SYSCO CORP

Sysco Corporation is the largest global distributor of food and related products primarily to the foodservice or food-away-from-home industry. The company provided products and related services to approximately 730,000 ¹ customer locations, including restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers during fiscal 2025. Founded in 1969, Sysco commenced operations as a public company in March 1970 and has grown from $115 million ² to its all-time high of $81.4 billion ³ in annual sales in fiscal 2025, both through internal expansion of existing operations and acquisitions. The company estimates that it serves about 17% ⁴ of an approximately $370 billion ⁵ annual foodservice market in the U.S., as estimated by Technomic, Inc., for calendar year 2024, and Technomic projects the market size to increase to approximately $382 billion ⁶ by the end of calendar 2025.

Sysco competes with local and regional distributors and some organizations that operate on a multi-region basis, and its customers may choose to purchase products directly from wholesale or retail outlets, including club, cash and carry and grocery stores, online retailers, or negotiate prices directly with suppliers. The company believes its competitive advantages include its sales consultants; its diversified product base, which includes quality-assured Sysco brand products; its service reliability; the ancillary services it provides to customers, such as business reviews and menu analysis; and its multi-regional presence in North America and Europe. Based upon industry trade data, Sysco believes its sales to the U.S. and Canada food-away-from-home industry were the highest of any foodservice distributor during fiscal 2025.

Sysco generates revenue by distributing a full line of food products and a wide variety of non-food products to foodservice customers. The company's primary operations are in North America and Europe, and it has combined certain operations into three reportable segments: U.S. Foodservice Operations, International Foodservice Operations, and SYGMA, with 'Other' financial information attributable to operations that do not meet quantitative disclosure thresholds. No single customer accounted for 10% or more of Sysco's total sales for the fiscal year ended June 28, 2025. The company estimates that sales to restaurants accounted for 60% ⁷ of sales in fiscal 2025, education and government for 8% ⁸, healthcare for 8% ⁹, travel and leisure for 7% ¹⁰, and other for 17% ¹¹.

U.S. Foodservice Operations primarily includes 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 U.S. Specialty operations, which include the FreshPoint fresh produce distribution business, the Buckhead | Newport Meat & Seafood specialty protein operations, the Italian Specialty platform anchored by Greco & Sons, Inc., the Edward Don restaurant equipment and supplies distribution business, an Asian specialty distribution company and a number of other small specialty businesses. For U.S. Foodservice Operations, which represents approximately 70% ¹² of total sales, over 90% ¹³ of products are purchased domestically. International Foodservice Operations includes operations outside the U.S. that distribute a full line of food products and a wide variety of non-food products, with the Americas primarily consisting of operations in Canada, Bahamas, Costa Rica and Panama, as well as export operations, and European operations primarily consisting of operations in the United Kingdom, France, Ireland and Sweden. SYGMA is the company's U.S. customized distribution operations serving quick-service chain restaurant customer locations. Other primarily includes the company's hotel supply operations, Guest Worldwide.

The principal product categories and their percentage of sales mix for fiscal 2025 were: fresh and frozen meats 19% ¹⁴, canned and dry products 18% ¹⁵, frozen fruits, vegetables, bakery and other 15% ¹⁶, dairy products 11% ¹⁷, poultry 10% ¹⁸, fresh produce 8% ¹⁹, paper and disposables 7% ²⁰, beverage products 4% ²¹, seafood 3% ²², equipment and smallwares 2% ²³, and other 3% ²⁴. The company also provides ancillary services relating to foodservice distribution, such as providing customers with product usage reports and other data, menu-planning advice, food safety training and assistance in inventory control, and access to various third-party services designed to add value to customers' businesses.

During fiscal 2025, 2024 and 2023, $906 million ²⁵, $832 million ²⁶ and $793 million ²⁷, respectively, were invested in facilities, technology, equipment, delivery fleet and other capital asset enhancements. Capital expenditures, net of proceeds from sales of assets, were $692 million ²⁸, $753 million ²⁹ and $751 million ³⁰ during fiscal 2025, 2024 and 2023, respectively. As of June 28, 2025, the company operated 337 ³¹ distribution facilities throughout North America and Europe. As of June 28, 2025, Sysco employed approximately 75,000 ³² employees, including 51,000 ³³ U.S. employees and 24,000 ³⁴ employees outside the U.S., as compared to approximately 76,000 ³⁵ employees as of June 29, 2024.

For fiscal 2025, Sysco reported total sales of $81.4 billion ³⁶, an increase from $78.8 billion ³⁷ in fiscal 2024 and $76.3 billion ³⁸ in fiscal 2023. Gross profit was $15.0 billion ³⁹ in fiscal 2025, compared to $14.4 billion ⁴⁰ in fiscal 2024 and $13.8 billion ⁴¹ in fiscal 2023. Operating income was $3.0 billion ⁴² in fiscal 2025, compared to $2.9 billion ⁴³ in fiscal 2024 and $2.7 billion ⁴⁴ in fiscal 2023. Net earnings were $2.0 billion ⁴⁵ in fiscal 2025, compared to $2.0 billion ⁴⁶ in fiscal 2024 and $1.8 billion ⁴⁷ in fiscal 2023. Diluted earnings per share were $4.07 ⁴⁸ in fiscal 2025, compared to $3.93 ⁴⁹ in fiscal 2024 and $3.50 ⁵⁰ in fiscal 2023.

Sysco expects its capital expenditures, net of proceeds from sales of assets, to approximate $700 million ⁵¹ in fiscal 2026, and expects to finance these capital expenditures from cash flows from operations and bank and other borrowings.

The company's growth strategy includes further expansion of operations into new markets and the establishment of new procurement organizations. Sysco also focuses on increasing profitability by lowering operating costs and aggregate inventory levels, which reduces future facility expansion needs at operating sites while providing greater value to suppliers and customers. The company administers a consolidated product procurement program designed to develop, obtain and ensure consistent quality food and non-food products, covering the purchasing and marketing of branded merchandise as well as products from several national brand suppliers, encompassing substantially all product lines, and some products are purchased internationally within global procurement centers to build strategic relationships with international suppliers and to optimize the supply chain network.

The company's business strategy also includes the possibility of expansion into businesses that are closely related or complementary to, but not currently part of, its core foodservice distribution business. Sysco also provides specialty and seasonal products from small to mid-sized producers to meet a growing demand for locally sourced products, which help differentiate customers' offerings, satisfy demand for new products, and support local communities.

Sysco's current sustainability goals include to reduce its Scope 1 & 2 emissions by 27.5% ⁵² by 2030 and to continue to encourage suppliers to reduce Scope 3 emissions (focusing on purchased goods and services and upstream transportation suppliers). The company's ability to meet these and other related goals depends in part on significant technological advancements with respect to the development and availability of reliable, affordable and sustainable alternative solutions, including electric and other alternative fuel vehicles as well as alternative energy sources.

The company's Global Support Center provides numerous centralized services to its operating sites and performs support activities for employees, suppliers and customers. Sysco has also outsourced several information technology support services and administrative functions to third-party service providers, including cloud-based service providers, and may outsource other functions in the future to achieve cost savings and efficiencies. The company is incorporating artificial intelligence, including machine learning, in certain of its operations, such as sales, support and supply chain operations, and may in the future incorporate artificial intelligence into more of its operations, with the intent to enhance their operation and effectiveness, including to manage inventory, optimize warehouse logistics, route customer deliveries more efficiently and enable more analytics for its sales consultants.

Sysco's growth is funded through a combination of cash on hand, cash flow from operations, commercial paper issuances and long-term borrowings. As of June 28, 2025, the company had approximately $13.3 billion ⁵³ of total indebtedness, which primarily includes its outstanding senior notes. Of the $13.3 billion ⁵⁴ of total indebtedness, $1.75 billion ⁵⁵ will mature within the next twelve months. The company expects 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 foodservice distribution industry is characterized by relatively high inventory turnover with relatively low profit margins, and volatile food costs have a direct impact on the industry. In periods of significant product cost inflation, if Sysco is unable to pass on all or a portion of such product cost increases to its customers in a timely manner, its results of operations would be adversely affected. Conversely, the company's results of operations may be adversely affected by periods of product cost disinflation and deflation, because it makes a significant portion of its sales at prices that are based on the cost of products sold plus a percentage margin, mark-up or fee per case.

Sysco periodically experiences shortages of qualified labor in certain geographies, particularly in the area of warehouse workers and drivers, which may result in increased costs from certain temporary wage actions, such as hiring, referral, and retention bonus programs. Increases in labor costs, such as increases in minimum wage requirements, wage inflation and/or increased overtime, reduce the company's profitability and that of its customers. Additionally, customer demand is currently outpacing available supply in certain categories, and certain suppliers are struggling to meet demand for orders and may also be affected by higher costs to source or produce and transport products, which impairs the company's ability to deliver products and services to its customers.

The foodservice distribution industry is characterized by low margins, and periods of significant or prolonged inflation or deflation affect product costs and may negatively impact profitability. In fiscal 2025, the company's total contributions to multiemployer defined benefit pension plans were approximately $66 million ⁵⁶, and the company estimates its share of the aggregate withdrawal liability on the multiemployer plans in which it participates could have been as much as $150 million ⁵⁷ as of August 5, 2025. As of June 28, 2025, the company had approximately $13.3 billion ⁵⁸ of total indebtedness, of which $1.75 billion ⁵⁹ will mature within the next twelve months, and a failure to refinance such indebtedness on favorable terms could adversely affect the company's business and liquidity position. The company also faces risks from cybersecurity incidents, noting that in March 2023, Sysco became aware of a cybersecurity event where a threat actor extracted certain company data, including data relating to operation of the business, customers, employees and personal data, though this did not impact operational systems or service to customers.

Management's message emphasizes that Sysco is the largest global distributor of food and related products primarily to the foodservice industry, having grown from $115 million ⁶⁰ to its all-time high of $81.4 billion ⁶¹ in annual sales in fiscal 2025. The company's purpose is 'Connecting the World to Share Food and Care for One Another.' Management highlights that the company provided products and related services to approximately 730,000 ⁶² customer locations during fiscal 2025. The strategic priorities emphasized include further expansion into new markets and the establishment of new procurement organizations, increasing profitability by lowering operating costs and aggregate inventory levels, and continuing to invest in capital expenditures, with capital expenditures, net of proceeds from sales of assets, expected to approximate $700 million ⁶³ in fiscal 2026.