current estimates of the range of potential losses, the Company’s consolidated financial position or results of operations could be materially adversely affected in future periods.
JUUL Labs, Inc. Marketing Sales Practices, and Products Liability Litigation. In October 2019, a Multidistrict Litigation action (“MDL”) was initiated in order to centralize litigation against JUUL Labs, Inc. (“JUUL”) and other parties in connection with JUUL’s e-cigarettes and related devices and components in the United States District Court for the Northern District of California. On March 11, 2020, counsel for plaintiffs and the Plaintiffs’ Steering Committee filed a Master Complaint in the MDL (“Master Complaint”) naming, among several other entities and individuals including JUUL, Altria Group, Inc., Philip Morris USA, Inc., Altria Client Services LLC, Altria Group Distribution Company, Altria Enterprises LLC, certain members of management and/or individual investors in JUUL, various e-liquid manufacturers, and various retailers, including the Company’s subsidiaries Eby-Brown Company LLC (“Eby-Brown”) and Core-Mark Holding Company, Inc. (“Core-Mark”), as defendants. The Master Complaint also named additional distributors of JUUL products (collectively with Eby-Brown and Core-Mark, the “Distributor Defendants”). The Master Complaint contains various state law claims and alleges that the Distributor Defendants: (i) failed to disclose JUUL’s nicotine contents or the risks associated; (ii) pushed a product designed for a youth market; (iii) engaged with JUUL in planning and marketing its product in a manner designed to maximize the flow of JUUL products; (iv) met with JUUL management in San Francisco, California to further these business dealings; and (v) received incentives and business development funds for marketing and efficient sales. JUUL and Eby-Brown are parties to a Domestic Wholesale Distribution Agreement dated March 10, 2020 (the “Distribution Agreement”), and JUUL has agreed to defend and indemnify Eby-Brown under the terms of that agreement and is paying Eby-Brown’s outside counsel fees directly. In addition, Core-Mark and JUUL have entered into a Defense and Indemnity Agreement dated March 8, 2021 (the “Defense Agreement”) pursuant to which JUUL has agreed to defend and indemnify Core-Mark, and JUUL is paying Core-Mark’s outside counsel fees directly.
On December 6, 2022, JUUL announced that it had reached settlements with the plaintiffs in the MDL and related cases that had been consolidated in the U.S. District Court for Northern District of California (the “MDL Settlement”). Per the settlement agreement, the MDL Settlement encompasses the various personal injury, consumer class action, government entity, and Native American tribe claims made against JUUL and includes, among others, all of the Distributor Defendants (including Core-Mark and Eby-Brown) as released parties. The release applicable to the Distributor Defendants, as well as certain other defendants, took effect when JUUL made the first settlement payment on October 27, 2023. The MDL Settlement Master informed the parties that there are ten plaintiffs who opted out of the MDL Settlement; however, those opt-out plaintiffs have amended their individual complaints and have removed Eby-Brown and Core-Mark as defendants in their individual cases.
On September 10, 2021, Michael Lumpkins filed a parallel lawsuit in Illinois state court against several entities, including JUUL, e-liquid manufacturers, various retailers, and various distributors, including Eby-Brown and Core-Mark, alleging similar claims to the claims at issue in the MDL (the “Illinois Litigation”). Because there was no federal jurisdiction for this case, it proceeded in Illinois state court. Plaintiff alleged as damages that his use of JUUL products caused a brain injury that was later exacerbated by medical negligence. The court denied Eby-Brown and Core-Mark’s motion to dismiss, and the case moved into the discovery phase. On October 20, 2025, the court entered a stipulated order of dismissal without prejudice as to various defendants, including Eby-Brown and Core-Mark. Following the order of dismissal, the Company considers the Illinois Litigation to be resolved. In the event the Plaintiff attempts to refile the Illinois Litigation against Eby-Brown or Core-Mark, the defense and indemnity of Eby-Brown and Core-Mark for the Illinois Litigation would be covered by the Distribution Agreement and the Defense Agreement, respectively.
Tax Liabilities
The Company is subject to customary audits by authorities in the jurisdictions where it conducts business in the United States and foreign countries, which may result in assessments of additional taxes. These additional taxes are accrued when probable and reasonably estimable.
11. Related-Party Transactions
The Company participates in, and has an equity method investment in, a purchasing alliance that was formed to obtain better pricing, to expand product options, to reduce internal costs, and to achieve greater inventory turnover. The Company’s investment in the purchasing alliance was $14.6 million as of December 27, 2025 and $13.3 million as of June 28, 2025. For the three-month periods ended December 27, 2025 and December 28, 2024, the Company recorded purchases of $729.2 million and $586.3 million, respectively, through the purchasing alliance. For the six-month periods ended December 27, 2025 and December 28, 2024, the Company recorded purchases of $1,524.0 million and $1,187.4 million, respectively, through the purchasing alliance.
12. Earnings Per Common Share
Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is calculated using the weighted-average number of common shares and dilutive potential common shares outstanding during the period. The Company’s potential common shares include outstanding stock-based compensation awards and expected issuable shares under the employee
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited Consolidated Financial Statements and the Notes thereto included in Item 1. Financial Statements (“Item 1”) of this Form 10-Q and the audited Consolidated Financial Statements and the Notes thereto included in Item 8. Financial Statements and Supplementary Data of the Form 10-K. In addition to historical consolidated financial information, this discussion contains forward-looking statements that reflect our plans, estimates, and beliefs and involve numerous risks and uncertainties, including those described in Item 1A. Risk Factors of the Form 10-K. Actual results may differ materially from those contained in any forward-looking statements. You should carefully read “Special Note Regarding Forward-Looking Statements” in this Form 10-Q.
Our Company
We market and distribute food and food-related products to customers across North America from our over 150 locations to over 300,000 customer locations in the “food-away-from-home” industry. We offer our customers a broad assortment of products including our proprietary-branded products, nationally branded products, and products bearing our customers’ brands. Our product assortment ranges from “center-of-the-plate” items (such as beef, pork, poultry, and seafood), frozen foods, and groceries to candy, snacks, and beverages. We also sell disposables, cleaning and kitchen supplies, and related products used by our customers, as well as cigarettes and other nicotine products. In addition to the products we offer to our customers, we provide value-added services by allowing our customers to benefit from our industry knowledge, scale, and expertise in the areas of product selection and procurement, menu development, and operational strategy.
Based on the Company’s organizational structure and how the Company’s management reviews operating results and makes decisions about resource allocation, the Company has three reportable segments: Foodservice, Convenience, and Specialty. Our Foodservice segment distributes a broad line of national brands, customer brands, and our proprietary-branded food and food-related products, or “Performance Brands.” Foodservice sells to independent and multi-unit chain restaurants and other institutions such as schools, healthcare facilities, business and industry locations, and retail establishments. Our chain customers are multi-unit restaurants with five or more locations and include some of the most recognizable family and casual dining restaurant chains. Our Convenience segment distributes candy, snacks, beverages, cigarettes, other tobacco products, food and foodservice related products and other items to convenience stores across North America. Our Specialty segment distributes candy, snacks, beverages, and other food items nationally to vending, office coffee service, theater, retail, and other channels and utilizes third-party carriers to deliver direct to consumers for our supplier partners and to our customers whose order sizes are too small to be served effectively by our fleet network. We believe our diverse segments provide substantial opportunities for cross-segment collaboration to better serve our customers, including business development, procurement, operational best practices such as the use of new productivity technologies, and supply chain and network optimization, as well as shared corporate functions such as accounting, treasury, tax, legal, information systems, and human resources.
Key Factors Affecting Our Business
Our business, our industry and the economy are influenced by a number of general macroeconomic factors, including reduced demand for our products related to unfavorable macroeconomic conditions triggered by developments beyond our control, including geopolitical dynamics and other events that trigger economic volatility or negatively affect consumer confidence and discretionary spending. We continue to actively monitor the impacts of the evolving macroeconomic and geopolitical landscape, including rapidly evolving tariff and global trade policies and recent geopolitical events, on all aspects of our business. The Company and our industry may face challenges related to uncertain economic conditions and heightened uncertainty in the financial markets, inflationary pressure, an uncertain political environment, supply chain disruptions, and lower disposable incomes due to macroeconomic conditions. Although rapidly evolving tariff and global trade policies and geopolitical dynamics caused increased uncertainty throughout calendar year 2025, we saw little impact to our results in fiscal 2025 and the first half of fiscal 2026. However, the extent and duration of the tariffs and the resulting future impact on general economic conditions and our future financial position, liquidity, and results of operations remains uncertain. Sustained macroeconomic challenges, whether due to tariffs or otherwise, could negatively affect consumer discretionary spending decisions within our customers’ establishments, which could negatively impact our sales and profitability.
We believe that our performance is principally affected by the following key factors:
•Changing demographic and macroeconomic trends. Excluding the peak years of the COVID-19 pandemic, the share of consumer spending captured by the food-away-from-home industry has increased steadily for several decades. The share increases in periods of increasing employment, rising disposable income, increases in the number of restaurants, and favorable demographic trends, such as smaller household sizes, an increasing number of dual income households, and an aging population base that spends more per capita at foodservice establishments and is adversely impacted when these factors move in the opposite direction. The foodservice distribution industry is also sensitive to national and regional
economic conditions, such as changes in consumer spending, changes in consumer confidence, changes in the rate of inflation and fuel prices, supply chain disruptions, and labor shortages.
•Food distribution market structure. The food distribution market consists of a wide spectrum of companies ranging from businesses selling a single category of product (e.g., produce) to large national and regional broadline distributors with many distribution centers and thousands of products across all categories. We believe our scale enables us to invest in our Performance Brands, to benefit from economies of scale in purchasing and procurement, and to drive supply chain efficiencies that enhance our customers’ satisfaction and profitability. We believe that the relative growth of larger foodservice distributors will continue to outpace that of smaller, independent players in our industry.
•Our ability to successfully execute our segment and corporate strategies and implement our initiatives. Our performance will continue to depend on our ability to successfully execute our segment and corporate strategies and to implement our current and future initiatives. The key strategies include focusing on independent sales and Performance Brands, pursuing new customers for our three reportable segments, expansion of geographies, utilizing our infrastructure to gain further operating and purchasing efficiencies, and making strategic acquisitions.
How We Assess the Performance of Our Business
In assessing the performance of our business, we consider a variety of performance and financial measures. The key measures used by our management are discussed below. The percentages on the results presented below are calculated based on rounded numbers.
Case Growth
Case volume represents the volume of products sold to customers during a given period of time. Case growth is calculated by dividing the increase (decrease) in the case volumes sold year-over-year by the number of cases sold in the prior year. We define a case as the lowest level of packaged products as received from our suppliers, with one case containing several individually packaged units of the same product. Where individual packaged units are sold separately, case volume is calculated using the case equivalent quantity sold. Case growth provides useful information to management and investors in evaluating sales performance and as an indicator of gross margin performance. In our assessment of sales performance, management utilizes total case growth, as well as organic case growth, which excludes acquisition-related growth until the acquired business has been reflected in our results of operations for at least 12 months. While overall case growth reflects a key component of sales growth, case growth by customer type provides additional context around gross profit performance. Management also reviews case volume growth by customer type, with distinction between Foodservice independent and chain customers, as this provides a measure of gross profit performance due to the pricing strategies and product mix differences associated with each customer type.
Net Sales
Net sales is equal to gross sales, plus excise taxes, minus sales returns; minus sales incentives that we offer to our customers, such as rebates and discounts that are offsets to gross sales; and certain other adjustments. Our net sales are driven by changes in case volumes, product inflation that is reflected in the pricing of our products, mix of products sold and acquisitions.
Gross Profit
Gross profit is equal to our net sales minus our cost of goods sold. Cost of goods sold primarily includes inventory costs (net of supplier consideration), inbound freight, and remittances of excise tax. Cost of goods sold generally changes as we incur higher or lower costs from our suppliers and as our customer and product mix changes.
Adjusted EBITDA
Management measures operating performance based on our Adjusted EBITDA, defined as net income before interest expense, interest income, income and franchise taxes, and depreciation and amortization, further adjusted to exclude certain items that we do not consider part of our core operating results. Such adjustments include certain unusual, non-cash, non-recurring, cost reduction, or other adjustment items permitted in calculating covenant compliance under our ABL Facility and indentures (other than certain pro forma adjustments permitted under our ABL Facility and indentures governing the Notes due 2027, Notes due 2029, and Notes due 2032 relating to the Adjusted EBITDA contribution of acquired entities or businesses prior to the acquisition date). Under our ABL Facility and indentures, our ability to engage in certain activities such as incurring certain additional indebtedness, making certain investments, and making restricted payments is tied to ratios based on Adjusted EBITDA (as defined in the ABL Facility and indentures). Our definition of Adjusted EBITDA may not be the same as similarly titled measures used by other companies.
Adjusted EBITDA is not a measure of operating income, operating performance, or liquidity presented in accordance with, or required by, GAAP and is subject to important limitations. We use this measure to evaluate the performance of our business on a consistent basis over time and for business planning purposes. In addition, targets based on Adjusted EBITDA are among the measures we use to evaluate our management’s performance for purposes of determining their compensation under our incentive
plans. We believe that the presentation of Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors, and other interested parties, including our lenders under the ABL Facility and holders of our Notes due 2027, Notes due 2029, and Notes due 2032, in their evaluation of the operating performance of companies in industries similar to ours.
Adjusted EBITDA has important limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. For example, Adjusted EBITDA:
•excludes certain tax payments that may represent a reduction in cash available to us;
•does not reflect any cash capital expenditure requirements for the assets being depreciated and amortized that may have to be replaced in the future;
•does not reflect changes in, or cash requirements for, our working capital needs; and
•does not reflect the significant interest expense, or the cash requirements, necessary to service our debt.
In calculating Adjusted EBITDA, we add back certain non-cash, non-recurring, and other items as permitted or required by our ABL Facility and indentures. Adjusted EBITDA, among other things:
•does not include non-cash stock-based employee compensation expense and certain other non-cash charges;
•does not include acquisition, restructuring, and other costs incurred to realize future cost savings and enhance our operations; and
•does not include items outside of the ordinary course of the Company’s operations and not indicative of ongoing performance.
We have included below reconciliations of Adjusted EBITDA to the most directly comparable measure calculated in accordance with GAAP for the periods presented.
Results of Operations and Adjusted EBITDA
The following table sets forth a summary of our results of operations and Adjusted EBITDA for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
(In millions, except per share data) |
|
December 27, 2025 |
|
|
December 28, 2024 |
|
|
Change |
|
|
% |
|
Net sales |
|
$ |
16,444.7 |
|
|
$ |
15,638.2 |
|
|
$ |
806.5 |
|
|
|
5.2 |
|
Cost of goods sold |
|
|
14,478.3 |
|
|
|
13,810.4 |
|
|
|
667.9 |
|
|
|
4.8 |
|
Gross profit |
|
|
1,966.4 |
|
|
|
1,827.8 |
|
|
|
138.6 |
|
|
|
7.6 |
|
Operating expenses |
|
|
1,776.3 |
|
|
|
1,669.0 |
|
|
|
107.3 |
|
|
|
6.4 |
|
Operating profit |
|
|
190.1 |
|
|
|
158.8 |
|
|
|
31.3 |
|
|
|
19.7 |
|
Other expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
104.5 |
|
|
|
100.2 |
|
|
|
4.3 |
|
|
|
4.3 |
|
Other, net |
|
|
(1.1 |
) |
|
|
1.9 |
|
|
|
(3.0 |
) |
|
|
(157.9 |
) |
Other expense, net |
|
|
103.4 |
|
|
|
102.1 |
|
|
|
1.3 |
|
|
|
1.3 |
|
Income before income taxes |
|
|
86.7 |
|
|
|
56.7 |
|
|
|
30.0 |
|
|
|
52.9 |
|
Income tax expense |
|
|
25.0 |
|
|
|
14.3 |
|
|
|
10.7 |
|
|
|
74.8 |
|
Net income (GAAP) |
|
$ |
61.7 |
|
|
$ |
42.4 |
|
|
$ |
19.3 |
|
|
|
45.5 |
|
Adjusted EBITDA (Non-GAAP) |
|
$ |
451.2 |
|
|
$ |
423.0 |
|
|
$ |
28.2 |
|
|
|
6.7 |
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
155.8 |
|
|
|
154.6 |
|
|
|
1.2 |
|
|
|
0.8 |
|
Diluted |
|
|
156.8 |
|
|
|
156.3 |
|
|
|
0.5 |
|
|
|
0.3 |
|
Earnings per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.40 |
|
|
$ |
0.27 |
|
|
$ |
0.13 |
|
|
|
48.1 |
|
Diluted |
|
$ |
0.39 |
|
|
$ |
0.27 |
|
|
$ |
0.12 |
|
|
|
44.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
(In millions, except per share data) |
|
December 27, 2025 |
|
|
December 28, 2024 |
|
|
Change |
|
|
% |
|
Net sales |
|
$ |
33,520.6 |
|
|
$ |
31,053.7 |
|
|
$ |
2,466.9 |
|
|
|
7.9 |
|
Cost of goods sold |
|
|
29,537.6 |
|
|
|
27,461.7 |
|
|
|
2,075.9 |
|
|
|
7.6 |
|
Gross profit |
|
|
3,983.0 |
|
|
|
3,592.0 |
|
|
|
391.0 |
|
|
|
10.9 |
|
Operating expenses |
|
|
3,568.2 |
|
|
|
3,217.9 |
|
|
|
350.3 |
|
|
|
10.9 |
|
Operating profit |
|
|
414.8 |
|
|
|
374.1 |
|
|
|
40.7 |
|
|
|
10.9 |
|
Other expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
208.9 |
|
|
|
167.0 |
|
|
|
41.9 |
|
|
|
25.1 |
|
Other, net |
|
|
(2.3 |
) |
|
|
3.5 |
|
|
|
(5.8 |
) |
|
|
165.7 |
|
Other expense, net |
|
|
206.6 |
|
|
|
170.5 |
|
|
|
36.1 |
|
|
|
21.2 |
|
Income before income taxes |
|
|
208.2 |
|
|
|
203.6 |
|
|
|
4.6 |
|
|
|
2.3 |
|
Income tax expense |
|
|
52.9 |
|
|
|
53.2 |
|
|
|
(0.3 |
) |
|
|
(0.6 |
) |
Net income (GAAP) |
|
$ |
155.3 |
|
|
$ |
150.4 |
|
|
$ |
4.9 |
|
|
|
3.3 |
|
Adjusted EBITDA (Non-GAAP) |
|
$ |
931.3 |
|
|
$ |
834.9 |
|
|
$ |
96.4 |
|
|
|
11.5 |
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
155.7 |
|
|
|
154.6 |
|
|
|
1.1 |
|
|
|
0.7 |
|
Diluted |
|
|
156.8 |
|
|
|
156.3 |
|
|
|
0.5 |
|
|
|
0.3 |
|
Earnings per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.00 |
|
|
$ |
0.97 |
|
|
$ |
0.03 |
|
|
|
3.1 |
|
Diluted |
|
$ |
0.99 |
|
|
$ |
0.96 |
|
|
$ |
0.03 |
|
|
|
3.1 |
|
We believe that the most directly comparable GAAP measure to Adjusted EBITDA is net income. The following table reconciles Adjusted EBITDA to net income for the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
(In millions) |
|
December 27, 2025 |
|
|
December 28, 2024 |
|
|
December 27, 2025 |
|
|
December 28, 2024 |
|
Net income (GAAP) |
|
$ |
61.7 |
|
|
$ |
42.4 |
|
|
$ |
155.3 |
|
|
$ |
150.4 |
|
Interest expense |
|
|
104.5 |
|
|
|
100.2 |
|
|
|
208.9 |
|
|
|
167.0 |
|
Income tax expense |
|
|
25.0 |
|
|
|
14.3 |
|
|
|
52.9 |
|
|
|
53.2 |
|
Depreciation |
|
|
133.0 |
|
|
|
114.1 |
|
|
|
261.7 |
|
|
|
211.5 |
|
Amortization of intangible assets |
|
|
66.9 |
|
|
|
68.4 |
|
|
|
133.6 |
|
|
|
123.9 |
|
Change in LIFO reserve (1) |
|
|
28.1 |
|
|
|
17.8 |
|
|
|
52.6 |
|
|
|
30.5 |
|
Stock-based compensation expense |
|
|
12.6 |
|
|
|
11.7 |
|
|
|
25.6 |
|
|
|
23.0 |
|
Loss (gain) on fuel derivatives |
|
|
0.2 |
|
|
|
(0.8 |
) |
|
|
— |
|
|
|
0.6 |
|
Acquisition, integration & reorganization expenses (2) |
|
|
9.1 |
|
|
|
51.3 |
|
|
|
18.3 |
|
|
|
70.4 |
|
Other adjustments (3) |
|
|
10.1 |
|
|
|
3.6 |
|
|
|
22.4 |
|
|
|
4.4 |
|
Adjusted EBITDA (Non-GAAP) |
|
$ |
451.2 |
|
|
$ |
423.0 |
|
|
$ |
931.3 |
|
|
$ |
834.9 |
|
(1)Includes an increase in the LIFO reserve of $28.1 million for Convenience for the second quarter of fiscal 2026 compared to a decrease of $0.1 million for Foodservice and an increase of $17.9 million for Convenience for the second quarter of fiscal 2025. The LIFO reserve increased $1.7 million for Foodservice and $50.9 million for Convenience for the first six months of fiscal 2026 compared to increases of $0.8 million for Foodservice and $29.7 million for Convenience for the first six months of fiscal 2025.
(2)Includes professional fees and other costs related to in-progress, completed, and abandoned acquisitions, costs of integrating certain of our facilities, and facility closing costs.
(3)Includes amounts related to favorable and unfavorable leases, litigation-related accruals, franchise tax expense, insurance proceeds due to hurricane and other weather related events, foreign currency transaction gains and losses, gains and losses on disposals of fixed assets, and other adjustments permitted by our ABL Facility. Additionally, for the three and six months ended December 27, 2025, Other adjustments includes $10.2 million and $20.1 million, respectively, of legal and professional fees incurred in connection with shareholder activism and the clean team agreement with US Foods Holding Corp.
Consolidated Results of Operations
Three and six months ended December 27, 2025 compared to the three and six months ended December 28, 2024
Net Sales
Net sales growth is primarily a function of acquisitions, case growth, pricing, including product inflation/deflation, and a changing mix of customers, channels, and product categories sold.
Net sales increased $806.5 million, or 5.2%, from the second quarter of fiscal 2025 to the second quarter of fiscal 2026 primarily driven by an increase in cases sold, including a favorable shift in mix of cases sold, and an increase in selling price per case as a result of inflation. Net sales increased $2,466.9 million, or 7.9%, for the first six months of fiscal 2026 compared to the first six months of fiscal 2025 primarily driven by recent acquisitions, including the Cheney Brothers Acquisition, an increase in cases sold, including a favorable shift in mix of cases sold, and an increase in selling price per case as a result of inflation. Total case volume increased 3.4% and 6.4% during the second quarter and first six months of fiscal 2026, respectively, compared to the same periods of fiscal 2025. Total organic case volume increased 2.8% in both the second quarter and first six months of fiscal 2026, compared to the same periods of fiscal 2025. Total organic case volume benefited from an increase of 5.3% and 5.8% in organic independent cases sold during the second quarter and first six months of fiscal 2026, respectively, including growth in Performance Brands cases and growth in cases sold to Foodservice’s chain business. The overall rate of product cost inflation was approximately 4.5% for both the second quarter and first six months of fiscal 2026.
Gross Profit
Gross profit increased $138.6 million, or 7.6%, for the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025 primarily driven by cost of goods sold optimization through procurement efficiencies, as well as a favorable shift in the mix of cases sold, including growth in the independent channel. Independent customers typically receive more services from us, cost more to serve, and pay a higher gross profit per case than other customers. Gross profit increased $391.0 million, or 10.9%, for the first six months of fiscal 2026 compared to the first six months of fiscal 2025 primarily driven by recent acquisitions, including the Cheney Brothers Acquisition, as well as the same drivers of the increase in gross profit for the second quarter of fiscal 2026.
Operating Expenses
Operating expenses increased $107.3 million, or 6.4%, for the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025 primarily driven by a $63.9 million increase in personnel expenses related to salaries, commissions, and benefits, a $16.5 million increase in depreciation and amortization expense mainly driven by an increase in transportation equipment under finance leases, and $10.2 million in legal and professional fees incurred in connection with the clean team agreement with US Foods Holding Corp.
Operating expenses increased $350.3 million, or 10.9%, for the first half of fiscal 2026 compared to the first half of fiscal 2025 primarily driven by recent acquisitions, including $156.4 million of additional operating expenses as a result of the Cheney Brothers Acquisition, a $129.7 million increase in personnel expenses related to wages and salaries, commissions, and benefits, a $29.1 million increase in depreciation and amortization expense mainly driven by an increase in transportation equipment under finance leases, and $20.1 million in legal and professional fees incurred in connection with shareholder activism and the clean team agreement with US Foods Holding Corp.
Net Income
Net income increased $19.3 million, or 45.5%, for the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025 primarily driven by an increase gross profit, partially offset by an increase in operating expenses, income taxes, and interest expense. Net income increased $4.9 million, or 3.3%, for the first six months of fiscal 2026 compared to the first six months of fiscal 2025 primarily driven by increases in gross profit and other income, partially offset by increases in operating expenses and interest expense. The increases in interest expense were primarily the result of an increase in the average borrowings, including finance lease obligations, during the second quarter and first six months of fiscal 2026 compared to the prior year periods.
The Company reported income tax expense of $25.0 million and $52.9 million for the second quarter and first six months of fiscal 2026, respectively, compared to income tax expense of $14.3 million and $53.2 million for the second quarter and first six months of fiscal 2025, respectively. Our effective tax rates for the second quarter and first six months of fiscal 2026 were 28.8% and 25.4%, respectively, compared to 25.2% and 26.1% for the second quarter and first six months of fiscal 2025, respectively. The effective tax rate for the three months ended December 27, 2025 differed from the prior year period primarily due to a decrease in deductible discrete items related to stock-based compensation and an increase in foreign taxes as a percentage of income, partially offset by an increase in tax credits net of the valuation allowance established. The effective tax rate for the six months ended December 27, 2025 differed from the prior year period primarily due to an increase in tax credits net of the valuation allowance established and deductible discrete items related to stock-based compensation, partially offset by an increase in foreign taxes and non-deductible expenses as a percentage of income.
Segment Results
In the third quarter of fiscal 2025, the Company updated its operating segments to reflect the manner in which the business is managed. The Company continues to have three reportable segments: Foodservice, Convenience, and Specialty. Management evaluates the performance of these segments based on various operating and financial metrics, including their respective sales growth and Segment Adjusted EBITDA, which is the Company’s GAAP measure of segment profit. Segment Adjusted EBITDA is defined as net income before interest expense, interest income, income taxes, depreciation, and amortization and excludes certain items that the Company does not consider part of its segments’ core operating results, including stock-based compensation expense, changes in the LIFO reserve, acquisition, integration and reorganization expenses, and gains and losses related to fuel derivatives. The presentation and amounts for the fiscal quarter and six months ended December 28, 2024 have been recast to reflect these segment changes. See Note 13. Segment Information of the consolidated financial statements in this Form 10-Q.
Corporate & All Other is comprised of unallocated corporate overhead and certain operations that are not considered separate reportable segments based on their size.
The following tables set forth net sales and Segment Adjusted EBITDA by reportable segment and the reconciling items for Corporate & All Other and eliminations for the periods indicated (dollars in millions):
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
December 27, 2025 |
|
|
December 28, 2024 |
|
|
Change |
|
|
% |
|
Foodservice |
|
$ |
8,802.7 |
|
|
$ |
8,378.6 |
|
|
$ |
424.1 |
|
|
|
5.1 |
|
Convenience |
|
|
6,331.0 |
|
|
|
5,967.5 |
|
|
|
363.5 |
|
|
|
6.1 |
|
Specialty |
|
|
1,252.7 |
|
|
|
1,234.6 |
|
|
|
18.1 |
|
|
|
1.5 |
|
Total segments |
|
$ |
16,386.4 |
|
|
$ |
15,580.7 |
|
|
$ |
805.7 |
|
|
|
5.2 |
|
Corporate & All Other |
|
|
239.7 |
|
|
|
229.9 |
|
|
|
9.8 |
|
|
|
4.3 |
|
Intersegment eliminations |
|
|
(181.4 |
) |
|
|
(172.4 |
) |
|
|
(9.0 |
) |
|
|
(5.2 |
) |
Total net sales |
|
$ |
16,444.7 |
|
|
$ |
15,638.2 |
|
|
$ |
806.5 |
|
|
|
5.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
|
|
|
|
December 27, 2025 |
|
|
December 28, 2024 |
|
|
Change |
|
|
% |
|
Foodservice |
|
$ |
17,948.8 |
|
|
$ |
16,080.1 |
|
|
$ |
1,868.7 |
|
|
|
11.6 |
|
Convenience |
|
|
12,917.9 |
|
|
|
12,331.2 |
|
|
|
586.7 |
|
|
|
4.8 |
|
Specialty |
|
|
2,528.9 |
|
|
|
2,520.3 |
|
|
|
8.6 |
|
|
|
0.3 |
|
Total segments |
|
$ |
33,395.6 |
|
|
$ |
30,931.6 |
|
|
$ |
2,464.0 |
|
|
|
8.0 |
|
Corporate & All Other |
|
|
489.9 |
|
|
|
476.6 |
|
|
|
13.3 |
|
|
|
2.8 |
|
Intersegment eliminations |
|
|
(364.9 |
) |
|
|
(354.5 |
) |
|
|
(10.4 |
) |
|
|
(2.9 |
) |
Total net sales |
|
$ |
33,520.6 |
|
|
$ |
31,053.7 |
|
|
$ |
2,466.9 |
|
|
|
7.9 |
|
Segment Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
December 27, 2025 |
|
|
December 28, 2024 |
|
|
Change |
|
|
% |
|
Foodservice |
|
$ |
292.1 |
|
|
$ |
285.1 |
|
|
$ |
7.0 |
|
|
|
2.5 |
|
Convenience |
|
|
121.7 |
|
|
|
107.3 |
|
|
|
14.4 |
|
|
|
13.4 |
|
Specialty |
|
|
100.2 |
|
|
|
93.9 |
|
|
|
6.3 |
|
|
|
6.7 |
|
Total segments |
|
$ |
514.0 |
|
|
$ |
486.3 |
|
|
$ |
27.7 |
|
|
|
5.7 |
|
Corporate & All Other |
|
|
(62.8 |
) |
|
|
(63.3 |
) |
|
|
0.5 |
|
|
|
0.8 |
|
Total Adjusted EBITDA |
|
$ |
451.2 |
|
|
$ |
423.0 |
|
|
$ |
28.2 |
|
|
|
6.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
|
|
|
|
December 27, 2025 |
|
|
December 28, 2024 |
|
|
Change |
|
|
% |
|
Foodservice |
|
$ |
616.5 |
|
|
$ |
559.7 |
|
|
$ |
56.8 |
|
|
|
10.1 |
|
Convenience |
|
|
242.7 |
|
|
|
212.6 |
|
|
|
30.1 |
|
|
|
14.2 |
|
Specialty |
|
|
194.2 |
|
|
|
177.1 |
|
|
|
17.1 |
|
|
|
9.7 |
|
Total segments |
|
$ |
1,053.4 |
|
|
$ |
949.4 |
|
|
$ |
104.0 |
|
|
|
11.0 |
|
Corporate & All Other |
|
|
(122.1 |
) |
|
|
(114.5 |
) |
|
|
(7.6 |
) |
|
|
(6.6 |
) |
Total Adjusted EBITDA |
|
$ |
931.3 |
|
|
$ |
834.9 |
|
|
$ |
96.4 |
|
|
|
11.5 |
|
Segment Results—Foodservice
Three and six months ended December 27, 2025, compared to the three and six months ended December 28, 2024
Net Sales
Net sales for Foodservice increased $424.1 million, or 5.1%, from the second quarter of fiscal 2025 to the second quarter of fiscal 2026 driven primarily by case volume growth, including growth in our independent and chain business, and an increase in selling price per case as a result of inflation. Net sales for Foodservice increased $1.9 billion, or 11.6%, from the first half of fiscal 2025 to the first half of fiscal 2026 driven primarily by the Cheney Brothers Acquisition in addition to organic case volume growth and an increase in selling price per case as a result of inflation. Cheney Brothers contributed $1.8 billion in net sales for the first half of fiscal 2026 compared to $825.0 million for the first half of fiscal 2025. Total case growth for Foodservice was 3.5% in the second quarter of fiscal 2026 and 9.3% in the first half of fiscal 2026, compared to the prior year periods. Total independent case growth was 6.7% and 13.0% for the second quarter and first half of fiscal 2026, respectively, compared to the prior year periods. Securing new and expanding business with independent customers resulted in organic independent case growth of 5.3% and 5.8% in the second quarter and first half of fiscal 2026, respectively, compared to the prior year periods. For the second quarter and first half of fiscal 2026, independent sales as a percentage of total Foodservice sales were 44.4% and 42.1%, respectively.
Segment Adjusted EBITDA
Adjusted EBITDA for Foodservice increased $7.0 million, or 2.5%, from the second quarter of fiscal 2025 to the second quarter of fiscal 2026. This increase was the result of an increase in gross profit, partially offset by an increase in operating expenses. Gross profit contributing to Foodservice’s Adjusted EBITDA increased $78.7 million, or 6.5%, in the second quarter of fiscal 2026 compared to the prior year period primarily driven by a favorable shift in the mix of cases sold and growth in cases sold, including more Performance Brands products sold to our independent customers. Operating expenses impacting Foodservice’s Adjusted EBITDA increased $72.2 million, or 7.8%, from the second quarter of fiscal 2025 to the second quarter of fiscal 2026. Operating expenses increased compared to the prior year period primarily as a result of a $46.4 million increase in personnel expenses related to salaries, commissions, and benefits, a $8.4 million increase in insurance expense related to auto insurance and workers’ compensation, a $3.3 million increase in professional fees, and a $2.9 million increase in fuel expense due to higher fuel prices.
Adjusted EBITDA for Foodservice increased $56.8 million, or 10.1%, from the first half of fiscal 2025 to the first half of fiscal 2026. This increase was the result of an increase in gross profit, partially offset by an increase in operating expenses. Gross profit contributing to Foodservice’s Adjusted EBITDA increased $308.5 million, or 13.3%, in the first half of fiscal 2026, primarily due to the Cheney Brothers Acquisition, a favorable shift in mix of cases sold, and growth in cases sold, including more Performance Brands products sold to our independent customers. The Cheney Brothers Acquisition contributed an additional $142.8 million of gross profit impacting Adjusted EBITDA for the first half of fiscal 2026. Operating expenses impacting Foodservice’s Adjusted EBITDA increased $253.4 million, or 14.5%, from the first half of fiscal 2025 to the first half of fiscal 2026 primarily as a result of the Cheney Brothers Acquisition, which contributed an additional $123.5 million of operating expenses for the first half of fiscal 2026. Excluding the impact of the additional Cheney Brothers expenses, operating expenses impacting Foodservice’s Adjusted EBITDA increased primarily as a result of a $94.2 million increase in personnel expenses related to salaries and wages, commissions, and benefits, and a $15.2 million increase in insurance expense related to auto insurance and workers’ compensation, a $5.1 million increase in professional fees, and a $4.9 million increase in fuel expense due to higher fuel prices.
Depreciation and amortization of intangible assets recorded in this segment increased from $115.7 million in the second quarter of fiscal 2025 to $133.4 million in the second quarter of fiscal 2026 primarily due to an increase in transportation equipment under finance leases. Additionally, Foodservice depreciation and amortization of intangible assets increased from $200.9 million in the first half of fiscal 2025 to $263.7 million in the first half of fiscal 2026 primarily as a result of an increase in transportation equipment under finance leases and the Cheney Brothers Acquisition. The Cheney Brothers Acquisition contributed an additional $29.7 million in depreciation and amortization for the first half of fiscal 2026 compared to the prior year period.
Segment Results—Convenience
Three and six months ended December 27, 2025, compared to the three and six months ended December 28, 2024
Net Sales
Net sales for Convenience increased $363.5 million, or 6.1%, from the second quarter of fiscal 2025 to the second quarter of fiscal 2026 and increased $586.7 million, or 4.8%, from the first half of fiscal 2025 to the first half of fiscal 2026 driven primarily by the addition of new chain customers, a recent acquisition, and an increase in selling price per case as a result of continued inflation. Total Convenience cases sold increased 6.8% and 3.6% for the second quarter and first half of fiscal 2026, respectively, compared to the prior year periods. Securing new chain customers resulted in an organic increase of 6.3% and 3.1% in Convenience cases sold for the second quarter and first half of fiscal 2026, respectively, compared to the prior year periods.
Segment Adjusted EBITDA
Adjusted EBITDA for Convenience increased $14.4 million, or 13.4%, from the second quarter of fiscal 2025 to the second quarter of fiscal 2026. This increase was a result of an increase in gross profit, partially offset by an increase in operating expenses. Gross profit contributing to Convenience’s Adjusted EBITDA increased $26.7 million, or 6.4%, for the second quarter of fiscal 2026 compared to the prior year period primarily due to inventory holding gains, an increase in cases sold, a favorable shift in mix of cases sold, and pricing improvements from procurement efficiencies. Operating expenses impacting Convenience’s Adjusted EBITDA increased $12.4 million, or 4.0%, from the second quarter of fiscal 2025 to the second quarter of fiscal 2026 primarily as a result of an $8.3 million increase in personnel expense related to salaries and benefits to support case volume growth from the addition of new chain customers and a $2.4 million increase due to recent acquisitions.
Adjusted EBITDA for Convenience increased $30.1 million, or 14.2%, from the first half of fiscal 2025 to the first half of fiscal 2026. This increase was a result of an increase in gross profit, partially offset by an increase in operating expenses. Gross profit contributing to Convenience’s Adjusted EBITDA increased $49.3 million, or 5.9%, for the first half of fiscal 2026 compared to the prior year period primarily due to inventory holding gains, an increase in cases sold, a favorable shift in mix of cases sold, higher fees earned from manufacturers for distribution and related services, and pricing improvements from procurement efficiencies. Operating expenses impacting Convenience’s Adjusted EBITDA increased $20.0 million, or 3.2%, from the first half of fiscal 2025 to the first half of fiscal 2026 primarily as a result of an increase in variable operating expenses to support case volume growth from the addition of new chain customers, including an $8.2 million increase in personnel expenses related to salaries and benefits, and a $4.9 million increase due to recent acquisitions.
Depreciation and amortization of intangible assets recorded in this segment increased from $39.0 million in the second quarter of fiscal 2025 to $41.0 million in the second quarter of fiscal 2026 and increased from $77.6 million in the first half of fiscal 2025 to $80.9 million in the first half of fiscal 2026.
Segment Results—Specialty
Three and six months ended December 27, 2025, compared to the three and six months ended December 28, 2024
Net Sales
Net sales for Specialty increased $18.1 million, or 1.5%, from the second quarter of fiscal 2025 to the second quarter of fiscal 2026 and increased $8.6 million, or 0.3%, from the first half of fiscal 2025 to the first half of fiscal 2026. The increases in net sales for the second quarter and first half of fiscal 2026 were primarily driven by an increase in selling price per case due changes in channel mix and growth in the vending and retail channels, partially offset by a decline in theater sales. Specialty cases sold for the second quarter and first half of fiscal 2026 decreased 1.3% and 1.9%, respectively, as growth in the vending, retail, office coffee service, and campus channels was more than offset by declines in theater compared to the prior year periods.
Segment Adjusted EBITDA
Adjusted EBITDA for Specialty increased $6.3 million, or 6.7%, from the second quarter of fiscal 2025 to the second quarter of fiscal 2026. This increase was a result of an increase in gross profit, partially offset by an increase in operating expenses. Gross profit contributing to Specialty’s Adjusted EBITDA increased $7.8 million, or 3.4%, for the second quarter of fiscal 2026 primarily driven by a shift in channel mix, pricing improvements from procurement efficiencies, and inventory holding gains, partially offset by a decrease in cases sold. Operating expenses impacting Specialty’s Adjusted EBITDA increased $1.5 million, or 1.1%, from the second quarter of fiscal 2025 to the second quarter of fiscal 2026 primarily due to an increase in variable operating expenses as a result of a shift in channel mix.
Adjusted EBITDA for Specialty increased $17.1 million, or 9.7%, from the first half of fiscal 2025 to the first half of fiscal 2026 as a result of an increase in gross profit and a decrease in operating expenses. Gross profit contributing to Specialty’s Adjusted EBITDA increased $14.8 million, or 3.2%, for the first half of fiscal 2026 compared to the prior year period primarily driven by a shift in channel mix, pricing improvements from procurement efficiencies, and inventory holding gains, partially offset by a decrease in
cases sold. Operating expenses impacting Specialty’s Adjusted EBITDA decreased $2.2 million, or 0.8%, from the first half of fiscal 2025 to the first half of fiscal 2026 primarily due to a decrease in variable operating expenses as a result of a shift in channel mix.
Depreciation and amortization of intangible assets recorded in this segment decreased from $13.3 million in the second quarter of fiscal 2025 to $13.1 million in the second quarter of fiscal 2026 and decreased from $27.7 million in the first half of fiscal 2025 to $26.1 million in the first half of fiscal 2026.
Liquidity and Capital Resources
We have historically financed our operations and growth primarily with cash flows from operations, borrowings under our ABL Facility, operating and finance leases, and normal trade credit terms. We have typically funded our acquisitions with additional borrowings under our ABL Facility and occasionally with the net proceeds from the issuances of senior notes and/or equity. Our borrowing levels are subject to seasonal fluctuations, as well as procurement and acquisition activities. We borrow under our ABL Facility or pay it down regularly based on our cash flows from operating and investing activities. Our practice is to minimize interest expense while maintaining reasonable liquidity.
As market conditions warrant, we may from time to time seek to repurchase our securities or loans in privately negotiated or open market transactions, by tender offer or otherwise. Any such repurchases may be funded by incurring new debt, including additional borrowings under our ABL Facility. In addition, depending on conditions in the credit and capital markets and other factors, we will, from time to time, consider other financing transactions, the proceeds of which could be used to refinance our indebtedness, make investments or acquisitions or for other purposes. Any new debt may be secured debt.
We are exposed to interest rate risk related to changes in interest rates for borrowings under our ABL Facility. To add stability to interest expense and manage our exposure to interest rate movements, we enter into interest rate swap agreements. These swaps are designated as cash flow hedges and involve the receipt of variable-rate amounts from a counterparty in exchange for making fixed-rate payments. As of December 27, 2025, $150.0 million of the outstanding ABL Facility balance is hedged under interest rate swaps which results in 70% of our total debt outstanding, including finance lease obligations, being fixed-rate debt.
On May 27, 2025, the Board of Directors authorized a new share repurchase program for up to $500 million of the Company’s outstanding common stock. This authorization replaces the previously authorized $300 million share repurchase program. The new share repurchase program has an expiration date of May 27, 2029. Repurchases of the Company’s outstanding common stock will be made in accordance with applicable securities laws and may be made at management’s discretion from time to time in the open market, through privately negotiated transactions or otherwise, including pursuant to Rule 10b5-1 trading plans. The share repurchase program may be amended, suspended or discontinued at any time at the Board’s discretion, and does not commit the Company to repurchase any specified number of shares of its common stock. The actual timing, number and value of the shares to be purchased under the program will be determined by the Company at its discretion and will depend on a number of factors, including the performance of the Company’s stock price, general market and other conditions, applicable legal requirements and compliance with the terms of the Company’s outstanding indebtedness. As of December 27, 2025, $500 million remained available for share repurchases.
Our contractual cash requirements over the next 12 months and beyond relate to our long-term debt and associated interest payments, operating and finance leases, and purchase obligations. For information regarding the Company’s expected cash requirements related to long-term debt and operating and finance leases, see Note 6. Debt and Note 7. Leases, respectively, of the consolidated financial statements in this Form 10-Q. As of December 27, 2025, the Company had total purchase obligations of $273.2 million, which includes agreements for purchases related to capital projects and services in the normal course of business, for which all significant terms have been confirmed, as well as a minimum amount due for various Company meetings and conferences. Purchase obligations also include amounts committed to various capital projects in process or scheduled to be completed in the coming fiscal years. As of December 27, 2025, the Company had commitments of $129.3 million for capital projects related to warehouse expansion and improvements and warehouse equipment. The Company anticipates using cash flows from operations or borrowings under the ABL Facility to fulfill these commitments. Amounts due under these agreements were not included in the Company’s consolidated balance sheet as of December 27, 2025.
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
We believe that our cash flows from operations and available borrowing capacity will be sufficient both to meet our anticipated cash requirements over at least the next 12 months and to maintain sufficient liquidity for normal operating purposes and to fund capital expenditures.
As of December 27, 2025, our cash balance totaled $49.5 million, including restricted cash of $8.5 million, as compared to a cash balance totaling $86.7 million, including restricted cash of $8.2 million, as of June 28, 2025.
Operating Activities
Six months ended December 27, 2025, compared to the six months ended December 28, 2024
During the first six months of fiscal 2026 and fiscal 2025, our operating activities provided cash flow of $456.0 million and $379.0 million, respectively. The increase in cash flow provided by operating activities in the first six months of fiscal 2026 compared to the first six months of fiscal 2025 was largely driven by higher cash-based operating income, partially offset by advanced purchases of inventory to take advantage of preferred pricing.
Investing Activities
Six months ended December 27, 2025, compared to the six months ended December 28, 2024
Cash used in investing activities totaled $251.6 million in the first six months of fiscal 2026 compared to $2,736.7 million in the first six months of fiscal 2025. These investments consisted of cash paid for acquisitions of $61.0 million in the first six months of fiscal 2026 compared to $2,535.5 million in the first six months of fiscal 2025, along with capital purchases of property, plant, and equipment of $192.3 million and $203.9 million for the first six months of fiscal 2026 and the first six months of fiscal 2025, respectively. For the first six months of both fiscal 2026 and fiscal 2025, purchases of property, plant, and equipment primarily consisted of outlays for warehouse improvements and expansion, warehouse equipment, transportation equipment, and information technology. The following table presents the capital purchases of property, plant, and equipment by segment:
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
(In millions) |
|
December 27, 2025 |
|
|
December 28, 2024 |
|
Foodservice |
|
$ |
122.9 |
|
|
$ |
166.5 |
|
Convenience |
|
|
32.2 |
|
|
|
15.6 |
|
Specialty |
|
|
6.1 |
|
|
|
11.2 |
|
Corporate & All Other |
|
|
31.1 |
|
|
|
10.6 |
|
Total capital purchases of property, plant and equipment |
|
$ |
192.3 |
|
|
$ |
203.9 |
|
Financing Activities
Six months ended December 27, 2025, compared to the six months ended December 28, 2024
During the first six months of fiscal 2026, our financing activities used cash flow of $241.6 million, which consisted primarily of $118.0 million in net repayments under our ABL Facility as well as $114.1 million in payments under finance lease obligations.
During the first six months of fiscal 2025, our financing activities provided cash flow of $2,348.7 million, which consisted primarily of $1,499.9 million in net borrowings under our ABL Facility and $1.0 billion in cash received from the issuance and sale of the Notes due 2032, partially offset by $84.8 million in payments under finance lease obligations.
The Company's financing arrangements as of December 27, 2025 are described in Note 6. Debt of the consolidated financial statements within this Form 10-Q. As of December 27, 2025, the Company was in compliance with all of the covenants under the ABL Facility and the indentures governing the Notes due 2027, the Notes due 2029, and the Notes due 2032.
Total Assets by Segment
Total assets by segment discussed below exclude intercompany receivables between segments, and amounts as of December 28, 2024 have been recast to reflect the changes to our reportable segments that occurred in the third quarter of fiscal 2025.
Total assets for Foodservice increased $738.3 million from $10,600.2 million as of December 28, 2024 to $11,338.5 million as of December 27, 2025, primarily due to an increase in property, plant and equipment and inventory due to warehouse expansion and improvement projects and an increase in goodwill due to recent acquisitions, partially offset by a decrease in intangible assets due to normal amortization. Total assets for Foodservice increased $67.4 million from $11,271.1 million as of June 28, 2025 to $11,338.5 million as of December 27, 2025, due to an increase in inventory and property, plant and equipment, offset by a decrease in intangible assets due to normal amortization and a decrease in accounts receivable.
Total assets for Convenience increased $380.2 million from $4,182.2 million as of December 28, 2024 to $4,562.4 million as of December 27, 2025. During this time period, the segment increased its inventory due to advanced purchases to take advantage of preferred pricing and increased its property, plant and equipment through additional transportation equipment leases and a warehouse under finance lease. Additionally, the Convenience segment's accounts receivable balance increased compared to the prior year end. These increases were partially offset by decreases in intangible assets due to normal amortization and right-of-use assets. Total assets for Convenience increased $285.6 million from $4,276.8 million as of June 28, 2025 to $4,562.4 million as of December 27, 2025. During this time period, the segment increased its inventory due to advanced purchases to take advantage of preferred pricing and
increased its property, plant and equipment through additional transportation equipment leases and a warehouse under finance lease. These increases were partially offset by decreases in accounts receivable, cash, and intangible assets due to normal amortization.
Total assets for Specialty decreased $69.8 million from $1,566.5 million as of December 28, 2024 to $1,496.7 million as of December 27, 2025. During this time period, this segment decreased its inventory due to sales in the normal course of business, right-of-use assets, and intangible assets due to normal amortization. These decreases were partially offset by an increase in accounts receivable. Total assets for Specialty decreased $90.2 million from $1,586.9 million as of June 28, 2025 to $1,496.7 million as of December 27, 2025 primarily due to decreases in inventory, accounts receivable, property, plant, and equipment, and right-of-use assets.
Critical Accounting Policies and Estimates
Critical accounting policies and estimates are those that are most important to portraying our financial position and results of operations. These policies require our most subjective or complex judgments, often employing the use of estimates about the effect of matters that are inherently uncertain. Our most critical accounting policies and estimates include those that pertain to the allowance for doubtful accounts receivable, inventory valuation, insurance programs, income taxes, vendor rebates and promotional incentives, leases, and goodwill and other intangible assets, which are described in the Form 10-K. There have been no material changes to our critical accounting policies and estimates as compared to our critical accounting policies and estimates described in the Form 10-K.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our market risks consist of interest rate risk and fuel price risk. There have been no material changes to our market risks since June 28, 2025. For further discussion on our exposure to market risk, see Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk in the Form 10-K.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Regulations under the Exchange Act require public companies, including us, to maintain “disclosure controls and procedures,” which are defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required or necessary disclosures. In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. In accordance with Rule 13a-15(b) of the Exchange Act, as of the end of the period covered by this Form 10-Q, an evaluation was carried out under the supervision and with the participation of the Company’s management, including its principal executive officer and principal financial officer, of the effectiveness of its disclosure controls and procedures. Based on that evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this Form 10-Q, were effective to accomplish their objectives at a reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as that term is defined in Rule 13a-15(f) under the Exchange Act), that occurred during the fiscal quarter ended December 27, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
