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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Previous rank

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Key Financials (last Fiscal Year)

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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 ($)

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EPS % Change (10 year annual rate)

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Total Return to Investors (last year)

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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

Welcome to Sysco's Second Quarter Fiscal Year 2025 Conference Call. As a reminder, today's call is being recorded. We will begin with opening remarks and introductions. I would now like to turn the call over to Kevin Kim, Vice President of Investor Relations. Please go ahead.

Good morning, everyone, and welcome to Sysco's 2nd quarter fiscal year 2025 earnings call. On today's call, we have Kevin Hourikin, our Chair of the Board and Chief Executive Officer and Kenny Cheung, our Chief Financial Officer. 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 ks for the year ended June 29, 2024, subsequent SEC filings in the news release issued earlier this morning.

A copy of these materials can be found in the Investors section at cisco.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 Investors 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 to one question.

At this time, I'd like to turn the call over to Kevin Hyrkins.

Good morning, everyone, and thank you for joining us today. Our financial results this quarter delivered improved performance and positive momentum with stronger top and bottom line year over year growth rates as it compares to our Q1. Cisco is delivering value over the short term with disciplined P and L management and remains well positioned to advance our business strategy, while delivering upon our financial commitments presented at our recent Investor Day. Importantly, we expect the positive momentum from our Q1 into Q2 to accelerate in the second half of the year as we benefit from sales and operations improvement initiatives, investments in our business and the potential for stronger foot traffic to restaurants as we begin to lap last year's negative 4% in late spring. Our leadership team is 100% focused upon executing with excellence with a strong plan in place to deliver our full year 2025 guidance.

Turning to Cisco's performance during the quarter on Slide 5. I'm pleased to report that Sysco delivered over $20,000,000,000 of total revenue, a growth of 4.5% versus fiscal 2024 and a sequential improvement from Q1 growth rates. The revenue growth was driven by U. S. Foodservice volume growth of 1.4% and moderate inflation of 2.1%.

From a volume perspective, we generated 4.3 percent national volume growth, 3% volume growth in our international segment and a decline of 0.9% in our U. S. FS local case business. Our national sales business continues to perform at an exceptionally high level with strong customer retention and we continue to onboard high quality net new national business. Our international segment posted very compelling results with adjusted operating income up 26 0.5%.

The strong profit growth was generated in part by local case growth of +4.7 percent year over year. We continue to advance the Cisco playbook in our international geographies, expanding our assortments, introducing Sysco branded products and increasing boots on the street sales headcount to win new local business. I will discuss our international business in more detail in a few moments. In the USFS business, we are making solid progress on our top priorities across our multiple business units. Local case performance this quarter, excluding the impact of our DAWN business, was down 1.9%.

It was a choppy quarter with hurricane impacts at the beginning of the quarter and holiday shifts that negatively impacted the end of the quarter. The year over year comparison was also impacted by strong growth rates from the prior year. Specific to our local business, we are seeing progress in our internal measures of success, and we remain confident that our efforts will help deliver improvements in the second half of fiscal twenty twenty five. More on this in a few moments. Lastly, our top line growth included strong contributions from Cigna, where sales were up 10.6%.

Now that we have summarized Sysco's top line performance, let's briefly discuss the external market. Foot traffic to restaurants in the U. S. Was down approximately 2% for the Q2, which represents a moderate improvement from Q1. We expect to see continued improvement in traffic trends as we head into the second half of the year.

Inflation for the industry has maintained at approximately 2%, which is within the normal range when we look at cost of goods sold inflation over the course of decades. From a bottom line perspective, Cisco delivered adjusted EPS of $0.93 a growth rate of 4.5% versus prior year, consistent with our expectations. The EPS growth was driven in part by the aforementioned volume growth, disciplined margin management and an organization wide focus around efficiency improvement. Margin management will remain a point of strength for the full year. As we stated on our Q1 call, we anticipate that our strategic sourcing efforts will pick up momentum as the year progresses.

As a result, we expect the positive momentum in gross profit from Q1 to Q2 to step up in the second half of the year as we have a direct line of sight to the actions that will deliver our full year margin performance. On the expense side of the ledger, we anticipate continued improvements in our supply chain efficiency, driven by improving colleague retention statistics and improved transportation route optimization. These routing efforts will reduce miles driven, lowering our cost, while simultaneously improving our ability to deliver on time and in full to our customers, a win win. Now I'd like to provide a brief update on our main business units, starting with international, where we grew our top line 3.6% for the quarter, and we grew adjusted operating income by an impressive 26.5%. Our strong profit growth is being driven by continued operational improvements, increased procurement synergies and a strong customer mix.

Local case growth in our international segment is up 4.7% year over year. Adding to our international success is a strong strategic sourcing program that is expanding globally and the successful growth of our Cisco URAE local sales program. Lastly, we are deploying enterprise technology that is improving efficiency. In short, our international segment is running the Cisco playbook. It's working, and we expect the positive momentum with international to continue into the second half of the year.

Our national sales business continues to deliver compelling top and bottom line results. For the quarter, national volume was up 4.3% as our supply chain solutions domestically and internationally resonate with our largest customers. Cisco has the assortment breadth, supply chain footprint and technology solutions to be a one stop shop for large customers. We make it easy to do business with Cisco with dedicated account teams that help enable customer growth, support their business expansion and oftentimes support the customers' international expansion. The success we are having in national sales is flowing through from top to the bottom line as these customers help improve our route density, cover our fixed costs, increase our procurement synergies with key suppliers.

We expect our national sales business to continue to deliver strong results due to high customer retention and continued new customer wins. Lastly, I'd like to provide an update on our local business. As I mentioned a few moments ago, we expect an improvement in our local performance in the second half of the year. We are making progress with our sales team hiring and training, and our sales compensation program is motivating the right behaviors. We see clear signs of progress on important drivers of the business.

As an example, our new customer win rate has ramped up significantly over the last quarter. The increased new customer win rate is attributed to our new compensation program and the increased sales professional headcount we are onboarding. New customers typically start by providing a portion of their business to Cisco. And as we work to what we call sell around the room and penetrate additional product categories with these newer customers, the positive contribution from them will grow over time. The new customers we're winning today are going to be the strong, mature penetration customers of tomorrow.

We expect our customer win rate progress to carry into our second half and into fiscal 2026. A second proof point is the progress that we are making with sales colleague headcount. Our sales consultant retention has substantially improved from Q1 to Q2 as the change management associated with our new compensation model has taken root and colleagues are experiencing the benefits of the new program. Additionally, we are making solid progress against our 2025 hiring goals with quality hires from the industry. Another proof point within our local segment is the improvement that we are making with our service proposition.

Over the past quarter, we improved our service offering to our customers with increased customer facing bill rates and improved on time delivery performance. Our supply chain continues to make strong progress month over month and that is evidenced by our Net Promoter Score, which improved solidly on a quarter over quarter and year over year basis. We expect continued improvement in service levels in our second half of fiscal twenty twenty five. Historically, NPS improvement has a strong correlation to business growth in future quarters. The sales and volume growth comes from increased customer retention and by winning new lines from existing customers.

Lastly, we increased our distribution capacity over the past quarter with new and expanded facilities to support our business. I am most bullish on our Italian platform expansion. Over the past 6 months, we have entered new geographies with our Greco Italian platform, and we will continue to expand to new geographies in the coming calendar year. The winning formula is clear, have the right Italian products at the right price, sold by colleagues that are full time Italian cuisine experts. Our success has been replicated in each new Greco market we have entered.

I expect compelling results from the Italian platform in the second half of fiscal twenty twenty five and for years to come as we advance our Greco expansion efforts. We have substantial white space to be filled in the coming years. As I wrap up my comments this morning, I will summarize with the following. We made progress from Q1 to Q2 in top and bottom line results. We delivered upon our financial expectations for the quarter, and we have posted progress on important strategic initiatives.

The progress on key initiatives like sales professional hiring and increasing our new customer win rate will fuel our improvement in the second half of fiscal twenty twenty five. When combined with the very compelling business performance we are already delivering from national sales business, our international segment and our Sigma segment, we have the confidence to reiterate our full year financial guidance. I am pleased with the progress that we're making in our supply chain from a service and cost perspective, in our merchandising ranks from a gross margin management perspective and with our sales team from a skills development perspective. The combination of the progress across these three vectors will build over time. I want to personally thank Cisco's 76,000 plus colleagues and our entire leadership team for their continued focus and energy.

We have the best team in the industry, and I'm proud to work with them every day serving Cisco's global customers. I also want to thank our supplier partners who have helped Cisco improve service levels to our customers over the past quarter. I'll now turn it over to Kenny, who will provide a detailed review of Q2 performance and select fiscal year 2025 guidance commentary. Kenny, over to you.

Thank you, Kevin, and good morning, everyone. As Kevin highlighted, our results for the quarter were driven by improvements of the core financials drivers: sales, gross profit and operating expense. Our success in Q2 was broad based across business segments and our product portfolio. We generated positive operating leverage and sequential improvements to gross profit, while continued operating expense management rendered adjusted operating margin expansion. Here at Sysco, we have levers across our P and L and our actions are driving structural improvements to the business.

We believe the table is set for continued improvement in the second half of our fiscal year. For example, this was on full display in our international segment this quarter. The positive momentum over the past few years continued into Q2 with sales growth of 4%, gross profit growth of 7% and adjusted operating income growth of 26.5%. The Cisco playbook is delivering across all geographies, driven primarily by our size and skill advantages in these markets, along with M and A contributions from the recent specialty additions to the portfolio, which are performing well. We expect our positive momentum in international to step up further in the second half of the year.

In addition to improved P and L results this quarter, I would be remiss if I did not highlight the compelling competitive advantage that our strong balance sheet and robust cash flow generation provides. On that note, I am pleased to announce the upsizing of our share repurchase plan. For this fiscal year, we now expect to buy back $1,250,000,000 of shares, up from our prior plan of $1,000,000,000 The full year amount has the potential to flex up further depending on M and A activity for the remainder of the year. Further, we take both our role as a dividend and our track record of dividend growth seriously as we are one of only 4 consumer staples company that have grown dividends for the past 25 plus years. This year, we expect to distribute to shareholders $1,000,000,000 in dividend payments.

In total, we are now on target to return over $2,250,000,000 to shareholders through share repurchase and dividends in FY 2025. Our balance sheet affords us the financial tools and flexibility to make the right decisions both for the short term and long term as we seek to grow our business while driving industry leading returns on invested capital and generating a double digit TSR for our investors. Now turning to a summary of our reported results for the quarter, starting on Slide 14. For the Q2, our enterprise sales grew 4.5%, in line with our guidance in the financial algorithm we shared during Investor Day. Our sales results were driven by U.

S. Foodservice growing 4.1%, international growing 3.6% and Sigma growing 10.6%. With respect to volume, total U. S. Foodservice volume increased 1.4% and local volume decreased 0.9%.

DAWN positively impacted U. S. Foodservice volumes by 1.6% and local volumes by 1%. National volume growth in the quarter also included margin expansion. Local results were lapping the highest rates of growth in the prior year as well as headwinds from weather disruptions and unfavorable holiday timing impact on a year over year basis this year.

We produced $3,700,000,000 in gross profit, up 3.9% and gross margin of 18.1%. On a dollar basis, we are encouraged by the expanding gross profit dollar per case trend and continued opportunities around our strategic sourcing efforts. Looking to the second half, we expect to execute on secured actions to expand the depth and breadth of our strategic sourcing to buy better, to sell better. This includes working with existing suppliers, looking for incremental win win opportunities, often adding items to existing contracts and scoping out work with new suppliers. Additionally, continual improvements in sourcing will come, allowing us to lever the scale of our North America presence, which includes our CAD6 billion business.

As I mentioned earlier, strategic sourcing is one example of structural improvements we expect to enhance gross profit in the second half of our fiscal year. Our gross profit dollar growth reflected our ability to continue to effectively manage profit inflation, which came in at 2.1% for the total enterprise, consistent with our expectations. This is the average across all of our major product categories with our teams regularly managing through pockets of fluctuations. We are doing an excellent job managing our corporate expenses with continued progress year over year. We have been extremely disciplined and reduced corporate expenses by 1.3% from the prior year on an adjusted basis, driven by efficiency work that we deployed in FY 2024 and incremental actions during the quarter.

We are making continued progress with our financial algorithm target of lowering corporate expenses to 1% of sales. Overall, adjusted operating expenses were $2,900,000,000 for the quarter or 14.2 percent of sales, a 13 basis point improvement from the prior year, reflecting supply chain and corporate expense efficiencies. Our supply chain operations remain fully staffed. We continue to improve colleague retention year over year and we are building on productivity gains with piece per labor hour improvements compared to the prior year. Our outbound fill rates to our customers also improved during the quarter, which will help drive increased NPS and sales in the coming quarters.

Turning to fuel expenses, we remain disciplined around the pacing of our sales professional hires and will continue to focus on the quality of return on investments of our new hires as they continue to climb up the productivity curve. These deliberate investments are well laddered with this year's hires expected to start driving financial contributions next year and thereafter. Overall, adjusted operating income was $783,000,000 for the quarter. Positive momentum continued in our international segment with adjusted operating income growing 26.5% during the quarter. Our teams are successfully applying the fiscal playbook to drive continued growth and margin expansion.

Adjusted operating income growth also benefited from Sigma contributing 11.8 percent profit growth as our focus on operational excellence resulted in improved profits from higher productivity alongside growth of new customers. For the quarter, adjusted EBITDA increased to $969,000,000 or up 4.4%. Our balance sheet remains robust and reflects the organization's healthy financial profile. We ended the quarter at a 2.76 times net debt leverage ratio. We ended the quarter with $11,800,000,000 in net debt and approximately $3,100,000,000 in total liquidity, which is substantially above our minimum threshold.

Turning to our cash flow. We generated approximately $498,000,000 in operating cash flow and $331,000,000 in free cash flow for the first half with the year over year variance driven by timing related to working capital, which also includes the opportunistic purchase of inventory with solid economics. For the full year, we continue to expect strong conversion rates from adjusted EBITDA to operating cash flow at approximately 70% and free cash flow at approximately 50%. Our strong financial position enabled us to return approximately $444,000,000 to shareholders this quarter. We remain confident in growing both top line and bottom line of results in FY 2025, in line with our financial algorithm.

Importantly, we are reiterating our 2025 guidance metrics as seen on Slide 20. During FY 2025, we expect net sales growth of 4% to 5%. Net sales growth includes continued inflation of approximately 2%, positive volume growth of low single digits and contributions from M and A during the year. All in, we are guiding to adjusted EPS growth of 6% to 7%, in line with our financial algorithm range. We continue to believe the second half will improve from investments in the sales professionals and other growth initiatives.

Additionally, we expect margin benefits as we leverage our unique scale advantages to expand strategic sourcing efforts to include a wider basket of categories, more efficiently harness our global buying power and improve inbound freight logistics to minimize touch points across our networks. Combined with recent actions around our organizational optimization at our GSE, we expect over $100,000,000 of annualized savings that benefit gross profit dollars and operating expenses starting in the second half. This figure highlights our ability to be disciplined with expenses and offset macro industry environment headwinds in the first half and fund business investments this year. This is consistent with our focus on driving continual business improvement and we plan to explore additional actions going forward. In addition to these self help initiatives, which we expect to drive the majority of our second half lift, we continue to expect a stronger macro and modest industry traffic improvements.

All in, we expect a stronger rate of adjusted EPS growth in the second half of the year, growing at a positive high single digit growth rate with similar rates of growth across Q3 and Q4. Consistent with our ROIC focus, we divested our joint venture in Mexico in mid December. This is expected to impact international sales by approximately $500,000,000 on an annualized basis and be immaterial from a profit standpoint. From a modeling perspective, international top line results will be negatively impacted from an as reported perspective for the next year as Mexico will be out of the number starting next quarter, but accretive to international margins. We do not plan to recast prior year numbers.

However, we do plan to provide additional context to aid in modeling this segment until we lap at sales at the end of this calendar year. In the upcoming quarters, we will provide growth comparisons with and without Mexico in an effort to add clarity around operating trends and enhance year over year comparability. Further, we plan to continue our practice rewarding our shareholders through the distribution of essentially all of our annual free cash flow with over $1,000,000,000 in dividends. And as outlined earlier, dollars 1,250,000,000 in share repurchases. This is another signal of continued confidence in our business.

Specific to share repurchase, we know that this figure can flex up depending on M and A activity. For the year, we expect to operate within our stated target of 2.5 times to 2.75 times net leverage and maintain our investment grade balance sheet. The adjusted tax rate for FY 'twenty five is now expected to range from 24.5% to 25%, slightly lower than our initial view. Adjusted depreciation and amortization remains unchanged at approximately $800,000,000 for the year. In closing, I'm confident in our FY 'twenty five guidance and our ability to deliver on our long term financial algorithm with levers across the business.

We believe we are taking the right steps for long term benefit of the business and unlocking value that will reward our shareholders. I look forward to our progress ahead as Cisco is positioned to win. With that, I will turn the call back to Kevin for closing remarks.

Thank you, Kenny. I appreciate all you are doing for Cisco. The disciplined leadership that you and your team display are a real strength for our company. Before we turn it over to questions, I want to reiterate the following key points. We are extremely pleased with our national sales, international and Sigma business results.

We believe these businesses are positioned to continue delivering compelling performance in the quarters and years to come. Our local business is in the midst of a business improvement phase. We have the right actions in place, and we are showing clear signs of progress by increasing our new customer win rate and improving Net Promoter Scores. That improvement trend has given us the confidence to reiterate our full year guidance and to equally reiterate our overarching financial algorithm. Our solid balance sheet affords us the opportunity to return value to our shareholders while we are profitably growing our business.

The announcement today of raising our share repurchase target for the year is just one example of the discipline we will deploy to ensure that our shareholders benefit along our journey. More to come as we have additional announcements in the future. Our future is bright as we expand our competitive moats, leveraging our size, our scale and our talented people. With that, operator, we're now ready for questions.

Our first question will come from Mark Carden with UBS. Please go ahead.

Good morning and thanks so much for taking the question. So you talked about some expected tailwinds in the second half of the fiscal year. How have January sales trended to date, just especially when considering some of the headwinds related to the Southern winter storms and Los Angeles area wildfires? And then would you expect this to have an outsized impact on either your local or national businesses in 3Q?

Good morning, Mark. It's good to hear from you. It's Kevin. Just let me start with tailwinds and reasons for confidence in the second half. I'll briefly talk about January, toss to Kenny for additional thoughts.

Why we have confidence in our second half is the following. As I said in our prepared remarks, the businesses that are doing extremely well, International, National and Sigma have clear momentum, building momentum we expect for continued extremely strong performance from each of those 3 business segments. Within our local business, as I talked about on the call. We have internal lines of measurement that are clearly showing progress, new customer win rate, NPS improvement, the colleague hiring and training that we're doing, which will result in forward facing increased momentum, again, on that new customer win rate. And then DC capacity expansions that occurred over the last 6 months, that those buildings enabled increased throughput, increased customer ability to serve, etcetera, etcetera.

So when we put all that together, we have a clear path towards delivering the outcomes that we expect to deliver, which will then allow us to deliver the financial guidance that we have put forward. Specific to January, just one reminder, January is the lowest volume month of the year, and that's the case for the entire industry every year. You're absolutely right that the California wildfires had an impact on Southern California. The even bigger topic is the Southern storm that impacted a large portion of the United States. We live and work in Houston, and it was quite the event in Houston this last week.

We're working through it. Our goal is to serve our customers during those periods of time. We're proud of is we're the 1st distributor to be out on the road delivering to customers, getting them back on their feet, working through that progress with our customers as they reopen and grow their business. As it relates to does it impact national or local more, impacts them equally. So we're not concerned about that.

Kenny, any additional comments on January? Sure.

Hey, Mark, good morning. Taking a step back, overall, in terms of industry foot traffic, in terms of what we're seeing, Q2 improved from Q1. Q1 was down 4% and Q2 was down 2%. But that said, as Kevin mentioned, January was a bit choppy with weather and other disruptions. And one thing to note, if we had to choose a month to have uncontrollable disruptions, it would be January, given the majority of our Q3 OI and EPS lands in February March.

Now we are encouraged by the fact that in select geographies, we are already seeing nice progress made based on our investments in SC additions as well as our new comp model. And then one thing to kind of call out, most of our comments are usually U. S. Based, but for international, strong momentum there. We saw a strong push on Christmas, holiday year end on both local and national volume and that momentum is carrying into January.

So the bottom line is we are confident we can operate in any environment as proven in prior periods, which supports our confidence in our FY 2025 guide.

Great. Thanks so much guys and good luck.

Our next question will come from Lauren Silverman with Deutsche Bank.

So I wanted to follow-up on the prior one related to the U. S. Foodservice case growth. Organic volumes fairly flat quarter over quarter, industry traffic I think improved almost 200 basis points quarter over quarter. So can you help us understand what you're seeing in terms of underlying dynamics and any market share dynamics during the quarter?

And then Kenny, I think you mentioned $100,000,000 in annualized savings for to help GP dollars in the back half. Just can you expand a bit on some of the drivers of that? Thank you.

Hey, good morning, Lauren. It's Kevin. I'll start. I'll talk about Q2 versus Q1, Q1, and Kenny will add on to that, and then he'll directly address your $100,000,000 question. It's an important and good one for us to be very clear on the drivers there.

Q2 performed as we expected. That's the punch line and that's the headline. It was a choppy quarter. That's the word I used in my prepared remarks. The beginning of the quarter had a substantial hurricane impacting our Florida market and up into the Carolinas, which you know all about.

And then the exit of that quarter was significantly impacted by holiday shift, which impacted the entire industry. So you've read about that through all of the retail names that are out there. But one last week between Christmas excuse me, Thanksgiving and Christmas that does have an impact to the restaurant industry and unfavorable calendar shift as it relates to that. And then the bow around that is we had a very strong volume growth in Q2 last year. So we're lapping strong numbers from a year ago, but that's because of that calendar component that I just talked about.

The prior year was very favorable from a calendar perspective. So when we put all that together, and I know it's choppy and there's a lot to be normalized there, when you normalize for those things, Q2 was solid versus Q1 from an underlying performance perspective. And the more important point is, we have the direct line of sight towards why it will be even stronger in the year to go. The direct line of sight towards the hiring we're doing, the new customer win rate, which is building momentum, the net promoter score momentum that we're driving, which will forward view add to customer retention and increased penetration. So we put all that together.

We do have confidence in our ability to improve local and the success that we're driving in the other three segments is notable and repeatable. Kenny, your comments to that and then turn it over to you.

Yes. So let me add on to Kevin's comments on the confidence in local. We do expect to see improved sequential performance of local case growth in the second half of the fiscal year. So let's be clear about that. And why is that?

If you look at the underlying themes of our business, most of our incremental sales professionals were hired at the end of FY 'twenty four and beginning of this year. So with each month, these sales professionals are more productive, therefore, contributing more on the sales side. The comp model is working very well. We're tracking it very closely. And it does 2 things just to remind everybody.

It incentivizes for growth and grow profitably. And we're seeing both right now through our new customer acquisition account that Kevin referenced in his prepared remarks. And then last but not least, as we approach the second half of the year, Kevin talked about this for the Q2, most of our lift is driven by self help and we will be lacking a more favorable comp in the second half of the year, which yields our confidence that we talked about in the prepared remarks. And Lauren, in terms of the $100,000,000 annualized savings, as you heard as part of our guide, we are expecting a second half of the year step up on EPS growth. So to put it to some real numbers, the first half is roughly, call it, 3.5% EPS growth and the back half will be a high single digit growth rate.

And I'll go slow on this part. One of the key drivers is that we have line of sight to $100,000,000 of annualized savings to benefit both the gross profit line and the operating expense line. So to your second part of the question, what are some of the details and examples that we can talk about? So there's a few buckets. The first bucket is strategic sourcing.

The second bucket is supply chain efficiencies, I. E, inbound logistics that we spoke about prior. And then last but not least, organizational optimization, which has been implemented recently already. So that's been done for the quarter. So the good news is we are starting to see savings from this month, meaning January, and we will continue to execute on the other actions, which we have strong line of sight to by the end of this quarter.

We expect these savings to obviously materialize this year, but because they're structural, they will also continue into the first half of 2026 as well. These savings highlight our ability to be disciplined with expenses and offset any macro or industry environment headwinds from the first half and allows us to reinvest in the business as well. Now we're not stopping here. We plan to explore additional actions going forward. These benefits are already in the current guide and it's another proof point that our ability to grow EPS by high single digits in the second half of the year.

Again, the indexing of the benefits were geared towards GP. Hope that's helpful.

Thank you, Our next question will come from John Heinbockel with Guggenheim Securities. Please go ahead.

Hey, Kevin. I have a sort of multipart on the sales force. So just remind us, I think you've got cohorts coming out of training every 6 to 8 weeks or something like that. Do you is it when I think about the number of people that are going to come off a non compete, so how do you think about that? And then I think you guys seeded these salespeople with 5 accounts and they have to double that over 6 months.

So when I try to think about all of this cadence wise, right, and when you return to positive territory on local case growth, and I recognize you're down whatever 1% to 2% today. Is that possible toward the end of this fiscal year? Or is that really a fiscal 'twenty six dynamic?

Good morning, John. Thank you for the question. I'll start with your cohorts and the cadence. We track it in exactly the way that you're describing. So we hire in waves, we train in waves, we deploy them out to geographies, as Kenny has said many times targeted geographies.

There are growth geographies, there are market share capture opportunities. We have Italian platform expansion opportunities and the likes. We're being very surgical about where we deploy. Each cohort is tracked longitudinally over time to how they're performing and where they need to be performing. The headline without disclosing confidential internal information is each of the cohorts is where we need them to be on their maturity curve.

We're pleased with the performance from the 2024 hiring, as Kenny said, which was mostly Q4. And we're pleased with the initial performance of the hires that we have done this fiscal year. They are onboarding new customers. That's the primary go get for the new hires. We give them a small little territory, as you quoted, and now they got to be out on the street knocking on doors, and we're pleased with their performance.

You're right for competitive hires, there's a non solicit window and we honor that. We're extremely respectful of that. So to the point you're making roughly on average 12 months after they onboard, there's a second wave of growth that can come from those new hires as those restrictive agreements expire and we anticipate benefit in 2026 for that behalf. So the headline is, we're pleased with the hiring, we're pleased with the quality of the staff we've onboarded, and we're pleased with the trajectory of their new customer performance. See my prepared remarks, notable increase in our new customer performance in Q2.

As it relates to when to return to positive growth, here's what I can say today. We are confident in our ability to show and display progress quarter over quarter, and we anticipate that we will show you numerically that progress on a quarter over quarter basis due to the reasons that we said in answering Lauren and Mark's question that I prefer not to repeat because we're done with the length of the call and the number of questions that we anticipate. But it's a combination of the colleague hiring, the improvement in service we're delivering, the progress we're making on the new customer win rate and the expansion of our DQC capacity. You put all that together, we're confident in displaying numerically progress as this year progresses on a quarter over quarter basis.

Thank you. Our next question will come from Jeffrey Bernstein with Barclays. Please go ahead.

Great. Thank you very much. Just one clarification on your last comment and then a question. Just the assumed continued improvement that you're talking about. Can you share any color in terms of the case growth that you're assuming for the back half of the year relative to, I guess, I think you said the industry was most recently down 2%.

I'm just wondering what your assumption is for your business versus perhaps the industry in the back half of the year? And then separately, just wondering if you can comment on the Sysco brand sales. I know as a percentage of total sales, it seems like the U. S. Broadline and the local both have been easing.

Just wondering your confidence in your ability to accelerate that mix. It would seem like compelling offering in a challenge macro where the consumers are looking to or the restaurant customers are looking to save. So just wondering your thoughts on those Sysco branded sales? Thank you.

Yes, certainly, Jeff. Good morning. Let me just clarify the minus 2% that you mentioned there that was foot traffic to restaurants in Q2. That wasn't a Cisco performance number. So the minus 2% is foot traffic.

We're expecting moderate, AKA slight improvement in that as we enter our second half, mostly in that spring, light spring timeframe, as I mentioned in my prepared remarks, where we're going to be lapping it down 4 in foot traffic. We don't anticipate that the industry will experience a minus 3 or minus 4 on top of what last year's minus 3, minus 4 from a traffic perspective. So there'll be some natural gravity based improvement tied to foot traffic. With that said, Kenny says this all the time, we don't need for that to occur in order to deliver our numbers. We are prepared to have the ability to deliver our financial algorithm despite economic external conditions.

We have plenty of self help activities in place that can move the needle for Cisco. So the traffic improvement in the macro is reasonably immaterial to the overall year to go performance. It's the $100,000,000 of economic improvement that Kenny talked about. That's actually the primary driver of first half EPS growth versus second half EPS growth. That's a meaningful and big deal.

And as he said, direct line of sight with most of those actions or many of those actions already completed, and that will have wrap value into next year. So again, it's progress in local over time, and I have to emphasize this work, profitably. We could easily move the needle from a volume perspective if we wanted to by being rational in price. And we're just simply not going to do that. We are going to be disciplined.

We are going to be consistent. We're going to run the Cisco play on the street. And the primary way we need to show the progress is by incremental sales headcount, which we've talked a lot about and we are where we need to be in that forward facing progress. So we need to show it to you in the outcomes and we're going to do that as this year progresses. To the second part of your question, which was Sysco brand, Sysco brand is performing as we expected it would for the quarter and we do not have concerns with Sysco brand.

It's a fortress for us. It is an incredible program. You know the stats, 46% of our cases in the local sector have a Cisco brand on the truck. And we're pleased with our performance. The primary causal is national suppliers really struggled during the past couple of years.

And during that period of time when supplier inbound fill rate to us was declining Sysco brand, we were doing a really good job of being in stock on those Sysco branded product and there was some shift towards Sysco brand and there's a little bit of a return to the mean in that regard. With that said, we are confident over the longer time horizon that we can and will grow Sysco brand. We're constantly introducing new items. We're constantly partnering with the supplier community to bring innovation forward through Sysco Brand. And as you said, when consumers are looking for value and customers are looking for value, Sysco Brand is a great alternative.

So again, the main causal for the year over year decline is a natural impact of suppliers of national branded products improving their fill rate, which net net for the industry is a good thing. We know select customers really want national brand and we're in stock on those products, we obviously give that customer choice. So Jeff, that's the answer to the second part of your question.

Hey, Jeff. Good morning, Kenny. Just one thing to add on the local piece of it. Kevin and I usually speak a lot about U. S, but international is doing really well on local case growth.

For the quarter, local case growth for international grew 5% and every market in our international business grew local case growth. It wasn't just one region, one area. So give you an example, Canada, our biggest market grew 5%. GB, 2nd biggest market and international grew 8%. And on Sysco brand, Kevin is right, but one thing to put things in perspective, it is still at over $22,000,000,000 business and it's still growing profitably as well with strong penetrations across our business.

And we do expect penetration rates to start to stabilize as we improve our local performance on the forward. And I think one thing to note as well is, it's important to call that as we talk about the $100,000,000 especially around strategic sourcing that impacts fiscal brand and also non Sysco brand as well, which is one of the reasons why we're expecting leverage in the second half of the year.

Our next question will come from John Ivankoe with JPMorgan.

I hope these numbers are more or less apples to apples, but certainly correct me if I'm wrong. Earlier in the call, you talked about Cisco local case volumes that were down 1.9%, excluding Don. And in your presentation, that the overall restaurant industry was down 1.6%. So I just did want to get kind of a sense of that underperformance, maybe real pockets of opportunity that you may see that might be based on customer type, maybe there's a specific geography that's really been lagging for you that we're not aware of, if it's a share per account issue or if new customers have been entering the industry that perhaps you just been having the tracking. So are there really any major pockets of underperformance that you see nationally or even locally that you can kind of come and say, hey, we fix these couple of things and then we go from underperformance to outperformance?

Good morning, John. Appreciate the question. Yes, the traffic to restaurants down 2% is what we quoted in our prepared remarks for the quarter. And again, there's 3 months in the quarter, but for the 3 months in its entirety traffic down to, you're right on the local number, Sands Don down 1.9. Again, when you strip out all the noise and I don't like talking about the noise, but I'm going to because you asked the question, it's a choppy quarter, a major hurricane that impacts the beginning end of the quarter, a huge calendar shift that occurs at the end of the quarter visavis the holidays, net net you put that all together.

Sysco (SYY) Q2 2025 Earnings Call Transcript

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