Sysco Reports Second Quarter Results

Sysco Corporation

HOUSTON, Jan. 31, 2023 (GLOBE NEWSWIRE) -- Sysco Corporation (NYSE: SYY) (“Sysco” or the “company”) today announced financial results for its 13-week second fiscal quarter ended December 31, 2022.

Key financial results for the second quarter of fiscal year 2023 include:

• Sales increased 13.9% versus the same period in fiscal year 2022;

• U.S. Foodservice volume increased 5.2% versus the same period in fiscal year 2022;

• Gross profit increased 15.9% to $3.3 billion, as compared to the same period last year;

• Operating income increased 44.0% to $640.6 million, and adjusted¹ operating income increased to $682.1 million, as compared to the same period last year;

• Earnings before interest, taxes, depreciation and amortization (“EBITDA”) decreased 22.6% to $500.5 million, and adjusted EBITDA increased 23.9% to $831.3 million, in each case as compared to the same period last year.² During the quarter, GAAP earnings included a pension liability transfer, resulting in a non-cash charge of $315.4 million;

• Earnings per share (“EPS”)³ decreased 15.2% to $0.28, as compared to $0.33 in the same period last year. Adjusted¹ EPS increased 40.4% to $0.80, as compared to $0.57 in the same period last year; and

• Net Debt to adjusted EBITDA⁴ of 3.0x times and returned over $249 million of capital to shareholders.

“Sysco results this quarter included double-digit top-line and bottom-line growth, ongoing market share gains and continued advancement of our Recipe For Growth strategy. This includes improvements in our digital tools, supply chain investments, and sales and merchandising initiatives. We remain fully staffed, and we are resolute on continuing to drive profitable share gains and operating efficiency improvements in the second half of the year,” said Kevin Hourican, Sysco’s President and Chief Executive Officer.

“We achieved solid financial results for the second quarter, including strong top-line growth and expanded gross profit dollar growth. Sequential improvements in operating expense helped drive meaningful profit growth. We remain focused on exceeding our customers’ expectations, while continuing to manage costs, and anticipate seeing additional benefit from our Recipe For Growth strategy in the second half of this fiscal year and into next fiscal year,” said Neil Russell, Sysco’s Interim Chief Financial Officer.

_______________________

¹ _{Adjusted financial results, including adjusted operating expense, adjusted operating income (loss), adjusted other expense (income), adjusted earnings per share (EPS) and adjusted EBITDA, are non-GAAP financial measures that exclude certain items, which primarily include acquisition-related costs, restructuring costs, transformational project costs, adjustments to our bad debt reserve specific to aged receivables existing prior to the COVID-19 pandemic and adjustments to a product return allowance related to COVID-related personal protection equipment inventory. Specific to adjusted EPS, this year’s Certain Items include a pension settlement charge that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer. Last year’s Certain Items include the impact of losses on the extinguishment of long-term debt and an increase in reserves for uncertain tax positions.}
² _{EBITDA and adjusted EBITDA are non-GAAP financial measures. Reconciliations of all non-GAAP financial measures to the nearest corresponding GAAP financial measure are included at the end of this release.}
³ _{Earnings per share (EPS) are shown on a diluted basis, unless otherwise specified.}
⁴ _{Net debt to adjusted EBITDA is a non-GAAP financial measure frequently used by investors and credit rating agencies. Our net debt to adjusted EBITDA ratio is calculated using a numerator of our debt minus cash and cash equivalents, divided by the sum of the most recent four quarters of adjusted EBITDA.}

Second Quarter Fiscal Year 2023 Results

Total Sysco

Sales for the second quarter were $18.6 billion, an increase of 13.9% compared to the same period last year.

Gross profit increased 15.9% to $3.3 billion, and gross margin increased 29 basis points to 18.0%, compared in each case to the same period last year. Product cost inflation was 8.3% at the total enterprise level, as measured by the estimated change in Sysco’s product costs, primarily in the dairy, fresh produce and frozen food categories. The increase in gross profit for the second quarter was primarily driven by higher volumes, as well as continued progress with effective management of product cost inflation and our partnership growth management initiatives.

Operating expenses increased $262.7 million, or 10.7%, compared to the same period last year, driven by increased volumes, cost inflation, operational pressures from the operating environment and our planned investments to drive our transformation initiatives. Adjusted operating expenses increased $272.1 million, or 11.4%, compared to the same period last year.

Operating income was $640.6 million, an increase of $195.7 million, or 44.0%, compared to the same period last year. Adjusted operating income was $682.1 million, an increase of $186.4 million compared to the same period last year.

Other expense (income), net was $330.1 million, and included a pension liability transfer, resulting in a non-cash charge of $315.4 million. Adjusted other expense (income), net was $15.2 million, an increase of $25.9 million, compared to the same period last year, primarily due to increased pension expenses.

U.S. Foodservice Operations

The U.S. Foodservice Operations segment generated strong sales growth, overall share gains and improved profitability.

Sales for the second quarter were $13.1 billion, an increase of 13.7% compared to the same period last year. Local case volume within U.S. Foodservice grew 3.2% for the second quarter, while total case volume within U.S. Foodservice grew 5.2%, in each case as compared to the same period last year.

Gross profit increased 16.5% to $2.5 billion, and gross margin increased 45 basis points to 19.1%, compared in each case to the same period last year.

Operating expenses increased $249.7 million, or 17.1%, compared to the same period last year. Adjusted operating expenses increased $247.6 million, or 17.0%, compared to the same period last year.

Operating income increased 15.4% to $781.0 million, an increase of $104.1 million compared to the same period last year. Adjusted operating income increased 15.5% to $790.9 million, an increase of $106.2 million compared to the same period last year.

International Foodservice Operations

The International Foodservice Operations segment continued to deliver positive results, with strong sales and significant profit growth.

Sales for the second quarter were $3.3 billion, an increase of 17.0% compared to the same period last year. On a constant currency basis⁵, sales for the second quarter were $3.6 billion, an increase of 28.6% compared to the same period last year. Foreign exchange rates decreased both International Foodservice Operations sales by 11.6% and total Sysco sales by 2.1% during the quarter.

Gross profit increased 10.3% to $624.5 million, and gross margin decreased 115 basis points to 19.0%, compared in each case to the same period last year. On a constant currency basis⁵, gross profit increased 22.0% to $690.3 million. Foreign exchange rates decreased both International Foodservice Operations gross profit by 11.7% and total Sysco gross profit by 2.3% during the quarter.

Operating expenses increased $11.9 million, or 2.1%, compared to the same period last year. Adjusted operating expenses increased $19.5 million, or 3.7%, compared to the same period last year. On a constant currency basis⁵, adjusted operating expenses increased $80.8 million, or 15.3%, compared to the same period last year. Foreign exchange rates decreased both International Foodservice Operations operating expenses by 11.6% and total Sysco operating expenses by 2.8% during the quarter.

Operating income was $57.4 million, an improvement of $46.6 million compared to the same period last year. Adjusted operating income increased $39.0 million compared to the same period last year. On a constant currency basis⁵, adjusted operating income was $83.3 million, an increase of $43.6 million compared to the same period last year. Foreign exchange rates decreased both International Foodservice Operations operating income by $4.6 million and total Sysco operating income by $0.9 million during the quarter.

⁵ _{Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on current year results. These adjusted measures are non-GAAP financial measures. Reconciliations of all non-GAAP financial measures to the nearest corresponding GAAP financial measure are included at the end of this release.}

Balance Sheet, Cash Flow and Capital Spending

As of the end of the quarter, the company had a cash balance of $500.3 million and approximately $11.1 billion of debt outstanding.

During the first 26 weeks of fiscal 2023, Sysco returned $766.0 million to shareholders via $267.7 million of share repurchases and $498.3 million of dividends.

Cash flow from operations was $503.5 million for the first 26 weeks of fiscal 2023, which was an increase of $126.4 million over the prior year period.

Capital expenditures, net of proceeds from sales of plant and equipment, for the first 26 weeks of fiscal 2023 were $284.2 million.

Free cash flow⁶ for the first 26 weeks of fiscal 2023 was $219.3 million, which was an increase of $18.2 million over the prior year period.

________________________

^{6 _{Free cash flow is a non-GAAP financial measure that represents net cash provided from operating activities less purchases of plant and equipment and includes proceeds from sales of plant and equipment. Reconciliations for all non-GAAP financial measures are included at the end of this release.}}

Conference Call & Webcast

Sysco will host a conference call to review the company’s second quarter fiscal 2023 financial results on Tuesday, January 31, 2023, at 10:00 a.m. Eastern Daylight Time. A live webcast of the call, accompanying slide presentation and a copy of this news release will be available online at investors.sysco.com.

Key Highlights:
	13-Week Period Ended		26-Week Period Ended
Financial Comparison:	December 31, 2022	Change	December 31, 2022	Change
GAAP:
Sales	$18.6 billion	13.9%	$37.7 billion	15.1%
Gross profit	$3.3 billion	15.9%	$6.8 billion	16.6%
Gross Margin	18.0%	29 bps	18.1%	24 bps
Operating expenses	$2.7 billion	10.7%	$5.5 billion	14.1%
Operating Income	$640.6 million	44.0%	$1.4 billion	27.7%
Operating Margin	3.5%	72 bps	3.7%	37 bps
Net Earnings	$141.2 million	-15.7%	$606.8 million	11.2%
Diluted Earnings Per Share	$0.28	-15.2%	$1.19	12.3%
Non-GAAP (1):
Gross profit	$3.3 billion	15.9%	$6.8 billion	16.6%
Gross Margin	18.0%	29 bps	18.1%	23 bps
Operating Expenses	$2.7 billion	11.4%	$5.4 billion	15.0%
Operating Income	$682.1 million	37.6%	$1.5 billion	23.0%
Operating Margin	3.7%	63 bps	3.9%	25 bps
EBITDA	$500.5 million	-22.6%	$1.4 billion	-4.1%
Adjusted EBITDA	$831.3 million	23.9%	$1.7 billion	14.7%
Net Earnings	$407.9 million	39.7%	$900.5 million	24.8%
Diluted Earnings Per Share (2)	$0.80	40.4%	$1.76	25.7%
Case Growth:
U.S. Foodservice	5.2%		6.3%
Local	3.2%		4.3%
Sysco Brand Sales as a % of Cases:
U.S. Broadline	37.1%	65 bps	37.2%	57 bps
Local	46.4%	157 bps	46.6%	153 bps
Note:
(1) Reconciliations of all non-GAAP financial measures to the nearest respective GAAP financial measures are included at the end of this release.
(2) Individual components in the table above may not sum to the totals due to the rounding.
NM represents that the percentage change is not meaningful.

Forward-Looking Statements

Statements made in this press release or in our earnings call for the second quarter of fiscal year 2023 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 concerning: the effect, impact, potential duration or other implications of the COVID-19 pandemic and any expectations we may have with respect thereto; our expectations regarding future improvements in productivity; our belief that improvements in our organizational capabilities will deliver compelling outcomes in future periods; our expectations regarding improvements in international volume; our expectations that our transformational agenda will drive long-term growth; our expectations regarding the continuation of an inflationary environment; our expectations regarding improvements in the efficiency of our supply chain; our expectations regarding the impact of our Recipe for Growth strategy and the pace of progress in implementing the initiatives under that strategy; our expectations regarding Sysco’s ability to outperform the market in future periods; our expectations that our strategic priorities will enable us to grow faster than the market; our expectations regarding our efforts to reduce overtime rates and the incremental investments in hiring; our expectations regarding the expansion of our driver academy and our belief that the academy will enable us to provide upward career path mobility for our warehouse colleagues and improve colleague retention; our expectations regarding the benefits of the six-day delivery and last mile distribution models; our plans to improve the capabilities of our sales team; our expectations regarding the impact of our growth initiatives and their ability to enable Sysco to consistently outperform the market; our expectations regarding the impact of the Concord Foods acquisition on our business; our expectations regarding our ability to grow faster than the total market in fiscal 2023 and to exceed our growth target by the end of fiscal 2024; our ability to deliver against our strategic priorities; economic trends in the United States and abroad; our belief that there is further opportunity for profit in the future; our future growth, including growth in sales and earnings per share; our expectations regarding profits and sales in fiscal 2023; the pace of implementation of our business transformation initiatives; our expectations regarding our balanced approach to capital allocation and rewarding our shareholders; our plans to improve colleague retention, training and productivity; our belief that our Recipe for Growth transformation is creating capabilities that will help us profitably grow for the long term; our expectations regarding our long-term financial outlook; our expectations of the effects labor harmony will have on sales and case volume, as well as mitigation expenses; our expectations for customer acquisition in the local/street space; our expectations regarding the effectiveness of our GSC expense control measures; our expectations regarding the growth and resilience of our Food Away From Home market; and our expectations regarding additional improvements from snap-back costs and productivity expenses during the fiscal third quarter.

It is important to note that actual results could differ materially from those projected in such forward-looking statements based on numerous factors, including those outside of Sysco’s control. For more information concerning factors that could cause actual results to differ from those expressed or forecasted, see our Annual Report on Form 10-K for the year ended July 2, 2022, as filed with the SEC, and our subsequent filings with the SEC. We do not undertake to update our forward-looking statements, except as required by applicable law.

About Sysco

Sysco is the global leader in selling, marketing and distributing food products to restaurants, healthcare and educational facilities, lodging establishments and other customers who prepare meals away from home. Its family of products also includes equipment and supplies for the foodservice and hospitality industries. With more than 71,000 colleagues, the company operates 333 distribution facilities worldwide and serves approximately 700,000 customer locations. For fiscal year 2022 that ended July 2, 2022, the company generated sales of more than $68 billion. Information about our Sustainability program, including Sysco’s 2022 Sustainability Report and 2022 Diversity, Equity & Inclusion Report, can be found at www.sysco.com.

For more information, visit www.sysco.com or connect with Sysco on Facebook at www.facebook.com/SyscoFoods. For important news and information regarding Sysco, visit the Investor Relations section of the company’s Internet home page at investors.sysco.com, which Sysco plans to use as a primary channel for publishing key information to its investors, some of which may contain material and previously non-public information. In addition, investors should continue to review our news releases and filings with the SEC. It is possible that the information we disclose through any of these channels of distribution could be deemed to be material information.

Sysco Corporation and its Consolidated Subsidiaries CONSOLIDATED RESULTS OF OPERATIONS (Unaudited) (In Thousands, Except for Share and Per Share Data)
	Quarter Ended							Year Ended
		Dec. 31, 2022			Jan. 1, 2022				Dec. 31, 2022			Jan. 1, 2022
Sales	$	18,593,953		$	16,320,203			$	37,720,783		$	32,776,749
Cost of sales		15,244,337			13,429,053				30,882,312			26,913,891
Gross profit		3,349,616			2,891,150				6,838,471			5,862,858
Operating expenses		2,708,974			2,446,241				5,463,496			4,786,267
Operating income		640,642			444,909				1,374,975			1,076,591
Interest expense		132,042			242,899				256,192			371,113
Other expense (income), net (1)		330,124			(10,676	)			345,405			(13,928	)
Earnings before income taxes		178,476			212,686				773,378			719,406
Income taxes		37,260			45,245				166,594			173,952
Net earnings	$	141,216		$	167,441			$	606,784		$	545,454
Net earnings:
Basic earnings per share	$	0.28		$	0.33			$	1.20		$	1.07
Diluted earnings per share		0.28			0.33				1.19			1.06
Average shares outstanding		507,609,696			511,044,400				507,594,137			511,780,234
Diluted shares outstanding		510,145,794			514,574,889				510,264,473			515,178,910

(1)		Sysco’s second quarter of fiscal 2023 included a charge for $315.4 million in other expense related to pension settlement charges.

Sysco Corporation and its Consolidated Subsidiaries CONSOLIDATED BALANCE SHEETS (Unaudited) (In Thousands, Except for Share Data)
		Dec. 31, 2022				Jul. 2, 2022
ASSETS
Current assets
Cash and cash equivalents	$	500,340			$	867,086
Accounts receivable, less allowances of $84,646 and $70,790		4,907,836				4,838,912
Inventories		4,661,516				4,437,498
Prepaid expenses and other current assets		300,513				303,789
Income tax receivable		25,801				35,934
Total current assets		10,396,006				10,483,219
Plant and equipment at cost, less accumulated depreciation		4,562,435				4,456,420
Other long-term assets
Goodwill		4,576,898				4,542,315
Intangibles, less amortization		911,196				952,683
Deferred income taxes		435,183				377,604
Operating lease right-of-use assets, net		708,535				723,297
Other assets		496,978				550,150
Total other long-term assets		7,128,790				7,146,049
Total assets	$	22,087,231			$	22,085,688
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	5,420,422			$	5,752,958
Accrued expenses		2,128,945				2,270,753
Accrued income taxes		33,017				40,042
Current operating lease liabilities		104,070				105,690
Current maturities of long-term debt		702,067				580,611
Total current liabilities		8,388,521				8,750,054
Long-term liabilities
Long-term debt		10,349,913				10,066,931
Deferred income taxes		232,444				250,171
Long-term operating lease liabilities		633,824				636,417
Other long-term liabilities		1,012,634				967,907
Total long-term liabilities		12,228,815				11,921,426
Commitments and contingencies
Noncontrolling interest		33,306				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		1,774,141				1,766,305
Retained earnings		10,649,338				10,539,722
Accumulated other comprehensive loss		(1,324,788	)			(1,482,054	)
Treasury stock at cost, 257,846,972 and 256,531,543 shares		(10,427,277	)			(10,206,888	)
Total shareholders’ equity		1,436,589				1,382,260
Total liabilities and shareholders’ equity	$	22,087,231			$	22,085,688

Sysco Corporation and its Consolidated Subsidiaries CONSOLIDATED CASH FLOWS (Unaudited) (In Thousands)
	Year Ended
		Dec. 31, 2022				Jan. 1, 2022
Cash flows from operating activities:
Net earnings	$	606,784			$	545,454
Adjustments to reconcile net earnings to cash provided by operating activities:
Pension settlement charge		315,354				—
Share-based compensation expense		52,679				60,254
Depreciation and amortization		378,949				377,763
Operating lease asset amortization		55,884				54,856
Amortization of debt issuance and other debt-related costs		10,315				11,014
Deferred income taxes		(123,187	)			(72,892	)
Provision for losses on receivables		9,732				1,508
Loss on extinguishment of debt		—				115,603
Other non-cash items		11,525				1,103
Additional changes in certain assets and liabilities, net of effect of businesses acquired:
Increase in receivables		(87,190	)			(385,179	)
Increase in inventories		(222,650	)			(357,908	)
Increase in prepaid expenses and other current assets		(8,915	)			(12,560	)
(Decrease) increase in accounts payable		(390,124	)			83,214
(Decrease) increase in accrued expenses		(62,779	)			95,388
Decrease in operating lease liabilities		(57,234	)			(65,123	)
Increase (decrease) in accrued income taxes		3,108				(111,227	)
Decrease (increase) in other assets		22,156				(4,255	)
(Decrease) increase in other long-term liabilities		(10,941	)			40,034
Net cash provided by operating activities		503,466				377,047
Cash flows from investing activities:
Additions to plant and equipment		(309,664	)			(181,374	)
Proceeds from sales of plant and equipment		25,493				5,450
Acquisition of businesses, net of cash acquired		(37,699	)			(769,658	)
Purchase of marketable securities		(14,019	)			(18,539	)
Proceeds from sales of marketable securities		11,641				16,648
Other investing activities (1)		4,840				6,651
Net cash used for investing activities		(319,408	)			(940,822	)
Cash flows from financing activities:
Bank and commercial paper borrowings, net		155,000				—
Other debt borrowings including senior notes		140,024				1,249,995
Other debt repayments including senior notes		(57,270	)			(23,050	)
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		47,339				36,083
Stock repurchases		(267,727	)			(415,824	)
Dividends paid		(498,323	)			(481,386	)
Other financing activities (2)		(46,517	)			(5,297	)
Net cash used for financing activities		(527,474	)			(1,027,567	)
Effect of exchange rates on cash, cash equivalents and restricted cash		(2,314	)			(10,868	)
Net decrease in cash and cash equivalents (3)		(345,730	)			(1,602,210	)
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 (3)	$	585,646			$	1,434,890
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	244,530			$	258,436
Income taxes, net of refunds		289,413				342,628

(1)		Change primarily includes proceeds from the settlement of corporate-owned life insurance policies.
(2)		Change includes cash paid for shares withheld to cover taxes, settlement of interest rate hedges and other financing activities.
(3)		Change includes restricted cash included within other assets in the Consolidated Balance Sheet.

Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items

Our discussion of our results includes certain non-GAAP financial measures, such as EBITDA and adjusted EBITDA, that we believe provide important perspective with respect to underlying business trends. Other than free cash flow and EBITDA, any non-GAAP financial measures will be denoted as adjusted measures to remove the impact of: (1) restructuring and transformational project costs consisting of: (a) restructuring charges, (b) expenses associated with our various transformation initiatives and (c) facility closure and severance charges; (2) acquisition-related costs consisting of: (a) intangible amortization expense and (b) acquisition costs and due diligence costs related to our acquisitions; and (3) 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. Our results for fiscal 2023 were also impacted by adjustments to a product return allowance related to COVID-related personal protection equipment inventory and a pension settlement charge that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer. Our results for fiscal 2022 were also impacted by debt extinguishment costs and an increase in reserves for uncertain tax positions.

The results of our foreign operations can be impacted due to changes in exchange rates applicable in converting local currencies to U.S. dollars. We measure our total Sysco and our International Foodservice Operations 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 International Foodservice Operations results on a constant currency basis, provides an important perspective with respect to our underlying business trends and results and 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 2023 and fiscal 2022.

Set forth below is a reconciliation of sales, operating expenses, operating income, net earnings and diluted earnings per share to adjusted results for these measures for the periods presented. Individual components of diluted earnings per share may not add up to the total presented due to rounding. Adjusted diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.

Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items (Dollars in Thousands, Except for Share and Per Share Data)
		13-Week Period Ended Dec. 31, 2022				13-Week Period Ended Jan. 1, 2022				Change in Dollars			% Change
Sales (GAAP)	$	18,593,953			$	16,320,203			$	2,273,750			13.9	%
Impact of currency fluctuations (1)		332,426				—				332,426			2.1
Comparable sales using a constant currency basis (Non-GAAP)	$	18,926,379			$	16,320,203			$	2,606,176			16.0	%
Cost of sales (GAAP)	$	15,244,337			$	13,429,053			$	1,815,284			13.5	%
Gross profit (GAAP)	$	3,349,616			$	2,891,150			$	458,466			15.9	%
Impact of currency fluctuations (1)		67,898				—				67,898			2.3
Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	3,417,514			$	2,891,150			$	526,364			18.2	%
Gross margin (GAAP)		18.01	%			17.72	%						29 bps
Impact of currency fluctuations (1)		0.05				—							5 bps
Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP)		18.06	%			17.72	%						34 bps
Operating expenses (GAAP)	$	2,708,974			$	2,446,241			$	262,733			10.7	%
Impact of restructuring and transformational project costs (2)		(14,388	)			(23,469	)			9,081			38.7
Impact of acquisition-related costs (3)		(28,960	)			(33,732	)			4,772			14.1
Impact of bad debt reserve adjustments (4)		1,923				6,438				(4,515	)		(70.1	)
Operating expenses adjusted for Certain Items (Non-GAAP)		2,667,549				2,395,478				272,071			11.4
Impact of currency fluctuations (1)		66,976				—				66,976			2.8
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	2,734,525			$	2,395,478			$	339,047			14.2	%
Operating expense as a percentage of sales (GAAP)		14.57	%			14.99	%						-42 bps
Impact of certain item adjustments		(0.22	)			(0.31	)						9 bps
Adjusted operating expense as a percentage of sales (Non-GAAP)		14.35	%			14.68	%						-33 bps
Operating income (GAAP)	$	640,642			$	444,909			$	195,733			44.0	%
Impact of restructuring and transformational project costs (2)		14,388				23,469				(9,081	)		(38.7	)
Impact of acquisition-related costs (3)		28,960				33,732				(4,772	)		(14.1	)
Impact of bad debt reserve adjustments (4)		(1,923	)			(6,438	)			4,515			70.1
Operating income adjusted for Certain Items (Non-GAAP)		682,067				495,672				186,395			37.6
Impact of currency fluctuations (1)		922				—				922			0.2
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	682,989