Management's Discussion and Analysis of Financial Condition and Results of Operations
This discussion should be read in conjunction with our consolidated financial statements as of June 27, 2026, and for the fiscal year then ended, and Management's Discussion and Analysis of Financial Condition and Results of Operations, both contained in our fiscal 2026 Form 10-K, as well as the consolidated financial statements (unaudited) and notes to the consolidated financial statements (unaudited) contained in this report. Sysco's fiscal year ends on the Saturday nearest to June 30th and we will have a 53-week year ending July 3, 2027 for fiscal 2027.
Highlights
Our first quarter of fiscal 2027 results included sales growth of 2.8% as compared to the first quarter of fiscal 2026, driven by increased sales in our U.S. Foodservice Operations, International Foodservice Operations, and SYGMA segments. Our gross profit increased 3.8% compared to the first quarter of fiscal 2026, due to local case volume growth, benefits associated with tariffs, customer fuel surcharges, savings from strategic sourcing efficiencies, and increased Sysco brand penetration. Operating income decreased 10.4% compared to the first quarter of fiscal 2026, due to increased acquisition-related costs and restructuring and transformational project costs. We consider these "Certain Item" expenses (as defined below). Excluding Certain Item expenses, adjusted operating income increased 3.2% as compared to the first quarter of fiscal 2026. Our net earnings for the first quarter of fiscal 2027 increased 10.5% as compared to the first quarter of fiscal 2026, which is primarily due to gains on deal contingent rate lock transactions, partially offset by amortization expense associated with debt issuance costs on a bridge loan facility. These items relate to the financing of the JRD Acquisition Transactions and are considered Certain Items. Excluding Certain Item expenses and income, adjusted net earnings increased by 4.2% as compared to the first quarter of fiscal 2026. See below for a comparison of our fiscal 2027 results to our fiscal 2026 results, both including and excluding Certain Items.
Comparisons of results from the first quarter of fiscal 2027 to the first quarter of fiscal 2026 are presented below:
•Sales:
◦increased 2.8%, or $596 million, to $21.7 billion;
•Operating income:
◦decreased 10.4%, or $83 million, to $717 million;
◦adjusted operating income increased 3.2%, or $29 million, to $927 million;
•Net earnings:
◦increased 10.5%, or $50 million, to $526 million;
◦adjusted net earnings increased 4.2%, or $23 million, to $574 million;
•Basic earnings per share:
◦increased 10.1%, or $0.10, to $1.09 per share;
•Diluted earnings per share:
◦increased 10.1%, or $0.10 to $1.09 per share;
◦adjusted diluted earnings per share increased 3.5%, or $0.04, to $1.19 per share;
•EBITDA:
◦increased 20.4%, or $205 million, to $1.2 billion; and
◦adjusted EBITDA increased 5.4%, or $58 million, to $1.1 billion.
The discussion of our results includes certain non-GAAP financial measures, including EBITDA and adjusted EBITDA, that we believe provide important perspective with respect to underlying business trends. Other than EBITDA and free cash flow, any non-GAAP financial measures will be denoted as adjusted measures to remove: (1) restructuring charges; (2) expenses associated with our various transformation initiatives; (3) severance charges; and (4) acquisition-related costs consisting of (a) intangible amortization expense and (b) acquisition costs and due diligence costs related to our acquisitions. Fiscal 2027 adjusted measures also remove amortization expense associated with debt issuance costs on a bridge loan facility and a gain on deal contingent rate lock transactions entered into to mitigate interest rate risk on permanent debt issued to finance the JRD Acquisition Transactions. No similar charges were applicable in the first quarter of fiscal 2026.
The fiscal 2027 and fiscal 2026 items discussed above are collectively referred to as "Certain Items." The results of our operations can be impacted by changes in exchange rates applicable to converting from local currencies to U.S. dollars. We measure our results on a constant currency basis.
Trends
Economic and Industry Trends
Foot traffic to restaurants decreased approximately 2% in the first quarter of fiscal 2027 as compared to the first quarter of fiscal 2026. The macroeconomic environment was negatively impacted by several items including a Cyclospora outbreak at the midpoint of our first quarter of fiscal 2027 and by rising fuel costs, which negatively affected supply chains and consumer demand. Despite continued softness in industry restaurant traffic, Sysco generated local case volume growth during the first quarter of fiscal 2027, and we expect to continue to grow our sales in the remainder of fiscal 2027. We believe the food-away-from-home sector is a healthy, long-term growth market, and Sysco is diversified and well positioned as a market leader in foodservice.
Sales and Gross Profit Trends
Sales increased 2.8% in the first quarter of fiscal 2027 as compared to the first quarter of fiscal 2026. Our sales and gross profit performance are influenced by multiple factors, including price, volume, inflation, customer mix and product mix. We experienced a 2.6% increase in U.S. Foodservice Operations case volume in the first quarter of fiscal 2027, as compared to the first quarter of fiscal 2026. Our volume growth trends were attributable to both national case volume and local case volume increasing 2.7% in the first quarter of fiscal 2027 as compared to the first quarter of fiscal 2026. Our volume reflects our broadline and specialty businesses. We expect our sales growth to be at the lower end of the range of 6% to 7%, reflecting a lower inflationary environment for the industry, partially offset by a benefit of a 53rd-week in fiscal 2027.
Product inflation was modest during the first quarter of 2027, with enterprise inflation of approximately 0.3%, primarily driven by inflation in the meat category. This inflation rate was lower than expected and was primarily driven by deflation of 0.2% within U.S. Foodservice Operations. We expect inflation to increase over the course of fiscal 2027 for both our U.S. Foodservice Operations and for the enterprise overall. Inflation is now expected to be approximately 1.0% to 1.5% for the full fiscal 2027 year, based on expected moderate rates of inflation for the poultry, dairy, and meat categories. Gross margin increased 18 basis points in the first quarter of fiscal 2027, as compared to the first quarter of fiscal 2026, primarily due to local case volume growth, benefits associated with tariffs, customer fuel surcharges, savings from strategic sourcing efficiencies, and increased Sysco brand penetration.
Operating Expense Trends
Total operating expenses were $3.3 billion in the first quarter of fiscal 2027, a 7.5% increase compared to the first quarter of fiscal 2026. Total adjusted operating expenses were $3.1 billion in the first quarter of fiscal 2027, a 4.0% increase as compared to the first quarter of fiscal 2026. Operating expenses increased primarily due to higher acquisition and due diligence costs, restructuring and transformational project costs, costs associated with planned investments in higher growth areas of the business with sales headcount and building expansions, and increased fuel costs. Adjusted operating expenses were 14.4% of sales during the first quarter of fiscal 2027, which represents a 17-basis point increase as compared to the first quarter of fiscal 2026, as a result of planned investments in higher growth areas of the business with sales headcount and building expansions, as well as increased fuel costs.
In fiscal 2027, we expect to achieve cost savings benefits through the continued use of technology, including artificial intelligence, and business efficiency initiatives across sales, merchandising, supply chain, and back-office functions. Collectively, these efforts are expected to generate approximately $100 million of net cost savings during fiscal 2027, with benefits accelerating in the second half of the fiscal year. In addition, we believe the advancements that have been made in our operational capabilities and ongoing investments in employee training will continue to drive supply chain productivity gains and reduce the cost to serve our customers.
Mergers and Acquisitions
In March 2026, we announced that we had entered into the Merger Agreement, pursuant to which we would acquire Jetro Restaurant Depot (JRD), a leading U.S. wholesale cash-and-carry foodservice provider serving smaller, independent restaurants and businesses. JRD operates 170 large-format warehouse stores across 35 states that serve more than 725,000 independent restaurants and foodservice operators with a broad assortment of fresh and low-priced products. The JRD Acquisition Transactions are expected to close by the third quarter of Sysco Corporation's fiscal 2027, subject to the satisfaction of customary closing conditions, including regulatory clearance under the Hart-Scott-Rodino Act. We expect to incur increased operating expenses for acquisition-related costs in fiscal 2027.
Interest Expense and Other Income and Expense Trends
In the first quarter of fiscal 2027 and in early October 2026, we completed the bond and equity financing for the cash component of the proposed JRD Acquisition Transactions with an outcome that reflected the strength of our investment-grade credit profile. As referenced in Note 8, "Debt" and Note 15, "Subsequent Events," in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q, Sysco Corporation and Sysco Holdings co-issued senior notes and junior subordinated notes in September and October of 2026. We intend to use the proceeds from the issuances to fund the expected third quarter of fiscal 2027 purchase of JRD. We expect to incur approximately $787 million of interest expense for the remainder of fiscal 2027 related to these newly issued notes. The interest expense incurred prior to the closing date of the JRD Acquisition Transactions will be treated as a Certain Item. The interest expense incurred subsequent to the closing date will not be treated as a Certain Item.
Sysco has invested the proceeds received from the bond and equity financings. The invested proceeds are expected to generate interest income, which is recorded in Other expense (income), net. Most of the interest income between the dates of financing and closing date of the JRD Acquisition Transactions will be reported as Certain Items, with the exception of interest income from the common stock offering proceeds, as these shares and thus the proceeds will be outstanding irrespective of whether the acquisition closes.
Strategy
Our purpose is "Connecting the World to Share Food and Care for One Another." Purpose-driven companies are believed to perform better. We believe our purpose will assist us to grow substantially faster than the foodservice distribution industry and deliver profitable growth through our Recipe for Growth transformation. This growth transformation is supported by strategic pillars that we believe will allow us to better serve our customers, including our digital, products and solutions, supply chain, customer teams, and future horizons strategies.
Our business transformation initiatives are progressing, which include promoting our specialty programs for produce, protein and Italian products, and our customer growth initiatives. From these actions, as a part of our Recipe for Growth, the benefits of our developing capabilities are apparent in the new customers we are winning and in the progress we are making toward increasing market share. We expect that, as our Recipe for Growth matures, the impact on our top-line growth will deliver profitable and consistent growth.
Results of Operations
The following table sets forth the components of our consolidated results of operations expressed as a percentage of sales for the periods indicated:
| 13-Week Period Ended | |||||||||||
| Sep. 26, 2026 | Sep. 27, 2025 | ||||||||||
| Sales | 100.0 | % | 100.0 | % | |||||||
| Cost of sales | 81.4 | 81.6 | |||||||||
| Gross profit | 18.6 | 18.4 | |||||||||
| Operating expenses | 15.3 | 14.6 | |||||||||
| Operating income | 3.3 | 3.8 | |||||||||
| Interest expense | 1.2 | 0.8 | |||||||||
| Other expense (income), net | (1.1) | 0.2 | |||||||||
| Earnings before income taxes | 3.2 | 2.8 | |||||||||
| Income taxes | 0.8 | 0.5 | |||||||||
| Net earnings | 2.4 | % | 2.3 | % | |||||||
The following table sets forth the change in the components of our consolidated results of operations expressed as a percentage increase or decrease over the comparable period in the prior year:
| 13-Week Period Ended | |||||
| Sep. 26, 2026 | |||||
| Sales | 2.8 | % | |||
| Cost of sales | 2.6 | ||||
| Gross profit | 3.8 | ||||
| Operating expenses | 7.5 | ||||
| Operating income | (10.4) | ||||
| Interest expense | 51.7 | ||||
Other expense (income), net (1) | (925.0) | ||||
| Earnings before income taxes | 14.5 | ||||
| Income taxes | 29.8 | ||||
| Net earnings | 10.5 | % | |||
| Basic earnings per share | 10.1 | % | |||
| Diluted earnings per share | 10.1 | ||||
| Average shares outstanding | 0.5 | ||||
| Diluted shares outstanding | 0.5 | ||||
(1) | Other expense (income), net was income of $231 million and expense of $28 million in the first quarter of fiscal 2027 and fiscal 2026, respectively. |
The following tables represent our results by reportable segments:
| 13-Week Period Ended Sep. 26, 2026 | |||||||||||||||||||||||||||||||||||
| U.S. Foodservice Operations | International Foodservice Operations | SYGMA | Other | Global Support Center | Consolidated Totals | ||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||
| Sales | $ | 15,142 | $ | 4,168 | $ | 2,152 | $ | 282 | $ | - | $ | 21,744 | |||||||||||||||||||||||
| Sales increase | 2.4 | % | 5.1 | % | 1.1 | % | 3.3 | % | 2.8 | % | |||||||||||||||||||||||||
| Percentage of total | 69.6 | % | 19.2 | % | 9.9 | % | 1.3 | % | 100.0 | % | |||||||||||||||||||||||||
| Operating income (loss) | $ | 894 | $ | 82 | $ | 21 | $ | 9 | $ | (289) | $ | 717 | |||||||||||||||||||||||
| Operating income (loss) increase (decrease) | 1.6 | % | (28.1) | % | (16.0) | % | NM | 29.6 | % | (10.4) | % | ||||||||||||||||||||||||
| Percentage of total segments | 88.9 | % | 8.2 | % | 2.1 | % | 0.8 | % | 100.0 | % | |||||||||||||||||||||||||
| Operating income as a percentage of sales | 5.9 | % | 2.0 | % | 1.0 | % | 3.2 | % | 3.3 | % | |||||||||||||||||||||||||
| 13-Week Period Ended Sep. 27, 2025 | |||||||||||||||||||||||||||||||||||
| U.S. Foodservice Operations | International Foodservice Operations | SYGMA | Other | Global Support Center | Consolidated Totals | ||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||
| Sales | $ | 14,780 | $ | 3,966 | $ | 2,129 | $ | 273 | $ | - | $ | 21,148 | |||||||||||||||||||||||
| Percentage of total | 69.9 | % | 18.8 | % | 10.1 | % | 1.2 | % | 100.0 | % | |||||||||||||||||||||||||
| Operating income (loss) | $ | 880 | $ | 114 | $ | 25 | $ | 4 | $ | (223) | $ | 800 | |||||||||||||||||||||||
| Percentage of total segments | 86.0 | % | 11.1 | % | 2.4 | % | 0.5 | % | 100.0 | % | |||||||||||||||||||||||||
| Operating income as a percentage of sales | 6.0 | % | 2.9 | % | 1.2 | % | 1.5 | % | 3.8 | % | |||||||||||||||||||||||||
Based on information in Note 14, "Business Segment Information," in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q, U.S. Foodservice Operations and International Foodservice Operations, collectively, represented approximately 88.8% of Sysco's overall sales in the first 13 weeks of fiscal 2027. U.S. Foodservice Operations and International Foodservice Operations, collectively, represented approximately 97.1% of total segment operating income, in the first 13 weeks of fiscal 2027. This illustrates that these segments represent a substantial majority of our total segment results when compared to other reportable segments.
Results of U.S. Foodservice Operations
The following table sets forth a summary of the components of operating income expressed as a percentage increase or decrease over the comparable period in the prior year:
| 13-Week Period Ended Sep. 26, 2026 | 13-Week Period Ended Sep. 27, 2025 | Change in Dollars | % Change | ||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
| Sales | $ | 15,142 | $ | 14,780 | $ | 362 | 2.4 | % | |||||||||||||||
| Gross profit | 2,913 | 2,823 | 90 | 3.2 | |||||||||||||||||||
| Operating expenses | 2,019 | 1,943 | 76 | 3.9 | |||||||||||||||||||
| Operating income | $ | 894 | $ | 880 | $ | 14 | 1.6 | % | |||||||||||||||
| Gross profit | $ | 2,913 | $ | 2,823 | $ | 90 | 3.2 | % | |||||||||||||||
| Adjusted operating expenses (Non-GAAP) | 1,972 | 1,907 | 65 | 3.4 | |||||||||||||||||||
| Adjusted operating income (Non-GAAP) | $ | 941 | $ | 916 | $ | 25 | 2.7 | % | |||||||||||||||
Sales
The following table sets forth the percentage and dollar value increase or decrease in the major factors impacting sales as compared to the corresponding prior year period in order to demonstrate the cause and magnitude of change:
| Increase (Decrease) | |||||||||||
| 13-Week Period | |||||||||||
| (Dollars in millions) | |||||||||||
| Cause of change | Percentage | Dollars | |||||||||
Case volume (1) | 2.6 | % | $ | 382 | |||||||
| Deflation | (0.2) | (25) | |||||||||
| Other | - | 5 | |||||||||
| Total change in sales | 2.4 | % | $ | 362 | |||||||
| (1) | Case volumes increased 2.6% compared to the first quarter of fiscal 2026. This volume increase resulted in a 2.6% increase in the dollar value of sales compared to the first quarter of fiscal 2026. |
The sales growth in our U.S. Foodservice Operations was primarily driven by growth in case volumes. Case volumes from our U.S. Foodservice Operations increased 2.6% in the first quarter of fiscal 2027, as compared to the first quarter of fiscal 2026. This includes a 2.7% increase in national case volume and a 2.7% increase in local customer case volume in the first quarter of fiscal 2027 as compared to the first quarter of fiscal 2026. Deflation contributed to a 0.2% decrease in sales in the first quarter of fiscal 2027, as compared to the first quarter of fiscal 2026. The deflation within our U.S. Foodservice Operations was largely attributable to the poultry and dairy product categories.
Operating Income
The increase in operating income for the first quarter of fiscal 2027 as compared to the first quarter of fiscal 2026 was driven by an increase in gross profit dollar growth and case volume growth, partially offset by an increase in operating expenses.
Gross profit dollars increased in the first quarter of fiscal 2027 as compared to the first quarter of fiscal 2026, primarily as a result of local case volume growth, benefits associated with tariffs, customer fuel surcharges, savings from strategic sourcing efficiencies, and increased Sysco brand penetration. The estimated change in product costs, an internal measure of inflation or deflation, decreased by 0.2% in the first quarter of fiscal 2027 as compared to the first quarter of fiscal 2026. Gross margin, which is gross profit as a percentage of sales, was 19.24% in the first quarter of fiscal 2027, for our U.S. Foodservice Operations, which represented an increase of 14 basis points compared to gross margin of 19.10% in the first quarter of fiscal 2026. This increase is primarily driven by strengthening customer mix and an improvement in our Sysco brand performance.
The increase in operating expenses for the first quarter of fiscal 2027, as compared to the first quarter of fiscal 2026, was primarily driven by increases in colleague-related costs, which are inclusive of investments in sales headcount, as well as increased fuel costs.
Results of International Foodservice Operations
The following table sets forth a summary of the components of operating income and adjusted operating income expressed as a percentage increase or decrease over the comparable period in the prior year:
| 13-Week Period Ended Sep. 26, 2026 | 13-Week Period Ended Sep. 27, 2025 | Change in Dollars | % Change | ||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
| Sales | $ | 4,168 | $ | 3,966 | $ | 202 | 5.1 | % | |||||||||||||||
| Gross profit | 887 | 826 | 61 | 7.4 | |||||||||||||||||||
| Operating expenses | 805 | 712 | 93 | 13.1 | |||||||||||||||||||
| Operating income | $ | 82 | $ | 114 | $ | (32) | (28.1) | % | |||||||||||||||
| Gross profit | $ | 887 | $ | 826 | $ | 61 | 7.4 | % | |||||||||||||||
| Adjusted operating expenses (Non-GAAP) | 722 | 679 | 43 | 6.3 | |||||||||||||||||||
| Adjusted operating income (Non-GAAP) | $ | 165 | $ | 147 | $ | 18 | 12.2 | % | |||||||||||||||
| Sales on a constant currency basis (Non-GAAP) | $ | 4,202 | $ | 3,966 | $ | 236 | 6.0 | % | |||||||||||||||
| Gross profit on a constant currency basis (Non-GAAP) | 893 | 826 | 67 | 8.1 | |||||||||||||||||||
| Adjusted operating expenses on a constant currency basis (Non-GAAP) | 727 | 679 | 48 | 7.1 | |||||||||||||||||||
| Adjusted operating income on a constant currency basis (Non-GAAP) | $ | 166 | $ | 147 | $ | 19 | 12.9 | % | |||||||||||||||
Sales
The following table sets forth the percentage and dollar value increase or decrease in the major components impacting sales as compared to the corresponding prior year period in order to demonstrate the cause and magnitude of change.
| Increase (Decrease) | |||||||||||
| 13-Week Period | |||||||||||
| (Dollars in millions) | |||||||||||
| Cause of change | Percentage | Dollars | |||||||||
| Inflation | 0.8 | % | $ | 32 | |||||||
| Foreign currency | (0.9) | (34) | |||||||||
| Case volume | 3.9 | 153 | |||||||||
| Other | 1.3 | 51 | |||||||||
| Total change in sales | 5.1 | % | $ | 202 | |||||||
Sales for the first quarter of fiscal 2027 increased 5.1% as compared to the first quarter of fiscal 2026, primarily due to case volume growth and inflation.
Operating Income
The decrease in operating income for the first quarter of fiscal 2027, as compared to the first quarter of fiscal 2026, was primarily due to increases in operating expenses, partially offset by growth in case volumes.
The increase in gross profit dollars in the first quarter of fiscal 2027, as compared to the first quarter of fiscal 2026, was primarily attributable to increases in case volumes and benefits from our strategic sourcing efforts. Local case volumes increased 3.2% in the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026.
The increase in operating expenses in the first quarter of fiscal 2027 as compared to the first quarter of fiscal 2026 was primarily due to increases in colleague-related costs, amortization expense on previously acquired intangible assets, and restructuring and transformational project costs.
Results of SYGMA and Other Segment
SYGMA segment sales were 1.1% higher in the first quarter of fiscal 2027, as compared to the first quarter of fiscal 2026. Sales growth has moderated, as we have passed the one-year anniversary mark of the substantial customer additions we had in fiscal 2025. Operating income decreased $4 million in the first quarter of fiscal 2027 as compared to the first quarter of fiscal 2026, primarily as a result of rising fuel costs.
For the operations that are grouped within Other, operating income increased $5 million in the first quarter of fiscal 2027, as compared to the first quarter of fiscal 2026. The operations of this group primarily consist of our hospitality business, Guest Worldwide.
Global Support Center Expenses
Our Global Support Center generally includes all expenses of the corporate office and Sysco's shared service operations. These expenses in the first quarter of fiscal 2027 increased $61 million, or 25.7%, as compared to the first quarter of fiscal 2026, primarily due to increases in acquisition-related costs, business technology expenses, colleague-related costs, and insurance costs.
Included in Global Support Center expenses are Certain Items that totaled $80 million in the first quarter of fiscal 2027, as compared to $29 million in the first quarter of fiscal 2026. Certain Items impacting the first quarter of fiscal 2027 were primarily expenses associated with acquisitions and expenses associated with our business technology transformation initiatives. Certain Items impacting the first quarter of fiscal 2026 were primarily expenses associated with our business technology transformation initiatives and expenses associated with acquisitions.
Interest Expense
Interest expense increased $89 million for the first quarter of fiscal 2027, as compared to the first quarter of fiscal 2026. The increase was primarily due to the amortization of debt issuance costs associated with the bridge loan facility related to the planned acquisition of JRD, which is treated as a Certain Item.
Other Income and Expense
Other income increased $259 million for the first quarter of fiscal 2027, as compared to the first quarter of fiscal 2026, primarily due to gains on deal contingent rate lock transactions in the first quarter of fiscal 2027, which are treated as Certain Items. Refer to Note 7, "Derivative Financial Instruments," in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further discussion of our deal-contingent rate lock transactions. Additionally, we recognized net foreign exchange gains in the first quarter of fiscal 2027, whereas net foreign exchange losses were recognized in the first quarter of fiscal 2026.
Net Earnings
Net earnings increased 10.5% in the first quarter of fiscal 2027 as compared to the first quarter of fiscal 2026, primarily due to the items noted above for operating income, interest expense, other income and expense, as well as items impacting our income taxes that are discussed in Note 12, "Income Taxes," in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q. Adjusted net earnings, excluding Certain Items, increased 4.2% in the first quarter of fiscal 2027 as compared to the first quarter of fiscal 2026, primarily due to the effective management of gross profit margins.
Earnings Per Share
Basic earnings per share in the first quarter of fiscal 2027 were $1.09, a 10.1% increase from the comparable prior year period amount of $0.99 per share. Diluted earnings per share in the first quarter of fiscal 2027 were $1.09, a 10.1% increase from the comparable prior year period amount of $0.99 per share. Adjusted diluted earnings per share, excluding Certain Items, in the first quarter of fiscal 2027 were $1.19, a 3.5% increase from the comparable prior year amount of $1.15 per share.
Non-GAAP Reconciliations
The discussion of our results includes certain non-GAAP financial measures, including EBITDA and adjusted EBITDA, that we believe provide important perspective with respect to underlying business trends. Other than EBITDA and free cash flow, any non-GAAP financial measures will be denoted as adjusted measures to remove (1) restructuring charges; (2) expenses associated with our various transformation initiatives; (3) severance charges; and (4) acquisition-related costs consisting of: (a) intangible amortization expense and (b) acquisition costs and due diligence costs related to our acquisitions. Adjustments provided herein for fiscal 2027 results of operations also remove amortization expense associated with debt issuance costs on a bridge loan facility and a gain on deal contingent rate lock transactions entered into to mitigate interest rate risk on permanent debt issued to finance the JRD Acquisition Transactions. No similar charges were applicable in the first quarter of fiscal 2026. | ||
| The results of our operations can be impacted due to changes in exchange rates applicable in converting local currencies to U.S. dollars. We measure our 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. | ||
| Management believes that adjusting its operating expenses, operating income, operating margin, interest expense, other (income) expense, net earnings and diluted earnings per share to remove these Certain Items, presenting its results on a constant currency basis, provides an important perspective with respect to our underlying business trends and results. It 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. | ||
| Sysco has a history of growth through acquisitions and excludes from its non-GAAP financial measures the impact of acquisition-related intangible amortization, acquisition costs and due-diligence costs for those acquisitions. We believe this approach significantly enhances the comparability of Sysco's results for fiscal 2027 and fiscal 2026. | ||
| Set forth on the following page 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 be equal to the total presented when added due to rounding. Adjusted diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding. The non-GAAP financial measures shown in the following tables should not be used as a substitute for the most comparable GAAP financial measures 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. |
| 13-Week Period Ended Sep. 26, 2026 | 13-Week Period Ended Sep. 27, 2025 | Change in Dollars | %/bps Change | ||||||||||||||||||||
| Sales (GAAP) | $ | 21,744 | $ | 21,148 | $ | 596 | 2.8 | % | |||||||||||||||
Impact of currency fluctuations (1) | 35 | 35 | 0.2 | ||||||||||||||||||||
| Comparable sales using a constant currency basis (Non-GAAP) | $ | 21,779 | $ | 21,148 | $ | 631 | 3.0 | % | |||||||||||||||
| Cost of sales (GAAP) | $ | 17,693 | $ | 17,247 | $ | 446 | 2.6 | % | |||||||||||||||
| Gross profit (GAAP) | $ | 4,051 | $ | 3,901 | $ | 150 | 3.8 | % | |||||||||||||||
Impact of currency fluctuations (1) | 6 | 6 | 0.2 | ||||||||||||||||||||
| Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP) | $ | 4,057 | $ | 3,901 | $ | 156 | 4.0 | % | |||||||||||||||
| 13-Week Period Ended Sep. 26, 2026 | 13-Week Period Ended Sep. 27, 2025 | Change in Dollars | %/bps Change | ||||||||||||||||||||
| Gross margin (GAAP) | 18.63 | % | 18.45 | % | 18 bps | ||||||||||||||||||
Impact of currency fluctuations (1) | - | 0 bps | |||||||||||||||||||||
| Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP) | 18.63 | % | 18.45 | % | 18 bps | ||||||||||||||||||
| Operating expenses (GAAP) | $ | 3,334 | $ | 3,101 | $ | 233 | 7.5 | % | |||||||||||||||
Impact of restructuring, transformational project, and other costs (2) | (102) | (56) | (46) | (82.1) | |||||||||||||||||||
Impact of acquisition-related costs (3) | (108) | (42) | (66) | NM | |||||||||||||||||||
| Operating expenses adjusted for Certain Items (Non-GAAP) | 3,124 | 3,003 | 121 | 4.0 | |||||||||||||||||||
Impact of currency fluctuations (1) | 6 | 6 | 0.2 | ||||||||||||||||||||
| Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP) | $ | 3,130 | $ | 3,003 | $ | 127 | 4.2 | % | |||||||||||||||
| Operating expense as a percentage of sales (GAAP) | 15.33 | % | 14.66 | % | 67 bps | ||||||||||||||||||
| Impact of certain item adjustments | (0.96) | (0.46) | -50 bps | ||||||||||||||||||||
| Adjusted operating expense as a percentage of sales (Non-GAAP) | 14.37 | % | 14.20 | % | 17 bps | ||||||||||||||||||
| Operating income (GAAP) | $ | 717 | $ | 800 | $ | (83) | (10.4) | % | |||||||||||||||
Impact of restructuring, transformational project, and other costs (2) | 102 | 56 | 46 | 82.1 | |||||||||||||||||||
Impact of acquisition-related costs (3) | 108 | 42 | 66 | NM | |||||||||||||||||||
| Operating income adjusted for Certain Items (Non-GAAP) | 927 | 898 | 29 | 3.2 | |||||||||||||||||||
Impact of currency fluctuations (1) | - | - | - | ||||||||||||||||||||
| Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP) | $ | 927 | $ | 898 | $ | 29 | 3.2 | % | |||||||||||||||
| Operating margin (GAAP) | 3.30 | % | 3.78 | % | -48 bps | ||||||||||||||||||
| Operating margin adjusted for Certain Items (Non-GAAP) | 4.26 | % | 4.25 | % | 1 bp | ||||||||||||||||||
| Operating margin adjusted for Certain Items using a constant currency basis (Non-GAAP) | 4.26 | % | 4.25 | % | 1 bp | ||||||||||||||||||
| Interest expense (GAAP) | $ | 261 | $ | 172 | $ | 89 | 51.7 | % | |||||||||||||||
Impact of bridge loan amortization (4) | (90) | - | (90) | NM | |||||||||||||||||||
| Interest expense adjusted for Certain Items (Non-GAAP) | $ | 171 | $ | 172 | $ | (1) | (0.6) | % | |||||||||||||||
| Other (income) expense (GAAP) | $ | (231) | $ | 28 | $ | (259) | NM | ||||||||||||||||
Impact of deal contingent rate lock transactions and other items associated with the planned acquisition of Jetro Restaurant Depot (4) | 237 | - | 237 | NM | |||||||||||||||||||
| Other expense adjusted for Certain Items (Non-GAAP) | $ | 6 | $ | 28 | $ | (22) | (78.6) | % | |||||||||||||||
| Net earnings (GAAP) | $ | 526 | $ | 476 | $ | 50 | 10.5 | % | |||||||||||||||
Impact of restructuring, transformational project, and other costs (2) | 102 | 56 | 46 | 82.1 | |||||||||||||||||||
Impact of acquisition-related costs (3) | 108 | 42 | 66 | NM | |||||||||||||||||||
Impact of bridge loan amortization (4) | 90 | - | 90 | NM | |||||||||||||||||||
Impact of deal contingent rate lock transactions and other items associated with the planned acquisition of Jetro Restaurant Depot (4) | (237) | - | (237) | NM | |||||||||||||||||||
Tax impact of restructuring, transformational project, and other costs (5) | (24) | (13) | (11) | (84.6) | |||||||||||||||||||
Tax impact of acquisition-related costs (5) | (26) | (10) | (16) | NM | |||||||||||||||||||
| 13-Week Period Ended Sep. 26, 2026 | 13-Week Period Ended Sep. 27, 2025 | Change in Dollars | %/bps Change | ||||||||||||||||||||
Tax impact of bridge loan amortization (5) | (22) | - | (22) | NM | |||||||||||||||||||
Tax impact of deal contingent rate lock transactions and other items associated with the planned acquisition of Jetro Restaurant Depot (5) | 57 | - | 57 | NM | |||||||||||||||||||
| Net earnings adjusted for Certain Items (Non-GAAP) | $ | 574 | $ | 551 | $ | 23 | 4.2 | % | |||||||||||||||
| Diluted earnings per share (GAAP) | $ | 1.09 | $ | 0.99 | $ | 0.10 | 10.1 | % | |||||||||||||||
Impact of restructuring, transformational project, and other costs (2) | 0.21 | 0.12 | 0.09 | 75.0 | |||||||||||||||||||
Impact of acquisition-related costs (3) | 0.22 | 0.09 | 0.13 | NM | |||||||||||||||||||
Impact of bridge loan amortization (4) | 0.19 | - | 0.19 | NM | |||||||||||||||||||
Impact of deal contingent rate lock transactions and other items associated with the planned acquisition of Jetro Restaurant Depot (4) | (0.49) | - | (0.49) | NM | |||||||||||||||||||
Tax impact of restructuring, transformational project, and other costs (5) | (0.05) | (0.03) | (0.02) | (66.7) | |||||||||||||||||||
Tax impact of acquisition-related costs (5) | (0.05) | (0.02) | (0.03) | NM | |||||||||||||||||||
Tax impact of bridge loan amortization (5) | (0.05) | - | (0.05) | NM | |||||||||||||||||||
Tax impact of deal contingent rate lock transactions and other items associated with the planned acquisition of Jetro Restaurant Depot (5) | 0.12 | - | 0.12 | NM | |||||||||||||||||||
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (6) | $ | 1.19 | $ | 1.15 | $ | 0.04 | 3.5 | % | |||||||||||||||
(1) | Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on the current year results. | ||||
(2) | Fiscal 2027 includes $80 million related to various transformation initiative costs, primarily consisting of supply chain transformation costs and changes to our business technology strategy, and $22 million related to restructuring and severance charges. Fiscal 2026 includes $46 million related to various transformation initiative costs, primarily consisting of supply chain transformation costs and changes to our business technology strategy, and $10 million related to restructuring and severance charges. | ||||
(3) | Fiscal 2027 includes $56 million in acquisition and due diligence costs and $52 million of intangible amortization expense. Fiscal 2026 includes $31 million of intangible amortization expense and $11 million in acquisition and due diligence costs. | ||||
(4) | Fiscal 2027 primarily includes $90 million of amortization expense associated with debt issuance costs on a bridge loan facility and a gain of $234 million on deal contingent rate lock transactions, both of which are related to the planned acquisition of Jetro Restaurant Depot. | ||||
(5) | The tax impact of adjustments for Certain Items is 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 equal the total presented when added 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. |
| 13-Week Period Ended Sep. 26, 2026 | 13-Week Period Ended Sep. 27, 2025 | Change in Dollars | %/bps Change | ||||||||||||||||||||
| U.S. FOODSERVICE OPERATIONS | |||||||||||||||||||||||
| Operating expenses (GAAP) | $ | 2,019 | $ | 1,943 | $ | 76 | 3.9 | % | |||||||||||||||
Impact of restructuring, transformational project, and other costs (1) | (28) | (7) | (21) | NM | |||||||||||||||||||
Impact of acquisition-related costs (2) | (19) | (29) | 10 | 34.5 | |||||||||||||||||||
| Operating expenses adjusted for Certain Items (Non-GAAP) | $ | 1,972 | $ | 1,907 | $ | 65 | 3.4 | % | |||||||||||||||
| Operating income (GAAP) | $ | 894 | $ | 880 | $ | 14 | 1.6 | % | |||||||||||||||
Impact of restructuring, transformational project, and other costs (1) | 28 | 7 | 21 | NM | |||||||||||||||||||
Impact of acquisition-related costs (2) | 19 | 29 | (10) | (34.5) | |||||||||||||||||||
| Operating income adjusted for Certain Items (Non-GAAP) | $ | 941 | $ | 916 | $ | 25 | 2.7 | % | |||||||||||||||
| INTERNATIONAL FOODSERVICE OPERATIONS | |||||||||||||||||||||||
| Sales (GAAP) | $ | 4,168 | $ | 3,966 | $ | 202 | 5.1 | % | |||||||||||||||
Impact of currency fluctuations (3) | 34 | 34 | 0.9 | ||||||||||||||||||||
| Comparable sales using a constant currency basis (Non-GAAP) | $ | 4,202 | $ | 3,966 | $ | 236 | 6.0 | % | |||||||||||||||
| Gross profit (GAAP) | $ | 887 | $ | 826 | $ | 61 | 7.4 | % | |||||||||||||||
Impact of currency fluctuations (3) | 6 | 6 | 0.7 | ||||||||||||||||||||
| Comparable gross profit using a constant currency basis (Non-GAAP) | $ | 893 | $ | 826 | $ | 67 | 8.1 | % | |||||||||||||||
| Gross margin (GAAP) | 21.28 | % | 20.83 | % | 45 bps | ||||||||||||||||||
Impact of currency fluctuations (3) | (0.03) | -3 bps | |||||||||||||||||||||
| Comparable gross margin using a constant currency basis (Non-GAAP) | 21.25 | % | 20.83 | % | 42 bps | ||||||||||||||||||
| Operating expenses (GAAP) | $ | 805 | $ | 712 | $ | 93 | 13.1 | % | |||||||||||||||
Impact of restructuring and transformational project costs (4) | (47) | (23) | (24) | NM | |||||||||||||||||||
Impact of acquisition-related costs (2) | (36) | (10) | (26) | NM | |||||||||||||||||||
| Operating expenses adjusted for Certain Items (Non-GAAP) | 722 | 679 | 43 | 6.3 | |||||||||||||||||||
Impact of currency fluctuations (3) | 5 | 5 | 0.8 | ||||||||||||||||||||
| Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP) | $ | 727 | $ | 679 | $ | 48 | 7.1 | % | |||||||||||||||
| Operating income (GAAP) | $ | 82 | $ | 114 | $ | (32) | (28.1) | % | |||||||||||||||
Impact of restructuring and transformational project costs (4) | 47 | 23 | 24 | NM | |||||||||||||||||||
Impact of acquisition-related costs (2) | 36 | 10 | 26 | NM | |||||||||||||||||||
| Operating income adjusted for Certain Items (Non-GAAP) | 165 | 147 | 18 | 12.2 | |||||||||||||||||||
Impact of currency fluctuations (3) | 1 | 1 | 0.7 | ||||||||||||||||||||
| Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP) | $ | 166 | $ | 147 | $ | 19 | 12.9 | % | |||||||||||||||
| SYGMA | |||||||||||||||||||||||
| Operating expenses (GAAP) | $ | 146 | $ | 145 | $ | 1 | 0.7 | % | |||||||||||||||
| Operating income (GAAP) | 21 | 25 | (4) | (16.0) | |||||||||||||||||||
| OTHER | |||||||||||||||||||||||
| Operating expenses (GAAP) | $ | 66 | $ | 64 | $ | 2 | 3.1 | % | |||||||||||||||
| Operating income (GAAP) | 9 | 4 | 5 | NM | |||||||||||||||||||
| GLOBAL SUPPORT CENTER | |||||||||||||||||||||||
| Gross profit (GAAP) | $ | 9 | $ | 14 | $ | (5) | (35.7) | % | |||||||||||||||
| 13-Week Period Ended Sep. 26, 2026 | 13-Week Period Ended Sep. 27, 2025 | Change in Dollars | %/bps Change | ||||||||||||||||||||
| Operating expenses (GAAP) | $ | 298 | $ | 237 | $ | 61 | 25.7 | % | |||||||||||||||
Impact of restructuring and transformational project costs (5) | (27) | (26) | (1) | (3.8) | |||||||||||||||||||
Impact of acquisition-related costs (6) | (53) | (3) | (50) | NM | |||||||||||||||||||
| Operating expenses adjusted for Certain Items (Non-GAAP) | $ | 218 | $ | 208 | $ | 10 | 4.8 | % | |||||||||||||||
| Operating loss (GAAP) | $ | (289) | $ | (223) | $ | (66) | (29.6) | % | |||||||||||||||
Impact of restructuring and transformational project costs (5) | 27 | 26 | 1 | 3.8 | |||||||||||||||||||
Impact of acquisition-related costs (6) | 53 | 3 | 50 | NM | |||||||||||||||||||
| Operating loss adjusted for Certain Items (Non-GAAP) | $ | (209) | $ | (194) | $ | (15) | (7.7) | % | |||||||||||||||
(1) | Primarily represents severance charges and transformation initiative costs. | ||||
(2) | Fiscal 2027 and fiscal 2026 include intangible amortization expense and acquisition costs. | ||||
(3) | Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on current year results. | ||||
(4) | Includes restructuring and transformation initiative costs primarily in Europe. | ||||
(5) | Includes various transformation initiative costs, primarily consisting of changes to our business technology strategy. | ||||
(6) | Represents acquisition and due diligence costs. | ||||
| NM | Represents that the percentage change is not meaningful. |
EBITDA and Adjusted EBITDA
EBITDA and adjusted EBITDA should not be used as a substitute for the most comparable GAAP measure in assessing Sysco's overall 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. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Key Performance Indicators" contained in our fiscal 2026 Form 10-K for discussions regarding this non-GAAP performance metric. Set forth below is a reconciliation of actual net earnings to EBITDA and to adjusted EBITDA results for the periods presented (dollars in millions):
| 13-Week Period Ended Sep. 26, 2026 | 13-Week Period Ended Sep. 27, 2025 | Change in Dollars | % Change | ||||||||||||||||||||
| Net earnings (GAAP) | $ | 526 | $ | 476 | $ | 50 | 10.5 | % | |||||||||||||||
| Interest (GAAP) | 261 | 172 | 89 | 51.7 | |||||||||||||||||||
| Income taxes (GAAP) | 161 | 124 | 37 | 29.8 | |||||||||||||||||||
| Depreciation and amortization (GAAP) | 262 | 233 | 29 | 12.4 | |||||||||||||||||||
| EBITDA (Non-GAAP) | $ | 1,210 | $ | 1,005 | $ | 205 | 20.4 | % | |||||||||||||||
| Certain Item adjustments: | |||||||||||||||||||||||
Impact of restructuring and transformational project costs (1) | $ | 98 | $ | 54 | $ | 44 | 81.5 | % | |||||||||||||||
Impact of acquisition-related costs (2) | 57 | 11 | 46 | NM | |||||||||||||||||||
Impact of deal contingent rate lock transactions and other items associated with the planned acquisition of Jetro Restaurant Depot (3) | (237) | - | (237) | NM | |||||||||||||||||||
EBITDA adjusted for Certain Items (Non-GAAP) (4) | $ | 1,128 | $ | 1,070 | $ | 58 | 5.4 | % | |||||||||||||||
Other expense (income), net, as adjusted (Non-GAAP) (5) | 6 | 28 | (22) | (78.6) | |||||||||||||||||||
Depreciation and amortization, as adjusted (Non-GAAP) (6) | (207) | (200) | (7) | (3.5) | |||||||||||||||||||
| Operating income adjusted for Certain Items (Non-GAAP) | $ | 927 | $ | 898 | $ | 29 | 3.2 | % | |||||||||||||||
(1) | Fiscal 2027 and fiscal 2026 include charges related to restructuring and severance, as well as various transformation initiative costs, primarily consisting of supply chain transformation costs and changes to our business technology strategy, excluding charges related to accelerated depreciation. | ||||
(2) | Fiscal 2027 and fiscal 2026 include acquisition and due diligence costs. | ||||
(3) | Fiscal 2027 primarily includes a gain on deal contingent rate lock transactions related to the planned acquisition of Jetro Restaurant Depot. | ||||
(4) | In arriving at adjusted EBITDA, Sysco does not exclude interest income of $7 million and $6 million or non-cash stock compensation expense of $28 million and $31 million in fiscal 2027 and fiscal 2026, respectively. | ||||
(5) | Fiscal 2027 represents $231 million in GAAP other expense (income), net less $237 million in income primarily from a gain on deal contingent rate lock transactions entered into to mitigate interest rate risk on permanent debt issued to finance the purchase of Jetro Restaurant Depot. Fiscal 2026 represents $28 million in GAAP other expense (income), net. | ||||
(6) | Fiscal 2027 includes $262 million in GAAP depreciation and amortization expense, less $55 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions. Fiscal 2026 includes $233 million in GAAP depreciation and amortization expense, less $33 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions. | ||||
| NM | Represents that the percentage change is not meaningful. |
Liquidity and Capital Resources
Highlights
We produced positive free cash flow of $230 million in the first 13 weeks of fiscal 2027, as compared to negative free cash flow of $50 million in the first 13 weeks of fiscal 2026. The increase in free cash flow is attributable to an increase in cash provided by operating activities, a decrease in capital expenditures, and an increase in proceeds from sales of plant and equipment. In the table that follows, free cash flow for each period presented is reconciled to net cash provided by operating activities and comparisons of the significant cash flows from the first 13 weeks of fiscal 2027 to the first 13 weeks of fiscal 2026 are provided.
| 13-Week Period Ended Sep. 26, 2026 | 13-Week Period Ended Sep. 27, 2025 | ||||||||||
| Source of cash (use of cash) | (In millions) | ||||||||||
| Net cash provided by operating activities (GAAP) | $ | 278 | $ | 86 | |||||||
| Additions to plant and equipment | (97) | (160) | |||||||||
| Proceeds from sales of plant and equipment | 49 | 24 | |||||||||
Free Cash Flow (Non-GAAP) (1) | $ | 230 | $ | (50) | |||||||
| Debt borrowings (repayments), net | $ | 401 | $ | 36 | |||||||
| Dividends paid | (264) | (259) | |||||||||
(1) | 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. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Key Performance Indicators" contained in our fiscal 2026 Form 10-K for discussions regarding this non-GAAP performance metric. |
Sources and Uses of Cash
Sysco generates cash in the U.S. and internationally. As of September 26, 2026, we had $3.2 billion in cash and cash equivalents, approximately 24% of which was held by our international subsidiaries. Sysco's strategic objectives are funded primarily by cash from operations and external borrowings. Traditionally, our operations have produced significant cash flow. Due to our strong financial position, we believe we will continue to be able to effectively access capital markets, as needed. Cash is generally allocated to working capital requirements, investments compatible with our overall growth strategy (organic and inorganic), debt management, and shareholder return. The remaining cash balances are invested in high-quality, short-term instruments.
We believe our cash flow from operations, the availability of liquidity under our commercial paper programs and our revolving credit facility, and our ability to access capital from financial markets will be sufficient to meet our anticipated cash requirements for more than the next 12 months, while maintaining sufficient liquidity for normal operating purposes.
Cash Flows
Operating Activities
We generated $278 million in cash flows from operations in the first 13 weeks of fiscal 2027, compared to cash flows from operations of $86 million in the first 13 weeks of fiscal 2026. In the first 13 weeks of fiscal 2027, these amounts included year-over-year favorable comparisons on working capital of $277 million due to favorable comparisons on inventory and accounts receivable, partially offset by an unfavorable comparison in accounts payable. Accrued expenses also had an unfavorable comparison, primarily related to higher payments of accrued incentive compensation in the first 13 weeks of fiscal 2027 in comparison to the first 13 weeks of fiscal 2026. Income tax payments negatively impacted cash flows from operations, as estimated payments made in the first 13 weeks of fiscal 2027 were higher compared to the first 13 weeks of fiscal 2026.
Investing Activities
Our capital expenditures in the first 13 weeks of fiscal 2027 consisted primarily of investments in buildings and building improvements, technology equipment, warehouse equipment, and fleet. Our capital expenditures in the first 13 weeks of fiscal 2027 were $63 million lower than in the first 13 weeks of fiscal 2026, reflecting a disciplined capital expenditure strategy and contributing to an increase in free cash flow. Proceeds from sales of plant and equipment were $49 million in the first 13 weeks of fiscal 2027, as compared to $24 million in the first 13 weeks of fiscal 2026. Our purchases of marketable securities were $135 million in the first 13 weeks of fiscal 2027, as we took advantage of higher interest rates available on corporate and government bonds. These marketable securities are held by our wholly owned captive insurance subsidiary in a restricted investment portfolio. See Note 6, "Marketable Securities," in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further details of these investments. We had no purchases of marketable securities in the first 13 weeks of fiscal 2026.
Financing Activities
Equity Transactions
On September 16, 2026, we issued 12,345,679 shares of our common stock in an underwritten public offering at an offering price of $81.00 per share. The common stock has a $1.00 per share par value. As a result of this transaction, we received cash proceeds of approximately $967 million, net of underwriting fees and other issuance costs.
Dividends paid in the first 13 weeks of fiscal 2027 were $264 million, or $0.55 per share, as compared to $259 million, or $0.54 per share, in the first 13 weeks of fiscal 2026. In August 2026, we declared our regular quarterly dividend for the first quarter of fiscal 2027 of $0.55 per share, which was paid in October 2026.
Proceeds from exercises of share-based compensation awards were $37 million in the first 13 weeks of fiscal 2027, as compared to $43 million in the first 13 weeks of fiscal 2026. The level of option exercises, and thus proceeds, will vary from period to period and is largely dependent on movements in our stock price and the time remaining before option grants expire.
In May 2021, our Board of Directors approved a share repurchase program to authorize the repurchase of up to $5.0 billion of the company's common stock, which will remain available until fully utilized. We repurchased no shares during the first 13 weeks of fiscal 2027. As of September 26, 2026, we had a remaining authorization of approximately $1.3 billion. We repurchased no additional shares under our authorization from the end of our fiscal first quarter through October 16, 2026.
Debt Activity and Borrowing Availability
Our debt activity, including issuances and repayments, if any, and our borrowing availability are described in Note 8, "Debt," and Note 15, "Subsequent Events," in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q. Our outstanding borrowings as of September 26, 2026 are disclosed within Note 8, "Debt."
Guarantor Summarized Financial Information
On January 19, 2011, the wholly owned U.S. Broadline subsidiaries of Sysco Corporation, which distribute a full line of food products and a wide variety of non-food products, entered into full and unconditional guarantees of all outstanding senior notes and debentures of Sysco Corporation. All subsequent issuances of senior notes and debentures in the U.S. and borrowings under the company's $3.0 billion long-term revolving credit facility have also been guaranteed by these subsidiaries. On September 25, 2026, Sysco Corporation and Sysco Holdings co-issued two series of CAD-denominated senior notes in an aggregate principal amount of C$1.5 billion (approximately USD $1.1 billion). These senior notes are fully and unconditionally guaranteed by our wholly owned U.S. Broadline subsidiaries. See Note 8, "Debt," in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further details of this debt issuance. In connection with the issuance of the CAD-denominated senior notes, Sysco Holdings also entered into full and unconditional guarantees of all outstanding senior notes and debentures of Sysco Corporation.
As of September 26, 2026, we had a total of $12.2 billion in senior notes, debentures and borrowings under the long-term revolving credit facility that were guaranteed by our U.S. Broadline subsidiary guarantors. Our remaining consolidated subsidiaries (non-guarantor subsidiaries) are not obligated under the senior notes indenture, debentures indenture or our long-term revolving credit facility. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" contained in our fiscal 2026 Form 10-K for additional information regarding the terms of the guarantees.
Basis of Preparation of the Summarized Financial Information
The summarized financial information of Sysco Corporation and Sysco Holdings Corporation ("issuers"), and certain wholly owned U.S. Broadline subsidiaries ("guarantors") (together, the "obligor group") is presented on a combined basis with intercompany balances and transactions between entities in the obligor group eliminated. Investments in and equity in the earnings of our non-guarantor subsidiaries, which are not members of the obligor group, have been excluded from the summarized financial information. The obligor group's amounts due to, amounts due from and transactions with non-guarantor
subsidiaries have been presented in separate line items, if they are material to the obligor financials. The following tables include summarized financial information of the obligor group for the periods presented.
| Combined Parent and Guarantor Subsidiaries Summarized Balance Sheet | Sep. 26, 2026 | Jun. 27, 2026 | ||||||||||||
| (In millions) | ||||||||||||||
| ASSETS | ||||||||||||||
| Receivables due from non-obligor subsidiaries | $ | 1,023 | $ | 274 | ||||||||||
| Current assets | 8,930 | 7,134 | ||||||||||||
| Total current assets | $ | 9,953 | $ | 7,408 | ||||||||||
| Notes receivable from non-obligor subsidiaries | $ | - | $ | 1 | ||||||||||
| Other noncurrent assets | 5,631 | 5,459 | ||||||||||||
| Total noncurrent assets | $ | 5,631 | $ | 5,460 | ||||||||||
| LIABILITIES | ||||||||||||||
| Payables due to non-obligor subsidiaries | $ | 87 | $ | 79 | ||||||||||
| Other current liabilities | 3,625 | 3,629 | ||||||||||||
| Total current liabilities | $ | 3,712 | $ | 3,708 | ||||||||||
| Notes payable to non-obligor subsidiaries | $ | 405 | $ | 388 | ||||||||||
| Long-term debt | 12,286 | 12,115 | ||||||||||||
| Other noncurrent liabilities | 1,832 | 1,704 | ||||||||||||
| Total noncurrent liabilities | $ | 14,523 | $ | 14,207 | ||||||||||
| Combined Parent and Guarantor Subsidiaries Summarized Results of Operations | 13-Week Period Ended Sep. 26, 2026 | |||||||
| (In millions) | ||||||||
| Sales | $ | 13,190 | ||||||
| Gross profit | 2,349 | |||||||
| Operating income | 585 | |||||||
| Interest expense from non-obligor subsidiaries | 41 | |||||||
| Net earnings | 451 | |||||||
Critical Accounting Estimates
Critical accounting estimates are those that are most important to the portrayal of our financial position and results of operations. These require our most subjective or complex judgments, often employing the use of estimates about the effect of matters that are inherently uncertain. We have reviewed with the Audit Committee of the Board of Directors the development and selection of the critical accounting estimates and this related disclosure. Our most critical accounting estimates pertain to goodwill and intangible assets, income taxes and company-sponsored pension plans, which are described in Item 7 of our fiscal 2026 Form 10-K.
Forward-Looking Statements
Certain statements made herein that look forward in time or express management's expectations or beliefs with respect to the occurrence of future events are forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as "anticipates," "believes," "can," "contemplates," "continues," "continuously," "could," "estimates," "expects," "forecasts," "future," "goal," "intends," "may," "outlook," "plans," "predicts," "projected," "seek," "should," "strive," "target," "will," "would," variations of such terms, and similar terms and phrases denoting anticipated or expected occurrences or results. This report contains various statements relating to future financial performance and results, business strategy, plans, goals and objectives, including certain outlook, business trends, our dividend and share repurchase programs, our expectation of future
macroeconomic conditions and other statements that are not historical facts, including statements about the expected timing and completion of the JRD Acquisition Transactions and the anticipated benefits of the these transactions.
These statements are based on management's current expectations and estimates; actual results may differ materially due in part to the risk factors set forth below, those within Part II, Item 1A of this Form 10-Q and those discussed in Item 1A of our fiscal 2026 Form 10-K:
•the risk that if sales from our locally managed customers do not grow at the same rate as sales from multi-unit customers, our gross margins may decline;
•periods of significant or prolonged inflation, deflation, or economic uncertainty and their impact on our product costs and profitability generally, and our inability to predict inflation over the long term;
•the risk that our efforts to modify truck routing, including our small truck initiative, in order to reduce outbound transportation costs may be unsuccessful;
•the risk that we may not realize anticipated benefits from our operating cost reduction efforts, including our ability to accelerate and/or identify additional cost savings;
•risks related to geopolitical, economic and market conditions and developments, including unfavorable conditions in the Americas and Europe, and changes in global trade policies, tariffs, and foreign conflicts, foreign exchange rates and the impact on our business, results of operations and financial condition;
•the risks related to our efforts to implement our business transformation initiatives and meet our other long-term strategic objectives, including 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 competition in our industry and the impact of group purchasing organizations may adversely impact our margins and our ability to retain customers and make it difficult for us to maintain our market share, growth rate and profitability;
•the risk that our relationships with long-term customers may be materially diminished or terminated;
•the risk that changes in consumer eating habits, including economic factors affecting consumer confidence and discretionary spending and the impact of advancements in pharmaceutical therapies, which may reduce the consumption of food prepared away from home, could materially and adversely affect our business, financial condition, or results of operations;
•the impact and effects of public health crises, pandemics, epidemics, and natural disasters or adverse weather conditions on our business, financial condition and results of operations;
•the risk that 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;
•the risk of interruption of supplies and increase in product costs as a result of conditions beyond our control;
•the potential impact on our reputation and earnings of adverse publicity or lack of confidence in our products;
•difficulties in successfully expanding into international markets and complementary lines of business;
•the potential impact of product liability claims or product recalls;
•the risk that we fail to comply with requirements imposed by applicable law or government regulations, including but not limited to those related to environmental, data privacy and tax and accounting laws, rules and regulations;
•risks related to our ability to effectively finance and integrate acquired businesses;
•risks related to our access to borrowed funds in order to grow and finance any remaining amounts needed for the JRD Acquisition Transaction, and risks related to any default by us under our indebtedness that could have a material adverse impact on cash flow and liquidity;
•the risk that our level of indebtedness and the terms of our indebtedness could adversely affect our business and liquidity position;
•the risk that we may not be able to effectively execute our capital allocation framework;
•the risk that divestiture of one or more of our businesses may not provide the anticipated effects on our operations;
•risks related to our ability to return capital to stockholders, including those related to the timing and amounts (including any plans or commitments in respect thereof) of any dividends and share repurchases;
•the risk that due to our reliance on technology, any technology disruption or delay in implementing new technology, including artificial intelligence (AI), could have a material negative impact on our business;
•the risk of negative impacts to our business and our relationships with customers from a cybersecurity incident and/or other technology disruptions, including risks from flaws, breaches, or malfunctions in AI systems that could lead to operational disruptions, data loss, or erroneous decision-making;
•risks related to our ability to attract, motivate and retain employees, including key personnel;
•risks related to labor issues, including the renegotiation of union contracts and shortage of qualified labor;
•the risk that the exclusive forum provisions in our amended and restated bylaws could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees;
•risks related to business uncertainties and contractual restrictions affecting us and Jetro Restaurant Depot while the JRD Acquisition Transactions are pending, including effects on employees, customers, suppliers, and other business relationships;
•the risk that the JRD Acquisition Transactions are not consummated as expected, in a timely manner or at all;
•the risk that any of the anticipated benefits of the JRD Acquisition Transactions will not be realized or will not be realized within the expected time period;
•risks relating to the integration of Jetro Restaurant Depot; and
•the outcome and costs of any litigation relating to the JRD Acquisition Transactions.
You should carefully consider these risks, as well as the additional risks described in other documents we file with the SEC. New risks emerge from time to time and it is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in, or implied by, any forward-looking statements.
In light of the significant risks and uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that such results will be
achieved, and readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. Except as required by law, we undertake no obligation to revise the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. You should read this Form 10-Q, our fiscal 2026 Form 10-K and the documents we file with the SEC, with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by the cautionary statements referenced above.