Sysco Sales Up, But Net Income Dips Amid Rising Costs

TL;DR

**SYY's sales growth is overshadowed by rising expenses and debt, making it a cautious hold for now.**

AI Summary

Sysco Corporation reported a 3.24% increase in sales, reaching $21.148 billion for the 13-week period ended September 27, 2025, up from $20.484 billion in the prior year. Despite higher sales, net earnings decreased by 2.86% to $476 million, compared to $490 million in the same period last year. This decline was primarily driven by a 5.3% increase in operating expenses to $3.101 billion and a 7.5% rise in interest expense to $172 million. Basic earnings per share slightly fell to $0.99 from $1.00. The company's cash and cash equivalents decreased to $844 million from $1.071 billion, while total current liabilities increased by 9.02% to $10.810 billion, largely due to a significant jump in current maturities of long-term debt from $949 million to $1.894 billion. Sysco also adopted new segment reporting accounting guidance (ASU 2023-07) which impacted disclosures but not financial position or results of operations.

Why It Matters

For investors, the dip in net earnings despite higher sales signals potential margin pressures and increased operational costs, which could impact future profitability and dividend growth. The substantial increase in current maturities of long-term debt from $949 million to $1.894 billion also raises questions about liquidity management and refinancing strategies. Employees and customers might see the impact through potential price adjustments or operational efficiency drives. In a competitive foodservice distribution market, Sysco's ability to manage expenses and debt while growing revenue is crucial for maintaining its market leadership against rivals like US Foods.

Risk Assessment

Risk Level: medium — The risk level is medium due to declining net earnings ($476 million vs. $490 million) despite sales growth, indicating margin compression. A significant increase in current maturities of long-term debt from $949 million to $1.894 billion also presents a liquidity management challenge.

Analyst Insight

Investors should monitor Sysco's upcoming earnings calls for detailed explanations on expense management and debt refinancing strategies. Consider holding existing positions but deferring new investments until there's clearer evidence of improved profitability and debt structure stability.

Financial Highlights

revenue

$21.148B

operating Margin

3.79%

total Assets

$27.044B

total Debt

$22.318B

net Income

$476M

eps

$0.99

gross Margin

18.45%

cash Position

$844M

revenue Growth

+3.24%

Key Numbers

• $21.148B — Sales (Increased from $20.484B year-over-year, a 3.24% rise.)
• $476M — Net Earnings (Decreased from $490M year-over-year, a 2.86% decline.)
• $3.101B — Operating Expenses (Increased from $2.945B year-over-year, a 5.3% rise.)
• $1.894B — Current Maturities of Long-Term Debt (Significantly increased from $949M as of June 28, 2025.)
• $0.99 — Diluted EPS (Slightly decreased from $1.00 year-over-year.)
• $844M — Cash and Cash Equivalents (Decreased from $1.071B as of June 28, 2025.)
• $172M — Interest Expense (Increased from $160M year-over-year, a 7.5% rise.)

Key Players & Entities

• SYSCO CORP (company) — registrant
• New York Stock Exchange (regulator) — exchange where SYY is registered
• FASB (regulator) — Financial Accounting Standards Board
• US Foods (company) — competitor in foodservice distribution
• $21.148 billion (dollar_amount) — total sales for 13-week period ended Sep 27, 2025
• $476 million (dollar_amount) — net earnings for 13-week period ended Sep 27, 2025
• $3.101 billion (dollar_amount) — operating expenses for 13-week period ended Sep 27, 2025
• $1.894 billion (dollar_amount) — current maturities of long-term debt as of Sep 27, 2025
• $0.99 (dollar_amount) — basic earnings per share for 13-week period ended Sep 27, 2025

FAQ

Risk Factors

• Supply Chain Disruptions [high — operational]: Sysco's operations are heavily reliant on its extensive supply chain. Disruptions due to natural disasters, labor disputes, or transportation issues can significantly impact the availability of products and increase costs. For the 13-week period ended September 27, 2025, operating expenses rose 5.3% to $3.101 billion, indicating potential cost pressures that could be exacerbated by supply chain inefficiencies.
• Interest Expense Increase [medium — financial]: The company experienced a 7.5% increase in interest expense, rising to $172 million for the 13-week period ended September 27, 2025. This increase, coupled with a significant rise in current maturities of long-term debt from $949 million to $1.894 billion, indicates increased financial leverage and potential sensitivity to interest rate fluctuations.
• Food Safety and Compliance [high — regulatory]: As a food distributor, Sysco faces stringent regulations regarding food safety, handling, and transportation. Non-compliance can lead to significant fines, reputational damage, and product recalls, impacting sales and profitability. The company's ability to maintain high standards is critical for its ongoing operations.
• Competition and Pricing Pressure [medium — market]: The food distribution industry is highly competitive, with numerous national, regional, and local players. Sysco faces constant pressure to maintain competitive pricing while managing its own cost of goods sold and operating expenses. The modest 3.24% sales increase to $21.148 billion suggests that market share gains may be challenging to achieve in a competitive environment.
• Labor Relations and Availability [medium — operational]: Sysco's business depends on a large workforce, including drivers and warehouse personnel. Labor shortages, union negotiations, and potential strikes can disrupt operations, increase labor costs, and affect service levels. The company's ability to attract and retain qualified employees is a key operational risk.

Industry Context

Sysco operates in the highly competitive food service distribution industry, serving a wide range of customers including restaurants, healthcare facilities, and educational institutions. The industry is characterized by complex logistics, a focus on product variety, and sensitivity to economic conditions affecting consumer spending. Key trends include a growing demand for fresh and specialty products, increasing emphasis on technology for efficiency, and ongoing consolidation.

Regulatory Implications

Sysco must adhere to strict food safety regulations (e.g., FDA, USDA) and transportation standards. Compliance failures can lead to severe penalties, product recalls, and reputational damage. The company's robust compliance programs are crucial for mitigating these risks and maintaining customer trust.

What Investors Should Do

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Glossary

Current maturities of long-term debt

The portion of long-term debt that is due to be repaid within the next year. (A significant increase in this line item from $949 million to $1.894 billion indicates a near-term increase in debt obligations for Sysco.)

Accumulated other comprehensive loss

Unrealized gains and losses that are not included in net income but are reported in a separate section of the income statement. (This represents unrealized losses of $1.129 billion as of September 27, 2025, impacting total shareholders' equity.)

Operating lease right-of-use assets, net

The value of assets that Sysco has the right to use for a specified period under an operating lease agreement, net of accumulated amortization. (This asset class, valued at $1.172 billion, reflects Sysco's significant leasing activities.)

Noncontrolling interest

The portion of equity in a subsidiary that is not attributable to the parent company. (An increase in noncontrolling interest from $27 million to $44 million suggests a greater ownership stake by external parties in consolidated subsidiaries.)

Year-Over-Year Comparison

Compared to the prior year's comparable period, Sysco reported a modest 3.24% increase in sales to $21.148 billion. However, net earnings declined by 2.86% to $476 million, primarily due to a 5.3% rise in operating expenses and a 7.5% increase in interest expense. Cash and cash equivalents decreased to $844 million, while current liabilities grew by 9.02%, largely driven by a significant jump in current debt maturities. Diluted EPS saw a slight decrease to $0.99.

Key Financial Figures

• $1.00 — ange on which registered Common stock, $1.00 Par Value SYY New York Stock Exchange

Filing Documents

• syy-20250927.htm (10-Q) — 1739KB
• exhibit102-syscoxfy26aipxf.htm (EX-10.2) — 49KB
• exhibit103-syyxstockoption.htm (EX-10.3) — 156KB
• exhibit104-syyxrsuagmtdive.htm (EX-10.4) — 164KB
• exhibit105-syyxpsuawardagm.htm (EX-10.5) — 183KB
• exhibit221subsidiariesguar.htm (EX-22.1) — 68KB
• exhibit311ceocertsec302-q1.htm (EX-31.1) — 9KB
• exhibit312cfocertsec302-q1.htm (EX-31.2) — 9KB
• exhibit321ceocertsec906-q1.htm (EX-32.1) — 4KB
• exhibit322cfocertsec906-q1.htm (EX-32.2) — 4KB
• syy-20250927_g1.jpg (GRAPHIC) — 10KB
• 0000096021-25-000157.txt ( ) — 8773KB
• syy-20250927.xsd (EX-101.SCH) — 38KB
• syy-20250927_cal.xml (EX-101.CAL) — 77KB
• syy-20250927_def.xml (EX-101.DEF) — 178KB
• syy-20250927_lab.xml (EX-101.LAB) — 566KB
• syy-20250927_pre.xml (EX-101.PRE) — 387KB
• syy-20250927_htm.xml (XML) — 1456KB

– FINANCIAL INFORMATION Page No

PART I – FINANCIAL INFORMATION Page No. Item 1.

Financial Statements

Financial Statements 1 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 23 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 40 Item 4.

Controls and Procedures

Controls and Procedures 41

– OTHER INFORMATION

PART II – OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 42 Item 1A.

Risk Factors

Risk Factors 42 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 42 Item 3. Defaults Upon Senior Securities 43 Item 4. Mine Safety Disclosures 43 Item 5. Other Information 43 Item 6. Exhibits 43

Signatures

Signatures 46

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Sysco Corporation and its Consolidated Subsidiaries CONSOLIDATED BALANCE SHEETS (In millions, except for share data) Sep. 27, 2025 Jun. 28, 2025 (unaudited) ASSETS Current assets Cash and cash equivalents $ 844 $ 1,071 Accounts receivable, less allowances of $ 46 and $ 17 5,800 5,502 Inventories 5,377 5,053 Prepaid expenses and other current assets 387 338 Income tax receivable 4 4 Total current assets 12,412 11,968 Plant and equipment at cost, less accumulated depreciation 5,936 6,084 Other long-term assets Goodwill 5,190 5,231 Intangibles, less amortization 1,043 1,080 Deferred income taxes 490 497 Operating lease right-of-use assets, net 1,172 1,131 Other assets 801 783 Total other long-term assets 8,696 8,722 Total assets $ 27,044 $ 26,774 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 6,492 $ 6,512 Accrued expenses 2,166 2,268 Accrued income taxes 117 51 Current operating lease liabilities 141 136 Current maturities of long-term debt 1,894 949 Total current liabilities 10,810 9,916 Long-term liabilities Long-term debt 11,459 12,360 Deferred income taxes 351 345 Long-term operating lease liabilities 1,087 1,049 Other long-term liabilities 1,226 1,247 Total long-term liabilities 14,123 15,001 Noncontrolling interest 44 27 Shareholders' equity Preferred stock, par value $ 1 per share Authorized 1,500,000 shares, issued none — — Common stock, par value $ 1 per share Authorized 2,000,000,000 shares, issued 765,174,900 shares 765 765 Paid-in capital 2,010 1,986 Retained earnings 13,262 13,061 Accumulated other comprehensive loss ( 1,129 ) ( 1,098 ) Treasury stock at cost, 286,624,506 and 287,678,658 shares ( 12,841 ) ( 12,884 ) Total shareholders' equity 2,067 1,830 Total liabilities and shareholders' equity $ 27,044 $ 26,774 Note: The June 28, 2025 balance sheet has been derived from the audited financial statements at that date. See Notes to Consol