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 29, 2024, and for the fiscal year then ended, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, both contained in our Annual Report on Form 10-K for the fiscal year ended June 29, 2024 (our “fiscal 2024 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 2025 results included sales growth of 1.1% as compared to the third quarter of fiscal 2024 primarily due to increased sales in our SYGMA and U.S. Foodservice Operations segments. Our gross profit decreased 0.8% compared to the third quarter of fiscal 2024, due to changes in customer mix attributable to national sales volumes outpacing local sales volumes and decreases in Sysco brand penetration rates. Operating income decreased 5.7% compared to the third quarter of fiscal 2024 and adjusted operating income decreased 3.3% as compared to the third quarter of fiscal 2024. These results reflect negative restaurant industry foot traffic partially attributable to lower levels of consumer confidence, and adverse weather and natural disasters. Our net earnings for the third quarter of fiscal 2025 decreased 5.6% as compared to the third quarter of fiscal 2024. Excluding Certain Item expenses, adjusted net earnings decreased by 2.9% as compared to the third quarter of fiscal 2024. See below for a comparison of our fiscal 2025 results to our fiscal 2024 results, both including and excluding Certain Items.

Comparisons of results from the third quarter of fiscal 2025 to the third quarter of fiscal 2024 are presented below:

• Sales:

◦increased 1.1%, or $218 million, to $19.6 billion;

• Operating income:

◦decreased 5.7%, or $41 million, to $681 million;

◦adjusted operating income decreased 3.3%, or $26 million, to $773 million;

• Net earnings:

◦decreased 5.6%, or $24 million, to $401 million;

◦adjusted net earnings decreased 2.9%, or $14 million, to $469 million;

• Basic earnings per share:

◦decreased 3.5%, or $0.03, to $0.82 per share;

• Diluted earnings per share:

◦decreased 3.5%, or $0.03, to $0.82 per share;

◦adjusted diluted earnings per share unchanged, at $0.96;

• EBITDA:

◦decreased 2.5%, or $23 million, to $910 million; and

◦adjusted EBITDA decreased 0.8%, or $8 million, to $969 million.

Comparisons of results from the first 39 weeks of fiscal 2025 to the first 39 weeks of fiscal 2024 are presented below:

• Sales:

◦increased 3.3%, or $1.9 billion, to $60.2 billion;

• Operating income:

◦decreased 1.2%, or $26 million, to $2.2 billion;

◦adjusted operating income increased 1.3%, or $30 million, to $2.4 billion;

• Net earnings:

◦decreased 3.4%, or $46 million, to $1.3 billion;

◦adjusted net earnings decreased 0.5%, or $7 million, to $1.5 billion;

• Basic earnings per share:

◦decreased 0.7%, or $0.02 to $2.65 per share;

• Diluted earnings per share:

◦decreased 0.8%, or $0.02, to $2.64 per share;

◦adjusted diluted earnings per share increased 2.1%, or $0.06, to $2.98;

• EBITDA:

◦increased 0.9%, or $27 million, to $2.9 billion; and

◦adjusted EBITDA increased 2.6%, or $77 million, to $3.0 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.

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.

Trends

Economic and Industry Trends

Foot traffic to restaurants decreased 3.1% for the third quarter of fiscal 2025, as compared to a decrease of 1.6% experienced in the second quarter of fiscal 2025. Winter storms throughout the U.S. and wildfires in the California region negatively affected foot traffic to restaurants during the third quarter of fiscal 2025. In addition, lower levels of consumer confidence due to macroeconomic conditions adversely impacted foot traffic trends during the quarter. Industry traffic trends, while still in a year-over-year decline, improved in March as compared to February. These trends have further modestly improved in April in comparison to March. 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 1.1% in the third quarter of fiscal 2025 as compared to the third quarter of fiscal 2024. Our sales and gross profit performance are influenced by multiple factors, including price, volume, inflation, customer mix and product mix. We experienced a 2.0% decrease and a 0.7% increase in U.S. Foodservice Operations case volume in the third quarter and first 39 weeks of fiscal 2025, respectively, as compared to the third quarter and first 39 weeks of fiscal 2024. Our volume growth trends were attributable to national volume growth remaining flat and local volume performance decreasing 3.5% in the third quarter of fiscal 2025 as compared to the third quarter of fiscal 2024. Our volume reflects our broadline and specialty businesses, except for our specialty meats business, which measures its volume in pounds.

We experienced inflation at a rate of 2.1% in the third quarter of fiscal 2025, at the total enterprise level, primarily driven by inflation in the dairy and meat categories. We continue to manage inflation by successfully passing on cost increases to our customers in a timely manner. We now expect net sales growth of approximately 3% for the full fiscal 2025 year, as compared to our previous fiscal 2025 sales growth target of 4-5%, as a result of lower than expected volume. Gross margin decreased 35 and 25 basis points in the third quarter and first 39 weeks of fiscal 2025, respectively, as compared to the third quarter and first 39 weeks of fiscal 2024, primarily due to a shift in our customer mix driven by national sales volumes outpacing local sales volumes and a decrease in Sysco brand penetration rates.

Operating Expense Trends

Total operating expenses increased 0.5% and 2.8% during the third quarter and first 39 weeks of fiscal 2025, respectively, as compared to the third quarter and first 39 weeks of fiscal 2024. Total adjusted operating expenses decreased 0.1% and increased 2.2% during the third quarter and first 39 weeks of fiscal 2025, respectively, as compared to the third quarter and first 39 weeks of fiscal 2024. Operating expenses increased primarily due to costs associated with expanded building capacity, including depreciation expense related to new facilities, sales headcount investments and higher supply chain labor rates, partially offset by lower annual bonus incentive compensation in the third quarter and first 39 weeks of fiscal 2025. Adjusted operating expenses were 14.3% and 14.2% of sales during the third quarter and first 39 weeks of fiscal 2025, respectively, which is a 17-basis point and 16-basis point improvement from the third quarter and first 39 weeks of fiscal 2024, respectively, due to lower annual bonus incentive compensation and recent supply chain and Global Support Center efficiency initiatives.

Earnings Per Share Trends

Reflecting the current uncertain macroeconomic environment, including concerns regarding consumer confidence, we expect earnings per share and adjusted earnings per share growth of approximately 1% for the full fiscal 2025 year, as

compared to our previous fiscal 2025 adjusted earnings per share growth target of 6-7% primarily due to lower than expected volume growth.

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

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 for the third quarter and first 39 weeks of 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. 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												39-Week Period Ended
			Mar. 29, 2025						Mar. 30, 2024						Mar. 29, 2025						Mar. 30, 2024
Sales			100.0		%				100.0		%				100.0		%				100.0		%
Cost of sales			81.7						81.4						81.8						81.5
Gross profit			18.3						18.6						18.2						18.5
Operating expenses			14.8						14.9						14.5						14.7
Operating income			3.5						3.7						3.7						3.8
Interest expense			0.8						0.7						0.8						0.8
Other expense (income), net			—						0.1						0.1						—
Earnings before income taxes			2.7						2.9						2.8						3.0
Income taxes			0.7						0.7						0.6						0.7
Net earnings			2.0		%				2.2		%				2.2		%				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						39-Week Period Ended
			Mar. 29, 2025						Mar. 29, 2025
Sales			1.1		%				3.3		%
Cost of sales			1.6						3.6
Gross profit			(0.8)						2.0
Operating expenses			0.5						2.8
Operating income			(5.7)						(1.2)
Interest expense			(5.7)						6.1
Other expense (income), net (1) (2)			(10.0)						39.1
Earnings before income taxes			(5.6)						(3.5)
Income taxes			(5.4)						(3.8)
Net earnings			(5.6)		%				(3.4)		%
Basic earnings per share			(3.5)		%				(0.7)		%
Diluted earnings per share			(3.5)						(0.8)
Average shares outstanding			(2.4)						(2.6)
Diluted shares outstanding			(2.5)						(2.6)

(1)			Other expense (income), net was expense of $9 million and $10 million in the third quarter of fiscal 2025 and fiscal 2024, respectively.
(2)			Other expense (income), net was expense of $32 million and $23 million in the first 39 weeks of fiscal 2025 and fiscal 2024, respectively.

The following tables represent our results by reportable segments:

			13-Week Period Ended Mar. 29, 2025
			U.S. Foodservice Operations						International Foodservice Operations						SYGMA						Other						Global Support Center						Consolidated Totals
			(In millions)
Sales			$	13,800					$	3,457					$	2,084					$	257					$	—					$	19,598
Sales increase (decrease)			0.7		%				(1.1)		%				9.5		%				(6.5)		%										1.1		%
Percentage of total			70.4		%				17.6		%				10.6		%				1.4		%										100.0		%
Operating income (loss)			$	754					$	96					$	17					$	(3)					$	(183)					$	681
Operating income (loss) increase (decrease)			(11.5)		%				14.3		%				NM						NM						(22.8)		%				(5.7)		%
Percentage of total segments			87.2		%				11.1		%				2.0		%				(0.3)		%										100.0		%
Operating income as a percentage of sales			5.5		%				2.8		%				0.8		%				(1.2)		%										3.5		%

			13-Week Period Ended Mar. 30, 2024
			U.S. Foodservice Operations						International Foodservice Operations						SYGMA						Other						Global Support Center						Consolidated Totals
			(In millions)
Sales			$	13,707					$	3,494					$	1,904					$	275					$	—					$	19,380
Percentage of total			70.7		%				18.0		%				9.8		%				1.5		%										100.0		%
Operating income (loss)			$	852					$	84					$	17					$	6					$	(237)					$	722
Percentage of total segments			88.8		%				8.7		%				1.8		%				0.7		%										100.0		%
Operating income as a percentage of sales			6.2		%				2.4		%				0.9		%				2.3		%										3.7		%

			39-Week Period Ended Mar. 29, 2025
			U.S. Foodservice Operations						International Foodservice Operations						SYGMA						Other						Global Support Center						Consolidated Totals
			(In millions)
Sales			$	42,206					$	10,978					$	6,246					$	802					$	—					$	60,232
Sales increase (decrease)			3.1		%				1.9		%				9.1		%				(7.4)		%										3.3		%
Percentage of total			70.1		%				18.2		%				10.4		%				1.3		%										100.0		%
Operating income (loss)			$	2,496					$	292					$	54					$	9					$	(651)					$	2,200
Operating income (loss) increase (decrease)			(5.2)		%				12.3		%				17.4		%				(66.7)		%				(11.9)		%				(1.2)		%
Percentage of total segments			87.6		%				10.2		%				1.9		%				0.3		%										100.0		%
Operating income as a percentage of sales			5.9		%				2.7		%				0.9		%				1.1		%										3.7		%

			39-Week Period Ended Mar. 30, 2024
			U.S. Foodservice Operations						International Foodservice Operations						SYGMA						Other						Global Support Center						Consolidated Totals
			(In millions)
Sales			$	40,925					$	10,773					$	5,724					$	866					$	—					$	58,288
Percentage of total			70.2		%				18.5		%				9.8		%				1.5		%										100.0		%
Operating income (loss)			$	2,632					$	260					$	46					$	27					$	(739)					$	2,226
Percentage of total segments			88.8		%				8.8		%				1.5		%				0.9		%										100.0		%
Operating income as a percentage of sales			6.4		%				2.4		%				0.8		%				3.1		%										3.8		%

Based on information in Note 13, “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 88.1% and 88.3% of Sysco’s overall sales in the third quarter and first 39 weeks of fiscal 2025, respectively. U.S. Foodservice Operations and International Foodservice Operations, collectively, represented approximately 98.4% and 97.8% of total segment operating income, in the third quarter and first 39 weeks of fiscal 2025, respectively. 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 tables set 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 Mar. 29, 2025						13-Week Period Ended Mar. 30, 2024						Change in Dollars						% Change
			(Dollars in millions)
Sales			$	13,800					$	13,707					$	93					0.7		%
Gross profit			2,603						2,653						(50)						(1.9)
Operating expenses			1,849						1,801						48						2.7
Operating income			$	754					$	852					$	(98)					(11.5)		%
Gross profit			$	2,603					$	2,653					$	(50)					(1.9)		%
Adjusted operating expenses (Non-GAAP)			1,813						1,778						35						2.0
Adjusted operating income (Non-GAAP)			$	790					$	875					$	(85)					(9.7)		%
			39-Week Period Ended Mar. 29, 2025						39-Week Period Ended Mar. 30, 2024						Change in Dollars						% Change
			(Dollars in millions)
Sales			$	42,206					$	40,925					$	1,281					3.1		%
Gross profit			8,003						7,915						88						1.1
Operating expenses			5,507						5,283						224						4.2
Operating income			$	2,496					$	2,632					$	(136)					(5.2)		%
Gross profit			$	8,003					$	7,915					$	88					1.1		%
Adjusted operating expenses (Non-GAAP)			5,428						5,236						192						3.7
Adjusted operating income (Non-GAAP)			$	2,575					$	2,679					$	(104)					(3.9)		%

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)												Increase (Decrease)
			13-Week Period												39-Week Period
			(Dollars in millions)												(Dollars in millions)
Cause of change			Percentage						Dollars						Percentage						Dollars
Case volume (1)			(1.6)		%				$	(225)					0.6		%				$	245
Inflation			2.7						370						2.6						1,068
Other (2)			(0.4)						(52)						(0.1)						(32)
Total change in sales			0.7		%				$	93					3.1		%				$	1,281

(1)			Case volumes decreased 2.0% and increased 0.7% compared to the third quarter and first 39 weeks of fiscal 2024, respectively. This volume decrease resulted in a 1.6% decrease and 0.6% increase in the dollar value of sales compared to the third quarter and first 39 weeks of fiscal 2024, respectively.
(2)			Case volume reflects our broadline and specialty businesses, with the exception of our specialty meats business, which measures its volume in pounds. Any impact in volumes from these operations are included within “Other.”

The sales growth in our U.S. Foodservice Operations was driven by higher inflation. Case volumes from our U.S. Foodservice Operations decreased 2.0% and increased 0.7% in the third quarter and first 39 weeks of fiscal 2025, respectively, as compared to the third quarter and first 39 weeks of fiscal 2024. This included a 3.5% decrease in local customer case volume in the third quarter of fiscal 2025 and a 1.4% decrease in the first 39 weeks of fiscal 2025. Case volumes have been negatively impacted by foot traffic to restaurant trends in the third quarter and first 39 weeks of fiscal 2025.

Operating Income

The decrease in operating income for the third quarter and first 39 weeks of fiscal 2025, respectively, as compared to the third quarter and first 39 weeks of fiscal 2024, was primarily driven by an increase in operating expenses. The decrease in operating income in the third quarter of fiscal 2025 was also driven by a decrease in case volume and gross profit dollars. The decrease in operating income in the first 39 weeks of fiscal 2025 was partially offset by gross profit dollar growth and case volume growth, inclusive of benefits from acquisitions.

Gross profit dollars decreased in the third quarter of fiscal 2025 as compared to the third quarter of fiscal 2024, primarily as a result of case volume decreases and changes in customer mix. Gross profit dollars increased in the first 39 weeks of fiscal 2025 as compared to the first 39 weeks of fiscal 2024 as a result of case volume growth inclusive of benefits from acquisitions and effective management of product cost fluctuations. The estimated change in product costs, an internal measure of inflation or deflation, increased in the third quarter and first 39 weeks of fiscal 2025. Gross margin, which is gross profit as a percentage of sales, was 18.9% and 19.0% in the third quarter and first 39 weeks of fiscal 2025, respectively, for our U.S. Foodservice Operations, which was a decrease of 50 basis points compared to gross margin of 19.4% in the third quarter of fiscal 2024, and a decrease of 38 basis points compared to a gross margin of 19.3% in the first 39 weeks of fiscal 2024, primarily due to a shift in our customer mix driven by national sales volumes outpacing local sales volumes and a decrease in Sysco brand penetration rates.

The increase in operating expenses for the third quarter and first 39 weeks of fiscal 2025, as compared to the third quarter and first 39 weeks of fiscal 2024, was primarily driven by increases in colleague-related costs, depreciation expense, and bad debt expense, partially offset by lower annual bonus incentive compensation.

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 Mar. 29, 2025						13-Week Period Ended Mar. 30, 2024						Change in Dollars						% Change
			(Dollars in millions)
Sales			$	3,457					$	3,494					$	(37)					(1.1)		%
Gross profit			728						720						8						1.1
Operating expenses			632						636						(4)						(0.6)
Operating income			$	96					$	84					$	12					14.3		%
Gross profit			$	728					$	720					$	8					1.1		%
Adjusted operating expenses (Non-GAAP)			600						611						(11)						(1.8)
Adjusted operating income (Non-GAAP)			$	128					$	109					$	19					17.4		%
Sales on a constant currency basis (Non-GAAP)			$	3,571					$	3,494					$	77					2.2		%
Gross profit on a constant currency basis (Non-GAAP)			749						720						29						4.0
Adjusted operating expenses on a constant currency basis (Non-GAAP)			617						611						6						1.0
Adjusted operating income on a constant currency basis (Non-GAAP)			$	132					$	109					$	23					21.1		%
			39-Week Period Ended Mar. 29, 2025						39-Week Period Ended Mar. 30, 2024						Change in Dollars						% Change
			(Dollars in millions)
Sales			$	10,978					$	10,773					$	205					1.9		%
Gross profit			2,262						2,160						102						4.7
Operating expenses			1,970						1,900						70						3.7
Operating income			$	292					$	260					$	32					12.3		%
Gross profit			$	2,262					$	2,160					$	102					4.7		%
Adjusted operating expenses (Non-GAAP)			1,875						1,832						43						2.3
Adjusted operating income (Non-GAAP)			$	387					$	328					$	59					18.0		%
Sales on a constant currency basis (Non-GAAP)			$	11,107					$	10,773					$	334					3.1		%
Gross profit on a constant currency basis (Non-GAAP)			2,278						2,160						118						5.5
Adjusted operating expenses on a constant currency basis (Non-GAAP)			1,887						1,832						55						3.0
Adjusted operating income on a constant currency basis (Non-GAAP)			$	391					$	328					$	63					19.2		%

Sales

The following tables set 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)												Increase (Decrease)
			13-Week Period												39-Week Period
			(Dollars in millions)												(Dollars in millions)
Cause of change			Percentage						Dollars						Percentage						Dollars
Inflation			2.6		%				$	89					1.6		%				$	170
Foreign currency			(3.3)						(114)						(1.2)						(129)
Other (1)			(0.4)						(12)						1.5						164
Total change in sales			(1.1)		%				$	(37)					1.9		%				$	205

(1)			The impact of volumes as a component of sales growth from international operations are included within “Other.”

Sales for the third quarter of fiscal 2025 decreased by 1.1% as compared to the third quarter of fiscal 2024, primarily due to the impacts of exchange rate fluctuations, partially offset by higher inflation. Sales increased by 1.9% in the first 39 weeks of fiscal 2025 as compared to the first 39 weeks of fiscal 2024, primarily due to higher inflation, partially offset by impacts of exchange rate fluctuations. Excluding the impact of the Mexico joint venture, which was divested in the second quarter of fiscal 2025, sales increased 2.5% in the third quarter of fiscal 2025 as compared to the third quarter of fiscal 2024.

Operating Income

The increase in operating income for the third quarter and first 39 weeks of fiscal 2025, as compared to the third quarter and first 39 weeks of 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 the third quarter and first 39 weeks of fiscal 2025, as compared to the third quarter and first 39 weeks of fiscal 2024, was primarily attributable to increases in local case volumes. Local case volumes increased 4.5% in the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024.

Operating expenses decreased by 0.6% in the third quarter of fiscal 2025, as compared to the third quarter of fiscal 2024, which is primarily attributable to the joint venture in Mexico that was divested in the second quarter of fiscal 2025. Operating expenses increased by 3.7% in the first 39 weeks of fiscal 2025 as compared to the first 39 weeks of fiscal 2024, primarily due to increases in colleague-related costs, depreciation expense, and other miscellaneous costs.

Results of SYGMA and Other Segment

SYGMA segment sales were 9.5% and 9.1% higher in the third quarter and first 39 weeks of fiscal 2025, respectively, as compared to the third quarter and first 39 weeks of fiscal 2024, primarily driven by the growth of new customers. Operating income was unchanged in the third quarter of fiscal 2025 as compared to the third quarter of fiscal 2024 and increased $8 million in the first 39 weeks of fiscal 2025 as compared to the first 39 weeks of fiscal 2024, primarily due to the growth of new customers and the improvement of profits from strengthening productivity.

For the operations that are grouped within Other, operating income decreased $9 million and $18 million in the third quarter and first 39 weeks of fiscal 2025, respectively, as compared to the third quarter and first 39 weeks of fiscal 2024. 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 third quarter of fiscal 2025 decreased $42 million, or 16.9%, as compared to the third quarter of fiscal 2024, primarily due to decreases in colleague-related costs, including lower annual bonus incentive compensation, and other miscellaneous costs. These expenses in the first 39 weeks of fiscal 2025 decreased $78 million, or 10.3%, as compared to the first 39 weeks of fiscal 2024, primarily due to decreases in colleague-related costs, including lower annual bonus incentive compensation, and other miscellaneous costs.

Included in Global Support Center expenses are Certain Items that totaled $24 million and $54 million in the third quarter and first 39 weeks of fiscal 2025, as compared to $29 million and $57 million in the third quarter and first 39 weeks of fiscal 2024, respectively. Certain Items impacting the third quarter and first 39 weeks of fiscal 2025 were primarily expenses associated with severances, our business technology transformation initiatives and expenses associated with acquisitions. Certain Items impacting the third quarter and first 39 weeks of fiscal 2024 were primarily expenses associated with severances, our business technology transformation initiatives and expenses associated with acquisitions.

Interest Expense

Interest expense decreased $9 million and increased $27 million for the third quarter and first 39 weeks of fiscal 2025, respectively, as compared to the third quarter and first 39 weeks of fiscal 2024. Interest expense incurred in a period is dependent upon the amount of commercial paper and senior notes outstanding, obligations under finance leases, and interest rates on outstanding borrowings and obligations. The $27 million increase in the first 39 weeks of fiscal 2025 as compared to the first 39 weeks of fiscal 2024 is attributable to interest on new senior notes issued and an increase in interest on outstanding commercial paper balances.

Net Earnings

Net earnings decreased 5.6% and 3.4% in the third quarter and first 39 weeks of fiscal 2025, respectively, as compared to the third quarter and first 39 weeks of fiscal 2024, primarily due to the items noted above for operating income, and interest expense, as well as items impacting our income taxes that are discussed in Note 11, “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, decreased 2.9% and 0.5% in the third quarter and first 39 weeks of fiscal 2025, respectively, primarily due to decreases in sales volumes, as well as gross margins being negatively impacted by changes in customer mix and a decrease in Sysco brand penetration.

Earnings Per Share

Basic earnings per share in the third quarter of fiscal 2025 were $0.82, a 3.5% decrease from the comparable prior year period amount of $0.85 per share. Diluted earnings per share in the third quarter of fiscal 2025 were $0.82, a 3.5% decrease from the comparable prior year period amount of $0.85 per share. Adjusted diluted earnings per share, excluding Certain Items, in the third quarter of fiscal 2025 were $0.96, which is unchanged from the comparable prior year amount of $0.96 per share.

Basic earnings per share in the first 39 weeks of fiscal 2025 were $2.65, a 0.7% decrease from the comparable prior year amount of $2.67 per share. Diluted earnings per share in the first 39 weeks of fiscal 2025 were $2.64, a 0.8% decrease from the comparable prior year period amount of $2.66 per share. Adjusted diluted earnings per share, excluding Certain Items, in the first 39 weeks of fiscal 2025 were $2.98, a 2.1% increase from the comparable prior year amount of $2.92 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.
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. We also measure our sales growth excluding the impact of our joint venture in Mexico which was divested in the second quarter of fiscal 2025.
Management believes that adjusting its operating expenses, operating income, operating margin, net earnings and diluted earnings per share to remove these Certain Items, presenting its results on a constant currency basis, and adjusting its results to exclude the impact of its joint venture in Mexico 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 year 2025 and fiscal year 2024.
Set forth on the following page is a reconciliation of sales, operating expenses, operating income, 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.

			13-Week Period Ended Mar. 29, 2025						13-Week Period Ended Mar. 30, 2024						Change in Dollars						%/bps Change
Sales (GAAP)			$	19,598					$	19,380					$	218					1.1		%
Impact of Mexico joint venture sales			—						(120)						120						0.7
Comparable sales excluding Mexico joint venture (Non-GAAP)			$	19,598					$	19,260					$	338					1.8		%
Sales (GAAP)			$	19,598					$	19,380					$	218					1.1		%
Impact of currency fluctuations (1)			117												117						0.6
Comparable sales using a constant currency basis (Non-GAAP)			$	19,715					$	19,380					$	335					1.7		%
Cost of sales (GAAP)			$	16,017					$	15,771					$	246					1.6		%
Gross profit (GAAP)			$	3,581					$	3,609					$	(28)					(0.8)		%
Impact of currency fluctuations (1)			22												22						0.6
Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP)			$	3,603					$	3,609					$	(6)					(0.2)		%
Gross margin (GAAP)			18.27		%				18.62		%										-35 bps
Impact of currency fluctuations (1)			0.01																		1 bp
Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP)			18.28		%				18.62		%										-34 bps
Operating expenses (GAAP)			$	2,900					$	2,887					$	13					0.5		%

			13-Week Period Ended Mar. 29, 2025						13-Week Period Ended Mar. 30, 2024						Change in Dollars						%/bps Change
Impact of restructuring and transformational project costs (2)			(50)						(28)						(22)						(78.6)
Impact of acquisition-related costs (3)			(42)						(49)						7						14.3
Operating expenses adjusted for Certain Items (Non-GAAP)			2,808						2,810						(2)						(0.1)
Impact of currency fluctuations (1)			18												18						0.7
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)			$	2,826					$	2,810					$	16					0.6		%
Operating expense as a percentage of sales (GAAP)			14.80		%				14.90		%										-10 bps
Impact of certain item adjustments			(0.47)						(0.40)												-7 bps
Adjusted operating expense as a percentage of sales (Non-GAAP)			14.33		%				14.50		%										-17 bps
Operating income (GAAP)			$	681					$	722					$	(41)					(5.7)		%
Impact of restructuring and transformational project costs (2)			50						28						22						78.6
Impact of acquisition-related costs (3)			42						49						(7)						(14.3)
Operating income adjusted for Certain Items (Non-GAAP)			773						799						(26)						(3.3)
Impact of currency fluctuations (1)			4												4						0.5
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)			$	777					$	799					$	(22)					(2.8)		%
Operating margin (GAAP)			3.47		%				3.73		%										-26 bps
Operating margin adjusted for Certain Items (Non-GAAP)			3.94		%				4.12		%										-18 bps
Operating margin adjusted for Certain Items using a constant currency basis (Non-GAAP)			3.94		%				4.12		%										-18 bps
Net earnings (GAAP)			$	401					$	425					$	(24)					(5.6)		%
Impact of restructuring and transformational project costs (2)			50						28						22						78.6
Impact of acquisition-related costs (3)			42						49						(7)						(14.3)
Tax impact of restructuring and transformational project costs (4)			(13)						(7)						(6)						(85.7)
Tax impact of acquisition-related costs (4)			(11)						(12)						1						8.3
Net earnings adjusted for Certain Items (Non-GAAP)			$	469					$	483					$	(14)					(2.9)		%
Diluted earnings per share (GAAP)			$	0.82					$	0.85					$	(0.03)					(3.5)		%
Impact of restructuring and transformational project costs (2)			0.10						0.06						0.04						66.7
Impact of acquisition-related costs (3)			0.09						0.10						(0.01)						(10.0)
Tax impact of restructuring and transformational project costs (4)			(0.03)						(0.01)						(0.02)						NM
Tax impact of acquisition-related costs (4)			(0.02)						(0.02)						—						—
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (5)			$	0.96					$	0.96					$	—					—		%

(1)			Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on the current year results.
(2)			Fiscal 2025 includes $15 million related to restructuring and severance charges and $35 million related to various transformation initiative costs, primarily consisting of supply chain transformation costs and changes to our business technology strategy. Fiscal 2024 includes $13 million related to restructuring and severance charges and $15 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(3)			Fiscal 2025 includes $32 million of intangible amortization expense and $10 million in acquisition and due diligence costs. Fiscal 2024 includes $32 million of intangible amortization expense and $17 million in acquisition and due diligence costs.
(4)			The tax impact of adjustments for Certain Items are 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.
(5)			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.

			39-Week Period Ended Mar. 29, 2025						39-Week Period Ended Mar. 30, 2024						Change in Dollars						%/bps Change
Sales (GAAP)			$	60,232					$	58,288					$	1,944					3.3		%
Impact of currency fluctuations (1)			133												133						0.3
Comparable sales using a constant currency basis (Non-GAAP)			$	60,365					$	58,288					$	2,077					3.6		%
Cost of sales (GAAP)			$	49,249					$	47,518					$	1,731					3.6		%
Gross profit (GAAP)			$	10,983					$	10,770					$	213					2.0		%
Impact of currency fluctuations (1)			18												18						0.1
Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP)			$	11,001					$	10,770					$	231					2.1		%
Gross margin (GAAP)			18.23		%				18.48		%										-25 bps
Impact of currency fluctuations (1)			(0.01)																		-1 bps
Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP)			18.22		%				18.48		%										-26 bps
Operating expenses (GAAP)			$	8,783					$	8,544					$	239					2.8		%
Impact of restructuring and transformational project costs (2)			(107)						(59)						(48)						(81.4)
Impact of acquisition-related costs (3)			(121)						(113)						(8)						(7.1)
Operating expenses adjusted for Certain Items (Non-GAAP)			8,555						8,372						183						2.2
Impact of currency fluctuations (1)			12												12						0.1
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)			$	8,567					$	8,372					$	195					2.3		%
Operating expense as a percentage of sales (GAAP)			14.58		%				14.66		%										-8 bps
Impact of certain item adjustments			(0.38)						(0.30)												-8 bps
Adjusted operating expense as a percentage of sales (Non-GAAP)			14.20		%				14.36		%										-16 bps
Operating income (GAAP)			$	2,200					$	2,226					$	(26)					(1.2)		%
Impact of restructuring and transformational project costs (2)			107						59						48						81.4
Impact of acquisition-related costs (3)			121						113						8						7.1
Operating income adjusted for Certain Items (Non-GAAP)			2,428						2,398						30						1.3
Impact of currency fluctuations (1)			6												6						0.2
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)			$	2,434					$	2,398					$	36					1.5		%
Operating margin (GAAP)			3.65		%				3.82		%										-17 bps
Operating margin adjusted for Certain Items (Non-GAAP)			4.03		%				4.11		%										-8 bps
Operating margin adjusted for Certain Items using a constant currency basis (Non-GAAP)			4.03		%				4.11		%										-8 bps
Net earnings (GAAP)			$	1,297					$	1,343					$	(46)					(3.4)		%
Impact of restructuring and transformational project costs (2)			107						59						48						81.4
Impact of acquisition-related costs (3)			121						113						8						7.1
Tax impact of restructuring and transformational project costs (4)			(27)						(14)						(13)						(92.9)
Tax impact of acquisition-related costs (4)			(31)						(27)						(4)						(14.8)
Net earnings adjusted for Certain Items (Non-GAAP)			$	1,467					$	1,474					$	(7)					(0.5)		%

			39-Week Period Ended Mar. 29, 2025						39-Week Period Ended Mar. 30, 2024						Change in Dollars						%/bps Change
Diluted earnings per share (GAAP)			$	2.64					$	2.66					$	(0.02)					(0.8)		%
Impact of restructuring and transformational project costs (2)			0.22						0.12						0.10						83.3
Impact of acquisition-related costs (3)			0.25						0.22						0.03						13.6
Tax impact of restructuring and transformational project costs (4)			(0.05)						(0.03)						(0.02)						(66.7)
Tax impact of acquisition-related costs (4)			(0.06)						(0.05)						(0.01)						(20.0)
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (5)			$	2.98					$	2.92					$	0.06					2.1		%

(1)			Represents a constant currency adjustment which eliminates the impact of foreign currency fluctuations on the current year results.
(2)			Fiscal 2025 includes $31 million related to restructuring and severance charges and $76 million related to various transformation initiative costs, primarily consisting of supply chain transformation costs and changes to our business technology strategy. Fiscal 2024 includes $21 million related to restructuring and severance charges and $38 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(3)			Fiscal 2025 includes $97 million of intangible amortization expense and $24 million in acquisition and due diligence costs. Fiscal 2024 includes $91 million of intangible amortization expense and $22 million in acquisition and due diligence costs.
(4)			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.
(5)			Individual components of diluted earnings per share may not add up to the total presented 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 Mar. 29, 2025						13-Week Period Ended Mar. 30, 2024						Change in Dollars						%/bps Change
U.S. FOODSERVICE OPERATIONS
Operating expenses (GAAP)			$	1,849					$	1,801					$	48					2.7		%
Impact of restructuring and transformational project costs (1)			(16)						(6)						(10)						NM
Impact of acquisition-related costs (2)			(20)						(17)						(3)						(17.6)
Operating expenses adjusted for Certain Items (Non-GAAP)			$	1,813					$	1,778					$	35					2.0		%
Operating income (GAAP)			$	754					$	852					$	(98)					(11.5)		%
Impact of restructuring and transformational project costs (1)			16						6						10						NM
Impact of acquisition-related costs (2)			20						17						3						17.6
Operating income adjusted for Certain Items (Non-GAAP)			$	790					$	875					$	(85)					(9.7)		%
INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP)			$	3,457					$	3,494					$	(37)					(1.1)		%
Impact of Mexico joint venture sales			—						(120)						120						3.6
Comparable sales excluding Mexico joint venture (Non-GAAP)			$	3,457					$	3,374					$	83					2.5		%
Sales (GAAP)			$	3,457					$	3,494					$	(37)					(1.1)		%
Impact of currency fluctuations (3)			114												114						3.3
Comparable sales using a constant currency basis (Non-GAAP)			$	3,571					$	3,494					$	77					2.2		%
Gross profit (GAAP)			$	728					$	720					$	8					1.1		%
Impact of currency fluctuations (3)			21												21						2.9
Comparable gross profit using a constant currency basis (Non-GAAP)			$	749					$	720					$	29					4.0		%
Gross margin (GAAP)			21.06		%				20.61		%										45 bps
Impact of currency fluctuations (3)			(0.09)																		-9 bps
Comparable gross margin using a constant currency basis (Non-GAAP)			20.97		%				20.61		%										36 bps
Operating expenses (GAAP)			$	632					$	636					$	(4)					(0.6)		%
Impact of restructuring and transformational project costs (4)			(13)						(7)						(6)						(85.7)
Impact of acquisition-related costs (5)			(19)						(18)						(1)						(5.6)
Operating expenses adjusted for Certain Items (Non-GAAP)			600						611						(11)						(1.8)
Impact of currency fluctuations (3)			17												17						2.8
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)			$	617					$	611					$	6					1.0		%
Operating income (GAAP)			$	96					$	84					$	12					14.3		%
Impact of restructuring and transformational project costs (4)			13						7						6						85.7
Impact of acquisition-related costs (5)			19						18						1						5.6
Operating income adjusted for Certain Items (Non-GAAP)			128						109						19						17.4
Impact of currency fluctuations (3)			4												4						3.7
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)			$	132					$	109					$	23					21.1		%
SYGMA
Operating expenses (GAAP)			$	149					$	136					$	13					9.6		%
Operating income (GAAP)			17						17						—						—
OTHER
Operating expenses (GAAP)			$	63					$	65					$	(2)					(3.1)		%
Operating (loss) income (GAAP)			(3)						6						(9)						NM

			13-Week Period Ended Mar. 29, 2025						13-Week Period Ended Mar. 30, 2024						Change in Dollars						%/bps Change
GLOBAL SUPPORT CENTER
Gross profit (GAAP)			$	24					$	12					$	12					100.0		%
Operating expenses (GAAP)			$	207					$	249					$	(42)					(16.9)		%
Impact of restructuring and transformational project costs (6)			(21)						(15)						(6)						(40.0)
Impact of acquisition-related costs (7)			(3)						(14)						11						78.6
Operating expenses adjusted for Certain Items (Non-GAAP)			$	183					$	220					$	(37)					(16.8)		%
Operating loss (GAAP)			$	(183)					$	(237)					$	54					22.8		%
Impact of restructuring and transformational project costs (6)			21						15						6						40.0
Impact of acquisition-related costs (7)			3						14						(11)						(78.6)
Operating loss adjusted for Certain Items (Non-GAAP)			$	(159)					$	(208)					$	49					23.6		%

(1)			Primarily represents severance and transformation initiative costs.
(2)			Fiscal 2025 and fiscal 2024 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 costs primarily in Europe.
(5)			Primarily represents intangible amortization expense and acquisition costs.
(6)			Includes various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(7)			Represents due diligence costs.
NM			Represents that the percentage change is not meaningful.

			39-Week Period Ended Mar. 29, 2025						39-Week Period Ended Mar. 30, 2024						Change in Dollars						%/bps Change
U.S. FOODSERVICE OPERATIONS
Operating expenses (GAAP)			$	5,507					$	5,283					$	224					4.2		%
Impact of restructuring and transformational project costs (1)			(26)						(6)						(20)						NM
Impact of acquisition-related costs (2)			(53)						(41)						(12)						(29.3)
Operating expenses adjusted for Certain Items (Non-GAAP)			$	5,428					$	5,236					$	192					3.7		%
Operating income (GAAP)			$	2,496					$	2,632					$	(136)					(5.2)		%
Impact of restructuring and transformational project costs (1)			26						6						20						NM
Impact of acquisition-related costs (2)			53						41						12						29.3
Operating income adjusted for Certain Items (Non-GAAP)			$	2,575					$	2,679					$	(104)					(3.9)		%
INTERNATIONAL FOODSERVICE OPERATIONS
Sales (GAAP)			$	10,978					$	10,773					$	205					1.9		%
Impact of currency fluctuations (3)			129												129						1.2
Comparable sales using a constant currency basis (Non-GAAP)			$	11,107					$	10,773					$	334					3.1		%
Gross profit (GAAP)			$	2,262					$	2,160					$	102					4.7		%
Impact of currency fluctuations (3)			16												16						0.8
Comparable gross profit using a constant currency basis (Non-GAAP)			$	2,278					$	2,160					$	118					5.5		%
Gross margin (GAAP)			20.60		%				20.05		%										55 bps
Impact of currency fluctuations (3)			(0.09)																		-9 bps
Comparable gross margin using a constant currency basis (Non-GAAP)			20.51		%				20.05		%										46 bps
Operating expenses (GAAP)			$	1,970					$	1,900					$	70					3.7		%
Impact of restructuring and transformational project costs (4)			(39)						(15)						(24)						NM
Impact of acquisition-related costs (5)			(56)						(53)						(3)						(5.7)
Operating expenses adjusted for Certain Items (Non-GAAP)			1,875						1,832						43						2.3
Impact of currency fluctuations (3)			12												12						0.7
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)			$	1,887					$	1,832					$	55					3.0		%
Operating income (GAAP)			$	292					$	260					$	32					12.3		%
Impact of restructuring and transformational project costs (4)			39						15						24						NM
Impact of acquisition-related costs (5)			56						53						3						5.7
Operating income adjusted for Certain Items (Non-GAAP)			387						328						59						18.0
Impact of currency fluctuations (3)			4												4						1.2
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)			$	391					$	328					$	63					19.2		%
SYGMA
Sales (GAAP)			$	6,246					$	5,724					$	522					9.1		%
Gross profit (GAAP)			492						454						38						8.4
Gross margin (GAAP)			7.88		%				7.93		%										-5 bps

			39-Week Period Ended Mar. 29, 2025						39-Week Period Ended Mar. 30, 2024						Change in Dollars						%/bps Change
Operating expenses (GAAP)			$	438					$	408					$	30					7.4		%
Operating income (GAAP)			54						46						8						17.4		%
OTHER
Operating expenses (GAAP)			$	188					$	195					$	(7)					(3.6)		%
Operating income (GAAP)			9						27						(18)						(66.7)		%
GLOBAL SUPPORT CENTER
Gross profit (GAAP)			$	29					$	19					$	10					52.6		%
Operating expenses (GAAP)			$	680					$	758					$	(78)					(10.3)		%
Impact of restructuring and transformational project costs (6)			(42)						(38)						(4)						(10.5)
Impact of acquisition-related costs (7)			(12)						(19)						7						36.8
Operating expenses adjusted for Certain Items (Non-GAAP)			$	626					$	701					$	(75)					(10.7)		%
Operating loss (GAAP)			$	(651)					$	(739)					$	88					11.9		%
Impact of restructuring and transformational project costs (6)			42						38						4						10.5
Impact of acquisition-related costs (7)			12						19						(7)						(36.8)
Operating loss adjusted for Certain Items (Non-GAAP)			$	(597)					$	(682)					$	85					12.5		%

(1)			Primarily represents severance and transformation costs.
(2)			Fiscal 2025 and fiscal 2024 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 costs primarily in Europe.
(5)			Primarily represents intangible amortization expense and acquisition costs.
(6)			Includes various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(7)			Represents 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 2024 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 Mar. 29, 2025						13-Week Period Ended Mar. 30, 2024						Change in Dollars						% Change
Net earnings (GAAP)			$	401					$	425					$	(24)					(5.6)		%
Interest (GAAP)			149						158						(9)						(5.7)
Income taxes (GAAP)			122						129						(7)						(5.4)
Depreciation and amortization (GAAP)			238						221						17						7.7
EBITDA (Non-GAAP)			$	910					$	933					$	(23)					(2.5)		%
Certain Item adjustments:
Impact of restructuring and transformational project costs (1)			$	49					$	27					$	22					81.5		%
Impact of acquisition-related costs (2)			10						17						(7)						(41.2)
EBITDA adjusted for Certain Items (Non-GAAP) (3)			$	969					$	977					$	(8)					(0.8)		%
Other expense (income), net			9						10						(1)						(10.0)
Depreciation and amortization, as adjusted (Non-GAAP) (4)			(205)						(188)						(17)						(9.0)
Operating income adjusted for Certain Items (Non-GAAP)			$	773					$	799					$	(26)					(3.3)		%

(1)			Fiscal 2025 and fiscal 2024 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 2025 and fiscal 2024 include acquisition and due diligence costs.
(3)			In arriving at adjusted EBITDA, Sysco does not adjust out interest income of $7 million and $7 million or non-cash stock compensation expense of $15 million and $24 million in fiscal 2025 and fiscal 2024, respectively.
(4)			Fiscal 2025 includes $238 million in GAAP depreciation and amortization expense, less $33 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions. Fiscal 2024 includes $221 million in GAAP depreciation and amortization expense, less $34 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions.

			39-Week Period Ended Mar. 29, 2025						39-Week Period Ended Mar. 30, 2024						Change in Dollars						% Change
Net earnings (GAAP)			$	1,297					$	1,343					$	(46)					(3.4)		%
Interest (GAAP)			469						442						27						6.1
Income taxes (GAAP)			402						418						(16)						(3.8)
Depreciation and amortization (GAAP)			709						647						62						9.6
EBITDA (Non-GAAP)			$	2,877					$	2,850					$	27					0.9		%
Certain Item adjustments:
Impact of restructuring and transformational project costs (1)			104						56						48						85.7
Impact of acquisition-related costs (2)			24						22						2						9.1
EBITDA adjusted for Certain Items (Non-GAAP) (3)			$	3,005					$	2,928					$	77					2.6		%
Other expense (income), net			32						23						9						39.1
Depreciation and amortization, as adjusted (Non-GAAP) (4)			(609)						(553)						(56)						(10.1)
Operating income adjusted for Certain Items (Non-GAAP)			$	2,428					$	2,398					$	30					1.3		%

(1)			Fiscal 2025 and 2024 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 2025 and 2024 include acquisition and due diligence costs.
(3)			In arriving at adjusted EBITDA, Sysco does not exclude interest income of $22 million and $28 million or non-cash stock compensation expense of $74 million and $77 million for fiscal 2025 and fiscal 2024, respectively.
(4)			Fiscal 2025 includes $709 million in GAAP depreciation and amortization expense, less $100 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions. Fiscal 2024 includes $647 million in GAAP depreciation and amortization expense, less $94 million of Non-GAAP depreciation and amortization expense primarily related to acquisitions.

Projected Adjusted Earnings Per Share Guidance

Adjusted earnings per share is a non-GAAP financial measure; however, we cannot predict with certainty certain items that would be included in the most directly comparable GAAP measure for the relevant future periods. Due to these uncertainties, we cannot provide a quantitative reconciliation of projected adjusted EPS to the most directly comparable GAAP financial measure without unreasonable effort. However, we expect to calculate adjusted earnings per share for future periods in the same manner as the reconciliations provided for the historical periods herein.

Liquidity and Capital Resources

Highlights

We produced positive free cash flow of $954 million in the first 39 weeks of fiscal 2025, as compared to positive free cash flow of $864 million in the first 39 weeks of fiscal 2024. The increase in free cash flow is attributable to an increase in proceeds from sales of plant and equipment, partially offset by a decrease in cash provided by operating activities. 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 39 weeks of fiscal 2025 to the first 39 weeks of fiscal 2024 are provided.

			39-Week Period Ended Mar. 29, 2025						39-Week Period Ended Mar. 30, 2024
Source of cash (use of cash)			(In millions)
Net cash provided by operating activities (GAAP)			$	1,317					$	1,373
Additions to plant and equipment			(532)						(530)
Proceeds from sales of plant and equipment			169						21
Free Cash Flow (Non-GAAP) (1)			$	954					$	864
Acquisition of businesses, net of cash acquired			$	(40)					$	(1,181)
Debt borrowings (repayments), net			1,078						1,447
Stock repurchases			(700)						(700)
Dividends paid			(752)						(758)

(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 2024 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 March 29, 2025, we had $1.5 billion in cash and cash equivalents, approximately 50% 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 $1.3 billion in cash flows from operations in the first 39 weeks of fiscal 2025, compared to cash flows from operations of $1.4 billion in the first 39 weeks of fiscal 2024. In the first 39 weeks of fiscal 2025, these amounts included year-over-year favorable comparisons on working capital of $163 million due to favorable comparisons on accounts payable and accounts receivable, partially offset by an unfavorable comparison in inventory. Accrued expenses also had an unfavorable comparison, primarily related to accrued payroll in the first 39 weeks of fiscal 2025 in comparison to the first 39 weeks of fiscal 2024. Income tax payments made in the first 39 weeks of fiscal 2025 were unchanged compared to the first 39 weeks of fiscal 2024. During the third quarter of fiscal 2025, tax payments were made that had been previously deferred under IRS disaster relief provisions related to Hurricane Beryl. These payments related to tax obligations that were originally due in fiscal 2024 and the first and second quarters of fiscal 2025.

Investing Activities

Our capital expenditures in the first 39 weeks of fiscal 2025 consisted primarily of investments in buildings and building improvements, technology equipment, warehouse equipment, and fleet. Our capital expenditures in the first 39 weeks of fiscal 2025 were $2 million higher than in the first 39 weeks of fiscal 2024.

During the first 39 weeks of fiscal 2025, we paid $40 million, net of cash acquired, for the acquisition of Campbells Prime Meat. The first 39 weeks of fiscal 2024 includes $1.2 billion of cash paid for the acquisitions of BIX Produce Company, Edward Don, and Ready Chef.

During the first 39 weeks of fiscal 2025, we received $169 million in proceeds from sales of plant and equipment, which is primarily attributable to proceeds received from sale leaseback transactions. During the first 39 weeks of fiscal 2024, we received $21 million in proceeds from sales of plant and equipment.

Financing Activities

Equity Transactions

Proceeds from exercises of share-based compensation awards were $96 million in the first 39 weeks of fiscal 2025, as compared to $103 million in the first 39 weeks of fiscal 2024. 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 9,418,578 shares for $700 million during the first 39 weeks of fiscal 2025 and intend to repurchase up to a total of $1.25 billion in fiscal 2025. As of March 29, 2025, we had a remaining authorization of approximately $2.1 billion. We repurchased no additional shares under our authorization from the end of our fiscal third quarter through April 11, 2025.

Dividends paid in the first 39 weeks of fiscal 2025 were $752 million, or $1.53 per share, as compared to $758 million, or $1.50 per share, in the first 39 weeks of fiscal 2024. In February 2025, we declared our regular quarterly dividend for the third quarter of fiscal 2025 of $0.51 per share, which was paid in April 2025. 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 will be payable in July 2025.

Debt Activity and Borrowing Availability

Our debt activity, including issuances and repayments, if any, and our borrowing availability are described in Note 7, “Debt,” in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q. Our outstanding borrowings as of March 29, 2025 are also disclosed within that note.

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. As of March 29, 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. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” contained in our fiscal 2024 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 (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 tables include summarized financial information of the obligor group for the periods presented.

Combined Parent and Guarantor Subsidiaries Summarized Balance Sheet						Mar. 29, 2025						Jun. 29, 2024
						(In millions)
ASSETS
Receivables due from non-obligor subsidiaries						$	247					$	428
Current assets						6,454						5,417
Total current assets						$	6,701					$	5,845
Notes receivable from non-obligor subsidiaries						$	39					$	78
Other noncurrent assets						5,016						4,714
Total noncurrent assets						$	5,055					$	4,792
LIABILITIES
Payables due to non-obligor subsidiaries						$	209					$	215
Other current liabilities						2,996						2,396
Total current liabilities						$	3,205					$	2,611
Notes payable to non-obligor subsidiaries						$	402					$	250
Long-term debt						11,822						11,276
Other noncurrent liabilities						1,472						1,334
Total noncurrent liabilities						$	13,696					$	12,860

Combined Parent and Guarantor Subsidiaries Summarized Results of Operations						39-Week Period Ended Mar. 29, 2025
			(In millions)
Sales						$	36,707
Gross profit						6,482
Operating income						1,765
Interest expense from non-obligor subsidiaries						2
Net earnings						927

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 2024 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 “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. Examples of forward-looking statements include, but are not limited to, statements about:

• our expectations regarding the ability of our supply chain and facilities to remain in place and operational;

• our plans regarding our transformation initiatives and the expected effects from such initiatives;

• statements regarding uncollectible accounts, including that if collections continue to improve, additional reductions in bad debt expense could occur;

• our expectations that our Recipe for Growth strategy will allow us to better serve our customers and differentiate Sysco from our competition;

• our expectations regarding our fiscal 2025 sales and our rate of sales growth in fiscal 2025;

• our expectations regarding the impact of inflation on sales, gross margin rates and gross profit dollars;

• our plans regarding cost savings, including our target for cost savings through fiscal 2025 and the impact of costs savings on the company;

• our belief that our purpose will allow us to grow substantially faster than the foodservice distribution industry and deliver profitable growth through our Recipe for Growth transformation, and statements regarding our plans with respect to our strategic pillars that support this growth transformation;

• our expectations regarding the use and investment of remaining cash generated from operations, including our expectations regarding the positive impact of our acquisitions;

• the sufficiency of our available liquidity to sustain our operations for multiple years;

• the impact of seasonal trends on our free cash flow;

• estimates regarding our capital expenditures and the sources of financing for our capital expenditures;

• our expectations regarding the impact of potential acquisitions and sales of assets on our liquidity, borrowing capacity, leverage ratios and capital availability;

• our expectations regarding real sales growth in the U.S. foodservice market and trends in produce markets;

• our expectations regarding the calculation of adjusted return on invested capital, adjusted operating income, adjusted net earnings and adjusted diluted earnings per share;

• our expectations regarding the impact of future Certain Items on our projected future non-GAAP and GAAP results;

• our expectations regarding our effective tax rate in fiscal 2025;

• the sufficiency of our mechanisms for managing working capital and competitive pressures, and our beliefs regarding the impact of these mechanisms;

• our ability to meet future cash requirements, including the ability to access financial markets effectively, including issuances of debt securities, and maintain sufficient liquidity;

• our expectations regarding the payment of dividends, and the growth of our dividend, in the future;

• our expectations regarding future activity under our share repurchase program;

• future compliance with the covenants under our revolving credit facility;

• our ability to effectively access the commercial paper market and long-term capital markets; and

• our intention to repay our long-term debt with cash on hand, cash flow from operations, issuances of commercial paper, issuances of senior notes, or a combination thereof.

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 2024 Form 10-K:

• the impact of geopolitical, economic and market conditions and developments, including changes in global trade policies and tariffs and their ability to impact consumer confidence and foot traffic to restaurants;

• 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;

• the risk that we are unlikely to be able to predict inflation over the long term, and lower inflation is likely to produce lower gross profit;

• 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 be able to accelerate and/or identify additional administrative cost savings in order to compensate for any gross profit or supply chain cost leverage challenges;

• 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 impact of unexpected future changes to our business initiatives based on management’s subjective evaluation of our overall business needs;

• the risk that the actual costs of any business initiatives may be greater or less than currently 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 natural disasters or adverse weather conditions;

• 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 changes in applicable tax laws or regulations and the resolution of tax disputes could negatively affect our financial results;

• 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;

• the risk that we may not realize anticipated benefits from our operating cost reduction efforts;

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

• the potential impact of product liability claims;

• the risk that we fail to comply with requirements imposed by applicable law or government 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 the implementation of various initiatives, the timing and successful completion of acquisitions, construction schedules and the possibility that other cash requirements could result in delays or cancellations of capital spending;

• the risk that divestiture of one or more of our businesses may not provide the anticipated effects on our operations;

• the risk that future labor disruptions or disputes could disrupt the integration of Brakes France and Davigel into Sysco France and our operations in France and the European Union generally;

• the risk that factors beyond management’s control, including fluctuations in the stock market, as well as management’s future subjective evaluation of the company’s needs, would impact the timing of 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;

• the potential requirement to pay material amounts under our multiemployer defined benefit pension plans;

• our funding requirements for our company-sponsored qualified pension plan may increase should financial markets experience future declines;

• labor issues, including the renegotiation of union contracts and shortage of qualified labor;

• capital expenditures may vary based on changes in business plans and other factors, including risks related to the implementation of various initiatives, the timing and successful completion of acquisitions, construction schedules and the possibility that other cash requirements could result in delays or cancellations of capital spending;

• the risk that the anti-takeover benefits provided by our preferred stock may not be viewed as beneficial to stockholders; 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.

For a more detailed discussion of factors that could cause actual results to differ from those contained in the forward-looking statements, see the risk factors discussion contained in Item 1A of our fiscal 2024 Form 10-K and in Item 1A of Part II of this Form 10-Q.