Sysco Corp. (NYSE:SYY)

Current Income Tax Expense

The current income tax expense shows a fluctuating trend over the analyzed periods. It started at $458 million in mid-2019, then significantly dropped to $269 million in mid-2020 and further to $218 million in mid-2021. After this decline, the current tax expense rebounded to $452 million in mid-2022 and showed a steady increase in subsequent years, reaching $532 million in mid-2023 and $584 million in mid-2024. This indicates a recovery and growth in current tax obligations after a notable dip during 2020-2021.

Deferred Income Tax Expense

The deferred income tax expense displayed a negative trend initially, starting at -$127 million in mid-2019 and increasing in negativity to -$191 million by mid-2020. In mid-2021, the deferred tax expense lessened in magnitude to -$158 million, then continued to decrease in absolute terms through mid-2022 (-$64 million) and mid-2023 (-$16 million), ultimately turning positive to $26 million by mid-2024. This progression from negative to positive deferred tax amounts indicates a reversal or recognition of deferred tax liabilities or assets over the years.

Total Income Tax Provision

The total income tax provision follows a pattern influenced by both current and deferred components. It decreased sharply from $332 million in mid-2019 to $78 million in mid-2020 and further to $61 million in mid-2021, reflecting the significant reductions in current tax expense during these years. Subsequently, there was a marked increase to $388 million in mid-2022, continuing upward to $515 million in mid-2023 and $610 million in mid-2024. This overall trend suggests a recovery in taxable income or changes in tax rates, with the deferred portion shifting from a negative to a positive impact, contributing to the rising total tax provision in recent periods.

The analysis of the effective income tax rate and its components over the six-year period reveals notable fluctuations and underlying factors impacting the overall tax burden.

U.S. statutory federal income tax rate

The statutory federal income tax rate remained constant at 21% throughout all periods, indicating no changes in the base federal tax legislation affecting the company during these years.

State and local income taxes, net of any applicable federal income tax benefit

This component shows variability, starting at 3.35% in 2019, peaking at 5.69% in 2020, then declining to its lowest point at 2.41% in 2022. It increases again in the subsequent years, reaching 3.9% in 2024. This pattern suggests fluctuations in state and local tax expenses relative to the federal tax benefit impact.

Foreign income taxes

The foreign income tax effect remained consistently negative across all periods, ranging from -1.42% in 2019 to a low of -9.99% in 2021, before moderating back to around -1.0% by 2024. The significant dip in 2021 could indicate increased foreign tax credits or changes in foreign operations affecting taxable income.

Uncertain tax positions

The impact of uncertain tax positions fluctuated in a narrow negative to slightly positive range between -1.44% and 0.83%. Notably, the adjustment shifted from negative values in the earlier years to a positive 0.83% in 2022, suggesting a reversal or resolution of tax uncertainties during that period.

Tax benefit of equity-based compensation

This component exhibited a sharp decline from -2.07% in 2019 to a significant -9.77% in 2020, followed by a rapid return near zero and slightly positive by 2024. The 2020 spike reflects a considerable tax benefit arising from equity-based compensation, which diminished substantially in subsequent years.

Nondeductible impairment charges

Data for this category is available only for 2020, showing a notably high value of 17.65%, signaling a one-time or special charge that year, elevating the effective tax burden significantly.

Impact of U.S. Tax Reform

This factor is reported only in 2019 at -4.64%, reflecting the residual effects of the tax reform enacted prior to the 2019 fiscal year, with no subsequent impact recorded.

Other

The category "Other" fluctuates around zero, with negative values at -4.12% in 2020 and -0.3% in 2024, but generally minimal influence on the effective tax rate in other years.

Effective income tax rate

The effective income tax rate shows considerable variability, from a low of 10.35% in 2021 up to a peak of 26.55% in 2020. The rate increased sharply in 2020, largely due to the nondeductible impairment charges and elevated state and local taxes, as well as a pronounced tax benefit from equity-based compensation. The subsequent decline in 2021 aligns with the normalization of these factors, particularly the foreign income tax effect and the resolution of uncertain tax positions. From 2022 onwards, the effective tax rate stabilized around 22-24%, indicating a return to more typical operating conditions.

The financial data reveals several noteworthy trends and shifts in deferred tax assets, liabilities, and related components over the six-year period.

Net Operating Tax Loss Carryforwards

Displayed a generally increasing trend from 274 million USD in 2019 to a peak of 613 million USD in 2021, followed by some fluctuations and leveling around 534 million USD in 2024, indicating periodic utilization or changes in tax positions.

Operating Lease Liabilities and Assets

Operating lease liabilities first appear in 2021 at 181 million USD, decreasing slightly in subsequent years before rising again to 237 million USD by 2024. Correspondingly, operating lease assets recorded a negative balance starting in 2021, mirroring the liability trend, with a notable increase in negative value to 231 million USD in 2024.

Interest Carryforwards

Introduced in 2022 at 170 million USD and steadily increased to 228 million USD by 2024, suggesting accumulating unused interest deductions.

Pension

There was a marked decline from 185 million USD in 2020 to 72 million USD in 2022, subsequently rising again to 121 million USD by 2024, indicating fluctuations in pension-related deferred tax components.

Receivables and Inventory

Receivables experienced a significant increase to 100 million USD in 2020, dropping in following years and stabilizing around 52 million USD in 2024. Inventory showed a consistent upward trend from 12 million USD in 2019 to 30 million USD in 2024, reflecting increased stock levels or valuation.

Deferred Compensation and Share-based Compensation

Both categories showed slight variations over time with deferred compensation gradually decreasing then rebounding slightly to 28 million USD in 2024, while share-based compensation declined steeply in 2020 to 21 million USD before modest recovery to 27 million USD by 2024.

Other Deferred Tax Assets

This category varied considerably, peaking sharply at 115 million USD in 2021 before declining and stabilizing at mid-range levels around 67 million USD in 2024.

Deferred Tax Assets Before Valuation Allowances

These totals showed a strong growth trajectory from 581 million USD in 2019 to 1324 million USD in 2024, driven by increases in various components despite some volatility in individual items.

Valuation Allowances

Also increased in magnitude (more negative) from -128 million USD in 2019 to -278 million USD in 2024, reflecting cautious recognition of realizability risks in deferred tax assets.

Deferred Tax Assets (Net of Allowances)

Improved markedly from 453 million USD in 2019 to 1046 million USD in 2024, although with some decline from the peak of 922 million USD in 2021 to 869 million USD in 2022, indicating stronger recognition of deferred tax assets over the period.

Goodwill and Intangible Assets

Consistently negative values with minor fluctuations, hovering around -350 million USD, showing a stable intangible-related deferred tax liability balance.

Excess Tax Depreciation and Basis Differences

While relatively stable through 2021, this liability grew significantly more negative in 2023 and 2024, reaching -285 million USD, indicating increased temporary differences related to asset basis.

Foreign Currency Remeasurement Losses and Currency Hedge

Observed only in the last two years, with incremental negative balances up to -20 million USD, implying recent recognition of currency-related deferred tax items.

Other Deferred Tax Liabilities

Varied over time between -23 million and -51 million USD, showing moderate fluctuations within this category.

Deferred Tax Liabilities (Total)

Overall increased in magnitude from -545 million USD in 2019 to -946 million USD in 2024, reflecting rising deferred tax obligations.

Net Deferred Tax Assets (Liabilities)

Displayed improvement from a negative net position of -91 million USD in 2019 to a positive peak of 205 million USD in 2021, then declining to 100 million USD in 2024, still maintaining a positive net deferred tax asset position.

In summary, the data indicates a general growth in deferred tax assets and related carryforwards, supported by increased valuation allowances to offset realizability concerns. Deferred tax liabilities have also risen notably, particularly due to excess tax depreciation and basis differences, as well as lease-related liabilities. Net deferred tax assets transitioned from a negative to a positive position over the period, with some recent moderation. Overall, these trends suggest active management of tax positions with evolving impacts from leasing, interest, and currency factors.

The analysis of deferred tax assets and liabilities over the six-year period reveals several notable trends and shifts. Both financial items are expressed in millions of US dollars and show significant fluctuations and general increases in recent years.

Deferred Tax Assets

Deferred tax assets increased substantially from $81 million in mid-2019 to $194 million in mid-2020, more than doubling within one year. This sharp rise was followed by continued growth, reaching $353 million in mid-2021. The upward trend persisted at a slower pace, with assets reaching $378 million in mid-2022, $420 million in mid-2023, and finally $445 million by mid-2024. Overall, deferred tax assets demonstrated a strong positive trend, growing more than fivefold across the period under review.

Deferred Tax Liabilities

Deferred tax liabilities exhibited a more volatile pattern. Starting at $172 million in mid-2019, the figure sharply declined to $87 million in mid-2020, representing a significant reduction. However, from mid-2020 onward, the liabilities increased steadily and consistently: to $147 million in mid-2021, $250 million in mid-2022, $303 million in mid-2023, and reaching $345 million by mid-2024. Despite the initial decline, the liabilities ended the period at a higher level than the starting point, showing an overall upward movement over the longer term.

Comparative Insights

Both deferred tax assets and liabilities demonstrated increases over the entire period with differing patterns and timing. Deferred tax assets showed continuous and more pronounced growth across the years, whereas deferred tax liabilities initially declined before rising steadily from 2020 onward. By the end of the timeframe, deferred tax assets remained slightly higher than liabilities, indicating a net deferred tax asset position that has expanded over time.

This expansion in deferred tax assets could reflect favorable timing differences or tax loss carryforwards expected to reduce future tax payments. The increasing deferred tax liabilities, particularly after the 2020 dip, suggest growing temporary differences that will result in future tax obligations. The divergences between these two items highlight dynamic tax position changes and potential implications for future cash flows related to income taxes.

Total Assets

The total assets, both reported and adjusted, exhibit an overall increasing trend throughout the periods analyzed. Reported total assets rose from approximately $17.97 billion in mid-2019 to about $24.92 billion by mid-2024. Adjusted total assets closely follow this pattern, increasing from $17.89 billion to $24.47 billion over the same timeframe, indicating consistent asset growth when accounting for income tax adjustments.

Total Liabilities

Total liabilities, both reported and adjusted, also show a general upward movement. Reported liabilities increased from $15.43 billion in 2019 to $23.03 billion in 2024, with a steady rise each year. Adjusted liabilities mirror this trend, growing from $15.26 billion to $22.68 billion. This indicates the company has been taking on more liabilities over time, which corresponds with the increasing asset base.

Shareholders' Equity

Shareholders’ equity exhibits more volatility compared to assets and liabilities. Reported equity declined sharply from $2.50 billion in 2019 to $1.16 billion in 2020, followed by partial recoveries and fluctuations in the following years, ending at $1.86 billion in 2024. Adjusted equity follows a similar trajectory, reflecting an initial decline and subsequent moderate recovery, reaching $1.76 billion in 2024. This pattern suggests periods of financial pressure or changes in retained earnings or other equity components, moderated somewhat by tax adjustments.

Net Earnings

Net earnings, both reported and adjusted, demonstrate significant volatility over the years. Reported net earnings plummeted from $1.67 billion in 2019 to $215 million in 2020, suggesting a major earnings impact potentially linked to extraordinary events. Subsequently, earnings improved steadily, reaching their highest point of $1.96 billion in 2024. Adjusted net earnings show an even sharper drop to $24 million in 2020 but recovered consistently afterwards, surpassing reported earnings in 2024 with $1.98 billion. The adjustments related to deferred taxes appear to smooth some fluctuations, particularly around the low point in 2020.

General Insights

The company has expanded its asset and liability base significantly over the five-year span, indicating growth and likely increased operational scale or investment. However, shareholders’ equity remains relatively constrained, reflecting that the growth in liabilities somewhat offsets asset increases. The dramatic earnings drop in 2020 and subsequent recovery highlight a period of financial stress or disruption, possibly linked to wider economic factors. Deferred income tax adjustments impact the financial metrics by slightly smoothing equity and earnings volatility, providing a more stabilized view of the company’s financial performance.

The financial performance and efficiency metrics present notable fluctuations and overall recovery trends across the reported periods.

Net Profit Margin (Reported and Adjusted)

Both reported and adjusted net profit margins experienced a significant decline in fiscal 2020, reaching lows of 0.41% and 0.05%, respectively. Following this drop, a steady recovery is observed through fiscal 2024, with reported margins increasing to 2.48% and adjusted margins slightly surpassing that at 2.51%, indicating improved profitability and effective adjustment for tax and other items.

Total Asset Turnover (Reported and Adjusted)

The total asset turnover ratio declined sharply in 2020 to around 2.34-2.36 from above 3.3 in 2019, indicating reduced efficiency in asset utilization during that year. Subsequently, there is a progressive rebound noted through 2024, with adjusted turnover reaching 3.22 and reported turnover slightly lower at 3.16, suggesting enhanced operational efficiency and effective asset deployment in recent years.

Financial Leverage (Reported and Adjusted)

Financial leverage ratios show considerable volatility. The reported ratio surged from 7.18 in 2019 to a peak of 19.53 in 2020, while adjusted leverage peaked even higher at 21.34 in the same year. This spike suggests increased reliance on debt or financing during 2020, possibly reflecting strategic capital structure adjustments under challenging conditions. Thereafter, leverage decreases to around 11.36 (reported) and 11.85 (adjusted) by 2023, with a marginal increase in 2024 to approximately 13.4 and 13.9, respectively, indicating a moderated but sustained leverage level relative to pre-2020 metrics.

Return on Equity (ROE, Reported and Adjusted)

ROE demonstrates pronounced volatility. A steep decline occurs in 2020 with reported ROE dropping from 66.9% to 18.6%, and adjusted ROE falling even more sharply to 2.3%. Following this, ROE exhibits strong recovery, peaking to 105.11% (reported) and 112.56% (adjusted) by 2024. This recovery reflects improved net income generation relative to shareholder equity and suggests that both reported and adjusted results converge toward very high profitability levels, although variability remains notable.

Return on Assets (ROA, Reported and Adjusted)

ROA follows a similar trend to net profit margin and total asset turnover. Starting at 9.32% (reported) and 8.65% (adjusted) in 2019, it falls substantially in 2020 (to 0.95% and 0.11%, respectively). There is consistent growth in ROA over the subsequent years, reaching 7.85% (reported) and 8.09% (adjusted) by 2024, indicating improved effectiveness in generating profits from asset bases.

Overall, the data indicates that 2020 was a year of considerable operational and financial strain, reflected in lower profitability, asset efficiency, and unusual leverage increases. From 2021 onward, a clear recovery trajectory is visible, with profitability and efficiency metrics returning toward or exceeding pre-2020 levels. Adjusted figures generally mirror the reported figures, with adjustments notably smoothing or amplifying certain effects, particularly in financial leverage and profitability.

Reported Net Earnings

Reported net earnings displayed significant volatility over the six-year period. Starting at 1,674 million USD in 2019, earnings dropped sharply to 215 million USD in 2020. A partial recovery occurred in subsequent years, with earnings rising to 524 million USD in 2021 and 1,359 million USD in 2022, before increasing further to 1,770 million USD in 2023 and reaching 1,955 million USD in 2024. The overall trend indicates a recovery trajectory after an initial decline.

Adjusted Net Earnings

Adjusted net earnings followed a pattern similar to reported earnings, though with some differences in magnitude. Beginning at 1,548 million USD in 2019, the adjusted figures plunged even more sharply to 24 million USD in 2020. Subsequently, there was a steady increase to 366 million USD in 2021 and a strong recovery to 1,294 million USD in 2022. Adjusted earnings then continued to rise to 1,754 million USD in 2023 and 1,981 million USD in 2024, surpassing reported earnings in the final year. This suggests adjustments for deferred income taxes and other items have a meaningful impact on earnings representation, especially in early periods.

Reported Net Profit Margin

The reported net profit margin also exhibited considerable fluctuation, mirroring the pattern of net earnings. From 2.79% in 2019, the margin declined sharply to 0.41% in 2020. Thereafter, it improved gradually to 1.02% in 2021, 1.98% in 2022, 2.32% in 2023, and 2.48% in 2024. This reflects overall profitability recovering after a pronounced downturn during 2020.

Adjusted Net Profit Margin

Adjusted net profit margin trends correspond closely with those of reported margins but show lower values during 2020 and 2021. The margin dropped precipitously from 2.57% in 2019 to just 0.05% in 2020, indicating near break-even adjusted profitability that year. Margins then rose steadily to 0.71% in 2021 and improved further to 1.89% in 2022. Subsequent years saw the margin approach and slightly exceed reported margins, reaching 2.3% in 2023 and 2.51% in 2024. The data indicates that tax adjustments significantly depressed margins during the downturn but had a normalizing effect as profitability recovered.

Overall Insights

The company's financial performance experienced a pronounced dip in 2020, likely reflecting significant operational or market challenges during that period. Both reported and adjusted figures capture this downturn, with adjustments amplifying the depth of the earnings and profit margin declines. Following 2020, a steady recovery pattern is observed across all measures, with earnings and margins approaching or exceeding pre-2019 levels by 2024. The close alignment of reported and adjusted data in later years suggests stabilization of deferred tax effects or other adjustments over time. The consistency between earnings and margin trends reinforces the reliability of these observations.

The data exhibits fluctuations and overall growth in both reported and adjusted total assets over the analyzed periods. Reported total assets increased from $17,967 million in mid-2019 to $24,917 million in mid-2024. Similarly, adjusted total assets rose in a comparable manner, moving from $17,886 million to $24,472 million during the same timeframe. This trend indicates consistent asset growth, albeit with minor differences between reported and adjusted figures, implying some level of deferred tax adjustments impacting the asset base.

Regarding asset turnover ratios, both reported and adjusted measures reveal a notable dip around 2020, followed by a recovery and stabilization. The reported total asset turnover decreased sharply from 3.35 in 2019 to 2.34 in 2020, a decline also mirrored in the adjusted total asset turnover, which fell from 3.36 to 2.36. This suggests a reduced efficiency in asset utilization during that period, potentially influenced by external factors affecting revenue generation relative to asset size.

Post-2020, the asset turnover ratios demonstrate an upward movement, with the reported ratio increasing from 2.34 in 2020 to 3.34 in 2023 before slightly declining to 3.16 in 2024. The adjusted ratio follows a similar pattern, rising from 2.36 to 3.41 by 2023, then moderately decreasing to 3.22. The progression indicates a recovery and improvement in asset use effectiveness, allowing the company to generate more revenue per dollar of assets. The slight reduction in the final period might reflect either a strategic increase in asset base or challenges in maintaining peak turnover levels.

Overall, the data reveals both growth in asset size and a temporary disruption in asset utilization efficiency, followed by a recovery phase. Adjusted values closely track reported figures, suggesting that deferred income tax adjustments have a limited but consistent impact on the financial presentation, without materially altering the performance trend interpretation.

The analysis of the annual financial data reveals several notable trends and fluctuations over the six-year period.

Total Assets

Both reported and adjusted total assets show an overall increasing trend from 2019 to 2024. Reported total assets increased from approximately $17.97 billion in 2019 to $24.92 billion in 2024. Similarly, adjusted total assets grew from about $17.89 billion to $24.47 billion. Despite minor year-to-year fluctuations, the asset base has expanded steadily, reflecting possible growth or acquisition activities.

Shareholders’ Equity

Reported shareholders’ equity experienced considerable volatility. It sharply declined from $2.50 billion in 2019 to $1.16 billion in 2020, followed by a moderate recovery in subsequent years, peaking at $2.01 billion in 2023, then slightly decreasing to $1.86 billion in 2024. Adjusted shareholders' equity displays a similar pattern, declining from $2.59 billion to $1.05 billion between 2019 and 2020, then gradually increasing to $1.89 billion in 2023 before decreasing again to $1.76 billion in 2024. This variability may indicate changes in retained earnings, accumulated other comprehensive income, or adjustments related to deferred taxes impacting equity levels.

Financial Leverage

Both reported and adjusted financial leverage ratios exhibit significant fluctuations. Reported leverage ratio rose dramatically from 7.18 in 2019 to a peak of 19.53 in 2020, then steadily declined to 11.36 in 2023 before slightly increasing again to 13.4 in 2024. The adjusted leverage ratio follows a similar trajectory but with higher peaks, starting at 6.89 in 2019, peaking at 21.34 in 2020, and ending at 13.9 in 2024. These high leverage ratios in 2020 suggest a considerable increase in debt relative to equity during that year, possibly linked to economic conditions or strategic financing decisions.

In summary, the asset base has grown consistently over the period, while shareholders’ equity has experienced notable volatility, impacting the company’s leverage ratios. The elevated leverage ratios in 2020 imply a shift towards increased debt financing, which subsequently moderated but remained above initial levels. Adjusted figures, accounting for deferred tax effects, follow similar patterns to reported data but often show more pronounced changes, highlighting the impact of tax adjustments on the company’s financial structure.

Net Earnings

The reported net earnings demonstrate significant volatility over the observed periods. There is a sharp decline from 1,674 million US dollars in 2019 to 215 million in 2020, followed by a consistent recovery with 524 million in 2021, 1,359 million in 2022, peaking at 1,770 million in 2023, and reaching 1,955 million in 2024. The adjusted net earnings follow a similar pattern but with even lower figures in 2020 and 2021, starting at 1,548 million in 2019, dropping to 24 million in 2020, and rising steadily to 1,981 million by 2024. This reflects a substantial impact of adjustments in the earlier years that diminishes over time.

Shareholders’ Equity

Reported shareholders’ equity shows a marked decrease from 2,503 million US dollars in 2019 to 1,159 million in 2020, with a slight recovery in subsequent years reaching 2,009 million in 2023 before decreasing moderately to 1,860 million in 2024. Adjusted shareholders’ equity exhibits a similar downward trend but at consistently lower values than the reported figures from 2020 onwards, moving from 2,594 million in 2019 down to 1,051 million in 2020, with gradual improvement over the following years to 1,760 million in 2024. The decline in equity in 2020 followed by partial recovery indicates possible write-downs or losses affecting the company's net asset base during that period.

Return on Equity (ROE)

Reported ROE experiences a considerable drop from an exceptionally high 66.9% in 2019 to 18.6% in 2020, before climbing sharply to a peak of 105.11% in 2024. The adjusted ROE mirrors this pattern, but with initially much lower values, notably 2.3% in 2020, suggesting that adjustments heavily influenced profitability metrics during that year. The increase to 112.56% in 2024 reflects an enhanced return for shareholders based on the adjusted equity base and earnings, likely driven by improved operational performance or financial management post-2020.

General Observations

The data indicate a period of significant disruption in 2020, with drastic declines in net earnings, equity, and returns, followed by a robust recovery through to 2024. Adjustments appear to have a pronounced effect in the early years, particularly in 2020, reducing reported figures substantially, but their impact lessens in the later periods. The rebound in profitability and equity suggests successful management responses to previous challenges. The elevated ROE percentages in later years imply either high net income relative to equity or possibly a reduced equity base, warranting further investigation into leverage or capital structure changes.

Net Earnings

Reported net earnings displayed considerable volatility over the periods analyzed, with an initial high of 1674 million US dollars in mid-2019, a significant drop to 215 million in mid-2020, followed by a recovery and steady increase reaching 1955 million by mid-2024. Adjusted net earnings showed a more pronounced drop in 2020, reaching as low as 24 million, but subsequently followed a strong upward trend, ultimately surpassing the reported figures, peaking at 1981 million by mid-2024.

Total Assets

The reported total assets exhibited an overall upward trend, increasing from 17967 million US dollars in mid-2019 to 24917 million in mid-2024, with a slight dip observed in 2021 and 2022. Adjusted total assets followed a similar pattern but were consistently slightly lower than the reported figures, rising from 17886 million to 24472 million over the same period. This indicates relatively stable asset base growth, with adjustments marginally reducing asset valuations.

Return on Assets (ROA)

The reported ROA percentage showed a marked decline from 9.32% in 2019 to a low of 0.95% in 2020, reflecting diminished profitability relative to total assets during the pandemic year. Afterward, there was a progressive recovery, culminating at 7.85% in 2024, though not quite reaching the initial peak. Adjusted ROA mirrored this trend but remained consistently lower than reported ROA, especially in 2020 where it dropped to 0.11%. By 2024, adjusted ROA slightly exceeded the reported figure, reaching 8.09%, indicating improved asset efficiency when considering adjustments.

Overall Trends and Insights

The data reveals substantial impact in 2020, likely associated with external economic disruptions, leading to sharp declines in both earnings and profitability metrics. The subsequent recovery phase is evident, with most indicators showing year-over-year improvement through 2024. Adjusted figures generally present a more conservative view, with lower earnings and asset values during downward periods, but surpass reported figures in later years, suggesting effective adjustment handling and improving underlying business performance. The steady increase in total assets coupled with rising ROA towards the end of the period reflects strengthening operational efficiency and asset utilization.