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

This discussion should be read in conjunction with our consolidated financial statements as of July 1, 2023, and for the fiscal year then ended, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, both contained in our Annual Report on Form 10-K for the fiscal year ended July 1, 2023 (our fiscal 2023 Form 10-K), as well as the consolidated financial statements (unaudited) and notes to the consolidated financial statements (unaudited) contained in this report.

Highlights

Our improved results for the first quarter of fiscal 2024 demonstrate the favorable impact of our Recipe for Growth Strategy on our business, as we experienced earnings growth in excess of sales growth, compared to the first quarter of fiscal 2023. The increase in earnings was the result of volume growth, effective margin management and productivity improvements. Our gross profit growth this quarter outpaced operating expense, due to effective management of product cost deflation in the U.S., improvements in supply chain productivity and cost-out actions. See below for a comparison of our fiscal 2024 results to our fiscal 2023 results, both including and excluding Certain Items (as defined below).

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

• Sales:

◦increased 2.6%, or $493.6 million, to $19.6 billion;

• Operating income:

◦increased 9.1%, or $66.8 million, to $803.6 million;

◦adjusted operating income increased 10.6%, or $81.6 million, to $854.3 million;

• Net earnings:

◦increased 8.1%, or $37.8 million, to $503.4 million;

◦adjusted net earnings increased 9.9%, or $49.0 million, to $541.6 million;

• Basic earnings per share:

◦increased 8.7%, or $0.08, to $1.00 per share;

• Diluted earnings per share:

◦increased 8.8%, or $0.08, to $0.99 per share;

◦adjusted diluted earnings per share increased 10.3%, or $0.10, to $1.07;

• EBITDA:

◦increased 10.5%, or $95.0 million, to $1.0 billion; and

◦adjusted EBITDA increased 11.7%, or $107.5 million, to $1.0 billion.

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

The fiscal 2024 and fiscal 2023 items discussed above are collectively referred to as “Certain Items.” The results of our operations can be impacted by changes in exchange rates applicable to converting from local currencies to U.S. dollars. We measure our results on a constant currency basis.

Trends

Economic and Industry Trends

Sysco continues to outperform the foodservice market due to the success of the Recipe for Growth strategy. The food-away-from-home sector is a healthy long-term market. Sysco is diversified and well positioned as a market leader in food service. The foodservice market is expected to grow at a slower rate in fiscal 2024 as compared to fiscal 2023, due to current macroeconomic conditions.

Sales and Gross Profit Trends

Our sales and gross profit performance are influenced by multiple factors, including price, volume, inflation, customer mix and product mix. The most significant factor affecting performance in the first quarter of fiscal 2024 was volume growth, as we experienced a 1.6% improvement in U.S. Foodservice case volume and a 0.1% decrease in local case volume within our U.S. segment in each case as compared to the first quarter of fiscal 2023. This volume reflects our broadline and specialty businesses, except for our specialty meats business, which measures its volume in pounds.

We experienced inflation at a rate of 1.7% in the first quarter of fiscal 2024, at the total enterprise level, primarily driven by inflation in the frozen and canned and dry categories. We continue to be successful in managing our inflation, resulting in an increase in gross profit dollars. Gross margin increased 35 basis points in the first quarter of fiscal 2024, as compared to the first quarter of fiscal 2023, primarily driven by higher volumes, the effective management of inflation, and our strategic sourcing efforts. We expect total enterprise level inflation to continue to be slightly positive in fiscal 2024.

Operating Expense Trends

Total operating expenses increased 3.3% during the first quarter of fiscal 2024, as compared to the first quarter of fiscal 2023, driven by increased volumes. We continued to improve our supply chain efficiency, while investing in associate retention and best-in-class training, primarily for transportation and warehouse colleagues. These efficiency efforts are expected to continue to improve in fiscal 2024. We believe the advancements we are making in our physical capabilities, and the investments we are making in improved training, will provide higher service levels to our customers and strengthen Sysco’s ability to profitably win market share.

Interest Expense Trends

Interest expense for fiscal 2024 is expected to increase by approximately $50 million, as compared to fiscal 2023, due to higher debt associated with our planned acquisition of Edward Don & Company.

Mergers and Acquisitions

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

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

In the second quarter of fiscal 2024, we announced our planned acquisition of Edward Don & Company, one of the largest kitchen equipment and supplies distributors, based out of Chicago. Edward Don & Company has a robust supply chain that is expected to enable cost effective distribution of restaurant equipment and supplies. This acquisition will further demonstrate our Recipe for Growth strategy of focusing on building strategic specialty platforms that help us better support restaurant and hospitality customers.

The results of these acquisitions are not expected to be material to the consolidated results of the company for fiscal 2024.

Strategy

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

Our various business transformation initiatives remain on track, including promoting our specialty programs for produce, protein and Italian products and our customer growth initiatives. Our strategic initiative to enable omni-channel inventory fulfillment is operating in our first test region, and we have made progress in expanding to deliveries six days a week.

From these actions as a part of our Recipe for Growth, the benefits of our developing capabilities are apparent in the new customers we are winning and in the progress we are making toward increasing market share. We expect that, as our Recipe for Growth matures, the impact on our top-line growth will continue to accelerate.

Results of Operations

The following table sets forth the components of our consolidated results of operations expressed as a percentage of sales for the periods indicated:

			13-Week Period Ended
			Sep. 30, 2023						Oct. 1, 2022
Sales			100.0		%				100.0		%
Cost of sales			81.4						81.8
Gross profit			18.6						18.2
Operating expenses			14.5						14.4
Operating income			4.1						3.8
Interest expense			0.7						0.6
Other expense (income), net			—						0.1
Earnings before income taxes			3.4						3.1
Income taxes			0.8						0.7
Net earnings			2.6		%				2.4		%

The following table sets forth the change in the components of our consolidated results of operations expressed as a percentage increase or decrease over the comparable period in the prior year:

			13-Week Period Ended
			Sep. 30, 2023
Sales			2.6		%
Cost of sales			2.1
Gross profit			4.6
Operating expenses			3.3
Operating income			9.1
Interest expense			8.2
Other expense (income), net (1)			(62.6)
Earnings before income taxes			11.4
Income taxes			23.1
Net earnings			8.1		%
Basic earnings per share			8.7		%
Diluted earnings per share			8.8
Average shares outstanding			(0.5)
Diluted shares outstanding			(0.6)

(1)			Other expense (income), net was expense of $6.6 million and $17.7 million in the first quarter of fiscal 2024 and fiscal 2023, respectively.

The following tables represent our results by reportable segments:

			13-Week Period Ended Sep. 30, 2023
			U.S. Foodservice Operations						International Foodservice Operations						SYGMA						Other						Global Support Center						Consolidated Totals
			(In thousands)
Sales			$	13,723,799					$	3,683,210					$	1,906,014					$	307,431					$	—					$	19,620,454
Sales increase (decrease)			0.9		%				12.2		%				(1.4)		%				0.1		%										2.6		%
Percentage of total			69.9		%				18.8		%				9.7		%				1.6		%										100.0		%
Operating income (loss)			$	940,971					$	93,483					$	12,767					$	11,823					$	(255,462)					$	803,582
Operating income (loss) increase (decrease)			3.9		%				7.5		%				NM						2.5		%				(6.5)		%				9.1		%
Percentage of total segments			88.9		%				8.8		%				1.2		%				1.1		%										100.0		%
Operating income as a percentage of sales			6.9		%				2.5		%				0.7		%				3.8		%										4.1		%

			13-Week Period Ended Oct. 1, 2022
			U.S. Foodservice Operations						International Foodservice Operations						SYGMA						Other						Global Support Center						Consolidated Totals
			(In thousands)
Sales			$	13,602,482					$	3,283,735					$	1,933,457					$	307,156					$	—					$	19,126,830
Percentage of total			71.1		%				17.2		%				10.1		%				1.6		%										100.0		%
Operating income (loss)			$	905,712					$	86,980					$	5,696					$	11,538					$	(273,125)					$	736,801
Percentage of total segments			89.7		%				8.6		%				0.6		%				1.1		%										100.0		%
Operating income as a percentage of sales			6.7		%				2.6		%				0.3		%				3.8		%										3.9		%

Results of U.S. Foodservice Operations

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

			13-Week Period Ended Sep. 30, 2023						13-Week Period Ended Oct. 1, 2022						Change in Dollars						% Change
			(Dollars in thousands)
Sales			$	13,723,799					$	13,602,482					$	121,317					0.9		%
Gross profit			2,684,775						2,612,343						72,432						2.8
Operating expenses			1,743,804						1,706,631						37,173						2.2
Operating income			$	940,971					$	905,712					$	35,259					3.9		%
Gross profit			$	2,684,775					$	2,612,343					$	72,432					2.8		%
Adjusted operating expenses (Non-GAAP)			1,731,201						1,696,686						34,515						2.0
Adjusted operating income (Non-GAAP)			$	953,574					$	915,657					$	37,917					4.1		%

Sales

The following table sets forth the percentage and dollar value increase or decrease in the major factors impacting sales as compared to the corresponding prior year period in order to demonstrate the cause and magnitude of change:

			Increase (Decrease)
			13-Week Period
			(Dollars in millions)
Cause of change			Percentage						Dollars
Case volume (1)			1.6		%				$	206.5
Deflation			(0.4)						(49.1)
Other (2)			(0.3)						(36.1)
Total change in sales			0.9		%				$	121.3

(1)			Case volumes increased 1.6% compared to the first quarter of fiscal 2023. This volume increase resulted in a 1.6% increase in the dollar value of sales compared to the first quarter of fiscal 2023.
(2)			Case volume reflects our broadline and specialty businesses, with the exception of our specialty meats business, which measures its volume in pounds. Any impact in volumes from these specialty meats operations is included within “Other.”

The sales growth in our U.S. Foodservice Operations was fueled by market share gains. Case volumes from our U.S. Foodservice Operations increased 1.6% in the first quarter of fiscal 2024, as compared to the first quarter of fiscal 2023. This included a 0.1% decrease in local customer case volume in the first quarter of fiscal 2024.

Operating Income

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

Gross profit dollar growth in the first quarter of fiscal 2024, as compared to the first quarter of fiscal 2023, was driven primarily by higher volumes, improvements in supply chain productivity and our strategic sourcing efforts. The estimated change in product costs, an internal measure of inflation or deflation, decreased in the first quarter of fiscal 2024. Gross margin, which is gross profit as a percentage of sales, was 19.6% in the first quarter of fiscal 2024 for our U.S. Foodservice Operations, which was an increase of 36 basis points compared to gross margin of 19.2% in the first quarter of fiscal 2023.

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

Results of International Foodservice Operations

The following table sets forth a summary of the components of operating income and adjusted operating income expressed as a percentage increase or decrease over the comparable period in the prior year:

			13-Week Period Ended Sep. 30, 2023						13-Week Period Ended Oct. 1, 2022						Change in Dollars						% Change
			(Dollars in thousands)
Sales			$	3,683,210					$	3,283,735					$	399,475					12.2		%
Gross profit			732,039						649,265						82,774						12.7
Operating expenses			638,556						562,285						76,271						13.6
Operating income			$	93,483					$	86,980					$	6,503					7.5		%
Gross profit			$	732,039					$	649,265					$	82,774					12.7		%
Adjusted operating expenses (Non-GAAP)			615,856						542,364						73,492						13.6
Adjusted operating income (Non-GAAP)			$	116,183					$	106,901					$	9,282					8.7		%
Sales on a constant currency basis (Non-GAAP)			$	3,577,707					$	3,283,735					$	293,972					9.0		%
Gross profit on a constant currency basis (Non-GAAP)			705,328						649,265						56,063						8.6
Adjusted operating expenses on a constant currency basis (Non-GAAP)			590,439						542,364						48,075						8.9
Adjusted operating income on a constant currency basis (Non-GAAP)			$	114,889					$	106,901					$	7,988					7.5		%

Sales

The following tables set forth the percentage and dollar value increase or decrease in the major components impacting sales as compared to the corresponding prior year period in order to demonstrate the cause and magnitude of change.

			Increase (Decrease)
			13-Week Period
			(Dollars in millions)
Cause of change			Percentage						Dollars
Inflation			7.6		%				$	248.8
Foreign currency			3.2						105.5
Other (1)			1.4						45.2
Total change in sales			12.2		%				$	399.5

(1)			The impact of volumes as a component of sales growth from international operations are included within “Other.” Volume in our foreign operations includes volume metrics that differ from country to country and cannot be aggregated on a consistent, comparable basis.

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

Operating Income

The increase in operating income for the first quarter of fiscal 2024, as compared to the first quarter of fiscal 2023, was due to the continuing increase in sales volumes, along with specific efforts to optimize our gross profit while addressing our increased operating expenses.

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

The increase in operating expenses for the first quarter of fiscal 2024, as compared to the first quarter of fiscal 2023, was primarily due to increased volume.

Results of SYGMA and Other Segment

For SYGMA, sales were 1.4% lower in the first quarter of fiscal 2024, as compared to the first quarter of fiscal 2023, primarily due to the planned exit of business that did not meet our disciplined profit thresholds. Operating income increased by $7.1 million in the first quarter of fiscal 2024, as compared to the first quarter of fiscal 2023, due to decreases in operating expenses.

For the operations that are grouped within Other, operating income increased $0.3 million in the first quarter of fiscal 2024, as compared to the first quarter of fiscal 2023. The operations in this group mainly consist of our hospitality business, Guest Worldwide.

Global Support Center Expenses

Our Global Support Center generally includes all expenses of the corporate office and Sysco’s shared service operations. These expenses in the first quarter of fiscal 2024 decreased $10.0 million, or 3.8%, as compared to the first quarter of fiscal 2023, primarily due to decreases in insurance expenses and fuel hedging program costs, offset by increases in costs associated with business technology transformation initiatives, payroll-related costs, and depreciation expenses.

Included in Global Support Center expenses are Certain Items that totaled $15.4 million in the first quarter of fiscal 2024, as compared to $6.1 million in the first quarter of fiscal 2023. Certain Items impacting the first quarter of fiscal 2024 were primarily expenses associated with our business technology transformation initiatives and expenses associated with acquisitions. Certain Items impacting the first quarter of fiscal 2023 were primarily expenses associated with our business technology transformation initiatives.

Interest Expense

Interest expense increased $10.2 million for the first quarter of fiscal 2024, as compared to the first quarter of fiscal 2023. The increase was primarily due to increased interest rates on borrowings and an increase in commercial paper borrowing activity.

Other income and expense

Other expense, net decreased $11.1 million for the first quarter of fiscal 2024, as compared to the first quarter of fiscal 2023, due to an increase in interest income earned and a decrease in pension and postretirement non-service costs.

Net Earnings

Net earnings increased 8.1% in the first quarter of fiscal 2024, as compared to the first quarter 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 12, “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 9.9% in the first quarter of fiscal 2024, primarily due to an increase in sales volume.

Earnings Per Share

Basic earnings per share in the first quarter of fiscal 2024 were $1.00, an 8.7% increase from the comparable prior year amount of $0.92 per share. Diluted earnings per share in the first quarter of fiscal 2024 were $0.99, an 8.8% increase from the comparable prior year period amount of $0.91 per share. Adjusted diluted earnings per share, excluding Certain Items, in the first quarter of fiscal 2024 were $1.07, a 10.3% increase from the comparable prior year amount of $0.97 per share.

Non-GAAP Reconciliations

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

			13-Week Period Ended Sep. 30, 2023						13-Week Period Ended Oct. 1, 2022						Change in Dollars						%/bps Change
Sales (GAAP)			$	19,620,454					$	19,126,830					$	493,624					2.6		%
Impact of currency fluctuations (1)			(104,066)						—						(104,066)						(0.6)
Comparable sales using a constant currency basis (Non-GAAP)			$	19,516,388					$	19,126,830					$	389,558					2.0		%
Cost of sales (GAAP)			$	15,972,682					$	15,637,975					$	334,707					2.1		%
Impact of inventory valuation adjustment (2)			—						2,571						(2,571)						NM
Cost of sales adjusted for Certain Items (Non-GAAP)			$	15,972,682					$	15,640,546					$	332,136					2.1		%
Gross profit (GAAP)			$	3,647,772					$	3,488,855					$	158,917					4.6		%
Impact of inventory valuation adjustment (2)			—						(2,571)						2,571						NM
Gross profit adjusted for Certain Items (Non-GAAP)			3,647,772						3,486,284						161,488						4.6
Impact of currency fluctuations (1)			(26,184)						—						(26,184)						(0.7)
Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP)			$	3,621,588					$	3,486,284					$	135,304					3.9		%
Gross margin (GAAP)			18.59		%				18.24		%										35 bps
Impact of inventory valuation adjustment (2)			—						(0.01)												1 bps
Gross margin adjusted for Certain Items (Non-GAAP)			18.59						18.23												36 bps
Impact of currency fluctuations (1)			(0.03)						—												-3 bps
Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP)			18.56		%				18.23		%										33 bps
Operating expenses (GAAP)			$	2,844,190					$	2,752,054					$	92,136					3.3		%
Impact of restructuring and transformational project costs (3)			(19,675)						(11,645)						(8,030)						(69.0)
Impact of acquisition-related costs (4)			(31,038)						(29,454)						(1,584)						(5.4)
Impact of bad debt reserve adjustments (5)			—						2,592						(2,592)						NM
Operating expenses adjusted for Certain Items (Non-GAAP)			2,793,477						2,713,547						79,930						2.9
Impact of currency fluctuations (1)			(25,838)						—						(25,838)						(0.9)
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)			$	2,767,639					$	2,713,547					$	54,092					2.0		%
Operating expense as a percentage of sales (GAAP)			14.50		%				14.39		%										11 bps
Impact of certain item adjustments			(0.26)						(0.20)												-6 bps
Adjusted operating expense as a percentage of sales (Non-GAAP)			14.24		%				14.19		%										5 bps
Operating income (GAAP)			$	803,582					$	736,801					$	66,781					9.1		%
Impact of inventory valuation adjustment (2)			—						(2,571)						2,571						NM
Impact of restructuring and transformational project costs (3)			19,675						11,645						8,030						69.0
Impact of acquisition-related costs (4)			31,038						29,454						1,584						5.4
Impact of bad debt reserve adjustments (5)			—						(2,592)						2,592						NM
Operating income adjusted for Certain Items (Non-GAAP)			854,295						772,737						81,558						10.6
Impact of currency fluctuations (1)			(346)						—						(346)						(0.1)
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)			$	853,949					$	772,737					$	81,212					10.5		%
Operating margin (GAAP)			4.10		%				3.85		%										25 bps
Operating margin adjusted for Certain Items (Non-GAAP)			4.35		%				4.04		%										31 bps

			13-Week Period Ended Sep. 30, 2023						13-Week Period Ended Oct. 1, 2022						Change in Dollars						%/bps Change
Operating margin adjusted for Certain Items using a constant currency basis (Non-GAAP)			4.38		%				4.04		%										34 bps
Net earnings (GAAP)			$	503,392					$	465,568					$	37,824					8.1		%
Impact of inventory valuation adjustment (2)			—						(2,571)						2,571						NM
Impact of restructuring and transformational project costs (3)			19,675						11,645						8,030						69.0
Impact of acquisition-related costs (4)			31,038						29,454						1,584						5.4
Impact of bad debt reserve adjustments (5)			—						(2,592)						2,592						NM
Tax impact of inventory valuation adjustment (6)			—						637						(637)						NM
Tax impact of restructuring and transformational project costs (6)			(4,847)						(2,884)						(1,963)						(68.1)
Tax impact of acquisition-related costs (6)			(7,646)						(7,295)						(351)						(4.8)
Tax impact of bad debt reserves adjustments (6)			—						642						(642)						NM
Net earnings adjusted for Certain Items (Non-GAAP)			$	541,612					$	492,604					$	49,008					9.9		%
Diluted earnings per share (GAAP)			$	0.99					$	0.91					$	0.08					8.8		%
Impact of inventory valuation adjustment (2)			—						(0.01)						0.01						NM
Impact of restructuring and transformational project costs (3)			0.04						0.02						0.02						100.0
Impact of acquisition-related costs (4)			0.06						0.06						—						—
Impact of bad debt reserve adjustments (5)			—						(0.01)						0.01						NM
Tax impact of restructuring and transformational project costs (6)			(0.01)						(0.01)						—						—
Tax impact of acquisition-related costs (6)			(0.02)						(0.01)						(0.01)						(100.0)
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (7)			$	1.07					$	0.97					$	0.10					10.3		%

(1)			Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on the current year results.
(2)			Fiscal 2023 represents an adjustment to a product return allowance, related to COVID-related personal protection equipment inventory.
(3)			Fiscal 2024 includes $6 million related to restructuring and severance charges and $14 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2023 includes $4 million related to restructuring and severance charges and $8 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(4)			Fiscal 2024 includes $28 million of intangible amortization expense and $3 million in acquisition and due diligence costs. Fiscal 2023 includes $26 million of intangible amortization expense and $4 million in acquisition and due diligence costs.
(5)			Fiscal 2023 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(6)			The tax impact of adjustments for Certain Items are calculated by multiplying the pretax impact of each Certain Item by the statutory rates in effect for each jurisdiction where the Certain Item was incurred.
(7)			Individual components of diluted earnings per share may not equal the total presented when added due to rounding. Total diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.
			NM represents that the percentage change is not meaningful.

			13-Week Period Ended Sep. 30, 2023						13-Week Period Ended Oct. 1, 2022						Change in Dollars						%/bps Change
U.S. FOODSERVICE OPERATIONS
Operating expenses (GAAP)			$	1,743,804					$	1,706,631					$	37,173					2.2		%
Impact of restructuring and transformational project costs			(55)						48						(103)						NM
Impact of acquisition-related costs (1)			(12,548)						(12,585)						37						0.3
Impact of bad debt reserve adjustments (2)			—						2,592						(2,592)						NM
Operating expenses adjusted for Certain Items (Non-GAAP)			$	1,731,201					$	1,696,686					$	34,515					2.0		%
Operating income (GAAP)			$	940,971					$	905,712					$	35,259					3.9		%
Impact of restructuring and transformational project costs			55						(48)						103						NM
Impact of acquisition-related costs (1)			12,548						12,585						(37)						(0.3)
Impact of bad debt reserve adjustments (2)			—						(2,592)						2,592						NM
Operating income adjusted for Certain Items (Non-GAAP)			$	953,574					$	915,657					$	37,917					4.1		%
INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP)			$	3,683,210					$	3,283,735					$	399,475					12.2		%
Impact of currency fluctuations (3)			(105,503)						—						(105,503)						(3.2)
Comparable sales using a constant currency basis (Non-GAAP)			$	3,577,707					$	3,283,735					$	293,972					9.0		%
Gross profit (GAAP)			$	732,039					$	649,265					$	82,774					12.7		%
Impact of currency fluctuations (3)			(26,711)						—						(26,711)						(4.1)
Comparable gross profit using a constant currency basis (Non-GAAP)			$	705,328					$	649,265					$	56,063					8.6		%
Gross margin (GAAP)			19.88		%				19.77		%										11 bps
Impact of currency fluctuations (3)			(0.17)						—												-17 bps
Comparable gross margin using a constant currency basis (Non-GAAP)			19.71		%				19.77		%										-6 bps
Operating expenses (GAAP)			$	638,556					$	562,285					$	76,271					13.6		%
Impact of restructuring and transformational project costs (4)			(5,803)						(3,907)						(1,896)						(48.5)
Impact of acquisition-related costs (5)			(16,897)						(16,014)						(883)						(5.5)
Operating expenses adjusted for Certain Items (Non-GAAP)			615,856						542,364						73,492						13.6
Impact of currency fluctuations (3)			(25,417)						—						(25,417)						(4.7)
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)			$	590,439					$	542,364					$	48,075					8.9		%
Operating income (GAAP)			$	93,483					$	86,980					$	6,503					7.5		%
Impact of restructuring and transformational project costs (4)			5,803						3,907						1,896						48.5
Impact of acquisition-related costs (5)			16,897						16,014						883						5.5
Operating income adjusted for Certain Items (Non-GAAP)			116,183						106,901						9,282						8.7
Impact of currency fluctuations (3)			(1,294)						—						(1,294)						(1.2)
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)			$	114,889					$	106,901					$	7,988					7.5		%
SYGMA
Operating expenses (GAAP)			$	140,043					$	148,197					$	(8,154)					(5.5)		%
Operating income (GAAP)			12,767						5,696						7,071						NM
OTHER
Operating expenses (GAAP)			$	66,152					$	69,300					$	(3,148)					(4.5)		%
Operating income (GAAP)			11,823						11,538						285						2.5

			13-Week Period Ended Sep. 30, 2023						13-Week Period Ended Oct. 1, 2022						Change in Dollars						%/bps Change
GLOBAL SUPPORT CENTER
Gross profit (loss) (GAAP)			$	173					$	(7,484)					$	7,657					NM
Impact of inventory valuation adjustment (6)			—						(2,571)						2,571						NM
Gross profit (loss) adjusted for Certain Items (Non-GAAP)			$	173					$	(10,055)					$	10,228					NM
Operating expenses (GAAP)			$	255,635					$	265,641					$	(10,006)					(3.8)		%
Impact of restructuring and transformational project costs (7)			(13,817)						(7,786)						(6,031)						(77.5)
Impact of acquisition-related costs (8)			(1,593)						(855)						(738)						(86.3)
Operating expenses adjusted for Certain Items (Non-GAAP)			$	240,225					$	257,000					$	(16,775)					(6.5)		%
Operating loss (GAAP)			$	(255,462)					$	(273,125)					$	17,663					6.5		%
Impact of inventory valuation adjustment (6)			—						(2,571)						2,571						NM
Impact of restructuring and transformational project costs (7)			13,817						7,786						6,031						77.5
Impact of acquisition-related costs (8)			1,593						855						738						86.3
Operating loss adjusted for Certain Items (Non-GAAP)			$	(240,052)					$	(267,055)					$	27,003					10.1		%

(1)			Fiscal 2024 and fiscal 2023 include intangible amortization expense and acquisition costs.
(2)			Fiscal 2023 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(3)			Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on current year results.
(4)			Includes restructuring costs primarily in Europe.
(5)			Represents intangible amortization expense.
(6)			Fiscal 2023 represents an adjustment to a product return allowance, related to COVID-related personal protection equipment inventory.
(7)			Includes various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(8)			Represents due diligence costs.
			NM represents that the percentage change is not meaningful.

EBITDA and Adjusted EBITDA

EBITDA and adjusted EBITDA should not be used as a substitute for the most comparable GAAP measure in assessing Sysco’s overall financial performance for the periods presented. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Key Performance Indicators” contained in our fiscal 2023 Form 10-K for discussions regarding this non-GAAP performance metric. Set forth below is a reconciliation of actual net earnings to EBITDA and to adjusted EBITDA results for the periods presented (dollars in thousands):

			13-Week Period Ended Sep. 30, 2023						13-Week Period Ended Oct. 1, 2022						Change in Dollars						% Change
Net earnings (GAAP)			$	503,392					$	465,568					$	37,824					8.1		%
Interest (GAAP)			134,334						124,150						10,184						8.2
Income taxes (GAAP)			159,216						129,334						29,882						23.1
Depreciation and amortization (GAAP)			206,007						188,924						17,083						9.0
EBITDA (Non-GAAP)			$	1,002,949					$	907,976					$	94,973					10.5		%
Certain Item adjustments:
Impact of inventory valuation adjustment (1)			$	—					$	(2,571)					$	2,571					NM
Impact of restructuring and transformational project costs (2)			18,833						10,509						8,324						79.2
Impact of acquisition-related costs (3)			2,629						3,546						(917)						(25.9)
Impact of bad debt reserve adjustments (4)			—						(2,592)						2,592						NM
EBITDA adjusted for Certain Items (Non-GAAP) (5)			$	1,024,411					$	916,868					$	107,543					11.7		%

(1)			Fiscal 2023 represents an adjustment to a product return allowance, related to COVID-related personal protection equipment inventory.
(2)			Fiscal 2024 and fiscal 2023 include charges related to restructuring and severance, as well as various transformation initiative costs, primarily consisting of changes to our business technology strategy, excluding charges related to accelerated depreciation.
(3)			Fiscal 2024 and fiscal 2023 include acquisition and due diligence costs.
(4)			Fiscal 2023 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(5)			In arriving at adjusted EBITDA, Sysco does not adjust out interest income of $12 million and $3 million or non-cash stock compensation expense of $24 million and $27 million in fiscal 2024 and fiscal 2023, respectively.
			NM represents that the percentage change is not meaningful.

Liquidity and Capital Resources

Highlights

We produced negative free cash flow, impacted by higher capital expenditures, timing and historical seasonality, and investments towards 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 13 weeks of fiscal 2024 to the first 13 weeks of fiscal 2023 are provided.

			13-Week Period Ended Sep. 30, 2023						13-Week Period Ended Oct. 1, 2022
Source of cash (use of cash)			(In thousands)
Net cash provided by operating activities (GAAP)			$	87,152					$	158,606
Additions to plant and equipment			(171,364)						(167,260)
Proceeds from sales of plant and equipment			11,012						22,448
Free Cash Flow (Non-GAAP) (1)			$	(73,200)					$	13,794
Acquisition of businesses, net of cash acquired			$	(219,264)					$	(32,651)
Debt borrowings (repayments), net			407,229						137,959
Stock repurchases			(99,974)						(267,727)
Dividends paid			(252,880)						(249,294)

(1)			Free cash flow should not be used as a substitute for the most comparable GAAP measure in assessing the company’s liquidity for the periods presented. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Key Performance Indicators” contained in our fiscal 2023 Form 10-K for discussions regarding this non-GAAP performance metric.

Sources and Uses of Cash

Sysco generates cash in the U.S. and internationally. As of September 30, 2023, we had $569.1 million in cash and cash equivalents, approximately 92% 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 and, due to our strong financial position, we believe that 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. Remaining cash balances are invested in high-quality, short-term instruments.

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

Cash Flows

Operating Activities

We generated $87.2 million in cash flows from operations in the first 13 weeks of fiscal 2024, compared to cash flows from operations of $158.6 million in the first 13 weeks of fiscal 2023. In the first 13 weeks of fiscal 2024, these amounts included year-over-year unfavorable comparisons on working capital of $85.8 million due to an unfavorable comparison on accounts payable, partially offset by a favorable comparison on accounts receivable and inventory. Accrued expenses also had an unfavorable comparison, primarily from accrued payroll in the first 13 weeks of fiscal 2024 in comparison to the first 13 weeks of fiscal 2023. Income taxes negatively impacted cash flows from operations, as estimated payments made in the first 13 weeks of fiscal 2024 increased compared to the first 13 weeks of fiscal 2023.

Investing Activities

Our capital expenditures in the first 13 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 13 weeks of fiscal 2024 were $4.1 million higher than in the first 13 weeks of fiscal 2023, as we made investments to advance our Recipe for Growth strategy.

During the first 13 weeks of fiscal 2024, we paid $219.3 million, net of cash acquired, for acquisitions compared to $32.7 million in acquisitions made in the first 13 weeks of fiscal 2023.

Financing Activities

Equity Transactions

Proceeds from exercises of share-based compensation awards were $17.4 million in the first 13 weeks of fiscal 2024, as compared to $24.6 million in the first 13 weeks of fiscal 2023. The level of option exercises, and thus proceeds, will vary from period to period and is largely dependent on movements in our stock price and the time remaining before option grants expire.

In May 2021, our Board of Directors approved a share repurchase program to authorize the repurchase of up to $5.0 billion of the company’s common stock, which will remain available until fully utilized. We repurchased 1,382,947 shares for $100.0 million during the first 13 weeks of fiscal 2024, and intend to repurchase $750.0 million in fiscal 2024. As of September 30, 2023, we had a remaining authorization of approximately $3.9 billion. We repurchased 319,375 additional shares for $20.4 million under our authorization through October 13, 2023.

Dividends paid in the first 13 weeks of fiscal 2024 were $252.9 million, or $0.50 per share, as compared to $249.3 million, or $0.49 per share, in the first 13 weeks of fiscal 2023. In August 2023, we declared our regular quarterly dividend for the first quarter of fiscal 2024 of $0.50 per share, which was paid in October 2023.

Debt Activity and Borrowing Availability

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

Guarantor Summarized Financial Information

On January 19, 2011, the wholly owned U.S. Broadline subsidiaries of Sysco Corporation, which distribute a full line of food products and a wide variety of non-food products, at that time entered into full and unconditional guarantees of all outstanding senior notes and debentures of Sysco Corporation. All subsequent issuances of senior notes and debentures in the U.S. and borrowings under the company’s $3.0 billion long-term revolving credit facility have also been guaranteed by these subsidiaries. As of September 30, 2023, Sysco had a total of $9.5 billion in senior notes, debentures and borrowings under the long-term revolving credit facility that were guaranteed by these subsidiary guarantors. Our remaining consolidated subsidiaries (non-guarantor subsidiaries) are not obligated under the senior notes indenture, debentures indenture or our long-term revolving credit facility. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” contained in our fiscal 2023 Form 10-K for additional information regarding the terms of the guarantees.

Basis of Preparation of the Summarized Financial Information

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

Combined Parent and Guarantor Subsidiaries Summarized Balance Sheet						Sep. 30, 2023						Jul. 1, 2023
						(In thousands)
ASSETS
Receivables due from non-obligor subsidiaries						$	272,246					$	321,476
Current assets						5,723,242						5,149,509
Total current assets						$	5,995,488					$	5,470,985
Notes receivable from non-obligor subsidiaries						$	109,020					$	108,380
Other noncurrent assets						4,356,920						4,254,145
Total noncurrent assets						$	4,465,940					$	4,362,525
LIABILITIES
Payables due to non-obligor subsidiaries						$	139,794					$	71,175
Other current liabilities						2,210,744						2,305,435
Total current liabilities						$	2,350,538					$	2,376,610
Notes payable to non-obligor subsidiaries						$	239,892					$	240,874
Long-term debt						10,148,155						9,793,541
Other noncurrent liabilities						1,213,561						1,121,884
Total noncurrent liabilities						$	11,601,608					$	11,156,299

Combined Parent and Guarantor Subsidiaries Summarized Results of Operations						13-Week Period Ended Sep. 30, 2023
			(In thousands)
Sales						$	12,311,637
Gross profit						2,262,288
Operating income						663,645
Interest expense from non-obligor subsidiaries						2,698
Net earnings						387,862

Critical Accounting Policies and Estimates

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

Forward-Looking Statements

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

• our expectations of an improving market over the course of fiscal 2024;

• our expectations regarding the ability of our supply chain and facilities to remain in place and operational;

• our plans regarding our transformation initiatives and the expected effects from such initiatives, including the Sysco Driver Academy;

• statements regarding uncollectible accounts, including that if collections continue to improve, additional reductions in bad debt expense could occur;

• our expectations that our Recipe for Growth strategy will allow us to better serve our customers and differentiate Sysco from our competition;

• our expectations regarding our fiscal 2024 sales and our rate of sales growth in fiscal 2024 and the three years of our long-range plan;

• our expectations regarding the impact of inflation on sales, gross margin rates and gross profit dollars;

• our expectations regarding gross margins in fiscal 2024;

• our plans regarding cost savings, including our target for cost savings through fiscal 2024 and the impact of costs savings on the company;

• our belief that our purpose will allow us to grow substantially faster than the foodservice distribution industry and deliver profitable growth through our Recipe for Growth transformation, and statements regarding our plans with respect to our strategic pillars that support this growth transformation;

• our expectations regarding the use and investment of remaining cash generated from operations;

• the effect, impact, potential duration or other implications of the COVID-19 pandemic and any expectations we may have with respect thereto, including our ability to withstand and recover from the crisis;

• the expected long-term rate of return on plan assets of the U.S. Retirement Plan;

• the sufficiency of our available liquidity to sustain our operations for multiple years;

• estimates regarding the outcome of legal proceedings;

• the impact of seasonal trends on our free cash flow;

• estimates regarding our capital expenditures and the sources of financing for our capital expenditures;

• our expectations regarding the impact of potential acquisitions and sales of assets on our liquidity, borrowing capacity, leverage ratios and capital availability;

• our expectations regarding real sales growth in the U.S. foodservice market and trends in produce markets;

• our expectations regarding the calculation of adjusted return on invested capital, adjusted operating income, adjusted net earnings and adjusted diluted earnings per share;

• our expectations regarding the impact of future Certain Items on our projected future non-GAAP and GAAP results;

• our expectations regarding our effective tax rate in fiscal 2024;

• the sufficiency of our mechanisms for managing working capital and competitive pressures, and our beliefs regarding the impact of these mechanisms;

• our ability to meet future cash requirements, including the ability to access financial markets effectively, including issuances of debt securities, and maintain sufficient liquidity;

• our expectations regarding the payment of dividends, and the growth of our dividend, in the future;

• our expectations regarding future activity under our share repurchase program;

• future compliance with the covenants under our revolving credit facility;

• our ability to effectively access the commercial paper market and long-term capital markets; and

• our intention to repay our long-term debt with cash on hand, cash flow from operations, issuances of commercial paper, issuances of senior notes, or a combination thereof.

These statements are based on management’s current expectations and estimates; actual results may differ materially due in part to the risk factors set forth below, those within Part II, Item 1A of this Form 10-Q and those discussed in Item 1A of our fiscal 2023 Form 10-K:

• the risk that if sales from our locally managed customers do not grow at the same rate as sales from multi-unit customers, our gross margins may decline;

• periods of significant or prolonged inflation or deflation and their impact on our product costs and profitability generally;

• the risk that we are unlikely to be able to predict inflation over the long term, and lower inflation is likely to produce lower gross profit;

• the risk that our efforts to modify truck routing, including our small truck initiative, in order to reduce outbound transportation costs may be unsuccessful;

• the risk that we may not be able to accelerate and/or identify additional administrative cost savings in order to compensate for any gross profit or supply chain cost leverage challenges;

• risks related to unfavorable conditions in the Americas and Europe and the impact on our results of operations and financial condition;

• the risks related to our efforts to implement our transformation initiatives and meet our other long-term strategic objectives, including the risk that these efforts may not provide the expected benefits in our anticipated time frame, if at all, and may prove costlier than expected;

• the impact of unexpected future changes to our business initiatives based on management’s subjective evaluation of our overall business needs;

• the risk that the actual costs of any business initiatives may be greater or less than currently expected;

• the risk that competition in our industry and the impact of GPOs may adversely impact our margins and our ability to retain customers and make it difficult for us to maintain our market share, growth rate and profitability;

• the risk that our relationships with long-term customers may be materially diminished or terminated;

• the risk that changes in consumer eating habits could materially and adversely affect our business, financial condition, or results of operations;

• the impact and effects of public health crises, pandemics and epidemics, such as the outbreak of COVID-19, and the adverse impact thereof on our business, financial condition and results of operations;

• the risk that changes in applicable tax laws or regulations and the resolution of tax disputes could negatively affect our financial results;

• the risk that we may not be able to fully compensate for increases in fuel costs, and forward purchase commitments intended to contain fuel costs could result in above market fuel costs;

• the risk of interruption of supplies and increase in product costs as a result of conditions beyond our control;

• the potential impact on our reputation and earnings of adverse publicity or lack of confidence in our products;

• risks related to unfavorable changes to the mix of locally managed customers versus corporate-managed customers;

• the risk that we may not realize anticipated benefits from our operating cost reduction efforts;

• difficulties in successfully expanding into international markets and complimentary lines of business;

• the potential impact of product liability claims;

• the risk that we fail to comply with requirements imposed by applicable law or government regulations;

• risks related to our ability to effectively finance and integrate acquired businesses;

• risks related to our access to borrowed funds in order to grow and any default by us under our indebtedness that could have a material adverse impact on cash flow and liquidity;

• our level of indebtedness and the terms of our indebtedness could adversely affect our business and liquidity position;

• the risk that the implementation of various initiatives, the timing and successful completion of acquisitions, construction schedules and the possibility that other cash requirements could result in delays or cancellations of capital spending;

• the risk that divestiture of one or more of our businesses may not provide the anticipated effects on our operations;

• the risk that future labor disruptions or disputes could disrupt the integration of Brakes France and Davigel into Sysco France and our operations in France and the European Union generally;

• the risk that factors beyond management’s control, including fluctuations in the stock market, as well as management’s future subjective evaluation of the company’s needs, would impact the timing of share repurchases;

• due to our reliance on technology, any technology disruption or delay in implementing new technology could have a material negative impact on our business;

• the risk of negative impacts to our business and our relationships with customers from a cybersecurity incident and/or other technology disruptions;

• the risk that changes in the method of determining LIBOR, or the replacement of LIBOR with an alternative reference rate, may adversely affect interest expense related to outstanding debt;

• the potential requirement to pay material amounts under our multiemployer defined benefit pension plans;

• our funding requirements for our company-sponsored qualified pension plan may increase should financial markets experience future declines;

• labor issues, including the renegotiation of union contracts and shortage of qualified labor;

• capital expenditures may vary based on changes in business plans and other factors, including risks related to the implementation of various initiatives, the timing and successful completion of acquisitions, construction schedules and the possibility that other cash requirements could result in delays or cancellations of capital spending;

• the risk that the anti-takeover benefits provided by our preferred stock may not be viewed as beneficial to stockholders; and

• the risk that the exclusive forum provisions in our amended and restated bylaws could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

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