Core Insights - Sysco Corporation reported first-quarter fiscal 2026 results that slightly exceeded expectations, with adjusted EPS of $1.15 compared to the estimated $1.12, and revenue of $21.1 billion, surpassing the consensus of $21.07 billion [1] Financial Performance - Operating income decreased by 1.0% to $800 million, while adjusted operating income increased by 2.9% to $898 million [2] - Gross profit rose by 3.9% to $3.9 billion, with gross margin expanding by 13 basis points to 18.5% [2] - Operating expenses grew by 5.3% due to investments in capacity and sales headcount, which outpaced revenue growth [2] Segment Performance - The International Foodservice Operations segment showed strong performance, with sales increasing by 4.5% and adjusted operating income rising by 13.1% to $147 million [3] Future Outlook - Sysco maintained its full-year fiscal 2026 targets, projecting 3–5% sales growth and 1–3% adjusted EPS growth [3]

Core Insights - Sysco Corporation (NYSE: SYY) has shown mediocre performance over the past year, with only a modest gain in its stock price [1] - The company is not expected to see a rebound in momentum, as indicated by its mixed financial results [1] Company Performance - Sysco's stock has generated a modest gain over the last year, suggesting a lack of strong growth [1] - The current outlook does not indicate an imminent recovery in momentum for the company [1]

Core Insights - Sysco Corporation reported first-quarter adjusted earnings per share of $1.15, a 5.5% increase year over year, surpassing the analyst consensus estimate of $1.12 [1] - Quarterly sales reached $21.148 billion, exceeding the expected $21.080 billion, with a year-over-year sales increase of 3.2% [1][3] Financial Performance - Gross profit rose by 3.9% to $3.9 billion, with gross margin expanding by 13 basis points to 18.5% [3][6] - Adjusted operating income increased by 2.9% to $898 million, while adjusted operating margin stood at 4.3% [6] - Adjusted EBITDA saw a slight increase of 0.1% to $1.1 billion [6] Segment Performance - U.S. Foodservice Operations reported sales growth of 2.9% to $14.8 billion, with total case volume up by 0.1% [4] - International Foodservice Operations experienced a 4.5% sales increase to $4.0 billion, benefiting from effective margin management and local volume gains [5] Cash Flow and Liquidity - As of the end of the quarter, Sysco had a cash balance of $844 million and total liquidity of $3.5 billion [7] - Cash flow from operations was reported at $86 million, while free cash flow was negative $50 million for the first 13 weeks of fiscal year 2026 [7] Outlook - Sysco reaffirmed its fiscal 2026 adjusted EPS outlook at $4.50 to $4.60, aligning closely with the consensus of $4.59 [8] - The company maintained its fiscal 2026 sales guidance of $84 billion to $85 billion, compared to the estimate of $84.536 billion [8]

Core Insights - Sysco reported revenue of $21.15 billion for the quarter ended September 2025, reflecting a 3.2% increase year-over-year and surpassing the Zacks Consensus Estimate of $21.1 billion by 0.23% [1] - Earnings per share (EPS) for the quarter was $1.15, up from $1.09 in the same quarter last year, exceeding the consensus EPS estimate of $1.12 by 2.68% [1] Financial Performance Metrics - International Foodservice Operations sales reached $3.97 billion, exceeding the average analyst estimate of $3.92 billion, marking a 4.5% year-over-year increase [4] - U.S. Foodservice Operations sales were $14.78 billion, slightly below the average estimate of $14.81 billion, with a year-over-year increase of 2.9% [4] - Sales from Other operations totaled $273 million, falling short of the average estimate of $285.2 million, representing a year-over-year decline of 3.2% [4] - SYGMA sales amounted to $2.13 billion, surpassing the average estimate of $2.11 billion, with a year-over-year increase of 4.1% [4] - Operating income for Other operations was $4 million, below the average estimate of $9.29 million [4] - SYGMA's operating income was reported at $25 million, exceeding the average estimate of $18.34 million [4] - Gross profit for Other operations was $68 million, compared to the average estimate of $73.2 million [4] - SYGMA's gross profit was $170 million, slightly above the average estimate of $167.3 million [4] Stock Performance - Sysco's shares have returned -4.7% over the past month, contrasting with the Zacks S&P 500 composite's increase of 3.6% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Sysco reported a sales growth of 3.2% on a reported basis and 3.8% when excluding the divestiture of Mexico, with gross profit growing by 3.9% and Adjusted EPS increasing by 5.5% [6][19][21] - The company achieved gross margin expansion of 13 basis points year over year, reflecting structural improvements [21][28] - Operating cash flow increased by 62% year over year to approximately $86 million, while free cash flow was negative $50 million due to typical seasonality [29][30] Business Line Data and Key Metrics Changes - Sysco's U.S. Broadline local business experienced a positive inflection, delivering volume growth of 0.4%, with USFS performance being 130 basis points stronger than Q4 results [7][24] - The international segment delivered outsized sales growth of 4.5% on a reported basis and 7.9% when excluding the divestiture of Mexico, with local case volume growth of approximately 5% [9][10] - Sigma segment reported 4% sales growth and 39% operating income growth, although more moderate results are expected for the remainder of the year [26][29] Market Data and Key Metrics Changes - Sysco's local business outperformed the overall industry traffic improvement, achieving a rate of local volume improvement more than 2x the industry average [6][8] - Restaurant traffic in Q1 improved by 60 basis points, with Sysco's performance being significantly stronger, particularly in September [8][24] - The company anticipates continued improvement in local business performance, expecting at least an additional 100 basis points improvement in Q2 versus Q1 [9][32] Company Strategy and Development Direction - Sysco aims to deliver profitable growth across its U.S. Food Service, international, and Sigma segments, even in a challenging macroeconomic environment [4][20] - The company is focused on enhancing its local business through initiatives like AI 360 and Perks 2.0, which are expected to drive customer retention and sales productivity [12][15][16] - Sysco's strategy includes expanding its specialty capabilities through acquisitions, such as the recent acquisition of Fairfax Meadow, to unlock incremental growth [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering full-year financial guidance, citing strong operational momentum and improved retention rates among sales colleagues [20][22] - The leadership team emphasized the importance of internal initiatives in driving performance improvements, independent of external market conditions [55][59] - Sysco's diversified business model and strong international segment performance are seen as key advantages in navigating economic challenges [37] Other Important Information - Sysco's total liquidity remains robust at $3.5 billion, with a net debt leverage ratio of 2.9x [29][30] - The company expects to return approximately $1 billion to shareholders through dividends and share repurchases in FY2026 [32][33] Q&A Session Summary Question: Local Salesforce productivity and metrics - Management highlighted a 130 basis points improvement in local volume and emphasized the stability of the workforce as a key driver of positive momentum [41][42] Question: Guidance for the second half of the year - Management expressed confidence in their guidance, citing strong momentum and internal initiatives driving growth [47][48] Question: Case volumes and customer type performance - Management noted that every month in Q1 showed improvement, with strong retention in national sales and growth in non-commercial segments [55][56] Question: Food cost and inflation trends - Management clarified that while inflation was higher in Q1, it is expected to normalize around 2% for the full year, with ongoing improvements in gross profit [71][74] Question: Broader restaurant industry trends - Management acknowledged industry weakness but emphasized Sysco's ability to outperform due to internal initiatives and a stable workforce [79]

Financial Data and Key Metrics Changes - Sysco reported sales growth of 3.2% on a reported basis and 3.8% excluding the divestiture of Mexico, with gross profit growing by 3.9% and adjusted EPS increasing by 5.5% [6][19][21] - The company achieved gross margin expansion of 13 basis points year over year, reflecting structural improvements [21][28] - Operating cash flow increased by 62% year over year to approximately $86 million, while free cash flow was negative $50 million due to typical seasonality [29][30] Business Line Data and Key Metrics Changes - Sysco's U.S. Broadline local business experienced a positive inflection with volume growth of 0.4%, significantly outpacing the overall industry traffic improvement [7][24] - The international segment delivered sales growth of 4.5% on a reported basis and 7.9% excluding the divestiture of Mexico, with local case volume growth of approximately 5% [9][10] - Sigma segment reported 4% sales growth and 39% operating income growth, although more moderate results are expected for the remainder of the year [26][29] Market Data and Key Metrics Changes - U.S. food service volume reporting included a negative impact from an intentional business exit within the FreshPoint business, which negatively affected total local performance by over 50 basis points [9][24] - Restaurant traffic improved by 60 basis points in Q1, with Sysco's local volume improvement being more than double the overall industry rate [8][24] Company Strategy and Development Direction - Sysco aims to deliver profitable growth across U.S. Food Service, international, and Sigma segments, focusing on local business momentum and strategic sourcing [4][19] - The company is leveraging technology initiatives like AI 360 and customer loyalty programs such as Perks 2.0 to enhance sales productivity and customer retention [14][16] - Sysco's strategy includes expanding its specialty capabilities through acquisitions, such as Fairfax Meadow, to unlock incremental growth [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering full-year financial guidance despite a challenging macro backdrop, citing strong operational momentum and improved retention rates [4][20][22] - The company anticipates continued sequential improvement in local business volume, projecting at least an additional 100 basis points improvement in Q2 versus Q1 [8][32] - Sysco's diversified business model and strong international segment performance are expected to provide resilience and growth opportunities [37] Other Important Information - Sysco's investment-grade balance sheet remains robust, with total liquidity of $3.5 billion and a net debt leverage ratio of 2.9 times [29][30] - The company plans to return approximately $1 billion to shareholders through dividends and share repurchases in FY26 [32][33] Q&A Session Summary Question: Local Salesforce productivity metrics and correlation to case growth - Management highlighted a 130 basis points improvement in local volume, with retention of sales colleagues exceeding targets, contributing to positive momentum [41][42] Question: Guidance for the back half of the year - Management expressed confidence in guidance, citing strong momentum and operational improvements, with expectations for continued growth in national sales [47][48] Question: Case volumes and customer type performance - Management noted that every month in Q1 showed improvement, with strong retention in national sales and growth in non-commercial segments [55][56] Question: Food cost and inflation trends - Management clarified that while inflation was higher in Q1, it is expected to normalize around 2% for the full year, with ongoing improvements in gross profit margins [72][74] Question: Drivers of industry weakness - Management acknowledged that while the overall restaurant industry showed weakness, Sysco's performance improved due to internal initiatives and workforce stability [79]

Financial Data and Key Metrics Changes - Sysco reported sales growth of 3.2% on a reported basis and 3.8% excluding the divestiture of Mexico, with gross profit growing by 3.9% and adjusted EPS increasing by 5.5% [5][18][19] - The company achieved gross margin expansion of 13 basis points year over year, reflecting structural improvements and effective management of product cost inflation [19][26] Business Line Data and Key Metrics Changes - The U.S. Broadline local business showed a positive inflection with volume growth of 0.4%, significantly outpacing the overall industry traffic improvement [6][22] - International segments delivered sales growth of 4.5% on a reported basis and 7.9% excluding the divestiture of Mexico, with local case volume growth of approximately 5% [8][21] Market Data and Key Metrics Changes - Restaurant traffic in Q1 improved by 60 basis points, with Sysco's local volume improvement being more than two times the overall industry rate [7][18] - The company anticipates an additional 100 basis points improvement in total U.S. local volume in Q2 compared to Q1, continuing the positive momentum [6][31] Company Strategy and Development Direction - Sysco aims to deliver profitable growth across its U.S. Food Service, international, and Sigma segments, focusing on local business momentum and strategic sourcing [4][19] - The company is leveraging technology initiatives like AI 360 and customer loyalty programs such as Perks 2.0 to enhance sales productivity and customer retention [12][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering full-year financial guidance despite a challenging macro backdrop, citing strong operational execution and momentum in local business [4][18] - The company expects to continue improving its local business performance, driven by stabilized sales force retention and effective growth initiatives [20][36] Other Important Information - Sysco's adjusted operating income grew to $898 million for the quarter, reflecting strong growth in international and Sigma segments [27] - The company generated approximately $86 million in operating cash flow, up 62% year-over-year, indicating effective working capital optimization [28] Q&A Session Summary Question: Local Salesforce productivity and metrics - Management highlighted a positive inflection in local volume growth, with retention of sales colleagues exceeding targets, contributing to improved productivity [40][41] Question: Guidance on earnings and confidence - Management expressed strong confidence in guidance, citing momentum in local case growth and successful initiatives within their control [46][47] Question: Total case volumes and customer type performance - Management noted that while local volumes improved significantly, total case volumes showed more modest growth, with national accounts expected to pick up due to strong retention and new customer onboarding [51][56] Question: Food cost and inflation trends - Management clarified that while inflation in Q1 was higher than the targeted 2%, it is expected to normalize, with some categories experiencing deflation [70][74] Question: Broader restaurant industry trends - Management observed that independents are performing better than larger national chains, indicating a shift in market dynamics [79]

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Core Insights - Sysco reported quarterly earnings of $1.15 per share, exceeding the Zacks Consensus Estimate of $1.12 per share, and showing an increase from $1.09 per share a year ago, resulting in an earnings surprise of +2.68% [1] - The company generated revenues of $21.15 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.23% and increasing from $20.48 billion year-over-year [2] - Sysco's stock has underperformed the market, gaining about 2% since the beginning of the year compared to the S&P 500's gain of 16.9% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.98 on revenues of $20.86 billion, and for the current fiscal year, it is $4.57 on revenues of $84.56 billion [7] - The estimate revisions trend for Sysco was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Zacks Industry Rank for Food - Miscellaneous is currently in the bottom 27% of over 250 Zacks industries, suggesting that the industry outlook may negatively impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Fiscal Q1 2026 Earnings Results October 28, 2025 Forward-Looking Statements Statements made in this presentation that look forward in time or that express management's beliefs, expectations or hopes are forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements concern, among other things, our future financial performance and results, business strategy, plans, goals and objectives, including certain outlook, business trends, our dividend and share repurchase prog ...