Good morning, everyone. My name is Jeff Bernstein, and I'm the restaurant and food service distribution analyst at Barclays. I'm pleased to introduce our next presenting company, Sysco Corporation. With us this morning, we have Kevin Hourican, to my immediate right, President and CEO, Kenny Cheung, CFO, sitting right next to him, and in the audience, we have Kevin Kim, head of IR, and Joshua Long, senior director of IR, and obviously, we are thrilled to have Sysco, and actually, I have Yum here as well, and we've gotten those two in as consumer staples, but otherwise, our primary consumer discretionary conference is our Eat, Sleep, Play, Shop conference, which includes many of our other restaurants and food service distributors. That's in our New York offices. Once again, the week post-Thanksgiving, so December 2nd through the 4th this year, we hope to see many of you there.
But now, back to Sysco. By way of background, Sysco is the global leader in selling, marketing, and distributing food products to restaurants and others. Globally, Sysco services 730,000 customer locations from 340 distribution facilities, generating $81 billion in sales this most recent year, with 60% plus going to restaurants. But to share more detail, I will turn it over to Kevin and Kenny to walk through some of their bigger picture slides, and then we will do some Q&A with the remaining time. But with that said, I want to turn it over first to Kevin Hourican.
Great.
Yes, appreciate it. Okay, good morning, everyone. It's a pleasure to be back with you all again. I have this obligatory slide. We all have seen it, so we move on from that. So great to be back in Boston, have an opportunity to talk about our business. My upfront five or six slides are some content that some of you have seen before. For some of you, it might be new. I do have some new content at the end. So I'm going to move through these initial slides at pace so I can get to that content and then turn it over to Kenny, who will walk us through the finance portion of the deck. So without further ado, this is a page that talks about who we are at Sysco.
As you know, we are the number one player in the food away-from-home distribution space, both here in our domestic home as well as in most of our international countries that we operate within. We did $81 billion in top line in the most recent year, and we like to say that size and scale has its advantages that we will bring to the marketplace on an increasing rate over time. We have number one market share here in the United States as well as in multiple other countries, which I will get to in just a moment. We have a $9 billion specialty business, which is more than three times the size of our second biggest or next biggest competitor within the specialty space. I will talk more about specialty in just a moment. We have a very diverse customer portfolio. Yes, we are all things restaurants.
Roughly two-thirds of our business is restaurants, but one-third of our business is what we call recession-resistant categories like government, education, healthcare, food service in buildings like this, as well as office complexes. We are number one in essentially almost all of those businesses. We're number two in the healthcare space. So let's talk more about food away from home. This is arguably our favorite chart. We have another one that shows the $370 billion total addressable market in just the United States. Most importantly, though, the market itself grows each and every year. And the why is the chart that is shown here. The up to the right line is the food away from home market share. The down to the right line is dollars spent at grocery. And this is a very persistent trend. It has lasted for decades. Our consumers are time-starved.
Across all three day parts, whether it's breakfast, lunch, or dinner, more and more meals are chosen to be eaten out or even presently brought to their home but purchased away from home. It is a strong trend, providing a good tailwind to our business, which, in addition to our ability to take share, which we have taken share each and every year for the past five years, results in a compelling CAGR. As you can see, 11% CAGR since our inception. We've grown our top line 54 out of the past 57 years. The 2008, 2009 financial crisis was one, and then the two years at the beginning of COVID were the second and the third year. We are the number one player on what we call national. We are number one in local, and we are number one in our specialty space.
And we have an opportunity to take more share profitably. That's the most important word: taking share profitably in each and every one of those business segments. Now, let's talk a little bit about our reporting segments. Our international business is doing incredibly well. We have a compelling opportunity to continue to grow our international business. We size that as more than a $10 billion opportunity over time. We have a meaningful opportunity to grow our specialty business, which is produce and protein, equipment and supplies, and what we call the ethnic food segments, which is mostly for us Asian foods and Italian foods. We have a $10 billion growth opportunity within specialty. And last but not least, we do have opportunities in M&A. Those are tuck-in opportunities. Those are specialty acquisitions. And as we think longer term, we can think about international opportunities. All at industry-leading profitability ratios.
We have the by far highest operating income percentage in our space, and we intend to continue to be the most disciplined operator in the business. We run a compelling business model across the world, as you can see. 80% of our business is domestic, 20% of our business is international, and we are growing international faster, both top line and bottom line, than our domestic core business. We've doubled the profitability percentage of our international business over the past two years alone, and there's no headroom, if you will, or glass ceiling for us to be able to not penetrate through when we think about the long-term profit growth potential of our international business. Why are we succeeding in international? We are running what we call the Sysco Play in each and every country that we go to.
That means modern warehouses fueled by modern technology, a boots-on-the-ground local sales force that's selling a broad product range. I order tonight, I can deliver tomorrow from that broad product range. When we replicate that playbook, with the addition of Sysco Brand private label cases being put on the truck, we win market share, we win so profitably, and we grow to become number one in the countries that we compete with around the world. As you can see, the circles are the total addressable market within each country. The green bar is our market share in 2019. The blue bar is our market share in the most recent year, and we have improved our market share in each and every country we compete within around the world, and that will not slow down. In fact, we believe it will accelerate.
So I went through those charts at pace to get to the next two slides. I'm going to slow down and have an opportunity to talk about some net new information on these slides. The headline on the slide says what we want you to hear today, and it's the takeaway from today. We are inflecting positive in local in the spot moment. We are making meaningful progress in our local business. And if you leave this conference and remember only two things about the Sysco story: we have double-digit growth potential, and we're producing those results internationally, and we are meaningfully, meaningfully improving our local business right here, right now. Today, we're encouraged by the progress that we are making within our local business. The bars on the chart show our Q3 into Q4, and you can see the 200 basis points of improvement that we have delivered.
We are in our Q1 as we speak, and that momentum has continued. If I could unpack that a little bit more, our U.S. Broadline business has inflected positive. We are positive in our local business, and we expect to be positive in our U.S. Broadline business in Q1. That is a net new data point being introduced today. Our U.S. FS business, which is a bigger business, which includes both broadline and specialty, is coming up a little bit slower behind that because you may recall on our most recent earnings call I talked about in our FreshPoint produce business, we actually exited one of the business lines within FreshPoint, and that's a little bit of a drag on the business right now. U.S. FS is improving at a similar rate and will take just a little bit longer to get to positive.
We'll talk more about that on our earnings call on Q1. So why are we succeeding and why are we now expecting to be positive in Q1 in our broadline business? It starts and ends with our colleague population. We have absolutely stabilized our sales consultant workforce. Our retention is at all-time highs. We are confident in our ability to sustain that performance all through fiscal 2026. So the headwind that you know existed in our business last year, which was elevated turnover, will not be repeated in 2026. Hard stop. Second point, the hiring that we have been doing, and I'll cover that on the next slide, is beginning to pay our dividend, provide dividends as more and more of our colleagues are graduating from first year into second year in their productivity and their yield increases.
Those two things together, not repeating the turnover challenge from a year ago, increasing productivity of our new hires, together, that is what we're referring to as colleague health and colleague productivity, and it is the reason we have inflected positive, and our Broadline business, and it is the reason we are absolutely confident in our ability to deliver against the guidance that Kenny will talk about when he is here at the podium. Colleague health. When we layer on top of colleague health, compelling initiatives, which I'll cover in a moment, that is the icing on the cake that gives us the confidence to be able to win share and to be able to do so profitably. How do we know this to be true?
We can see the widening of the gap between new customer wins and customer losses, providing the separation between new and lost that we need simultaneously while penetrating additional cases with existing customers. We call that new, lost, and pen within our industry. We have successfully widened the gap between new and lost, and we're increasing the penetration with existing customers through compelling growth initiatives. And as I said, we're on track to be positive in local and U.S. Broadline in Q1. So let's talk a little bit more about the actions that are giving us the confidence for the momentum that we are already delivering and the increased momentum we expect to be able to drive throughout fiscal 2026. Kenny talks about well-laddered investments across time horizons: long-term investments, midterm investments, and right here in the now moment investments.
The top left falls in a midterm type investment, increasing our boots-on-the-ground colleague workforce. As you can see on the chart, we've been growing our sales workforce approximately 4% for the past couple of years. That will continue into 2026, approximately 4% headcount growth, 100% dedicated to street, essentially 100% focused on winning that new business so we can profitably grow. We are on track with that investment. The colleagues that we hired over the past two years are hitting their individual productivity targets, and we're pleased with the return on that investment. The top right is a longer-term horizon of investments. Kenny talks about five to 10-year out time horizons, and that's the building of net new physical supply chain capacity. Here in the United States, we have a new building within the past year in Allentown, PA. To be crystal clear, it's not about Allentown.
It's about the population-dense northeast corridor and increasing our ability to store products needed by our customers to deliver on time and deliver in full. Just a month ago, we opened our next brand new building in Tampa, Florida, to support the growing Florida market to be able to win share profitably. We've communicated publicly. Approximately 10 buildings across the world have been approved over the past couple of years, all coming to life now, which create the capacity for a broader assortment to support new business in both national and in local, and we are pleased with the performance of these large supply chain investments. The bottom left is where we talk about specialty. I mentioned before a $10 billion growth opportunity within our specialty business. How do we apply that math? We have approximately 17% market share in total. In specialty, we have less than 10% share.
Getting our business to our fair share of that business is a big opportunity, and we prove it with the how that is shown on the bottom left. When one of our Broadline customers adds a single Specialty business like FreshPoint to their purchasing, we have a three-times increase in the revenue from that customer. If they buy from Specialty Meat, which is our Buckhead and Newport business, on top of FreshPoint, it's a six-times yield. So we are getting smarter, more strategic, and better at bringing together our sales organizations to provide more from Sysco to meet their needs and to make it worth the while of the customer to do exactly that. We call this total team selling, and we're extremely pleased with the performance outcomes. On the bottom right, our growth initiatives that I talked about on our most recent earnings call.
In the month of July, we rebooted our loyalty program, and it's called Perks. It previously was more of a marketing program where you buy X, you get rewards of Y, and you can redeem them through purchases Z. That is good. It's valuable, but it is not as important as providing a hard-hitting service improvement experience for our absolute best customers, and I want to be crystal clear. These are for mom-and-pop local independent restaurants. This is not for national chains. These are our most important, most profitable local customers. We are going to provide them a step-change improved level of service. It will not cost Sysco more money. This is about prioritization. They will get the window that they desire, delivery window. We will be on time at a higher rate. Their fill rate will be higher than the book of business average.
If ever there's a challenge or a problem, it'll be resolved on the spot immediately. Sounds easy, does hard. Think about the hotel that is your loyalty program or the airline you prefer. You're not paying for your ticket at a lower rate. You're getting a better level of service from that airline that you prefer. If you're one of their top customers, it's the same thing in our industry. It will make a difference. It'll be measured through improved retention of these most important customers and increased penetration of cases sold to these top customers. We have piloted this program. It is having a compelling yield, and we expanded it nationwide in July, or I should have said rolled out Perks 2.0 nationwide in July. Last but not least for me, so I can hand the microphone over to Kenny, is AI 360.
It is a selling tool in the palm of our colleague's hand. It's literally their smartphone. It is our CRM turbocharged with AI to improve that sales colleague's ability to sell. We see a great customer visit, you sell an item you haven't sold before, win back a lost case, and switch from a national brand to Sysco Brand for something that will save the customer money with a great quality flavor profile. Salesforce 360, powered through our AI , is enabling us the opportunity to do that at a better rate. In the palm of their hand, prioritize next best actions. As I'm in my truck ready to walk into a restaurant, it tells me what I can sell, how to sell it, and if I have any questions, I can talk into my phone and I can get those questions answered on the spot.
More on that later, but we rolled out this capability two weeks ago nationwide, and the positive feedback from our colleagues has been outstanding. So with that, I'm going to stop. Again, the takeaways, we're extremely pleased and proud of our international business, and we are inflecting positive in local, and the momentum that we are building in local is significant, and we are pleased with the progress that we are making. So Kenny, come on up. I'll turn it over to you.
All right. Thanks, Kevin, so hello, everyone. It is great to be back in Boston with all of you today. Thank you for your continued interest and support to the Sysco Corporation. We are excited, as you heard from Kevin, about the quarter-to-date momentum that we're seeing in our business and the compounding improvements we expect going forward, so far, Kevin's talked about three exciting items. Number one, our leadership position in a growing, attractive industry. Number two, our strong track record of delivering long-term success, and last but not least, the balance of initiatives that are driving near-term momentum while also setting our enterprise up for long-term success and growth, so today, during my presentation, I'll talk about how these items translate to our industry-leading financial performance across the P&L, the balance sheet, and cash flow, so let's start with a key piece of information that's Kevin shared.
Our local case volume has improved further versus Q4 results. This gives us confidence, and I'll say it again, confidence in reiterating our Q1 and our FY 2026 guidance as we're on track to deliver top line of 3%-5% sales growth and EPS growth of 1%-3%. Excluding the impact of incentive compensation, adjusted EPS growth would be 5%-7% for FY 2026. As seen on the slide in front of you, we've achieved performance in each of the past five years. This is across both top line and bottom line, and we are positioned to deliver another record year in FY 2026. So if we take a giant step back and look at the past few years, you can see that the CAGR of sales has been roughly 5%, and the CAGR for EPS has been roughly 9%.
And Sysco has proven to be a resilient company able to grow across all various market conditions. This consistent performance also includes what we call positive operating leverage, with gross profit growing faster than operating expenses. This attractive return profile also includes our number one market-leading position. And as Kevin mentioned, size and scale matters in this industry as it for Sysco, it renders five things. Number one, leading sales, industry-leading sales. Two, margins. Third, free cash flow. Fourth, ROIC, industry-leading. And last but not least, the only investment-grade balance sheet in the industry. These industry metrics are a position of strength and illustrate our strong quality of earnings. As Kevin noted earlier, Sysco holds the position as the global market leader with a diverse portfolio of operations across the food away from home sector.
Restaurants, as Kevin said, roughly 60% of our total revenue mix, and it grew 3% year-on-year in FY 2025. We are encouraged by the momentum of this channel, especially on the local case growth front, which is driven by self-help and growth initiatives. Looking beyond restaurants, as Kevin said, we are majority number one in all the spaces that we play. We have travel and leisure. We have education. We have government. These areas are growing mid to high teens in the range. Healthcare, business, doing well as well, growing high single-digit range. We are encouraged to see that our growth being both accretive on the dollar standpoint and margin standpoint, accretive to historical levels with the multi-year contract in place. So it's locked in stream for the next few years at least, and every year it renews. The mix is strategic if you think about it.
As Kevin said, these are what we call recession-resilient segments, and they are sticky business as well. This is one of the reasons why on the chart that Kevin highlighted earlier, we have grown sales in 54 of the past 57 years. More specifically, as you think about performance versus the average industry core peers, you can clearly see there are benefits and advantages across both the income statement and the balance sheet. Our competitive advantages combined with operational rigor allow Sysco to have what I call meaningful spreads versus our average core peers. So let's first start with the income statement. If you look at the left side of the chart, and I'll guide your eyes with you, left piece of the chart, from a GP standpoint, Sysco last year generated 18.4% gross margins.
That is 1.3 times higher than the average core peer, really driven by our power of size and scale. Turning to adjusted operating margin line, we generated over 4% operating margin last year, and that is roughly 1.5 times higher than the average core peer, and that's really driven by what I call Sysco-specific leverage across gross profit, such as strategic sourcing, leveraging total team selling to sell our specialty product, which has a higher margin attachment rate, and also driving international growth, which also comes with a higher gross margin, but we don't stop there. We're also focused on the middle part of the P&L as well, around operating expense levers, and this includes supply chain efficiencies across retention and labor productivity, structural cost out, and also optimization of our corporate SG&A costs, which was down 6% year-on-year in FY 2025.
These are meaningful, permanent structural advantages that show up across our P&L. On the balance sheet side, we have industry-leading cash flow conversion, so as you think about EBITDA to operating cash flow, roughly 70% conversion. EBITDA to free cash flow, roughly 50% conversion. As you look at the chart in front of you, you can see that Sysco generates roughly $2 billion of free cash flow annually, and that is 2.5 times higher than the average core peer, so as you think about the robust cash generation profile of our company, we have the luxury to invest in our business, and we reward our shareholders as well through share repurchase as well as the dividend. We're roughly current today, 3% yield, which is right between that 40%-50% dividend payout ratio, and that's a key differentiator. We're the only ones that pay dividend in this industry.
As you think about the backdrop of capital allocation, all of what I just mentioned earlier is underpinned by balanced and disciplined capital allocation as we leverage the ROIC mindset to ensure capital deployed across various asset classes, which are well-laddered to Kevin's point, yields optimal return. First, we will invest for growth. We will invest in our business. We generally plan for CapEx to be roughly 1% of sales. This consists both of growth CapEx and maintenance CapEx. For FY 2026, we will come in a touch below that 1% target as we plan to grow into our investments that we've made the past few years and to ensure that we render returns on the investment of capital portion of ROIC. Second, we remain committed to our investment-grade balance sheet and we're comfortable operating within 2.5-2.75 times net leverage ratio.
Last but not least, excess cash, we are committed to rewarding our investors with a steady flow of share repurchase and dividends as we did in FY 2025. So here's my last page. I won't read the slides, but I'll tell it to you in my own words. We like our position. In fact, we love our position. We are the industry leader that sits in an industry that's attractive and growing. We have a balanced and diversified portfolio across geographies, channels, and product mixes. We have multiple vectors of growth across our core business as well as M&A, B&I, local, chain, specialty, and international, and we also have a solid pipeline of growth initiatives that will further drive our earnings trajectory. Our industry-leading margins, balanced capital allocation, as well as strong ROIC yields a TSR of 9%-11% going forward for our shareholders.
We have a strong track record of providing dividend growth as well as share repurchases. So this allows us to have an investment-grade balance sheet and deliver value at the spot moment while playing the long game on the forward. So therefore, whether you are a value investor, a growth investor, an income investor, Sysco provides extremely compelling opportunity. So I will end with where I started, which is we are excited about our quarter-to-date performance, and we are very confident in Q1 as well as the full year 2026 guidance. We have the right leadership team in place to execute against this plan. We are focused on consistent delivery results, which will compound over time. This is a great time to be at Sysco. Our future is bright, and we are positioned to win. Thank you for your support.
With that, I'll turn it over to Jeff for some Q&A.
Great. Thank you very much. Very thorough presentation. With our remaining minutes here, there's obviously lots to dive into, but where you started and where you ended is probably an area that garners a lot of attention. So the first question is just on the local case growth and the momentum you're seeing there. If you could just share more about the progress being made in this part of the business and your confidence in sustaining.
Yeah, sure, Jeff. Appreciate the question. It's what we're most pleased to be able to talk about and report today is the progress that we're making. First, just context. The overall macro is getting nominally better. So from Q3 to Q4, macro traffic, reminder, traffic to restaurants has been down for more than a year. So from Q3 to Q4, traffic improved. We've seen a continued improvement in foot traffic to restaurants overall. But Jeff, what we're really pleased with is our business performance is improving at a faster rate than that overall environment, most specifically with small mom-and-pop independent operators. In fact, oftentimes it gets written that big national chains are doing better than local. That is not accurate. We are seeing actually our local business doing better than big national chains.
Now, to be honest and fair, a big part of that is we're able to take share within that local space, and we are taking share. So we said today on main stage, we will be positive in our U.S. BL local business in Q1. U.S. FS, which includes our specialty businesses, will trail that a little bit because of a business exit that took place within FreshPoint, but we're pleased with our performance, sans that business exit, and we're really pleased with the progress that we're making. If I answer the question of why are you making the incremental progress that you're making, as I said on stage, it starts and ends with our colleague population. Retention is solid. Productivity is improving. The new hires that we have completed over the past two years are kind of finding their rhythm and really growing into their job.
And when we layer on top of the initiatives, I want to be clear. The initiatives I discussed today, Perks 2.0, AI 360, they're not in the improvement that I just talked about. They literally just launched weeks ago, and that would be icing on top of the cake. What we say internally to our team, we will make a plan this year just because of the health of our colleague workforce, meaning that one topic is so important. It will help deliver our profitable growth. The initiatives that we're bullish on give us an opportunity to outperform, and we're really excited about what is to come at Sysco, specifically within local.
Yeah, just the plus up on Kevin. We are very confident with our local performance. We will be positive for total U.S. FS for the year. As Kevin said, we will be positive for U.S. BL for Q1. As I think about from my chair and from your chair as well, some of the proof points that we're seeing right now in terms of that yields is confidence. One is the cohorts are coming in right now. These are the hires that we've hired recently, 750 between 2024 and 2025. And then this year, we're hiring another 300, as you saw on Kevin's page. And these cohorts are climbing up the curve, and they are exactly where we want them to be right now in terms of productivity. So really good progress there.
Because of that, we are seeing, and as you know this, we are seeing new customer ramp up every single month. As Kevin mentioned, the spread between new and lost has widened. So in Q4, it doubled versus the first three quarters. And now we're seeing that increase again. And that's the reason why every single month we're adding net new customers to a portfolio. And I think you all know this. Today's new customers is tomorrow's penetration. So we're seeing not only the spread between new and lost widen, but we're also seeing penetration go up as well. And the third point I would say is that let's not forget about international. International is a growth engine for us, and local business continues to do well. Last year, you may remember we were missing those digits for local case growth.
Right now, we're in the same zip code as well. Good progress globally on local.
Great. Thank you. My second question is on the fiscal 2026 guidance, which for those not familiar, Sysco runs on a June 30th year-end. So we are in their first fiscal quarter, the final month, but we have three quarters to go. Just wanted you to talk a little bit about your confidence in that guidance. And then maybe layering into it just because it's such a popular topic, the current state of the consumer and the local restaurant industry as a whole, kind of your thoughts on the health there.
Yeah, Kenny, why don't you?
Sure. I can start, and then I'll turn it over to Kevin. So there's a couple of reasons why we are extremely confident in our FY 26 guidance. One is I would group them as will be what I call self-help and momentum. As Kevin and I have said before, we believe our plan is achievable and realistic. That's point number one. And the plan is contingent upon self-help, things that we control as an enterprise. It is not contingent upon the world getting better, the market getting better, etc. If anything, we plan for the world to be similar. Now, if it gets better, that's great. But right now, our plan is based on self-help. And the second bucket is momentum. We're seeing momentum, as Kevin and I just spoke about, local case growth. But there's more to our business than just local case growth.
Our national business is going really well, growing case, taking share profitably. As you saw, the recession resilience segment is doing really well, double-digit growth. International business, seven quarters of double-digit growth, doing really well as well, and let's not forget, last quarter, we saw gross profit expand both dollars and margins, and that is a gift that keeps on giving because nice carryover benefit in FY 2026, and let's not forget supply chain. We haven't spoke about that because things are going really well there. Retention is working really well. Productivity is hitting all cylinders, and oh, by the way, corporate SG&A, we plan to do really well there this year as well, so if you think about our business, yes, local volume has momentum, but the other parts of the P&L are actually harmonizing and driving great outcomes for our business as well.
So I'll just address the last half of Jeff's question. So consumer health, just overall macro, other things that are going on. Best way to describe the consumer again across the very, very broad type of business that we're in is they're holding in. Q4 for us was better than Q3. July was better than Q4. We're continuing the momentum to inflect positive. We just communicated today. We are positive in our U.S. BL business. We expect to be positive in Q1. And that business was negative in Q4. So health improvement. Now, part of that, Jeff, what's hard for us is it's coming from self-help. We're taking share profitably. But the general consumer holding in there from a food away from home perspective. We also have a third of our business that's not tied to the end consumer.
We call it non-commercial, government, hospitals, education. Kenny covered in his prepared remarks. We're winning share meaningfully in that space, and we're doing so profitably. So we're feeling reasonably cautiously optimistic about the full year. We are not expecting for it to improve, macro. We can grow by taking share profitably from the industry. The second topic for me would be tariffs. I'll do this really fast. Some data that may be useful for you. Relative to other industries, tariffs will have a smaller impact on our overall P&L. Greater than 90% of the food that we buy is bought locally within each country, in every country that we operate in around the world. Food is an inherently local supply chain.
For the 5%-10% that's bought internationally, the majority of that, knock on wood, today is exempt through U.S. MCA because it's produce and potatoes and the like from Canada and from Mexico, and those are exempt from tariffs. Why? Because you can't grow the produce in the United States in the wintertime that we buy from Mexico, and the government's been thus far quite reasonable about that, so yes, we're talking to the government. We're reinforcing the need for a USMCA extension of that exemption. As long as that holds, the impact to our cost of goods sold inbound is reasonably moderate, and we can push back on suppliers, and we will work hard to minimize that cost increase.
If there's a cost increase that we can't minimize, it's a reasonably efficient marketplace that we compete in, which translates to we'll be able to pass that cost increase on to our end consumer. We will work very hard, though, to prevent that from being needed. If necessary, we can pass it through. That's the general take on tariffs. So it's not material to our fiscal 2026, and it's being managed properly and being managed well. Jeff, back to you for anything else.
Yeah, in our final 30 seconds, if this is possible, just for our staple audience, converting from your fundamentals, which we've talked about, to get to your EPS and total shareholder return, if you could just talk a little bit about capital allocation and specifically your share purchase and dividend assumptions for this fiscal year.
Sure, sure. I'll be brief on this one, so capital allocation priorities. First, invest for growth in our business, ROIC mentality. Second is to maintain our IG-rated balance sheet, operate within that 2.5-3.75 times net leverage ratio, and then the third piece is your last question in terms of the assumption for share repo and dividends. That's our capital allocation strategy. Share repo and dividend, roughly $2 billion combined, $1 billion for dividends, and approximately $1 billion for share repo under the current market conditions.
Understood. We have exhausted our time, but I wanted to thank Sysco for joining us and specifically Kevin and Kenny for joining me on stage. We do have a breakout session after this for those who have questions. I know you have meetings throughout the day. Again, thank you, Sysco, very much for joining us.
Great. Thank you.
Thank you.