SYSCO CORP (SYY)

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:

36

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:

The following tables represent our results by reportable segments:

37

Based on information in Note 14, “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 88.3% and 88.5% of Sysco’s overall sales in the third quarter and first 39 weeks of fiscal 2026,

respectively. U.S. Foodservice Operations and International Foodservice Operations, collectively, represented approximately

97.2% of total segment operating income in both the third quarter and first 39 weeks of fiscal 2026, 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 table sets forth a summary of the components of operating income expressed as a percentage increase or

decrease over the comparable period in the prior year:

38

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:

The sales growth in our U.S. Foodservice Operations was primarily driven by case volume growth. Case volumes from

our U.S. Foodservice Operations increased 2.3% and 1.0% in the third quarter and first 39 weeks of fiscal 2026, respectively, as

compared to the third quarter and first 39 weeks of fiscal 2025. The growth in case volumes was attributable to local case

volumes increasing 3.3% and 1.4% in the third quarter and first 39 weeks of fiscal 2026, respectively, as compared to the third

quarter and first 39 weeks of fiscal 2025. National case volumes increased 1.4% and 0.9% in the third quarter and first 39

weeks of fiscal 2026, respectively, as compared to the third quarter and first 39 weeks of fiscal 2025.

39

Operating Income

The increase in operating income for the third quarter of fiscal 2026, as compared to the third quarter fiscal 2025, was

driven by case volume growth and gross profit dollar growth, partially offset by an increase in operating expenses. The decrease

in operating income for the first 39 weeks of fiscal 2026, as compared to the first 39 weeks of fiscal 2025, was driven by an

increase in operating expenses, partially offset by case volume growth and gross profit dollar growth.

Gross profit dollars increased in the third quarter and first 39 weeks of fiscal 2026 as compared to the third quarter and

first 39 weeks of fiscal 2025, primarily as a result of improvements in our strategic sourcing initiatives, stronger volume

performance from local customers and improving mix from Sysco Brand penetration rates, and the effective management of

product cost fluctuations. Our local case volumes have improved due to improved sales colleague retention and incremental

sales colleague productivity improvements. The estimated change in product costs, an internal measure of inflation or deflation,

increased in the third quarter and first 39 weeks of fiscal 2026. Gross margin, which is gross profit as a percentage of sales, was

19.24% and 19.08% in the third quarter and first 39 weeks of fiscal 2026, respectively, for our U.S. Foodservice Operations,

which was an increase of 38 basis points compared to gross margin of 18.86% in the third quarter of fiscal 2025, and an

increase of 12 basis points compared to a gross margin of 18.96% in the first 39 weeks of fiscal 2025. The improvement in the

third quarter and first 39 weeks of fiscal 2026 is attributable to improvements in our strategic sourcing initiatives, favorable

changes in customer mix, and the effective management of product cost fluctuations.

The increase in operating expenses for the third quarter and first 39 weeks of fiscal 2026, as compared to the third

quarter and first 39 weeks of fiscal 2025, was primarily driven by increases in colleague-related costs, which is inclusive of

incentive compensation, and costs associated with investments in sales headcount and building expansions.

40

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:

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

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

The following discussion and analysis of Sysco’s financial condition, results of operations and liquidity and capital resources for the fiscal years ended June 27, 2026 and June 28, 2025 should be read as a supplement to our Consolidated Financial Statements and the accompanying notes contained in Item 8 of this report, and in conjunction with the “Forward-looking Statements” section set forth in Part II and the “Risk Factors” section set forth in Item 1A of Part I. All discussion of changes in our results of operations from fiscal 2025 to fiscal 2024 has been omitted from this Form 10-K, but may be found in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the year ended June 28, 2025, filed with the Securities and Exchange Commission on August 22, 2025.

Overview

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

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

32

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

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

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

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

We estimate that we serve about 18% of an approximately $377 billion annual foodservice market in the U.S. based on industry data obtained from Technomic, Inc. (Technomic) as of the end of calendar year 2025. Technomic projects the market size to increase to approximately $390 billion by the end of calendar year 2026. From time to time, Technomic may revise the methodology used to calculate the size of the foodservice market and, as a result, our percentage can change not only from our sales results, but also from such revisions. We also serve certain international geographies that vary in size and amount of market share.

According to industry sources, the foodservice, or food-away-from-home, market represents approximately 56% of the total dollars spent on food purchases made at the consumer level in the U.S. as of the end of calendar year 2025.

Highlights

Our fiscal 2026 results reflected sales growth of 3.9% as compared to fiscal 2025, driven by inflation and volume growth, including contributions from recent acquisitions. Sales increased across our U.S. Foodservice Operations, International Foodservice Operations, and SYGMA segments. Gross profit increased 4.5% as compared to fiscal 2025, primarily due to our strategic sourcing efforts and higher volumes from local customers. Operating income increased 0.2% as compared to fiscal 2025, primarily due to gross profit gains, partially offset by increased sales headcount investments, increased restructuring and transformational project costs, higher incentive compensation, and higher acquisition and due diligence costs. We consider restructuring and transformational project costs and acquisition and due diligence costs to be “Certain Item” expenses (as defined below). Excluding Certain Item expenses, adjusted operating income increased 2.6% as compared to fiscal 2025. See below for a comparison of our fiscal 2026 results to our fiscal 2025 results, both including and excluding Certain Items (as defined below).

Below is a comparison of results from fiscal 2026 to fiscal 2025:

•Sales:

◦increased 3.9%, or $3.2 billion, to $84.6 billion;

•Operating income:

◦increased 0.2%, or $7 million, to $3.1 billion;

◦adjusted operating income increased 2.6%, or $91 million, to $3.6 billion;

•Net earnings:

◦decreased 3.9%, or $71 million, to $1.8 billion;

◦adjusted net earnings increased 1.4%, or $31 million, to $2.2 billion;

•Basic earnings per share:

◦decreased 1.9%, or $0.07, to $3.67 from the comparable prior year amount of $3.74 per share;

•Diluted earnings per share:

◦decreased 1.9%, or $0.07, to $3.66 from the comparable prior year amount of $3.73 per share;

◦adjusted diluted earnings per share were $4.61 in fiscal 2026, a $0.15 increase from the comparable prior year amount of $4.46 per share;

•EBITDA:

◦decreased 0.7%, or $26 million, to $4.0 billion; and

◦adjusted EBITDA increased 2.2%, or $94 million, to $4.4 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

33

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. Fiscal year 2026 results of operations also remove the impact of a charge associated with a legal matter, amortization expense associated with debt issuance costs on a bridge loan facility, and a loss on deal contingent rate lock transactions entered into to mitigate interest rate risk on future permanent debt that could potentially be issued to finance the purchase of Jetro Restaurant Depot. No similar charges were applicable in fiscal year 2025. Fiscal year 2025 results of operations were also negatively impacted by a noncash goodwill impairment charge. No similar charge was applicable in fiscal year 2026.

The fiscal 2026 and fiscal 2025 items discussed above are collectively referred to as “Certain Items.” The results of our operations can be impacted by changes in exchange rates applicable to converting from local currencies to U.S. dollars. We measure our results on a constant currency basis. Our discussion below of our results includes certain non-GAAP financial measures that we believe provide important perspective with respect to underlying business trends. Other than free cash flow, any non-GAAP financial measures will be denoted as adjusted measures and exclude the impact from Certain Items, and certain metrics are stated on a constant currency basis.

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

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

Key Performance Indicators

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

•Adjusted operating income growth (non-GAAP);

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

•Adjusted EBITDA (non-GAAP);

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

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

•Free cash flow (non-GAAP).

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

Key Financial Definitions

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

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

34

Adjusted Operating Income and Adjusted Diluted Earnings per Share Growth

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

Adjusted EBITDA

EBITDA represents net earnings plus: (1) interest expense, (2) income tax expense and benefit, (3) depreciation and (4) amortization. The net earnings component of our EBITDA calculation is impacted by Certain Items that we do not consider representative of our underlying performance. As a result, in the non-GAAP reconciliations below for each period presented, adjusted EBITDA is computed as EBITDA plus the impact of Certain

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]