The companies on the Global 500 employ 70.2 million people, and their revenue represents more than one-third of the world’s GDP.

Fortune Global 500

With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

The 300 companies on this year’s list brought in over $12.5 trillion in revenue for the latest 12 months, with the median revenue figure at $24 billion.

America's Most Innovative Companies

The corporations on our annual list of the world's 500 largest companies combined to generate $41.7 trillion in revenue over the past year.

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

The corporations on our annual list posted aggregate revenues of $41 trillion for the second year in a row.

Industries included in the sector are diversified, electronics, and food and grocery.

Fortune Sector Leaders: Wholesalers

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

F500-2023-056-Sysco

Sysco, a food marketer and distributor, jumped up 14 spots on the Fortune 500 and posted a 34% increase in revenue in 2022, as restaurant demand—abnormally low during the height of the pandemic—rebounded. 
<ul> 
 	<li>The majority of Sysco's sales come from operations in the U.S., but international growth outstripped domestic in 2022, partly due to the reversal of more stringent pandemic restrictions abroad.</li> 
 	<li>The company sued a slew of meat companies in 2022, alleging that they violated antitrust regulations through price fixing. Although Sysco moved to settle the lawsuits, it is now mired in a legal battle with Burford Capital, which financed Sysco’s litigation.</li> 
 	<li>The workforce for the food marketer and distributor grew 22% in size from 2021, the third largest increase among the top 100 companies in the Fortune 500.</li> 
</ul>

Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

This year’s Fortune 500 marks the 68th running of the list.

F500-2022-070-Sysco

Food product marketer and distributor Sysco continued its slide down the Fortune 500 this year as the pandemic kept restaurant demand largely depressed. The company dropped 10 spots on this list, its revenue decreasing 3% to $51 billion. However, it managed to more than double its profits year over year, to $524 million—a fact that reflects the gradual loosening of COVID-related restrictions throughout the year. In its fourth quarter, the company’s sales finally surpassed 2019 quarterly volume levels—another encouraging sign.

Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

G500-2021-199-Sysco

<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;The coronavirus chewed through Sysco’s core grub-supplying business as restaurants around the world shuttered last year. Revenues for Sysco, America’s biggest wholesale food distributor, fell 12% year on year to $52.9 billion, a decline that caused it to slide four places in the Fortune 500 rankings. COVID-19 took a bite out of profits, too, causing a stomach-churning 87% drop to $215 million. The Houston-based company pivoted amid pandemic-related closures to help its eatery customers offer alternative options, like takeout-meal kits and contactless menus. But Sysco’s financial prospects are mostly tied to people’s desire to dine out again as the economy reopens.&quot;}" data-sheets-userformat="{&quot;2&quot;:12673,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:2,&quot;11&quot;:4,&quot;15&quot;:&quot;Calibri, Arial&quot;,&quot;16&quot;:11}" data-sheets-textstyleruns="{&quot;1&quot;:0}{&quot;1&quot;:280,&quot;2&quot;:{&quot;6&quot;:1}}{&quot;1&quot;:287}">The coronavirus chewed through Sysco’s core grub-supplying business as restaurants around the world shuttered last year. Revenues for Sysco, America’s biggest wholesale food distributor, fell 12% year on year to $52.9 billion, a decline that caused it to slide 20 places in the Global 500 rankings. COVID-19 took a bite out of profits, too, causing a stomach-churning 87% drop to $215 million. The Houston, Texas-based company pivoted amid pandemic-related closures to help its eatery customers offer alternative options, like takeout-meal kits and contactless menus. But Sysco’s financial prospects are mostly tied to people’s desire to dine out again as the economy reopens.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-60-Sysco

<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;The coronavirus chewed through Sysco’s core grub-supplying business as restaurants around the world shuttered last year. Revenues for Sysco, America’s biggest wholesale food distributor, fell 12% year on year to $52.9 billion, a decline that caused it to slide four places in the Fortune 500 rankings. COVID-19 took a bite out of profits, too, causing a stomach-churning 87% drop to $215 million. The Houston-based company pivoted amid pandemic-related closures to help its eatery customers offer alternative options, like takeout-meal kits and contactless menus. But Sysco’s financial prospects are mostly tied to people’s desire to dine out again as the economy reopens.&quot;}" data-sheets-userformat="{&quot;2&quot;:12673,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:2,&quot;11&quot;:4,&quot;15&quot;:&quot;Calibri, Arial&quot;,&quot;16&quot;:11}" data-sheets-textstyleruns="{&quot;1&quot;:0}{&quot;1&quot;:280,&quot;2&quot;:{&quot;6&quot;:1}}{&quot;1&quot;:287}">The coronavirus chewed through Sysco’s core grub-supplying business as restaurants around the world shuttered last year. Revenues for Sysco, America’s biggest wholesale food distributor, fell 12% year on year to $52.9 billion, a decline that caused it to slide four places in the Fortune 500 rankings. COVID-19 took a bite out of profits, too, causing a stomach-churning 87% drop to $215 million. The Houston-based company pivoted amid pandemic-related closures to help its eatery customers offer alternative options, like takeout-meal kits and contactless menus. But Sysco’s financial prospects are mostly tied to people’s desire to dine out again as the economy reopens.

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-179-Sysco

Sysco is America’s biggest and most profitable wholesale food distributor. While the Houston company took in $60.1 billion in 2019, up 2.4% from the year prior, it slid seven places in the Global 500 rankings. Rising food costs, due to inflation and international tariffs, plus higher labor expenses, exacerbated by a shortage of commercial truck drivers, gnawed at the bottom line. Regardless, Sysco grew profits by 17% to $1.6 billion, partly through layoffs, subsidiary consolidation in France, and facility closures in Canada and Europe. Now, as the coronavirus pandemic shutters restaurants around the world, Sysco’s new CEO, Kevin Hourican, formerly of CVS Health, will have to figure out how to keep the business cooking.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-056-Sysco

Sysco is America’s biggest and most profitable wholesale food distributor. While the Houston company took in $60.1 billion in 2019, up 2.4% from the year prior, it slid two places in the Fortune 500 rankings. Rising food costs, due to inflation and international tariffs, plus higher labor expenses, exacerbated by a shortage of commercial truck drivers, gnawed at the bottom line. Regardless, Sysco grew profits by 17% to $1.6 billion, partly through layoffs, subsidiary consolidation in France, and facility closures in Canada and Europe. Now, as the coronavirus pandemic shutters restaurants around the world, Sysco’s new CEO, Kevin Hourican, formerly of CVS Health, will have to figure out how to keep the business cooking.

This year's Fortune Global 500 generated $27.7 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune Global 500 generated $27.6 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 62nd running of the list.

The world's 500 largest companies generated $31.2 trillion in revenues and $1.7 trillion in profits in 2014. Together, this year's Fortune Global 500 employ 65 million people worldwide and are represented by 36 countries.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Sector

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Years on list

Previous rank

State

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

Sysco is a marketer and distributor of food and related products to the food service or food-away-from-home industries in the U.S., Canada, the U.K., France, and elsewhere. The company serves restaurants, hospitals and nursing facilities, schools and colleges, hotels and motels, industrial caterers, and other food service venues. Sysco was incorporated in 1969 and is headquartered in Houston.

Q4 2026

Q3 2026

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Sysco (SYY): Company Profile, Stock Price, News, Rankings

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Sysco

sysco

Good morning, everyone, and welcome to Sysco's first quarter fiscal year 2026 conference call. As a reminder, today's call is being recorded. We will begin with opening remarks and introductions. With that, I would now like to turn the call over to Mr. Kevin Kim, Vice President of Investor Relations. Please go ahead, sir.

Good morning, everyone, and welcome to Sysco's first quarter fiscal year 2026 earnings call. On today's call, we have Kevin Hourican, our Chair of the Board and CEO, and Kenny Cheung, our CFO. Before we begin, please note that statements made during this presentation that state the company's or management's intentions, beliefs, expectations, or predictions of the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act, and actual results could differ in a material manner. Additional information about factors that could cause results to differ from those in the forward-looking statements is contained in the company's SEC filings. This includes, but is not limited to, risk factors contained in our annual report on Form 10-K for the year ended June 28, 2025, subsequent SEC filings, and in the news release issued earlier this morning.

A copy of these materials can be found in the Investor section at Sysco.com. non-GAAP financial measures are included in our comments today and in our presentation slides. The reconciliation of these non-GAAP measures to the corresponding GAAP measures is included at the end of the presentation slides and can also be found in the Investor section of our website. During the discussion today, unless otherwise stated, all results are compared to the same quarter in the prior year. To ensure we have sufficient time to answer all questions, we'd like to ask each participant to limit their time today to one question. If you have a follow-up, please, we ask that you re-enter the queue. At this time, I'd like to turn the call over to Kevin Hourican.

Good morning, everyone. We appreciate your joining our call today. I'm pleased to report that Sysco delivered a strong financial quarter to start Fiscal 2026 with solid performance on the top and bottom line. Most importantly, we have inflected positive in our U.S. Broadline local business, and we are building momentum in our local business across the board. During our call today, we will share insights into the progress that we are making and highlight key growth initiatives that are fueling our performance improvement. After my update on our business progress, Kenny will highlight our financial results, and he will communicate why we are confident that we will deliver our full-year financial guidance. In Fiscal 2026, we plan to deliver profitable growth across USFS, international, and our Sigma segments, even in a macro backdrop that is less than compelling. Let's get started with our financial results on slide four.

In Q1, we exceeded our financial plan and delivered our second consecutive beat relative to consensus expectations. For the quarter, our strong performance was driven by volume improvement, coupled with expanded gross margins and solid expense control. Most importantly, in the quarter, our local volumes improved sequentially every month of the period. During the quarter, our rate of local volume improvement was more than 2x the overall industry traffic rate of improvement. The positive inflection versus industry traffic was the strongest in September, once again conveying the progress that we made throughout the quarter. Our Q1 results were driven by sales growth of 3.2% on a reported basis and up 3.8% to last year when excluding the divestiture of Mexico. Gross profit grew 3.9% and Adjusted EPS grew 5.5%.

Our financial outcomes were anchored by another compelling performance from our international segments, excellent work by our merchandising teams on gross profit expansion, strong productivity improvement from our supply chain, and a sales organization that is increasing their stride in growing our local business. Momentum is building at Sysco across the board, and we are confident we will accelerate that momentum throughout 2026. Given the importance of our local street business, I would like to go a bit deeper on our performance as seen on slide number eight. The chart displays our meaningful sequential progress in U.S. local over the past three quarters. Our Sysco Broadline local business inflected positive in the quarter, delivering volume growth of 0.4%. The USFS performance was 130 basis points stronger than our Q4 results, which significantly outpaced the improvement in restaurant traffic during the quarter.

Per Black Box, restaurant traffic in Q1 improved by 60 basis points. As a result, Sysco improved more than 2x the overall industry in the quarter. We are pleased that industry traffic improved, and it is even better to see Sysco improving at a faster clip. As I mentioned earlier, September was the strongest month of the quarter for Sysco and the strongest month of positive variance versus the industry. Importantly, Sysco has continued to make progress in October. Given the strong start to Q2, we anticipate that we will improve our total U.S. local by at least an additional 100 basis points in Q2 versus Q1, continuing our positive momentum. In Q1, our USFS total local business posted a negative 0.2% case volume result in the period. A friendly reminder that our U.S.

food service volume reporting includes an ongoing negative impact from an intentional business exit within our FreshPoint business, as previously communicated on our Q4 call. In Q1, the FreshPoint business exit negatively impacted our total local performance by over 50 basis points. When excluding this headwind from this quarter, our USFS total local business grew 0.3%. Turning from local to our international segments, we are extremely pleased with the performance being delivered by our international team. We delivered outsized sales growth of 4.5% on a reported basis and up 7.9% when excluding the divestiture of Mexico. International continues to deliver positive customer mix benefits, growing the local segment much faster than our total book of business. In fact, our international business posted local case volume growth of approximately 5% for the quarter.

The customer mix shift to local helped drive adjusted operating income growth of 13.1%, representing the eighth consecutive quarter of double-digit profit growth. The P&L strength was delivered from every single region in our international portfolio. Sysco's international portfolio is delivering strong top and bottom line growth within every major market we operate. Sysco's international business is a strong standout in the overall food away from home industry and will be a tailwind for Sysco for many years to come. It is equally important to note that Kenny has said previously, over the past three years, we have doubled the profit margin rate of our international business, and we will continue to work to increase international profitability while simultaneously taking share and growing the top line. We call this performing for today while transforming for tomorrow. Sysco's international team is doing a great job of embodying that ethos.

Before I segue into a brief update on our growth initiatives, I would like to do a quick shout out to our entire supply chain organization. Year to date in 2026, we have greatly improved our customer service levels on time and in full, and we have improved our health and safety performance by reducing accidents in our warehouses and on the road. Additionally, our operators have reduced product shrink, and they have increased colleague productivity across the board. In my six years at Sysco, this is the strongest quarter our supply chain has delivered from a service and cost perspective. I thank our entire supply chain for the great job they are doing. I have full confidence that the strong results will continue throughout 2026. Doing so will help us win new business and increase the retention of the customers we serve today.

I would like to now transition into a brief update on select growth initiatives that highlight the progress that we are making as a company. Let's start with our colleague population. In our first quarter, sales consultant retention improved meaningfully versus 2025 and versus our exit velocity of Q4. We have fully stabilized our sales colleague population, and we expect the overall productivity of our sales force to improve throughout 2026. As outlined in our recent proxy, our colleague engagement scores have strongly improved. Our colleagues are expressing positive sentiment in regards to overall engagement, team inclusion, and working in a rewarding and motivating culture with a compelling compensation program. These engagement drivers improved strongly year over year. We are bullish about our ability to continue our local progress momentum given the stability of our sales force.

Our sales organization is stable, and many talented industry sales professionals are becoming increasingly interested in working at Sysco. During our recent quarter, we introduced AI 360, our AI-empowered sales tool, and we are very pleased with the initial impact and colleague receptivity. Approximately 90% of our SEs are actively using the tool on a daily or weekly basis. While it remains early days, our outcomes data suggests that there is a strong correlation between high colleague engagement with the tool and improved volume and selling performance by those same colleagues. The work our sales teams do every day is hard. Each Sales Consultant serves dozens of customers, and the day of an SE is very dynamic. Throughout an average day, SEs answer questions, provide consultative services to restaurants, solve problems for their customers, and they actively sell.

AI 360 helps balance these activities and improve overall customer service levels while simultaneously increasing time for selling activities. The customer could ask if there are gluten-free options for their menu. They could ask for advice on seasonally relevant proteins for their upcoming menu change, or they could ask for cost savings ideas and suggestions given the overall inflation in the food basket. Our best SEs are seasoned at answering these types of questions while proactively selling. AI 360 helps all sales colleagues manage these conversations productively, reducing administrative barriers and increasing the amount of time that they can spend actively prospecting and selling. Another important initiative is our customer loyalty program, Perks 2.0. Perks targets our local street customers that buy the most, buy the most often, and deserve the absolute best from Sysco.

Over the past quarter, we have enrolled all eligible customers into the new Perks program, introduced the benefits to our customers, and have greatly increased our colleague visit frequency to these accounts. We have improved supply chain service levels to Perks accounts, and our 24 by 7 help desk is resolving Perks questions the first time 98% of the time. In Q1, we experienced an improvement in customer retention with Perks customers versus our broader book of business. Over time, we are very confident that Perks will be a differentiator for these customers, and as such, we will improve customer retention rates, and Perks will help us penetrate these customers with additional lines. In Q1, we can see the green shoots of positive impact of these initiatives on our local business.

During the quarter, we increased the number of new accounts opened versus prior year, and we simultaneously decreased the number of lost accounts versus prior year. That performance enabled an increased spread between new and lost of more than 220 basis points versus the prior year. The new lost positive spread was an incremental improvement of 40 basis points versus Q4, with September being the strongest period of the quarter. Our improved retention of colleagues is also helping us drive increased penetration of lines with existing customers. From Q4 to Q1, our penetration with existing customers improved by 90 basis points. This can be directly attributed to the increased selling skills of our team and the assistance they are receiving from technology tools. As I wrap up my prepared remarks, I submit we are very pleased with our Q1 results. We are building momentum across sales, merchandising, and operations.

Our team is increasing their pace month over month, quarter over quarter. We expect this progress to accelerate even further throughout 2026. While the external market is important, the improvement we are delivering at Sysco is being driven by growth initiatives within our control. Sysco Your Way is three years live in the market and continues to drive success. Total Team Selling is now two years in market and is continuing to accelerate progress and market share. We expect our new initiatives of AI 360, Perks 2.0, and pricing agility to build upon the success of Sysco Your Way and Total Team Selling and therefore fuel continued positive momentum in our local business. With that, I'd now like to turn the call over to Kenny. Kenny, over to you.

Thank you, Kevin, and good morning, everyone. Our performance this quarter was strong, representing a continuation of the improved operational momentum we established last quarter. In Q1, results included sales growth of 3.2% and Adjusted EPS growth of 5.5%, reflecting continued momentum across customer segments and geographies. This diverse customer and geographic mix is a competitive advantage for Sysco and a leading factor in why our company has grown annual sales in 54 of the past 57 years. Our strong performance highlights the powerful combination of Sysco's portfolio breadth and the ability to drive operational execution necessary to deliver compounding rates of improvement. Our Q1 beat and the momentum with volume growth and margin management gives us confidence to deliver our FY2026 guidance.

Our Adjusted EPS growth in Q1 included benefits from our disciplined strategic sourcing efforts, aiding in the delivery of 3.9% growth in gross profit, translating to 13 basis points of gross margin expansion year over year. The increase in both dollar and rates reflects structural improvements that we expect to carry over into upcoming quarters. Additionally, we continue to see returns from our investments in sales headcount and capacity expansion alongside benefits from ongoing efforts to optimize costs and prudent tax planning. This ultimately rendered outsized profit growth with Adjusted EPS growth of 5.5% coming in ahead of our expectations. This beat to consensus included higher sales and adjusted operating income, as well as net benefit from below-the-line items, of which the majority was driven by a lower effective tax rate.

Results this quarter highlight the power of our organization's collective effort to deliver profitable growth, allowing us to weather volatility in the current macro backdrop. Furthermore, our stabilized retention rates, paired with important Sysco-specific initiatives, generated business momentum that accelerated throughout the quarter and are expected to add to compounding improvements over time. The success generated by our international segment is a great example of the power behind the Sysco playbook. The positive momentum over the past few years continued in Q1 with sales growth of 4.5%, gross profit growth of 6.7%, and adjusted operating income growth of 13.1%. Our strategy in driving results across all geographies underscores the significant operational advantages enabled by our size and scale. We also recently expanded our specialty capabilities with the successful acquisition of Fairfax Meadow in early October, one of the UK's leading center-of-plate protein suppliers.

This addition follows last year's acquisition of Campbell’s Prime Meat and favorably positions our team in Great Britain to unlock incremental growth by leveraging center-of-plate and specialty capabilities through Total Team Selling in the North and South regions. We expect our positive momentum in International to continue this year as we leverage our investments to unlock future growth. Now, let's discuss our performance and the financial drivers for the quarter, starting on slide 12. For the first quarter, our enterprise sales grew 3.2% on an as-reported basis, driven by US Food Service, International, and Sigma. Excluding the impact of our divested Mexico business, sales grew 3.8%. Total US Foods Service volumes increased 0.1% and local volume decreased 0.2% in the quarter. US Broadline volumes increased 0.6%. These results were sequential improvements as compared to Q4.

For our USFS local business, this represents a sequential volume improvement of 120 basis points, outpacing the industry's 60 basis points traffic improvement for the quarter. It remains early in our fiscal second quarter, but I am encouraged to share that we are seeing continued year-over-year momentum in volume growth rates during the month of October. As Kevin highlighted, the benefits of our stabilized colleague population are fueling this performance alongside our newer sales professionals making meaningful contributions as they leverage training and tools to work up the productivity curve. These factors directly contributed to an acceleration in new account growth for the quarter. In fact, this was the highest rate of new account growth over the past 12 months, helping drive continued improvements in new loss spread. Again, another reason for our confidence in delivering our FY2026 guidance. These sequential volume improvements also benefited our USFS segment results.

Stable gross profit performance also included continued investments in our USFS segment. The year-over-year trends are an improvement versus FY2025 results, and we expect to deliver improving financial results in 2026 and beyond. Before moving along, I want to discuss a minor but important upgrade to our case volume reporting. As shown on slide 14, we are updating our reported case growth figure to now also include volumes related to our center-of-plate Buckhead Newport Meat and Seafood Specialty platform. Our reported results for this quarter and the prior year period include the update. Historically, these volumes were measured in pounds sold and therefore not able to be reflected in our reported case growth figures. The change is relatively minor, and as you can see on the slide, it accounts for an approximate 0 basis points-10 basis points impact on average over the last five quarters.

This change enhances our reporting to be more holistically reflective of our entire portfolio with the inclusion of this important growth engine. Important growth projects like Total Team Selling have the opportunity to shift cases from Broadline into Specialty Channel, and this upgraded volume reporting will provide more external visibility to contributions from this program. The reporting matches the agility of one Sysco world-class service to a customer across our portfolio. Additionally, Sigma results this quarter were outsized. This included 4% sales growth and 39% operating income growth. While we expect more moderate results for the remainder of the year, Sigma growth for FY2026 will be driven by operating efficiencies. Sysco produced $3.9 billion in gross profit of 3.9%, gross margin expansion of 13 basis points to 18.5%, and improved gross profit per case performance.

This notable margin improvement reflects effective management of product cost inflation and a mentality of continual improvement with cost savings driven by our strategic sourcing initiatives. Inflation rates in US Food Service were approximately 2.6%. International inflation on a constant currency basis was slightly higher for the quarter at 4.5%. Overall, adjusted operating expense was $3 billion for the quarter, or 14.2% of sales, a 14 basis points increase from the prior year. The increase was driven by planned investments in higher growth areas of the business with fleet, building expansion, and sales headcount, along with lapping $10 million in incentive compensation from the first quarter of the prior year, which negatively impacted adjusted operating expense growth by approximately 100 basis points and Adjusted EPS growth by approximately 150 basis points.

Corporate adjusted expenses were up 1% from the prior year, reflecting continued investments lapping incentive compensation from last year and other costs. This was balanced with a creative productivity cost out and corporate efficiencies, including improved insurance costs. Overall, adjusted operating income grew to $898 million for the quarter, reflecting continued strong growth in our International and Sigma segments. For the quarter, Adjusted EBITDA of $1.1 billion was up 0.1% versus the prior year. Now let's turn to our balance sheet and cash flow. Our investment-grade balance sheet remains robust and reflects a healthy financial profile. Our $3.5 billion in total liquidity remains well above our minimum threshold and offers flexibility and optionality. We ended the quarter at a 2.9x net debt leverage ratio. Turning to our cash flow, we generated approximately $86 million in operating cash flow, up 62% on a year-over-year basis, reflecting working capital optimization.

Our free cash flow in the quarter was a negative $50 million, reflecting typical seasonality and the timing of CapEx. Now, I would like to share with you our expectation for FY2026, as seen on slide 19. During FY2026, we remain on target with key guidance metrics. This includes reported net sales growth of approximately 3% to 5% to approximately $84 billion-$85 billion. These assumptions include inflation of approximately 2%, which we are seeing now, volume growth, and contributions from M&A. We continue to expect full-year 2026 Adjusted EPS of $4.50-$4.60, representing growth of 1%-3%, which includes an approximate $100 million headwind from lapping lower incentive compensation in fiscal 2025, an impact of roughly $0.16 per share. Similar to last year, we are providing full visibility to the carryover impact from incentive compensation for the year and by quarter, as outlined on slide 20.

In Q1, this carryover impact included a $10 million headwind, which equates to approximately $0.02 per share to Adjusted EPS. These headwinds impact year-over-year comparability for expenses in FY2026. That being said, we are pleased that our compensation system is a pay-for-performance program and that our structure is in place to properly motivate behavior and drive positive performance in the business in fiscal year 2026. Excluding the negative impact of the incentive compensation on 2026, our outlook for the Adjusted EPS growth will deliver approximately 5%-7%, with the midpoint in line with the long-term growth algorithm. To help with phasing for Q2, based on the current environment, we expect EPS growth of approximately 4%-6%, with the midpoint in line with the current consensus EPS of approximately $0.98. This includes positive total and local USFS volume performance.

As Kevin highlighted, we currently expect our USFS local volume improvement to improve at least 100 basis points sequentially quarter over quarter in Q2 2026. As previously disclosed, Q2 reported sales growth rates will also be impacted by the divestiture of our Mexico JV, which we fully lapped in December this year. This financial guidance assumes improvements to be driven by our Sysco-specific initiatives with industry foot traffic and macro environment similar to what we have seen over the past couple of quarters. We are proud of our strong track record of dividend growth and dividend aristocrat status. For FY2026, we remain on target for shareholders' returns to approximately $1 billion in dividends and approximately $1 billion in share repurchase plans for the year. This is all based on our current expectations and economic conditions and reflects based on M&A activity for the year.

Specific to our dividend, our expected payout for FY2026 equates to a 6% year-over-year increase on a per-share basis. In terms of leverage, we continue to target a net leverage ratio of 2.5x-2.75x and maintain our investment-grade balance sheet. Now turning to a few other modeling items. For FY2026, we expect a tax rate of approximately 23.5%-24% and adjusted depreciation and amortization now to be approximately $850 million, reflecting a now relatively longer useful life for our fleet assets balanced against underlying D&A related to continued capacity expansion domestically this year, as well as international markets over the coming years. Interest expense is expected to be approximately $700 million, while other expense is now expected to be approximately $65 million. CapEx is expected to be approximately $700 million, representing less than approximately 1% of sales.

This includes growth and maintenance CapEx as we grow into our investments we've made over the past few years, while also maintaining an eye towards driving ROIC by optimizing spend levels across the enterprise. Looking ahead, we are confident in our position and remain focused on leveraging our strength as the industry leader to drive customer growth while continuing to create value for our shareholders. With that, I will turn the call back to Kevin for closing remarks.

Thank you, Kenny. We are pleased with the strong performance we delivered in Q1, and more importantly, the significant progress we are making as a company across sales, merchandising, and operations. We posted a strong exit velocity in the quarter, and that momentum has continued into October. Our leadership team placed tremendous focus on improving our local business, strengthening our gross profit through strategic sourcing, and tightly managing our expenses through strong supply chain productivity improvement. The team stepped up and delivered a beat across all three areas. The strong performance from sales, merchandising, and operations enabled a compelling Adjusted EPS growth year over year. I'm proud of the team for their performance and the momentum that we are building. As we look toward the remainder of 2026, we expect to build upon the Q1 momentum and deliver against our targets.

Our top line results will further strengthen based upon sequential improvement in our local business throughout 2026. We have a diversified business with number one market share in the non-commercial sectors of food away from home. Non-commercial continues to grow year over year, and this segment is much more resilient in a challenging economic cycle. Our strong international segment performance gives us another form of diversification. Food away from home is a good business. It takes share from the grocery channel every year. As I've said before, the pie is getting bigger, and Sysco intends to take a bigger slice of that expanding pie. We are confident shareholders are positioned to benefit from our industry-leading dividend, compelling ROIC, intentional share buybacks, and improving financial results. Our performance in Q1 displays strong progress in the early innings of improving our local business. The momentum will continue throughout 2026.

I'm thankful for our leadership team and our entire 75,000 colleague population for the strong efforts to start the year. The collective team's hard work is poised to have a positive impact in 2026. With that, operator, we're now ready for questions.

Thank you very much, Mr. Hourican. Ladies and gentlemen, at this time, if you do have any questions, please press star one. You can always remove yourself from the queue by pressing star two. We do ask that you please limit yourself to one question this morning. We'll go first this morning to Alex Slagle of Jefferies.

All right, thanks. Good morning. The question on the local Salesforce productivity, if you could talk more about what you're seeing there and any metrics behind where we are on the curve. I guess specifically, the % of new hires that are now over that 12 or 18-month hurdle when productivity really inflects. I know leveraging new tools is a piece of this, but how this tenure and retention really correlates to the local case growth step up that you saw in September and October, because I know the industry was a little more sluggish during that period.

Good morning, Alex. Thanks for the question. This is Kevin. Just start with some of the key stats and facts plus 130 basis points of progress in Q1, a rate of improvement 2x the overall traffic improvement to the market, positive inflection of local. Really important to communicate what we shared on our prepared remarks. October, stronger than Q1, which Kenny then reiterated in his prepared remarks. We anticipate to make at least an additional 100 basis points of progress in Q2 versus Q1, because we're building momentum. That is the main point of our call today, is building momentum. It starts and ends, Alex, with your question, which is stabilized retention. We are exceeding our retention target year to date for our sales colleagues, which is enabling us to have less churn of our Salesforce coverage to our customer population.

We are absolutely working hard on improving overall productivity of our sales consultant population, and we're pleased with the progress that we're making in that regard. With more progress still to be made year to go, as you just annotated, because of the percentage of folks that work for us that are new versus what would be historical. We will continue to make progress in productivity. Key growth initiatives are helping in that regard, but I want to be fundamentally clear, it's the stability of the workforce that is creating the biggest force of positive momentum. With that, growth initiatives like Sysco Your Way and Total Team Selling are continuing to produce. We have Perks 2.0 and AI 360 that are helping us build momentum. Most notably, as I said, Q2, an additional minimum of 100 basis points of progress that we will make.

Kenny, anything else you'd like to share?

Yeah, so Alex, this is Kenny. I agree with Kevin. I'll add a few more points here. The bumper sticker is we are extremely confident in our momentum and our local case growth. As I said earlier, 100 basis points sequential improvement quarter over quarter in terms of volume. The question would be, why are you so confident? There's a few proof points from our side to what you just said. Our SDs are becoming more productive as they climb up the productivity curve. That's the reason why this quarter you saw the highest increase of new customer onboarding, which is driving that new loss spread that Kevin spoke about earlier. Number two is, as you know, there's a trailing benefit as well. Obviously, when you sign up a new customer, they help with the new loss, but they also drive penetration.

This quarter, we saw that pick up for us, 90 basis points improvement quarter over quarter. That helped a lot as well. Last but not least, the retention playbook that Kevin mentioned earlier, we're seeing that in our 12 to 18 months, kind of our newer SDs, but we're also seeing that with our experienced SDs. You have the entire portfolio of SDs climbing up the curve, which drives overall productivity.

Thanks. I just had a follow-up question. Just a really strong quarter, and the outlook for the second quarter looks pretty strong. Is there additional conservatism in the back half guide on earnings? You're up 5%-6% or so in the first half, so I just wanted to clarify.

I guess the question behind the question is how confident are you in your guidance and how should we think about the rest of the year? From our vantage point, we are really confident in our guide as we're coming off of a quarter beat. This is two quarters in a row that we beat. Just to clarify, the $0.03 beat this quarter, one penny of it was driven by higher expected sales, slowing it down to operating income, and the other $0.02 was driven by improvement in tax planning below the line. That, again, it's a nice beat all around the P&L. In terms of our confidence in the guide, Alex, we are extremely confident, and there's three reasons why. Number one is momentum, right? We continue to see, as Kevin said, September being the strongest month for us, and we're seeing the SDs climb up the productivity curve.

In our national business, we're also seeing momentum there as well. We're seeing nice recent wins, really strong retention as well, and we have really solid start ship dates coming up, and we expect national to pick up starting with Q2. We are taking share, and we're taking share profitably. The second piece why we're confident is most of the growth that we expect this year is really driven by initiatives within our control. We expect the macro environment to be similar to the past couple of quarters. This includes the commercial productivity, the supply chain productivity that Kevin mentioned earlier. We feel very, very good about the robustness of our P&L. Last but not least, just the fact that we have a strong IG balance sheet and a very diversified portfolio that positions well in any environment.

Thank you. We'll go next now to Edward Kelly of Wells Fargo.

Yeah, hi. Good morning, everyone. Thank you for all the color. I wanted to follow up on, you know, really on case volumes, I guess. As we think about, you know, total case volumes, the improvement there was, you know, more modest than what we saw in local. Can we maybe just speak to what you're seeing on the, you know, the total case volume side, excluding the local, maybe what you're seeing by customer type? As we think about, you know, things moving forward in the guidance, I'm curious, you know, you highlighted local volumes being better by about 100 basis points or so in Q2. Is that what you saw in September and October? Kenny, I thought I heard you say something about national account maybe picking up.

I'm curious as to how you think about that total local spread moving forward as well, if that should be somewhat similar or if local picks up with, sorry, total picks up again.

Okay, good morning, Ed. Thank you for the questions. This is Kevin. I'll start, and I will pick up on some of what Kenny mentioned relative to our national sales business. As it relates to your question about September and October, I'm not going to provide additional bi-month commentary for Q1 other than to say the following. Every single month in Q1 was better than the prior month, and July was better than June. Each month was sequentially better. Exit velocity continued into October, October being stronger than September. As Alex mentioned a moment ago, the overall market is not stronger in October versus September, which again shows that the improvement we're making is because of initiatives within our control. September for the overall market was not stronger than August, but September for Sysco was stronger than August.

It's a point of confidence that the progress we're making is within our control, being driven by the stability of our workforce and by key initiatives. As I just said a second ago, October is stronger than September. The confidence in our ability to say that Q2 will be at least 100 basis points better is directly fueled by what we're seeing in our performance outcomes quarter to date in Q2. As it relates to national sales, just a little bit more color on what Kenny said. We're confident we will improve our volume in national sales year to go for the following reasons. Number one, we have an incredibly high customer retention rate in national sales, greater than 98%. We have an incredibly strong national sales customer retention. Number two, non-commercial within national sales continues to perform really well. That's food service management, travel, and hospitality.

Our government business, all falling within non-commercial, continues to do well. The business that's under pressure within national, and this shouldn't be a surprise to anyone on this call, are large national chain restaurants. That business is down on a year-over-year basis from a traffic perspective, and it's down year-over-year from a volume perspective. We're growing our national in total because of strength that we're producing and delivering within non-commercial. To be clear, as it relates to the P&L, national restaurants would be the least profitable portion of the business. Therefore, as you're somewhat communicating in your question, a tilt to growth in local being higher from a contribution perspective is a net positive in the P&L. As we think about the rest of the year from a national sales perspective, Kenny mentioned this a moment ago. I'm just going to reiterate it.

We have strong wins already signed that have start ship dates in the year-to-go period. When we include the strong retention of existing customers, plus the start ship dates that are coming in the year to go, our volume will pick up in national for the full year. If you think about the year in aggregate, Kenny, I believe it's we have national and local growing similarly for the full year. Over the longer course of time, we would anticipate local growing faster than national, but for fiscal 2026, growing roughly in parity. Last comment for me on national, we are definitively taking a share in total in the national segment, which includes non-commercial. By throwing international as a part of the answer to this question as well, similar pattern happening in our global business.

I mentioned in my prepared remarks our local business and international up 5% from a volume perspective. That growth is happening in every single geography internationally. We're doing extremely well in local, taking share in local and every international geography. The national segment within international is similar to what we're seeing in the U.S., where national restaurants in the global setting are slightly down, but we are very pleased with the profit growth that we're delivering in large part because of that growth in local internationally. Kenny, is there anything else you'd like to say?

Yeah, no, I agree with Kevin. Just one thing to add is, you know, just to clarify, you know, Sysco, we improved every month from a growth rate standpoint in local throughout the quarter. We inflected versus the market the greatest, actually, in September. That has continued based on the first few weeks of October. Just to recap the phasing for the year in terms of local, the first quarter was USFS was down 0.2%. We expect to step up sequentially by at least 100 basis points in Q2. Given the momentum that we have and the initiatives that are within our control, we'd expect that step up even further in the back half of the year for the full year to be positive.

Thank you. We'll go next now to John Heinbockel of Guggenheim.

Hey, Kevin, two questions. If you adjust for FreshPoint, it looks like Q2 is probably up, I don't know, 13%, 14%, 15%, somewhere in that ballpark. I know the ambition is to get close to 4%, where you're growing your sales force. Maybe you talk about the ability to get there if the macro backdrop stays this weak. I don't know how close you can get to that, if there's anything else to tweak to make up for that. That's question one. Then two, penetration up 90 bps. What's happening with drop size? Has that now inflected positively? I would think if it has, that's going to have a positive impact on profitability in the U.S. soon, pretty soon, I would think.

Yeah, good morning, John. Thank you for the question.

Just to go back to where crystal clear on the at least 100 basis points of improvement, that's versus USFS. The starting place is -0.2. We will improve USFS total local volume by at least 100 basis points in Q2. That is what we're communicating today. We're building momentum, each month better than the prior month. We do not believe that external environment improving is required to continue to perform and to continue to improve because of the stability of our workforce, the lapping of lost customers a year ago, and the increased impact of our initiatives that we launched throughout Q1. That's the clarity on USFS volume. As it relates to penetration improvement driving drop size improvement on a year-over-year basis, we increased penetration with existing customers. Absolutely, that had a positive pull-through to drop size.

As I said in my prepared remarks, I've been here for six years now. It was by far the strongest quarter we had from a supply chain productivity perspective and service outcomes perspective. We measure service outcomes as a measure of on time and in full. In addition, cost per piece shipped, we had a very strong quarter in our supply chain, fueled by two things. Kenny and I talk about this all the time. Retention improvement in our supply chain has been notable and significant, and that started more than 12 months ago. This time a year ago, I was talking about a stable workforce in our supply chain. We are now seeing the benefit of that stability of retention in our supply chain. Our drivers are more productive. Our selectors are more productive. They're working more safely. They're having fewer accidents out on the road.

Shrink results are improved year over year. When you put all that together, cost per piece improved versus our plan, and we had a beat in supply chain cost per piece versus our own plan for the quarter. Job size is a part of that, John. It is a part of it. The more notable part is the improvement in retention and the improvement in productivity from our supply chain workforce. Kenny, anything to add?

Yeah, just one thing to clarify. You mentioned the 4% growth or volume on local. That is in perpetuity, right? Assuming if you grow your sales force by 4%, in perpetuity, your volume will increase by 4% as well. For this year, we're not expecting that level, given the fact that we have a new core coming in. It takes 12 to 18 months for them to get to speed. That is not, it's a lower number than 4%, but it is positive for the year.

will go next now to Jake Bartlett with Truist Securities.

Great. Thank you so much for taking the question. Mine was on the composition of the sales growth guidance that you reiterated. Specifically on the food cost and inflation, I think you said that you expect to continue to expect 2%. It was much more. It was to, I think, 3.4% in the first quarter. One is I want to make sure we're talking about the same thing kind of definitionally. Last quarter, you had said that you were at that 2% as of the time of the quarter, but you reported the 3.4%. Trying to just make sure I understand what the trends are in the product cost inflation and making sure I understand kind of your guidance of 2% relative to the 3.4% currently.

Yeah, Jake, we understand and appreciate the question. We've guided the full year at approximately 2% from an inflation perspective. You're right to point out that the total inflation rate in Q1 was a bit higher than that, mostly from international, which Kenny can provide some additional color in a second. In the spot moment in the month that we're in, the rate of inflation in the domestic U.S. business has come down from the number that you reported back to that approximately 2% rate because we're starting to see some deflation in select categories. Poultry on a year-over-year basis is deflationary. Dairy on a year-over-year basis, because we're lapping avian flu from a year ago, is now deflationary. Produce has been deflationary for going on 12 months now.

The beef market continues to be inflationary at the high single-digit rates, but also slightly down from where it was, which was higher previously. Kenny says this all the time. We have 13 attribute groups. The inflation number that we quote is the aggregate of all of them. Our full-year PEG is approximately 2%. It came in a little bit hotter than that in Q1. We're seeing it reduce to that targeted 2% rate in the quarter that we are currently in. We're confident we can grow our business profitably and deliver our operating income and EPS growth in spite of whatever the inflation or deflation is over time. We've proven that over the past six years in an inflation cycle, we can expand GP, and even in a deflation cycle, we can expand GP. Kenny, is there anything you'd like to add?

Yeah, yeah. Hey, Jake. You know, we're currently operating what I would call a normalized inflationary environment. In Q1, US Broadline inflation was roughly 2.6%. And to Kevin's point, international was roughly 4.5%. That's really driven by a few markets, Canada, which was tariff-related, as well as GP, which is 7% wage inflation mandated by the government. The real takeaway is that even with this environment, we're seeing total GP up 4% and expansion of GP margins by 13 basis points for our company. As Kevin said, we have a diverse set of product categories. We don't over-index on one or two of them. Long story short, you know, we are operating in this environment that sits around 3% and it bodes well for the overall industry.

The last point that Kevin mentioned, the center of the plate, you know, we do expect the center of the plate to moderate towards the back half of the year as well.

We'll go next to Jeffrey Bernstein with Barclays.

Great, thank you very much. Just curious on the broader restaurant industry. You mentioned easing trends to close the quarter. I think you said, and we've seen industry data that showed September was weaker than August. I think you mentioned that October was weaker than September. Yet Sysco is going the opposite direction, which is encouraging. Just wondering if there's any particular drivers of the industry weakness that you've seen, whether by segment or geography or income levels or ethnicity. It seemed like we were moving in the right direction until a couple of months ago. Just wondering the drivers that you've seen that have led to that slowdown. I had one follow-up question.

Okay, yeah, thank you, Jeff. I'll start. This data is publicly available, so I'll just reference the black box data. Q1 was better than Q4, positive 60 basis points of traffic. In aggregate, Q1 was better than Q4. It is appropriate to point out that September was softer than Q1 in its entirety, and that has continued into October. It's QSR and larger national chains that are underperforming relative to the overall book of business. Independents, and this is a good thing for a food service distributor, independents are performing better. Whether or not that is a secular trend and if that's something that's going to be long continued into the future, it remains to be seen. At the present moment, independents are performing better, restaurants, independents are performing better than large national chains, and particularly better than QSR. You understand our profitability.

You understand that that trend is actually a positive for Sysco. The more important point, though, is our performance relative to the market. While the overall traffic to market was softer in September versus the quarter, we experienced the complete opposite, September being our strongest period of the quarter, which Kenny then referenced as the spread, the positive inflection, the delta between us and the overall market widened. It widened even further in October, and we anticipate that will continue as the year progresses. Because of the initiatives that we launched, we have an opportunity to take share. Reminder, despite our being the biggest in this space, we have 17% market share. We have a meaningful opportunity to profitably grow our business regardless of the overall macro conditions. You said you had a follow-up, so I'll toss to you for that.

Yes, just on slide eight, it seems like you guys made a draw a line in the sand saying at least 100 basis points of sequential improvement from the down 20 bps in the first quarter. Just wondering whether there's any, I mean, it sounds like you're encouraged by October, but the industry is clearly volatile. I know some would say it looks aggressive, especially when it's not fully in your control. I know you said it's a lot of self-help driven, but your confidence in the 100+ basis points if the industry were to continue to slow as we've seen in September to October, again, seems like a big promise to make with still 2+ months to go and the industry slowing.

We're confident in our ability to deliver the at least +100. We're one third of the way through the quarter. October stronger than September, despite what the market overall is doing. We have line of sight towards the ability to make progress in the year to go for a host of reasons. The stability of our workforce initiatives, AI 360 is not even 45 days old, and our colleagues are increasing their usage of it. They're asking it questions, getting real-time answers. Do you have cauliflower pizza crust in stock in Cleveland today? It gives them the exact item number, the quantity on hand. They can sell it right then and there. If they want selling tips on how to introduce that product to the customer, they can get the answer to that too. Teach me how to sell this item, on and on and on.

The AI tool gets smarter. In each and every at bat, we have thousands of colleagues using it on a daily basis. The tool's utility is increasing every day. Just an example, Perks 2.0, not live for more than 45 days. Our customers are beginning to see the differentiation in the service that they're providing. I want to be really clear about one thing. Perks 2.0 doesn't cost Sysco any more money. This is about prioritization of these customers over the average book of business that we have. Why? Because they're the most profitable and important customers that we have. Their delivery window is going to be their preferred window. Our on-time rate to that window will be higher. Their fill rate on the products they order will be higher.

If they have a damaged case on their delivery, we're going to give them credit immediately versus having them have to wait a couple of days. These are thorns in the side in the customer experience. These initiatives are picking up progress. They're picking up their impact over time, and therefore we are confident in our ability to deliver on the at least +100 in Q2. Kenny, anything you'd like to add?

Yeah, I agree with Kevin. We're confident, Jeff, for two reasons. One is, as you said, the majority of our initiatives that yield the 100 basis points improvement is within our control. This is the SE retention. The other piece is we're also encouraged by the fact that we continue to see select geographies already hitting our growth expectations, driven by SE additions, improved retention, and that's carrying into Q2 as well. We have proof points of actual data that certain markets are already hitting that stride. The last thing I would add is about foot traffic. Foot traffic is a proxy, if you will, for our business. It's important. We also have a big part of our business that are not tied to restaurants. Two thirds of our national portfolio are actually what we call recession-resilient, non-commercial categories: FSM, food service management, education, healthcare, and the like.

Even within restaurants, if you think about it, Jeff, we have QSR, the casual dining, the fine dining. We're pretty well diversified from a restaurant, non-restaurant, and restaurant standpoint. We also have international, which serves as a strategic counterbalance, enhancing the resiliency and stability of our total overall business.

We'll go next now to Sara Senatore at Bank of America.

Thank you very much. I just wanted to, I guess, two questions. The first is I wanted to take maybe the guidance question from a different perspective. Obviously, the top line is very encouraging, but I think, as you said, you know, guidance for Q2 is sort of in line, and you didn't raise the full year. Maybe you could just talk a little bit about the extent to which some of the investments that you're making maybe start to moderate, and you see a little bit more of that flow through. I don't know if it's later this year or if it's next year. I just have a quick follow-up.

Thank you, Sarah, for the question. Your question is more around the investments and what we're seeing around the flow through around it. Here at Sysco, we're playing the long game, right? We're investing in our business, and we're also seeing incremental return to our clients from the investments we made in the previous quarter and period. For example, the two biggest investments we made as a company, number one is the Salesforce. We've hired 750+ people in the past couple of years. As we mentioned earlier, we're seeing all of them climb the productivity curve right now and driving new account growth penetration. That's the reason why you're seeing an outsized growth versus the market in Q1. We expect that to continue in Q2 and the outer quarter. Nice return on investments, and the pacing is there. We're doing it the right way as well.

We're taking share profitably. That's really important. Taking share profitably. That's the reason why you're seeing both dollar expansion on the margin as well as the rate expansion on the margin. In terms of the other big investment that we have in our portfolio, it's the 10 new facilities that we're building around the world. Seven are in the U.S., three are international. I can tell you firsthand, we have a strong pipeline, robust pipeline that can fill the capacity in the slots. As time progresses and it kind of goes hand in hand in glove, as CP customer productive, you're still filling the pipeline with accretive cases through our DC. Overall, we feel very confident that, for example, in USFS, as time progresses, we will continue to make strides on operating income, gross profit, and volume and achieve leverage in the outer periods.

Great, thank you. Just on the market share point, I know you talked about having relatively low market share, 17%. I know it's even lower in specialty. As we think about those share gains, should I just think a sort of a reversal of what we saw last year where Sysco obviously ceded some ground, just as you have some transition in the SE group? Do you have a kind of a target market share in mind as you think about whether it's, again, the broad lines where I think you're closer to 30% versus specialty where it's kind of 9% or high single digits? Anything, any kind of color on how you think about that market share?

Yeah, Sarah, it's Kevin. Great question. To be clear, you know, again, been here six years. We've taken market share. We've grown market share each and every year for the past six years in total. In the past fiscal 2024, excuse me, fiscal 2025, we over-indexed in national, clearly taking share in national, and we underperformed our own expectations in local. This year, we intend to take share in both national and local in total, as evidenced by the positive inflection, and we're growing faster than traffic at the present period in our local business. National, I already addressed earlier with my prepared remarks, so I won't repeat that. As it relates to where will outsized share gains come from, that was the second part of your question. You actually just quoted all the stats. It's going to come from specialty.

We have a very strong, significant, and robust broadline business. We have an opportunity to meaningfully grow our specialty produce, our specialty meat, our equipment and supplies, our Asian foods, and our Italian foods businesses. Sometimes that gets delivered on a broadline truck, so the cases may show up in broadline. Sometimes that gets delivered on a specialty truck. The growth is about the following key things. Having the product available. Kenny talks all the time about these are unique items. These are bespoke items. These are custom-cut items. These are the direct request of an end customer items. That's why they're called special. It's about the product first. We definitively have that product available when most broadliners don't. Number two, it's about having a sales colleague who's an absolute expert in that category, be it produce or protein or any of the other businesses.

We have dedicated specialists who know these categories. Part of that incremental headcount investment that Kenny talked about is in that specialty business. The last within specialty is the service model. There are some restaurant customers who, for those specialty categories, want a very late in the evening cutoff, and they want it delivered six, seven days a week because it's fresh product. They pay for that. We build that into the pricing of those products, which therefore have a higher gross margin. We can check all of those boxes. We can check those boxes in geographies where broadliners cannot, and we can check those boxes where most smaller specialty entities cannot. To be crystal clear, that's who we're competing against in specialty. We're not competing against big names. We're competing against thousands of very small companies who have one van, two vans in a specific geography.

To be clear, we buy more local produce than any other company in the geographies we compete with, and we're able to provide that product to our customers in a cost-effective manner. We are going to meaningfully grow our specialty business. It's approximately a $10 billion business today. We said at our investor day, we see $10 billion of growth coming from specialty over the next period of time. Sarah, we haven't said what percent market share that will drive in the next year. We'll save that for a future investor day. We appreciate your question.

Thank you. Ladies and gentlemen, we do have time for one more question this morning. We'll take that now from John Ivankoe of JPMorgan.

Hi, thank you very much. The question is on independent restaurants and specifically the difference in performance between existing account penetration and new account generation. Certainly, some of the data that we see is that the industry is actually growing a surprisingly high number of new units, and many of those units are actually driven by independents. Firstly, tell us if you see the same. It does sound like a number of the tools that you have, such as AI 360 and Perks 2.0, sound to be to drive market share at existing business. Can you talk about some of the tools that the Salesforce now have to specifically generate new account penetrations?

Yeah, excellent, John. Thank you for the question. Appreciate it. What we're pleased about in Q1 is we saw improvement from the new loss spread, and we also saw improvement from penetration. We saw a 220 basis point improvement year over year in new loss spread and a 40 basis point improvement in that same metric Q4 into Q1. The even more important point is what happened with penetration. We increased our penetration with existing customers by 90 basis points from Q4 into Q1. I do attribute that to two things. AI 360 is increasing our sales colleagues' ability to know what to be selling on that given visit, on that given day, to solve problems in a timely manner, and to provide suggestions on what could be sold. It is absolutely a penetration-full, direct, focused selling effort. Perks is the exact same thing.

We're not interested per se in growing the number of Perks customers. We're interested in retaining those customers at a high rate and penetrating even further with those customers because, as the other John always says, that's the most profitable case on the truck. These tools are meaningfully focused on increasing penetration. To the other part of your question, which is, okay, what about new? The largest opportunity for improvement there is the incremental headcount investment that we've made. Kenny talked about it, 750+ people over the past couple of years. Those folks need to build their book of business. We provide them a starter book of business. They need to go fill in that business over time. The accounts that we seed them with come from existing sales and another

Sysco (SYY) Q1 2026 Earnings Call Transcript

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