01—Abstract
Summary
Summary of the 10-Q filed January 28, 2026. Cited figures are marked; the original filing is the authoritative source.
Sysco Corporation's 10-Q for the second quarter of fiscal 2026 (13 weeks ended December 27, 2025) shows sales of $20.76 billiona, up 3.0% from $20.15 billion a year earlier, with gross profit up 3.9% to $3.79 billion.
GAAP operating income fell 2.8% to $692 millionb and net earnings fell 4.2% to $389 million, primarily due to higher restructuring, transformation and acquisition-related costs, which the company treats as Certain Items. Excluding those items, adjusted operating income rose 3.1% to $807 million, adjusted net earnings rose 3.9% to $476 million, and adjusted diluted EPS rose 6.5% to $0.99. For the first 26 weeks, sales rose 3.1% to $41.91 billion and GAAP diluted EPS was $1.80, down 1.1%, while adjusted diluted EPS was $2.14, up 5.9%.
Cash generation and balance sheet items were mixed. Net cash from operating activities for the 26 weeks was $611 millionc versus $498 million a year earlier, and free cash flow (a non-GAAP measure) was $413 million versus $331 million. Total debt carrying value rose to $13.6 billion from $13.3 billion, driven by new commercial paper issuances, partly offset by a senior note that matured in October 2025.
The company repurchased no shares in the first 26 weeks, has about $1.5 billiond remaining under its $5.0 billion authorization, and says it intends to resume repurchases in the second half of fiscal 2026, potentially totaling about $1.0 billion. Management cites a sequential decline of 230 basis points in foot traffic to restaurants versus the prior quarter, while U.S. Foodservice local case growth improved by 140 basis points.
Inflation was 2.9% at the enterprise level, led by meat and seafood. The company also disclosed a rebranding of its UK Brakes brand to "Sysco GB," which will add roughly $100 million of amortization expense over two years, treated as a Certain Item, and noted a pending IRS-related tax credit dispute in which a previously recorded $131 million benefit could be reversed.
02—Key points
Key Highlights
- Sales of $20.76 billion in Q2 fiscal 2026, up 3.0% year over year; first 26 weeks sales of $41.91 billion, up 3.1%.
- GAAP operating income fell 2.8% to $692 million, while adjusted operating income rose 3.1% to $807 million after excluding Certain Items such as restructuring, transformation and acquisition-related costs.
- GAAP diluted EPS was $0.81 in Q2, down 1.2%; adjusted diluted EPS rose 6.5% to $0.99.
- Operating cash flow for the first 26 weeks was $611 million (vs. $498 million), and free cash flow was $413 million (vs. $331 million).
- Total debt carrying value rose to $13.6 billion from $13.3 billion, mainly from new commercial paper issuances; the company had $1.2 billion of cash and cash equivalents.
- No share repurchases in the first 26 weeks; about $1.5 billion of authorization remains, and the company intends to resume buybacks in the second half of fiscal 2026, potentially up to about $1.0 billion.
- U.S. Foodservice local case volume rose 1.2% in Q2, and International Foodservice operating income rose 23.2% in Q2 on higher local case volumes and supply chain capacity.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Sysco kept $0.02.
- Revenue$20.76B100.0%
- Cost of revenue−$16.97B81.7%
- Gross profit$3.79B18.3%
- Operating costs−$3.10B14.9%
- Operating income$692.0M3.3%
- Interest, other & tax−$303.0M1.5%
- Net income$389.0M1.9%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed January 28, 2026Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $20.76B$20.15B | +3.0% |
| Cost of Revenue | $16.97B$16.50B | +2.8% |
| Gross Profit | $3.79B$3.65B | +3.9% |
| Operating Expenses | $3.10B$2.94B | +5.5% |
| Operating Income | $692.00M$712.00M | −2.8% |
| Net Income | $389.00M$406.00M | −4.2% |
| EPS (Basic) | $0.81$0.83 | −2.4% |
| EPS (Diluted) | $0.81$0.82 | −1.2% |
| Shares Outstanding (Basic) | 479.35M490.70M | −2.3% |
| Shares Outstanding (Diluted) | 480.66M492.80M | −2.5% |
05—Questions
Frequently Asked Questions
How did Sysco perform in the second quarter of fiscal 2026?
Sales rose 3.0% to $20.76 billion and gross profit rose 3.9% to $3.79 billion. GAAP operating income declined 2.8% to $692 million and net earnings declined 4.2% to $389 million, mainly due to higher Certain Item expenses. Adjusted net earnings rose 3.9% to $476 million.
Why did GAAP earnings decline while adjusted earnings grew?
The filing attributes the GAAP decline to increased restructuring and transformational project costs and acquisition-related costs, which the company excludes in its adjusted measures. Operating expenses rose 5.5% in Q2, driven by sales headcount investments, a decrease in gains on sale leaseback transactions, higher incentive compensation, and acquisition-related costs.
What is Sysco's cash flow and capital return position?
Operating cash flow was $611 million for the first 26 weeks and free cash flow was $413 million. Dividends paid totaled $518 million, or $1.08 per share, and the company declared a $0.54 quarterly dividend. No shares were repurchased in the first 26 weeks, with about $1.5 billion of authorization remaining.
What risks or one-time items does the filing highlight?
The filing notes a UK rebranding of Brakes to "Sysco GB" that will add about $100 million of amortization over two years, a sequential 230 basis point decline in restaurant foot traffic, and a pending IRS-related foreign tax credit dispute in which a previously recorded $131 million benefit could be reversed in whole or in part.
How is the debt position changing?
Total debt carrying value increased to $13.6 billion from $13.3 billion, driven by new commercial paper issuances, partly offset by a senior note that matured in October 2025. Sysco has a $3.0 billion revolving credit facility, with no borrowings outstanding as of December 27, 2025.
06—Continue