SYSCO CORP (SYY)

Item 2.  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 28, 2025, 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 2025 Form 10-K, as well as the consolidated financial statements (unaudited) and notes to the

consolidated financial statements (unaudited) contained in this report.

Highlights

Our third quarter of fiscal 2026 results included sales growth of 4.7% as compared to the third quarter of fiscal 2025,

primarily driven by volume improvements across our business. Sales increased in our U.S. Foodservice Operations,

International Foodservice Operations, and SYGMA segments. Our gross profit increased 6.5% compared to the third quarter of

fiscal 2025, due to our strategic sourcing efforts, favorable changes in customer mix, and the effective management of product

cost inflation. Operating income decreased 9.1% compared to the third quarter of fiscal 2025, due to higher incentive

compensation, increased restructuring and transformational project costs, and higher acquisition and due diligence costs. We

consider restructuring and transformational project costs and acquisition and due diligence costs to be “Certain Item” expenses

(as defined below). Excluding Certain Item expenses, adjusted operating income decreased 0.6% as compared to the third

quarter of fiscal 2025, primarily due to higher incentive compensation. Our net earnings for the third quarter of fiscal 2026

decreased 15.2% as compared to the third quarter of fiscal 2025. Excluding Certain Item expenses, adjusted net earnings

decreased by 3.6% as compared to the third quarter of fiscal 2025. See below for a comparison of our fiscal 2026 results to our

fiscal 2025 results, both including and excluding Certain Items.

Comparisons of results from the third quarter of fiscal 2026 to the third quarter of fiscal 2025 are presented below:

•Sales:

◦increased 4.7%, or $921 million, to $20.5 billion;

•Operating income:

◦decreased 9.1%, or $62 million, to $619 million;

◦adjusted operating income decreased 0.6%, or $5 million, to $768 million;

•Net earnings:

◦decreased 15.2%, or $61 million, to $340 million;

◦adjusted net earnings decreased 3.6%, or $17 million, to $452 million;

•Basic earnings per share:

◦decreased 13.4%, or $0.11, to $0.71 per share;

•Diluted earnings per share:

◦decreased 13.4% or $0.11, to $0.71 per share;

◦adjusted diluted earnings per share decreased 2.1%, or $0.02, to $0.94 per share;

•EBITDA:

◦decreased 5.1%, or $46 million, to $864 million; and

◦adjusted EBITDA increased 0.1%, or $1 million, to $970 million.

Comparisons of results from the first 39 weeks of fiscal 2026 to the first 39 weeks of fiscal 2025 are presented below:

•Sales:

◦increased 3.6%, or $2.2 billion, to $62.4 billion;

•Operating income:

◦decreased 4.0%, or $88 million, to $2.1 billion;

◦adjusted operating income increased 1.9%, or $46 million, to $2.5 billion;

•Net earnings:

◦decreased 7.0%, or $91 million, to $1.2 billion;

◦adjusted net earnings increased 1.0%, or $14 million, to $1.5 billion;

•Basic earnings per share:

◦decreased 4.9%, or $0.13, to $2.52 per share;

•Diluted earnings per share:

◦decreased 4.9% , or $0.13 to $2.51 per share;

◦adjusted diluted earnings per share increased 3.4%, or $0.10, to $3.08 per share;

•EBITDA:

◦decreased 3.0%, or $85 million, to $2.8 billion; and

◦adjusted EBITDA increased 1.2%, or $36 million, to $3.0 billion.

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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 2026 results of operations also remove the impact of a charge associated with a legal

matter. No similar charge was applicable in fiscal 2025.

The fiscal 2026 and fiscal 2025 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 experienced a decrease of 1.9% in the third quarter of fiscal 2026. Our U.S. Foodservice

Operations local case growth trends experienced a sequential improvement of 210 basis points compared to the second quarter

of fiscal 2026, despite the industry’s foot traffic performance. The macroeconomic environment was similar in the third quarter

of fiscal 2026 as compared to the previous quarter, which has continued to adversely impact consumer sentiment. Despite the

current macroeconomic landscape, we expect to grow our sales in fiscal 2026. 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 food service.

Sales and Gross Profit Trends

Sales increased 4.7% and 3.6% in the third quarter and first 39 weeks of fiscal 2026, respectively, as compared to the

third quarter and first 39 weeks of fiscal 2025. Our sales and gross profit performance are influenced by multiple factors,

including price, volume, inflation, customer mix and product mix. We experienced a 2.3% and 1.0% increase in U.S.

Foodservice Operations case volume in the third quarter and first 39 weeks of fiscal 2026, respectively, as compared to the third

quarter and first 39 weeks of fiscal 2025. Our volume growth trends were attributable to local case volume increasing 3.3% and

1.4% in the third quarter and first 39 weeks of fiscal 2026, respectively, as compared to the third quarter and first 39 weeks of

fiscal 2025. Our local case volumes have improved due to improved sales colleague retention and incremental sales colleague

productivity improvements. National case volume increased 1.4% and 0.9% in the third quarter and first 39 weeks of fiscal

2026, respectively, as compared to the third quarter and first 39 weeks of fiscal 2025. Our volume reflects our broadline and

specialty businesses. Beginning in fiscal 2026, we are now including volumes from our specialty meat business for all periods

presented. We expect continued local volume growth in the fourth quarter of fiscal 2026 of at least 2.5% due to continued sales

consultant productivity improvements. In addition, we expect national case volume growth in the fourth quarter due to the

strength of our non-restaurant business and the onboarding of new national restaurant customers.

We experienced inflation at a rate of 2.8% in the third quarter of fiscal 2026, at the total enterprise level, primarily

driven by inflation in the dairy, meat, and seafood categories. We continue to address inflation by successfully managing

through cost increases in a timely manner. Gross margin increased 31 and 20 basis points in the third quarter and first 39 weeks

of fiscal 2026, respectively, as compared to the third quarter and first 39 weeks of fiscal 2025, primarily due to benefits from

our strategic sourcing initiatives, stronger volume performance from local customers and improving mix from Sysco Brand

penetration rates, and the effective management of product cost inflation.

Operating Expense Trends

Total operating expenses were $3.2 billion and $9.4 billion in the third quarter and first 39 weeks of fiscal 2026, a

10.1% and 6.9% increase compared to the third quarter and first 39 weeks of fiscal 2025, respectively. Total adjusted operating

expenses were $3.0 billion and $9.0 billion in the third quarter and first 39 weeks of fiscal 2026, an 8.4% and 5.6% increase

compared to the third quarter and first 39 weeks of fiscal 2025, respectively. Operating expenses increased primarily due to

higher incentive compensation, sales headcount investments, increased acquisition and due diligence costs, and increased costs

associated with expanded building capacity, partially offset by decreases in insurance costs. Adjusted operating expenses were

14.8% and 14.5% of sales during the third quarter and first 39 weeks of fiscal 2026, which represents a 51 and 27 basis point

increase as compared to the third quarter and first 39 weeks of fiscal 2025, respectively, as a result of higher incentive

compensation, sales headcount investments, and increased costs associated with expanded building capacity, partially offset by

decreases in insurance costs.

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Amortization Expense Trends

Sysco’s operations within the United Kingdom, located within the International Foodservice Operations segment,

initiated a rebranding effort in the second quarter of fiscal 2026 to transition the Brakes® brand and other smaller brands to

“Sysco GB.” This rebranding initiative will take approximately two years to complete and will result in Sysco amortizing

previously indefinite-lived intangible assets on a straight-line basis over this two-year period. The rebranding is expected to

result in approximately $100 million of additional amortization expense over two years, including approximately $29 million in

fiscal 2026. This amortization expense will be treated as a Certain Item, which is consistent with our treatment of amortization

expense of other previously acquired intangible assets.

Mergers and Acquisitions

In October 2025, we acquired Fairfax Meadow, a leading specialty meat supplier based in the United Kingdom. This

acquisition follows our acquisition of Campbells Prime Meat last fiscal year and positions our team in the United Kingdom to

achieve additional growth by leveraging additional specialty meat capabilities geographically. This company’s results are

included within International Foodservice Operations and were not material to our results for the third quarter and first 39

weeks of fiscal 2026.

In December 2025, we acquired Ginsberg’s Foods, a broadline distributor servicing restaurants, schools, and

healthcare facilities across eastern New York and neighboring states. This acquisition opens opportunities to new customers

while creating procurement efficiencies through Sysco buying programs and expanded access to Sysco brand products. This

company’s results are included within U.S. Foodservice Operations and were not material to our results for the third quarter and

first 39 weeks of fiscal 2026.

In March 2026, we announced an agreement to acquire Jetro Restaurant Depot (JRD), a leading U.S. wholesale cash-

and-carry foodservice provider serving smaller, independent restaurants and businesses (the Proposed Transaction). JRD

operates 167 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. This transaction is expected to close by the

third quarter of Sysco’s fiscal 2027, subject to the satisfaction of customary closing conditions, including regulatory clearance

under the Hart-Scott-Rodino Act. See Note 15 "Subsequent Events" for more information on the terms of the Proposed

Transaction.

Interest Expense and Other Income and Expense Trends

The cash portion of the purchase price in the Proposed Transaction is expected to be financed with a combination of

new senior unsecured notes, hybrid debt, cash on hand and equity or equity-linked securities. Sysco has executed a commitment

letter for a $22 billi

[Excerpt truncated for page length; source filing is linked above.]

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of Sysco’s financial condition, results of operations and liquidity and capital resources for the fiscal years ended June 28, 2025 and June 29, 2024 should be read as a supplement to our Consolidated Financial Statements and the accompanying notes contained in Item 8 of this report, and in conjunction with the “Forward-looking Statements” section set forth in Part II and the “Risk Factors” section set forth in Item 1A of Part I. All discussion of changes in our results of operations from fiscal 2024 to fiscal 2023 has been omitted from this Form 10-K, but may be found in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the year ended June 29, 2024, filed with the Securities and Exchange Commission on August 28, 2024.

Overview

Sysco distributes food and related products to restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers. Our primary operations are in North America and Europe. Under the accounting provisions related to disclosures about segments of an enterprise, we have combined certain operations into three reportable segments. “Other” financial information is attributable to our other operations that do not meet the quantitative disclosure thresholds.

•U.S. Foodservice Operations – primarily includes (a) our U.S. Broadline operations, which distribute a full line of food products, including custom-cut meat, seafood, produce, specialty Italian, specialty imports and a wide variety of non-food products and (b) our U.S. Specialty operations, which include our FreshPoint fresh produce

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distribution business, our Buckhead | Newport Meat & Seafood specialty protein operations, our growing Italian Specialty platform anchored by Greco & Sons, Inc., our Edward Don restaurant equipment and supplies distribution business, our Asian specialty distribution company and a number of other small specialty businesses that are not material to the operations of Sysco;

•International Foodservice Operations – includes operations outside of the United States (U.S.), which distribute a full line of food products and a wide variety of non-food products. The Americas primarily consists of operations in Canada, Bahamas, Costa Rica and Panama, as well as our export operations that distribute to international customers. Our European operations primarily consist of operations in the United Kingdom (U.K.), France, Ireland and Sweden;

•SYGMA – our U.S. customized distribution operations serving quick-service chain restaurant customer locations; and

•Other – primarily our hotel supply operations, Guest Worldwide.

We estimate that we serve about 17% of an approximately $370 billion annual foodservice market in the U.S. based on industry data obtained from Technomic, Inc. (Technomic) as of the end of calendar year 2024. Technomic projects the market size to increase to approximately $382 billion by the end of calendar year 2025. From time to time, Technomic may revise the methodology used to calculate the size of the foodservice market and, as a result, our percentage can change not only from our sales results, but also from such revisions. We also serve certain international geographies that vary in size and amount of market share.

According to industry sources, the foodservice, or food-away-from-home, market represents approximately 56% of the total dollars spent on food purchases made at the consumer level in the U.S. as of the end of calendar year 2024.

Highlights

Our fiscal 2025 results were driven by sales growth of 3.2% as compared to fiscal 2024. This growth was driven by inflation and volume growth, partially from recent acquisitions. Gross profit increased 2.5% as compared to fiscal 2024, primarily attributable to effective management of product cost inflation. Operating income decreased 3.6% as compared to fiscal 2024, primarily due to a noncash goodwill impairment charge in our Guest Worldwide business. Adjusted operating income increased 1.2% as compared to fiscal 2024. See below for a comparison of our fiscal 2025 results to our fiscal 2024 results, both including and excluding Certain Items (as defined below).

Below is a comparison of results from fiscal 2025 to fiscal 2024:

•Sales:

◦increased 3.2%, or $2.5 billion, to $81.4 billion;

•Operating income:

◦decreased 3.6%, or $114 million, to $3.1 billion;

◦adjusted operating income increased 1.2%, or $42 million, to $3.5 billion;

•Net earnings:

◦decreased 6.5%, or $127 million, to $1.8 billion;

◦adjusted net earnings increased 0.8%, or $17 million, to $2.2 billion;

•Basic earnings per share:

◦decreased 4.1%, or $0.16, to $3.74 from the comparable prior year amount of $3.90 per share;

•Diluted earnings per share:

◦decreased 4.1%, or $0.16, to $3.73 from the comparable prior year amount of $3.89 per share;

◦adjusted diluted earnings per share were $4.46 in fiscal 2025, a $0.15 increase from the comparable prior year amount of $4.31 per share;

•EBITDA:

◦decreased 1.2%, or $50 million, to $4.0 billion; and

◦adjusted EBITDA increased 2.4%, or $101 million, to $4.3 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.

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Fiscal 2025 results of operations were also negatively impacted by a noncash goodwill impairment charge. No similar charge was applicable in fiscal 2024.

The fiscal 2025 and fiscal 2024 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. Our discussion below of our results includes certain non-GAAP financial measures that we believe provide important perspective with respect to underlying business trends. Other than free cash flow, any non-GAAP financial measures will be denoted as adjusted measures and exclude the impact from Certain Items, and certain metrics are stated on a constant currency basis.

Management believes that adjusting its operating expenses, operating income, other (income) expense, net earnings and diluted earnings per share to remove these Certain Items, provides an important perspective with respect to our underlying business trends and results. Additionally, it provides meaningful supplemental information to both management and investors that (1) is indicative of the performance of the company’s underlying operations, (2) facilitates comparisons on a year-over-year basis and (3) removes those items that are difficult to predict and are often unanticipated and that, as a result, are difficult to include in analysts’ financial models and our investors’ expectations with any degree of specificity.

The company uses these non-GAAP measures when evaluating its financial results as well as for internal planning and forecasting purposes. These financial measures should not be used as a substitute for GAAP measures in assessing the company’s results of operations for periods presented. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP. Any metric within this section referred to as “adjusted” will reflect the applicable impact of Certain Items. More information on the rationale for the use of these measures and reconciliations to GAAP numbers can be found under “Non-GAAP Reconciliations.”

Key Performance Indicators

Sysco seeks to meet its strategic goals by continually measuring its success in its key performance metrics that drive stakeholder value through sales growth and capital allocation and deployment. We believe the following are our most significant performance metrics in our current business environment:

•Adjusted operating income growth (non-GAAP);

•Adjusted diluted earnings per share growth (non-GAAP);

•Adjusted EBITDA (non-GAAP);

•Case volume growth for U.S. Foodservice and International Foodservice operations;

•Sysco brand penetration for U.S. Broadline operations; and

•Free cash flow (non-GAAP).

We use these financial metrics and related computations, as well as sales and gross profit growth, to evaluate our business and to plan for near and long-term operating and strategic decisions. We believe it is useful to provide investors with the same financial information that we use internally to make comparisons of our historical operating results, identify trends in our underlying operating results and evaluate our business.

Key Financial Definitions

•Sales – Sales are equal to gross sales subtracted by, (1) sales returns and (2) sales incentives that we offer to certain customers, such as upfront monies and discounts. Our sales are driven by changes in case volumes and product inflation that is reflected in the pricing of our products and mix of products sold.

•Gross profit – Gross profit is equal to our net sales subtracted by our cost of goods sold. Cost of goods sold primarily includes inventory costs (net of supplier consideration) and inbound freight. Cost of goods sold generally changes as we incur higher or lower costs from our suppliers and as our customer and product mix changes.

Adjusted Operating Income and Adjusted Diluted Earnings per Share Growth

Adjusted operating income represents our consolidated operating income, adjusted for the impact of Certain Items that we do not consider representative of our underlying performance. Adjusted diluted earnings per share represents our consolidated diluted earnings per share, adjusted for the impact of Certain Items that we do not consider representative of our underlying performance. Sysco’s management considers growth in these metrics to be useful measures of operating efficiency and profitability as they facilitate comparison of performance on a consistent basis from period to period by providing a measurement of recurring factors and trends affecting our business.

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Adjusted EBITDA

EBITDA represents net earnings plus: (1) interest expense, (2) income tax expense and benefit, (3) depreciation and (4) amortization. The net earnings component of our EBITDA calculation is impacted by Certain Items that we do not consider representative of our underlying performance. As a result, in the non-GAAP reconciliations below for each period presented, adjusted EBITDA is computed as EBITDA plus the impact of Certain Items, excluding Certain Items related to interest expense, income taxes, depreciation and amortization. Sysco’s management considers growth in this metric to be a measure of overall financial performance that provides useful information to management and investors about the profitability of the business. It facilitates comparison of performance on a consistent basis from period to period by providing a measurement of recurring factors and trends affecting our business. Additionally, it is a commonly used component metric used to inform on capital structure decisions.

Case Volume Growth for U.S. Foodservice and International Foodservice Operations

Case volume represents the volume of products sold to customers during a period of time and improvements in this metric are a primary driver of Sysco’s top line performance. We define a case as the lowest level of packaged products that are sold from our warehouses, with one case potentially containing several pieces of a product packaged in bulk. Case size does not generally vary by location or from period to period due to the design of our warehouses but can vary within our international operations. Case volume growth is calculated by dividing the change in the volume of cases sold year-over-year by the volume of cases sold in the prior year. Sysco management considers case volume growth within its U.S. Foodservice and International Foodservice operations to be a measure that provides useful information to management and investors in evaluating sales performance and as an indicator of gross margin performance. Management monitors case volume growth by customer type, with bifurcation between local customers and national customers, as this provides a measure of gross profit performance due to the pricing strategies attached to each customer type. Local customers are primarily street customers, such as independent restaurants that do not have long-term contracts, or locally managed customers, such as local chain restaurants, while national customers are the multi-unit customers requiring national coverage from a customer-centric view and are managed centrally from our Global Support Center, specific to U.S. Foodservice. Sysco management seeks to drive higher case volume growth to local customers, which allows more favorable pricing terms for these operations and generates higher gross margins as a result. National customers benefit from purchasing power as they are able to negotiate pricing agreements across multiple businesses reducing our gross profit potential, but reducing our overall cost per case, as national customers have bigger drop sizes. While overall case volume growth reflects a key component of sales growth, local customer case growth provides additional context around gross profit performance.

Sysco Brand Penetration for U.S. Broadline Operations

Sysco management considers Sysco brand penetration to be a measure that provides useful information to management and investors in evaluating the gross profit performance of the company’s U.S. Broadline operations. Sysco offers an assortment of Sysco-branded products which are differentiated from privately branded products. These Sysco Branded products enable us to achieve higher gross margin by administering and leveraging a consolidated product procurement program for quality food and non-food products. Due to cost efficiencies, Sysco-branded products generate a higher gross margin than sales from other privately branded products. We define Sysco brand penetration as the percentage of Sysco-branded case volume sold to U.S. Broadline customers over all cases sold to U.S. Broadline customers. It is calculated by dividing Sysco-branded case volume sold to U.S. Broadline customers by total cases sold to U.S. Broadline customers. This performance indicator, also measured at the customer type level, including local and national customers, is driven by growth in the distribution of Sysco branded products to more customers and more geographies, as well as increasing Sysco branded offerings through innovation and the launch of new products.

Free Cash Flow

Free cash flow represents net cash provided from operating activities, subtracted by purchases of plant and equipment, added to proceeds from sales of plant and equipment. Sysco management considers free cash flow to be a non-GAAP liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases and sales of buildings, fleet, equipment and technology, which may potentially be used to pay for, among other things, strategic uses of cash, including dividend payments, share repurchases and acquisitions. However, free cash flow may not be available for discretionary expenditures as it may be necessary that we use it to make mandatory debt service or other payments. Free cash flow should be considered in addition to, rather than as a substitute for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. See “Liquidity and

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Capital Resources” for discussions of GAAP metrics, including net cash provided by operating activities and our reconciliation of this non-GAAP financial measure.

Trends

Economic and Industry Trends

During fiscal 2025, Sysco was impacted by negative year-over-year foot traffic to restaurants. Foot traffic trends improved in the fourth quarter of fiscal 2025. We expect foot traffic in fiscal 2026 to be similar to foot traffic trends in the fourth quarter of fiscal 2025. 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 food service.

Sales and Gross Profit Trends

Our sales and gross profit performance are influenced by multiple factors including price, volume, inflation, customer mix and product mix. The most significant factor affecting our sales and gross profit performance in fiscal 2025 was product cost inflation, as we experienced 2.5% inflation at the total enterprise level. U.S. Foodservice experienced a 0.5% improvement in total case volume and a 1.4% decrease in local case volume as compared to fiscal 2024. This volume reflects our broadline and specialty businesses, except for our specialty meats business, which measures its volume in pounds. We experienced growth in local case volume in our International Foodservice segment of approximately 4.0% in fiscal 2025, as compared to fiscal 2024.

We experienced inflation at a rate of 3.5% and 2.5% in the fourth quarter and for fiscal 2025, respectively, at the total enterprise level, primarily driven by inflation in the dairy, poultry, and meat categories. We have been successful in managing inflation, resulting in an increase in gross profit dollars. Gross margin decreased 13 basis points in fiscal 2025 as compared to fiscal 2024, primarily as a result of a shift in our customer mix driven by national sales volumes outpacing local sales volumes and a decrease in Sysco brand penetration rates. Gross margin increased 19 basis points in the fourth quarter of fiscal 2025 as compared to the fourth quarter of fiscal 2024, primarily as a result of disciplined strategic sourcing efforts.

We expect to grow our revenue and earnings in fiscal 2026. We expect the rate of inflation for fiscal 2026 to be approximately 2%, which is consistent with recent trends experienced in fiscal 2025. We also expect volume growth in fiscal 2026 as a result of improved sales consultant retention, increased sales consultant tenure, and from contributions from potential mergers and acquisitions. In total, we expect these factors to result in net sales growth across the enterprise of 3% to 5% in fiscal 2026.

Operating Expense Trends

Total operating expenses increased 4.2% during fiscal 2025, as compared to fiscal 2024, driven by business and sales headcount investments, cost inflation, as well as a noncash impairment charge on our Guest Worldwide business. These increases were partially offset by lower incentive compensation as our operating results were lower than our target payout criteria. Our Global Support Center expenses experienced a decrease of 5.7% in fiscal 2025 as compared to fiscal 2024, primarily as a result of progress on our existing cost savings program.

In fiscal 2026, we expect to achieve target operating results thereby increasing our incentive compensation by approximately $100 million compared to fiscal 2025. In fiscal 2026, we expect to achieve cost savings benefits as we leverage our unique scale advantages to expand strategic sourcing efforts to include a broader range of categories, more efficiently harness our global buying power, improve inbound freight logistics to minimize points across our network, and take actions to improve organizational optimization at our Global Support Center. We believe the advancements that have been made in our physical capabilities, and the investments made to improve training, will result in continued supply chain productivity improvements and in lowered costs to serve our customers.

Goodwill Impairment

In our annual fiscal 2025 goodwill impairment assessment, we concluded that one reporting unit, Guest Worldwide, had a fair value that was less than book value due to its recent financial performance and downward revisions in its long-range financial outlook. During the fourth quarter of fiscal 2025 we recorded a noncash goodwill impairment charge of $92 million for a portion of the goodwill attributable to our Guest Worldwide reporting unit. This charge is included within operating

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expenses in the consolidated results of operations. All other reporting units were concluded to have a fair value that exceeded book value. We do not anticipate to incur additional goodwill impairment charges in fiscal 2026.

Income Tax Trends

Our provision for income taxes primarily reflects a combination of income earned and taxed in the various U.S. federal and state as well as foreign jurisdictions. Tax law changes, increases or decreases in book versus tax basis differences, accruals or adjustments of accruals for unrecognized tax benefits or valuation allowances, and our change in the mix of earnings from these taxing jurisdictions all affect the overall effective tax rate. Our effective tax rate for fiscal 2025 was 24.3% and is expected to be approximately 23.5% to 24.0% in fiscal 2026.

On July 4, 2025, President Trump signed into law the legislation commonly referred to as the One Big Beautiful Bill Act (OBBBA). The OBBBA includes various provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. Certain provisions will be effective for Sysco beginning in our fiscal 2026 tax year. We are currently evaluating the future impact of these tax law changes on our financial statements.

Divestitures

In the second quarter of fiscal 2025, we sold our interest in our joint venture partnership in Mexico, which was a part of our International Foodservice Operations. This operation was not significant to Sysco’s business, and the divestiture will facilitate our efforts to improve our return on invested capital position.

Mergers and Acquisitions

We continue to focus on mergers and acquisitions as a part of our growth strategy. Our strategy is to grow our existing businesses, while cultivating new channels, new business lines and new capabilities.

In the second quarter of fiscal 2025, we acquired Campbells Prime Meat, a leading specialty meat business based in Scotland. By combining the Campbells Prime Meat product offering with our broadline business, this acquisition provides a strategic opportunity to enable total team selling in this region. This company’s results are included within International Foodservice Operations and were not material to our results in fiscal 2025.

Strategy

Our purpose is “Connecting the World to Share Food and Care for One Another.” Purpose driven companies are believed to perform better, and 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 continue to enable us to better serve our customers, including:

•Digital – We have and will continue to enrich the customer experience through personalized digital tools that reduce friction in the purchase experience and introduce innovation to our customers.

•Products and Solutions – We are providing customer-focused marketing and merchandising solutions that inspire increased sales of our broad assortment of fair priced products and services. We continue to improve our merchandising strategies globally to secure the best possible cost for our customers.

•Supply Chain – We are efficiently and consistently serving customers with the products they need, when and how they need them, through a flexible delivery framework. We are developing a more nimble, accessible and productive supply chain that is better positioned to support our customers.

•Customer Teams – Our greatest strength is our people - people who are passionate about food and food service. Our team - diverse in perspectives, backgrounds, and life experiences - delivers expertise and differentiated services designed to help our customers grow their businesses. We will continue to invest in the sales organization through incremental sales colleagues and intend to improve the effectiveness by leveraging data to increase the yield of the sales process.

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•Future Horizons – We are committed to responsible growth. We will cultivate new channels, new segments, and new capabilities, organically and through strategic acquisitions, while being stewards of our company and our planet for the long term. We will utilize cost-out and efficiency improvements to mitigate the costs of our future investments.

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:

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:

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Segment Results

The following represents our results by reportable segments:

Our U.S. Foodservice Operations and our International Foodservice Operations segments represent a substantial majority of our total segment results when compared to other reportable segments. In fiscal 2025, U.S. Foodservice Operations and International Foodservice Operations represented approximately 70.0% and 18.3%, respectively, of Sysco’s overall sales, compared to 70.2% and 18.5%, respectively, in fiscal 2024. In fiscal 2025 and fiscal 2024, U.S. Foodservice Operations represented approximately 88.8% and 88.3%, respectively, of the total segment operating income. See Note 21, “Business Segment Information,” in the Notes to Consolidated Financial Statements in Item 8 for more information.

Cost of sales primarily includes our product costs, net of vendor consideration, and includes in-bound freight. Operating expenses include the costs of facilities, product handling, delivery, selling and general and administrative activities. Fuel surcharges are reflected within sales and gross profit; fuel costs are reflected within operating expenses. Along with sales, operating income is the most relevant measure for evaluating segment performance and allocating resources, as operating income includes cost of goods sold in addition to the costs to warehouse and deliver goods, which are significant and relevant costs when evaluating a distribution business.

Results of U.S. Foodservice Operations

In fiscal 2025, the U.S. Foodservice Operations operating results represented approximately 70.0% of Sysco’s overall sales and 88.8% of the aggregated operating income of Sysco’s reporting segments. Several factors contributed to these higher operating results as compared to the other operating segments. We have invested substantial amounts in assets, operating methods, technology and management expertise in this segment. The breadth of its sales force, geographic reach of its distribution area and its purchasing power enable this segment to generate its relatively stronger results of operations.

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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 prior year:

Sales

The following table sets forth the percentage and dollar value increase or decrease in sales over the prior year in order to demonstrate the cause and magnitude of change.

The sales growth in our U.S. Foodservice Operations was driven by higher inflation in fiscal 2025. Case volumes from our U.S. Foodservice Operations increased 0.5%, as compared to fiscal 2024. This included a 1.4% decrease in local customer case volume as compared to fiscal 2024.

Operating Income

The decrease in operating income for fiscal 2025, as compared to fiscal 2024, was driven by increases in operating expenses, partially offset by gross profit dollar growth and case volume growth.

Gross profit dollar growth in fiscal 2025 was driven primarily by disciplined strategic sourcing efforts and case volume growth from recent acquisitions. The estimated change in product costs, an internal measure of inflation or deflation, increased in fiscal 2025. For fiscal 2025, this change in product costs was primarily driven by inflation in the dairy and poultry categories. Sysco brand penetration for U.S. Broadline decreased by 81 basis points to 35.8% for fiscal 2025, as compared to fiscal 2024. Specific to local customers, Sysco brand penetration for U.S. Broadline decreased by 81 basis points to 46.2% for fiscal 2025, as compared to fiscal 2024.

Gross margin, which is gross profit as a percentage of sales, was 19.1% in fiscal 2025. This was a decrease of 26 basis points compared to gross margin of 19.4% in fiscal 2024, primarily due to a shift in our customer mix driven by national sales volumes outpacing local sales volume and a decrease in Sysco brand penetration rates.

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The increase in operating expenses for fiscal 2025, as compared to fiscal 2024, was primarily driven by cost inflation and increases in colleague-related costs, depreciation expense, and bad debt, partially offset by lower incentive compensation and gains from sale leaseback transactions.

Results of International Foodservice Operations

In fiscal 2025, the International Foodservice Operations operating results represented approximately 18.3% of Sysco’s overall sales.

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 prior year:

Sales

The following table sets forth the percentage and dollar value increase or decrease in sales over the comparable prior year period in order to demonstrate the cause and magnitude of change.

Sales increased 2.4% in fiscal 2025 as compared to fiscal 2024, primarily due to higher inflation and local case growth. Excluding the impact of the Mexico joint venture, which was divested during the second quarter of fiscal 2025, sales increased 4.8% in fiscal 2025 as compared to fiscal 2024.

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Operating Income

The $62 million increase in operating income for fiscal 2025, as compared to fiscal 2024, was primarily due to growth in local case volumes, success in our strategic sourcing program, and positive contributions from our recent mergers and acquisitions efforts.

The increase in gross profit dollars in fiscal 2025, as compared to fiscal 2024, was primarily attributable to increases in local case volumes. Local case volumes increased approximately 4.0% in fiscal 2025, as compared to fiscal 2024.

The increase in operating expenses for fiscal 2025, as compared to fiscal 2024, was primarily due to increases in colleague-related costs and depreciation expense.

Results of SYGMA and Other Segment

Our SYGMA segment sales were 8.3% higher in fiscal 2025, as compared to fiscal 2024, primarily driven by the growth of new customers. Operating income increased by $9 million in fiscal 2025, as compared to fiscal 2024, primarily due to the growth of new customers and productivity improvements. We expect SYGMA’s sales growth rates to moderate in fiscal 2026 as we reach the one-year anniversary mark of fiscal 2025’s substantial customer additions.

For the operations that are grouped within our Other segment, sales were 7.3% lower in fiscal 2025, as compared to fiscal 2024. Operating income decreased $113 million in fiscal 2025, as compared to fiscal 2024. The operations of this group mainly consist of our hospitality business, Guest Worldwide. In fiscal 2025, a noncash goodwill impairment charge of $92 million was recorded within operating expenses for a portion of the goodwill attributable to our Guest Worldwide reporting unit. This impairment charge is considered a Certain Item (defined above). We do not expect a similar impairment charge in fiscal 2026 and as a result, are expecting improved operating results within our Other segment in fiscal 2026.

Global Support Center Expenses

Our Global Support Center generally includes all expenses of the corporate office and Sysco’s shared service operations. These expenses decreased $56 million in fiscal 2025, or 5.7% as compared to fiscal 2024, primarily due to decreases in colleague-related costs, including lower incentive compensation.

Included in Global Support Center expenses are Certain Items that totaled $79 million in fiscal 2025, as compared to $81 million in fiscal 2024. Certain Items impacting fiscal 2025 were primarily expenses associated with severances, our business technology transformation initiatives, and expenses associated with acquisitions. In fiscal 2024, Certain Items that impacted the year were primarily expenses associated with severances, our business technology transformation initiatives, and expenses associated with acquisitions.

Interest Expense

Interest expense increased $28 million for fiscal 2025, as compared to fiscal 2024, primarily due to interest on new senior notes issued. We expect to incur $700 million in interest expense in fiscal 2026.

Net Earnings

Net earnings decreased 6.5% in fiscal 2025, as compared to fiscal 2024, due primarily to the items noted previously for operating income and interest expense, as well as items impacting our income taxes that are discussed in Note 19, “Income Taxes,” in the Notes to Consolidated Financial Statements in Item 8. Adjusted net earnings, excluding Certain Items, increased 0.8% in fiscal 2025, primarily due to an increase in sales volume as a result of recent acquisitions and disciplined strategic sourcing efforts.

Earnings Per Share

Basic earnings per share in fiscal 2025 were $3.74, a 4.1% decrease from the fiscal 2024 amount of $3.90 per share. Diluted earnings per share in fiscal 2025 were $3.73, a 4.1% decrease from the fiscal 2024 amount of $3.89 per share. Adjusted diluted earnings per share, excluding Certain Items (which is a non-GAAP financial measure for which a reconciliation is

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provided in “Non-GAAP Reconciliations” on the subsequent page), in fiscal 2025 were $4.46, a 3.5% increase from the fiscal 2024 amount of $4.31 per share. These results were primarily attributable to the factors discussed previously related to net earnings in fiscal 2025.

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Non-GAAP Reconciliations

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Set forth below is a reconciliation by segment of actual operating expenses and operating income to adjusted results for these measures for the periods presented (dollars in millions):

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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 “Key Performance Indicators” for further discussion regarding this non-GAAP financial measure. Set forth below is a reconciliation of actual net earnings (loss) to EBITDA and to adjusted EBITDA results for the periods presented (dollars in millions):

Liquidity and Capital Resources

Highlights

Below are comparisons of the cash flows from fiscal 2025 to fiscal 2024:

•Cash flows from operations were $2.5 billion in fiscal 2025, compared to $3.0 billion in fiscal 2024;

•Net capital expenditures totaled $692 million in fiscal 2025, compared to $753 million in fiscal 2024;

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•Free cash flow was $1.8 billion in fiscal 2025, compared to $2.2 billion in fiscal 2024 (see “Cash Flows – Free Cash Flow – Non-GAAP Reconciliation” below for an explanation of this non-GAAP financial measure);

•Cash used for acquisition of businesses was $40 million in fiscal 2025, compared to $1.2 billion in fiscal 2024;

•Dividends paid were $1.0 billion in fiscal 2025, and in fiscal 2024;

•Cash paid for treasury stock repurchases was $1.3 billion in fiscal 2025, compared to $1.2 billion in fiscal 2024;

•We issued senior notes totaling $1.25 billion in fiscal 2025, and totaling $1.0 billion in fiscal 2024; and

•The commercial paper amount outstanding as of the end of fiscal 2025 was $205 million. There were $200 million in commercial paper amounts outstanding as of the end of fiscal 2024.

As of June 28, 2025, there were no borrowings outstanding under our long-term revolving credit facility and the company had approximately $3.8 billion in cash and available liquidity. As of August 5, 2025, the company had approximately $2.7 billion in cash and available liquidity.

Sources and Uses of Cash

Sysco generates cash in the U.S. and internationally. Sysco’s strategic objectives include continuous investment in our business; these investments are funded primarily by cash from operations and, to a lesser extent, external borrowings. Traditionally, our operations have produced significant cash flow and, due to our strong financial position, we believe that we will continue to be able to effectively access capital markets, as needed. Cash generated from operations is generally allocated to:

•working capital investments;

•capital investments in facilities, systems, fleet, other equipment and technology;

•acquisitions consistent with our growth strategy;

•debt repayments;

•cash dividends; and

•share repurchases.

Any remaining cash generated from operations may be invested in high-quality, short-term instruments. As a part of our ongoing strategic analysis, we regularly evaluate business opportunities, including potential acquisitions and sales of assets and businesses, and our overall capital structure. Any transactions resulting from these evaluations may materially impact our liquidity, borrowing capacity, leverage ratios and capital availability.

We continue to be in a strong financial position based on our balance sheet and operating cash flows; however, our liquidity and capital resources can be influenced by macro-economic trends and conditions that impact our results of operations. We believe our mechanisms to manage working capital, such as actively working with customers to receive payments on receivables, optimizing inventory levels and maximizing payment terms with vendors, have been sufficient to limit a significant unfavorable impact on our cash flows from operations. We believe these mechanisms will continue to mitigate any unfavorable impact on our cash flows from operations arising from macro-economic trends and conditions.

We extend credit terms to some of our customers based on our assessment of each customer’s creditworthiness. We monitor each customer’s account and will suspend shipments if necessary. In the ordinary course of business, customers periodically negotiate extended payment terms on trade accounts receivable. The company may utilize purchase arrangements with third-party financial institutions to transfer portions of our trade accounts receivable balance on a non-recourse basis in order to extend terms for the customer without negatively impacting our cash flow. The arrangements meet the requirements for the receivables transferred to be accounted for as sales. See Note 1, “Summary of Accounting Policies,” in the Notes to Consolidated Financial Statements in Item 8 for additional information.

As of June 28, 2025, we had $1.1 billion in cash and cash equivalents, approximately 64% of which was held by our international subsidiaries and generated from our earnings of international operations. If these earnings were transferred among countries or repatriated to the U.S., such amounts may be subject to withholding and additional foreign tax obligations.

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Additionally, Sysco Corporation has provided intercompany loans to certain of its international subsidiaries. When interest and principal payments are made, some of this cash will move to the U.S.

Our wholly owned captive insurance subsidiary (the Captive) must maintain a sufficient level of liquidity to fund future reserve payments. As of June 28, 2025, the Captive held $132 million of fixed income marketable securities and $277 million of restricted cash and restricted cash equivalents in a restricted investment portfolio in order to meet solvency requirements. We purchased $32 million in marketable securities in fiscal 2025 and received $29 million in proceeds from the sale of marketable securities in the period.

Cash Requirements

Our cash requirements within the next twelve months include accounts payable and accrued liabilities, current maturities of long-term debt, other current liabilities, purchase commitments and other obligations. We expect the cash required to meet these obligations to be primarily generated through a combination of cash from operations and access to capital from financial markets.

Our long-term cash requirements under our various contractual obligations and commitments include:

•Debt Obligations and Interest Payments – See Note 12, “Debt and Other Financing Arrangements,” in the Notes to Consolidated Financial Statements in Item 8 for further detail of our debt and the timing of expected future principal and interest payments.

•Operating and Finance Leases – See Note 13, “Leases,” in the Notes to Consolidated Financial Statements in Item 8 for further detail of our obligations and the timing of expected future payments.

•Deferred Compensation – The estimate of the timing of future payments under the Executive Deferred Compensation Plan and Management Savings Plan involves the use of certain assumptions, including retirement ages and payout periods. See Note 14, “Company-Sponsored Employee Benefit Plans,” in the Notes to Consolidated Financial Statements in Item 8 for further detail of our obligations and the timing of expected future payments.

•Purchase and Other Obligations – Purchase obligations include agreements for purchases of product in the normal course of business for which all significant terms have been confirmed, including minimum quantities resulting from our category management process. Such amounts are based on estimates. Purchase obligations also include amounts committed with various third-party service providers to provide information technology services and warehouse management services for periods up to fiscal 2036. See discussion under Note 20, “Commitments and Contingencies,” in the Notes to Consolidated Financial Statements in Item 8. Purchase obligations exclude full requirements electricity contracts where no stated minimum purchase volume is required.

•Other Liabilities – These include other long-term liabilities reflected in our consolidated balance sheets as of June 28, 2025, including obligations associated with certain employee benefit programs, unrecognized tax benefits and various long-term liabilities which have some inherent uncertainty in the timing of these payments.

•Contingent Consideration – Certain acquisitions involve contingent consideration typically payable only if certain operating results are attained or certain outstanding contingencies are resolved.

We believe the following sources will be sufficient to meet our anticipated cash requirements for at least the next twelve months while maintaining sufficient liquidity for normal operating purposes:

•our cash flows from operations;

•the availability of additional capital under our existing commercial paper programs, supported by our revolving credit facility; and

•our ability to access capital from financial markets, including issuances of debt securities, either privately or under our shelf registration statement filed with the SEC.

Due to our strong financial position, we believe that we will continue to be able to effectively access the commercial paper market and long-term capital markets if necessary.

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Cash Flows

Operating Activities

We generated $2.5 billion in cash flows from operations in fiscal 2025, compared to cash flows from operations of $3.0 billion in fiscal 2024. In fiscal 2025, these amounts included year-over-year unfavorable comparisons on working capital of $317 million due to an unfavorable comparison on inventory and accounts receivable of $260 million and $96 million, respectively, partially offset by a favorable comparison on accounts payable of $39 million. Income taxes negatively impacted cash flows from operations by $115 million, as estimated payments made were higher than in fiscal 2024.

Investing Activities

Fiscal 2025 and Fiscal 2024 capital expenditures included:

•buildings and building improvements;

•fleet replacements;

•investments in technology; and

•warehouse equipment.

The following table sets forth the company’s total plant and equipment additions:

Our capital expenditures in fiscal 2025 were $74 million higher than in fiscal 2024, as we made investments to advance our Recipe for Growth strategy. We expect our capital expenditures in fiscal 2026 to be approximately $700 million.

During fiscal 2025, we paid $40 million, net of cash acquired, for acquisitions. During fiscal 2024, we paid $1.2 billion, net of cash acquired, for acquisitions.

During fiscal 2025, we received $214 million in proceeds from sales of plant and equipment, which was primarily attributable to proceeds received from sale leaseback transactions. During fiscal 2024, we received $79 million in proceeds from sales of plant and equipment.

Free Cash Flow

Our free cash flow for fiscal 2025 decreased by $418 million, to $1.8 billion, as compared to fiscal 2024, principally as a result of a decrease in cash flows from operations, an increase in capital expenditures, partially offset by an increase in proceeds from sales of plant and equipment.

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Non-GAAP Reconciliation

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 “Key Performance Indicators” for further discussion regarding this non-GAAP financial measure. In the table that follows, free cash flow for each period presented is reconciled to net cash provided by operating activities.

Financing Activities

Equity Transactions

Proceeds from exercises of share-based compensation awards were $110 million and $120 million in fiscal 2025 and fiscal 2024, respectively. 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.

We have traditionally engaged in share repurchase programs to allow Sysco to continue offsetting dilution resulting from shares issued under the company’s benefit plans and to make opportunistic repurchases. 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 16,988,703 shares for $1.3 billion during fiscal 2025. As of June 28, 2025, we had a remaining authorization of approximately $1.5 billion. We expect to complete approximately $1.0 billion in share repurchases in fiscal 2026; however, this amount is subject to change based on economic conditions and the level of any acquisition activity in fiscal 2026. As of August 5, 2025, we have repurchased no additional shares under this authorization.

We have made dividend payments to our shareholders in each fiscal year since our company’s inception. Dividends paid in fiscal 2025 were $1.0 billion, or $2.04 per share, as compared to $1.0 billion, or $2.00 per share, in fiscal 2024. In April 2025, we declared our regular quarterly dividend for the fourth quarter of fiscal 2025 of $0.54 per share, representing an increase of $0.03 per share. This dividend was paid in July 2025.

In August 2024, we filed a universal shelf registration statement with the SEC under which we, as a well-known seasoned issuer, have the ability to issue and sell an indeterminate amount of various types of debt and equity securities. The specific terms of any securities we issue under this registration statement will be provided in the applicable prospectus supplements.

In November 2000, we filed with the SEC a shelf registration statement covering 30,000,000 shares of common stock to be offered from time to time in connection with acquisitions. As of August 5, 2025, there were 29,477,835 shares remaining for issuance under this registration statement.

Debt Activity and Borrowing Availability

Our debt activity, including issuances and repayments, and our borrowing availability is described in Note 12, “Debt and Other Financing Arrangements,” in the Notes to Consolidated Financial Statements in Item 8. Our outstanding borrowings at June 28, 2025, and repayment activity since the end of fiscal 2025 are disclosed within those notes. Updated amounts at August 5, 2025, include:

•No outstanding borrowings from the long-term revolving credit facility supporting our commercial paper programs;

•$746 million outstanding borrowings under our U.S. commercial paper program; and

•$341 million outstanding borrowings under our commercial paper program in Europe.

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Our aggregate commercial paper issuances and short-term bank borrowings had weighted average interest rates of 4.57% for fiscal 2025 and 5.49% for fiscal 2024.

Senior notes classified within current maturities of long-term debt totaling $750 million will mature on October 1, 2025. Senior notes classified within long-term debt totaling $999 million will mature on July 15, 2026. We expect to fund the repayment of this debt using a combination of cash flows from operations and the proceeds from issuances of commercial paper and long-term debt.

The availability of financing in the form of debt is influenced by many factors, including our profitability, free cash flows, debt levels, credit ratings, debt covenants and economic and market conditions. As of August 5, 2025, Moody’s Investors Service has assigned us an unsecured debt credit rating of Baa1 and a ratings outlook of “stable.” Standard & Poor’s has assigned us an unsecured debt credit rating of BBB and a ratings outlook of “stable.” Fitch Ratings Inc. has assigned us an unsecured debt credit rating of BBB and a ratings outlook of “stable.” A significant downgrade in our credit ratings or adverse conditions in the capital markets may increase the cost of borrowing for us or limit our access to capital. To date, we have not experienced difficulty accessing the credit markets. As of August 5, 2025, the company had approximately $2.7 billion in cash and available liquidity.

Our long-term revolving credit facility includes aggregate commitments of the lenders thereunder of $3.0 billion with an option to increase such commitments to $4.0 billion. The facility includes a covenant, among others, requiring Sysco to maintain a ratio of consolidated EBITDA to consolidated interest expense of 3.0 to 1.0 over four consecutive fiscal quarters. The revolving credit facility expires on April 29, 2027. As of June 28, 2025, Sysco was in compliance with all of its debt covenants and the company expects to remain in compliance through the next twelve months.

Sysco’s U.S. commercial paper dealer agreement includes an issuance allowance for an aggregate amount not to exceed $3.0 billion. Our commercial paper dealer agreement in Europe includes an issuance allowance for an aggregate amount not to exceed €500 million. Any outstanding commercial paper balances are classified within long-term debt, as the programs are supported by the long-term revolving credit facility.

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. A list of the current guarantors is included in Exhibit 22 to this Form 10-K. 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, as discussed in Note 12, “Debt and Other Financing Arrangements,” in the Notes to Consolidated Financial Statements in Item 8. As of June 28, 2025, Sysco had a total of $11.8 billion in senior notes, debentures and borrowings under the long-term revolving credit facility that were guaranteed by these 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.

All subsidiary guarantors are 100% owned by the parent company, all guarantees are full and unconditional, and all guarantees are joint and several. The guarantees rank equally and ratably in right of payment with all other existing and future unsecured and unsubordinated indebtedness of the respective guarantors.

The assets of Sysco Corporation consist principally of the stock of its subsidiaries. Therefore, the rights of Sysco Corporation and the rights of its creditors to participate in the assets of any subsidiary upon liquidation, recapitalization or otherwise will be subject to the prior claims of that subsidiary’s creditors, except to the extent that claims of Sysco Corporation itself and/or the claims of those creditors themselves may be recognized as creditor claims of the subsidiary. Furthermore, the ability of Sysco Corporation to service its indebtedness and other obligations is dependent upon the earnings and cash flow of its subsidiaries and the distribution or other payment to it of such earnings or cash flow. If any of Sysco Corporation’s subsidiaries becomes insolvent, the direct creditors of that subsidiary will have a prior claim on its assets. Sysco Corporation’s rights and the rights of its creditors, including the rights of a holder of senior notes as an owner of debt securities, will be subject to that prior claim unless Sysco Corporation or such noteholder, if such noteholder’s debt securities are guaranteed by such subsidiary, also is a direct creditor of that subsidiary.

The guarantee of any subsidiary guarantor with respect to a series of senior notes or debentures may be released under certain customary circumstances. If we exercise our defeasance option with respect to the senior notes or debentures of any series, then any subsidiary guarantor effectively will be released with respect to that series. Further, each subsidiary guarantee

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will remain in full force and effect until the earliest to occur of the date, if any, on which (1) the applicable subsidiary guarantor shall consolidate with or merge into Sysco Corporation or any successor of Sysco Corporation or (2) Sysco Corporation or any successor of Sysco Corporation consolidates with or merges into the applicable subsidiary guarantor.

Basis of Preparation of the Summarized Financial Information

The summarized financial information of Sysco Corporation (issuer), 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 table includes summarized financial information of the obligor group for the periods presented.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Critical Accounting Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales and expenses in the accompanying financial statements. Significant accounting policies employed by Sysco are presented in the notes to the financial statements.

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Critical accounting estimates are those that are most important to the portrayal of our financial position and results of operations. These policies 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 the goodwill and intangible assets, income taxes and company-sponsored pension plans.

Goodwill and Intangible Assets

We account for acquired businesses using the acquisition method of accounting, which requires that once control of a business is obtained, 100% of the assets acquired and liabilities assumed are recorded at the date of acquisition at their respective fair values. We use multiple valuation methods to determine the fair value of assets acquired and liabilities assumed. For intangible assets, we generally use the income method which uses a forecast of the expected future net cash flows associated with each asset. These cash flows are then adjusted to present value by applying an appropriate discount rate that reflects the risk factors associated with the cash flow streams. Some of the more significant estimates and assumptions inherent in the income method or other methods include the amount and timing of projected future cash flows and the discount rate selected to measure the risks inherent in the future cash flows. Determining the useful life of an intangible asset also requires judgment, as different types of intangible assets will have different useful lives. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. More information on our acquisitions can be found in Note 4, “Acquisitions,” in the Notes to Consolidated Financial Statements in Item 8.

Annually in our fiscal fourth quarter, we assess the recoverability of goodwill and indefinite-lived intangibles by determining whether the fair values exceed the carrying values of these assets. Impairment reviews, outside our annual review time frame, are performed if events or circumstances occur that include changes in macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, other relevant entity-specific events, specific events affecting the reporting unit or sustained decrease in share price. Our testing may be performed utilizing either a qualitative or quantitative assessment; however, if a qualitative assessment is performed and we determine that the fair value of a reporting unit is more likely than not (i.e., a likelihood of more than 50 percent) to be less than its carrying amount, a quantitative test is performed.

When using a quantitative test, we arrive at our estimates of fair value using a combination of discounted cash flow and earnings or revenue multiple models. The results from each of these models are then weighted and combined into a single estimate of fair value for each reporting unit. We use a higher weighting for our discounted cash flow valuation compared to the earnings multiple models because the forecasted operating results that serve as a basis for the analysis incorporate management’s outlook and anticipated changes for the businesses consistent with a market participant. The primary assumptions used in these various models include future cash flow estimates of the reporting units which are dependent on internal forecasts and projected growth rates, weighted average cost of capital, working capital and capital expenditure requirements, along with earnings multiples of acquisitions completed by Sysco and those estimated of comparable acquisitions in the industry, including control premiums. When possible, we use observable market inputs in our models to arrive at the fair values of our reporting units.

Certain reporting units have a greater proportion of goodwill recorded to estimated fair value as compared to the U.S. Foodservice Operations, Canada Broadline or SYGMA reporting units. This is primarily due to these businesses having been more recently acquired, and as a result there has been less history of organic growth than in the U.S. Foodservice Operations, Canadian Broadline and SYGMA reporting units. As such, these reporting units have a greater risk of future impairment if their operations were to suffer a significant downturn. Goodwill totals $3.1 billion for our U.S. Foodservice Operations, Canada Broadline and SYGMA reporting units, with $2.1 billion remaining for our other reporting units.

In our annual fiscal 2025 assessment, we concluded that one reporting unit, Guest Worldwide, had a fair value that was less than book value due to its recent financial performance and downward revisions in its long-range financial outlook. During the fourth quarter of fiscal 2025 we recorded a noncash goodwill impairment charge of $92 million for a portion of the goodwill attributable to our Guest Worldwide reporting unit. This charge is included within operating expenses in the consolidated results of operations. All other reporting units were concluded to have a fair value that exceeded book value.

We estimate the fair value of our reporting units using a combination of discounted cash flow and earnings or revenue multiple models. For the purposes of the discounted cash flow models, fair value was determined based on the present value of estimated future cash flows, discounted at an appropriate risk adjusted rate. Our fair value conclusions as of June 28, 2025 for the reporting units are sensitive to changes in the assumptions used in the income approach which include forecasted revenues and EBITDA, perpetual growth rates, and long-term discount rates, among others, all of which require significant judgments by management. Fair value of the reporting unit is, therefore, determined using significant unobservable inputs, or level 3 in the fair value hierarchy. We used recent historical performance, current forecasted financial information, and broad-based industry

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and economic statistics as a basis to estimate the key assumptions utilized in the discounted cash flow model. These key assumptions are inherently uncertain and require a high degree of estimation and judgment and are subject to change based on actual results, industry and global economic and geo-political conditions, and the timing and success of the implementation of current strategic initiatives. The fair value estimates of two of our more significant reporting units, with total goodwill of $1.5 billion, are more sensitive to changes in significant assumptions, including changes in projected cash flows or weighted average cost of capital.

Income Taxes

The determination of our provision for income taxes requires significant judgment, the use of estimates and the interpretation and application of complex tax laws. Our provision for income taxes primarily reflects a combination of income earned and taxed in the various U.S. federal and state as well as foreign jurisdictions. Tax law changes, increases or decreases in book versus tax basis differences, accruals or adjustments of accruals for unrecognized tax benefits or valuation allowances, and our change in the mix of earnings from these taxing jurisdictions all affect the overall effective tax rate. Certain of our operations have carryforward attributes, such as operating losses. If these operations do not produce sufficient income, it could lead to the recognition of valuation allowances against certain deferred tax assets in the future if losses occur or growth is insufficient beyond our current expectations. This would negatively impact our income tax expense, net earnings, and balance sheet.

Our liability for unrecognized tax benefits contains uncertainties because management is required to make assumptions and to apply judgment in estimating the exposures associated with our various filing positions. We believe that the judgments and estimates discussed herein are reasonable; however, actual results could differ, and we may be exposed to losses or gains that could be material. To the extent we prevail in matters for which a liability has been established, or pay amounts in excess of recorded liabilities, our effective income tax rate in a given financial statement period could be materially affected. An unfavorable tax settlement generally would require use of our cash and may result in an increase in our effective income tax rate in the period of resolution. A favorable tax settlement may be recognized as a reduction in our effective income tax rate in the period of resolution. During the third quarter of fiscal 2023, Sysco received a Statutory Notice of Deficiency from the Internal Revenue Service, mainly related to foreign tax credits generated in fiscal 2018 from repatriated earnings primarily from our Canadian operations. On April 18, 2023, during the company’s fourth fiscal quarter, the company filed suit in the U.S. Tax Court challenging the validity of certain tax regulations related to the one-time transition tax on unrepatriated foreign earnings, which was enacted as part of the Tax Cuts and Jobs Act of 2017 (TCJA). The lawsuit seeks to have the court invalidate these regulations, which would affirm the company’s position regarding its foreign tax credits. Sysco previously recorded a benefit of $131 million attributable to its interpretation of the TCJA and the Internal Revenue Code. If the company is ultimately unsuccessful in defending its position, it may be required to reverse all, or some portion, of the benefit previously recorded.

Company-Sponsored Pension Plans

Amounts related to defined benefit plans recognized in the financial statements are determined on an actuarial basis. Two of the more critical assumptions in the actuarial calculations are the discount rate for determining the current value of plan benefits and the expected rate of return on plan assets. Our U.S. Retirement Plan is largely frozen and is only open to a small number of employees. Our Supplemental Executive Retirement Plan (SERP) is frozen and is not open to any employees. None of these plans have a significant sensitivity to changes in discount rates specific to our results of operations, but such changes could impact our balance sheet due to a change in our funded status. Due to the low level of active employees in our retirement plans, our assumption for the rate of increase in future compensation is not a critical assumption.

The expected long-term rate of return on plan assets was 5.63% for fiscal 2025. The expectations of future returns are derived from a mathematical asset model that incorporates assumptions as to the various asset class returns reflecting a combination of historical performance analysis, the forward-looking views of the financial markets regarding the yield on bonds, historical returns of the major stock markets, and returns on alternative investments. The rate of return assumption is reviewed annually and revised as deemed appropriate.

The expected return on plan assets impacts the recorded amount of net pension costs. The expected long-term rate of return on plan assets of the U.S. Retirement Plan is 5.70% for fiscal 2026. A 25 basis point increase (decrease) in the assumed rate of return in the Plan for fiscal 2026 would decrease (increase) Sysco’s net company-sponsored pension costs for fiscal 2026 by approximately $6 million.

Pension accounting standards require the recognition of the funded status of our defined benefit plans in the Statement of Financial Position, with a corresponding adjustment to accumulated other comprehensive income, net of tax. The amount reflected in accumulated other comprehensive loss related to the recognition of the funded status of our defined benefit plans as

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of June 28, 2025 was a charge, net of tax, of $918 million. The amount reflected in accumulated other comprehensive loss related to the recognition of the funded status of our defined benefit plans as of June 29, 2024 was a charge, net of tax, of $917 million.

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 “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” “projected,” “continues,” “continuously,” 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.

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 and those within Part I, Item 1A of this report:

•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 or deflation 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 that we may not realize anticipated benefits from our operating cost reduction efforts, including our ability to accelerate and/or identify additional administrative cost savings;

•risks related to unfavorable conditions in the Americas and Europe and the impact on our results of operations and financial condition;

•the risks related to our efforts to implement our 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 GPOs 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 could materially and adversely affect our business, financial condition, or results of operations;

•the impact and effects of public health crises, pandemics and epidemics, and the adverse impact thereof 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 forward purchase commitments 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;

•risks related to unfavorable changes to the mix of locally managed customers versus corporate-managed customers;

•difficulties in successfully expanding into international markets and complimentary lines of business;

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•the potential impact of product liability claims;

•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 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 any default by us under our indebtedness that could have a material adverse impact on cash flow and liquidity;

•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;

•due to our reliance on technology, any technology disruption or delay in implementing new technology 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;

•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; and

•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.

You should carefully consider these risks, as well as the additional risks described in other documents we file with the Securities and Exchange Commission. 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 Annual Report on 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.