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 April 1, 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 jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

1390 Enclave Parkway, Houston, Texas                       77077-2099

(Address of principal executive offices)                     (Zip Code)

Registrant’s telephone number, including area code:

(281) 584-1390

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, $1.00 Par Value	SYY	New York Stock Exchange
1.25% Notes due June 2023	SYY 23	New York Stock Exchange

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☑	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
(Do not check if a smaller reporting company)		Emerging growth company	☐

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

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

506,682,318 shares of common stock were outstanding as of April 14, 2023.

1

TABLE OF CONTENTS

	PART I – FINANCIAL INFORMATION	Page No.
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	57
Item 4.	Controls and Procedures	57
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	58
Item 1A.	Risk Factors	58
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58
Item 3.	Defaults Upon Senior Securities	58
Item 4.	Mine Safety Disclosures	58
Item 5.	Other Information	59
Item 6.	Exhibits	59
Signatures		61

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In thousands, except for share data)

	Apr. 1, 2023		Jul. 2, 2022
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	757,867	$	867,086
Accounts receivable, less allowances of $81,190 and $70,790	5,227,387		4,838,912
Inventories	4,620,614		4,437,498
Prepaid expenses and other current assets	292,726		303,789
Income tax receivable	—		35,934
Total current assets	10,898,594		10,483,219
Plant and equipment at cost, less accumulated depreciation	4,649,356		4,456,420
Other long-term assets
Goodwill	4,613,805		4,542,315
Intangibles, less amortization	886,629		952,683
Deferred income taxes	435,800		377,604
Operating lease right-of-use assets, net	708,763		723,297
Other assets	509,086		550,150
Total other long-term assets	7,154,083		7,146,049
Total assets	$	22,702,033	$	22,085,688
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	5,902,249	$	5,752,958
Accrued expenses	2,136,322		2,270,753
Accrued income taxes	123,892		40,042
Current operating lease liabilities	94,799		105,690
Current maturities of long-term debt	723,473		580,611
Total current liabilities	8,980,735		8,750,054
Long-term liabilities
Long-term debt	10,258,345		10,066,931
Deferred income taxes	212,407		250,171
Long-term operating lease liabilities	633,224		636,417
Other long-term liabilities	1,009,016		967,907
Total long-term liabilities	12,112,992		11,921,426
Noncontrolling interest	33,004		31,948
Shareholders’ equity
Preferred stock, par value $1 per share Authorized 1,500,000 shares, issued none	—		—
Common stock, par value $1 per share Authorized 2,000,000,000 shares, issued 765,174,900 shares	765,175		765,175
Paid-in capital	1,785,075		1,766,305
Retained earnings	10,829,909		10,539,722
Accumulated other comprehensive loss	(1,280,885)		(1,482,054)
Treasury stock at cost, 258,761,015 and 256,531,543 shares	(10,523,972)		(10,206,888)
Total shareholders’ equity	1,575,302		1,382,260
Total liabilities and shareholders’ equity	$	22,702,033	$	22,085,688

Note: The July 2, 2022 balance sheet has been derived from the audited financial statements at that date.

See Notes to Consolidated Financial Statements

1

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)

(In thousands, except for share and per share data)

	13-Week Period Ended				39-Week Period Ended
	Apr. 1, 2023		Apr. 2, 2022		Apr. 1, 2023		Apr. 2, 2022
Sales	$	18,875,676	$	16,902,139	$	56,596,459	$	49,678,888
Cost of sales	15,444,316		13,888,745		46,326,628		40,802,636
Gross profit	3,431,360		3,013,394		10,269,831		8,876,252
Operating expenses	2,737,183		2,517,665		8,200,679		7,303,932
Operating income	694,177		495,729		2,069,152		1,572,320
Interest expense	134,931		124,018		391,123		495,131
Other expense (income), net (1)	5,209		(13,777)		350,614		(27,705)
Earnings before income taxes	554,037		385,488		1,327,415		1,104,894
Income taxes	124,433		82,163		291,027		256,115
Net earnings	$	429,604	$	303,325	$	1,036,388	$	848,779
Net earnings:
Basic earnings per share	$	0.85	$	0.60	$	2.04	$	1.66
Diluted earnings per share	0.84		0.59		2.03		1.65
Average shares outstanding	507,716,975		508,368,159		507,635,083		510,642,876
Diluted shares outstanding	509,842,400		512,238,523		510,123,782		514,198,780

(1) Sysco’s second quarter of fiscal 2023 included a charge for $315.4 million in other expense related to pension settlement charges. See Note 9, “Company-Sponsored Employee Benefit Plans.”

See Notes to Consolidated Financial Statements

2

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(In thousands)

	13-Week Period Ended				39-Week Period Ended
	Apr. 1, 2023		Apr. 2, 2022		Apr. 1, 2023		Apr. 2, 2022
Net earnings	$	429,604	$	303,325	$	1,036,388	$	848,779
Other comprehensive income (loss):
Foreign currency translation adjustment	62,771		(96,582)		72,403		(210,646)
Items presented net of tax:
Amortization of cash flow hedges	2,170		2,155		6,495		6,465
Change in net investment hedges	(5,401)		12,041		(15,641)		30,568
Change in cash flow hedges	(22,455)		18,375		(48,642)		11,845
Reclassification adjustment for loss included in net income	(7)		—		15		—
Amortization of prior service cost	74		74		222		222
Amortization of actuarial loss	5,605		6,514		18,124		18,369
Pension settlement charge	—		—		236,591		—
Net actuarial loss arising in current year	—		—		(67,388)		—
Change in marketable securities	1,146		(5,323)		(1,010)		(7,063)
Total other comprehensive income (loss)	43,903		(62,746)		201,169		(150,240)
Comprehensive income	$	473,507	$	240,579	$	1,237,557	$	698,539

See Notes to Consolidated Financial Statements

3

Sysco Corporation and its Consolidated Subsidiaries

CHANGES IN CONSOLIDATED SHAREHOLDERS’ EQUITY (Unaudited)

(In thousands, except for share data)

Quarter to Date

								Accumulated Other Comprehensive Loss
	Common Stock			Paid-in Capital		Retained Earnings				Treasury Stock
	Shares	Amount								Shares	Amounts		Totals
Balance as of December 31, 2022	765,174,900	$	765,175	$	1,774,141	$	10,649,338	$	(1,324,788)	257,846,972	$	(10,427,277)	$	1,436,589
Net earnings						429,604							429,604
Foreign currency translation adjustment								62,771					62,771
Amortization of cash flow hedges, net of tax								2,170					2,170
Change in cash flow hedges, net of tax								(22,455)					(22,455)
Change in net investment hedges, net of tax								(5,401)					(5,401)
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax								5,679					5,679
Change in marketable securities, net of tax								1,139					1,139
Dividends declared ($0.49 per common share)						(249,033)							(249,033)
Treasury stock purchases										1,530,029	(116,023)		(116,023)
Share-based compensation awards				10,934						(615,986)	19,328		30,262
Balance as of April 1, 2023	765,174,900	$	765,175	$	1,785,075	$	10,829,909	$	(1,280,885)	258,761,015	$	(10,523,972)	$	1,575,302
								Accumulated Other Comprehensive Loss
	Common Stock			Paid-in Capital		Retained Earnings				Treasury Stock
	Shares	Amount								Shares	Amounts		Totals
Balance as of January 1, 2022	765,174,900	$	765,175	$	1,690,487	$	10,216,625	$	(1,236,258)	258,033,856	$	(10,214,957)	$	1,221,072
Net earnings						303,325							303,325
Foreign currency translation adjustment								(96,582)					(96,582)
Amortization of cash flow hedges, net of tax								2,155					2,155
Change in cash flow hedges, net of tax								18,375					18,375
Change in net investment hedges, net of tax								12,041					12,041
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax								6,588					6,588
Change in marketable securities, net of tax								(5,323)					(5,323)
Dividends declared ($0.47 per common share)						(240,158)							(240,158)
Share-based compensation awards				46,814						(1,525,874)	53,102		99,916
Balance as of April 2, 2022	765,174,900	$	765,175	$	1,737,301	$	10,279,792	$	(1,299,004)	256,507,982	$	(10,161,855)	$	1,321,409

4

Year to Date

								Accumulated Other Comprehensive Loss
	Common Stock			Paid-in Capital		Retained Earnings				Treasury Stock
	Shares	Amount								Shares	Amounts		Totals
Balance as of July 2, 2022	765,174,900	$	765,175	$	1,766,305	$	10,539,722	$	(1,482,054)	256,531,543	$	(10,206,888)	$	1,382,260
Net earnings						1,036,388							1,036,388
Foreign currency translation adjustment								72,403					72,403
Amortization of cash flow hedges, net of tax								6,495					6,495
Change in cash flow hedges, net of tax								(48,642)					(48,642)
Change in net investment hedges, net of tax								(15,641)					(15,641)
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax								18,346					18,346
Pension settlement charge, net of tax								236,591					236,591
Net actuarial loss arising in current year								(67,388)					(67,388)
Change in marketable securities, net of tax								(995)					(995)
Dividends declared ($1.47 per common share)						(746,201)							(746,201)
Treasury stock purchases										4,629,297	(383,750)		(383,750)
Increase in ownership interest in subsidiaries				(2,077)									(2,077)
Share-based compensation awards				20,847						(2,399,825)	66,666		87,513
Balance as of April 1, 2023	765,174,900	$	765,175	$	1,785,075	$	10,829,909	$	(1,280,885)	258,761,015	$	(10,523,972)	$	1,575,302
								Accumulated Other Comprehensive Loss
	Common Stock			Paid-in Capital		Retained Earnings				Treasury Stock
	Shares	Amount								Shares	Amounts		Totals
Balance as of July 3, 2021	765,174,900	$	765,175	$	1,619,995	$	10,151,706	$	(1,148,764)	253,342,595	$	(9,835,216)	$	1,552,896
Net earnings						848,779							848,779
Foreign currency translation adjustment								(210,646)					(210,646)
Amortization of cash flow hedges, net of tax								6,465					6,465
Change in cash flow hedges, net of tax								11,845					11,845
Change in net investment hedges, net of tax								30,568					30,568
Reclassification of pension and other postretirement benefit plans amounts to net earnings, net of tax								18,591					18,591
Change in marketable securities, net of tax								(7,063)					(7,063)
Dividends declared ($1.41 per common share)						(720,693)							(720,693)
Treasury stock purchases										5,679,298	(415,824)		(415,824)
Increase in ownership interest in subsidiaries				(304)									(304)
Share-based compensation awards				117,610						(2,513,911)	89,185		206,795
Balance as of April 2, 2022	765,174,900	$	765,175	$	1,737,301	$	10,279,792	$	(1,299,004)	256,507,982	$	(10,161,855)	$	1,321,409

See Notes to Consolidated Financial Statements

5

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED CASH FLOWS (Unaudited)

(In thousands)

	39-Week Period Ended
	Apr. 1, 2023		Apr. 2, 2022
Cash flows from operating activities:
Net earnings	$	1,036,388	$	848,779
Adjustments to reconcile net earnings to cash provided by operating activities:
Pension settlement charge	315,354		—
Share-based compensation expense	73,765		90,667
Depreciation and amortization	574,945		571,607
Operating lease asset amortization	83,959		82,415
Amortization of debt issuance and other debt-related costs	15,019		16,160
Deferred income taxes	(163,044)		(110,058)
Provision for losses on receivables	21,899		572
Loss on extinguishment of debt	—		115,603
Other non-cash items	2,787		(8,945)
Additional changes in certain assets and liabilities, net of effect of businesses acquired:
Increase in receivables	(405,372)		(908,127)
Increase in inventories	(172,117)		(644,799)
Increase in prepaid expenses and other current assets	(6,242)		(25,391)
Increase in accounts payable	88,995		764,263
(Decrease) increase in accrued expenses	(55,162)		131,376
Decrease in operating lease liabilities	(100,847)		(99,343)
Increase (decrease) in accrued income taxes	119,784		(42,013)
Decrease (increase) in other assets	23,843		(6,595)
Decrease in other long-term liabilities	(28,172)		(30,300)
Net cash provided by operating activities	1,425,782		745,871
Cash flows from investing activities:
Additions to plant and equipment	(474,456)		(327,535)
Proceeds from sales of plant and equipment	28,313		15,946
Acquisition of businesses, net of cash acquired	(37,384)		(1,281,835)
Purchase of marketable securities	(15,078)		(19,318)
Proceeds from sales of marketable securities	11,641		16,648
Other investing activities	5,610		12,773
Net cash used for investing activities	(481,354)		(1,583,321)
Cash flows from financing activities:
Other debt borrowings including senior notes	174,262		1,251,484
Other debt repayments including senior notes	(81,345)		(38,370)
Redemption premiums and repayments for senior notes	—		(1,395,668)
Debt issuance costs	—		(15,547)
Cash received from termination of interest rate swap agreements	—		23,127
Proceeds from stock option exercises	67,115		89,185
Stock repurchases	(377,800)		(415,824)
Dividends paid	(747,378)		(719,865)
Other financing activities	(57,906)		(19,456)
Net cash used for financing activities	(1,023,052)		(1,240,934)
Effect of exchange rates on cash, cash equivalents and restricted cash	1,713		(13,623)
Net decrease in cash, cash equivalents and restricted cash	(76,911)		(2,092,007)
Cash, cash equivalents and restricted cash at beginning of period	931,376		3,037,100
Cash, cash equivalents and restricted cash at end of period	$	854,465	$	945,093
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	343,402	$	456,996
Income taxes, net of refunds	306,174		395,065

See Notes to Consolidated Financial Statements

6

Sysco Corporation and its Consolidated Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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

1.  BASIS OF PRESENTATION

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

These financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended July 2, 2022. Certain footnote disclosures included in annual financial statements prepared in accordance with generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to applicable rules and regulations for interim financial statements.

Supplemental Cash Flow Information

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

	Apr. 1, 2023		Apr. 2, 2022
	(In thousands)
Cash and cash equivalents	$	757,867	$	876,139
Restricted cash (1)	96,598		68,954
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows	$	854,465	$	945,093

(1) Restricted cash primarily represents cash and cash equivalents of Sysco’s wholly owned captive insurance subsidiary, restricted for use to secure the insurer’s obligations for workers’ compensation, general liability and auto liability programs. Restricted cash is located within other assets in each consolidated balance sheet.

The following table sets forth the company’s non-cash investing and financing activities:

	Apr. 1, 2023		Apr. 2, 2022
	(In thousands)
Non-cash investing and financing activities:
Plant and equipment acquired through financing programs	$	111,771	$	—
Assets obtained in exchange for finance lease obligations	99,776		155,541

2. NEW ACCOUNTING STANDARDS

Liabilities – Supplier Financing Programs

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

The guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2022, which is the first quarter of fiscal 2024 for Sysco, except for the roll forward requirement, which is effective annually for fiscal years beginning after December 15, 2023, which is fiscal year 2025 for Sysco. Early adoption is permitted.

7

The guidance requires retrospective application to all periods in which a balance sheet is presented, except for the roll forward requirement, which will be applied prospectively. The company is currently reviewing the provisions of the new standard.

3. REVENUE

The company recognizes revenues when its performance obligations are satisfied in an amount that reflects the consideration Sysco expects to be entitled to receive in exchange for those goods and services. Customer receivables, which are included in accounts receivable, less allowances in the consolidated balance sheet, were $4.9 billion and $4.6 billion as of April 1, 2023 and July 2, 2022, respectively.

Sysco has certain customer contracts in which upfront monies are paid to its customers. These payments have become industry practice and are not related to financing of the customer’s business. They are not associated with any distinct good or service to be received from the customer and, therefore, are treated as a reduction of transaction prices. All upfront payments are capitalized in other assets and amortized over the life of the contract or the expected life of the relationship with the customer. As of April 1, 2023, Sysco’s contract assets were not significant. Sysco has no significant commissions paid that are directly attributable to obtaining a particular contract.

The following tables present our sales disaggregated by reportable segment and sales mix for the company’s principal product categories for the periods presented:

	13-Week Period Ended Apr. 1, 2023
	US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
	(In thousands)
Principal Product Categories
Canned and dry products	$	2,649,632	$	743,056	$	244,695	$	—	$	3,637,383
Fresh and frozen meats	2,378,124		474,824		461,897		—		3,314,845
Frozen fruits, vegetables, bakery and other	1,949,160		548,719		336,495		—		2,834,374
Dairy products	1,513,084		404,943		162,065		—		2,080,092
Poultry	1,266,096		288,185		272,727		—		1,827,008
Fresh produce	1,288,241		255,615		66,458		—		1,610,314
Paper and disposables	988,448		131,784		205,353		14,561		1,340,146
Seafood	587,726		111,779		51,077		—		750,582
Beverage products	328,221		145,013		144,703		21,957		639,894
Other (1)	308,787		240,203		26,588		265,460		841,038
Total Sales	$	13,257,519	$	3,344,121	$	1,972,058	$	301,978	$	18,875,676

(1) Other sales relate to non-food products, including textiles and amenities for our hotel supply business, equipment, and other janitorial products, medical supplies and smallwares.

8

	13-Week Period Ended Apr. 2, 2022
	US Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
	(In thousands)
Principal Product Categories
Fresh and frozen meats	$	2,295,514	$	398,378	$	484,082	$	9	$	3,177,983
Canned and dry products	2,194,073		593,156		203,184		77		2,990,490
Frozen fruits, vegetables, bakery and other	1,597,129		514,418		282,246		—		2,393,793
Poultry	1,425,320		232,456		243,927		—		1,901,703
Dairy products