PresentationJeffrey BernsteinDirector & Senior Equity Research Analyst Good morning, everyone. My name is Jeff Bernstein, and I'm the restaurant and foodservice distribution analyst at Barclays. I'm pleased to introduce our next presenting company, Sysco Corporation. With us this morning, we have Kevin Hourican to my immediate right, President and CEO; Kenny Cheung, CFO, sitting right next to him; and in the audience, we have Kevin Kim, Head of IR; and Joshua Long, Senior Director of IR. And obviously, we a ...

Sysco (SYY) FY 2025 Conference September 03, 2025 11:15 AM ET Company ParticipantsKevin Hourican - Chair of the Board & CEOKenny Cheung - EVP & CFOConference Call ParticipantsJeffrey Bernstein - MD - Senior Restaurant AnalystJeffrey BernsteinGood morning, everyone. My name is Jeff Bernstein, and I am the restaurant and foodservice distribution analyst at Barclays. I'm pleased to introduce our next presenting company, Sysco Corporation. With us this morning, we have Kevin Hurican, to my immediate right, Pres ...

Financial Data and Key Metrics Changes - Sysco reported $81 billion in sales for the most recent year, with over 60% of revenue coming from restaurants, reflecting a 3% year-on-year growth in the restaurant segment [2][41] - The company expects FY 2026 sales growth of 3% to 5% and EPS growth of 1% to 3%, with adjusted EPS growth projected at 5% to 7% [38][50] - Sysco achieved a gross margin of 18.4%, which is 1.3 times higher than the average core peer, and an adjusted operating margin of over 4%, approximately 1.5 times higher than peers [45][46] Business Line Data and Key Metrics Changes - Sysco's specialty business, valued at $9 billion, is more than three times the size of its next biggest competitor in that space [5] - The U.S. Broadline business has shown positive inflection, with expectations for continued growth in Q1 [17][60] - The FreshPoint produce business experienced a drag due to exiting a business line, impacting the overall U.S. Foodservice (USFS) performance [18][56] Market Data and Key Metrics Changes - Sysco's international business is growing faster than its domestic core business, with a significant opportunity for expansion valued at over $10 billion [12][13] - The company has seen double-digit growth in its international segment for seven consecutive quarters [71] - The local case growth is improving, with Sysco's local business performing better than large national chains [56][64] Company Strategy and Development Direction - Sysco aims to leverage its size and scale to maintain its market leadership and drive profitability across various segments [4][40] - The company is focused on expanding its specialty business and enhancing its operational efficiencies through strategic sourcing and total team selling [45][46] - Sysco is committed to a balanced capital allocation strategy, investing in growth while maintaining an investment-grade balance sheet [48][82] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving FY 2026 guidance based on self-help initiatives and momentum in local case growth [68][70] - The overall consumer health is stabilizing, with improvements in foot traffic to restaurants noted [74][75] - Sysco is cautiously optimistic about the full year, expecting to grow by taking market share profitably [76][78] Other Important Information - Sysco has implemented new initiatives such as the Perks loyalty program and AI360 sales tool to enhance customer service and sales productivity [28][34] - The company plans to invest approximately $1 billion in share repurchases under current market conditions [83] Q&A Session Summary Question: Local case growth and momentum - Management highlighted that local business is outperforming national chains, with positive expectations for USBL in Q1 [56][60] - The retention and productivity of the sales workforce have improved, contributing to the positive momentum [57][61] Question: Confidence in FY 2026 guidance and consumer health - Management emphasized that guidance is based on self-help initiatives and momentum across various business segments, including international growth [68][70] - The consumer health is stabilizing, with improvements noted in restaurant traffic and performance in non-commercial sectors [74][76]

September 3, 2025 Barclays Global Consumer Staples Conference 2025 Kevin Hourican CHAIR OF THE BOARD AND CHIEF EXECUTIVE OFFICER 3 Forward-Looking Statements Statements made in this presentation that look forward in time or that express management's beliefs, expectations or hopes are forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements concern, among other things, our future financial performance and results, business strategy, plans, goals and objectives, ...

Core Insights - Sysco Corporation (SYY) is a leader in the global foodservice industry, enhancing its customer base through digital solutions and retail-style formats [1] - The company's 'Recipe for Growth' strategy focuses on digital transformation, supply-chain strength, customer-centric initiatives, and innovation to expand sales and earnings while maximizing shareholder value [2] - Sysco's acquisitions, including Ready Chef and Campbells Prime Meat, are crucial for enhancing its distribution network and growth prospects [3] Business Strategy - Sysco is implementing cost-cutting measures, simplifying processes, and expanding distribution capacity to improve operational efficiency [4] - The company aims to provide customer-oriented merchandising and marketing solutions to strengthen its leadership in global food distribution [5] Market Performance - Sysco's shares have increased by 5.2% year-to-date, contrasting with a 5.6% decline in the industry [8] - The company trades at a forward price-to-earnings ratio of 17.42X, higher than the industry average of 15.9X [9] Earnings Estimates - The Zacks Consensus Estimate for Sysco's fiscal 2026 and fiscal 2027 earnings per share (EPS) indicates year-over-year growth of 2% and 8.9%, respectively [11] - Current estimates for the upcoming quarters show a slight increase in EPS, with a year-over-year growth estimate of 2.75% for the current quarter [12]

Core Insights - Sysco Corporation will webcast its presentations at two upcoming conferences: Barclays 18th Annual Global Consumer Staples Conference on September 3 at 11:15 a.m. ET and Wells Fargo 8th Annual Consumer Conference on September 16 at 8:00 a.m. PST [1][2] Company Overview - Sysco is the global leader in selling, marketing, and distributing food and related products to customers who prepare meals away from home, including restaurants, healthcare facilities, and educational institutions [3][4] - The company operates 337 distribution centers across 10 countries, employing 75,000 colleagues and serving approximately 730,000 customer locations [3] - Sysco generated sales exceeding $81 billion in fiscal year 2025, which ended on June 28, 2025 [3] Business Model and Offerings - As the largest food-away-from-home distributor, Sysco provides customized supply chain solutions, specialty product offerings, and culinary support to help customers innovate and optimize operations [4] - The company acts as a trusted business partner, offering a portfolio that includes fresh produce, premium proteins, specialty products, sustainably focused items, equipment, supplies, and innovative culinary solutions [4]

[PART I](index=3&type=section&id=PART%20I) [Business Overview](index=3&type=section&id=Item%201.%20Business) Sysco Corporation is the largest global food and related products distributor, serving 730,000 foodservice locations - Sysco Corporation is the **largest global distributor** of food and related products, serving approximately **730,000 customer locations** in the foodservice industry[12](index=12&type=chunk) Fiscal Year 2025 Annual Sales | Metric | Amount | | :----------- | :------------ | | Annual Sales | **$81.4 billion** | - The company's operations are primarily in North America and Europe, structured into three reportable segments: U.S. Foodservice Operations, International Foodservice Operations, and SYGMA, plus 'Other' operations[16](index=16&type=chunk) Fiscal Year 2025 Product Sales Mix | Principal Product Categories | 2025 Sales Mix (%) | | :-------------------------------- | :----------------- | | Fresh and frozen meats | 19 | | Canned and dry products | 18 | | Frozen fruits, vegetables, bakery | 15 | | Dairy products | 11 | | Poultry | 10 | | Fresh produce | 8 | | Paper and disposables | 7 | | Beverage products | 4 | | Seafood | 3 | | Equipment and smallwares | 2 | | Other | 3 | | **Totals** | **100** | Fiscal Year 2025 Sales by Customer Type | Type of Customer | 2025 Sales (%) | | :---------------- | :------------- | | Restaurants | 60 | | Education, government | 8 | | Healthcare | 8 | | Travel and leisure | 7 | | Other | 17 | | **Totals** | **100** | - As of June 28, 2025, Sysco employed approximately **75,000 employees globally**, with **14% represented by unions**[31](index=31&type=chunk) - Sysco estimates it serves about **17% of the approximately $370 billion annual U.S. foodservice market**, with competitive advantages including sales consultants, diversified products, service reliability, and multi-regional presence[42](index=42&type=chunk) [Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) Sysco faces risks from low margins, volatile costs, intense competition, supply chain disruptions, and evolving technology threats - The foodservice distribution industry is characterized by **low profit margins**, making it vulnerable to significant or prolonged inflation or deflation in product costs[62](index=62&type=chunk) - Labor shortages and increases in labor costs, including minimum wage requirements and wage inflation, could adversely affect profitability[63](index=63&type=chunk)[64](index=64&type=chunk) - Global health developments, economic uncertainty, and geopolitical instability (e.g., military conflicts, trade policies) can depress demand, impact supply chains, and increase operating costs[66](index=66&type=chunk)[69](index=69&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) - The fragmented and highly competitive foodservice distribution industry, including competition from non-traditional sources and technology-driven competitors, puts pressure on profit margins[76](index=76&type=chunk) - Supply chain interruptions due to conditions beyond control (e.g., weather, labor actions, product recalls, geopolitical events) can increase product costs and impair delivery capabilities[81](index=81&type=chunk)[82](index=82&type=chunk) - Reliance on technology and the growing use of artificial intelligence systems introduce risks such as cybersecurity incidents, operational disruptions, data loss, and compliance challenges with evolving data privacy regulations (e.g., GDPR, CCPA, CPRA)[113](index=113&type=chunk)[114](index=114&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk) Total Indebtedness (as of June 28, 2025) | Metric | Amount | | :----------------- | :------------ | | Total Indebtedness | **$13.3 billion** | - The company faces potential material payments under multiemployer defined benefit pension plans and increased funding requirements for company-sponsored pension plans due to financial market declines[131](index=131&type=chunk)[132](index=132&type=chunk) [Unresolved Staff Comments](index=23&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) No unresolved staff comments from the SEC were reported - No unresolved staff comments were reported[139](index=139&type=chunk) [Cybersecurity](index=23&type=section&id=Item%201C.%20Cybersecurity) Sysco's cybersecurity program, overseen by the Board, focuses on prevention, detection, and response, with no material threats identified in FY25 - Sysco's cybersecurity program is led by a dedicated team, including the Chief Information Security Officer (CISO) and Chief Information Officer (CIO), with oversight from the Board of Directors' Technology Committee[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk) - The program is designed to align with applicable industry standards and includes prevention, detection, and response capabilities, employee training, threat intelligence monitoring, and third-party vendor risk management[145](index=145&type=chunk)[146](index=146&type=chunk) - No cybersecurity threats materially affected the company's business strategy, results of operations, or financial condition during the year ended June 28, 2025, despite an increase in cyberattack volume and sophistication[147](index=147&type=chunk) [Properties](index=25&type=section&id=Item%202.%20Properties) Sysco operates 337 global distribution facilities (57.4 million sq ft, mostly owned) and a fleet of 19,000 delivery vehicles Distribution Facilities and Square Footage (as of June 28, 2025) | Location | Number of Facilities | Square Feet (in thousands) | | :--------------------------- | :------------------- | :------------------------- | | United States and its territories | 207 | 44,841 | | Canada | 28 | 4,364 | | France | 41 | 2,902 | | United Kingdom | 41 | 2,591 | | Sweden | 7 | 1,395 | | Ireland and Northern Ireland | 9 | 867 | | Bahamas | 1 | 192 | | Costa Rica | 1 | 188 | | Panama | 1 | 87 | | Belgium | 1 | 18 | | **Totals** | **337** | **57,445** | - Approximately **66.9% of the distribution facilities** (**38.4 million square feet**) are owned by Sysco, with the remainder under leases[149](index=149&type=chunk) - The company's fleet consists of approximately **19,000 delivery vehicles**, with about **91% owned**[152](index=152&type=chunk) [Legal Proceedings](index=25&type=section&id=Item%203.%20Legal%20Proceedings) Sysco is involved in ordinary legal proceedings, with no anticipated material adverse effects or environmental matters requiring disclosure - Sysco is party to legal proceedings in the ordinary course of business, but management does not believe they will have a material adverse effect on financial condition, results of operations, or cash flows[153](index=153&type=chunk) - No environmental matters requiring disclosure (threshold of **$1 million**) were identified for this period[154](index=154&type=chunk) [Mine Safety Disclosures](index=26&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Sysco Corporation - Mine Safety Disclosures are not applicable[155](index=155&type=chunk) [PART II](index=27&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=27&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Sysco's common stock trades on the NYSE, with a recent dividend increase and significant share repurchases in FY25 - Sysco's common stock (SYY) is traded on the New York Stock Exchange, with **6,672 record owners** as of August 5, 2025[157](index=157&type=chunk) - A quarterly dividend of **$0.54 per share** was declared in April 2025, an increase of **$0.03 per share**, paid in July 2025[158](index=158&type=chunk) Issuer Share Repurchases (Q4 Fiscal 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :------------------ | :------------------------------- | :--------------------------- | | March 30 - April 26 | 1,197,396 | $72.04 | | April 27 - May 24 | 3,022,284 | $71.35 | | May 25 - June 28 | 3,352,333 | $74.05 | | **Totals** | **7,572,013** | **$72.65** | - Sysco repurchased **16,988,703 shares for $1.3 billion** during fiscal 2025, with approximately **$1.5 billion remaining** under its **$5.0 billion share repurchase authorization**[160](index=160&type=chunk) [Reserved](index=28&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information - This item is reserved[166](index=166&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Sysco's financial performance, condition, and liquidity for FY25 and FY24, highlighting sales growth, goodwill impairment, and strategic goals [Overview](index=28&type=section&id=Overview) Sysco is a leading global food distributor, serving 17% of the growing U.S. foodservice market, which accounts for 56% of consumer food spending - Sysco distributes food and related products to restaurants, healthcare, educational facilities, lodging establishments, and other foodservice customers, primarily in North America and Europe[167](index=167&type=chunk) - The company serves approximately **17% of the U.S. foodservice market**, estimated at **$370 billion** in calendar year 2024, with projections to increase to **$382 billion** by the end of calendar year 2025[168](index=168&type=chunk) - The food-away-from-home market accounts for approximately **56% of total consumer food purchases** in the U.S. as of calendar year 2024[169](index=169&type=chunk) [Highlights](index=29&type=section&id=Highlights) FY25 saw sales growth from inflation and acquisitions, with adjusted non-GAAP metrics showing positive underlying growth despite a goodwill impairment charge Fiscal Year 2025 vs. Fiscal Year 2024 Financial Highlights | Metric | Fiscal 2025 (Amount) | Change vs. FY2024 | | :------------------------- | :------------------- | :---------------- | | Sales | **$81.4 billion** | **+3.2%** | | Operating income | **$3.1 billion** | **-3.6%** | | Adjusted operating income | **$3.5 billion** | **+1.2%** | | Net earnings | **$1.8 billion** | **-6.5%** | | Adjusted net earnings | **$2.2 billion** | **+0.8%** | | Basic earnings per share | **$3.74** | **-4.1%** | | Diluted earnings per share | **$3.73** | **-4.1%** | | Adjusted diluted earnings per share | **$4.46** | **+3.5%** | | EBITDA | **$4.0 billion** | **-1.2%** | | Adjusted EBITDA | **$4.3 billion** | **+2.4%** | - Fiscal 2025 operating income and net earnings were negatively impacted by a **noncash goodwill impairment charge**, which was not present in fiscal 2024[170](index=170&type=chunk)[174](index=174&type=chunk) [Key Performance Indicators](index=30&type=section&id=Key%20Performance%20Indicators) Sysco uses adjusted operating income, diluted EPS, EBITDA, case volume, brand penetration, and free cash flow to measure strategic goals and value - Sysco's most significant performance metrics include **adjusted operating income growth**, **adjusted diluted earnings per share growth**, **adjusted EBITDA**, **case volume growth** for U.S. and International Foodservice operations, **Sysco brand penetration** for U.S. Broadline operations, and **free cash flow**[178](index=178&type=chunk) - Case volume growth is a primary driver of top-line performance, with local customer case growth indicating higher gross profit potential due to more favorable pricing terms[182](index=182&type=chunk) - Sysco brand penetration for U.S. Broadline operations is a key measure for gross profit performance, as Sysco-branded products generally yield higher gross margins due to cost efficiencies[183](index=183&type=chunk) [Trends](index=32&type=section&id=Trends) FY25 saw negative restaurant foot traffic, 2.5% product cost inflation, decreased gross margin, increased operating expenses, and a $92 million goodwill impairment charge - Negative year-over-year foot traffic to restaurants impacted Sysco in fiscal 2025, but trends improved in the fourth quarter, with similar trends expected in fiscal 2026[186](index=186&type=chunk) - Total enterprise product cost inflation was **2.5%** in fiscal 2025, primarily driven by dairy, poultry, and meat categories[187](index=187&type=chunk)[188](index=188&type=chunk) - Gross margin decreased by **13 basis points** in fiscal 2025 due to a shift in customer mix (national sales outpacing local) and a decrease in Sysco brand penetration rates[188](index=188&type=chunk) - Operating expenses increased **4.2%** in fiscal 2025 due to business and sales headcount investments, cost inflation, and a **$92 million noncash goodwill impairment charge** for Guest Worldwide[190](index=190&type=chunk)[192](index=192&type=chunk) - Global Support Center expenses decreased **5.7%** in fiscal 2025 due to progress on existing cost savings programs[190](index=190&type=chunk) - The effective tax rate for fiscal 2025 was **24.3%**, with an expected range of **23.5% to 24.0%** in fiscal 2026, influenced by the recently signed One Big Beautiful Bill Act (OBBBA)[194](index=194&type=chunk)[195](index=195&type=chunk) - Sysco divested its interest in a Mexico joint venture and acquired Campbells Prime Meat in Scotland during fiscal 2025 as part of its growth strategy[196](index=196&type=chunk)[198](index=198&type=chunk) [Strategy](index=33&type=section&id=Strategy) Sysco's 'Recipe for Growth' strategy focuses on five pillars: Digital, Products and Solutions, Supply Chain, Customer Teams, and Future Horizons, to drive profitable growth - Sysco's 'Recipe for Growth' strategy is built on five strategic pillars: Digital, Products and Solutions, Supply Chain, Customer Teams, and Future Horizons[199](index=199&type=chunk)[200](index=200&type=chunk) - The strategy aims to enrich customer experience through digital tools, provide customer-focused marketing and merchandising, develop a nimble supply chain, invest in sales organization effectiveness, and cultivate new growth channels through organic expansion and strategic acquisitions[199](index=199&type=chunk)[200](index=200&type=chunk) [Results of Operations (Consolidated)](index=34&type=section&id=Results%20of%20Operations) FY25 consolidated sales increased 3.2% to $81.37 billion, but operating income and net earnings decreased due to a goodwill impairment charge Consolidated Results of Operations (Fiscal 2025 vs. 2024) | Metric | 2025 (Millions) | 2024 (Millions) | % Change | | :--------------------- | :------------ | :------------ | :------- | | Sales | **$81,370M** | $78,844M | **3.2%** | | Cost of sales | $66,401M | $64,236M | 3.4% | | Gross profit | **$14,969M** | $14,608M | **2.5%** | | Operating expenses | **$11,881M** | $11,406M | **4.2%** | | Operating income | **$3,088M** | $3,202M | **(3.6)%** | | Interest expense | $635M | $607M | 4.6% | | Other expense (income), net | $38M | $30M | 26.7% | | Earnings before income taxes | $2,415M | $2,565M | (5.8)% | | Income taxes | $587M | $610M | (3.8)% | | Net earnings | **$1,828M** | $1,955M | **(6.5)%** | | Basic earnings per share | $3.74 | $3.90 | (4.1)% | | Diluted earnings per share | **$3.73** | $3.89 | **(4.1)%** | [Segment Results](index=35&type=section&id=Segment%20Results) U.S. Foodservice remains the largest segment, contributing 70% of sales and 88.8% of operating income, while International Foodservice saw strong growth, and 'Other' was impacted by goodwill impairment Segment Sales and Operating Income (Fiscal 2025) | Segment | Sales (Millions) | % of Total Sales | Operating Income (Millions) | % of Total Segment Operating Income | | :----------------------------- | :--------------- | :--------------- | :-------------------------- | :---------------------------------- | | U.S. Foodservice Operations | **$56,965** | **70.0%** | **$3,516** | **88.8%** | | International Foodservice Operations | $14,905 | 18.3% | $437 | 11.0% | | SYGMA | $8,410 | 10.3% | $81 | 2.0% | | Other | $1,090 | 1.4% | $(73) | (1.8)% | | Global Support Center | — | — | $(873) | — | | **Consolidated Totals** | **$81,370** | **100.0%** | **$3,088** | **100.0%** | - U.S. Foodservice Operations sales increased **2.9% to $56.97 billion**, driven by higher inflation, but operating income decreased **4.3%** due to increased operating expenses and a **1.4% decrease in local customer case volume**[205](index=205&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk) - International Foodservice Operations sales increased **2.4% to $14.91 billion**, with operating income increasing **16.5% to $437 million**, primarily due to **4.0% growth in local case volumes** and strategic sourcing[212](index=212&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk) - SYGMA sales increased **8.3% to $8.41 billion**, and operating income rose by **$9 million**, driven by new customer growth and productivity improvements[217](index=217&type=chunk) - The 'Other' segment's operating income decreased by **$113 million**, primarily due to a **$92 million noncash goodwill impairment charge** related to Guest Worldwide[218](index=218&type=chunk) - Global Support Center expenses decreased **5.7% ($56 million)** in fiscal 2025, mainly due to lower colleague-related costs and incentive compensation[219](index=219&type=chunk) [Interest Expense](index=38&type=section&id=Interest%20Expense) Interest expense increased by $28 million in FY25 due to new senior notes, with approximately $700 million projected for FY26 Interest Expense (Fiscal 2025 vs. 2024) | Metric | 2025 (Millions) | 2024 (Millions) | Change (Millions) | | :------------- | :-------------- | :-------------- | :---------------- | | Interest Expense | **$635** | $607 | **+$28** | - The increase in interest expense was primarily due to interest on new senior notes issued[221](index=221&type=chunk) - Sysco expects interest expense to approximate **$700 million** in fiscal 2026[221](index=221&type=chunk) [Net Earnings](index=38&type=section&id=Net%20Earnings) GAAP net earnings decreased by 6.5% in FY25, while adjusted net earnings increased by 0.8% due to higher sales volume and strategic sourcing Net Earnings (Fiscal 2025 vs. 2024) | Metric | 2025 (Millions) | 2024 (Millions) | % Change | | :---------------- | :-------------- | :-------------- | :------- | | Net Earnings | **$1,828** | $1,955 | **(6.5)%** | | Adjusted Net Earnings | **$2,184** | $2,167 | **0.8%** | - The decrease in GAAP net earnings was primarily due to factors impacting operating income and interest expense, as well as income taxes[222](index=222&type=chunk) - Adjusted net earnings increased due to higher sales volume from recent acquisitions and disciplined strategic sourcing efforts[222](index=222&type=chunk) [Earnings Per Share](index=38&type=section&id=Earnings%20Per%20Share) Basic and diluted EPS decreased by 4.1% in FY25, but adjusted diluted EPS increased by 3.5%, reflecting underlying operational performance Earnings Per Share (Fiscal 2025 vs. 2024) | Metric | 2025 | 2024 | % Change | | :------------------------- | :------ | :------ | :------- | | Basic earnings per share | **$3.74** | $3.90 | **(4.1)%** | | Diluted earnings per share | **$3.73** | $3.89 | **(4.1)%** | | Adjusted diluted earnings per share | **$4.46** | $4.31 | **3.5%** | - The adjusted diluted earnings per share increased by **3.5% to $4.46** in fiscal 2025, reflecting underlying business performance[224](index=224&type=chunk) [Non-GAAP Reconciliations](index=40&type=section&id=Non-GAAP%20Reconciliations) Sysco provides non-GAAP reconciliations, excluding restructuring, transformation, acquisition costs, and goodwill impairment, for clearer underlying business trends - Non-GAAP financial measures (adjusted operating income, adjusted diluted EPS, adjusted EBITDA) exclude restructuring charges, transformation initiative expenses, severance, acquisition-related costs, and a goodwill impairment charge in fiscal 2025[225](index=225&type=chunk) - Results are also presented on a constant currency basis and exclude the impact of the Mexico joint venture divestiture to provide a clearer perspective on underlying business trends[226](index=226&type=chunk)[227](index=227&type=chunk) Consolidated Non-GAAP Financial Measures (Fiscal 2025 vs. 2024) | Metric | 2025 (Millions) | 2024 (Millions) | % Change | | :------------------------------------------- | :-------------- | :-------------- | :------- | | Comparable sales excluding Mexico joint venture (Non-GAAP) | **$81,163** | $78,308 | **3.6%** | | Comparable sales using a constant currency basis (Non-GAAP) | **$81,403** | $78,844 | **3.2%** | | Operating income adjusted for Certain Items (Non-GAAP) | **$3,523** | $3,481 | **1.2%** | | Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP) | **$3,525** | $3,481 | **1.3%** | | Net earnings adjusted for Certain Items (Non-GAAP) | **$2,184** | $2,167 | **0.8%** | | Diluted earnings per share adjusted for Certain Items (Non-GAAP) | **$4.46** | $4.31 | **3.5%** | | EBITDA (Non-GAAP) | **$3,995** | $4,045 | **(1.2)%** | | EBITDA adjusted for Certain Items (Non-GAAP) | **$4,293** | $4,192 | **2.4%** | [Quantitative and Qualitative Disclosures about Market Risk](index=55&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Sysco manages interest rate, foreign currency, fuel price, and investment risks through debt strategies, hedging, and operational optimizations - Sysco's market risks include interest rate risk, foreign currency exchange rate risk, fuel price risk, and investment risk[299](index=299&type=chunk) - Interest rate risk is managed through a debt portfolio strategy that balances fixed and floating rates, utilizing interest rate swaps. As of June 28, 2025, **90% of the $13.3 billion total debt was at fixed rates**[300](index=300&type=chunk)[301](index=301&type=chunk)[303](index=303&type=chunk) - Foreign currency exchange rate risk, primarily from Canadian dollars, British pound sterling, and Euro, is hedged using foreign currency forward swap contracts and cross-currency swaps[308](index=308&type=chunk)[310](index=310&type=chunk) - Fuel price risk is mitigated through routing optimization, fleet utilization, fuel surcharges, and diesel fuel swap contracts, which are expected to lock in prices for approximately **85% of bulk fuel purchases** for fiscal 2026[311](index=311&type=chunk)[312](index=312&type=chunk) - Investment risk is associated with the U.S. Retirement Plan's assets, which are sensitive to financial market factors, potentially impacting future contributions and funded status[313](index=313&type=chunk) [Financial Statements and Supplementary Data](index=58&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section includes Sysco's consolidated financial statements, management's internal control report, and independent auditor reports, all with unqualified opinions [Report of Management on Internal Control Over Financial Reporting](index=59&type=section&id=Report%20of%20Management%20on%20Internal%20Control%20Over%20Financial%20Reporting) Management affirmed the effectiveness of Sysco's internal control over financial reporting as of June 28, 2025, based on COSO framework - Management assessed and concluded that Sysco's internal control over financial reporting was effective as of June 28, 2025, based on the COSO criteria[318](index=318&type=chunk) [Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting (PCAOB ID: 42)](index=60&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20on%20Internal%20Control%20Over%20Financial%20Reporting%20%28PCAOB%20ID%3A%2042%29) Ernst & Young LLP issued an unqualified opinion on the effectiveness of Sysco's internal control over financial reporting as of June 28, 2025 - Ernst & Young LLP issued an **unqualified opinion** on the effectiveness of Sysco's internal control over financial reporting as of June 28, 2025[322](index=322&type=chunk) [Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements (PCAOB ID: 42)](index=61&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20on%20Consolidated%20Financial%20Statements%20%28PCAOB%20ID%3A%2042%29) Ernst & Young LLP provided an unqualified opinion on Sysco's consolidated financial statements, highlighting goodwill valuation as a critical audit matter - Ernst & Young LLP issued an **unqualified opinion** on the consolidated financial statements for the three years ended June 28, 2025, confirming their fair presentation in conformity with U.S. GAAP[331](index=331&type=chunk) - The valuation of goodwill was identified as a **critical audit matter** due to its complexity and the significant estimation required to determine the fair value of reporting units[336](index=336&type=chunk)[337](index=337&type=chunk) [Consolidated Balance Sheets](index=63&type=section&id=Consolidated%20Balance%20Sheets) As of June 28, 2025, Sysco reported total assets of $26.77 billion, with increased liabilities and a slight decrease in shareholders' equity Consolidated Balance Sheet Highlights (as of June 28, 2025 vs. June 29, 2024) | Metric | Jun. 28, 2025 (Millions) | Jun. 29, 2024 (Millions) | | :--------------------------- | :----------------------- | :----------------------- | | Cash and cash equivalents | **$1,071** | $696 | | Accounts receivable, net | **$5,502** | $5,324 | | Inventories | **$5,053** | $4,678 | | Total current assets | **$11,968** | $11,043 | | Plant and equipment, net | **$6,084** | $5,497 | | Goodwill | **$5,231** | $5,153 | | Total assets | **$26,774** | $24,917 | | Accounts payable | **$6,512** | $6,290 | | Total current liabilities | **$9,916** | $9,241 | | Long-term debt | **$12,360** | $11,513 | | Total liabilities | **$24,917** | $23,026 | | Total shareholders' equity | **$1,830** | $1,860 | [Consolidated Results of Operations](index=64&type=section&id=Consolidated%20Results%20of%20Operations) FY25 consolidated results show $81.37 billion sales, $14.97 billion gross profit, and $3.09 billion operating income, with $1.83 billion net earnings Consolidated Results of Operations (Fiscal 2025, 2024, 2023) | Metric | Jun. 28, 2025 (Millions) | Jun. 29, 2024 (Millions) | Jul. 1, 2023 (Millions) | | :------------------------- | :----------------------- | :----------------------- | :---------------------- | | Sales | **$81,370** | $78,844 | $76,325 | | Cost of sales | $66,401 | $64,236 | $62,370 | | Gross profit | **$14,969** | $14,608 | $13,955 | | Operating expenses | **$11,881** | $11,406 | $10,916 | | Operating income | **$3,088** | $3,202 | $3,039 | | Interest expense | **$635** | $607 | $527 | | Other expense (income), net | $38 | $30 | $227 | | Earnings before income taxes | $2,415 | $2,565 | $2,285 | | Income taxes | $587 | $610 | $515 | | Net earnings | **$1,828** | $1,955 | $1,770 | | Diluted earnings per share | **$3.73** | $3.89 | $3.47 | [Consolidated Statements of Comprehensive Income](index=65&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Sysco's comprehensive income for fiscal 2025 increased to $2.07 billion, driven by net earnings and a significant foreign currency translation adjustment gain Consolidated Statements of Comprehensive Income (Fiscal 2025, 2024, 2023) | Metric | Jun. 28, 2025 (Millions) | Jun. 29, 2024 (Millions) | Jul. 1, 2023 (Millions) | | :----------------------------------- | :----------------------- | :----------------------- | :---------------------- | | Net earnings | **$1,828** | $1,955 | $1,770 | | Foreign currency translation adjustment | **$287** | $(33) | $127 | | Total other comprehensive income (loss) | **$241** | $(86) | $229 | | Comprehensive income | **$2,069** | $1,869 | $1,999 | - A foreign currency translation adjustment resulted in a **gain of $287 million** in fiscal 2025, compared to a loss of $33 million in fiscal 2024[344](index=344&type=chunk) [Changes in Consolidated Shareholders' Equity](index=66&type=section&id=Changes%20in%20Consolidated%20Shareholders%27%20Equity) Total shareholders' equity slightly decreased to $1.83 billion, reflecting net earnings, other comprehensive income, dividends, and treasury stock purchases Changes in Consolidated Shareholders' Equity (Fiscal 2025) | Metric | Jun. 28, 2025 (Millions) | Jun. 29, 2024 (Millions) | | :----------------------------------- | :----------------------- | :----------------------- | | Balance at beginning of period | $1,860 | $2,009 | | Net earnings | **$1,828** | $1,955 | | Other comprehensive income (loss) | **$241** | $(86) | | Dividends declared | **$(1,008)** | $(1,006) | | Treasury stock purchases | **$(1,250)** | $(1,241) | | Share-based compensation awards | $178 | $229 | | Adjustments to non-controlling interest | $(19) | — | | Balance at end of period | **$1,830** | $1,860 | - Dividends declared in fiscal 2025 totaled **$1.01 billion**, or **$2.07 per common share**[345](index=345&type=chunk) - Treasury stock purchases amounted to **$1.25 billion** in fiscal 2025[345](index=345&type=chunk) [Consolidated Cash Flows](index=67&type=section&id=Consolidated%20Cash%20Flows) Operating cash flow decreased to $2.51 billion in FY25, while investing activities used less cash, and financing activities increased due to higher stock repurchases Consolidated Cash Flows (Fiscal 2025, 2024, 2023) | Metric | Jun. 28, 2025 (Millions) | Jun. 29, 2024 (Millions) | Jul. 1, 2023 (Millions) | | :----------------------------------- | :----------------------- | :----------------------- | :---------------------- | | Net cash provided by operating activities | **$2,510** | $2,989 | $2,868 | | Net cash used for investing activities | **$(717)** | $(1,962) | $(785) | | Net cash used for financing activities | **$(1,412)** | $(1,038) | $(2,056) | | Net increase (decrease) in cash, cash equivalents and restricted cash | **$403** | $(21) | $35 | | Cash, cash equivalents and restricted cash at end of period | **$1,348** | $945 | $966 | - Cash flows from operating activities decreased by **$479 million (16.0%)** in fiscal 2025 compared to fiscal 2024[346](index=346&type=chunk) - Acquisition spending, net of cash acquired, significantly decreased to **$40 million** in fiscal 2025 from $1.21 billion in fiscal 2024[346](index=346&type=chunk) [Notes to Consolidated Financial Statements](index=68&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail Sysco's accounting policies, new standards, disaggregated revenue, acquisitions, fair value measurements, debt, and commitments - Sysco's fiscal year ends on the Saturday nearest to June 30th, resulting in 52-week years for fiscal 2025, 2024, and 2023[349](index=349&type=chunk) - Accounts receivable sold to third-party financial institutions on a non-recourse basis amounted to **$5.2 billion** in fiscal 2025 and **$5.5 billion** in fiscal 2024[353](index=353&type=chunk) - A noncash goodwill impairment charge of **$92 million** was recorded in fiscal 2025 for the Guest Worldwide reporting unit[363](index=363&type=chunk) - Sysco adopted ASU 2023-07 (Segment Reporting) in fiscal 2025, impacting disclosures but not financial position or results of operations[391](index=391&type=chunk) - The company completed the fair value determination for the Edward Don & Company acquisition in the second quarter of fiscal 2025[399](index=399&type=chunk) - Total debt was **$13.3 billion** as of June 28, 2025, with **$949 million** classified as current maturities[428](index=428&type=chunk) - Sysco issued **$1.25 billion in senior notes** in February 2025[433](index=433&type=chunk) - Cash contributions to company-sponsored pension plans were **$61 million** in fiscal 2025, and to multiemployer plans were **$66 million**[456](index=456&type=chunk)[480](index=480&type=chunk) - The company is challenging an IRS Statutory Notice of Deficiency related to foreign tax credits from fiscal 2018, which could require reversing a previously recorded **$131 million benefit**[526](index=526&type=chunk) - Product purchase commitments totaled approximately **$22.4 billion** as of June 28, 2025[536](index=536&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=116&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) No changes in or disagreements with accountants on accounting and financial disclosure were reported - No changes in or disagreements with accountants on accounting and financial disclosure were reported[546](index=546&type=chunk) [Controls and Procedures](index=116&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management affirmed the effectiveness of disclosure controls and procedures as of June 28, 2025, with no material changes in internal control during Q4 FY25 - Sysco's disclosure controls and procedures were evaluated as effective at the reasonable assurance level as of June 28, 2025[547](index=547&type=chunk) - Ernst & Young LLP issued an audit report on the effectiveness of internal control over financial reporting[548](index=548&type=chunk) - No material changes in internal control over financial reporting occurred during the fourth quarter ended June 28, 2025[549](index=549&type=chunk) [Other Information](index=118&type=section&id=Item%209B.%20Other%20Information) No director or executive officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q4 FY25 - No director or executive officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended June 28, 2025[550](index=550&type=chunk) [Disclosure Reporting Regarding Foreign Jurisdictions that Prevent Inspections](index=118&type=section&id=Item%209C.%20Disclosure%20Reporting%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to Sysco Corporation - Disclosure Reporting Regarding Foreign Jurisdictions that Prevent Inspections is not applicable[551](index=551&type=chunk) [PART III](index=119&type=section&id=PART%20III) [Directors, Executive Officers and Corporate Governance](index=119&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2025 Proxy Statement - Information on directors, executive officers, and corporate governance is incorporated by reference from the 2025 Proxy Statement[553](index=553&type=chunk) - The company has adopted a Securities Trading Policy to promote compliance with insider trading laws[554](index=554&type=chunk) [Executive Compensation](index=119&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation information is incorporated by reference from the 2025 Proxy Statement - Executive compensation information is incorporated by reference from the 2025 Proxy Statement[556](index=556&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=119&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information for certain beneficial owners and management is incorporated by reference from the 2025 Proxy Statement - Security ownership information is incorporated by reference from the 2025 Proxy Statement[557](index=557&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=119&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related transactions and director independence is incorporated by reference from the 2025 Proxy Statement - Information on related transactions and director independence is incorporated by reference from the 2025 Proxy Statement[558](index=558&type=chunk) [Principal Accountant Fees and Services](index=119&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services is incorporated by reference from the 2025 Proxy Statement - Information on principal accountant fees and services is incorporated by reference from the 2025 Proxy Statement[559](index=559&type=chunk) [PART IV](index=119&type=section&id=PART%20IV) [Exhibit and Financial Statement Schedules](index=119&type=section&id=Item%2015.%20Exhibit%20and%20Financial%20Statement%20Schedules) This section lists all documents filed or incorporated by reference, including financial statements, schedules, and a comprehensive exhibit index - All financial statements are included, and all financial statement schedules are omitted as they are not applicable or the information is set forth in the consolidated financial statements or notes[561](index=561&type=chunk) - A comprehensive exhibit index lists various corporate documents, debt instruments, credit agreements, and executive compensation arrangements[561](index=561&type=chunk)[563](index=563&type=chunk)[564](index=564&type=chunk)[565](index=565&type=chunk)[566](index=566&type=chunk)[567](index=567&type=chunk) [Form 10-K Summary](index=124&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K Summary is provided - No Form 10-K Summary is provided[568](index=568&type=chunk)

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