01—Abstract
Summary
Summary of the 10-Q filed October 29, 2025. Cited figures are marked; the original filing is the authoritative source.
Sysco Corporation's first quarter of fiscal 2026 (13 weeks ended September 27, 2025) showed sales growth alongside flat-to-lower profit.
Sales rose 3.2% to $21.1 billiona, driven by increases in U.S. Foodservice Operations, International Foodservice Operations and SYGMA. Gross profit increased 3.9% to $3.9 billion on product cost savings from strategic sourcing initiatives. Operating income declined 1.0% to $800 million, reflecting higher operating expenses and increased restructuring, transformational project and acquisition-related costs.
Net earnings decreased 2.9% to $476 millionb, and diluted earnings per share were unchanged at $0.99. Excluding Certain Items, adjusted operating income rose 2.9% to $898 million, adjusted net earnings rose 2.0% to $551 million, and adjusted diluted earnings per share rose 5.5% to $1.15. Cash flow and liquidity were weaker than the prior year period.
Net cash provided by operating activities was $86 millionc, and free cash flow, a non-GAAP measure, was negative $50 million compared with positive $8 million a year earlier, due to lower proceeds from equipment sales and higher capital expenditures. Cash and cash equivalents were $844 million at quarter end, and total debt carrying value was $13.4 billion. The company repurchased no shares during the quarter and had about $1.5 billion remaining under its $5.0 billion repurchase authorization.
Dividends paid totaled $259 milliond, or $0.54 per share. Management expects to grow both sales and net earnings per share in fiscal 2026.
The filing also notes a new $3.0 billion revolving credit facility entered into September 5, 2025, which expires in 2030, and an October 2025 acquisition of Fairfax Meadow, a U.K. specialty meat supplier, whose results are not expected to be material. Total shareholders' equity rose to $2.07 billion from $1.83 billion, and the company remains subject to an open IRS tax dispute concerning foreign tax credits, with a previously recorded benefit of $131 million at risk.
02—Key points
Key Highlights
- Sales increased 3.2% to $21.1 billion, with growth in U.S. Foodservice, International Foodservice and SYGMA segments.
- Gross profit rose 3.9% to $3.9 billion, attributed to product cost savings from strategic sourcing initiatives.
- Operating income fell 1.0% to $800 million due to higher operating expenses and increased restructuring, transformation and acquisition-related costs.
- Net earnings decreased 2.9% to $476 million; diluted EPS was flat at $0.99. Adjusted diluted EPS rose 5.5% to $1.15.
- Free cash flow was negative $50 million versus positive $8 million a year earlier, driven by lower equipment sale proceeds and higher capital expenditures.
- No share repurchases were made in the quarter; approximately $1.5 billion remains under the $5.0 billion authorization.
- A new $3.0 billion revolving credit facility, expiring September 2030, was entered into, with no borrowings outstanding at quarter end.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Sysco kept $0.02.
- Revenue$21.15B100.0%
- Cost of revenue−$17.25B81.6%
- Gross profit$3.90B18.4%
- Operating costs−$3.10B14.7%
- Operating income$800.0M3.8%
- Interest, other & tax−$324.0M1.5%
- Net income$476.0M2.3%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed October 29, 2025Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $21.15B$20.48B | +3.2% |
| Cost of Revenue | $17.25B$16.73B | +3.1% |
| Gross Profit | $3.90B$3.75B | +3.9% |
| Operating Expenses | $3.10B$2.94B | +5.3% |
| Operating Income | $800.00M$808.00M | −1.0% |
| Net Income | $476.00M$490.00M | −2.9% |
| EPS (Basic) | $0.99$1.00 | −1.0% |
| EPS (Diluted) | $0.99$0.99 | 0.0% |
| Shares Outstanding (Basic) | 478.76M492.02M | −2.7% |
| Shares Outstanding (Diluted) | 480.37M493.79M | −2.7% |
05—Questions
Frequently Asked Questions
Why did operating income decline even though sales and gross profit grew?
Operating expenses rose 5.3% to $3.1 billion, driven by sales headcount investments, higher incentive compensation and building capacity expansion. Restructuring and transformation costs and acquisition-related costs also increased, which the company classifies as Certain Items. Excluding these items, adjusted operating income rose 2.9%.
How did cash generation compare with the prior year?
Net cash provided by operating activities was $86 million, up from $53 million. However, free cash flow was negative $50 million compared with positive $8 million, because proceeds from sales of plant and equipment fell to $24 million from $77 million and capital expenditures rose.
Is the company continuing to return capital to shareholders?
Dividends paid were $259 million, or $0.54 per share, up from $251 million a year earlier. No shares were repurchased during the quarter, and about $1.5 billion remained under the repurchase authorization as of September 27, 2025.
What is the outlook for fiscal 2026?
Management stated it expects to grow both sales and net earnings per share in fiscal 2026, while noting that the macroeconomic environment continues to weigh on consumer sentiment.
Are there any material risks or contingencies disclosed?
The company disclosed an ongoing IRS dispute over foreign tax credits, in which it previously recorded a $131 million benefit that may need to be reversed if it is unsuccessful. Management does not believe any pending legal proceedings will have a material adverse effect on the company.
06—Continue