Market Newsdesk

HOUSTON, May 04, 2021 (GLOBE NEWSWIRE) — Sysco Corporation (NYSE: SYY) today announced financial results for its 13-week third fiscal quarter ended March 27, 2021.

• Sales trends improving as markets reopen; Q3 decreased 13.7% versus FY20 and decreased 19.3% versus FY19; April increased 102.1% versus 2020 and decreased 8.8% versus 2019;
• We are now serving more independent customers compared to pre-COVID;
• Gross profit decreased 17.2% to $2.1 billion; industry-leading gross margin decreased 77 basis points on mix among businesses;
• Operating income increased 291.4% to $235.9 million; adjusted¹ operating income decreased 32.0% to $256.2 million;
• Earnings before interest, taxes, depreciation and amortization (“EBITDA”) increased 76.5% to $425.8 million; adjusted¹ EBITDA decreased 18.7% to $437.4 million;
• Earnings per share (“EPS”) increased $0.18, to $0.17; adjusted¹ EPS decreased $0.23, to $0.22;
• Cash flow from operations was $543.1 million and free cash flow was $459.7 million in the quarter; and
• Company reduced debt by $1.1 billion during the quarter.

“A robust business recovery is now upon us. We are seeing consistently improving demand trends from our customers in the United States and we are ready to execute in International as markets reopen,” said Kevin Hourican, Sysco’s president and chief executive officer. “Sysco has made substantial progress against our transformation agenda, as we simultaneously invest in growth and transform our company to better serve our customers.”

¹
Earnings Per Share (EPS) are shown on a
diluted basis unless otherwise specified. Adjusted financial results exclude certain items, which primarily include adjustments to our bad debt reserve specific to aged receivables existing prior to the COVID-19 pandemic, goodwill impairment charges, restr
ucturing costs, transformational project costs and acquisition-related costs. Specific to EPS, this year’s third quarter and first 39 weeks Certain Items include the impact of a loss on the sale of our Spain operations. The first 39 weeks Certain Items inc
lude the impact of a loss on the sale of Cake Corporation and the impact of a new U.K. tax law change. Reconciliations of all non-GAAP measures are included at the end of this release.

Third Quarter Fiscal 2021 Results

Total Sysco

Sales for the third quarter were $11.8 billion, a decrease of 13.7% compared to the same period last year. The exit rate for the third quarter was stronger than the overall quarter, as select geographic markets continue to drive the recovery as restrictions ease in the areas in which we operate.

Gross profit decreased 17.2% to $2.1 billion, and gross margin decreased 77 basis points to 18.0%, compared in each case to the same period last year. The decline in gross profit for the third quarter was primarily driven by lower volumes due to COVID-19.

Operating expenses decreased $617.2 million, or 24.6%, compared to the same period last year, driven by reduced costs from the achievement of cost-out initiatives, as well as a benefit from a reduction in our allowance for doubtful accounts. Adjusted operating expenses decreased $320.8 million, or 14.7%, compared to the same period last year.

Operating income was $235.9 million, an increase of $175.6 million, or 291.4%, compared to the same period last year. Adjusted operating income was $256.2 million, a decrease of $120.8 million, or 32.0%, compared to the same period last year.

“We are leveraging our balance sheet strength to invest in our business – inventory, fleet, people and technology — while simultaneously reducing our debt levels to reflect the improving business environment,” said Aaron Alt, Sysco’s chief financial officer.

U.S. Foodservice Operations

Sales for the third quarter were $8.4 billion, a decrease of 12.8% compared to the same period last year. Local case volume within U.S. Broadline operations decreased 9.7% for the third quarter, of which a decrease of 9.7% was organic, while total case volume within U.S. Broadline operations decreased 14.1%, of which a decrease of 14.1% was organic.

Gross profit decreased 13.7% to $1.6 billion, and gross margin decreased 22 basis points to 19.6%, compared in each case to the same period last year. Product cost inflation was 3.5% in U.S. Broadline, as measured by the estimated change in Sysco’s product costs, primarily in the paper and disposables, poultry, and meat categories.

Operating expenses decreased $341.9 million, or 23.9%, compared to the same period last year. Adjusted operating expenses decreased $212.9 million, or 16.1%, compared to the same period last year.

Operating income was $545.5 million, an increase of $81.3 million, or 17.5%, compared to the same period last year. Adjusted operating income was $525.1 million, a decrease of $47.7 million, or 8.3%, compared to the same period last year.

International Foodservice Operations

Sales for the third quarter were $1.7 billion, a decrease of 31.3% compared to the same period last year. On a constant currency basis, sales for the third quarter were $1.6 billion, a decrease of 35.4% compared to the same period last year. Foreign exchange rates increased International Foodservice Operations sales by 4.1% and total Sysco sales by 0.8% during the quarter.

Gross profit decreased 35.1% to $325.2 million, and gross margin decreased 110 basis points to 18.9%, compared in each case to the same period last year. On a constant currency basis, gross profit decreased 39.2% to $304.5 million. Foreign exchange rates increased International Foodservice Operations gross profit by 4.1% and total Sysco gross profit by 0.8% during the quarter.

Operating expenses decreased $138.0 million, or 23.6%, compared to the same period last year. Adjusted operating expenses decreased $78.4 million, or 15.8%, compared to the same period last year. On a constant currency basis, adjusted operating expenses decreased $107.2 million, or 21.6%, compared to the same period last year. Foreign exchange rates increased International Foodservice Operations operating expense by 5.8% and total Sysco operating expense by 1.3% during the quarter.

The International Foodservice Operations segment delivered an operating loss of $121.5 million, a decrease of $37.7 million compared to the same period last year. Adjusted operating loss was $92.4 million, a decrease of $97.4 million compared to the same period last year. On a constant currency basis, adjusted operating loss was $84.2 million, a decrease of $89.2 million compared to the same period last year. Foreign exchange rates increased International Foodservice Operations operating loss by $8.2 million and reduced total Sysco operating income by $8.0 million during the quarter.

Balance Sheet, Capital Spending and Cash Flow

Capital expenditures, net of proceeds from sales of plant and equipment, for the first 39 weeks of fiscal 2021 were $358.8 million lower compared to the prior year period.

Cash flow from operations was $1.5 billion for the first 39 weeks of fiscal 2021, which was $401.3 million higher compared to the prior year period. Free cash flow² for the first 39 weeks of fiscal 2021 was $1.2 billion, which was $760.1 million higher compared to the prior year period. The improvement in cash flow was driven by higher earnings, improved working capital, lower capital spending and lower cash taxes paid during the quarter.

²
Free cash flow is a non-GAAP measure that represents net cash provide
d from operating activities less purchases of plant and equipment and includes proceeds from sales of plant and equipment. Reconciliations for all non-GAAP measures are included at the end of this release.

Conference Call & Webcast

Sysco will host a conference call to review the company’s third quarter fiscal 2021 financial results on Tuesday, May 4, 2021, at 10:00 a.m. Eastern. 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					39-Week Period Ended
Financial Comparison:	March 27, 2021			Change		March 27, 2021			Change
Sales	$11.8 billion			-13.7%		$35.2 billion			-20.1%
Gross profit	$2.1 billion			-17.2%		$6.4 billion			-22.7%
Gross Margin	18.0 %			-77 bps		18.3 %			-62 bps
GAAP:
Operating expenses	$1.9 billion			-24.6%		$5.6 billion			-21.0%
Certain Items	$20.3 million			-93.6 %		$(12.6) million			-102.7 %
Operating Income	$235.9 million			291.4%		$867.6 million			-32.3%
Operating Margin	2.0 %			156 bps		2.5 %			-44 bps
Net Earnings	$88.9 million			NM		$373.1 million			-55.3%
Diluted Earnings Per Share	$0.17			NM		$0.73			-54.9%
Non-GAAP (1) :
Operating Expenses	$1.9 billion			-14.7%		$5.6 billion			-15.2%
Operating Income	$256.2 million			-32.0%		$855.0 million			-51.0%
Operating Margin	2.2 %			-59 bps		2.4 %			-153 bps
EBITDA	$425.8 million			76.5%		$1.4 billion			-22.3%
Adjusted EBITDA	$437.4 million			-18.7%		$1.4 billion			-38.3%
Net Earnings	$114.8 million			-50.5%		$374.1 million			-68.3%
Diluted Earnings Per Share (2)	$0.22			-51.1%		$0.73			-68.1%
Case Growth:
U.S. Broadline	-14.1%					-21.4%
Local	-9.7 %					-17.2 %
Sysco Brand Sales as a % of Cases:
U.S. Broadline	37.3%			-116 bps		37.6%			-92 bps
Local	44.5 %			-234 bps		44.4 %			-274 bps

Note:

⁽¹⁾ A reconciliation of non-GAAP measures is 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 third quarter of fiscal 2021 that look forward in time or that express management’s beliefs, expectations or hopes are forward-looking statements within the meaning of 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 coronavirus (“COVID-19”) pandemic and any expectations we may have with respect thereto, including the extent and duration of lockdowns in the U.S. and Europe; the pace of the business recovery; our expectations regarding our ability to manage the current downturn and capitalize on our position as the industry leader as the global economy recovers; our expectations regarding future market share gains; the pace of implementation of our business transformation initiatives; our belief that our strategy and our transformational initiatives will drive future value for our associates, shareholders and customers in the fourth quarter and beyond; our expectations regarding our company, and our ability to attract and serve new customers, following the COVID-19 crisis; our expectations regarding our ability to win meaningful business in the national account space; the effects of our continuing investments in digital technology; our expectations regarding the timing of the business recovery following the COVID-19 crisis; our belief that consumers are ready to eat at restaurants as soon as COVID-19 restrictions are reduced; our expectations regarding the business recovery in Europe; the impact on our results of government-imposed restrictions on restaurant operations; our expectations that our work to accelerate growth will return to pre-COVID levels as demand resurges; our expectations regarding the effect of our hiring of drivers on transportation expenses in the short term; our belief that our hiring of drivers will help ensure that Sysco is able to maximize our share gain during the upcoming business recovery; our expectations regarding our ability to become the most customer-centric foodservice distributor in the industry; our expectations regarding our ability to accelerate profitable growth; our expectations regarding future sales; our expectations regarding cost savings over the next several quarters; our expectations that our investments in technology and our business will allow for future growth and exceptional customer service; our belief that the steps undertaken as part of our management of the COVID-19 crisis to date will help us retain and win additional business from our independent restaurant customers beyond the pandemic; our expectations that we will hire over 6,000 associates in the second half of our fiscal year; our expectations of significant returns on our investments in our capability builds in service of our transformation; our expectations regarding the impact of our investments in our transformation initiatives on our results in the second half of fiscal 2021; our expectations regarding improvements in the SYGMA segment; our plans to transition away from a large existing SYGMA customer; our expectations that international will be a growth opportunity for Sysco in fiscal 2022; our plans to reinvest a portion of our cost savings into our growth agenda; our ability to deliver against our strategic priorities; statements regarding economic trends in the United States and abroad; our expected repayment of amounts under the UK Commercial Paper Program; our expectations regarding the deployment of capital proceeds that Sysco currently holds; and our expectations regarding our cash performance in the fourth quarter of fiscal 2021.

The success of our plans and expectations regarding our operating performance are subject to the general risks associated with our business, including the risks of interruption of supplies due to lack of long-term contracts, severe weather, crop conditions, work stoppages, intense competition, technology disruptions, dependence on large, long-term regional and national customers, inflation risks, the impact of fuel prices, adverse publicity, labor issues, political or financial instability, trade restrictions, tariffs, currency exchange rates, transport capacity and costs and other factors relating to foreign trade, any or all of which could delay our receipt of product or increase our input costs. Risks and uncertainties also include the impact and effects of public health crises, pandemics and epidemics, such as the COVID-19 pandemic, and the adverse impact thereof on our business, financial condition and results of operations, including, but not limited to, our growth, product costs, supply chain, labor availability, logistical capabilities, customer demand for our products and industry demand generally, consumer spending, our liquidity, the price of our securities and trading markets with respect thereto, our credit ratings, our ability to maintain compliance with the covenants in our credit agreement, our ability to access capital markets, and the global economy and financial markets generally. Risks and uncertainties also include risks impacting the economy generally, including the risks that the current general economic conditions will deteriorate, or consumer confidence in the economy or consumer spending, particularly on food-away-from-home, may decline. Market conditions may not improve. Competition and the impact of GPOs may reduce our margins and make it difficult for us to maintain our market share, growth rate and profitability. We may not be able to fully compensate for increases in fuel costs, and fuel hedging arrangements intended to contain fuel costs could result in above market fuel costs. Our ability to meet our long-term strategic objectives depends on our ability to grow gross profit, leverage our supply chain costs and reduce administrative costs. This will depend largely on the success of our various business initiatives, including efforts related to revenue management, expense management, our digital e-commerce strategy and any efforts related to restructuring or the reduction of administrative costs. There are various risks related to these efforts, including the risk that if sales from our locally managed customers do not grow at the same rate as sales from regional and national customers, or if we are unable to continue to accelerate local case growth, our gross margins may decline; 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 mitigate increases in warehouse 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; 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 risk that the actual costs of any initiatives may be greater or less than currently expected; and the risk of adverse effects to our business, results of operations and liquidity if past and future undertakings, and the associated changes to our business, do not prove to be cost effective or do not result in the cost savings and other benefits at the levels that we anticipate. Our plans related to and the timing of any initiatives are subject to change at any time based on management’s subjective evaluation of our overall business needs. If we are unable to realize the anticipated benefits from our efforts, we could become cost disadvantaged in the marketplace, and our competitiveness and our profitability could decrease. Adverse publicity about us or lack of confidence in our products could negatively impact our reputation and reduce earnings. 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. Periods of significant or prolonged inflation or deflation, either overall or in certain product categories, can have a negative impact on us and our customers, as high food costs can reduce consumer spending in the food-away-from-home market, and may negatively impact our sales, gross profit, operating income and earnings, and periods of deflation can be difficult to manage effectively. Fluctuations in inflation and deflation, as well as fluctuations in the value of foreign currencies, are beyond our control and subject to broader market forces. Expanding into international markets presents unique challenges and risks, including compliance with local laws, regulations and customs and the impact of local political and economic conditions, including the impact of Brexit and the “yellow vest” protests in France against a fuel tax increase, pension reform and the French government, and such expansion efforts may not be successful. Any business that we acquire may not perform as expected, and we may not realize the anticipated benefits of our acquisitions. Expectations regarding the financial statement impact of any acquisitions may change based on management’s subjective evaluation. A divestiture of one or more of our businesses may not provide the anticipated effects on our operations. Meeting our dividend target objectives depends on our level of earnings, available cash and the success of our various strategic initiatives. Changes in applicable tax laws or regulations and the resolution of tax disputes could negatively affect our financial results. We rely on technology in our business and any cybersecurity incident, other technology disruption or delay in implementing new technology could negatively affect our business and our relationships with customers. For a discussion of additional factors impacting Sysco’s business, see our Annual Report on Form 10-K for the year ended June 27, 2020, 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 57,000 associates, the company operates 326 distribution facilities worldwide and serves more than 625,000 customer locations. For fiscal 2020 that ended June 27, 2020, the company generated sales of more than $52 billion. Information about our CSR program, including Sysco’s 2020 Corporate Social Responsibility Report, can be found at sysco.com/csr2020report.

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

(In Thousands, Except for Share and Per Share Data)

	13-Week Period Ended								39-Week Period Ended
	Mar. 27, 2021				Mar. 28, 2020				Mar. 27, 2021				Mar. 28, 2020
Sales	$	11,824,589			$	13,698,699			$	35,160,950			$	44,026,746
Cost of sales	9,701,921				11,134,459				28,719,979				35,690,737
Gross profit	2,122,668				2,564,240				6,440,971				8,336,009
Operating expenses	1,886,751				2,503,966				5,573,413				7,054,924
Operating income	235,917				60,274				867,558				1,281,085
Interest expense	145,773				83,854				438,988				243,951
Other (income) expense, net	(12,708		)		5,200				(14,140		)		7,505
Earnings (loss) before income taxes	102,852				(28,780		)		442,710				1,029,629
Income taxes	13,925				(25,483		)		69,594				195,735
Net earnings (loss)	$	88,927			$	(3,297	)		$	373,116			$	833,894
Net earnings (loss):
Basic earnings (loss) per share	$	0.17			$	(0.01	)		$	0.73			$	1.63
Diluted earnings (loss) per share	0.17				(0.01		)		0.73				1.62
Average shares outstanding	511,110,670				508,745,253				510,081,610				510,729,277
Diluted shares outstanding	514,585,129				512,657,657				512,688,895				515,632,815

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except for Share Data)

	Mar. 27, 2021				Jun. 27, 2020
ASSETS
Current assets
Cash and cash equivalents	$	4,895,723			$	6,059,427
Accounts receivable, less allowances of $211,607 and $334,810	3,220,659				2,893,551
Inventories	3,218,827				3,095,085
Prepaid expenses and other current assets	250,022				192,163
Income tax receivable	1,534				108,006
Total current assets	11,586,765				12,348,232
Plant and equipment at cost, less accumulated depreciation	4,297,862				4,458,567
Other long-term assets
Goodwill	3,932,570				3,732,469
Intangibles, less amortization	769,503				780,172
Deferred income taxes	321,674				194,115
Operating lease right-of-use assets, net	661,474				603,616
Other assets	473,433				511,095
Total other long-term assets	6,158,654				5,821,467
Total assets	$	22,043,281			$	22,628,266
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Notes payable	$	8,315			$	2,266
Accounts payable	4,221,252				3,447,065
Accrued expenses	1,645,139				1,616,289
Accrued income taxes	64,159				2,938
Current operating lease liabilities	111,761				107,167
Current maturities of long-term debt	957,303				1,542,128
Total current liabilities	7,007,929				6,717,853
Long-term liabilities
Long-term debt	11,741,114				12,902,485
Deferred income taxes	49,426				86,601
Long-term operating lease liabilities	586,479				523,496
Other long-term liabilities	1,228,265				1,204,953
Total long-term liabilities	13,605,284				14,717,535
Commitments and contingencies
Noncontrolling interest	34,471				34,265
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	1,594,561				1,506,901
Retained earnings	10,241,666				10,563,008
Accumulated other comprehensive loss	(1,352,446		)		(1,710,881		)
Treasury stock at cost, 253,817,013 and 256,915,825 shares	(9,853,359		)		(9,965,590		)
Total shareholders’ equity	1,395,597				1,158,613
Total liabilities and shareholders’ equity	$	22,043,281			$	22,628,266

Sysco Corporation and its Consolidated Subsidiaries

CONSOLIDATED CASH FLOWS

(In Thousands)

	39-Week Period Ended
	Mar. 27, 2021				Mar. 28, 2020
Cash flows from operating activities:
Net earnings	$	373,116			$	833,894
Adjustments to reconcile net earnings to cash provided by operating activities:
Share-based compensation expense	65,655				63,942
Depreciation and amortization	542,471				558,588
Operating lease asset amortization	81,414				83,749
Amortization of debt issuance and other debt-related costs	19,485				15,247
Goodwill impairment	—				68,725
Deferred income taxes	(161,824		)		(145,133		)
Provision for losses on receivables	(137,670		)		213,769
Loss on sale of businesses	22,834				—
Other non-cash items	(7,507		)		6,765
Additional changes in certain assets and liabilities, net of effect of businesses acquired:
(Increase) decrease in receivables	(130,403		)		342,557
Increase in inventories	(82,525		)		(497,391		)
Increase in prepaid expenses and other current assets	(50,833		)		(38,831		)
Increase (decrease) in accounts payable	800,248				(353,836		)
Increase (decrease) in accrued expenses	9,065				(28,406		)
Decrease in operating lease liabilities	(94,228		)		(95,861		)
Increase (decrease) in accrued income taxes	167,693				(25,987		)
Decrease in other assets	23,345				23,263
Increase in other long-term liabilities	39,448				53,415
Net cash provided by operating activities	1,479,784				1,078,469
Cash flows from investing activities:
Additions to plant and equipment	(251,167		)		(603,865		)
Proceeds from sales of plant and equipment	19,308				13,245
Acquisition of businesses, net of cash acquired	—				(142,780		)
Purchase of marketable securities	(44,687		)		(11,424		)
Proceeds from sales of marketable securities	30,773				17,465
Other investing activities	—				67,371
Net cash used for investing activities	(245,773		)		(659,988		)
Cash flows from financing activities:
Bank and commercial paper (repayments) borrowings, net	(411,200		)		20,886
Other debt borrowings	2,943				2,682,278
Other debt repayments	(1,489,431		)		(28,244		)
Proceeds from stock option exercises	112,231				186,503
Stock repurchases	—				(844,699		)
Dividends paid	(689,251		)		(628,056		)
Other financing activities (1)	(15,024		)		(45,990		)
Net cash (used for) provided by financing activities	(2,489,732		)		1,342,678
Effect of exchange rates on cash, cash equivalents and restricted cash	85,183				(8,857		)
Net (decrease) increase in cash and cash equivalents (2)	(1,170,538		)		1,752,302
Cash, cash equivalents and restricted cash at beginning of period	6,095,570				532,245
Cash, cash equivalents and restricted cash at end of period (2)	$	4,925,032			$	2,284,547
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	386,753			$	247,606
Income taxes, net of refunds	71,435				358,622

⁽¹⁾  Change includes cash paid for shares withheld to cover taxes, debt issuance costs and other financing activities.
⁽²⁾  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

Sysco’s results of operations for fiscal 2021 and fiscal 2020 were impacted by restructuring and transformational project costs consisting of: (1) restructuring charges; (2) expenses associated with our various transformation initiatives; and (3) facility closure and severance charges. Sysco’s results for fiscal 2021 and fiscal 2020 were also impacted by intangible amortization expense related to the fiscal 2017 acquisition of Cucina Lux Investments Limited (the Brakes Acquisition). Additionally, our results for fiscal 2021 were impacted by loss on the sale of businesses.

Fiscal 2021 results of operations were also positively impacted by the reduction of bad debt expense previously recognized in fiscal 2020 due to the unexpected impact of the COVID-19 pandemic on the collectability of our pre-pandemic trade receivable balances. Fiscal 2020 results of operations were also negatively impacted by costs arising from the COVID-19 pandemic, the most significant of which were (1) excess bad debt expense, as we experienced an increase in past due receivables and recognized additional bad debt charges, and (2) goodwill impairment charges. Many of Sysco’s customers, including those in the restaurant, hospitality and education segments, are operating at a substantially reduced volume due to governmental requirements for closures or other social-distancing measures and a portion of Sysco’s customers have been closed. Some of these customers ceased paying their outstanding receivables, creating uncertainty as to their collectability. We experienced an increase in past due receivables and recognized additional bad debt charges in the third and fourth quarters of fiscal 2020; however, collections have improved in fiscal 2021, partially from restaurant reopenings, volumes improvements and Sysco’s improved credit processes. We have estimated uncollectible amounts based on the current collection experience and by applying write-off percentages based on historical loss experience, including loss experience during times of local and regional disasters, current conditions and collection rates, and expectations regarding future losses. The COVID-19 pandemic is more widespread and longer in duration than historical disasters impacting our business, and it is possible that actual uncollectible amounts will differ and additional charges may be required; however, if collections continue to improve, it is also possible that additional reductions in our bad debt reserve could occur. While Sysco traditionally incurs bad debt expense, the magnitude of such expenses and benefits, that we have experienced is not indicative of our normal operations. Our adjusted results have not been normalized in a manner that would exclude the full impact of the COVID-19 pandemic on our business. As such, Sysco has not adjusted its results for lost sales, inventory write-offs or other costs associated with the COVID-19 pandemic not previously stated.

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. The constant currency impact on our adjusted total Sysco and our adjusted International Foodservice Operations results are disclosed when the impact exceeds a defined threshold of greater than 1% on the growth metric. If the amount does not exceed this threshold, a disclosure will be made that the impact of the currency change was not significant.

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.

Although Sysco has a history of growth through acquisitions, the Brakes Group was significantly larger than the companies historically acquired by Sysco, with a proportionately greater impact on Sysco’s consolidated financial statements. Accordingly, Sysco is excluding from its non-GAAP financial measures for the relevant period the impact of acquisition-related intangible amortization specific to the Brakes Acquisition. We believe this approach significantly enhances the comparability of Sysco’s results for fiscal 2021 and fiscal 2020.

Set forth below is a reconciliation of sales, operating expenses, operating income, interest expense, 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 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 Mar. 27, 2021				13-Week Period Ended Mar. 28, 2020				Change in Dollars				% Change
Operating expenses (GAAP)	$	1,886,751			$	2,503,966			$	(617,215	)		-24.6		%
Impact of restructuring and transformational project costs (1)	(34,953		)		(77,195		)		42,242				-54.7
Impact of acquisition-related intangible amortization (2)	(18,834		)		(17,321		)		(1,513		)		8.7
Impact of bad debt reserve adjustments (3)	33,473				(153,499		)		186,972				-121.8
Impact of goodwill impairment	—				(68,725		)		68,725				NM
Operating expenses adjusted for Certain Items (Non-GAAP)	1,866,437				2,187,226				(320,789		)		-14.7		%
Impact of currency fluctuations (4)	(29,659		)		—				(29,659		)		-1.3
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	1,836,778			$	2,187,226			$	(350,448	)		-16.0		%
Operating income (GAAP)	$	235,917			$	60,274			$	175,643			291.4		%
Impact of restructuring and transformational project costs (1)	34,953				77,195				(42,242		)		-54.7
Impact of acquisition-related intangible amortization (2)	18,834				17,321				1,513				8.7
Impact of bad debt reserve adjustments (3)	(33,473		)		153,499				(186,972		)		-121.8
Impact of goodwill impairment	—				68,725				(68,725		)		NM
Operating income adjusted for Certain Items (Non-GAAP)	256,231				377,014				(120,783		)		-32.0		%
Impact of currency fluctuations (4)	8,029				—				8,029				-2.1
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	264,260			$	377,014			$	(112,754	)		-29.9		%
Other (income) expense (GAAP)	$	(12,708	)		$	5,200			$	(17,908	)		NM
Impact of loss on sale of businesses	(10,790		)		—				(10,790		)		NM
Other (income) expense (Non-GAAP)	$	(23,498	)		$	5,200			$	(28,698	)		NM
Net earnings (loss) (GAAP)	$	88,927			$	(3,297	)		$	92,224			NM
Impact of restructuring and transformational project costs (1)	34,953				77,195				(42,242		)		-54.7
Impact of acquisition-related intangible amortization (2)	18,834				17,321				1,513				8.7
Impact of bad debt reserve adjustments (3)	(33,473		)		153,499				(186,972		)		-121.8
Impact of goodwill impairment	—				68,725				(68,725		)		NM
Impact of loss on sale of businesses	10,790				—				10,790				NM
Tax impact of restructuring and transformational project costs (4)	(10,300		)		(28,461		)		18,161				-63.8
Tax impact of acquisition-related intangible amortization (4)	(5,573		)		(6,777		)		1,204				-17.8
Tax impact of bad debt reserve adjustments (4)	10,354				(46,410		)		56,764				-122.3
Tax impact of loss on sale of businesses	301				—				301				NM
Net earnings adjusted for Certain Items (Non-GAAP)	$	114,813			$	231,795			$	(116,982	)		-50.5		%
Diluted earnings (loss) per share (GAAP)	$	0.17			$	(0.01	)		$	0.18			NM
Impact of restructuring and transformational project costs (1)	0.07				0.15				(0.08		)		-53.3
Impact of acquisition-related intangible amortization (2)	0.04				0.03				0.01				33.3
Impact of bad debt reserve adjustments (3)	(0.07		)		0.30				(0.37		)		-123.3
Impact of goodwill impairment	—				0.13				(0.13		)		NM
Impact of loss on sale of businesses	0.02				—				0.02				NM
Tax impact of restructuring and transformational project costs (4)	(0.02		)		(0.06		)		0.04				-66.7
Tax impact of acquisition-related intangible amortization (4)	(0.01		)		(0.01		)		—				0.0
Tax impact of bad debt reserve adjustments (4)	0.02				(0.09		)		0.11				-122.2
Diluted EPS adjusted for Certain Items (Non-GAAP) (5)	$	0.22			$	0.45			$	(0.23	)		-51.1		%
Diluted shares outstanding	514,585,129				512,657,657

(1)	Fiscal 2021 includes $21 million related to restructuring charges and $14 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2020 includes $48 million related to restructuring, facility closure and severance charges and $30 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(2)	Represents intangible amortization expense from the Brakes Acquisition, which is included in the results of International Foodservice.
(3)	Fiscal 2021 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020. Fiscal 2020 represents excess bad debt charges recognized on the increase in past due receivables arising from the COVID-19 pandemic.
(4)	Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on current year results.
(5)	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.
(6)	Individual components of diluted earnings per share may not add up to the total presented 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.

Sysco Corporation and its Consolidated Subsidiaries

Non-GAAP Reconciliation (Unaudited)

Impact of Certain Items

(Dollars in Thousands, Except for Share and Per Share Data)

	39-Week Period Ended Mar. 27, 2021				39-Week Period Ended Mar. 28, 2020				Change in Dollars				% Change
Operating expenses (GAAP)	$	5,573,413			$	7,054,924			$	(1,481,511	)		-21.0		%
Impact of restructuring and transformational project costs (1)	(95,078		)		(191,022		)		95,944				-50.2
Impact of acquisition-related intangible amortization (2)	(54,714		)		(51,543		)		(3,171		)		6.2
Impact of bad debt reserve adjustments (3)	162,372				(153,499		)		315,871				-205.8
Impact of goodwill impairment	—				(68,725		)		68,725				NM
Operating expenses adjusted for Certain Items (Non-GAAP)	$	5,585,993			$	6,590,135			$	(1,004,142	)		-15.2		%
Operating income (GAAP)	$	867,558			$	1,281,085			$	(413,527	)		-32.3		%
Impact of restructuring and transformational project costs (1)	95,078				191,022				(95,944		)		-50.2
Impact of acquisition-related intangible amortization (2)	54,714				51,543				3,171				6.2
Impact of bad debt reserve adjustments (3)	(162,372		)		153,499				(315,871		)		-205.8
Impact of goodwill impairment	—				68,725				(68,725		)		NM
Operating income adjusted for Certain Items (Non-GAAP)	$	854,978			$	1,745,874			$	(890,896	)		-51.0		%
Other (income) expense (GAAP)	$	(14,140	)		$	7,505			$	(21,645	)		-288.4		%
Impact of loss on sale of businesses	(22,834		)		—				(22,834		)		NM
Other (income) expense (Non-GAAP)	$	(36,974	)		$	7,505			$	(44,479	)		NM
Net earnings (loss) (GAAP)	$	373,116			$	833,894			$	(460,778	)		-55.3		%
Impact of restructuring and transformational project costs (1)	95,078				191,022				(95,944		)		-50.2
Impact of acquisition-related intangible amortization (2)	54,714				51,543				3,171				6.2
Impact of bad debt reserve adjustments (3)	(162,372		)		153,499				(315,871		)		-205.8
Impact of goodwill impairment	—				68,725				(68,725		)		NM
Impact of loss on sale of businesses	22,834				—				22,834				NM
Tax impact of restructuring and transformational project costs (4)	(26,886		)		(57,756		)		30,870				-53.4
Tax impact of acquisition-related intangible amortization (4)	(15,471		)		(15,584		)		113				-0.7
Tax impact of bad debt reserve adjustments (4)	45,913				(46,410		)		92,323				-198.9
Tax impact of loss on sale of businesses	(7,251		)		—				(7,251		)		NM
Impact of foreign tax rate change	(5,548		)		924				(6,472		)		NM
Net earnings adjusted for Certain Items (Non-GAAP)	$	374,127			$	1,179,857			$	(805,730	)		-68.3		%
Diluted earnings (loss) per share (GAAP)	$	0.73			$	1.62			$	(0.89	)		-54.9		%
Impact of restructuring and transformational project costs (1)	0.19				0.37				(0.18		)		-48.6
Impact of acquisition-related intangible amortization (2)	0.11				0.10				0.01				10.0
Impact of bad debt reserve adjustments (3)	(0.32		)		0.30				(0.62		)		-206.7
Impact of goodwill impairment	—				0.13				(0.13		)		NM
Impact of loss on sale of businesses	0.04				—				0.04				NM
Tax impact of restructuring and transformational project costs (4)	(0.05		)		(0.11		)		0.06				-54.5
Tax impact of acquisition-related intangible amortization (4)	(0.03		)		(0.03		)		—				0.0
Tax impact of bad debt reserve adjustments (4)	0.09				(0.09		)		0.18				-200.0
Tax impact of loss on sale of businesses	(0.01		)		—				(0.01		)		NM
Tax impact of foreign tax rate change	(0.01		)		—				(0.01		)		NM
Diluted EPS adjusted for Certain Items (Non-GAAP) (5)	$	0.73			$	2.29			$	(1.56	)		-68.1		%
Diluted shares outstanding	512,688,895				515,632,815

(1)	Fiscal 2021 includes $56 million related to restructuring, severance and facility closure charges, and $39 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2020 includes $100 million related to restructuring, severance, and facility closure charges and $91 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(2)	Represents intangible amortization expense from the Brakes Acquisition, which is included in the results of International Foodservice.
(3)	Fiscal 2021 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020. Fiscal 2020 represents excess bad debt charges recognized on the increase in past due receivables arising from the COVID-19 pandemic.
(4)	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.
(5)	Individual components of diluted earnings per share may not add up to the total presented 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.

Sysco Corporation and its Consolidated Subsidiaries

Segment Results

Non-GAAP Reconciliation (Unaudited)

Impact of Certain Items on Applicable Segments

(Dollars in Thousands)

	13-Week Period Ended Mar. 27, 2021					13-Week Period Ended Mar. 28, 2020					Change in Dollars				%/bps Change
U.S. FOODSERVICE OPERATIONS
Sales	$	8,360,241				$	9,587,005				$	(1,226,764	)		-12.8	%
Gross Profit	1,634,837					1,895,378					(260,541		)		-13.7	%
Gross Margin	19.6			%		19.8			%						-22 bps
Operating expenses (GAAP)	$	1,089,335				$	1,431,205				$	(341,870	)		-23.9	%
Impact of restructuring and transformational project costs (1)	(1,285		)			(1,403		)			118				-8.4
Impact of bad debt reserve adjustments (2)	21,669					(107,230		)			128,899				-120.2
Operating expenses adjusted for Certain Items (Non-GAAP)	$	1,109,719				$	1,322,572				$	(212,853	)		-16.1	%
Operating income (GAAP)	$	545,502				$	464,173				$	81,329			17.5	%
Impact of restructuring and transformational project costs (1)	1,285					1,403					(118		)		-8.4
Impact of bad debt reserve adjustments (2)	(21,669		)			107,230					(128,899		)		-120.2
Operating income adjusted for Certain Items (Non-GAAP)	$	525,118				$	572,806				$	(47,688	)		-8.3	%
INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP)	$	1,723,126				$	2,508,642				$	(785,516	)		-31.3	%
Impact of currency fluctuations (3)	(103,338		)			—					(103,338		)		4.1
Comparable sales using a constant currency basis (Non-GAAP)	$	1,619,788				$	2,508,642				$	(888,854	)		-35.4	%
Gross Profit (GAAP)	$	325,200				$	500,929				$	(175,729	)		-35.1	%
Impact of currency fluctuations (3)	(20,660		)			—					(20,660		)		4.1
Comparable gross profit using a constant currency basis (Non-GAAP)	$	304,540				$	500,929				$	(196,389	)		-39.2	%
Gross Margin (GAAP)	18.9			%		20.0			%						-110 bps
Impact of currency fluctuations (3)	0.1					—									7 bps
Comparable gross margin using a constant currency basis (Non-GAAP)	18.8			%		20.0			%						-117 bps
Operating expenses (GAAP)	$	446,687				$	584,715				$	(138,028	)		-23.6	%
Impact of restructuring and transformational project costs (4)	(18,635		)			(25,180		)			6,545				-26.0
Impact of acquisition-related intangible amortization (5)	(18,834		)			(17,321		)			(1,513		)		8.7
Impact of bad debt reserve adjustments (2)	8,357					(46,269		)			54,626				-118.1
Operating expenses adjusted for Certain Items (Non-GAAP)	$	417,575				$	495,945				$	(78,370	)		-15.8	%
Impact of currency fluctuations (3)	(28,811		)			—					(28,811		)		5.8
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	388,764				$	495,945				$	(107,181	)		-21.6	%
Operating (loss) income (GAAP)	$	(121,487	)			$	(83,786	)			$	(37,701	)		-45.0	%
Impact of restructuring and transformational project costs (4)	18,635					25,180					(6,545		)		-26.0
Impact of acquisition-related intangible amortization (5)	18,834					17,321					1,513				8.7
Impact of bad debt reserve adjustments (2)	(8,357		)			46,269					(54,626		)		-118.1
Operating (loss) income adjusted for Certain Items (Non-GAAP)	$	(92,375	)			$	4,984				$	(97,359	)		NM
Impact of currency fluctuations (3)	8,151					—					8,151				NM
Comparable operating (loss) income adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	(84,224	)			$	4,984				$	(89,208	)		NM
SYGMA
Sales	$	1,580,695				$	1,364,111				$	216,584			15.9	%
Gross Profit	133,478					118,891					14,587				12.3	%
Gross Margin	8.4			%		8.7			%						-27 bps
Operating expenses (GAAP)	$	120,541				$	108,590				$	11,951			11.0	%
Impact of restructuring and transformational project costs (1)	—					(122		)			122				NM
Operating expenses adjusted for Certain Items (Non-GAAP)	$	120,541				$	108,468				$	12,073			11.1	%
Operating income (GAAP)	$	12,937				$	10,301				$	2,636			25.6	%
Impact of restructuring and transformational project costs (1)	—					122					(122		)		NM
Operating (loss) income adjusted for Certain Items (Non-GAAP)	$	12,937				$	10,423				$	2,514			24.1	%
OTHER
Sales	$	160,527				$	238,941				$	(78,414	)		-32.8	%
Gross Profit	37,911					56,000					(18,089		)		-32.3	%
Gross Margin	23.6			%		23.4			%						18 bps
Operating expenses (GAAP)	$	32,027				$	75,051				$	(43,024	)		-57.3	%
Impact of bad debt reserve adjustments (2)	3,447					—					3,447				NM
Impact of goodwill impairment	—					(11,660		)			11,660				NM
Operating expenses adjusted for Certain Items (Non-GAAP)	$	35,474				$	63,391				(27,917		)		-44.0	%
Operating (loss) income (GAAP)	$	5,884				$	(19,051	)			$	24,935			130.9	%
Impact of bad debt reserve adjustments (2)	(3,447		)			—					(3,447		)		NM
Impact of goodwill impairment	—					11,660					(11,660		)		NM
Operating (loss) income adjusted for Certain Items (Non-GAAP)	$	2,437				$	(7,391	)			9,828				133.0	%
CORPORATE
Gross Profit	$	(8,758	)			$	(6,958	)			$	(1,800	)		-25.9	%
Operating expenses (GAAP)	$	198,161				$	304,405				$	(106,244	)		-34.9	%
Impact of restructuring and transformational project costs (6)	(15,033		)			(50,490		)			35,457				-70.2
Impact of goodwill impairment	—					(57,065		)			57,065				NM
Operating expenses adjusted for Certain Items (Non-GAAP)	$	183,128				$	196,850				$	(13,722	)		-7.0	%
Operating loss (GAAP)	$	(206,919	)			$	(311,363	)			$	104,444			33.5	%
Impact of restructuring and transformational project costs (6)	15,033					50,490					(35,457		)		-70.2
Impact of goodwill impairment	—					57,065					(57,065		)		NM
Operating loss adjusted for Certain Items (Non-GAAP)	$	(191,886	)			$	(203,808	)			$	11,922			5.8	%
TOTAL SYSCO
Sales	$	11,824,589				$	13,698,699				$	(1,874,110	)		-13.7	%
Gross Profit	2,122,668					2,564,240					(441,572		)		-17.2	%
Gross Margin	18.0			%		18.7			%						-77 bps
Operating expenses (GAAP)	$	1,886,751				$	2,503,966				$	(617,215	)		-24.6	%
Impact of restructuring and transformational project costs (1) (4) (6)	(34,953		)			(77,195		)			42,242				-54.7
Impact of acquisition-related intangible amortization (5)	(18,834		)			(17,321		)			(1,513		)		8.7
Impact of bad debt reserve adjustments (2)	33,473					(153,499		)			186,972				-121.8
Impact of goodwill impairment	—					(68,725		)			68,725				NM
Operating expenses adjusted for Certain Items (Non-GAAP)	$	1,866,437				$	2,187,226				$	(320,789	)		-14.7	%
Operating income (GAAP)	$	235,917				$	60,274				$	175,643			291.4	%
Impact of restructuring and transformational project costs (1) (4) (6)	34,953					77,195					(42,242		)		-54.7
Impact of acquisition-related intangible amortization (5)	18,834					17,321					1,513				8.7
Impact of bad debt reserve adjustments (2)	(33,473		)			153,499					(186,972		)		-121.8
Impact of goodwill impairment	—					68,725					(68,725		)		NM
Operating income adjusted for Certain Items (Non-GAAP)	$	256,231				$	377,014				$	(120,783	)		-32.0	%

(1)	Includes charges related to restructuring and business transformation projects.
(2)	Fiscal 2021 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020. Fiscal 2020 represents excess bad debt charges recognized on the increase in past due receivables arising from the COVID-19 pandemic.
(3)	Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on current year results.
(4)	Includes restructuring, severance and facility closure costs primarily in Europe.
(5)	Represents intangible amortization expense from the Brakes Acquisition.
(6)	Includes various transformation initiative costs, primarily consisting of changes to our business technology strategy.
	NM represents that the percentage change is not meaningful.

Sysco Corporation and its Consolidated Subsidiaries

Segment Results

Non-GAAP Reconciliation (Unaudited)

Impact of Certain Items on Applicable Segments

(Dollars in Thousands)

	39-Week Period Ended Mar. 27, 2021					39-Week Period Ended Mar. 28, 2020					Change in Dollars				%/bps Change
U.S. FOODSERVICE OPERATIONS
Sales	$	24,205,917				$	30,659,215				$	(6,453,298	)		-21.0		%
Gross Profit	4,793,866					6,089,171					(1,295,305		)		-21.3		%
Gross Margin	19.8			%		19.9			%						-6 bps
Operating expenses (GAAP)	$	3,174,704				$	4,126,576				$	(951,872	)		-23.1		%
Impact of restructuring and transformational project costs (1)	(4,010		)			(9,208		)			5,198				-56.5
Impact of bad debt reserve adjustments (2)	123,225					(107,230		)			230,455				-214.9
Operating expenses adjusted for Certain Items (Non-GAAP)	$	3,293,919				$	4,010,138				$	(716,219	)		-17.9		%
Operating income (GAAP)	$	1,619,162				$	1,962,595				$	(343,433	)		-17.5		%
Impact of restructuring and transformational project costs (1)	4,010					9,208					(5,198		)		-56.5
Impact of bad debt reserve adjustments (2)	(123,225		)			107,230					(230,455		)		-214.9
Operating income adjusted for Certain Items (Non-GAAP)	$	1,499,947				$	2,079,033				$	(579,086	)		-27.9		%
INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP)	$	5,854,608				$	8,311,081				$	(2,456,473	)		-29.6		%
Impact of currency fluctuations (3)	(197,380		)			—					(197,380		)		2.4
Comparable sales using a constant currency basis (Non-GAAP)	$	5,657,228				$	8,311,081				$	(2,653,853	)		-31.9		%
Gross Profit (GAAP)	$	1,149,438				$	1,692,153				$	(542,715	)		-32.1		%
Impact of currency fluctuations (3)	(43,631		)			—					(43,631		)		2.6
Comparable gross profit using a constant currency basis (Non-GAAP)	$	1,105,807				$	1,692,153				$	(586,346	)		-34.7		%
Gross Margin (GAAP)	19.6			%		20.4			%						-73 bps
Impact of currency fluctuations (3)	0.1					—									9 bps
Comparable gross margin using a constant currency basis (Non-GAAP)	19.5			%		20.4			%						-81 bps
Operating expenses (GAAP)	$	1,351,411				$	1,686,258				$	(334,847	)		-19.9		%
Impact of restructuring and transformational project costs (4)	(52,033		)			(74,302		)			22,269				-30.0
Impact of acquisition-related intangible amortization (5)	(54,714		)			(51,543		)			(3,171		)		6.2
Impact of bad debt reserve adjustments (2)	33,583					(46,269		)			79,852				-172.6
Operating expenses adjusted for Certain Items (Non-GAAP)	$	1,278,247				$	1,514,144				$	(235,897	)		-15.6		%
Impact of currency fluctuations (3)	(56,263		)			—					(56,263		)		3.7
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	1,221,984				$	1,514,144				$	(292,160	)		-19.3		%
Operating (loss) income (GAAP)	$	(201,973	)			$	5,895				$	(207,868	)		NM
Impact of restructuring and transformational project costs (4)	52,033					74,302					(22,269		)		-30.0
Impact of acquisition-related intangible amortization (5)	54,714					51,543					3,171				6.2
Impact of bad debt reserve adjustments (2)	(33,583		)			46,269					(79,852		)		-172.6
Operating (loss) income adjusted for Certain Items (Non-GAAP)	$	(128,809	)			$	178,009				$	(306,818	)		-172.4		%
Impact of currency fluctuations (3)	12,632					—					12,632				-7.1
Comparable operating (loss) income adjusted for Certain Items using a constant currency basis (Non-GAAP)	$	(116,177	)			$	178,009				$	(294,186	)		-165.3		%
SYGMA
Sales	$	4,625,244				$	4,266,998				$	358,246			8.4		%
Gross Profit	394,318					369,048					25,270				6.8		%
Gross Margin	8.5			%		8.6			%						-12 bps
Operating expenses (GAAP)	$	358,361				$	341,316				$	17,045			5.0		%
Impact of restructuring and transformational project costs (1)	(7		)			(3,662		)			3,655				-99.8
Operating expenses adjusted for Certain Items (Non-GAAP)	$	358,354				$	337,654				$	20,700			6.1		%
Operating income (GAAP)	$	35,957				$	27,732				$	8,225			29.7		%
Impact of restructuring and transformational project costs (1)	7					3,662					(3,655		)		-99.8
Operating (loss) income adjusted for Certain Items (Non-GAAP)	$	35,964				$	31,394				$	4,570			14.6		%
OTHER
Sales	$	475,181				$	789,452				$	(314,271	)		-39.8		%
Gross Profit	114,108					194,248					(80,140		)		-41.3		%
Gross Margin	24.0			%		24.6			%						-59 bps
Operating expenses (GAAP)	$	109,247				$	193,762				$	(84,515	)		-43.6		%
Impact of bad debt reserve adjustments (2)	5,564					—					5,564				NM
Impact of goodwill impairment	—					(11,660		)			11,660				NM
Operating expenses adjusted for Certain Items (Non-GAAP)	$	114,811				$	182,102				$	(67,291	)		-37.0		%
Operating (loss) income (GAAP)	$	4,861				$	486				$	4,375			NM
Impact of bad debt reserve adjustments (2)	(5,564		)			—					(5,564		)		NM
Impact of goodwill impairment	—					11,660					(11,660		)		NM
Operating (loss) income adjusted for Certain Items (Non-GAAP)	$	(703	)			$	12,146				(12,849		)		-105.8		%
CORPORATE
Gross Profit	$	(10,759	)			$	(8,611	)			$	(2,148	)		-24.9		%
Operating expenses (GAAP)	$	579,690				$	707,012				$	(127,322	)		-18.0		%
Impact of restructuring and transformational project costs (6)	(39,028		)			(103,850		)			64,822				-62.4
Impact of goodwill impairment	—					(57,065		)			57,065				NM
Operating expenses adjusted for Certain Items (Non-GAAP)	$	540,662				$	546,097				$	(5,435	)		-1.0		%
Operating loss (GAAP)	$	(590,449	)			$	(715,623	)			$	125,174			17.5		%
Impact of restructuring and transformational project costs (6)	39,028					103,850					(64,822		)		-62.4
Impact of goodwill impairment	—					57,065					(57,065		)		NM
Operating loss adjusted for Certain Items (Non-GAAP)	$	(551,421	)			$	(554,708	)			$	3,287			0.6		%
TOTAL SYSCO
Sales	$	35,160,950				$	44,026,746				$	(8,865,796	)		-20.1		%
Gross Profit	6,440,971					8,336,009					(1,895,038		)		-22.7		%
Gross Margin	18.3			%		18.9			%						-62 bps
Operating expenses (GAAP)	$	5,573,413				$	7,054,924				$	(1,481,511	)		-21.0		%
Impact of restructuring and transformational project costs (1) (4) (6)	(95,078		)			(191,022		)			95,944				-50.2
Impact of acquisition-related intangible amortization (5)	(54,714		)			(51,543		)			(3,171		)		6.2
Impact of bad debt reserve adjustments (2)	162,372					(153,499		)			315,871				-205.8
Impact of goodwill impairment	—					(68,725		)			68,725				NM
Operating expenses adjusted for Certain Items (Non-GAAP)	$	5,585,993				$	6,590,135				$	(1,004,142	)		-15.2		%
Operating income (GAAP)	$	867,558				$	1,281,085				$	(413,527	)		-32.3		%
Impact of restructuring and transformational project costs (1) (4) (6)	95,078					191,022					(95,944		)		-50.2
Impact of acquisition-related intangible amortization (5)	54,714					51,543					3,171				6.2
Impact of bad debt reserve adjustments (2)	(162,372		)			153,499					(315,871		)		-205.8
Impact of goodwill impairment	—					68,725					(68,725		)		NM
Operating income adjusted for Certain Items (Non-GAAP)	$	854,978				$	1,745,874				$	(890,896	)		-51.0		%

(1)	Includes charges related to restructuring and business transformation projects.
(2)	Fiscal 2021 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020. Fiscal 2020 represents excess bad debt charges recognized on the increase in past due receivables arising from the COVID-19 pandemic.
(3)	Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on current year results.
(4)	Includes restructuring, severance and facility closure costs primarily in Europe.
(5)	Represents intangible amortization expense from the Brakes Acquisition.
(6)	Includes various transformation initiative costs, primarily consisting of changes to our business technology strategy.
	NM represents that the percentage change is not meaningful.

Sysco Corporation and its Consolidated Subsidiaries

Non-GAAP Reconciliation (Unaudited)

Free Cash Flow

(In Thousands)

Free cash flow represents net cash provided from operating activities less purchases of plant and equipment and includes proceeds from sales of plant and equipment. Sysco considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases and sales of buildings, fleet, equipment and technology, which may potentially be used to pay for, among other things, strategic uses of cash including dividend payments, share repurchases and acquisitions. However, free cash flow may not be available for discretionary expenditures, as it may be necessary that we use it to make mandatory debt service or other payments. 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. In the table that follows, free cash flow for each period presented is reconciled to net cash provided by operating activities.

	39-Week Period Ended Mar. 27, 2021				39-Week Period Ended Mar. 28, 2020				39-Week Period Change in Dollars
Net cash provided by operating activities (GAAP)	$	1,479,784			$	1,078,469			$	401,315
Additions to plant and equipment	(251,167		)		(603,865		)		352,698
Proceeds from sales of plant and equipment	19,308				13,245				6,063
Free Cash Flow (Non-GAAP)	$	1,247,925			$	487,849			$	760,076

Sysco Corporation and its Consolidated Subsidiaries

Non-GAAP Reconciliation (Unaudited)

Impact of Certain Items on Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)

(Dollars in Thousands)

EBITDA represents net earnings (loss) plus (i) interest expense, (ii) income tax expense and benefit, (iii) depreciation and (iv) amortization. The net earnings (loss) component of our EBITDA calculation is impacted by Certain Items that we do not consider representative of our underlying performance. As a result, in the non-GAAP reconciliations below for each period presented, adjusted EBITDA is computed as EBITDA plus the impact of Certain Items, excluding Certain items related to interest expense, income taxes, depreciation and amortization. Sysco’s management considers growth in this metric to be a measure of overall financial performance that provides useful information to management and investors about the profitability of the business, as it facilitates comparison of performance on a consistent basis from period to period by providing a measurement of recurring factors and trends affecting our business. Additionally, it is a commonly used component metric used to inform on capital structure decisions. Adjusted EBITDA should not be used as a substitute for the most comparable GAAP measure in assessing the company’s 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. In the tables that follow, adjusted EBITDA for each period presented is reconciled to net earnings (loss).

	13-Week Period Ended Mar. 27, 2021				13-Week Period Ended Mar. 28, 2020				Change in Dollars				% Change
Net earnings (loss) (GAAP)	$	88,927			$	(3,297	)		$	92,224			NM
Interest (GAAP)	145,773				83,854				61,919				73.8
Income taxes (GAAP)	13,925				(25,483		)		39,408				-154.6
Depreciation and amortization (GAAP)	177,139				186,172				(9,033		)		-4.9
EBITDA (Non-GAAP)	$	425,764			$	241,246			$	184,518			76.5		%
Certain Item adjustments:
Impact of restructuring and transformational project costs (1)	$	34,301			$	74,656			$	(40,355	)		-54.1		%
Impact of bad debt reserve adjustments (2)	(33,473		)		153,499				(186,972		)		-121.8
Impact of goodwill impairment	—				68,725				(68,725		)		NM
Impact of loss on sale of businesses	10,790				—				10,790				NM
EBITDA adjusted for Certain Items (Non-GAAP)	$	437,382			$	538,126			$	(100,744	)		-18.7		%

(1)	Includes various transformation initiative costs, primarily consisting of changes to our business technology strategy, excluding charges related to accelerated depreciation.
(2)	Fiscal 2021 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020. Fiscal 2020 represents excess bad debt charges recognized on the increase in past due receivables arising from the COVID-19 pandemic.

	39-Week Period Ended Mar. 27, 2021				39-Week Period Ended Mar. 28, 2020				Change in Dollars				% Change
Net earnings (loss) (GAAP)	$	373,116			$	833,894			$	(460,778	)		-55.3		%
Interest (GAAP)	438,988				243,951				195,037				79.9
Income taxes (GAAP)	69,594				195,735				(126,141		)		-64.4
Depreciation and amortization (GAAP)	542,471				558,588				(16,117		)		-2.9
EBITDA (Non-GAAP)	$	1,424,169			$	1,832,168			$	(407,999	)		-22.3		%
Certain Item adjustments:
Impact of restructuring and transformational project costs (1)	$	89,253			$	174,066			$	(84,813	)		-48.7		%
Impact of bad debt reserve adjustments (2)	(162,372		)		153,499				(315,871		)		-205.8
Impact of goodwill impairment	—				68,725				(68,725		)		NM
Impact of loss on sale of businesses	22,834				—				22,834				NM
EBITDA adjusted for Certain Items (Non-GAAP)	$	1,373,884			$	2,228,458			$	(854,574	)		-38.3		%

(1)	Includes various transformation initiative costs, primarily consisting of changes to our business technology strategy, excluding charges related to accelerated depreciation.
(2)	Fiscal 2021 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020. Fiscal 2020 represents excess bad debt charges recognized on the increase in past due receivables arising from the COVID-19 pandemic.

	13-Week Period Ended												39-Week Period Ended
	Sep. 26, 2020				Dec. 26, 2020				Mar. 27, 2021				Mar. 27, 2021
Net earnings (loss) (GAAP)	$	216,900			$	67,289			$	88,927			$	373,116
Interest (GAAP)	146,717				146,498				145,773				438,988
Income taxes (GAAP)	41,838				13,831				13,925				69,594
Depreciation and amortization (GAAP)	180,521				184,811				177,139				542,471
EBITDA (Non-GAAP)	$	585,976			$	412,429			$	425,764			$	1,424,169
Certain Item adjustments:
Impact of restructuring and transformational project costs (1)	$	25,278			$	29,674			$	34,301			$	89,253
Impact of bad debt reserve adjustments (2)	(98,628		)		(30,271		)		(33,473		)		(162,372		)
Impact of loss on sale of businesses	12,044				—				10,790				22,834
EBITDA adjusted for certain items (Non-GAAP)	$	524,670			$	411,832			$	437,382			$	1,373,884

(1)	Includes various transformation initiative costs, primarily consisting of changes to our business technology strategy, excluding charges related to accelerated depreciation.
(2)	Fiscal 2021 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.

	13-Week Period Ended																		52-Week Period Ended
	Sep. 28, 2019				Dec. 28, 2019				Mar. 28, 2020					June 27, 2020					June 27, 2020
Net earnings (loss) (GAAP)	$	453,781			$	383,410			$	(3,297	)			$	(618,419	)			$	215,475
Interest (GAAP)	83,335				76,762				83,854					164,269					408,220
Income taxes (GAAP)	128,090				93,128				(25,483		)			(117,826		)			77,909
Depreciation and amortization (GAAP)	187,405				185,011				186,172					247,177					805,765
EBITDA (Non-GAAP)	$	852,611			$	738,311			$	241,246				$	(324,799	)			$	1,507,369
Certain Item adjustments :
Impact of restructuring and transformational project costs (1)	$	45,546			$	53,864			$	74,656				$	116,218				$	290,284
Impact of bad debt reserve adjustments (2)	—				—				153,499					169,903					323,402
Impact of goodwill impairment	—				—				68,725					134,481					203,206
Impact of loss on assets held for sale	—				—				—					46,968					46,968
EBITDA adjusted for certain items (Non-GAAP)	$	898,157			$	792,175			$	538,126				$	142,771				$	2,371,229

(1)	Includes various transformation initiative costs, primarily consisting of changes to our business technology strategy, excluding charges related to accelerated depreciation.
(2)	Fiscal 2020 represents excess bad debt charges recognized on the increase in past due receivables arising from the COVID-19 pandemic.

For more information contact:
Shannon Mutschler Media Contact [email protected] T 281-584-5980	Rachel Lee Investor Contact [email protected] T 281-436-7815

First quarter net income of $8.8 million

First quarter adjusted EBITDA of $26.8 million

First quarter awards of $90.3 million resulting in 42% bid market share

HOUSTON, May 04, 2021 (GLOBE NEWSWIRE) — Great Lakes Dredge & Dock Corporation (Nasdaq:GLDD), the largest provider of dredging services in the United States, today reported financial results for the quarter ended March 31, 2021.

First Quarter 2021 Highlights

• Revenue was $177.6 million in the first quarter
• Total operating income was $16.6 million in the first quarter
• Net income was $8.8 million in the first quarter
• Adjusted EBITDA was $26.8 million in the first quarter

Management Commentary

Lasse Petterson, President and Chief Executive Officer commented, “During 2020 as the COVID-19 pandemic hit our nation, Great Lakes was able to adjust and navigate the difficulties and challenges the pandemic posed to our operations. However, as the 3^rd wave of the pandemic spread through our population, we started to see significant additional direct costs and operational interruptions in the first quarter of 2021. Several of our vessel crews were infected despite our extensive testing and isolation protocols. Vessels were required to go to shore for crew changes and the vessels had to be disinfected before returning to work. This impacted the vessels’ scheduling and availability, which impacted our productivity on several projects and led to delays which pushed revenue from the first quarter into remaining quarters of 2021. Today the projects and vessels that were impacted are back in operation and with our solid backlog, vaccinations increasing, and stronger performance expectations in the third and fourth quarters, we do not see adjusting our full year expectations at this time. Approximately twenty three revenue days were lost due to COVID outbreaks. Downtime for the vessels impacted directly by COVID delays equated to $3.9 million of revenue and $1.2 million of gross margin. The direct COVID costs of at home and on site testing and costs of quarantining were $4.3 million in the quarter. We have initiated an extensive vaccination effort of our crews and staff and as of today we have approximately 20% of our staff either fully vaccinated or partially vaccinated. Our target is to have the majority of all staff and crew vaccinated in the second quarter of 2021, which we hope will greatly reduce or even potentially eliminate further impacts on our operations.

We ended the quarter with net income of $8.8 million and Adjusted EBITDA of $26.8 million compared to the first quarter of 2020 that ended with $34 million of net income and $61.4 million in Adjusted EBITDA. The first quarter of 2020 was a record breaking quarter for Great Lakes, driven by robust performance on several projects and no vessels in drydock, therefore comparison to this quarter was expected to be difficult.   In addition to the COVID related impacts, in the first quarter of 2021 we experienced some extended drydocks and equipment failure which impacted project schedules.

We expect the domestic bid market to be just as strong this year as it was in 2020. In the first quarter, Great Lakes announced awards for the Boston Phase 3 Deepening Project and the Panama City beach renourishment totaling $90.3 million. We also were the low bidder on the Mobile Deepening Phase 3 project that was pending award for $53.9 million at the end of the first quarter, but has since been awarded. In addition, in April of this year we were awarded the Golden Triangle Marsh Creation Project in Louisiana for $32.4 million and we were the low bidder on the Captiva Island Project for $15.6 million.

In the offshore wind market, the Biden administration has pushed to accelerate wind energy development and has set a target to install 30GW of offshore wind energy by 2030. This target confirms our plans and determination to evaluate future investments in the offshore wind market. In December of last year, we announced the design and development of the first U.S. flagged Jones Act compliant, inclined fall-pipe vessel for subsea rock installation for wind turbine foundations and in March we awarded the integration engineering and detail design package to Ulstein. This vessel would represent a significant critical advancement in building the U.S. logistics infrastructure to support the future of the new U.S. offshore wind industry. Delivery of the vessel is expected in late 2023.”

Quarterly Results

• Revenue was $177.6 million, a decrease of $40.1 million from the first quarter of 2020. The lower revenue in the first quarter of 2021 was due to lower coastal protection and capital dredging revenue, offset by an increase in revenue from maintenance dredging projects. The decrease in revenue compared to the first quarter of 2020 is mainly attributed to the fact that in last year’s first quarter there were no vessels in drydock, which allowed for more revenue generation, and we also had exceptional performance on several projects.
• Gross margin percentage declined to 18.6% in the first quarter of 2021 from 31.5% in the first quarter of 2020. Direct COVID-19 costs had an unfavorable impact of $4.3 million on gross profit during the first quarter and $1.2 million of opportunity lost related to the impacted vessels. In addition, productivity impacts and delays affected several projects. Also both the Dredge55 and the Carolina remained in drydock for the entire quarter but are expected to return to work in the second quarter of 2021.
• Operating income was $16.6 million, which is a $36.4 million decrease from the prior year quarter. The decrease is a direct result of lower gross margin. General and administrative expenses was $0.7 million higher than prior year. The increase in general and administrative expenses for the quarter was due to higher relocation expense in current year related to regional office and headquarter partially offset by a decrease in incentive pay.
• Net income for the quarter was $8.8 million compared to $34.0 million in the prior year quarter. The shortfall in operating income was offset partially by lower tax expense and interest expense.
• At March 31, 2021, the Company had $177.6 million in cash and total debt of $324.0 million.
• At March 31, 2021, the Company had $486.0 million in backlog, a decrease of $73.4 million from December 31, 2020. This decrease was expected as bidding activity is historically low in the first quarter of the year.
• Capital expenditures for the first quarter of 2021 were $16.5 million, which includes $5.4 million for our new hopper dredge, $1.0 million for our rock installation vessel, and $1.4 million for our new multicats.

Market Update

At the end of 2020, the domestic bid market for the year had reached $1.8 billion in projects bid. We continue to be optimistic and believe the 2021 domestic market will remain strong. The bid market continues to be driven by the large-scale port deepening projects along the East and Gulf coasts. We expect that 2021 will see bids for multiple project phases for port deepenings in Corpus Christi, Norfolk and the Houston ship channel that will continue for the next several years. Strong hurricane and storm seasons have resulted in an increase in beach erosion and other damage which adds to the recurring nature of our business and the need for more frequent coastal protection and port maintenance projects. 2021 will also see several major coastal marsh creation projects in Louisiana. These projects are needed as they help to reduce the risk of future damage from flood and storm events and are important in providing resilience to protect coastal communities and ecosystems as well as driving job creation and economic development. We have seen support for the dredging industry in the U.S. Army Corps of Engineers’ 2021 budget that was approved at a record high of $7.3 billion. In addition, the 2020 Water Resource Development Act (the “WRDA”) was signed into law and included some additional reforms to the Harbor Maintenance Trust Fund (the “HMTF”). These reforms will allow Congress to, for the first time, drawdown from the $9.3 billion surplus in the HMTF. This is in addition to having the annual cap lifted on the HMTF earlier in the year in the Coronavirus Aid, Relief and Economic Security Act. WRDA also includes significant language encouraging more beneficial use of dredged material and natural infrastructure, both of which are important environmental issues.

As noted above, we see strong support for offshore wind from the Biden administration. In March, the White House announced new initiatives that will advance the administration’s goals to expand the nation’s offshore wind energy capacity in the coming decade by opening new areas of development, improving environmental permitting, and increasing public financing for projects. The administration committed to approving 16 offshore wind projects by 2025 and stated it would direct $230 million in federal transportation dollars to fund port infrastructure and earmark $3 billion in loan guarantees from the Department of Energy. President Biden has set a target to install 30GW of offshore wind energy by 2030. In addition, in January, the White House released a Buy America fact sheet that emphasized President Biden’s strong support for the Jones Act and its importance to renewable offshore energy.

Great Lakes remains committed to maintaining the health and safety of our team members through an Incident & Injury Free® (IIF®) safety management program. This value-based approach has allowed us to respond quickly and effectively to the COVID-19 pandemic and any challenges resulting from the pandemic, and has helped us to minimize the financial impact.

The Company will be holding a conference call at 9:00 a.m. C.D.T. today where we will further discuss these results. Information on this conference call can be found below.

Conference Call Information

The Company will conduct a quarterly conference call, which will be held on Tuesday, May 4, 2021 at 9:00 a.m. C.D.T (10:00 a.m. E.S.T.). The call in number is (877) 377-7553 and Conference ID is 8696297. The conference call will be available by replay until Thursday, May 6, 2021 by calling (855) 859-2056 and providing Conference ID 8696297. The live call and replay can also be heard on the Company’s website, www.gldd.com, under Events & Presentations on the investor relations page. Information related to the conference call will also be available on the investor relations page of the Company’s website.

Use of Non-GAAP measures

Adjusted EBITDA, as provided herein, represents net income (loss) from continued operations, adjusted for net interest expense, income taxes, depreciation and amortization expense, debt extinguishment, accelerated maintenance expense for new international deployments, goodwill or asset impairments and gains on bargain purchase acquisitions. Adjusted EBITDA is not a measure derived in accordance with GAAP. The Company presents Adjusted EBITDA as an additional measure by which to evaluate the Company’s operating trends. The Company believes that Adjusted EBITDA is a measure frequently used to evaluate performance of companies with substantial leverage and that the Company’s primary stakeholders (i.e., its stockholders, bondholders and banks) use Adjusted EBITDA to evaluate the Company’s period to period performance. Additionally, management believes that Adjusted EBITDA provides a transparent measure of the Company’s recurring operating performance and allows management and investors to readily view operating trends, perform analytical comparisons and identify strategies to improve operating performance. For this reason, the Company uses a measure based upon Adjusted EBITDA to assess performance for purposes of determining compensation under the Company’s incentive plan. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, amounts determined in accordance with GAAP including: (a) operating income as an indicator of operating performance; or (b) cash flows from operations as a measure of liquidity. As such, the Company’s use of Adjusted EBITDA, instead of a GAAP measure, has limitations as an analytical tool, including the inability to determine profitability or liquidity due to the exclusion of accelerated maintenance expense for new international deployments, goodwill or asset impairments, gains on bargain purchase acquisitions, interest and income tax expense and the associated significant cash requirements and the exclusion of depreciation and amortization, which represent significant and unavoidable operating costs given the level of indebtedness and capital expenditures needed to maintain the Company’s business. For these reasons, the Company uses operating income to measure the Company’s operating performance and uses Adjusted EBITDA only as a supplement. Adjusted EBITDA is reconciled to net income attributable to common stockholders of Great Lakes Dredge & Dock Corporation in the table of financial results. For further explanation, please refer to the Company’s SEC filings.

The Company

Great Lakes Dredge & Dock Corporation (“Great Lakes” or the “Company”) is the largest provider of dredging services in the United States. In addition, the Company has a long history of performing significant international projects. The Company employs experienced civil, ocean and mechanical engineering staff in its estimating, production and project management functions. In its over 130-year history, the Company has never failed to complete a marine project. Great Lakes owns and operates the largest and most diverse fleet in the U.S. dredging industry, comprised of over 200 specialized vessels. Great Lakes has a disciplined training program for engineers that ensures experienced-based performance as they advance through Company operations. The Company’s Incident-and Injury-Free® (IIF®) safety management program is integrated into all aspects of the Company’s culture. The Company’s commitment to the IIF® culture promotes a work environment where employee safety is paramount.

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this press release may constitute “forward-looking” statements as defined in Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), the Private Securities Litigation Reform Act of 1995 (the “PSLRA”) or in releases made by the Securities and Exchange Commission (the “SEC”), all as may be amended from time to time. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of Great Lakes and its subsidiaries, or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements that are not historical fact are forward-looking statements. Forward-looking statements can be identified by, among other things, the use of forward-looking language, such as the words “plan,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “may,” “would,” “could,” “should,” “seeks,” “are optimistic,” or “scheduled to,” or other similar words, or the negative of these terms or other variations of these terms or comparable language, or by discussion of strategy or intentions. These cautionary statements are being made pursuant to the Exchange Act and the PSLRA with the intention of obtaining the benefits of the “safe harbor” provisions of such laws. Great Lakes cautions investors that any forward-looking statements made by Great Lakes are not guarantees or indicative of future performance. Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements with respect to Great Lakes include, but are not limited to: impacts resulting from or attributable to the COVID-19 pandemic, our ability to obtain federal government dredging and other contracts; uncertainties in federal government budgeting; extended federal government shutdowns, which may lead to funding issues, the incurrence of costs without payment or reimbursement under our contracts, and delays or cancellations of key projects; the risk that the President of the United States may divert funds away from the Army Corps of Engineers in response to a national emergency; our ability to qualify as an eligible bidder under government contract criteria and to compete successfully against other qualified bidders; risks associated with cost over-runs, operating cost inflation and potential claims for liquidated damages, particularly with respect to our fixed cost contracts; the timing of our performance on contracts; significant liabilities that could be imposed were we to fail to comply with government contracting regulations; risks related to international dredging operations, including instability and declining relationships amongst certain governments in the Middle East and the impact this may have on infrastructure investment, asset value of such operations, and local licensing, permitting and royalty issues; increased cost of certain material used in our operations due to tariffs; a significant negative change to large, single customer contracts from which a significant portion of our international revenue is derived; changes in previous-recorded net revenue and profit as a result of the significant estimates made in connection with our methods of accounting for recognizing revenue; consequences of any lapse in disclosure controls and procedures or internal control over financial reporting; changes in the amount of our estimated backlog; our ability to obtain bonding or letters of credit and risks associated with draws by the surety on outstanding bonds or calls by the beneficiary on outstanding letters of credit; increasing costs to operate and maintain aging vessels; equipment or mechanical failures; acquisition integration and consolidation risks; impacts of legal and regulatory proceedings, including potential penalties and reputational damage as a result of such proceedings: unforeseen delays and cost overruns related to the construction of new vessels, including potential mechanical and engineering issues; our becoming liable for the obligations of joint ventures, partners and subcontractors; capital and operational costs due to environmental regulations; market and regulatory responses to climate change; our potential entry into the offshore wind market; unionized labor force work stoppages; increased costs associated with the transition and risks related to employee retention; maintaining an adequate level of insurance coverage; information technology security breaches; our substantial amount of indebtedness; restrictions imposed by financing covenants; the impact of adverse capital and credit market conditions; limitations on our hedging strategy imposed by statutory and regulatory requirements for derivative transactions; foreign exchange risks; changes in macroeconomic indicators and the overall business climate; and losses attributable to our investments in privately financed projects. For additional information on these and other risks and uncertainties, please see Item 1A. “Risk Factors” of Great Lakes’ Annual Report on Form 10-K for the year ended December 31, 2020, and in other securities filings by Great Lakes with the SEC.

Although Great Lakes believes that its plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, actual results could differ materially from a projection or assumption in any forward-looking statements. Great Lakes’ future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The forward-looking statements contained in this press release are made only as of the date hereof and Great Lakes does not have or undertake any obligation to update or revise any forward-looking statements whether as a result of new information, subsequent events or otherwise, unless otherwise required by law.

Great Lakes Dredge & Dock Corporation
Condensed Consolidated Statements of Operations
(Unaudited and in thousands, except per share amounts)
	Three Months Ended
	March 31,
		2021				2020
Contract revenues	$	177,633			$	217,695
Gross profit		33,076				68,474
General and administrative expenses		16,322				15,571
(Gain) loss on sale of assets—net		106				(145	)
Operating income		16,648				53,048
Interest expense—net		(6,586	)			(6,630	)
Other income (expense)		141				(1,121	)
Income before income taxes		10,203				45,297
Income tax provision		(1,389	)			(11,310	)
Net income	$	8,814			$	33,987
Basic earnings per share	$	0.14			$	0.53
Basic weighted average shares		65,269				64,455
Diluted earnings per share	$	0.13			$	0.52
Diluted weighted average shares		66,159				65,717

Great Lakes Dredge & Dock Corporation
Reconciliation of Net Income to Adjusted EBITDA
(Unaudited and in thousands)
	Three Months Ended
	March 31,
		2021				2020
Net income	$	8,814			$	33,987
Adjusted for:
Interest expense—net		6,586				6,630
Income tax provision		1,389				11,310
Depreciation and amortization		10,053				9,451
Adjusted EBITDA	$	26,842			$	61,378

Great Lakes Dredge & Dock Corporation
Selected Balance Sheet Information
(Unaudited and in thousands)
	Period Ended
	March 31,				December 31,
		2021				2020
Cash and cash equivalents	$	177,708			$	216,510
Total current assets		349,677				362,693
Total assets		959,982				958,024
Total current liabilities		169,297				176,287
Long-term debt		323,958				323,735
Total equity		356,610				346,668

Great Lakes Dredge & Dock Corporation
Revenue and Backlog Data
(Unaudited and in thousands)
	Three Months Ended
	March 31,
Revenues		2021				2020
Dredging:
Capital – U.S.	$	77,606			$	83,549
Capital – foreign		4,709				6,862
Coastal protection		46,631				79,850
Maintenance		45,301				42,385
Rivers & lakes		3,386				5,049
Total revenues	$	177,633			$	217,695

	As of
	March 31,				December 31,				March 31,
Backlog		2021				2020				2020
Dredging:
Capital – U.S.	$	310,163			$	320,920			$	303,637
Capital – foreign		2,077				6,865				23,896
Coastal protection		82,589				97,986				76,786
Maintenance		84,820				125,090				58,945
Rivers & lakes		6,334				8,515				11,631
Total backlog	$	485,983			$	559,376			$	474,895

For further information contact:

Tina Baginskis

Director, Investor Relations

630-574-3024

BOCA RATON, Fla., May 04, 2021 (GLOBE NEWSWIRE) — FOREWARN, LLC, a red violet company (NASDAQ: RDVT) and the leading provider of real-time information solutions for real estate agents, today announced that the South Metro Denver REALTOR® Association (“SMDRA”) has contracted to make FOREWARN® services available for the 5,200+ REALTOR® members it serves throughout the Denver metro area to promote proactive real estate agent safety.

Available both online and through a mobile application, FOREWARN analyzes billions of data points and provides users with the ability to mitigate risks by verifying identity, searching for criminal histories, and validating information provided by potential clients — using just a phone number. FOREWARN allows agents to properly and safely plan for showings with a higher level of confidence.

The FOREWARN services purchased by SMDRA will be available to the 5,200+ real estate agent membership at no additional cost to individual agents.

“I am pleased to announce this partnership with FOREWARN to provide an added layer of proactive safety and intelligence for all our members,” said Brian Anzur, Chairman of South Metro Denver REALTOR® Association. “FOREWARN is a powerful tool that we feel is critical for our members’ safety and wellbeing. It is important that our members can quickly identify their prospects and potential risks well before they are in a vulnerable situation.”

Melissa Maldonado, CEO of South Metro Denver REALTOR® Association went on to say, “Working with unknown prospects is a regular occurrence for our members. Having FOREWARN at their fingertips is going to help them operate with greater peace of mind.”

On May 4, 2021, existing SMDRA members will receive specific instructions on how to move forward with activating their FOREWARN subscription.

All other real estate agencies and agents can learn more about FOREWARN at www.forewarn.com.

About FOREWARN®

At FOREWARN, we bring instant knowledge through innovative solutions to ensure safer engagements and smarter interactions. Leveraging powerful analytics and a massive data repository, our solutions enable organizations to gain real-time knowledge, for purposes such as verifying identity, searching for criminal histories, and validating information. Risk assessment and due diligence at your fingertips™.

RELATED LINKS:
www.forewarn.com

About red violet®

At red violet, we build proprietary technologies and apply analytical capabilities to deliver identity intelligence. Our technology powers critical solutions, which empower organizations to operate with confidence. Our solutions enable the real-time identification and location of people, businesses, assets and their interrelationships. These solutions are used for purposes including risk mitigation, due diligence, fraud detection and prevention, regulatory compliance, and customer acquisition. Our intelligent platform, CORE™, is purpose-built for the enterprise, yet flexible enough for organizations of all sizes, bringing clarity to massive datasets by transforming data into intelligence. Our solutions are used today to enable frictionless commerce, to ensure safety, and to reduce fraud and the concomitant expense borne by society. For more information, please visit www.redviolet.com.

FORWARD-LOOKING STATEMENTS

This press release contains “forward-looking statements,” as that term is defined under the Private Securities Litigation Reform Act of 1995 (PSLRA), which statements may be identified by words such as “expects,” “plans,” “projects,” “will,” “may,” “anticipate,” “believes,” “should,” “intends,” “estimates,” and other words of similar meaning. Such forward looking statements are subject to risks and uncertainties that are often difficult to predict, are beyond our control and which may cause results to differ materially from expectations, including whether FOREWARN will provide an added layer of proactive safety and intelligence for SMDRA members and whether FOREWARN will assist SMDRA members to quickly identify their prospects and potential risks well before SMDRA members find themselves in a vulnerable situation. Readers are cautioned not to place undue reliance on these forward-looking statements, which are based on our expectations as of the date of this press release and speak only as of the date of this press release and are advised to consider the factors listed above together with the additional factors under the heading “Forward-Looking Statements” and “Risk Factors” in red violet’s SEC Filings. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

Investor Relations Contact:

Camilo Ramirez
Red Violet, Inc.
561-757-4500
[email protected]