - The company increased its stock buyback target for FY 2024 from $750 million to $1.25 billion, expecting total shareholder returns to reach approximately $2.25 billion [11][39] Business Line Data and Key Metrics Changes - The US foodservice segment grew by 3.2%, while the international segment saw a growth of 9.6% [41] - SYGMA experienced a decrease of 1% due to the planned exit of unprofitable customers, but profits more than doubled due to improved supply chain productivity [41] - Local case volume growth was reported at 2.9%, reflecting a 300 basis point sequential improvement from Q1 [42][25] Market Data and Key Metrics Changes - Enterprise inflation was recorded at 1.1%, with US broadline inflation being slightly positive and international inflation at 6.6% [42] - Total US foodservice volume increased by 3.4%, with local volume up 2.9% [42] Company Strategy and Development Direction - Sysco is focused on its "Recipe for Growth" strategy, which includes improving sales execution and enhancing supply chain productivity [31][34] - The company aims to leverage its scale advantages in foodservice distribution to profitably grow its business [33] - Sysco is committed to maintaining a strong balance sheet while increasing capital allocation to shareholders [19][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth momentum, despite a slight slowdown observed in January due to seasonal factors and weather conditions [10][67] - The company reiterated its guidance for FY 2024, expecting mid-single-digit net sales growth and adjusted EPS growth of 7% at the midpoint [51][75] Other Important Information - Sysco's strong balance sheet and free cash flow generation allow for continued investment in growth and shareholder returns [40][49] - The company is on track to achieve $100 million in cost-out commitments for FY 2024 [44][73] Q&A Session Summary Question: Confidence in sustaining local case volume growth - Management is confident in continuing to improve local sales, citing performance management and compensation changes as key drivers [60][61] Question: Surprises in the first half of FY 2024 - Management noted that Sysco has proven its ability to manage under various environments, with Q1 being slightly deflationary and Q2 slightly positive [70][71] Question: Sales force additions and hiring challenges - Management reported no challenges in hiring, with a significant number of new sales consultants being trained [79][80] Question: Integration of Edward Don and future M&A strategy - Early integration of Edward Don is progressing well, with significant synergy opportunities identified [84][86] Question: Visit frequency and quality as KPIs - Management emphasized the importance of visit frequency and quality in driving sales growth, with specific targets being tracked [91][92] Question: Implications of local customer growth on gross margin - Local customers contribute higher GP dollars per case, positively impacting gross margin performance [134]

Sysco Fiscal Q2 2024 Earnings Results Statements made in this presentation that look forward in time or that express management's beliefs, expectations or hopes are forward-looking statements under the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the views of management at the time such statements are made and are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ materially from current expectations. T ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ________________ FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 1-6544 ________________ Sysco Corporation (Exact name of registrant as specified in its charter) Delaware 74-1648137 (State or other jurisdictio ...