Sysco(SYY) - 2026 Q2 - Quarterly Results

Financial Performance - Sales for the second quarter increased 3.0% to $20.8 billion compared to the same period in fiscal year 2025[5] - Gross profit increased 3.9% to $3.8 billion, with a gross margin of 18.3%, reflecting a 15 basis point increase[6] - Operating income decreased 2.8% to $692 million, while adjusted operating income increased 3.1% to $807 million[3] - Net earnings decreased 4.2% to $389 million, but adjusted net earnings increased 3.9% to $476 million[3] - Sales for the 13-week period ended December 27, 2025, were $20,762 million, an increase of 3.0% compared to $20,151 million for the same period in 2024[24] - Gross profit for the 26-week period ended December 27, 2025, was $7,693 million, up from $7,403 million in 2024, reflecting a growth of 3.9%[24] - Net earnings for the 26-week period ended December 27, 2025, were $866 million, a decrease of 3.3% from $896 million in the prior year[26] - Basic earnings per share for the 13-week period ended December 27, 2025, were $0.81, compared to $0.83 for the same period in 2024[24] - For the 26-week period, Sysco reported GAAP sales of $41,910 million, a 3.1% increase from $40,634 million in the prior year[36] - Diluted earnings per share (GAAP) decreased to $1.80, down 1.1% from $1.82[37] Cash Flow and Shareholder Returns - Cash flow from operations was $611 million, and free cash flow was $413 million for the first 26 weeks of fiscal year 2026[13] - The company returned $518 million to shareholders via dividends during the first 26 weeks of fiscal year 2026[13] - Free cash flow for the 26-week period ended December 27, 2025, was $413 million, up from $331 million in the prior year, reflecting an increase of $82 million[43] Sales Growth - U.S. Foodservice local case volume grew by 1.2%, contributing to overall positive case growth[1] - International Foodservice Operations sales increased 7.3% to $4.0 billion, with a gross profit increase of 9.5% to $832 million[11] - U.S. foodservice operations sales increased by $339 million, or 2.4%, reaching $14,383 million[38] - International foodservice operations sales grew by $271 million, or 7.3%, totaling $3,999 million[38] - Total Sysco sales rose by $611 million, or 3.0%, to $20,762 million[39] Operating Expenses - Operating expenses increased by 5.5% to $3,100 million, with adjusted operating expenses (Non-GAAP) at $2,985 million, reflecting a 4.1% increase[33] - Operating expenses for Total Sysco increased by 5.4% to $6,200 million, with adjusted operating expenses rising by 4.2% to $5,987 million[41] Debt and Leverage - Long-term debt stood at $12,440 million as of December 27, 2025, slightly up from $12,360 million as of June 28, 2025[25] - Total Debt (GAAP) stands at $13,590 million, with Net Debt (Non-GAAP) at $12,368 million[48] - The Net Debt to Adjusted EBITDA ratio (Non-GAAP) is 2.86, indicating the company's leverage relative to its earnings[48] Adjusted Metrics - Adjusted net earnings for fiscal 2026 were $1,028 million, a 3.1% increase from $997 million in fiscal 2025[37] - Adjusted EBITDA growth is considered a key measure of financial performance, with management emphasizing its importance for consistent period comparisons[44] - Adjusted EBITDA for the 13-week period, after certain item adjustments, increased to $1,001 million, reflecting a 3.3% rise from $969 million in the previous year[45] - Adjusted EBITDA for the 26-week period was $2,071 million, an increase of 1.7% compared to $2,037 million in the prior year[46] Strategic Focus - Sysco continues to focus on growth through acquisitions, excluding acquisition-related costs from its non-GAAP financial measures to enhance comparability[31] - The company reported a significant increase in acquisition-related costs, rising to $23 million from $8 million year-over-year, indicating ongoing strategic investments[45] - The impact of restructuring and transformational project costs was significant, with a total impact of $114 million on operating expenses for Total Sysco[41] - The impact of restructuring and transformational project costs in fiscal 2026 included $21 million in severance charges and $93 million in transformation initiative costs[37]