Q4 2025 Sysco Corp Earnings Call

July 29, 2025

Mhm.

Operator: © The Ultimate Parody Site! Please stand by, your program is about to begin. Welcome to Sysco's 4th Quarter Fiscal Year. 2025 conference call. As a reminder, today's call is being recorded. We will begin with opening remarks and I would now like to turn the call over to Kevin.

Operator: Please stand by. Your program is about to begin. Welcome to Sysco's fourth 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. Sir, you may begin.

Please stand by your program is about to begin.

Welcome to Cisco's fourth quarter fiscal year 2025 conference call. As a reminder, today's call is being recorded.

Operator: Vice President of Investor Relations. Sir, you may begin.

Kevin Kim: Good morning everyone and welcome to Sysco's fourth quarter fiscal year 2025 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 and 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 29 June 2024, subsequent SEC filings, and in the news release issued earlier this morning.

Kevin Hourican: Good morning, everyone, and welcome to Sysco's fourth quarter fiscal year 2025 earnings call.

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 sir you may begin.

Operator: On today's call, we have Kevin Hourican, our chair of the board and CEO, and Kenny Cheung, our CFO.

Operator: 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 Security 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 29, 2024, subsequent SEC filings, and in the news release issued earlier this morning.

Good morning everyone and welcome to Cisco's fourth quarter fiscal year 2025 earnings. Call, on today's call, we have Kevin herin, our chair of the board and CEO and Kenny, Chao our CFO before we begin, please note that statements made during this presentation that state. The companies are Management's, intentions beliefs, expectations, or predictions of the future are forward-looking statements within the meaning of the private security litigation Reform Act and actual results could differ in a material manner.

Operator: A copy of these materials can be found in the investor section at sysco.com.

Kevin Kim: A copy of these materials can be found in the investors section of sysco.com. Non-GAAP financial measures are included in our comments today and on 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 be found in the investors section of our website. During the discussion today, unless otherwise stated, all results are compared to the same quarter as 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 question, we ask that you re-enter the queue. At this time, I'd like to turn the call over to Kevin Hourican.

A copy of these materials can be found in the investors section of sysco.com. Non-GAAP financial measures are included in our comments today and on 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 be found in the investors section of our website. During the discussion today, unless otherwise stated, all results are compared to the same quarter as 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 question, we ask that you re-enter the queue. At this time, I'd like to turn the call over to Kevin Hourican.

Operator: 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 be found in the investor section of our website.

Operator: During the discussion today, unless otherwise stated, all results are compared to the same quarter in the prior year.

Operator: 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 question, we ask that you re-enter the queue.

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. 10K for the year, ended June 29th 2024, 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 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 Gap. Measures is included at the end of the presentation slides, and can 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.

Kevin Hourican: At this time, I'd like to turn the call over to Kevin Harkin. Good morning, everyone. We appreciate your joining our call this morning. Today, we will recap our fourth quarter performance, highlight our four-year 2025 outcomes, provide an update on key initiatives that will drive our momentum in the new fiscal year, and finally, Kenny will share our view on our guidance for fiscal year 2026. Let's get started with a highlight of our fourth quarter financial outcomes. We are pleased to report that our fourth quarter adjusted results exceeded our expectations. Traffic to restaurants improved throughout the quarter, and Sysco-specific initiatives delivered improved financial outcomes, top to bottom.

Kevin Hourican: Good morning everyone. We appreciate your joining our call this morning. Today we will recap our fourth quarter performance, highlight our full year 2025 outcomes, provide an update on key initiatives that will drive our momentum in the new fiscal year. Finally, Kenny will share our view on our guidance for fiscal year 2026. Let's get started with a highlight of our fourth quarter financial outcomes. We are pleased to report that our fourth quarter adjusted results exceeded our expectations. Traffic to restaurants improved throughout the quarter and Sysco specific initiatives delivered improved financial outcomes top to bottom. The progress accelerated throughout the quarter and has continued into July for Sysco. All considered, Q4 was a relatively steady quarter from the perspective of restaurant foot traffic on a monthly basis. April traffic trends for the industry were down 1.5%, May was down 1%, and June was down approximately 0.9%.

To ensure we have sufficient time to answer all questions. We'd like to ask each participant to limit their time today, to 1 question, if you have a follow-up question, we ask that you re-enter the Queue. At this time, I'd like to turn the call over to Kevin hearken.

Good morning everyone. We appreciate your joining our call this morning. Today, we will recap our fourth quarter performance, highlight our 4 year, 2025 outcomes, provide an update on key initiatives that will drive our momentum in the new fiscal year. And finally, can you will share our view on our guidance for fiscal year 2026.

Let's get started with the highlight of our fourth quarter Financial outcomes. We are pleased to report that our fourth quarter adjusted results. Exceeded our expectations.

Kevin Hourican: The progress accelerated throughout the quarter and has continued into July for Sysco. All considered, Q4 was a relatively steady quarter from the perspective of restaurant foot traffic. On a monthly basis, April traffic trends for the industry were down 1.5 percent, May was down 1 percent, and June was down approximately 0.9 percent. The quarter overall was down 1.1%, which represented approximately 190 basis points of improvement versus Q3's traffic level of down three. It is good to see the industry stabilizing after a rocky start to the calendar year.

Traffic to restaurants improved throughout the quarter in Cisco specific initiatives delivered. Improved Financial outcomes top to bottom

The progress accelerated throughout the quarter and has continued into July for Cisco.

All considered Q4 was a relatively steady quarter from the perspective of restaurant, footrest traffic.

On a monthly basis. April traffic trends for the industry were down 1.5%.

Kevin Hourican: The quarter overall was down 1.1%, which represented approximately 190 basis points of improvement versus Q3's traffic level of down 3%. It is good to see the industry stabilizing after a rocky start to the calendar year. I'll now pivot to Sysco's results for the quarter. As you can see on slide 4, we delivered sales results of $21.1 billion, up 2.8% on a reported basis and up 3.7% to last year when excluding the divestiture of our Mexican business. We delivered adjusted operating income of $1.1 billion, up 1.1% to last year and adjusted EPS growth of $1.48, up 6.5% relative to last year. Importantly, we made solid progress on our $100 million profit improvement target with a strong contribution in Q4 from our strategic sourcing efforts. Our international segment posted another compelling quarter with 3.6% top line growth on a reported basis and up 8.3% to last year.

The quarter overall was down 1.1%, which represented approximately 190 basis points of improvement versus Q3's traffic level of down 3%. It is good to see the industry stabilizing after a rocky start to the calendar year. I'll now pivot to Sysco's results for the quarter. As you can see on slide 4, we delivered sales results of $21.1 billion, up 2.8% on a reported basis and up 3.7% to last year when excluding the divestiture of our Mexican business. We delivered adjusted operating income of $1.1 billion, up 1.1% to last year and adjusted EPS growth of $1.48, up 6.5% relative to last year. Importantly, we made solid progress on our $100 million profit improvement target with a strong contribution in Q4 from our strategic sourcing efforts. Our international segment posted another compelling quarter with 3.6% top line growth on a reported basis and up 8.3% to last year.

May was down 1% in June, was down approximately 0.9%.

The quarter overall was down 1.1%, which represented approximately 190 basis points of improvement versus Q3's traffic level of down 3.

Kevin Hourican: I'll now pivot to Sysco's results for the quarter. As you can see on slide four, we delivered sales results of $21.1 billion, up 2.8% on a reported basis, and up 3.7% to last year when excluding the divestiture of our Mexican business. We delivered adjusted operating income of $1.1 billion, up 1.1% to last year, and adjusted EPS growth of $1.48, up 6.5% relative to last year. Importantly, we made solid progress on our 100 million profit improvement target with a strong contribution in Q4 from our strategic sourcing. Our international segment posted another compelling quarter, with 3.6% top-line growth on a reported basis and up 8.3% to last year when excluding the divestiture of Mexico.

It is good to see the industry stabilizing after a rocky start to the calendar year.

I'll now pivot to Cisco's results for the quarter.

As you can see on slide 4, we delivered sales results of 21.1 billion up 2.8% on a reported basis and up 3.7% to last year when excluding the destitute of our Mexican business.

We delivered adjusted operating income of 1.1 billion up 1.1% to last year and adjusted, EPS growth of 1.48 up 6.5% relative to last year.

Importantly, we made solid progress on our $100 million profit improvement target, with a strong contribution in Q4 from our strategic sourcing efforts.

Kevin Hourican: When excluding the divestiture of Mexico, International posted strong local case growth of +4% in the quarter. Adjusted operating income increased 20.1%, representing the seventh consecutive quarter of double-digit profit growth. Strength was delivered from across all international geographies with notable strong performances across from Canada, Great Britain, Ireland, and Latin America. We expect a continuation of strong international financial performance in fiscal 2026 within USFS. Our national sales business delivered 1.3% volume growth for the quarter. Unpacking those results further, our non-commercial national business continues to perform at a very high level with strength in food service management, education, and travel and leisure. Most importantly, gross profit within national sales grew almost three times faster than volume due to the excellent efforts by the team to improve profitability of the national business.

When excluding the divestiture of Mexico, International posted strong local case growth of +4% in the quarter. Adjusted operating income increased 20.1%, representing the seventh consecutive quarter of double-digit profit growth. Strength was delivered from across all international geographies with notable strong performances across from Canada, Great Britain, Ireland, and Latin America. We expect a continuation of strong international financial performance in fiscal 2026 within USFS. Our national sales business delivered 1.3% volume growth for the quarter. Unpacking those results further, our non-commercial national business continues to perform at a very high level with strength in food service management, education, and travel and leisure. Most importantly, gross profit within national sales grew almost three times faster than volume due to the excellent efforts by the team to improve profitability of the national business.

Kevin Hourican: International posted strong local case growth of plus 4% in the quarter. Adjusted operating income increased 20.1%, representing the seventh consecutive quarter of double-digit profit. Strength was delivered from across all international geographies with notable strong performances from Canada, Great Britain, Ireland, and Latin America. We expect a continuation of strong international financial performance in fiscal 2026. Within USFS, our national sales business delivered 1.3% volume growth for the quarter. Unpacking those results further, our non-commercial, national business continues to perform at a very high level, with strength in food service management, education, and travel and leisure. Most importantly, gross profit within national sales grew almost three times faster than volume due to the excellent efforts by the team to improve profitability of the national business.

Our International segment posted another compelling quarter with 3.6% Top Line growth on a reported basis and up 8.3% to last year. When excluding the destitute of Mexico,

International posted, strong, local case growth of plus 4% in the quarter.

Adjusted operating income increased 20.1% representing the seventh consecutive quarter of double digit profit growth.

From Canada, Great, Britain Ireland, and Latin America.

We expect a continuation of strong International financial performance in fiscal 2026.

Within us FS our national sales, business delivered, 1.3% volume growth for the quarter.

Unpacking those results, further our non-commercial National Business continues to perform at a very high level.

With strength and Food, Service management, education, and travel and nature.

Kevin Hourican: The strong profit improvement was delivered through customer optimization and the creation of win-win provisions in our contracts that motivate customers to partner with Sysco to optimize efficiency. Our SYGMA segment delivered sales growth of 5.9% for the quarter, driven by strong customer wins versus prior year. For the year, SYGMA grew top line 8.3% and bottom line 12.5%. It was a record year for our SYGMA business. From top and a bottom line perspective, it is important to note that the SYGMA top line growth rates will begin to moderate in the coming year as we begin to lap large customer wins earned in 2025. On the local side of our business, we delivered negative 1.5% case volume within our US foodservice segment during the quarter. As shown on Slide 8, this was a meaningful 200 basis point step up versus our Q3 outcomes. US

The strong profit improvement was delivered through customer optimization and the creation of win-win provisions in our contracts that motivate customers to partner with Sysco to optimize efficiency. Our SYGMA segment delivered sales growth of 5.9% for the quarter, driven by strong customer wins versus prior year. For the year, SYGMA grew top line 8.3% and bottom line 12.5%. It was a record year for our SYGMA business. From top and a bottom line perspective, it is important to note that the SYGMA top line growth rates will begin to moderate in the coming year as we begin to lap large customer wins earned in 2025. On the local side of our business, we delivered negative 1.5% case volume within our US foodservice segment during the quarter. As shown on Slide 8, this was a meaningful 200 basis point step up versus our Q3 outcomes. US

Kevin Hourican: The strong profit improvement was delivered through customer optimization and the creation of win-win provisions in our contracts that motivate customers to partner with Sysco to optimize efficiency. Our Sigma segment delivered sales growth of 5.9% for the quarter, driven by strong customer wins versus prior year. For the year, Sigma grew top line 8.3% and bottom line 12.5%. It was a record year for our Sigma business from top and a bottom line perspective. It is important to note that the SGMA top line growth rates will begin to moderate in the coming year as we begin to lap large customer wins earned in 2025.

Most importantly gross profit within national sales. Grew almost 3 times faster than volume, due to the excellent efforts by the team to improve profitability of the national business.

The strong profit Improvement was delivered through customer optimization, and the creation of win-win provisions, and our contracts that motivate customers to partner with Cisco to optimize efficiency.

Our Sigma segment delivered sales growth of 5.9% for the quarter, driven by strong customer wins versus the prior year.

For the year Sigma group, Topline 8.3% and bottom line 12.5%, it was a record year for our Sigma business from top and a bottom line perspective.

Kevin Hourican: On the local side of our business, we delivered negative 1.5% case volume within our U.S. Food Service segment during the quarter. As shown on slide 8, this was a meaningful 200 basis point step up versus our Q3 outcome.

It is important to note that the Sigma topline growth rates will begin to moderate in the coming year as we begin to lap large customer wins earned in 2025.

On the local side of our business, we delivered negative 1.5% case volume within our US Food Service, segments. During the quarter.

Kevin Hourican: U.S. Food Service volume reporting included impact from exiting a business within Freshpoint that did not meet our profit threshold. which negatively impacted our total local performance by over 50 bases. When excluding this intentional business exit, our USFS local business performed at a negative 1% rate, again, a meaningful step up versus Q3, and a strong improvement relative to our four-year results. More importantly, as I mentioned, we had a strong exit velocity in the quarter, with June performance being the highlight of the quarter. It is important to call out that the positive momentum has carried into July, as Sysco's specific initiatives to improve our local performance are taking root.

Kevin Hourican: Foodservice volume reporting included impact from exiting a business within FreshPoint that did not meet our profit thresholds, which negatively impacted our total local performance by over 50 basis points. When excluding this intentional business exit, our USFS local business performed at a -1% rate, again a meaningful step up versus Q3 and a strong improvement relative to our full year results. More importantly, as I mentioned, we had a strong exit velocity in the quarter. With June performance being the highlight of the quarter. It is important to call out that the positive momentum has carried into July as Sysco-specific initiatives to improve our local performance are taking root. I'll discuss these efforts in more detail in a moment.

Foodservice volume reporting included impact from exiting a business within FreshPoint that did not meet our profit thresholds, which negatively impacted our total local performance by over 50 basis points. When excluding this intentional business exit, our USFS local business performed at a -1% rate, again a meaningful step up versus Q3 and a strong improvement relative to our full year results. More importantly, as I mentioned, we had a strong exit velocity in the quarter. With June performance being the highlight of the quarter. It is important to call out that the positive momentum has carried into July as Sysco-specific initiatives to improve our local performance are taking root. I'll discuss these efforts in more detail in a moment.

As shown on slide 8. This was a meaningful, 200 basis point Step Up versus our Q3 outcomes.

US Food Service, volume reporting included, impact from exiting a business within Fresh Point, that did not meet our profit thresholds, which negatively impacted our total local performance by over 50 basis points.

When excluding this intentional business exit, our usfs. Local business performed at a negative 1% rate again, a meaningful Step Up versus Q3 and a strong Improvement relative to our 4 year results.

More importantly, as I mentioned, we had a strong exit velocity in the quarter, with June performance, being the highlight of the quarter.

Kevin Hourican: I'll discuss these efforts in more detail in a moment.

Kevin Hourican: Now that we have reviewed our business results for the quarter, I'd like to discuss the key initiatives that are going to drive our performance and local case volume growth for fiscal 2026. Let's start with our international segment. We are very pleased with our international business and have strong confidence that the compelling top and bottom line results will continue into fiscal 2026. We are advancing selling initiatives like Sysco Your Way across the globe. Additionally, we have improved our customer and colleague facing technology in the international segment, making it easier to do business with Sysco. We are adding incremental local sales resources in key international geographies, primarily metro areas like Toronto, Dublin, and London to drive new customer wins and improve customer engagement. Lastly, our international supply chain capacity expansion efforts continue with our newest facility outside of London on track to open later this calendar year.

Now that we have reviewed our business results for the quarter, I'd like to discuss the key initiatives that are going to drive our performance and local case volume growth for fiscal 2026. Let's start with our international segment. We are very pleased with our international business and have strong confidence that the compelling top and bottom line results will continue into fiscal 2026. We are advancing selling initiatives like Sysco Your Way across the globe. Additionally, we have improved our customer and colleague facing technology in the international segment, making it easier to do business with Sysco. We are adding incremental local sales resources in key international geographies, primarily metro areas like Toronto, Dublin, and London to drive new customer wins and improve customer engagement. Lastly, our international supply chain capacity expansion efforts continue with our newest facility outside of London on track to open later this calendar year.

Kevin Hourican: Now that we have reviewed our business results for the quarter, I'd like to discuss the key initiatives that are going to drive our performance and local case volume growth for fiscal 2026. Let's start with our international segment. We are very pleased with our international business and have strong confidence that the compelling top and bottom line results will continue into fiscal 2026. We are advancing selling initiatives like Sysco Your Way across the globe. Additionally, we have improved our customer and colleague facing technology in the international segment, making it easier to do business with Sysco. We are adding incremental local sales resources in key international geographies, primarily metro areas like Toronto, Dublin and London, to drive new customer wins and improve customer engagement.

It is important to call out that the positive momentum has carried into July as Cisco specific initiatives to improve. Our local performance, are taking root. I'll discuss these efforts in more detail in a moment.

Now that we have reviewed our business results for the quarter, I'd like to discuss the key initiatives that are going to drive our performance and local case volume growth for fiscal 2026.

Let's start with our International segment. We are very pleased with our international business and have strong confidence that the compelling top and bottom line results, will continue into fiscal 2026.

We are advancing selling initiatives, like, Cisco your way across the globe. Additionally, we have improved our customer and colleague facing technology in the international segment making it easier to do business with Cisco.

We are adding incremental local sales resources in key international geographies.

Kevin Hourican: Lastly, our international supply chain capacity expansion efforts continue, with our newest facility outside of London on track to open later this calendar year.

Primarily, metro areas like Toronto, Dublin, and London will drive new customer wins and improve customer engagement.

Kevin Hourican: National. Our national sales business continues to perform well with exceptionally high customer retention rates and continued new wins on the selling circuit. We expect Sysco's national sales growth in 2026 will be driven by our food service management sector, travel and leisure, and increases in our health care business. To further unlock growth, we are allocating our national sales resources to the highest potential segments of the business and are making technology investments to deepen our connectivity with our largest customers.

Kevin Hourican: Our national sales business continues to perform well with exceptionally high customer retention rates and continued new wins on the selling circuit. We expect Sysco's national sales growth in 2026 will be driven by our food service management sector, travel and leisure, and increases in our healthcare business. To further unlock growth, we are allocating our national sales resources to the highest potential segments of the business and are making technology investments to deepen our connectivity with our largest customers. Lastly, Total Team Selling is beginning to gain traction among our largest customers with an increasing percentage of national customers purchasing from at least one of our specialty platforms. Lastly, I'd like to discuss our improvement efforts and strategic growth drivers for our local business.

Lastly, our international supply chain capacity expansion efforts continue, with our newest facility outside of London on track to open later this calendar year.

Our national sales business continues to perform well with exceptionally high customer retention rates and continued new wins on the selling circuit. We expect Sysco's national sales growth in 2026 will be driven by our food service management sector, travel and leisure, and increases in our healthcare business. To further unlock growth, we are allocating our national sales resources to the highest potential segments of the business and are making technology investments to deepen our connectivity with our largest customers. Lastly, Total Team Selling is beginning to gain traction among our largest customers with an increasing percentage of national customers purchasing from at least one of our specialty platforms. Lastly, I'd like to discuss our improvement efforts and strategic growth drivers for our local business.

National.

Our national sales business continues to perform well, with exceptionally high customer retention rates and continued new wins on the selling circuit.

We expect Cisco's national sales growth in 2026 will be driven by our food service, management sector, travel and leisure, and increases in our healthcare business.

Kevin Hourican: Lastly, total game selling is beginning to gain traction amongst our largest customers, with an increasing percentage of national customers purchasing from at least one of our specialty platforms. Lastly, I'd like to discuss our improvement efforts and strategic growth drivers for our local business. Let me start by saying that we are very confident that we will deliver profitable local volume growth in 2026 within every country we operate, especially in the United States. We have addressed the key challenge of 2025 head-on and we have growth activation initiatives launching this summer. First off, I want to start by discussing our sales colleague population.

To further unlock growth. We are allocating our national sales resources to The Highest Potential segments of the business that are making technology Investments to deepen. Our connectivity with our largest customers,

Lastly Total Team selling is beginning to gain traction, amongst our largest customers with an increasing percentage of national customers purchasing, from at least 1 of our specialty platforms.

Kevin Hourican: Let me start by saying that we are very confident that we will deliver profitable local volume growth in 2026 within every country we operate, especially in the United States. We have addressed the key challenge of 2025 head on and we have growth activation initiatives launching this summer. First off, I want to start by discussing our sales colleague population. We have fully stabilized their sales colleague retention and are now fully focused on improving sales colleague training, productivity, and effectiveness. The stabilized colleague retention is important because it will drive significantly improved customer retention in 2026. As we enter 2026, we will be lapping last year's excessive colleague turnover and will replace that condition with strong in-year retention. A headwind in 2025 will be converted into a tailwind in 2026. We are seeing the beginning positive impact of this equation in our July results.

Let me start by saying that we are very confident that we will deliver profitable local volume growth in 2026 within every country we operate, especially in the United States. We have addressed the key challenge of 2025 head on and we have growth activation initiatives launching this summer. First off, I want to start by discussing our sales colleague population. We have fully stabilized their sales colleague retention and are now fully focused on improving sales colleague training, productivity, and effectiveness. The stabilized colleague retention is important because it will drive significantly improved customer retention in 2026. As we enter 2026, we will be lapping last year's excessive colleague turnover and will replace that condition with strong in-year retention. A headwind in 2025 will be converted into a tailwind in 2026. We are seeing the beginning positive impact of this equation in our July results.

Lastly, I'd like to discuss our Improvement efforts and strategic growth drivers for our local business.

Let me start by saying that we are very confident that we will deliver profitable, local, volume growth in 2026, within every country we operate, especially in the United States.

We have addressed the key challenge of 2025 head-on, and we have growth activation initiatives launching this summer.

Kevin Hourican: We have fully stabilized our sales colleague retention and are now fully focused on improving sales colleague training, productivity, and effectiveness. The stabilized colleague retention is important because it will drive significantly improved customer retention in 2026. As we enter 2026, we will be lapping last year's excessive colleague turnover and will replace that condition with strong in-year retention. A headwind in 2025 will be converted into a tailwind in 2026. We are seeing the beginning positive impact of this equation in our July results. That positive impact will grow throughout 2026. As I mentioned a moment ago, now that we have stabilized retention, our leadership focus turns to driving improved productivity of the sales force through training and upscaling of our sales colleagues.

First off, I want to start by discussing our sales calling population, we have fully stabilized, their sales colleague retention and are now fully focused on improving sales, calling training, productivity and effectiveness.

In 2026.

As we enter 2026, we will be lapping last year's excessive colleague turnover and will replace that condition with strong in-ear retention.

A headwind in 2025 will be converted into a tailwind in 2026.

Kevin Hourican: That positive impact will grow throughout 2026. As I mentioned a moment ago, now that we have stabilized retention, our leadership focus turns to driving improved productivity of the sales force through training and upskilling of our sales colleagues. Additionally, our initial cohorts of sales consultant hires from calendar 2024 are beginning to eclipse their 12- to 18-month anniversary with Sysco. As Kenny has said many times, this time horizon is important as it is when the productivity of a sales consultant significantly improves. As each quarter progresses, an increased number of our sales consultants will eclipse their 12- to 18-month mark, increasing their positive impact on Sysco's results. As sales colleague tenure improves, our results improve. Lower turnover in 2026 means higher customer retention and higher retention means more productive colleagues. These two factors will be powerful drivers of improved outcomes for Sysco in 2026.

That positive impact will grow throughout 2026. As I mentioned a moment ago, now that we have stabilized retention, our leadership focus turns to driving improved productivity of the sales force through training and upskilling of our sales colleagues. Additionally, our initial cohorts of sales consultant hires from calendar 2024 are beginning to eclipse their 12- to 18-month anniversary with Sysco. As Kenny has said many times, this time horizon is important as it is when the productivity of a sales consultant significantly improves. As each quarter progresses, an increased number of our sales consultants will eclipse their 12- to 18-month mark, increasing their positive impact on Sysco's results. As sales colleague tenure improves, our results improve. Lower turnover in 2026 means higher customer retention and higher retention means more productive colleagues. These two factors will be powerful drivers of improved outcomes for Sysco in 2026.

We are seeing the beginning positive impact of this equation. In our July results that positive impact will grow throughout 2026.

Kevin Hourican: Additionally, our initial cohorts of sales consultant hires from calendar 2024 are beginning to eclipse their 12 to 18 month anniversary with Sysco. As Kenny has said many times, this time horizon is important as it is when the productivity of a sales consultant significantly improves. As each quarter progresses, an increased number of our sales consultants will eclipse their 12 to 18 month mark, increasing their positive impact on Sysco's results. As sales colleague tenure improves, our results improve. Lower turnover in 2026 means higher customer retention, and higher retention means more productive colleagues. These two factors will be powerful drivers of improved outcomes for Sysco in 2026.

As I mentioned a moment ago, now that we have stabilized and retained our leadership, focus turns to driving improved productivity of the sales force through training and upskilling of our sales colleagues.

The additionally, our initial cohorts of sales, consultant hires from calendar 2024 and are beginning to Eclipse, their 12 to 18 month anniversary with Cisco. As Kenny has said many times. This time Horizon is important as it is when the productivity of a sales consultant significantly improves.

As each quarter progresses and increased number of our sales, Consultants will Eclipse their 12 to 18 month. Mark, increasing their positive impact on Cisco's results.

A sales colleague's tenure improves, and our results improved.

Kevin Hourican: To complement the strength and productivity of our sales professionals and further improve our business results, we are launching select growth initiatives this summer and fall. First up is a rewiring of our Perks customer loyalty program. Perks will evolve from a marketing and rewards platform into a hard-hitting exceptional customer service program targeting our most important customers. The why is clear. These customers buy the most, buy the most often, and they deserve the absolute best from Sysco. We have trained our operations, inventory, merchandising, and sales teams on the key tenets of Perks 2.0, and we are ready to launch this summer. The program will improve customer retention and will improve penetration of business with existing customers. Next up is an AI-empowered sales tool to help improve the productivity of our sales colleagues.

To complement the strength and productivity of our sales professionals and further improve our business results, we are launching select growth initiatives this summer and fall. First up is a rewiring of our Perks customer loyalty program. Perks will evolve from a marketing and rewards platform into a hard-hitting exceptional customer service program targeting our most important customers. The why is clear. These customers buy the most, buy the most often, and they deserve the absolute best from Sysco. We have trained our operations, inventory, merchandising, and sales teams on the key tenets of Perks 2.0, and we are ready to launch this summer. The program will improve customer retention and will improve penetration of business with existing customers. Next up is an AI-empowered sales tool to help improve the productivity of our sales colleagues.

Kevin Hourican: To complement the strength and productivity of our sales professionals and further improve our business results, we are launching select growth initiatives this summer and fall. First up is a rewiring of our Perks Customer Loyalty Program. Perks will evolve from a marketing and rewards platform into a hard-hitting, exceptional customer service program targeting our most important customers. The why is clear, these customers buy the most, buy the most often, and they deserve the absolute best from Sysco. We've trained our operations, inventory, merchandising, and sales teams on the key tenants of Perks 2.0, and we are ready to launch this summer.

Lower turnover in 2026 means higher customer retention. And higher retention means more productive colleagues. These two factors will be powerful drivers of improved outcomes for Cisco in 2026.

To complement the strength and productivity of our sales professionals and further, improve our business results. We are launching select growth initiatives this summer involved

First up is a rewiring of our perks Customer Loyalty program.

Perks will evolve from a marketing and rewards platform into a hard-hitting. Exceptional customer service program targeting our most important customers. The, why is clear these customers buy the most by the most often and they deserve the absolute best from Cisco.

Kevin Hourican: The program will improve customer attention and will improve penetration of business with existing customers.

Kevin Hourican: Next up is an AI-empowered sales tool to help improve the productivity of our sales colleagues. As you know, we leverage a CRM platform to guide the work of our sales team. Our technology teams have been hard at work to supercharge our CRM capabilities by leveraging AI to help our sales consultants succeed. The enhanced capabilities will reside in the palm of the colleague's hand on their smartphone. The features of the tool will help our team to drive increased levels of selling effectiveness, increase close rates on sales suggestions, and deliver higher rates of customer satisfaction. To say that we are excited about this capability would be an understatement.

We've trained. Our operations, inventory, merchandising, and sales teams on the key tenants of perks 2.0, and we are ready to launch this summer. The program will improve customer retention and will improve penetration of business with existing customers.

Kevin Hourican: As you know, we leverage a CRM platform to guide the work of our sales teams. Our technology teams have been hard at work to supercharge our CRM capabilities by leveraging AI to help our sales consultants succeed. The enhanced capabilities will reside in the palm of the colleague's hand on their smartphone. The features of the tool will help our team to drive increased levels of selling effectiveness, increase close rates on sales suggestions, and deliver higher rates of customer satisfaction. To say that we are excited about this capability would be an understatement. Our newer sales colleagues will benefit the most from the powerful capabilities of our AI-powered CRM. Last up is price agility.

As you know, we leverage a CRM platform to guide the work of our sales teams. Our technology teams have been hard at work to supercharge our CRM capabilities by leveraging AI to help our sales consultants succeed. The enhanced capabilities will reside in the palm of the colleague's hand on their smartphone. The features of the tool will help our team to drive increased levels of selling effectiveness, increase close rates on sales suggestions, and deliver higher rates of customer satisfaction. To say that we are excited about this capability would be an understatement. Our newer sales colleagues will benefit the most from the powerful capabilities of our AI-powered CRM. Last up is price agility.

Next up is an AI empowered sales tool to help improve the productivity of our sales colleagues.

As you know, we leverage a CRM platform to guide the work of our sales teams. Our technology teams have been hard at work through supercharge our CRM capabilities by leveraging AI to help our sales Consultants succeed.

The enhanced capabilities will reside in the palm of the colleague's hand on their smartphone.

The features of the tool will help our team to drive increased levels of selling Effectiveness increased, close rates on sales, suggestions and deliver higher rates of customer satisfaction.

Kevin Hourican: Our newer sales colleagues will benefit the most from the powerful capabilities of our AI-powered CRM.

To say that we are excited about this capability would be an understatement.

Kevin Hourican: Last up is Price Agility. As we have previously communicated, we are piloting improvements to our pricing architecture that improve sales colleague engagement with customers by providing the sales force the ability to be more agile in responding to pricing requests. Our sales reps will be enabled to make decisions in the moment, leveraging the science of our pricing software. In July, we are expanding our pilot to additional geographies to learn more about the change management process required for a national rollout.

Our newer sales colleagues will benefit the most from the powerful capabilities of our AI powered CRM.

Kevin Hourican: As we have previously communicated, we are piloting improvements to our pricing architecture that improve sales colleague engagement with customers by providing the sales force the ability to be more agile in responding to pricing requests. Our sales reps will be enabled to make decisions in the moment, leveraging the science of our pricing software. In July, we are expanding our pilot to additional geographies to learn more about the change management process required for a national rollout. As I wrap up my prepared remarks, we are pleased with our strong performance in Q4 and the progress that we are making in local volume. Most importantly, we are excited about the exit velocity of the quarter and that the momentum has carried into July.

As we have previously communicated, we are piloting improvements to our pricing architecture that improve sales colleague engagement with customers by providing the sales force the ability to be more agile in responding to pricing requests. Our sales reps will be enabled to make decisions in the moment, leveraging the science of our pricing software. In July, we are expanding our pilot to additional geographies to learn more about the change management process required for a national rollout. As I wrap up my prepared remarks, we are pleased with our strong performance in Q4 and the progress that we are making in local volume. Most importantly, we are excited about the exit velocity of the quarter and that the momentum has carried into July.

Last up is price agility as we have previously communicated. We are piloting improvements to our pricing architecture that improves sales, colleague engagement with customers. By providing the Salesforce, the ability to be more agile and responding to pricing requests.

Our sales reps will be enabled to make decisions in the moment.

Leveraging the science of our pricing software.

Kevin Hourican: As I wrap up my prepared remarks, we are pleased with our strong performance in Q4 and the progress that we are making in local volume. Most importantly, we are excited about the exit velocity of the quarter and that the momentum has carried into July. We are confident that improved sales consultant retention, increased sales consultant tenure, and the three growth programs I just covered will drive profitable and positive case growth for Sysco in fiscal 2026. We expect that positive local case growth will, in turn, support our financial targets.

In July we are expanding our pilot to additional geographies to learn more about the change management process required for a National Rollout.

As I wrap up my prepared remarks, we are pleased with our strong performance in Q4 and the progress that we are making in local volume.

Kevin Hourican: We are confident that improved sales consultant retention, increased sales consultant tenure, and the three growth programs I just covered will drive profitable and positive case growth for Sysco in fiscal 2026. We expect that positive local case growth will in turn support our financial targets. With that, now, I'd like to turn the call over to Kenny. Kenny, over to you.

We are confident that improved sales consultant retention, increased sales consultant tenure, and the three growth programs I just covered will drive profitable and positive case growth for Sysco in fiscal 2026. We expect that positive local case growth will in turn support our financial targets. With that, now, I'd like to turn the call over to Kenny. Kenny, over to you.

Most importantly, we are excited about the exit velocity of the quarter and that the momentum has carried into July.

Kenny Cheung: With that, I'd now like to turn the call over to Kenny. Kenny, over to you. Thank you, Kevin, and good morning, everyone. I plan to start with high-level thoughts on our performance, detail our financials, and then introduce our full year 2026 guidance. As we outlined before, business plans don't always materialize the exact way you draw them up on paper. This year was no different. However, our teams remained both nimble and focused as we leveraged our leadership position within the industry to successfully apply the Sysco playbook. The operational rigor of our organization provides us a high degree of confidence for delivering our 2026 guidance across the P&L and our Capital Allocation Committee.

Kenny Cheung: Thank you, Kevin, and good morning, everyone. I plan to start with high level thoughts on our performance, detail our financials, and then introduce our full year 2026 guidance. As we outlined before, business plans don't always materialize the exact way you draw them up. On paper, this year was no different. However, our teams remain both nimble and focused as we leverage our leadership position within the industry to successfully apply the Sysco playbook. The operational rigor of our organization provides us a high degree of confidence for delivering our 2026 guidance across the P&L and our capital allocation commitments to start. Financial results this quarter included sales growth of 2.8% and adjusted EPS growth of 6.5%, representing strong year-over-year performance, and noteworthy sequential improvements compared to the prior quarter.

We are confident that improved sales, consultant retention, increased sales, consultant tenure and the 3 grow programs, I just covered will drive profitable and positive case growth for Cisco in fiscal 2026. We expect that positive local case growth will in turn support our financial targets. With that, I'd now like to turn the call over to Kenny. Kenny over to you.

Thank you, Kevin and good morning everyone.

I plan to start with high-level thoughts on a performance detail, our financials. And then introduce our full year 2026 guidance,

As we outlined before business plans. Don't always materialize the exact way, you draw them up on paper. This year, was no different. However, our teams remained, both Nimble and focused, as we leverage, our leadership position within the industry to successfully. Apply the Cisco Playbook.

Kenny Cheung: To start, financial results this quarter included sales growth of 2.8% and adjusted EPS growth of 6.5%, representing strong year-over-year performance and noteworthy sequential improvements compared to the prior quarter. This sequential acceleration is visible across sales, including both national and local volume performance, but also across gross margins, adjusted operating income, and adjusted EPS. This is an important proof point as we enter FY22. Q4 Adjusted EPS Growth included benefits from our disciplined strategic sourcing efforts aiding in the delivery of 3.9% growth in gross profit, translating to 19 basis points of gross margin expansion. These results include an increase in both dollars and rates of performance and reflect structural improvements that we expect to carry into the next fiscal year.

6, guidance, across the pnl and our Capital allocation commitments.

Kenny Cheung: This sequential acceleration is visible across sales, including both national and local volume performance, but also across gross margins, adjusted operating income, and adjusted EPS. This is an important proof point as we enter FY26 Q4. Adjusted EPS growth included benefits from our disciplined strategic sourcing efforts, aiding in the delivery of 3.9% growth in gross profit translating to 19 basis points of gross margin expansion. These results include an increase in both dollars, and rates of performance and reflect structural improvements that we expect to carry into the next fiscal year. Our investments in sales headcount and capacity expansion continued this quarter alongside benefits from ongoing efforts to optimize cost and prudent tax planning. This ultimately rendered outsized profit growth with adjusted EPS growth of 6.5% accounting for the strongest rate of growth for the year during fiscal 2025.

This sequential acceleration is visible across sales, including both national and local volume performance, but also across gross margins, adjusted operating income, and adjusted EPS. This is an important proof point as we enter FY26 Q4. Adjusted EPS growth included benefits from our disciplined strategic sourcing efforts, aiding in the delivery of 3.9% growth in gross profit translating to 19 basis points of gross margin expansion. These results include an increase in both dollars, and rates of performance and reflect structural improvements that we expect to carry into the next fiscal year. Our investments in sales headcount and capacity expansion continued this quarter alongside benefits from ongoing efforts to optimize cost and prudent tax planning. This ultimately rendered outsized profit growth with adjusted EPS growth of 6.5% accounting for the strongest rate of growth for the year during fiscal 2025.

To start Financial results of this quarter included, sales, growth of 2.8% and adjusted, EPS, growth of 6.5% representing, strong year-over-year, performance, and noteworthy sequential improvements compared to the prior quarter.

This sequential acceleration is visible across sales, including both national and local volume performance but also a cross growth margins, adjusted operating income and adjusted EPS. This is an important proof Point as we enter sy26.

Q4 adjusted EPS, growth included benefits from our discipline strategic sourcing efforts aiding in the delivery of 3.9% growth. In gross profit translating to 19 basis points of growth margin expansion.

Kenny Cheung: Our investments and sales tech count and capacity expansion continue this quarter alongside benefits from ongoing efforts to optimize cost and prudent tax planning. This ultimately rendered outsized profit growth with adjusted EPS growth of 6.5 percent, accounting for the strongest rate of growth for the year. During Sysco 2025, we remain committed to rewarding our shareholders by repurchasing $1.3 billion in shares and paying out $1 billion in dividends.

These results include an increase in both dollars and rates of performance and reflect structural improvements that we expect to carry into the next fiscal year.

Our investments and sales Tech counts and capacity expansion. Continued. This quarter alongside benefits from ongoing efforts to optimize cost and prudent tax planning.

Because ultimately rendered outsized profit growth with adjusted EPS growth of 6.5% accounting for the strongest rate of growth for the year.

Kenny Cheung: We remain committed to rewarding our shareholders by repurchasing $1.3 billion in shares and paying out $1 billion in dividends. Now let's discuss our performance and financial drivers for the quarter starting on slide 12. For the fourth quarter our enterprise sales grew 2.8% on an as reported basis, driven by US Foodservice, International, and SYGMA. Excluding the impact of our divested Mexico business, sales grew 3.7%. Volumes across the enterprise sequentially improved with total US Foodservice volumes decreasing 0.3% and local volume decreasing 1.5% in the quarter. This represents a 200 basis points improvement in local case performance and 170 basis points improvement in total Foodservice on a sequential basis quarter over quarter. The sequential improvement was consistent with the industry traffic for the quarter, but importantly our performance accelerated in the quarter with a strong June exit rate.

We remain committed to rewarding our shareholders by repurchasing $1.3 billion in shares and paying out $1 billion in dividends. Now let's discuss our performance and financial drivers for the quarter starting on slide 12. For the fourth quarter our enterprise sales grew 2.8% on an as reported basis, driven by US Foodservice, International, and SYGMA. Excluding the impact of our divested Mexico business, sales grew 3.7%. Volumes across the enterprise sequentially improved with total US Foodservice volumes decreasing 0.3% and local volume decreasing 1.5% in the quarter. This represents a 200 basis points improvement in local case performance and 170 basis points improvement in total Foodservice on a sequential basis quarter over quarter. The sequential improvement was consistent with the industry traffic for the quarter, but importantly our performance accelerated in the quarter with a strong June exit rate.

Kenny Cheung: Now, let's discuss our performance and financial drivers for the quarter, starting on slide 12. For the fourth quarter, our enterprise sales grew 2.8% on an as-reported basis, driven by U.S. Food Service, International, and Sigma. excluding the impact of our divested Mexico business, sales grew 3.7%. Volumes across the enterprise sequentially improve, with total U.S. food service volumes decreasing 0.3% and local volume decreasing 1.5% in the quarter. This represents a 200 basis points improvement in local case performance and 170 basis points improvement in total food service on a sequential basis quarter over quarter. The sequential improvement was consistent with the industry traffic for the quarter, but importantly, our performance accelerated in the quarter with a strong June exit.

During fiscal 2025, we remain committed to rewarding our shareholders by repurchasing 1.3 billion dollars in shares and paying out 1 billion dollars in dividends.

Now let's discuss our performance and financial drivers for the quarter, starting on slide 12.

For the fourth quarter, our Enterprise sales grew 2.8% on an as-reported basis, driven by U.S. Foodservice, international markets, and Sigma.

Excluding the impact of our divested Mexico. Business sales grew 3.7%

Volumes across the enterprise sequentially improved, with total U.S. food service volumes decreasing 0.3% and local volumes decreasing 1.5% in the quarter. This represents a 200 basis point improvement in local case performance and a 170 basis point improvement in total food service on a sequential basis, quarter over quarter.

Kenny Cheung: We are seeing stronger contributions from newer sales professionals, as they work up the productivity curve, and the benefits from the stabilization of colleague retention. These factors directly contributed to an acceleration in new account growth for the quarter. We expect an acceleration in sales productivity to continue in FY26. These sequential volume improvements also benefited our USFS segment results. Top- and bottom-line results for the quarter represent a sequential improvement, and we expect our investment actions in 2025 to deliver financial tailwinds for 2026 and beyond. International segment results included continued top-line momentum and double-digit operating income growth. This was across all markets and marked our seventh consecutive quarter of double-digit operating income growth, adding to our impressive multi-year track record.

Kevin Kim: We are seeing stronger contributions from newer sales professionals, as they work up the productivity curve, and the benefits from the stabilization of colleague retention. These factors directly contributed to an acceleration in new account growth for the quarter. We expect an acceleration in sales productivity to continue in FY26. These sequential volume improvements also benefited our USFS segment results. Top- and bottom-line results for the quarter represent a sequential improvement, and we expect our investment actions in 2025 to deliver financial tailwinds for 2026 and beyond. International segment results included continued top-line momentum and double-digit operating income growth. This was across all markets and marked our seventh consecutive quarter of double-digit operating income growth, adding to our impressive multi-year track record.

Kenny Cheung: We are seeing stronger contributions from newer sales professionals as they work up the productivity curve and the benefits from the stabilization of colleague retention. These factors directly contributed to an acceleration in new account growth for the quarter. We expect an acceleration in sales productivity to continue in FY26. These sequential volume improvements also benefited our USFS segment results. Top and bottom line results for the quarter represent a sequential improvement, and we expect our investment actions in 2025 to deliver financial tailwinds for 2026 and beyond. International segment results included continued top-line momentum and double-digit operating income growth.

the sequential Improvement was consistent with the industry traffic for the quarter, but importantly, our performance accelerated in the quarter with a strong, June exit rate,

We are seeing stronger contributions from newer sales professionals as they work up the productivity curve and the benefits from the stabilization of colleague retention.

These factors directly contributed to an acceleration in new account growth for the quarter.

We expect an acceleration in sales productivity to continue in FY, 26.

These sequential volume improvements also benefited our USFS segment results. The top and bottom line results for the quarter represent a sequential improvement. We expect our investment actions in 2025 to deliver a financial tailwind for 2026 and beyond.

Kenny Cheung: This was across all markets and marked our seventh consecutive quarter of double-digit operating income growth, adding to our impressive multi-year track record. These results reflect ongoing success as we apply the Sysco playbook to generate local volume growth of 4% and broad-based operating income growth across our international portfolio. Sysco produced $4 billion in gross profit of 3.9% and gross margins of 18.9% with improved gross profit per case performance. This notable margin improvement includes a mentality of continual improvement with cost savings driven by our strategic sourcing initiative. Inflation rates and USBL were approximately 2.4%. International inflation was slightly higher for the quarter at 3.4%.

International segment, results included continued, Topline momentum and double-digit operating income growth.

Kenny Cheung: These results reflect ongoing success as we apply the Sysco playbook to generate local volume growth of 4% and broad-based operating income growth across our international portfolio. Sysco produced $4 billion in gross profit, up 3.9%, and gross margins of 18.9% with improved gross profit per case performance. This notable margin improvement includes a mentality of continual improvement with cost savings driven by our strategic sourcing initiatives. Inflation rates in USBL were approximately 2.4%. International inflation was slightly higher for the quarter at 3.4%. Overall adjusted operating expenses were $2.9 billion for the quarter, or 13.7% of sales, a 28 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.

These results reflect ongoing success as we apply the Sysco playbook to generate local volume growth of 4% and broad-based operating income growth across our international portfolio. Sysco produced $4 billion in gross profit, up 3.9%, and gross margins of 18.9% with improved gross profit per case performance. This notable margin improvement includes a mentality of continual improvement with cost savings driven by our strategic sourcing initiatives. Inflation rates in USBL were approximately 2.4%. International inflation was slightly higher for the quarter at 3.4%. Overall adjusted operating expenses were $2.9 billion for the quarter, or 13.7% of sales, a 28 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.

this was across all markets and marked, our seventh consecutive quarter of double digit, operating income growth adding to our impressive multi-year, track record,

These results reflect ongoing success as we apply the Cisco playbooks, generating local volume growth of 4% and broad-based operating income growth across our international portfolio.

Cisco produced 4 billion dollars in gross profit up 3.9% in Gross, margins of 18.9% with improved gross. Profit per case performance, this notable margin Improvement, includes a mentality of continual improvement with cost savings driven by our strategic sourcing initiatives.

Inflation rates and usbl, where approximately 2.4%?

Kenny Cheung: Overall, adjusted operating expenses were $2.9 billion for the quarter, or 13.7% of sales, a 28 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. Corporate adjusted expenses were up 9.8% from the prior year, driven by insurance, investments, and other costs, partially offset by accretive productivity costs out. For the full year, corporate adjusted expense were down 6%, reflecting solid progress on our existing cost savings program. Overall, adjusted operating income grew to $1.1 billion for the quarter, reflecting continued strong growth in our international segment, SIGMA, and more stable results in our USFS segment.

International inflation was slightly higher for the quarter at 3.4%.

Overall adjusted operating expenses were 2.9 billion dollars for the quarter or 13.7% of sales. A 28 basis points increase from the prior year.

Kenny Cheung: Corporate adjusted expenses were up 9.8% from the prior year driven by insurance investments and other costs partially offset by accretive productivity. Cost out for the full year. Corporate adjusted expenses were down 6% reflecting solid progress on our existing cost savings program. Overall adjusted operating income grew to $1.1 billion for the quarter reflecting continued strong growth in our international segment SYGMA and more stable results in our USFS segment. For the quarter, Adjusted EBITDA of $1.3 billion was up 1.8% versus the prior year. Fourth quarter results also include a non-cash goodwill impairment charge of $92 million related to our Guest Worldwide business as reflected in our other segments. Let's now turn to balance sheet and cash flow. Our balance sheet remains robust and reflects a healthy financial profile. This includes flexibility and optionality from approximately $3.8 billion in total liquidity, well above our minimum threshold.

Corporate adjusted expenses were up 9.8% from the prior year driven by insurance investments and other costs partially offset by accretive productivity. Cost out for the full year. Corporate adjusted expenses were down 6% reflecting solid progress on our existing cost savings program. Overall adjusted operating income grew to $1.1 billion for the quarter reflecting continued strong growth in our international segment SYGMA and more stable results in our USFS segment. For the quarter, Adjusted EBITDA of $1.3 billion was up 1.8% versus the prior year. Fourth quarter results also include a non-cash goodwill impairment charge of $92 million related to our Guest Worldwide business as reflected in our other segments. Let's now turn to balance sheet and cash flow. Our balance sheet remains robust and reflects a healthy financial profile. This includes flexibility and optionality from approximately $3.8 billion in total liquidity, well above our minimum threshold.

The increase was driven by planned investments and higher growth areas of the business, with fleet building expansion and sales headcount.

For Q4, up 9.8% from the prior year, driven by insurance investments and other costs, partially offset by accretive productivity cost out.

For the full year. Corporate adjusted expense were down 6%. Reflecting solid progress on our existing cost Savings Program.

Kenny Cheung: For the quarter, adjusted EBITDA of $1.3 billion was up 1.8% versus the prior year.

Overall adjusted operating income grew to 1.1 billion dollars worth of quarter reflecting continued strong growth in our International segment Sigma and more stable results in our usfs segment.

Kenny Cheung: Fourth quarter results also include a non-cash goodwill impairment charge of $92 million related to our guests' worldwide business, as reflected in our other segments.

For the quarter adjusted, EBITDA of $1.3 billion was up 1.8% versus the prior year.

Kenny Cheung: Let's now turn to balance sheet and cash flow. Our balance sheet remains robust and reflects a healthy financial profile. This includes flexibility and optionality from approximately three point eight billion dollars in total liquidity, well above our minimum threshold. We ended the year at a 2.85 times net debt leverage ratio with plans to return to our target ratio at FY26. Turning to our cash flow, we generated approximately $2.5 billion in operating cash flow and $1.8 billion in free cash flow. Free cash flow, compared to the prior year, was impacted by higher cash taxes, interest, and working capital timing.

Fourth quarter results also include a non-cash goodwill impairment charge of $92 million related to our guests worldwide business, as reflected in our other segments.

Let's now turn to balance sheet and cash flow.

Kenny Cheung: We ended the year at a 2.85x net debt leverage ratio with plans to return to our target ratio in FY26. Turning to our cash flow, we generated approximately $2.5 billion in operating cash flow and $1.8 billion in free cash flow. Free cash flow compared to the prior year was impacted by higher cash taxes, interest, and working capital timing. Now I would like to share with you our expectations for FY26 as seen on slide 22. During FY26 we expect reported net sales growth of approximately 3% to 5% to approximately $84 billion to $85 billion. These assumptions include inflation of approximately 2%, which we are seeing now, volume growth, and contributions from MA.

We ended the year at a 2.85x net debt leverage ratio with plans to return to our target ratio in FY26. Turning to our cash flow, we generated approximately $2.5 billion in operating cash flow and $1.8 billion in free cash flow. Free cash flow compared to the prior year was impacted by higher cash taxes, interest, and working capital timing. Now I would like to share with you our expectations for FY26 as seen on slide 22. During FY26 we expect reported net sales growth of approximately 3% to 5% to approximately $84 billion to $85 billion. These assumptions include inflation of approximately 2%, which we are seeing now, volume growth, and contributions from MA.

Our balance sheet remains robust and reflectively healthy. The financial profile includes flexibility and optionality from approximately $3.8 billion in total liquidity, which is above our minimum threshold.

We ended the year at a 2.85 times. Net debt, leverage ratio with plans, to return to our Target ratio and FY 26.

Turning to our cash flow. We generated approximately 2.5 billion dollars in operating cash flow and 1.8 billion in free cash flow.

Kenny Cheung: Now, I would like to share with you our expectations for FY26 as seen on slide 22. During FY26, we expect reported net sales growth of approximately 3% to 5% to approximately $84 billion to $85 billion. These assumptions include inflation of approximately 2%, which we are seeing now, volume growth, and contributions from M&A. We expect full year 2026 adjusted EPS of $4.50 to $4.60, representing growth of 1% to 3%, which includes an approximate $100 million of headwind from lapping lower incentive compensation in FY25, an impact of roughly $0.16 per share. With FY25 behind us, we wanted to provide full visibility to the carryover impact from Incentive Comp for the year and by quarter as outlined on slide 23.

Free cash flow compared to the prior year was impacted by higher cash taxes interest and working capital timing.

Now, I will like to share with you our expectations for FY 26, as seen on slide 22.

During FY 26, we expect reported, net sales, growth of approximately 3% to 5% to approximately 84 billion to 85 billion.

Kenny Cheung: We expect full year 2026 Adjusted EPS of $4.50 to $4.60, representing growth of 1% to 3%, which includes an approximate $100 million of headwind from lapping lower incentive compensation in FY25, an impact of roughly $0.16 per share. With FY25 behind us, we wanted to provide full visibility to the carryover impact from incentive comps for the year and by quarter. As outlined on slide 23, this impacts year over year comparability for expenses. Our compensation structure rewards for business performance. As such, this carryover impact reflects challenges this past year in 2025. Importantly, our incentive comp structure is focused on core business drivers and aligned with long-term interests of our shareholders. Excluding this impact, our outlook reflects Adjusted EPS growth of approximately 5% to 7%, with the midpoint in line with a long-term growth algorithm to help with phasing.

We expect full year 2026 Adjusted EPS of $4.50 to $4.60, representing growth of 1% to 3%, which includes an approximate $100 million of headwind from lapping lower incentive compensation in FY25, an impact of roughly $0.16 per share. With FY25 behind us, we wanted to provide full visibility to the carryover impact from incentive comps for the year and by quarter. As outlined on slide 23, this impacts year over year comparability for expenses. Our compensation structure rewards for business performance. As such, this carryover impact reflects challenges this past year in 2025. Importantly, our incentive comp structure is focused on core business drivers and aligned with long-term interests of our shareholders. Excluding this impact, our outlook reflects Adjusted EPS growth of approximately 5% to 7%, with the midpoint in line with a long-term growth algorithm to help with phasing.

These assumptions include inflation of approximately 2%, which we are seeing now volume growth and contributions from m&a.

We expect a full year of 2026 adjusted EPS of $4.50 to $4.60, representing growth of 1% to 3%. This includes an approximate $100 million headwind from lagging, lower incentive compensation, and FY2, with an impact of roughly 16 cents per share.

Kenny Cheung: This impacts year-over-year comparability for expense. Our compensation structure rewards for business performance. As such, this carryover impact reflects challenges this past year in 2025. Importantly, our incentive comp structure is focused on core business drivers and aligned with long-term interests of our shareholders. Excluding this impact, our outlook reflects adjusted EPS growth of approximately 5% to 7% with the midpoint in line with a long-term growth algorithm. To help with phasing for Q1, we expect to grow our adjusted EPS consistent with the annual growth rate of 1% to 3%, driven by part of carryover benefit from strategic sourcing to gross margins and the impact from lapping incentive compensation.

With FY, 25 behind us. We wanted to provide full visibility to the carryover impact from incentive comp for the year and buy a quarter as outlined on slide 23.

This impacts year-over-year comparability for expenses.

Our compensation structure rewards for business performance as such this carryover impact reflects challenges this past year in 201.

25.

Importantly, our incentive constructure is focused on Core Business drivers and aligned with long-term interests of our shareholders.

Excluding this impact, our outlook reflects adjusted EPS growth of approximately 5% to 7%, with the midpoint in line with our long-term growth algorithm.

Kenny Cheung: For Q1, we expect to grow our Adjusted EPS consistent with the annual growth rate of 1% to 3% driven by part of carryover benefit from strategic sourcing to gross margins and the impact from lapping incentive compensation. Q1 and Q2 sales growth rates will be impacted by the divestiture of our Mexico JV in December 2024. We plan to provide additional modeling updates as the year progresses. This financial guidance assumes improvements to be driven by our Sysco specific initiatives with industry foot traffic and macro environment similar to current conditions. It also includes carryover impact related to sourcing benefits from our $100 million.

For Q1, we expect to grow our Adjusted EPS consistent with the annual growth rate of 1% to 3% driven by part of carryover benefit from strategic sourcing to gross margins and the impact from lapping incentive compensation. Q1 and Q2 sales growth rates will be impacted by the divestiture of our Mexico JV in December 2024. We plan to provide additional modeling updates as the year progresses. This financial guidance assumes improvements to be driven by our Sysco specific initiatives with industry foot traffic and macro environment similar to current conditions. It also includes carryover impact related to sourcing benefits from our $100 million.

Kenny Cheung: Q1 and Q2 sales growth rates will be impacted by the divestiture of a Mexico JV in December 2021. who plan to provide additional modeling updates as the year progresses. This financial guidance assumes improvements to be driven by our Sysco-specific initiatives with industry foot traffic and macroenvironment similar to current conditions. It also includes care over impact related to sourcing benefits from our $100 million cost savings program. As mentioned on prior calls, this muscle memory is built across the organization, leveraging a stronger operating model that positions us to grow shared profit. We remain on target for shareholder returns through approximately $1 billion in dividends and approximately $1 billion in share repurchases planned for FY26.

To help with phasing for Q1, we expect to grow our adjusted EPS consistent with the annual growth rate of 1% to 3%, driven by part of the carryover benefit from strategic sourcing through gross margins, and the impact from lapping incentive compensation.

Q1 and Q2 sales, growth rates will be impacted by the diversity of our Mexico. JV in December 2024, we plan to provide additional modeling updates as the year progresses.

This financial guidance assumes improvements to be driven by our Cisco specific initiatives with industry foot traffic and macro environment, similar to current conditions.

Kenny Cheung: Of cost savings program.

Of cost savings program. As mentioned on prior calls, this muscle memory is built across the organization leveraging a stronger operating model that positions us to grow share profitably. We remain on target for shareholder returns through approximately $1 billion in dividends and approximately $1 billion in share repurchases planned for FY26. This is all based on our current expectation and economic conditions and could flex based on M&A activity for the year specific to our dividend. Our expected payout for FY26 equates to a 6% year over year increase on a per share basis, highlighting our commitment to our standing as a dividend aristocrat. In terms of leverage, we expect to end the year within our stated target of 2.5 to 2.75x net leverage ratio and maintain our investment grade balance sheet.

Kenny Cheung: As mentioned on prior calls, this muscle memory is built across the organization leveraging a stronger operating model that positions us to grow share profitably. We remain on target for shareholder returns through approximately $1 billion in dividends and approximately $1 billion in share repurchases planned for FY26. This is all based on our current expectation and economic conditions and could flex based on M&A activity for the year specific to our dividend. Our expected payout for FY26 equates to a 6% year over year increase on a per share basis, highlighting our commitment to our standing as a dividend aristocrat. In terms of leverage, we expect to end the year within our stated target of 2.5 to 2.75x net leverage ratio and maintain our investment grade balance sheet.

It also includes care over the impact related to sourcing benefits from our $100 million Cost Savings Program.

That's mentioned on prior calls, this muscle memory is built across the organization leveraging, a stronger. Operating model that positions us to grow share profitably.

Kenny Cheung: This is all based on our current expectations and economic conditions and could flex based on M&A activity for the year. Specific to our dividend, our expected payout for FY26 equates to a 6% year-over-year increase on a per-year basis, highlighting our commitment to our standing as a dividend aristocrat. In terms of leverage, we expect to end the year within our stated target of 2.5 to 2.75 times net leverage ratio and maintain our investment grade balance. Now turning to a few other modeling items. For FY26, we expect a tax rate of approximately 23.5% to 24% and adjust the depreciation and amortization of approximately $870 million.

we remain on target for shareholder returns through approximately 1 billion dollars in dividends and approximately 1 billion dollars in Share repurchases, Plans for FY, 2 6,

This is all based on our current expectation and economic conditions and could Flex based on m&a activity for the year.

Aristocrat.

In terms of leverage, we expect to end the year within our stated target of 2.5 to 2.75 times net leverage ratio, and maintain our investment grade balance sheet.

Kenny Cheung: Now turning to a few other modeling items for FY26, we expect a tax rate of approximately 23.5% to 24%, and adjusted depreciation and amortization of approximately $870 million. Interest expense is now expected to be approximately $700 million, while other expense is expected to be approximately $45 million. The elevated D&A levels will be driven by continued capacity expansion, such as the expansion outside of London this coming year. As Kevin highlighted, CapEx is expected to be approximately $700 million, representing less than 1% of sales. This includes growth and maintenance CapEx, and an eye toward optimizing spend levels across the enterprise, and as the organization further sharpens our collective efforts around driving ROIC. Looking ahead, we like our position, and we remain focused on leveraging our position as the industry leader to support the growth of our customer, while also continuing to unlock value for our shareholders.

Now turning to a few other modeling items for FY26, we expect a tax rate of approximately 23.5% to 24%, and adjusted depreciation and amortization of approximately $870 million. Interest expense is now expected to be approximately $700 million, while other expense is expected to be approximately $45 million. The elevated D&A levels will be driven by continued capacity expansion, such as the expansion outside of London this coming year. As Kevin highlighted, CapEx is expected to be approximately $700 million, representing less than 1% of sales.

Kenny Cheung: Interest expense is now expected to be approximately $700 million, while other expense is expected to be approximately $45 million. The elevated DNA levels will be driven by continued capacity expansion such as the expansion outside of London this coming year, as Kevin highlighted. CapEx is expected to be approximately $700 million, representing less than 1% of sales. This includes growth and maintenance CapEx and an eye towards optimizing spend levels across the enterprise as the organization further sharpens our collective efforts around driving ROI. Looking ahead, we like our position, and we remain focused on leveraging our position as the industry leader to support the growth of our customer while also continuing to unlock value for our shareholders.

Now turning to a few other modeling items for FY 26, we expect a tax rate of approximately 23.5% to 24%, and adjusted depreciation and amortization of approximately $870 million.

Interest expense is now expected to be approximately 700 million while other expense is expected to be approximately 45 million.

The elevated DNA levels will be driven by continued capacity expansion such as the expansion outside of London, this coming year as Kevin Holland.

This includes growth and maintenance CapEx, and an eye toward optimizing spend levels across the enterprise, and as the organization further sharpens our collective efforts around driving ROIC. Looking ahead, we like our position, and we remain focused on leveraging our position as the industry leader to support the growth of our customer, while also continuing to unlock value for our shareholders. With that, we'll turn the call back to Kevin for closing remarks.

Capex is expected to be approximately 700 million representing less than 1% of sales.

This includes growth and maintenance capex and an eye towards optimizing spend levels across the Enterprise as the organization further sharpens. Our Collective efforts around driving roic.

Kenny Cheung: With that, we'll turn the call back to Kevin for closing remarks.

Kevin Hourican: With that, we'll turn the call back to Kevin for closing remarks. Thank you, Kenny. We are pleased with the strong performance in Q4, and more importantly, the strong exit velocity of the Our leadership team placed tremendous focus on improving our local business, strengthening our gross profit through strategic sourcing, and tightly managing our expenses through productivity improvement. The team stepped up and delivered a beat performance versus what we expected 90 days ago, and I'm proud of their effort.

Kevin Hourican: Thank you Kenny. We are pleased with the strong performance in Q4 and, more importantly, the strong exit velocity of the quarter. Our leadership team placed tremendous focus on improving our local business, strengthening our gross profit through strategic sourcing, and tightly managing our expenses through productivity improvement. The team stepped up and delivered a beat performance versus what we expected 90 days ago, and I'm proud of their efforts. As we look toward 2026, we expect to build upon the Q4 momentum and deliver improved financial results for Sysco and our investors. Our top line results will strengthen based on the sequential improvement of our local business throughout 2026. The improvement starts and ends with our colleague population. We have stabilized colleague retention. As a result, our customer loss rate will improve greatly in 2026 versus 2025.

Looking ahead. We like our position and we remain focused on leveraging, our position as the industry leader to support the growth of our customer while also continuing to unlock value for our shareholders with that. We'll turn the call back to Kevin for closing remarks.

Thank you, Kenny.

Kevin Hourican: As we look toward 2026, we expect to build upon the Q4 momentum and deliver improved financial results for Sysco and our investors. Our top-line results will strengthen based on the sequential improvement of our local business throughout 2026. The improvement starts and ends with our colleague population. We have stabilized colleague retention. As a result, our customer loss rate will improve greatly in 26 verse 25. Stabilizing colleague retention also will enable us to improve colleague productivity in 2026. We will measure our improvement through the continued expansion of our gap between new customer wins and reducing customer loss.

The team stepped up and delivered a better performance than what we expected 90 days ago, and I'm proud of their efforts.

As we look forward 2026. We expect to build upon the Q4 momentum and deliver improved Financial results for Cisco and our investors, our Top Line results will strengthen based on the sequential Improvement of our local business throughout 2026.

The Improvement starts and ends with our colleague population.

Kevin Hourican: Stabilizing colleague retention will also enable us to improve colleague productivity in 2026. We will measure our improvement through the continued expansion of our gap between new customer wins and reducing customer losses. The spread between new customer wins and customer losses improved greatly in our Q4. In fact, the gap between new and lost doubled in Q4 versus the year to date results in Q1 through Q3. We see the positive spread between new and lost expanding further in 2026 through the growth initiatives that I covered on today's call. Our future is bright at Sysco, and we are excited for the year ahead. We head into this next fiscal year with positive momentum, and we are well positioned for continued improvements. We plan to leverage our competitive advantages as the industry leader.

Stabilizing colleague retention will also enable us to improve colleague productivity in 2026. We will measure our improvement through the continued expansion of our gap between new customer wins and reducing customer losses. The spread between new customer wins and customer losses improved greatly in our Q4. In fact, the gap between new and lost doubled in Q4 versus the year to date results in Q1 through Q3. We see the positive spread between new and lost expanding further in 2026 through the growth initiatives that I covered on today's call. Our future is bright at Sysco, and we are excited for the year ahead. We head into this next fiscal year with positive momentum, and we are well positioned for continued improvements. We plan to leverage our competitive advantages as the industry leader.

We have stabilized colleague retention as a result. Our customer loss rate will improve greatly in Q2 2026 versus Q2 2025.

Stabilizing calling with tension will also enable us to improve colleague productivity in 2026.

Kevin Hourican: The spread between new customer wins and customer losses improved greatly in our Q4. In fact, the gap between new and loss doubled in Q4 versus the year-to-date results in Q1 through Q3. We see the positive spread between new and lost expanding further in 2026 through the growth initiatives that I covered on today's call.

We will measure our Improvement through the continued expansion of our gap between new customer wins and reducing customer losses. The spread between new customer wins and customer losses. Improved greatly in our Q4. In fact, the gap between new and loss doubled in Q4 versus the year-to-date results in q1 through Q3

Kevin Hourican: Our future is bright at Sysco, and we are excited for the year ahead. We head into this next fiscal year with positive momentum, and we are well-positioned for continued improvements. We plan to leverage our competitive advantages as the industry leader. This includes strong diversification across our diverse customer types, our wide product assortment, and our geographic diversity as the only global player in the food-away-from-home landscape. 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 see the positive spread between new and lost accounts expanding further in 2026 through the growth initiatives that I covered on today's call.

Our future is bright at Cisco, and we are excited for the year ahead.

Kevin Hourican: This includes strong diversification across our diverse customer types, our wide product assortment, and our geographic diversity. As the only global player in the food away from home landscape, 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. Q4 displays the beginning of improving our local business, and the momentum will accelerate throughout 2026. I am thankful for our leadership team, and our entire 75,000 colleague population for the strong efforts in 2025.

This includes strong diversification across our diverse customer types, our wide product assortment, and our geographic diversity. As the only global player in the food away from home landscape, 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.

We head into this next fiscal year with positive momentum and we are well positioned for continued improvements. We plan to leverage our competitive advantages as the industry leader.

This includes strong diversification across our diverse customer types, our wide product assortment, and our geographic diversity as the only global player in the food-away-from-home landscape.

Kevin Hourican: We are confident shareholders are positioned to benefit from our industry-leading dividend, compelling ROIC, intentional share buybacks, and improving financial results. Keyboard displays the beginning of improving our local business and the momentum will accelerate throughout 2020. I am thankful for our leadership team and our entire 75,000 colleague population for the strong efforts in 2025. The team leaned into some stiff challenges in the macro and at Sysco specifically. The hard work of the past year is poised to have a positive impact in 2026.

Food away from home, is a good business. It takes care from the grocery Channel. Every year, as I've said before, the pie is getting bigger and Cisco in 10, is to take a bigger slice of that expanding pi.

Q4 displays the beginning of improving our local business, and the momentum will accelerate throughout 2026. I am thankful for our leadership team, and our entire 75,000 colleague population for the strong efforts in 2025. The team leaned into some stiff challenges in the macro and at Sysco specifically, the hard work of the past year is poised to have a positive impact in 2026. With that, operator, we're now ready for questions.

We're confident shareholders are positioned to benefit from our industry-leading dividend compelling, roic, intentional, share, BuyBacks and improving Financial results.

Q4 displays the beginning of improving our local business and the momentum will accelerate throughout 2026.

Kevin Hourican: The team leaned into some stiff challenges in the macro and at Sysco specifically, the hard work of the past year is poised to have a positive impact in 2026. With that, operator, we're now ready for questions.

I am thankful for our leadership team and our entire 75,000 colleague population for the strong efforts in 2025.

Operator: With that, operator, we're now ready for questions. At this time, if you'd like to ask a question... Keep in mind, you can't remove yourself. at any time by pressing star.

Operator: At this time, if you'd like to ask a question, please press the star and one keys on your telephone keypad. Keep in mind you can remove yourself from the question queue at any time by pressing star and two. We do again ask that you limit yourself to one question. If you have any follow-up questions, you may re-enter the queue. Again, it is star and one to ask a question today. We'll take our first question from Jake Bartlett with Truist Securities. Please go ahead. Your line is open.

The team leaned into some stiff challenges in the macro. And at Cisco specifically, the hard work of the past year, is poised to have a positive impact in 2026 with that operator. We're now ready for questions.

Operator: You again ask that you limit yourself to one question.

At this time. If you'd like to ask a question, please press the star and 1 keys on your telephone keypad. Keep in mind, you can remove yourself from the question Queue at any time by pressing star and 2.

Jake Bartlett: have any follow-up questions you may Again, it is star and one to ask a ques- Let's take our first question from Jake Bartlett. Go ahead. Your line is open. Great, thank you for taking the question. Mine was on the momentum in the local case growth. And you saw it in the fourth quarter, an improvement from the third. That was roughly in line with what industry traffic trends were. You mentioned an improvement in June and July.

We do again, ask that you limit yourself to 1 question. If you have any follow-up questions, you may re-enter the queue.

Again, it is star and 1 to ask a question today.

Kevin Hourican: Great. Thank you for taking the question. Mine was on the momentum in the local case growth, and you saw it in the fourth quarter, an improvement from the third. That was roughly in line with what industry traffic trends were. You mentioned an improvement in June and July. The question is whether you're gaining share within June and July. Are you seeing that acceleration that you expect to come with the sales force getting more productive? Just trying to gauge the inflection that you're seeing there, the impact that that's.

Jake Bartlett: Great. Thank you for taking the question. Mine was on the momentum in the local case growth, and you saw it in the fourth quarter, an improvement from the third. That was roughly in line with what industry traffic trends were. You mentioned an improvement in June and July. The question is whether you're gaining share within June and July. Are you seeing that acceleration that you expect to come with the sales force getting more productive? Just trying to gauge the inflection that you're seeing there, the impact that that's. Having on your market share gains.

We'll take our first question from Jake, Bartlett with truist Securities. Please go ahead. Your line is open.

Kevin Hourican: The question is whether you're gaining share within June and July. Are you seeing that acceleration that you expect to come with the sales force getting more productive? Just trying to gauge the inflection that you're seeing there, the impact that that's having on your market share gain. Thank you.

Kenny Cheung: Having on your market share gains.

Kevin Hourican: Morning, Jake, it's Kevin. Thanks for the question. Yes, we're really pleased with Q4's progress versus Q3, but more importantly that exit velocity. So it's in the data that we shared. June versus May was flat from an industry traffic perspective. Our performance in June was considerably better than May, which obviously conveys progress that we're making, and that progress has continued into July. It's important to note the drivers. Yes, traffic improvement helped, and we're pleased that the industry overall is seeing some strength relative to the tough start to the year. It's the colleague retention piece that is the most notable. We stabilized our colleague retention in Q4, and that will have meaningful positive impact as we enter 2026 because the 2025 story is about customer loss that occurred tied to colleague separation or colleague departure.

Mine was on the momentum, um, in the local um, you know case growth and you saw it in the fourth quarter and improvement from from the third. Um, that was roughly in line with, um, with what industry traffic Trends were. Um, you mentioned in Improvement in June and July. The question is whether your gaining share, um, within June and July, are you seeing that acceleration? Um, that should be that you expect to come with, um, the better, um, you know, with the sales force, getting more productive, just trying to gauge the inflection that you're seeing there. The impact that that that's having on your, your market share gains.

Kevin Hourican: And we're not going to be lapping those losses until we're in Q1. That's the point. So the strength of that, the headwind of 25 being replaced by a tailwind in 26, will be evident as we enter our Q1. So we wouldn't have expected that positive impact to be in Q4 because these are losses that have already occurred, and you carry that loss until you're at month 13. So we've stabilized retention. That is an important key point. As Kenny says, many times the new hires from the past year to year and a half are hitting their month 12, month 13, month 14 where their contribution positive significantly increases. An important data point I put in my prepared remarks. I just want to make sure it came through clearly.

Morning, Jake. It's Kevin. Thanks for the question. Yes, sir. We're really pleased with q4's progress versus Q3, but more importantly, that exit velocity. So, um, it's in the data that we shared June versus May was flat from an industry traffic perspective. Our performance in June was considerably better than May, which obviously conveys progress that we're making in that progress has continued into July. It's important to note that drivers, yes traffic Improvement uh helped and we're pleased that the industry overall is seeing some strength relative to the tough start to the year. It's the colleague retention piece. That is the most notable. We stabilized our colleague retention in Q4 and that will have meaningful positive impact as we enter 2026. Is the 2025 story is about customer loss. That occurred tied to colleague, uh, separation or colleague departure. And we're not going to be lapping. Those losses until we're in.

Kevin Hourican: The gap between new and lost in Q4 was double the gap that we experienced in Q1 through Q3. And again that strength will be visible and evident in fiscal 2026 as that loss rate comes down significantly. And when I add on top of that the three growth initiatives that I referenced on today's call that launched this summer and into early fall, we have significant confidence in our ability to deliver positive and profitable local case growth to take share. And that gives us the confidence in the guide that we put out there. It starts and ends with the colleague population stability which we have achieved and the tools that we are providing to our colleagues that help them increase their productivity. I'll talk to Kenny if he wants to add anything.

The gap between new and lost in Q4 was double the gap that we experienced in Q1 through Q3. And again that strength will be visible and evident in fiscal 2026 as that loss rate comes down significantly. And when I add on top of that the three growth initiatives that I referenced on today's call that launched this summer and into early fall, we have significant confidence in our ability to deliver positive and profitable local case growth to take share. And that gives us the confidence in the guide that we put out there. It starts and ends with the colleague population stability which we have achieved and the tools that we are providing to our colleagues that help them increase their productivity. I'll talk to Kenny if he wants to add anything.

1, that's the point. So, the strength of that the the headwind of 25 being replaced by a Tailwind in 26, will be evident as we enter our q1. So we wouldn't have expected that positive impact to be in Q4 because these are losses that have already occurred and you carry that loss into your at month 13. So we've stabilized retention. That is an important key Point. As Kenny says, many times the new hires from the past year to year and a half are hitting their month, 12 month, 13 month 14, where they're uh contribution positive significantly increases an important data point. I, I put in my prepared remarks, I just want to make sure it came through clearly. The gap between new and lost in Q4 was double the Gap that we experienced in Q's 1 through Q3. And again, that strength will be visible and evident in fiscal 2026 as that loss, rate comes down significantly. And when I add on top of that, uh, the 3 growth initiatives that I referenced on

Kenny Cheung: Sure. I agree with Kevin. Three things for me, the first is we are encouraged by the fact that we continue to see select geographies already hitting our growth expectations driven by SD additions and improved retentions, as Kevin just mentioned. And that's carrying over into Q1 2026. That's point number one. Point number two is, you know, Kevin talked about this. The 12 to 18 months is really important for us as the SE jumps on their productivity curve. And we're also seeing our retention playbook work across experienced SES as well. Right. So you have your year two, go to year three, three to four, four to five years as well. And that helps on the overall sales pool, which actually drives our new customer accounts. This past quarter we opened more new accounts than any other period this year.

today's call that launched this summer and into early fall, we have significant confidence in our ability to deliver positive and profitable local case growth to take share and that gives us the confidence in the guy that we put out there. It starts and ends with the colleague population stability which we have achieved and the tools that we are providing to our colleagues that helped them increase their productivity. I'll talk to toss McKenney if he wants to add anything. Sure I agree with Kevin. No 3 things from me. The first is you know we are

And we're also seeing our retention playbook work across experienced SES as well. Right. So you have your year two, go to year three, three to four, four to five years as well. And that helps on the overall sales pool, which actually drives our new customer accounts. This past quarter we opened more new accounts than any other period this year. Jake, as you know, new accounts are tomorrow's penetration opportunities. And then last but not least, we're seeing our service levels go up as well. Fill rates are up, on-time delivery is up as well. And this is the leading indicator for future business generation.

Kenny Cheung: Jake, as you know, new accounts are tomorrow's penetration opportunities. And then last but not least, we're seeing our service levels go up as well. Fill rates are up, on-time delivery is up as well. And this is the leading indicator for future business generation.

We are encouraged by the fact that we continue to deselect geographies already hitting our growth expectations, driven by FC additions and improved retention, as Kevin just mentioned. That's carrying over into Q1 2026. Point number one. Point number two is, as Kevin talked about, the next 12 to 18 months are really important for us as the SD jumpstones are productivity curve, and we're also seeing our retention playbook work across experience, SES as well. Right? So you have your Year 2 goes to Year 3, Year 3 to Year 4, and Year 4 to Year 5 as well. That's helped on the overall sales pool, which actually drives our new customer accounts. This past quarter, we opened more new accounts than any other period this year. And Jake, as you know, new accounts are tomorrow's penetration opportunities. And last but not least, we're seeing our service levels go up as well. Bill rates are up, all-time delivery is up as well, and this is the leading indicator for future business generation.

Kevin Hourican: Thank you.

Jake Bartlett: Thank you.

Operator: We'll take the next question from Jeffrey Bernstein with Barclays. Please go ahead. Your line is open.

Jeffrey Bernstein: Thanks, Jake.

Thank you.

Kevin Hourican: from Jeffrey Bernstein with Barclays, please go ahead. Great. Thank you very much. Just following on the top-line trend. I'm encouraged to see the improvement in recent months. Just wondering, what do you attribute in terms of the broader industry that gives you confidence in sustaining the momentum over the next 12 months? And then just to clarify, within Sysco's expectations, again, not looking at the industry, but specific to your momentum, just wondering if you could share any color in terms of Local case volume growth within the 3-5% sales, I think you mentioned positive. Thoughts on M&A, whether for yourself.

Kenny Cheung: Great. Thank you very much. Just following on the top line trends, encouraged to see the improvement in recent months. I'm just wondering to what do you attribute in terms of the broader industry that gives you confidence in sustaining the momentum over the next 12 months? And then just to clarify within Sysco's expectations, again, not looking at the industry but specific to your momentum. Just wondering if you could share any color in terms of the local case volume growth within the 3% to 5% sales. I think you mentioned positive and maybe thoughts on M and A, whether for yourself or perhaps related to headlines that we've seen recently about consolidation among some.

Jeffrey Bernstein: Great. Thank you very much. Just following on the top line trends, encouraged to see the improvement in recent months. I'm just wondering to what do you attribute in terms of the broader industry that gives you confidence in sustaining the momentum over the next 12 months? And then just to clarify within Sysco's expectations, again, not looking at the industry but specific to your momentum. Just wondering if you could share any color in terms of the local case volume growth within the 3% to 5% sales. I think you mentioned positive and maybe thoughts on M and A, whether for yourself or perhaps related to headlines that we've seen recently about consolidation among some. Of your larger peers. Just hoping to get a little bit more perspective on that. Thank you.

Thank you. Next question, from Jeffrey Bernstein with Barclays. Please go ahead. Your line is open.

Great, thank you very much. Uh, just following on the, uh, the Top Line Trends. I encourage to see the Improvement in recent months. I'm just wondering, what do you attribute in terms of the broader industry? That gives you confidence in sustaining the momentum over the next 12 months?

Um and then just to clarify, within Cisco's expectations again not looking at the industry, but specific to your momentum. Just wondering if you could share any color in terms of,

The local case volume growth within the 3 to 5% sales. I think you mentioned positive,

Jeffrey Bernstein: related to headlines that we've seen recently about consolidation among some of your larger peers. to get a little bit more perspective on that. Thank you.

Kevin Hourican: Of your larger peers.

Kenny Cheung: Just hoping to get a little bit more perspective on that. Thank you.

Kevin Hourican: Okay. Good morning, Jeff. I'll start with broad industry traffic to restaurants, down approximately 1% in the quarter, certainly better than Q3. We believe Q3 was a bit of an anomaly. You know, that's when the external news was quite negative. Consumer confidence dropped, the conversations about tariffs and the impact on consumer confidence that was happening in our Q3 calendar. Q1, the industry took a pretty significant step back. It's good to see in the most recent quarter an improvement against that. We think the anomaly was actually the start to the year, and what we just saw as an industry in our Q4 is more reflective of the operating environment. Kenny said it in his prepared remarks. We're expecting the current conditions to continue for 2026.

Kevin Hourican: head into slight traffic to the industry overall for this next fiscal year, and the growth that we will deliver will come from taking share, and we're confident in our ability to do that. As I mentioned a few moments ago, we're not going to repeat the customer loss rate that we experienced in 2025. We will be lapping those customer losses. We've been doing great with new customer wins over the past three quarters. I've shared that pretty openly on earnings calls. So we will sustain our new customer win rate. We will significantly improve our customer loss rate. And when we layer on top of that, the Perks 2.0 program I mentioned, which is going to significantly improve the service experience that our top customers will benefit from, that's going to drive penetration improvement. That will drive improved customer retention as well.

head into slight traffic to the industry overall for this next fiscal year, and the growth that we will deliver will come from taking share, and we're confident in our ability to do that. As I mentioned a few moments ago, we're not going to repeat the customer loss rate that we experienced in 2025. We will be lapping those customer losses. We've been doing great with new customer wins over the past three quarters. I've shared that pretty openly on earnings calls. So we will sustain our new customer win rate. We will significantly improve our customer loss rate. And when we layer on top of that, the Perks 2.0 program I mentioned, which is going to significantly improve the service experience that our top customers will benefit from, that's going to drive penetration improvement. That will drive improved customer retention as well.

Okay, good morning, Jeff. I'll start with broad Industries for traffic to restaurants down approximately 1% in the in the quarter. Uh, certainly better than Q3, We Believe Q3 was a bit of an anomaly, you know, that's when the external news was quite negative consumer confidence. Dropped the conversations about tariffs and the impact on consumer confidence that was happening in our Q3 calendar, q1. Uh, the industry took a pretty significant step back. It's good to see in the most recent quarter, uh, in Improvement against that. Um, we think the anomaly was actually the start to the year and what we just saw as an industry in our Q4 uh is more reflective of the operating environment and and Kenny said it in his preferred remarks we're expecting the current conditions to continue for 2026 read down slight traffic uh to the industry overall for this next fiscal year. And the growth that we will deliver will come from taking share and we're confident in our ability to do that.

As I mentioned, a few moments ago, we're not going to repeat the customer loss rate that we experienced in 2025. We will be lapping. Those customer losses. We've been doing great with new customer wins over the past 3 quarters, I've shared that pretty openly on Rene's call, so we will sustain our new customer win. Rate, we will significantly improve our customer loss rate. And when we layer on top of that, the perks 2.0 program, I mentioned, which is going to significantly improve the service experience that our top customers.

Kevin Hourican: The AI360 capability, which is our name internally for the AI-empowered CRM, is going to be meaningfully helpful. I'll talk more about that, I'm sure, as a part of this call, and we put all those things together, we are confident even in a flat to down overall macro, that we can grow local, that we will grow it profitably, and that will occur in fiscal 2026. So, Kenny, I toss to you for additional comments about the guide. Over to you.

The AI360 capability, which is our name internally for the AI-empowered CRM, is going to be meaningfully helpful. I'll talk more about that, I'm sure, as a part of this call, and we put all those things together, we are confident even in a flat to down overall macro, that we can grow local, that we will grow it profitably, and that will occur in fiscal 2026. So, Kenny, I toss to you for additional comments about the guide. Over to you.

Kenny Cheung: Sure, absolutely. So in terms of foot traffic, Kevin's right. One thing to put things in perspective though, foot traffic, while it's a good proxy as a whole for Sysco, if you think about our business, we have 2/3 of our business is restaurant and 1/3 of our business is recession-resilient categories such as education, healthcare, travel, and the like. And even within restaurants, our customers range from QSRs to casual dining to fine dining. So, and let's not forget that 20% of our business is international segment, which serves as a, in our view, a strategic counterbalance, right, and enhances the resiliency and stability of our overall business. In terms of the guide itself, Jeff, on the 3% to 5%, let me unpack that a little bit for you. So top line, 3% to 5%, which is $84 billion to 85 billion.

Will benefit from that's going to drive penetration Improvement that will drive improved customer retention as well. The AI 360 capability which is our name internally for the AI. Empowered CRM is going to be meaningfully helpful, I'll talk more about that. I'm sure as a part of this call and we put all those things together, we are confident even in a flat to down overall macro that we can grow local that we will grow at profitably and that will occur in fiscal 2026. So Kenny I tossed to you for um additional comments about the guide um over to you. Sure, absolutely. So, you know, in terms of foot traffic, you know, Kevin's right. Um you know, 1 thing to put things in perspective though, uh, put traffic while it's a good proxy as a whole for Cisco. If you think about our business, right? We have 2 third of our businesses restaurant and 1/3 of our business is recession resilient category such as uh, education Healthcare travel, and the likes. And even with within restaurants, our our customer ranges, from qsrs to calculate dining, to find dining. So and let's

Kenny Cheung: Remember, on a year on year standpoint, there is a lapping impact here from the divestiture of Mexico. That is roughly 50 basis points on a year on year standpoint. Then, if you decouple between volume and inflation, inflation is roughly assumed at 2% inflation. Right now, Jeff, we are operating right around that ballpark right now. USBL this quarter was 2.4%, and International was roughly 3.4%. The majority of the spread between US and International was FX driven. So, again, long story short, 2%. It's where we're upping it right now, and it bodes well for the industry on volume and M&A contributions. Those two combined, you can probably model in 2% to 3% growth, and that's what you tie back to the 3% to 5%.

Remember, on a year on year standpoint, there is a lapping impact here from the divestiture of Mexico. That is roughly 50 basis points on a year on year standpoint. Then, if you decouple between volume and inflation, inflation is roughly assumed at 2% inflation. Right now, Jeff, we are operating right around that ballpark right now. USBL this quarter was 2.4%, and International was roughly 3.4%. The majority of the spread between US and International was FX driven. So, again, long story short, 2%. It's where we're upping it right now, and it bodes well for the industry on volume and M&A contributions. Those two combined, you can probably model in 2% to 3% growth, and that's what you tie back to the 3% to 5%.

Not forget a 20% of our business is international segment which serves as a in our view, a strategic account of balance, right? And enhances the resiliency and stability of our overall business. In terms of the guide itself, Jack on the 3 to 5%. Let me unpack that a little bit for you. So, Top Line 3 to 5%, uh, which is 84 billion to 85 billion dollars. Remember on a year on your SP end point, there is a lapping impact here from the diversity of Mexico, uh, that is roughly 50 basis points on a year on your standpoint.

Kevin Hourican: Okay, and then the third part of your question, which was the speculation on industry news. We're not going to speculate on M and A rumors in the industry for Sysco. We're focused on driving profitable growth within our strategic capabilities. What we are very pleased with is that Q4 was better than the entire year. June was better than Q4, July. That momentum is continued as we progress in through 2026. We will be lapping an accelerated or elevated loss rate last year that will not be repeated when we layer on top of that condition the growth initiatives that I just referenced. We have strong confidence in our ability to take share profitably, grow the business, and deliver upon the guidance that was just communicated by Kenny. And we're positioned therefore to have compounding improvement to the overall financial health of the company.

Kevin Hourican: Okay, and then the third part of your question, which was the speculation on industry news, we're not going to speculate on M&A rumors in the industry. For Sysco, we're focused on driving profitable growth within our strategic capabilities. What we are very pleased with is that Q4 was better than the entire year. June was better than Q4. July, that momentum has continued. As we progress into 2026, we have a lapping and accelerated or elevated loss rate last year that will not be repeated. When we layer on top of that condition, the growth initiatives that I just referenced, we have strong confidence in our ability to take share, profitably grow the business, and deliver upon the guidance that was just communicated by Kenny.

All right, so and then, if you decouple between volume and inflation, inflation is roughly assumed at uh, 2% inflation and right now. Jeff we are operating right around that ballpark right now. Uh usbl this quarter was 2.4% International was roughly uh 3.4% the majority of the spread between us and international was affects driven. So again long story short 2%, it's we're upping it right now and it bows well for the industry on volume and m&a contributions. Those 2 combined you, you can probably model in 2 to 3% growth. And that's what you tie back to the 3 to 5%.

We will be lapping an accelerated or elevated loss rate last year that will not be repeated when we layer on top of that condition the growth initiatives that I just referenced. We have strong confidence in our ability to take share profitably, grow the business, and deliver upon the guidance that was just communicated by Kenny. And we're positioned therefore to have compounding improvement to the overall financial health of the company. We have confidence in our ability to succeed in the marketplace.

Kevin Hourican: And we're positioned, therefore, to have compounding improvement to the overall financial health of the company. So we have confidence in our ability to succeed in the marketplace.

Kevin Hourican: We have confidence in our ability to succeed in the marketplace. Thank you. Thanks, Jeff.

Okay. And then the third part of your question which was the the speculation on industry news that we're not going to speculate on m&a, Rumors in the industry for Cisco. We're focused on driving profitable growth within our strategic capabilities. What we are very pleased with is that Q4 was better than the entire year. June was better than Q4 July that momentum is continued as we progress in through 2026. We were overlapping and accelerated or elevated loss rate last year. That will not be repeated. When we layer on top of that condition, the growth initiatives that I just referenced, we have strong confidence in our ability, to take share profitably, grow the business, and deliver upon the guidance. That was just communicated by Kenny and we're positioned, therefore, to have, you know, compounding Improvement to the overall Financial Health, you know, of the company. So, we have confidence in our ability to succeed in the marketplace.

Jeffrey Bernstein: Thank you.

Kevin Hourican: Thanks, Jeff.

Operator: Thanks, Jeff.

Thank you.

Operator: We'll take our next question from Alex Slagle with Jefferies. Please go ahead. Your line is open.

Thanks Jeff.

Alexander Slagle: Our next question from Alex Slagle with Jeffreys, please go ahead. Alright, thanks. Good morning. Question on international. Given the recent strength in this business, do you expect the year-over-year growth momentum we've seen to moderate a bit as you lap this growth? Maybe you can just kind of call out some of the specific drivers that give you the visibility for that growth to continue as we roll through the year.

Kenny Cheung: All right, thanks.

Alex Slagle: All right, thanks. Morning question on international. Just given the recent strength in this. Business, do you expect the year-over-year growth momentum we've seen to moderate a bit? As you lap this growth, maybe you. Can just kind of call out some. Of the specific drivers that give you. The visibility for that growth to continue. As we roll through the year?

We'll take our next question from Alex legal with Jeffrey's. Please go ahead. Your line is open

Kevin Hourican: Morning question on international.

Kenny Cheung: Just given the recent strength in this.

Kevin Hourican: Business, do you expect the year-over-year growth momentum we've seen to moderate a bit?

Kenny Cheung: As you lap this growth, maybe you.

Kenny Cheung: Can just kind of call out some.

Kenny Cheung: Of the specific drivers that give you.

Kenny Cheung: The visibility for that growth to continue.

Kenny Cheung: As we roll through the year?

Maybe you could just kind of call out some of the specific drivers um that give you the visibility for that growth to continue uh as we roll through the year.

Kevin Hourican: Good morning, Alex. This is Kevin. We expect the success in our international segment to continue in 2026, not to moderate or slow down. The why is the health is coming from all geographies. It's coming in the top, the middle, and on the bottom of the P&L. And I'll just highlight a few of the examples. The success we're having on the top line, which is volume strength, especially in local, we're driving a four plus percent case growth in local. We expect for that level of performance to continue into 2026 for the following reasons. We're adding sales resource headcount into the street sales side of the business, the local side of the business in major metros.

Kevin Hourican: Good morning, Alex. This is Kevin. We expect the success in our international segment to continue in 2026, not to moderate or slow down. The why is the health is coming from all geographies. It's coming in the top, the middle, and on the bottom of the P&L, and I'll just highlight a few of the examples. The success we're having on the top line, which is volume strength, especially in local. We're driving a 4-plus percent case growth in local. We expect for that level of performance to continue into 2026 for the following reasons. We're adding sales resource headcount into the street sales side of the business, the local side of the business in major metros. So Toronto has an opportunity to see increased headcount, boots on the ground, boots on the street, increasing our ability to serve local restaurant customers.

Kevin Hourican: So Toronto has an opportunity to see increased headcount, boots on the ground, boots on the street, increasing our ability to serve local restaurant customers. We're doing that play in Dublin. We're doing that play in London. We are doing that play in Stockholm. When we do that in international, we're increasing our physical presence on the ground, and we are seeing market share capture coming from that. We've improved our website in each of those countries. We've improved our ability to have relevant pricing in each of those countries. And each of those three vectors is driving volume capture.

Kevin Hourican: We're doing that play in Dublin, we're doing that play in London, and we are doing that play in Stockholm. When we do that in international, we're increasing our physical presence on the ground, and we are seeing market share capture coming from that. We've improved our website in each of those countries. We've improved our ability to have relevant pricing in each of those countries, and each of those three vectors is driving volume capture. Examples like Sysco Your Way are enabling that success in the middle of the P&L. We've launched strategic sourcing in every country. We did that first in the United States. We've carried that playbook to each international geography. Food is inherently purchased local, but that capability of strategic sourcing exists, and that opportunity exists in every country. And we're expanding our profit margins because of that.

We're doing that play in Dublin, we're doing that play in London, and we are doing that play in Stockholm. When we do that in international, we're increasing our physical presence on the ground, and we are seeing market share capture coming from that. We've improved our website in each of those countries. We've improved our ability to have relevant pricing in each of those countries, and each of those three vectors is driving volume capture. Examples like Sysco Your Way are enabling that success in the middle of the P&L. We've launched strategic sourcing in every country. We did that first in the United States. We've carried that playbook to each international geography. Food is inherently purchased local, but that capability of strategic sourcing exists, and that opportunity exists in every country. And we're expanding our profit margins because of that.

Yeah, good morning, Alex. This is Kevin. We expect the success in our International segment to continue in 2026 not to moderate or slow down. Uh the LIE is, it's the health is coming from all geographies. It's coming in the top, the middle and on the bottom of the p&l and I'll just highlight a few of the examples. Uh the success we're having on the top line which is volume strength. Specially in local, we're driving a 4 plus percent case growth in local, we expect for that level of performance to continue into 2026. For the following reasons, we're adding sales resource, headcount into the street sales, side of the business, the local side of the business in major metros. So, uh, Toronto has an opportunity to um, see increased headcount boots on the ground boots on the street. Uh, increasing our ability to serve local restaurant customers. We're doing that play in Dublin. We're doing that play in, uh, London. We are doing that play in Stockholm. When we do that in international, we're increasing.

Kevin Hourican: Examples like Sysco Your Way are enabling that success. In the middle of the P&L, we've launched strategic sourcing in every country. We did that first in the United States. We've carried that playbook to each international geography. Food is inherently purchased local, but that capability of strategic sourcing exists and that opportunity exists in every country, and we're expanding our profit margins because of that excellent work done by our merchandising and buying teams. And on the bottom line, deploying enterprise technology, improved warehouse technology, improved routing technology, improved back-end software to increase efficiency in businesses that were more manual than Sysco is used to and accustomed to has driven significant bottom-line growth, seventh consecutive quarter of double-digit profit growth.

Kevin Hourican: Excellent work done by our merchandising and buying teams. On the bottom line, deploying enterprise technology, improved warehouse technology, improved routing technology, improved back-end software to increase efficiency in businesses that were more manual than Sysco is used to and accustomed to has driven significant bottom line growth. Seventh consecutive quarter of double-digit profit growth. So Alex, we're really bullish on international, and this is just within the countries that we compete within today. Our opportunities are bright in international, and we are very bullish on our long-term future internationally. Kenny, anything to add?

Excellent work done by our merchandising and buying teams. On the bottom line, deploying enterprise technology, improved warehouse technology, improved routing technology, improved back-end software to increase efficiency in businesses that were more manual than Sysco is used to and accustomed to has driven significant bottom line growth. Seventh consecutive quarter of double-digit profit growth. So Alex, we're really bullish on international, and this is just within the countries that we compete within today. Our opportunities are bright in international, and we are very bullish on our long-term future internationally. Kenny, anything to add?

Kevin Hourican: So, Alex, we're really bullish on international, and this is just within the countries that we compete within today. Our opportunities are bright in international, and we are very bullish on our long-term future internationally.

Our physical presence on the ground and we are seeing market share capture coming from that. We've improved our website. And each of those countries, we've improved our ability to have relevant pricing in each of those countries and each of those 3 vectors is driving volume capture examples, like Cisco. Your way are enabling that success in the middle of the pnl. We've launched strategic sourcing in every country and we're, we did that first in the United States. We've carried that Playbook to each International geography. Food is inherently purchased local, but that capability of strategic sourcing exists and that opportunity exists in every country and we're expanding our profit margins. Because of that. Excellent work done by our merchandising and buying teams and on the bottom line. Deploying Enterprise technology improved Warehouse technology, improved routing technology, improved back-end software to increase efficiency in businesses that were more manual than Cisco is used to in accustomed, to has driven significant, bottom line, growth, seventh consecutive quarter of double digits.

Kenny Cheung: Kenny, anything to add? Yeah, so, Alex, as we think about the margin profile of this business, there's nothing structural that impedes our ability to achieve the same profit levels in the U.S. There's a lot of upside here. Just think back a few years ago, the margin of the business was roughly 2%. Since then, we've doubled the margins to 4% now, so that train will continue. And the last thing I would say is that it's a place that we will continue to invest for growth. That's part of our working capital strategy and the capital allocation strategy.

Kenny Cheung: Yeah. So you know, Alex, as we think about the margin profile of this business, there's nothing structural that impedes our ability to achieve the same profit levels in the US. There's a lot of upside here. You know, just think back a few years ago the margin of the business was roughly 2%. Since then we've doubled the margins to 4% now. So that trend will continue. And the last thing I would say is that it's a place that we will continue to invest for growth as part of our working capital strategy and the two capital allocation strategy the two recent acquisitions, Ready Chef and Campbell's sitting in Ireland and GB, they're doing really well. Off to a great start and ahead of our own deal model from a both a commercial go to market standpoint as well as a cost synergy standpoint.

Profit growth. So, Alex, we're really bullish on international, and this is just within the countries that we compete in today. Our opportunities are bright internationally, and we are very bullish on our long-term future abroad. Kenny, anything that you'd like to add? Yeah, so, you know, Alex, as we think about the margin profile of this business, there's nothing structural that impedes our ability to achieve the same proper levels in the U.S. There's a lot of upside here. You know, just think back a few years ago when the margin of the business was roughly 2%. Since then, we've…

Kenny Cheung: The two recent acquisitions, Ready, Chefs, and Campbell's sitting in Ireland and GB. They're doing really well. Off to a great start and ahead of our own deal model from both a commercial go-to-market standpoint as well as a cost-synergy perspective.

The margins, the 4% now so that train will continue. And the last thing I would say is that it's a place that we will continue to invest for growth as part of our working capital, uh, strategy, and the 2, uh, Capital application strategy. The 2 recent acquisition, uh, ready shifts in Campbell sitting in Ireland and GB. They're doing really well. Also, a great start and ahead of our own deal model from a, both a commercial go to market standpoint, as well as the cost energy standpoint.

John Heinbockel: Great, thank you. from John Heinbockel with Guggenheim. Please go ahead, you're live. Hey, so Kevin, I wanted to drill down right on the That's sort of the Salesforce local case growth relationship. I assume with your commentary that local case growth is, maybe this is a wrong assumption, it's positive today or it's crossed into positive territory. What's your current thinking on how you want to grow the sales? Right, versus that seven gold that you had originally. Uh, you know, and then what do you think, um, what's the right number if it's, if the, if the effort is working?

Kevin Hourican: Great.

Alex Slagle: Great.

Kenny Cheung: Thank you.

Kevin Hourican: Thanks Alex.

Great. Thank you.

Operator: We'll take the next question from John Heinbockle with Guggenheim. Please go ahead. Your line is open.

Thanks Alex.

Kevin Hourican: So Kevin, I wanted to drill down right on the sort of sales force local case growth relationship.

John Heinbockel: So Kevin, I wanted to drill down right on the sort of sales force local case growth relationship. So I assume with your commentary that. Local case growth is maybe this is. A wrong assumption that it's positive today or it's crossed into positive territory. What's your current thinking on how you want to grow the sales force right versus that sevenfold that you had originally? What do you think? What's the right number? If the effort is working, what's the? Right number that local case growth should grow at in your mind?

We'll take the next question from John Hine. Buckle with Guggenheim, please go ahead. Your line is open.

Kevin Hourican: So I assume with your commentary that.

Hey, so Kevin I wanted to uh drill down right on the um it's sort of the sales force, local case, growth relationship. So

Kevin Hourican: Local case growth is maybe this is.

Kevin Hourican: A wrong assumption that it's positive today or it's crossed into positive territory.

Kevin Hourican: What's your current thinking on how you want to grow the sales force right versus that sevenfold that you had originally? What do you think? What's the right number?

I assume uh with your commentary that local case growth is maybe this is the wrong assumption that it's it's positive today or it's crossed into positive territory.

What's what's your current thinking on how you want to grow the sales force right versus that? That that 7 goal that you had originally

Kevin Hourican: If the effort is working, what's the?

John Heinbockel: What's the right number that local case growth should grow at? um in your mind?

Kevin Hourican: Right number that local case growth should grow at in your mind? Good morning, John. Thanks for the question. I'll start with our expectations of colleague growth for fiscal 2026. We anticipate adding approximately 4% incremental sales professional headcount in fiscal 2026. As we look back on fiscal 2025, one of the reasons the headcount investments that we have already made are not showing up in the outcomes of the year just completed is the excess or excessive colleague turnover that we had, which resulted in an increased customer loss ratio, which was masking the incremental benefit that was coming from the new hires. It's incredibly important to note that we track every single new hire in a cohort or class that they join with. We're able to model where should they be from a productivity perspective in month 3, month 6, month 9, month 12.

Uh, you know and what, what do you think? Um, what's the right number? If it's if the if the effort is working

What's the right number that local case growth should grow at?

Kevin Hourican: Good morning, John. Thanks for the question. I'll start with our expectations of colleague growth for fiscal 2026. We anticipate adding approximately 4% incremental sales professional headcount in fiscal 2026. As we look back on fiscal 2025, one of the reasons the headcount investments that we have already made are not showing up in the outcomes of the year just completed is the excess or excessive colleague turnover that we had, which resulted in an increased customer loss ratio, which was masking the incremental benefit that was coming from the new hires. It's incredibly important to note that we track every single new hire in a cohort or class that they join with. We're able to model where should they be from a productivity perspective in month 3, month 6, month 9, month 12.

Um, in your mind.

Kevin Hourican: We're able to model where should they be from a productivity perspective in month 3, month 6, month 9, month 12, every one of the hiring classes that we have done. Those colleagues are hitting those productivity targets. Kenny has said many times, month 13 matters. It's when they break through to begin to be productive and eclipsing month 18 matters even more because there's a turbo charge of their productivity between month 12 and month 18. For fiscal 26, it's very important to do the understanding of the math of increased headcount each and every quarter is hitting that incredibly pivotal 12 to 18 month period.

Kevin Hourican: Every one of the hiring classes that we have done, those colleagues are hitting those productivity targets. Kenny has said many times. Month 13 matters. It's when they break through to begin to be productive. And eclipsing month 18 matters even more because there's a turbocharge of their productivity between month 12 and month 18 for fiscal 2026. It's very important to do the understanding of the math of increased headcount. Each and every quarter is hitting that incredibly pivotal 12- to 18-month period. And we're not going to be repeating the customer loss rate. Therefore, we will inflect to positive case growth in fiscal 2026 from local and profitable case growth to boot. So Kenny, any additional comments you'd like to make about guidance for 2026?

Every one of the hiring classes that we have done, those colleagues are hitting those productivity targets. Kenny has said many times. Month 13 matters. It's when they break through to begin to be productive. And eclipsing month 18 matters even more because there's a turbocharge of their productivity between month 12 and month 18 for fiscal 2026. It's very important to do the understanding of the math of increased headcount. Each and every quarter is hitting that incredibly pivotal 12- to 18-month period. And we're not going to be repeating the customer loss rate. Therefore, we will inflect to positive case growth in fiscal 2026 from local and profitable case growth to boot. So Kenny, any additional comments you'd like to make about guidance for 2026?

Kevin Hourican: And we're not going to be repeating the customer loss rate. Therefore, we will inflect to positive case growth in fiscal 2026 from local and profitable case growth to boot.

Kenny Cheung: So, Kenny, any additional comments you'd like to make about guidance for 26? Yeah, so if you think about the headcount, just putting in numbers context. So in 2024, we hired 450. In 2025, we hired 300. And then as Kevin said, 4% increased in 2026. If you add that all together, the CAGR of the growth rate of sales headcount is roughly mid-single digits. On the forward, we do believe we will render a return from this investment. That's point number one. Number two, I think we talked about the analogy before. The faucet is turning on right now.

Kenny Cheung: Yeah, so if you think about the headcount, just put things in numbers context, so in 2024 we hired 450. In 2025 we hired 300. And then, as Kevin said, 4% increase in 2026. If you add that altogether, the CAGR of the growth rate of sales headcount is roughly mid-single digits going forward. We do believe we will render a return from this investment. That's point number one. Number two, I think we talked about this analogy before. The faucet is turning on right now on the 4. From a long-term stability standpoint, we do expect headcount growth to be in line with volume growth, therefore driving positive leverage in SG&A.

Targets, Kenny has said many times, month 13 matters. It's when they break through to begin to be productive, and eclipsing month 18 matters even more because there's a turbocharged increase in their productivity between month 12 and month 18 for fiscal 2026. It's very important to understand the math of increased headcount each and every quarter, hitting that incredibly pivotal 12 to 18 month period. And we're not going to be repeating the customer loss rate; therefore, we will expect positive case growth in fiscal 2026 from local and profitable case growth, you know, to boot. So can you give any additional comments you'd like to make about guidance for 2026? Yeah, but if you think about the headcount, just putting, you know, in numbers context. So in 2024, we hired 450, and in 2025, we hired 300, and then it's, as Kevin said, a 4% increase in 2026. If you add that all together, the CAGR of the growth rate of sales accounts is roughly mid-single digits.

Kenny Cheung: On the forward, from a long-term stability standpoint, we do expect headcount growth to be in line with volume growth, therefore driving positive leverage.

Forward. We do, we do believe we will render a return from this investment. That's point number one. And number two, the, you know, we I think we talked about this analogy before: the fast is turning on right now, in on the 4th of August ability standpoint. We do expect headcount growth to be in line with volume growth, therefore driving positive leverage in RPO.

Kenny Cheung: Thank you. Thanks, John.

Kevin Hourican: Thanks, John.

Thank.

Operator: We'll take our next question from Kelly Banya with BMO Capital. Please go ahead. Your light is open.

Thank thanks. John.

Kelly Bania: We'll take our next question from Kelly. GMO Capital. Please go ahead. Hi, good morning. I was wondering if we could go back to the Price Agility Initiative and what are the financial implications of that initiative? I believe it's intended to drive growth, but is there any sort of tradeoff between margin and case growth? And you mentioned maybe the desire to learn more about the change management required to support a broader rollout. I was wondering if you can elaborate on that, and is it in your plan for this fiscal year that that does broadly roll out to more regions, or does this remain kind of a pilot and regional test?

We'll take our next question from Kelly Ba with BMO Capital. Please go ahead; your line is open.

[Company Representative] (Sysco Corporation): Hi, good morning. I was wondering if we could go back to the price agility initiative and what are the financial implications of that initiative. I believe it's intended to drive growth, but is there any sort of trade off between margin and case growth? You mentioned maybe the desire to learn more about the change management required to support a broader rollout? Wondering if you can elaborate on that? And is it in your plan for this fiscal year that that does broadly roll out to more regions or does this remain kind of a pilot and regional test?

Kelly Bania: Hi, good morning. I was wondering if we could go back to the price agility initiative and what are the financial implications of that initiative. I believe it's intended to drive growth, but is there any sort of trade off between margin and case growth? You mentioned maybe the desire to learn more about the change management required to support a broader rollout? Wondering if you can elaborate on that? And is it in your plan for this fiscal year that that does broadly roll out to more regions or does this remain kind of a pilot and regional test?

Kevin Hourican: Yeah, Kelly, good question. Thank you. It's Kevin. I'll start. So the stated financial objectives would be to improve volume, but to do so profitably. So maintaining margin percentage but driving increased volume through the pipe. That's the stated objective. The objective is not to lower margin rate, to drive volume. We could do that centrally if that was something that we wanted to do. It's to give that sales colleague the opportunity to be responsive in the spot moment to the needs of the customer. That sales colleague understands even better than a computer does the emotional items that a customer has within their menu, within their book of business. And if that customer presents themselves with, hey, I think I can do $2 better elsewhere. We need to give that colleague the opportunity to respond in the moment.

Hi, good morning. Um, I was wondering if we could go back to the to the price agility uh initiative and what are the financial implications of that initiative? I believe it's intended to drive growth. But is there any sort of trade-off between margin and and case growth? And um you mentioned, um, maybe the desire to learn more about the change management, required to support a broader rollout, wondering if you can elaborate on that. And is it, is it in your plan for this fiscal year that that does um, broadly roll out uh, to to the more regions or just remain kind of a, a pilot and Regional test.

Yeah, Kelly good question. Thank you. It's Kevin. I I'll start so the the stated Financial objectives would be to improve volume but to do so profitably. So maintaining margin percentage, but driving increased volume through the pipe. That's the stated objective, the objective is not to lower margin rate to drive volume, uh, we could do that. Centrally if that was something that we wanted to do, its to give that sales, scholarly the opportunity to be responsive in the spot moment, to the needs of the customer that sales colleague understands even better than a computer. Does the emotional items that a customer has within their menu within their book of

Kevin Hourican: The change management I'm referring to is the need for that colleague to then be able to do something we call sell around the room, which is, I'm going to give you that price that you just asked for, but I know you're buying produce from someone else. I have the best produce program in town. And can we talk about having my FreshPoint colleague join me next week when I visit you to get that product put onto the Sysco truck? That's the change management, that's the selling skills development that is necessary as a part of giving more decision making authority into the hands of that sales colleague. Kenny always makes the point the compensation for that colleague will reward them if they do the right things, which is if I'm going to make an investment in price, I offset it elsewhere.

The change management I'm referring to is the need for that colleague to then be able to do something we call sell around the room, which is, I'm going to give you that price that you just asked for, but I know you're buying produce from someone else. I have the best produce program in town. And can we talk about having my FreshPoint colleague join me next week when I visit you to get that product put onto the Sysco truck? That's the change management, that's the selling skills development that is necessary as a part of giving more decision making authority into the hands of that sales colleague. Kenny always makes the point the compensation for that colleague will reward them if they do the right things, which is if I'm going to make an investment in price, I offset it elsewhere.

Kevin Hourican: It will punish them if they make an investment in price and they don't succeed in offsetting that elsewhere. So, again, responsibly rolling this out. We don't want to roll it out until the colleagues are prepared to be successful in that environment. We do not, to answer your question, have meaningful growth tied to this program in fiscal 2026. A.k.a., if we didn't move it nationwide, we don't have risks on delivering our numbers. This is a program we intend to roll out, but we're going to roll it out at the pace of the skills development of the organization. In contrast, the other two programs that I talked about on today's program are full speed ahead. Perks 2.0. As I mentioned on my prepared remarks, up until now Perks has been a very successful program for us.

It will punish them if they make an investment in price and they don't succeed in offsetting that elsewhere. So, again, responsibly rolling this out. We don't want to roll it out until the colleagues are prepared to be successful in that environment. We do not, to answer your question, have meaningful growth tied to this program in fiscal 2026. A.k.a., if we didn't move it nationwide, we don't have risks on delivering our numbers. This is a program we intend to roll out, but we're going to roll it out at the pace of the skills development of the organization. In contrast, the other two programs that I talked about on today's program are full speed ahead. Perks 2.0. As I mentioned on my prepared remarks, up until now Perks has been a very successful program for us.

Business. And if that customer presents themselves with, "Hey, I think I can do $2 better elsewhere," you know, we need to give that colleague the opportunity to respond in the moment. The change management I’m referring to is the need for that colleague to then be able to do something. We call it "sell around the room," which is, I’m going to give you that price that you just asked for, but I know you’re buying produce from someone else. I have the best produce program in town, and can we talk about having my Fresh Point colleague join me next week when I visit you to get that product put onto the Cisco truck? That’s the change management. That’s the selling skills development that is necessary as a part of giving more decision-making authority into the hands of that sales colleague. Kevin always makes the point that the compensation for that colleague will reward them if they do the right things, which is, if I’m going to make an investment in price, I offset it elsewhere. It will punish them if they make an investment in price and they don’t succeed in offsetting that elsewhere. So again, responsibly rolling this out. We don’t want to roll it out until the...

colleagues are prepared to be successful in that environment. We do not to answer your question, have meaningful growth tied to this program in fiscal 2026 AKA. If we didn't move it nationwide, uh, we don't have risks on delivering our numbers. This is a program we intend to roll out, but we're going to roll it out at the pace of the skills development of the organization. In contrast, the other 2 programs that I talked about on today's program are Full Speed Ahead perks. 2.0, as I mentioned

Kevin Hourican: It's best to think about it as a marketing points, loyalty rewards type program, and it is converting to the customers that are eligible to be in Perks, which are our best customers receiving a step change differentiated better level of service than the average customer. So think about the hotel that you prefer. Think about the airline that you prefer. Yes, you get points from those entities, but if you're in their top tier, what you're really getting is a substantially better service experience. Whatever that thing is that's important to you, you get to board first, you get to put your bag in the overhead. If there's a cancellation, they're taking care of you first. That's an example only from a different industry. In our industry, we know exactly what these key tenets are that matter to our customers.

It's best to think about it as a marketing points, loyalty rewards type program, and it is converting to the customers that are eligible to be in Perks, which are our best customers receiving a step change differentiated better level of service than the average customer. So think about the hotel that you prefer. Think about the airline that you prefer. Yes, you get points from those entities, but if you're in their top tier, what you're really getting is a substantially better service experience. Whatever that thing is that's important to you, you get to board first, you get to put your bag in the overhead. If there's a cancellation, they're taking care of you first. That's an example only from a different industry. In our industry, we know exactly what these key tenets are that matter to our customers.

On my prepared remarks, up until now, Perks has been a very successful program for us, but it's been thought of as a marketing, uh, points loyalty rewards type program.

Kevin Hourican: These Perks customers are going to get a substantially elevated service program. We don't need to test that. We're rolling that out nationwide, and we're rolling it out this summer. It's going to make a difference. It's going to make a difference on our customer retention. It will make a difference on our penetration. We are confident because we have been testing this in a spot market that it will have an impact. We have accounted for that in our guidance, and we are confident in its ability to move the needle. The other program I launched today, excuse me, announced today, this AI360 is a really big deal. As I said in my prepared remarks, to say we're excited about this would be an understatement. In the palm of the hand of our colleague.

These Perks customers are going to get a substantially elevated service program. We don't need to test that. We're rolling that out nationwide, and we're rolling it out this summer. It's going to make a difference. It's going to make a difference on our customer retention. It will make a difference on our penetration. We are confident because we have been testing this in a spot market that it will have an impact. We have accounted for that in our guidance, and we are confident in its ability to move the needle. The other program I launched today, excuse me, announced today, this AI360 is a really big deal. As I said in my prepared remarks, to say we're excited about this would be an understatement. In the palm of the hand of our colleague.

Kevin Hourican: On their smartphone, they have all the tools that they need to better understand that customer, to know what things could be offered to that customer, pre-approved from a pricing perspective. If they want to learn more about that product because they're not comfortable selling the item, they can quickly ask for input on how to sell that product in a freeform AI-based language model that gives them really good suggestions on how to sell that product. So we will be rolling out AI360 coast to coast in the places that we are piloting that tool. The response rate from our colleagues, both tenured and new, has been remarkable. And as I said in my prepared remarks, where we are incredibly bullish is that newer, lower-tenured colleague who has a lot to learn about the product range we have about the selling process that we have.

On their smartphone, they have all the tools that they need to better understand that customer, to know what things could be offered to that customer, pre-approved from a pricing perspective. If they want to learn more about that product because they're not comfortable selling the item, they can quickly ask for input on how to sell that product in a freeform AI-based language model that gives them really good suggestions on how to sell that product. So we will be rolling out AI360 coast to coast in the places that we are piloting that tool.

Important to you, you get the board first, you get to put your bag in the overhead, if there's a cancellation, they're taking care of you first. That's an example, only from a different industry in our industry. We know exactly what these key tenants are that matter to our customers and these perks customers are going to get a substantially elevated service program and we don't need to test that. We're rolling that out Nationwide. Uh and we're rolling it out this summer and it's going to make a difference. It's going to make a difference in our customer retention. It'll make a difference on our penetration and we are confident because we have been testing this in a spot Market that it will have an impact. And we have accounted for that in our guidance and we are confident in its ability. To move the needle and the other program. I launched today. Excuse me, announced today. This AI CRM is a really big deal. As I said in my prepared remarks just say we're excited about this would be in under statement in the palm of the hand of our colleague on their smartphone. They have all the tools that they need to better understand that customer to know what things could be, offered to that customer pre-approved.

The response rate from our colleagues, both tenured and new, has been remarkable. And as I said in my prepared remarks, where we are incredibly bullish is that newer, lower-tenured colleague who has a lot to learn about the product range we have about the selling process that we have. This tool helps accelerate their skills development and makes them a more effective sales rep, which will increase overall productivity.

From a pricing perspective, if they want to learn more about that product because they're not comfortable selling the item, they can quickly ask for input on how to sell that product and a free form. You know, AI based, uh, language model, that gives them really good suggestions on how to sell that product. So we will be rolling out ai360 coast to coast in the places that we are piloting that tool the response rate from our colleagues, both tenured and new has been remarkable. And as I said, in my prepared remarks, where we are, incredibly bullish. Is that

Kevin Hourican: This tool helps accelerate their skills development and makes them a more effective sales rep, which will increase overall productivity.

Newer, uh, lower tenure colleague, who has a lot to learn about the product range. We have about the selling process that we have, this tool helps accelerate, their skills development and makes them in a more effective sales rep, which will increase overall productivity.

Kevin Hourican: Thank you. That's very helpful. Kevin, just to follow up with the PERCS 2.0, can you size up what that looks like if it's as successful as you hope in fiscal 2026 and maybe in the years to come? What is the potential there? as you focus on that penetration. Yeah, so for us, it's an enabler of delivering the guidance that we just provided. So on today's call, I'm not going to parse out its contribution, but it's meaningful. It is absolutely meaningful. Think about Pareto. A percentage of your customer is driving a disproportionate percentage of your sales and profit.

[Company Representative] (Sysco Corporation): Thank you, that's very helpful. Kevin, just to follow up with the Perks 2.0, can you size up what that looks like? If it's as successful as you hope in fiscal 2026 and maybe in the years to come, what is the potential there? Focus on that penetration.

Kelly Bania: Thank you, that's very helpful. Kevin, just to follow up with the Perks 2.0, can you size up what that looks like? If it's as successful as you hope in fiscal 2026 and maybe in the years to come, what is the potential there? Focus on that penetration.

Um,

Size up what that looks like if it's as successful as you hope in fiscal 2026 and maybe in the years to come. And what is the potential there?

Kevin Hourican: Yeah. So for us it's an enablement, enabler of delivering the guidance that we just provided. So on today's call, I'm not going to parse out its contribution, but it's meaningful. It is absolutely meaningful. Think about Pareto. Percentage of your customer is driving a disproportionate percentage of your sales and profit. That's exactly who these customers are. And the customer doesn't get to opt in. We get to choose. We are specifically choosing. It's an invite only into the program club. And our sales colleagues have the opportunity to actually motivate customers who are right on the cusp. Hey, with an extra $1,000 a week I can get you into this program. So we are bullish about this, Kelly. We will share more, let's say it this way, at upcoming investor events about this program and the expected impact we intend for it to have.

if you focus on that penetration,

Yeah. So for us, it's an enabler of delivering the guidance that we just provided. So on today's call, I'm not going to parse out its contribution, but it's meaningful.

Kenny Cheung: That's exactly who these customers are. And the customer doesn't get to opt in. We get to choose. We are specifically choosing. It's an invite only into the program club. And our sales colleagues have the opportunity to motivate customers who are right on the cusp. Hey, with an extra $1,000 a week, I can get you into this program. So we are bullish about this, Kelly. We will share more, let's say it this way, at upcoming investor events about this program and the expected impact we intend for it to have. Kelly, just to put a bullet around this one, the major driver of our growth year on year and local case growth in 2026 will be the stability, the retention around our sales colleagues.

Kenny Cheung: Kelly, I mean, this is. Kenny, just put a bow around this one. The major driver of our growth, year-on-year local case growth in 2023, will be the stability, the retention around our sales colleagues. And that's the reason why Kevin and I are so confident with the growth number, because we're seeing that right now, at this moment. Right. These three things that Kevin talked about, these are added enablers that will help us as well, to help for this year, but more importantly for periods to come.

It is absolutely meaningful. Think about Paro percentage of your customers driving, a disproportionate percentage of your sales and profit. That's exactly who these customers are and the customer doesn't get to opt in. We get to choose. We are specifically choosing, it's an invite-only into the program club and our sales colleagues have the opportunity to actually motivate customers who are right on the cusp, hey with, you know, an extra thousand dollars a week. I can get you into this program. So we are bullish about this Kelly. Um, we will share more, let's say it this way at upcoming investor events about this program and the expected impact we intend for it to have, hey, Kelly, I mean, this is kind of, just just put a bow on this 1. The, the, the major driver of our

Kenny Cheung: And that's the reason why Kevin and I are so confident with the growth number because we're seeing that right now, spot on, right? These three things that Kevin talked about, these are added neighbors that will help us as well to help us for this year, but more importantly, for periods after to come.

Growth, you're on your local case. Growth in 2026 will be the stability and retention around our sales colleagues. And that's the reason why Kevin and I are so confident with the growth number, because we're seeing that right now at this moment, right? These three things that Kevin talked about, these are added neighbors that will help us, um, to be, um, to help with this year, but more importantly for periods to come.

[Company Representative] (Sysco Corporation): Thank you.

Kelly Bania: Thank you.

Operator: Thank you.

Kevin Hourican: Thanks.

thanks.

Operator: We'll take our next question from Edward Kelly with Wells Fargo. Please go ahead. Your line is open.

Kelly Bania: and take our next question. Kelly with Wells Fargo. Please go ahead. Hi, good morning, everyone. Kevin, I wanted to ask you, you know, just a brief follow up on all this local stuff. So you know, customer losses are improving. Is there is there any concern about like the Salesforce turnover that you've seen over the last year, those rolling off and potentially impacting the momentum that's coming back into the business. And then, Kenny, just one for you. I'm curious as to how you're thinking about cost per case growth in the U.S. If you look at this past quarter, you know, it looks like dollars are up about 5% on flat cases, right?

Kenny Cheung: Hi, good morning everyone. Kevin, I wanted to ask you just a brief follow up on all this local stuff. So you know customer losses are improving. Is there any concern about like the salesforce turnover that you've seen over the last year, those non competes rolling off and potentially impacting the momentum that's coming back into the business? And then Kenny, just one for you. I'm curious as to how you're thinking about cost per case growth in the.

Edward Kelly: Hi, good morning everyone. Kevin, I wanted to ask you just a brief follow up on all this local stuff. So you know customer losses are improving. Is there any concern about like the salesforce turnover that you've seen over the last year, those non competes rolling off and potentially impacting the momentum that's coming back into the business? And then Kenny, just one for you. I'm curious as to how you're thinking about cost per case growth in the. US, if you look at this past. Quarter, it looks like dollars are up about 5% on flat cases. So call it 5% cost per case growth. What's the driver of that? And then how does that look in 2026? Is there opportunity to bring that lower next year?

We'll take our next. Uh question from Edward. Kelly with Wells Fargo. Please go ahead. Your line is open.

Kevin Hourican: US, if you look at this past.

Kenny Cheung: Quarter, it looks like dollars are up about 5% on flat cases. So call it 5% cost per case growth. What's the driver of that? And then how does that look in 2026? Is there opportunity to bring that lower next year?

Edward Kelly: So call it 5% cost per case growth. What's the driver of that? And then how does that look in 26? Is there opportunity? bring that level.

Hi, good morning everyone. Kevin I wanted to ask you, um, you know, just a brief follow-up on all this local stuff. So, you know, customer losses are improving. Is there, is there any concern about like, the sales force turnover? You know, that you've seen over the last year, those non-competes rolling off, um, and potentially impacting, the, the momentum on this coming back into the business and then Kenny just 1 for you. Um, I'm curious as to how you're thinking about, um, cost per case growth in the US. If you look at this past quarter, you know, it looks like dollars are up about 5% on flat cases, right? So call out 5% cost per case growth

Kevin Hourican: Thanks. Good morning, Ed. Thank you for the question. Understood completely. Your question about the sales rep who departed 12 months ago when they hit month 13 and their non-compete agreement expires, is there an echo or a ripple effect from prior year? The facts are the vast majority of the customer loss, customer departure occurs almost immediately. The why is the following. Let's say Kenny's been calling on an account for 10 years. Kenny departs while he, Kenny, is not able to call upon that customer. What happens is that we, Sysco, assign a new sales rep to that account and then right then and there, that immediate moment is where the disruption occurs. That customer then has to make a choice. Do I want to work with the new colleague? Hey, maybe I should look around.

Kevin Hourican: Good morning, Ed. Thank you for the question. I understood completely your question about the sales rep who departed 12 months ago when they hit month 13 and their non-compete agreement expires. Is there an echo or a ripple effect from prior year? The facts are the vast majority of the customer loss, customer departure occurs almost immediately. And why is the following? Let's say Kenny's been calling on an account for 10 years. Kenny departs while he, Kenny, is not able to call upon that customer. What happens is that we, Sysco, assign a new sales rep to that account.

What's the driver of that? And then, how does that look in 26 is their opportunity to to bring that lower next year? Thanks.

Kevin Hourican: And then right then and there, that immediate moment is where the disruption occurs. That customer then has to make a choice. Do I want to work with the new colleague? Hey, maybe I should look around. And the looking around is what causes an alternative distributor to tend to get into the account. So the vast majority of the loss happens immediately. There's the possible impact of the ripple 13 months later. What we can see in our data, though, is that the not repeating the initial loss is a far greater positive impact on the avoidance of that negative than the ripple.

Kevin Hourican: The looking around is what causes an alternative distributor to tend to get into the account. So the vast majority of the loss happens immediately. There's the possible impact of the ripple, 13 months later. What we can see in our data though is that the not repeating the initial loss is a far greater positive impact on the avoidance of that negative than the ripple. And obviously through the service improvement that we're making. Kenny mentioned this. Our fill rates are improving, our on-time delivery is improving, our sales colleagues' capabilities are improving through training, skill development, and the tools that I just mentioned. And we're confident that the ripple effect, the echo is more than offset by the goodness of the programs that I just referenced and the stability of the sales force at Sysco and therefore the confidence in the guide in the year ahead.

The looking around is what causes an alternative distributor to tend to get into the account. So the vast majority of the loss happens immediately. There's the possible impact of the ripple, 13 months later. What we can see in our data though is that the not repeating the initial loss is a far greater positive impact on the avoidance of that negative than the ripple. And obviously through the service improvement that we're making. Kenny mentioned this.

Kevin Hourican: And obviously, through the service improvement that we're making, Kenny mentioned this, our fill rates are improving. Our on-time delivery is improving. Our sales colleagues capabilities are improving through training, skill development, and the tools that I just mentioned. And we're confident that the ripple effect, the echo, is more than offset by the goodness of the programs that I just referenced and the stability of the Salesforce at Sysco, and therefore the confidence in the guide in the year ahead.

Our fill rates are improving, our on-time delivery is improving, our sales colleagues' capabilities are improving through training, skill development, and the tools that I just mentioned. And we're confident that the ripple effect, the echo is more than offset by the goodness of the programs that I just referenced and the stability of the sales force at Sysco and therefore the confidence in the guide in the year ahead. I'll toss to Kenny for the comments that he'd like to make about the cost question that you asked. Kenny, over to you.

Isco assigned a new sales rep to that account and then right then and there, that immediate moment is where the disruption occurs that that customer then has to make a choice. Do I want to work with the new colleague? Hey, maybe I should look around and the looking around is, what causes alternative distributor to tend to get into the account. So, the vast majority of the loss happens immediately, there's the possible impact of the Ripple, uh, 13 months later. What we can see in our data though is that the not repeating. The initial loss is a far greater positive impact on the avoidance of that negative than the Ripple. And obviously, through the service improvement, that we're making Kenny mentioned this, our fill rates are improving. Our on-time delivery is improving our sales colleagues. Capabilities are improving through training skills development. And the tools that I just mentioned, they had worked confident that the ripple effect. The echo um, is more than offset by the goodness of the programs that I just referenced and disability of the Salesforce at Cisco. And therefore the

Kevin Hourican: I'll toss to Kenny for the comments that he'd like to make about the cost question that you asked. Kenny, over to you.

Kenny Cheung: And I'll toss to Kenny for the comments that he'd like to make about the cost question that you asked. Kenny, over to you. Yeah. Kenny, on the cost per case, I would like to bifurcate and talk about it from a COGS standpoint and also a base cost standpoint, because they're a bit different here as dynamics. So you're right. Volume was slottish around USFS, but with that, our GDP was 4%. So the good work that we've been doing around strategic sourcing, that's flowing through the P&L, and that's the reason why you're seeing nice leverage between volume of sales and sales to GDP, where the increased cost that you called out earlier is really driven by two main things, mostly on the base cost side of the house, SG&A.

Kenny Cheung: Yeah, Kenny. On the cost per case, I would like to bifurcate and talk about it from a COG standpoint and also a base cost standpoint because they're a bit different here at Sysco. So you're right, volume was flattish around USFS, but with that our GP grew 4%. So the good work that we've been doing around strategic sourcing, that's flowing through the P&L. And that's the reason why you're seeing nice leverage between volume to sales and sales to GP, where the increased cost that you called out earlier is really driven by two main things, mostly on the base cost side of the house. SG&A number one is our investment in SPS.

Confidence in the guide, in the year ahead and I'll toss to Kenny for the comments that he'd like to make about the cost question that you asked any over to you? Yeah, yeah, yeah. Kenny on the cost per case. Um, I, um, I would like to buy for Kate and talk about it from a Cox a cog standpoint and also a based cost standpoint because they're, they're a bit different here at Dynamics. Um, so you're right, uh, volume was flattish around usfs, but with that, our GPU 4%, so the good work that we've been doing around 3 to 6, that's flowing through the p&l and that's the reason why you're seeing nice

Kenny Cheung: Number one is our investment in SVs. These are what we call deliberate plan investments that are ROIC positive, and the return will be rendered, you know, call it 12 to 18 months down the road from day one. So that's point number one. As the local case grows within our business, that cost per piece will have a corresponding revenue tied to it. Therefore, you'll see leverage in the P&L. The second biggest piece of the cost increase is the plan and deliberate investment around capacity. You may remember we have 10 buildings going live right now around the world.

Kenny Cheung: These are what we call deliberate planned investments that are ROIC positive, and the return will be rendered, you know, call it 12 to 18 months down the road from day one. So that's point number one. As the local case grows within our business, that cost per piece will have a corresponding revenue tied to it. Therefore, you'll see leverage in the P and L. The second biggest piece of the cost increase is the plan and deliberate investment around capacity. You may remember we have 10 buildings going live right now around the world. Seven of them are sitting in the US. Think about Allentown, think about Tampa, East Wisconsin, LA, Las Vegas. Right. Can go on and on, and same dynamic. You have the cost of those buildings, mainly depreciation hitting the P and L.

These are what we call deliberate planned investments that are ROIC positive, and the return will be rendered, you know, call it 12 to 18 months down the road from day one. So that's point number one. As the local case grows within our business, that cost per piece will have a corresponding revenue tied to it. Therefore, you'll see leverage in the P and L. The second biggest piece of the cost increase is the plan and deliberate investment around capacity. You may remember we have 10 buildings going live right now around the world.

Kenny Cheung: Seven of them are sitting in the US. Think about Allentown, think about Tampa, East Wisconsin, go to LA, Las Vegas, right, and go on and on. And same dynamic. You have the cost of those buildings, mainly depreciation, hitting the P&L. And that as time progresses with the initiatives kicking in, the confidence that Kevin and I have, our local case growth in particular, you will see that scale down to the P&L because that cost will be welcomed by volume. So overall, we do expect a stronger leverage in the P&L on the floor.

Seven of them are sitting in the US. Think about Allentown, think about Tampa, East Wisconsin, LA, Las Vegas. Right. Can go on and on, and same dynamic. You have the cost of those buildings, mainly depreciation hitting the P and L. And then, as time progresses with the initiatives kicking in, the comps that Kevin and I have on local case growth in particular, you will see that scale down to the P&L, because that cost will be welcome by volume. So overall, we do expect a stronger leverage in the P&L going forward.

Kenny Cheung: And then, as time progresses with the initiatives kicking in, the comps that Kevin and I have on local case growth in particular, you will see that scale down to the P&L, because that cost will be welcome by volume. So overall, we do expect a stronger leverage in the P&L going forward.

Leverage between sale volume to sales and sales the GP where the increased cost that you that you called out earlier was really driven by 2 main things. Mostly on the base cost side of the house. Sgna number 1 is our investment in SDS. Um these are what we call deliberate plan Investments that are roic positive and the return will be rendered, um, you know, to call it all the 18 months down the road from day 1. So that's Point number 1, as the local case grows within our business that cost per piece will have a corresponding Revenue tied to it. Therefore you'll see leverage in the p&l. The second biggest piece of the cost increase is the plan and deliberate investment around capacity. Uh you may remember we have 10 buildings going live right now and around the world. 7 of them are sitting in the US. Think about Allentown think about Tampa East Wisconsin we have to La Las Vegas where I can go on and on and same Dynamic. You have the cost of those uh buildings mainly depreciation, hitting the PM.

Kevin Hourican: Great, thank you. Thanks, Ed.

Edward Kelly: Great, thank you.

Kenny Cheung: Great, thank you. Thanks, Ed.

Now, and that is time progresses with the initiative kicking in the comments like Kevin, and I have all local case growth, uh, in particular, um, you will see that scale down to the p&l because that cost will be welcome, uh, by by volume. So overall we do expect a stronger leverage in the p&l on the forward.

Kenny Cheung: Thanks, Ed.

Great. Thank you.

Operator: We'll take our next question from John Ivankoe with J.P. Morgan. Please go ahead. Your line is open.

Thanks Ed.

John: Hi, thank you. Not just in food service distribution, but at least from what I hear, you know, many industries broadly, you know, are considering consolidation at this point, whether it's AI investments or automation investments, or maybe some concern or uncertainty, you know, related to tariffs. I mean, it does, you know, again, you know, seem that we're more primed for consolidation and deconsolidation across a lot of industries. So the question that I would ask you is, you know, how does Sysco, you kind of view that within food service distribution? Obviously, not making a specific comment, but you know, just generally in terms of, you know, the opportunity to consolidate and how might, you know, the company and where might the company be able to take advantage of some opportunities, you have to further drive efficiency and consolidation both globally, but more specifically, and importantly, at least for me, within the US.

Kenny Cheung: Hi. Thank you. Not just in food service distribution, but at least from what I hear, many industries broadly are considering consolidation at this point. Whether it's AI investments or automation investments, or maybe some concern or uncertainty related to tariffs. It does, again, seem that we're more primed for consolidation than deconsolidation across a lot of industries. So the question that I would ask you is how does Sysco kind of view that within food service distribution? Obviously not making a specific comment, but just generally in terms of the opportunity to consolidate and how might the company, and where might the company be able to take advantage of some opportunities to further drive efficiency and consolidation both globally, but more specifically and importantly, at least for me, within the US thank you.

John Ivankoe: Hi. Thank you. Not just in food service distribution, but at least from what I hear, many industries broadly are considering consolidation at this point. Whether it's AI investments or automation investments, or maybe some concern or uncertainty related to tariffs. It does, again, seem that we're more primed for consolidation than deconsolidation across a lot of industries. So the question that I would ask you is how does Sysco kind of view that within food service distribution? Obviously not making a specific comment, but just generally in terms of the opportunity to consolidate and how might the company, and where might the company be able to take advantage of some opportunities to further drive efficiency and consolidation both globally, but more specifically and importantly, at least for me, within the US thank you.

John: Thank you.

We'll take our next question from John. Ian go with JP Morgan. Please go ahead. Your line is open. Hi, thank you. Uh, you not just in Food Service distribution, but at least from what I hear, you know, many industry, broadly, you know, are considering consolidation at this point, whether it's AI Investments or automation Investments or maybe some concern or uncertainty, you know, related to tariffs, I mean, you know, it does, you know, again, uh, you know, seen that we're more primed for consolidation indeed deck consolidation across a lot of Industries. So, the question that I would ask you is, you know, how does Cisco, you kind of view that within Food Service distribution? Obviously not making a specific comment, but, you know, just generally in terms of, you know, the opportunity to consolidate and how might, you know, the company and where might the company, uh, be able to take advantage of some opportunities, uh, you to further Drive, efficiency, and consolidation both globally, but more specifically, and importantly, at least for me within the US,

Kevin Hourican: Good morning, John. It's Kevin. Thank you for the question. Let me start with the AI impact on our business and the part of your question that tied to that. And then secondarily I'll talk about just more macro, bigger chessboard strategy on the AI side. We got to bifurcate it into front of house, back of house, or front end selling back office management. AI absolutely is and will increasing our efficiency in the back office side of the business. Kenny manages that for the company. We've centralized that activity, we offshore that activity. Now we're automating that activity. And AI can help turbocharge those efforts. Our merchandising division answers a tremendous number of questions from both customers and from our own sales colleagues. Like the amount of volume that flows through that pipe would stagger you.

Kevin Hourican: Good morning, John. Kevin, thank you for the question. Let me start with the AI impact on our business and the part of your question that's tied to that. And then secondarily, I'll talk about just, you know, more macro, you know, bigger chess board strategy. On the AI side, you know, we got a bifurcated into front of house, back of house or front end selling back office management. AI absolutely is and will increasing our efficiency in the back office side of the business. Kenny manages that for the company. We've centralized that activity, we offshored that activity.

thank you.

Good morning, John. It's Kevin. Thank you for the question. Let me start with the AI impact on our business and the part of your question that's tied to that, and then secondarily, I'll talk about just, you know, a more macro, um, you know, bigger chessboard strategy on the AI side. You know, we got bifurcated into the front of the house, back of house, or front-end selling, back office, uh, management AI. Absolutely.

Kevin Hourican: Now we're automating that activity. And AI can help turbocharge those efforts. Our merchandising division answers a tremendous number of questions from both customers and from our own sales colleagues, like the amount of volume that flows through that pipe would stagger you. We can use AI to answer intelligently, accurately, many, many, many of those questions, which can make us more efficient. So we think about the back end, attack the cost, attack the cost, attack the cost. And we've done a good job of taking out structural costs at our company over the past years, simultaneously taking that cost out to invest for growth.

Kevin Hourican: We can use AI to answer intelligently, accurately, many, many, many of those questions which can make us more efficient. So we think about the back end, attack the cost, attack the cost, attack the cost. And we've done a good job of taking out structural cost at our company over the past years, simultaneously taking that cost out to invest for growth. See Tampa that we just grand opened last week and the other examples that Kenny gave around the world. So to be relentlessly zealot-like focused on taking structural cost out to invest in growth is the more macro strategy on the sales force side. This is where I will delineate. We don't view it as a reduction in the future selling occupation in any way, shape or form. This is a relationships-based business. And John, I know you know that this is a relationships business.

We can use AI to answer intelligently, accurately, many, many, many of those questions which can make us more efficient. So we think about the back end, attack the cost, attack the cost, attack the cost. And we've done a good job of taking out structural cost at our company over the past years, simultaneously taking that cost out to invest for growth. See Tampa that we just grand opened last week and the other examples that Kenny gave around the world. So to be relentlessly zealot-like focused on taking structural cost out to invest in growth is the more macro strategy on the sales force side. This is where I will delineate. We don't view it as a reduction in the future selling occupation in any way, shape or form. This is a relationships-based business. And John, I know you know that this is a relationships business.

Kevin Hourican: See Tampa that we just grand opened last week and the other examples that Kenny gave around the world. So to be relentlessly zealot like focused on taking structural cost out to invest in growth is the more macro strategy. On the Salesforce side, this is where I will delineate, we don't view it as a reduction in the future selling occupation in any way, shape or form. This is a relationships based business. And john, I know you know that this is a relationships business. We want the technology to increase even further that sales colleagues relationship with that customer help do the administrative stuff.

Kevin Hourican: We want the technology to increase even further that sales colleague's relationship with that customer, help do the administrative stuff. Again, the number of questions that our colleagues answer about: Does this product have gluten? Is this allergen free? What's the country of origin? Will I or will I not be able to substitute this for something else? If we're out of stock, what substitutions would you recommend if this is out of stock? These are questions that are happening all throughout the day, every day. Hundreds of questions they're facing every day. To enable that sales colleague to answer those types of questions proactively more efficiently reduces substantially their administrative burden. And then guess what they get to do at that time. They get to sell.

We want the technology to increase even further that sales colleague's relationship with that customer, help do the administrative stuff. Again, the number of questions that our colleagues answer about: Does this product have gluten? Is this allergen free? What's the country of origin? Will I or will I not be able to substitute this for something else? If we're out of stock, what substitutions would you recommend if this is out of stock? These are questions that are happening all throughout the day, every day. Hundreds of questions they're facing every day. To enable that sales colleague to answer those types of questions proactively more efficiently reduces substantially their administrative burden. And then guess what they get to do at that time. They get to sell.

Kevin Hourican: Again, that number of questions that our colleagues answer about does this product have gluten? Is this you know, allergen free? What's the country of origin? Will I will I not be able to substitute this for something else if we're out of stock? What substitutions would you recommend if this is out of stock? These are questions that are happening all throughout the day every day. Hundreds of questions they're facing every day. to enable that sales colleague to answer those types of questions proactively, more efficiently, reduces substantially their administrative burden, and then guess what they get to do at that time?

Attack the cost and you know we've done a good job of taking out structural costs at our company over the past years simultaneously taking that cost out to invest for growth. See Tampa that we just Grand opened last week and the other examples that Kenny gave around the world. So to be relentlessly, Zealot like focused on taking structural cost out to invest in growth is the more you know macro strategy on the Salesforce side this is where I will delineate. We don't view it as a reduction in the future selling occupation. In any way, shape or form, this is a relationships based business and John, I know, you know that this is a relationship business. We want the technology to increase even further that sales colleagues relationship with that customer help, do the administrative stuff again. The number of questions that our colleagues answer about does this product have gluten? Is this, you know, allergen-free? What's the country of origin? Well, our will I not be able

To substitute this for something else, if we're out of stock, what substitutions would you recommend? If this is out of stock, these are questions that are happening all throughout the day, every day. Hundreds of questions they're facing every day.

Kevin Hourican: They get to sell. They get to look around the kitchen and see product that's not on the Sysco truck to talk about introducing our capabilities, introducing our specialty capabilities, go prospect net new customers because you have more time on your hands. So we will grow our sales force, as we mentioned on this call, 4% approximately this coming year, and we believe AI is going to turbocharge that effectiveness.

Kevin Hourican: They get to look around the kitchen and see product that's not on the Sysco truck to talk about introducing our capabilities, introducing our specialty capabilities. Go prospect net new customers because you have more time on your hands. So we will grow our sales force, as we mentioned on this call, 4% approximately this coming year. And we believe AI is going to turbocharge that effectiveness. As it relates to your question about consolidation in the industry, here's what we would say. We know that size and scale matter in this industry. Purchasing scale, supply chain scale, the trucking, last mile delivery, as you've heard me say before, is the most expensive part of what we do. So therefore being efficient in that manner is important.

They get to look around the kitchen and see product that's not on the Sysco truck to talk about introducing our capabilities, introducing our specialty capabilities. Go prospect net new customers because you have more time on your hands. So we will grow our sales force, as we mentioned on this call, 4% approximately this coming year. And we believe AI is going to turbocharge that effectiveness. As it relates to your question about consolidation in the industry, here's what we would say. We know that size and scale matter in this industry. Purchasing scale, supply chain scale, the trucking, last mile delivery, as you've heard me say before, is the most expensive part of what we do. So therefore being efficient in that manner is important.

Kevin Hourican: As it relates to your question about consolidation in the industry, here's what we would say. We know that size and scale matter in this industry, purchasing scale, supply chain scale, the trucking last mile delivery, as you've heard me say before, is the most expensive part of what we do, so therefore being efficient in that manner is important, and we will continue to survey our landscape for M&A opportunities, tuck-ins, specialty purchases, because we have tremendous white space existing still in specialty. I know you didn't ask about international, but we have compelling opportunities international, and we will be very strategic and thoughtful about our approach in the U.S., and obviously we can't comment, as I said earlier, about any other company's strategies and actions.

Kevin Hourican: And we will continue to survey our landscape for M and A opportunities, tuck-ins, and specialty purchases because we have tremendous white space existing still in specialty. I know you didn't ask about international, but we have compelling opportunities international and we will be very strategic and thoughtful about our approach in the US and obviously we can't comment, as I said earlier, about any other company's strategies and actions.

And we will continue to survey our landscape for M and A opportunities, tuck-ins, and specialty purchases because we have tremendous white space existing still in specialty. I know you didn't ask about international, but we have compelling opportunities international and we will be very strategic and thoughtful about our approach in the US and obviously we can't comment, as I said earlier, about any other company's strategies and actions.

To enable that sales colleague to answer those types, of questions, proactively more efficiently, reduces substantially their administrative burden. And then guess what they get to do with that time they get to sell they get to look around the kitchen and see product. That's not on The Cisco truck to talk about, introducing our capabilities, introducing our specialty capabilities, go Prospect net, new customers because you have more time on your hands. So we will grow our sales force. As we mentioned, on this call, 4% approximately this coming year and we believe AI is going to turbocharge that Effectiveness, uh as it relates to your question about consolidation in the industry here. Here's what we would say. We know that size and scale matter, in this industry, purchasing scale supply chain scale. Uh, the trucking last mile delivery as you've heard me say before is the most expensive part of what we do. So therefore being efficient in that manner is important and we will continue to survey our landscape for m&a opportunities tuck-ins specialty, purchases, because we have tremendous white space.

Existing still in specialty. Uh, I know you didn't ask about International, but we have compelling opportunities International and we will be very strategic and thoughtful about our approach in the US. And obviously, we can't comment, as I said earlier about any other, uh, companies, strategies and actions.

Kenny Cheung: Thank you very much.

John Ivankoe: Thank you very much.

John: Thank you very much.

Kevin Hourican: Thanks John.

Mark Carden: Thanks, John. from Mark. Go ahead, your line is open. Good morning. Thanks so much for taking the questions. You guys called out improving industry traffic throughout the period, still not all the way back. I'm curious, are you seeing any uptick in promotional activity or up front to the distributor level? And then related, are independent restaurants showing much in the way of incremental stress? Do you see any risk of closures taking up there? They're weathering it quite well. Thank you.

Thank you very much.

Operator: We'll take our next question from Mark Carden with UBS. Please go ahead. Your line is open.

Thanks John.

Kenny Cheung: Good morning.

Mark Carden: Good morning. Thanks so much for taking the questions you guys called out. Improving industry traffic throughout the period. Still not all the way back. I'm curious, are you seeing any uptick? In promotional activity or upfronts at the distributor level? And then, related, are independent restaurants showing much in the way of incremental stress? Do you see any risk of closures sticking up there? They're weathering it quite well. Thank you,

Kevin Hourican: Thanks so much for taking the questions you guys called out. Improving industry traffic throughout the period. Still not all the way back. I'm curious, are you seeing any uptick?

We'll take our next question from Mark Kardon with UBS. Please go ahead. Your line is open.

[Company Representative] (Sysco Corporation): In promotional activity or upfronts at the distributor level?

Kevin Hourican: And then, related, are independent restaurants showing much in the way of incremental stress? Do you see any risk of closures sticking up there?

Good morning. Thanks so much for taking the question. So you guys called out improving industry traffic throughout the period still not all the way back. I'm curious. Are you seeing any uptick in promotional activity or upfronts the distributor level? And then related our independent restaurants showing much in the way of incremental stress.

[Company Representative] (Sysco Corporation): They're weathering it quite well.

Kevin Hourican: Thank you, Mark. Thank you for the question. I'll start to talk to Kenny for any additional comments. Let me start with the restaurant operator first. We are seeing restaurants that have a strong value prop for their end customers succeeding. And that's across the board, from fine dining to casual, fast casual to QSR. Those concepts that are providing a good value to their customer are succeeding. And value could be quantity of food for price, value could be a promotional program that they are doing. Value could be within their tier. They're perceived by the customer as providing more for the dollar than who they compete against. And those names that are having some struggles, and you know who they are, are out of tilt with their end consumer on that equation. Our job in that equation is the following.

Kevin Hourican: Mark, thank you for the question. I'll start, toss to Kenny for any additional comments. Let me start with the restaurant operator first. We are seeing restaurants that have a strong value prop for their end customer succeeding, and that's across the board from fine dining to casual, fast casual to QSR. Those concepts that are providing a good value to their customer are succeeding. And value could be quantity of food for price. Value could be a promotional program that they are doing. Value could be within their tier. They're perceived by the customer as providing more for the dollar than who they compete against.

Kevin Hourican: Mark. Thank you for the question. I'll start to talk to Kenny for any additional comments. Let me start with the restaurant operator first. We are seeing restaurants that have a strong value prop for their end customers succeeding. And that's across the board, from fine dining to casual, fast casual to QSR. Those concepts that are providing a good value to their customer are succeeding. And value could be quantity of food for price, value could be a promotional program that they are doing. Value could be within their tier. They're perceived by the customer as providing more for the dollar than who they compete against. And those names that are having some struggles, and you know who they are, are out of tilt with their end consumer on that equation. Our job in that equation is the following.

Do you see any risk of closure sticking up there? They they weathering it quite well. Thank you.

Kevin Hourican: And those names that are having some struggles, and you know who they are, are out of tilt with their end consumer on that equation. Our job in that equation is the following. We need to provide value to the restaurant operators across from fine dining to QSR. And that's our relentless focus on improving strategic sourcing to bring our costs down so we can share in that value creation with the end consumer so that they can be successful and profitable. And we're doing a good job on that. In the quarter that we just ended, we had a very strong performance from a gross profit perspective.

Kevin Hourican: We need to provide value to the restaurant operators across, from fine dining to QSR. That's our relentless focus on improving strategic sourcing to bring our cost down so we can share in that value creation with the end consumer so that they can be successful and profitable. We're doing a good job on that. In the quarter that we just ended, we had a very strong performance from a gross profit perspective. We are able to invest in our customers from a price perspective when we have that equation. As Kenny said, the goodness of what we delivered in Q4 is going to have wrap value positive into fiscal 2026. Those are our perspectives on the end restaurant consumer, on what we Sysco are doing about it.

We need to provide value to the restaurant operators across, from fine dining to QSR. That's our relentless focus on improving strategic sourcing to bring our cost down so we can share in that value creation with the end consumer so that they can be successful and profitable. We're doing a good job on that. In the quarter that we just ended, we had a very strong performance from a gross profit perspective. We are able to invest in our customers from a price perspective when we have that equation. As Kenny said, the goodness of what we delivered in Q4 is going to have wrap value positive into fiscal 2026. Those are our perspectives on the end restaurant consumer, on what we Sysco are doing about it. Kenny, I'll toss to you if there's any additional comment that you'd like to make on Mark's question.

Mark, thank you for the question. I'll start toss to Kenny for any additional comments. Let me start with the restaurant. Um, operator first, uh, we are seeing restaurants that have a strong value prop for their end, customer succeeding. And that's across the board from fine, dining to Casual fast, casual to qsr. Those Concepts that are providing a good value to their customer are succeeding in value. Could be quantity of food for price value. Could be, um, a promotional program that they are doing value, could be within their tear their perceived by the customer as providing more for the dollar than who they compete against, and those names that are having some struggles. And, you know, who they are, are out of tilt with their end, uh, consumer on that equation. Uh, our job in that equation is the

Kenny Cheung: And we are able to invest in our customers from a price perspective when we have that equation. And as Kenny said, the goodness of what we delivered in Q4 is going to have wrapped value positive into fiscal 2026. So those are our perspectives on the end restaurant consumer on what we, you know, Cisco, are doing about it. And, Kenny, I'll toss to you if there's any additional comment that you'd like to make on that.

Kevin Hourican: Kenny, I'll toss to you if there's any additional comment that you'd like to make on Mark's question.

Kenny Cheung: Yeah. In terms of restaurant closures, from our standpoint, there's always churn in the marketplace. The one thing from our side is bad debt. Right. When you think about closure, you think about bad debt. The majority of our bad debt is current. Bad debt as a percent of sales is less than 0.1%. We have automation tools in place and to manage that one. No risk, no material risk to our company in terms of restaurant closures.

Kenny Cheung: Yeah, in terms of restaurant closures, you know, you know, from our standpoint, you know, there's always churn in the marketplace. The one thing from our side is, you know, bad debt, right? When you think about closures, you think about bad debt. The majority of our bad debts, current bad debt is percent of sales is less than 0.1%. We have automation tools in place and to manage that one and no risk, no service to our company in terms of restaurant. And we are not seeing, specific to your question, pain in the local mom-and-pop restaurant sector to be higher than large customers.

Kevin Hourican: We are not seeing, specific to your question, pain in the local mom and pop restaurant sector to be higher than large customers. We're not seeing that. Thanks so much. Good luck, guys. Thank you, Mark.

Kevin Hourican: We are not seeing, specific to your question, pain in the local mom and pop restaurant sector to be higher than large customers. We're not seeing that.

Kenny Cheung: We're not seeing that.

1 Thing from our side is you know, bad debt, right? When you when you think about what you think about bad debt, the majority of our debt, that's current bad debt. Is percent of sales is less than 0.1%. We have automation Tools in place and to manage that 1 and uh no risk, uh, no materialist to our company, in terms of restaurant closures and we are not seeing specific to your question. Um, pain in the local mom and pop restaurant sector to be higher than large customers. We're not seeing that.

Mark Carden: Thanks so much. Good luck, guys.

Operator: Thanks so much. Good luck, guys. Thank you, Mark.

Kenny Cheung: Thank you, Mark.

Kevin Hourican: Thanks.

Thanks so much. Good luck guys.

Thank you Mark. Thanks.

Operator: That does end the Q and A portion of today's call. I'll hand the program back to Kevin and Kenny for any additional or closing remarks.

Operator: does and I'll hand the program back to Kevin and Kenny for any additional... Great. Thank you, everybody, for joining us. If you have any follow-up calls or questions, please feel free to reach out to the investor relations team here at Sysco. Have a great day. Thank you. Thank you for your participation.

Kenny Cheung: Great. Thank you everybody for joining us. If you have any follow up calls or questions, please feel free to reach out to the investor relations team here at Sysco. Have a great day. Thank you.

And that does end the Q&A portion of today's call. I'll hand the program back to Kevin and Kenny for any additional or closing remarks.

Right. Uh, thank you everybody for joining us. If you have any follow-up calls or questions, please, feel free to reach out to the investor relations team here at Cisco. Have a great day. Thank you.

Operator: This does conclude today's program. Thank you for your participation, and you may now disconnect.

This include today's program. Thank you for your participation and you may now disconnect

Q4 2025 Sysco Corp Earnings Call

Request a DemoDemo

SYY

Sysco

Earnings