Sysco Corp. (NYSE:SYY)

The analysis of the annual financial data reveals notable trends in the intangible assets of the company over the six-year period.

Goodwill

The value of goodwill experienced a decline from US$3,896 million in 2019 to US$3,732 million in 2020, followed by a recovery and consistent growth reaching US$5,153 million by 2024. This upward trajectory indicates ongoing acquisitions or reassessments increasing the recorded goodwill.

Customer Relationships

Customer relationships, a key component of intangible assets, showed stable values between 2019 and 2020 (around US$1,050 million), then gradually increased to US$1,502 million by 2024. This suggests strengthening or expansion in customer-related intangible resources.

Non-compete Agreements

Non-compete agreements remained relatively low in absolute terms but demonstrated gradual growth from US$12 million in 2019 to US$28 million in 2024, reflecting either new agreements or enhanced valuations of existing ones.

Trademarks (Gross)

The gross carrying amount for trademarks showed a substantial increase in 2022 to US$148 million from a stable base of approximately US$14-15 million in prior years, maintaining a similar level through 2024. This sharp increase points to significant trademark acquisitions or revaluations.

Other Intangible Assets

Other intangible assets, previously showing no recorded value, reflect an amount of US$10 million in 2024, indicating possible recognition of newly identified intangibles.

Amortizable Intangible Assets - Gross Carrying Amount

These assets increased from US$1,079 million in 2019 to US$1,691 million in 2024, with a notable rise after 2020. This growth reflects continued investments or acquisitions of amortizable intangibles.

Accumulated Amortization

The accumulated amortization increased steadily in absolute value (more negative) from -US$373 million in 2019 to -US$807 million in 2024, which is consistent with aging intangible assets being amortized over time.

Amortizable Intangible Assets - Net

The net amount showed a decline from US$706 million in 2019 to US$590 million in 2021, then rose sharply to US$828 million in 2022 before fluctuating and finally increasing to US$884 million in 2024. These fluctuations may reflect a combination of new intangibles acquired, amortization expense, and possible impairments or disposals.

Trademarks (Net)

Net trademarks decreased slightly from US$150 million in 2019 to US$123 million in 2022 but surged to US$303 million by 2024. This pattern suggests brand asset revaluations or significant acquisitions in the recent periods.

Licenses

Licenses remained constant at US$1 million throughout the period, indicating no material changes in this category.

Indefinite-Lived Intangible Assets

Indefinite-lived intangibles remained fairly stable between US$124 million and US$156 million up to 2021, but then increased sharply to US$304 million by 2024, likely driven by the aforementioned trademark revaluations or additions.

Total Intangible Assets

Overall intangible assets showed a decline from US$857 million in 2019 to US$746 million in 2021, followed by a significant increase reaching US$1,188 million by 2024. This reflects a combination of asset growth through acquisitions and revaluations despite amortization pressures.

Goodwill and Other Intangibles

The aggregate of goodwill and other intangibles rose from US$4,754 million in 2019 to US$6,341 million in 2024, demonstrating an upward trend consistent with the individual components, and indicating overall enhancement of intangible asset values within the company.

In summary, the data exhibits a strong upward trend in goodwill and certain intangible asset components, particularly trademarks and customer relationships, after a period of stabilization or slight decline. The increase in accumulated amortization aligns with the aging of assets, while net intangible asset values suggest periodic reassessments or growth initiatives. The marked growth in intangible assets by 2024 likely reflects strategic investments, acquisitions, or revaluations enhancing the company's intangible asset base.

The financial data demonstrates discernible shifts in the company's assets, equity, and earnings over the six-year span examined. Several key trends and contrasts between reported and adjusted figures emerge from the analysis.

Total Assets

Reported total assets generally increased from $17.967 billion in 2019 to $24.917 billion in 2024, exhibiting some fluctuations, particularly a dip in 2021. Adjusted total assets also showed growth from $14.070 billion in 2019 to $19.764 billion in 2024 but remained consistently lower than reported assets, reflecting adjustments presumably related to goodwill or intangible asset valuations. The divergence between reported and adjusted assets indicates significant goodwill or intangible asset carrying values that impact the reported figures.

Shareholders’ Equity

Reported shareholders’ equity displayed volatility, initially declining sharply from $2.503 billion in 2019 to $1.159 billion in 2020, then partially recovering but fluctuating thereafter, ending at $1.860 billion in 2024. Conversely, adjusted shareholders’ equity remained negative throughout the period, worsening from -$1.394 billion in 2019 to -$3.293 billion in 2024, signaling possible persistent impairment or accounting adjustments affecting equity when goodwill is excluded or adjusted.

Net Earnings

Reported net earnings declined markedly in 2020 to $215 million from $1.674 billion in 2019, indicative of a substantial earnings hit during that year, yet recovered strongly in subsequent years, reaching $1.955 billion by 2024. Adjusted net earnings mirror the reported earnings trend closely, with some exception in 2020 where adjusted net earnings ($419 million) were substantially higher than the reported figure. This suggests that adjustments made in net earnings relate mainly to extraordinary items or goodwill impairments affecting that year’s reported result.

Overall, the data indicates that while total assets have generally increased, the adjusted figures reveal a more conservative asset base after removing goodwill effects. Shareholders’ equity adjustments highlight ongoing negative impacts likely tied to asset impairments or revaluations. Net earnings show recovery post-2020 disruption, with adjustments smoothing some volatility. These patterns suggest a company managing significant intangible asset considerations alongside operational recovery and growth in recent years.

Net Profit Margin

The reported net profit margin exhibited a notable decline in the fiscal year 2020, dropping sharply from 2.79% in 2019 to 0.41%. Following this low point, a consistent recovery trend is observed, with margins increasing to 1.02% in 2021 and continuing their upward trajectory to 2.48% by 2024. The adjusted net profit margin, which accounts for goodwill adjustments, shows a similar pattern but remains slightly higher in 2020 at 0.79%, indicating that goodwill adjustments mitigated some negative impacts during that period.

Total Asset Turnover

Reported total asset turnover decreased significantly in 2020 from 3.35 to 2.34, suggesting reduced efficiency in asset use during that year. A gradual recovery occurs through 2021 to 2024, with turnover reaching 3.16 by 2024, close to pre-2020 levels. Adjusted total asset turnover, which excludes goodwill, follows this overall trend but remains consistently higher than the reported figures. The higher adjusted ratios suggest that goodwill assets may be inflating total assets, thus reducing the turnover ratio in the reported figures.

Financial Leverage

Reported financial leverage shows significant volatility across the years. It spikes dramatically from 7.18 in 2019 to 19.53 in 2020, then decreases to 13.79 in 2021, slightly rises in 2022 to 15.98, and subsequently declines to 11.36 in 2023 before a moderate increase to 13.4 in 2024. This fluctuation indicates changing capital structure dynamics and possibly varying reliance on debt or financing methods. No adjusted financial leverage data was available for comparison.

Return on Equity (ROE)

The reported ROE displays substantial variability. It sharply decreases from 66.9% in 2019 to 18.6% in 2020, reflecting the impact of reduced profit margins and asset turnover. In the subsequent years, ROE improves significantly, reaching an outstanding 105.11% in 2024. This exceptional level suggests strong profitability relative to equity, potentially influenced by fluctuating leverage ratios and operational efficiency. Adjusted ROE data is unavailable for further analysis.

Return on Assets (ROA)

Reported ROA follows a similar pattern to net profit margin and asset turnover, declining steeply in 2020 to 0.95% from 9.32% in 2019, then recovering steadily to reach 7.85% in 2024. Adjusted ROA, which excludes goodwill, is consistently higher than the reported ROA across all years, indicating that goodwill negatively affects reported asset profitability. The adjusted ROA decreases from 11.9% in 2019 to 2.22% in 2020 before rebounding to 9.89% in 2024, mirroring the recovery trend seen in reported figures.

Overall Observations

The data reveals a significant disruption around the 2020 fiscal period, marked by declines in profitability and efficiency ratios. Subsequent years demonstrate a clear recovery trend across all key metrics. Goodwill adjustments generally result in improved profitability and asset efficiency ratios, suggesting that goodwill valuation impacts reported results notably. Financial leverage exhibits more pronounced volatility, which could be a key factor affecting return on equity variations during the period analyzed.

Net Earnings

The reported net earnings exhibit significant fluctuations over the observed periods. Starting from 1,674 million US dollars in 2019, there is a sharp decline to 215 million in 2020, followed by a partial recovery to 524 million in 2021. Subsequently, earnings increase substantially to 1,359 million in 2022 and continue growing to reach 1,770 million and 1,955 million in 2023 and 2024, respectively.

Adjusted net earnings show a similar trend but with differences in magnitude for the year 2020. In 2020, adjusted earnings are nearly double the reported figure, at 419 million US dollars, indicating adjustments impacting reported earnings significantly during that year. For all other years, adjusted earnings are identical to reported earnings, reflecting either no adjustments or adjustments equal to zero in those periods.

Net Profit Margin

The reported net profit margin follows a pattern consistent with net earnings, dropping sharply from 2.79% in 2019 to 0.41% in 2020. This low margin year is followed by a gradual recovery, increasing to 1.02% in 2021, 1.98% in 2022, 2.32% in 2023, and 2.48% in 2024.

Adjusted net profit margin data are similar to the reported figures, differing only in 2020, where the adjusted margin is 0.79%, nearly double the reported margin. For other years, both reported and adjusted margins coincide exactly, emphasizing a period in 2020 where adjustments had a notable positive effect on profitability metrics.

The analysis of the financial data over the reported periods reveals notable trends in both the asset base and asset efficiency metrics.

Total Assets

The reported total assets exhibited an overall upward trajectory, increasing from $17,967 million in 2019 to $24,917 million in 2024. This represents a cumulative growth reflecting expansion or acquisition activities. Adjusted total assets, which exclude goodwill, also showed growth but at a slightly lower scale, rising from $14,070 million to $19,764 million during the same period. The adjustment underscores the impact of goodwill on the asset base, with the gap between reported and adjusted figures suggesting substantial intangible asset values.

Total Asset Turnover (Efficiency)

The reported total asset turnover declined significantly from 3.35 in 2019 to a low of 2.34 in 2020, possibly indicating reduced efficiency or increased asset investments not yet generating proportional sales. After 2020, it improved steadily, reaching 3.34 in 2023 before slightly declining to 3.16 in 2024. Adjusted total asset turnover followed a similar pattern but at higher levels, indicating better operational efficiency when goodwill is excluded. It dropped from 4.27 in 2019 to 2.8 in 2020, then recovered strongly to peak at 4.2 in 2023, tapering slightly to 3.99 in 2024.

Insights

The data suggests that while the company increased its asset base substantially, the initial impact on efficiency was negative, likely due to external factors or strategic investments during 2020. The subsequent recovery in asset turnover metrics indicates improved asset utilization and operational performance in the following years. The consistent difference between reported and adjusted figures highlights the influence of intangible assets on reporting, with adjusted metrics providing a clearer view of tangible asset productivity.

The reported total assets of the company exhibit a generally upward trend over the period analyzed. Starting from $17,967 million in 2019, assets increased significantly to $22,628 million in 2020, followed by a slight decline in 2021 to $21,414 million. From 2021 onward, total assets showed a steady increase again, reaching $24,917 million by 2024.

In contrast, adjusted total assets, which remove goodwill effects, follow a similar overall pattern but at consistently lower values. They rose from $14,070 million in 2019 to $18,896 million in 2020, then decreased to $17,469 million in 2021. From 2021 to 2024, adjusted total assets increased steadily, reaching $19,764 million. The gap between reported and adjusted total assets suggests a significant portion of assets is attributable to goodwill and intangible assets.

Reported shareholders’ equity presents more volatility. It declined dramatically from $2,503 million in 2019 to $1,159 million in 2020. A recovery phase followed, with equity growing to $1,553 million in 2021. However, equity dipped again in 2022 to $1,382 million, rebounded to $2,009 million in 2023, and then decreased to $1,860 million in 2024. This fluctuation indicates varying profitability or potential equity transactions affecting the equity base during these years.

Adjusted shareholders’ equity, which accounts for goodwill adjustments, remains negative throughout the entire period. The negative values, ranging from -$1,394 million in 2019 to -$3,293 million in 2024, indicate that goodwill adjustments result in a net deficit in equity when intangible assets are excluded. This ongoing negative adjusted equity suggests a material intangible asset component and potential impairment or write-down considerations affecting the net worth.

The reported financial leverage ratio, defined as the ratio of total assets to shareholders' equity, shows significant fluctuations. It peaked sharply at 19.53 in 2020, following the steep decline in shareholders’ equity, which increased leverage risk. Subsequently, leverage decreased to 13.79 in 2021, rose slightly to 15.98 in 2022, then declined again to 11.36 in 2023 before increasing moderately to 13.4 in 2024. These variations reflect the changes in reported equity more than total assets, indicating fluctuating reliance on debt or other liabilities to finance assets.

Adjusted financial leverage data is not available, limiting the ability to analyze leverage trends excluding goodwill impacts.

Overall, the data indicates that the company's asset base has expanded over the period, with a substantial goodwill component affecting the adjusted figures. Reported shareholders’ equity and leverage ratios display volatility, likely influenced by changes in profitability, equity transactions, and intangible asset valuations. The persistent negative adjusted equity highlights the importance of intangible assets in the capital structure, which may have implications for financial stability and risk assessment.

The financial data reveals a fluctuating trajectory of net earnings over the six-year period. Reported net earnings experienced a significant drop from 1,674 million US dollars in mid-2019 to a low of 215 million in mid-2020, likely reflecting adverse conditions during that period. Subsequently, net earnings showed a recovery trend, rising to 524 million in mid-2021 and continuing upward to 1,770 million by mid-2023, eventually reaching 1,955 million by mid-2024. The adjusted net earnings follow a similar pattern, with the notable difference in mid-2020 where adjusted earnings were almost double the reported figure, indicating significant adjustments made for that year.

Shareholders’ equity shows a contrasting trend when comparing reported and adjusted figures. Reported shareholders’ equity declined sharply from 2,503 million in 2019 to 1,159 million in 2020, then fluctuated with a moderate recovery toward 2,009 million in 2023 but slightly fell back to 1,860 million in 2024. In stark contrast, the adjusted shareholders’ equity values are consistently negative throughout the years and show a worsening trend, dropping from -1,394 million in 2019 to -3,293 million in 2024. This sustained negative adjusted equity implies substantial goodwill or intangible asset adjustments affecting the book value.

The reported Return on Equity (ROE) figures display considerable volatility. After a steep decline from 66.9% in 2019 to 18.6% in 2020, ROE rebounded strongly in the subsequent years, peaking dramatically at 98.3% in 2022. Although it decreased slightly thereafter, the ROE remained very high at 88.13% in 2023 and further climbed to 105.11% in 2024. This suggests an improving profitability relative to shareholder equity in reported terms despite equity fluctuations. Adjusted ROE data is not available for analysis.

Overall, the company shows a resilient recovery in net earnings following a dip in 2020, with profitability indicators improving markedly. However, the sustained negative adjusted shareholders’ equity highlights ongoing concerns related to asset valuations and goodwill adjustments which may affect long-term financial health assessments. The divergence between reported and adjusted equity figures suggests the importance of considering both metrics in evaluating the company’s financial position.

Net Earnings

Reported net earnings experienced significant fluctuations over the analyzed periods. The earnings dropped sharply from 1,674 million USD in 2019 to 215 million USD in 2020, indicating a substantial decline. Following this trough, net earnings showed a gradual recovery to 524 million USD in 2021, then increased sharply in 2022 and subsequent years, reaching 1,955 million USD by 2024. Adjusted net earnings mirrored this trend with a slightly higher recovery in 2020 (419 million USD) compared to reported figures, suggesting that adjustments related to goodwill or other factors improved the indication of underlying profitability.

Total Assets

Reported total assets rose consistently throughout the period, increasing from 17,967 million USD in 2019 to 24,917 million USD in 2024. This growth, however, contrasts with the adjusted total assets, which exclude goodwill and other adjustments. Adjusted total assets started at 14,070 million USD in 2019 and increased more modestly to 19,764 million USD in 2024. The difference between reported and adjusted assets highlights a considerable component of goodwill or intangible assets, which appear to have been relatively stable in magnitude but contributed to the higher reported asset base.

Return on Assets (ROA)

Reported ROA declined sharply from 9.32% in 2019 to 0.95% in 2020, aligning with the drop in net earnings and possibly reflecting operational challenges or economic conditions during that period. Following 2020, the ROA steadily improved, reaching 7.85% in 2024, though not returning to the initial 2019 level. The adjusted ROA provides a more optimistic view, showing higher percentages at each point, starting at 11.9% in 2019, dropping to 2.22% in 2020, and improving significantly thereafter to 9.89% in 2024. This suggests that when excluding goodwill effects, asset efficiency and profitability appear stronger, particularly in the recovery phase.

General Insights

The data reveals a pronounced impact on earnings and returns in 2020, likely due to adverse external factors. Recovery trends from 2021 onward reflect improved operational performance and asset utilization. The disparity between reported and adjusted figures emphasizes the importance of considering goodwill adjustments for a more precise assessment of financial health and operating performance. Asset growth is steady, supporting increased earnings capacity, while adjusted metrics suggest strengthening profitability and efficiency when excluding intangible asset effects.