Core Viewpoint - Sysco has maintained its annual forecasts despite exceeding first-quarter estimates, indicating rising concerns regarding the effects of economic uncertainty on the food distributor's foodservice customers [1] Group 1: Financial Performance - Sysco reported better-than-expected first-quarter results, which suggests strong operational performance [1] - The company continues to project its annual forecasts, reflecting confidence in its business model despite external economic pressures [1] Group 2: Market Concerns - There are growing worries about the impact of economic uncertainty on Sysco's foodservice customers, which could affect future performance [1] - The maintenance of annual forecasts amidst these concerns highlights the company's cautious optimism in navigating potential market challenges [1]

Sysco (NYSE:SYY) traded lower in early action on Tuesday despite topping revenue, adjusted EBITDA, and EPS estimates with its FQ1 earnings report. Revenue rose 3.3% year-over-year to $21.5 billion to edge past the consensus mark by $70 million. U.S. foodservice volume was up 2.9% during the ...

Core Insights - The company reported first-quarter sales of $21.1 billion, slightly exceeding the expected $21.09 billion [1] - Adjusted earnings per share (EPS) were $1.15, surpassing the forecast of $1.12 [1] Financial Performance - First-quarter sales: $21.1 billion, compared to the expected $21.09 billion [1] - Adjusted EPS: $1.15, exceeding the anticipated $1.12 [1]

Financial Performance - Sales for the first quarter increased 3.2% to $21.1 billion compared to $20.5 billion in the same period last year[7]. - Gross profit increased 3.9% to $3.9 billion, with a gross margin of 18.5%, up 13 basis points[6][8]. - Adjusted EPS increased 5.5% to $1.15, while diluted EPS remained flat at $0.99[6][18]. - Operating income decreased 1.0% to $800 million, while adjusted operating income increased 2.9% to $898 million[6][9]. - Net earnings for the 13-week period ended September 27, 2025, were $476 million, a decrease of 2.9% compared to $490 million for the same period in 2024[27][34]. - Adjusted net earnings for Sysco Corporation increased to $551 million, up 2.0% from $540 million[35]. - Diluted earnings per share (EPS) adjusted for Certain Items rose to $1.15, reflecting a 5.5% increase from $1.09[35]. - Operating income for Sysco Corporation decreased to $800 million, down 1.0% from $808 million[37]. - Adjusted EBITDA for the 13-week period ended September 27, 2025, was $1,070 million, showing a slight increase of 0.1% from $1,069 million in the prior year[41]. Sales and Revenue - U.S. Foodservice volume increased 0.1%, with local case volume decreasing 0.2%[10][18]. - International Foodservice Operations sales increased 4.5% to $4.0 billion, with gross profit up 6.7% to $826 million[13][14]. - Comparable sales excluding the impact of the Mexico joint venture increased by 3.8% to $21,148 million for the 13-week period ended September 27, 2025, compared to $20,367 million in the prior year[34]. - U.S. Foodservice Operations sales reached $14.78 billion, a 2.9% increase from $14.36 billion[36]. - International Foodservice Operations sales grew to $3.97 billion, marking a 4.5% increase from $3.79 billion[36]. - Comparable sales excluding Mexico joint venture increased by 7.9% to $3.97 billion[36]. Expenses and Liabilities - Operating expenses rose to $3,101 million, an increase of 5.3% from $2,945 million in the previous year[34]. - Operating expenses adjusted for Certain Items were $3.00 billion, reflecting a 4.3% increase from $2.88 billion[37]. - Total current liabilities increased to $10,810 million as of September 27, 2025, compared to $9,916 million on June 28, 2025[26]. Cash Flow and Liquidity - Cash flow from operations was $86 million, while free cash flow was negative $50 million for the first quarter[15][16]. - Cash provided by operating activities was $86 million for the 13-week period, up from $53 million in the same period last year[27]. - Cash, cash equivalents, and restricted cash at the end of the period were $1,127 million, compared to $834 million at the end of the same period last year[27]. - Sysco had a cash balance of $844 million and total liquidity of $3.5 billion as of the end of the quarter[14]. - Free cash flow for the 13-week period ended September 27, 2025, was $(50) million, a decrease of $58 million compared to $8 million in the prior year[39]. Shareholder Returns - Sysco returned $259 million to shareholders via dividends during the first quarter[15]. Debt and Taxation - The company's total debt as of September 27, 2025, was $13,353 million, resulting in a Net Debt to Adjusted EBITDA ratio of 2.90[43]. - Interest expense for the 13-week period ended September 27, 2025, was $172 million, an increase of 7.5% from $160 million in the same period last year[41]. - Income tax expense for the 13-week period decreased by 18.4% to $124 million from $152 million in the prior year[41]. Future Outlook - The company expects full-year sales growth of 3%-5% and adjusted EPS growth of 1%-3%, with a potential headwind of approximately $100 million from lower incentive compensation[4][19]. - Sysco expects to calculate adjusted earnings per share for future periods similarly to historical reconciliations, although specific guidance cannot be provided at this time[45].

Core Insights - Sysco Corporation reported a solid start to fiscal year 2026, with improved sales performance, margin management, and supply chain operations, leading to adjusted EPS performance exceeding expectations [1][2] - The company anticipates full-year sales growth of 3%-5% and adjusted EPS growth of 1%-3%, with an adjusted outlook reflecting EPS growth of approximately 5% to 7% when excluding the impact of lower incentive compensation from fiscal 2025 [2] Financial Performance - Total sales for the first quarter increased by 3.2% to $21.1 billion compared to the same period in fiscal year 2025 [4][22] - Gross profit rose by 3.9% to $3.9 billion, with gross margin increasing by 13 basis points to 18.5% [5][22] - Operating income decreased by 1.0% to $800 million, while adjusted operating income increased by 2.9% to $898 million [6][22] - Net earnings fell by 2.9% to $476 million, but adjusted net earnings increased by 2.0% to $551 million [8][22] Segment Performance - U.S. Foodservice Operations saw sales increase by 2.9% to $14.8 billion, with total case volume increasing by 0.1% [9][22] - International Foodservice Operations reported a 4.5% increase in sales to $4.0 billion, with comparable sales growth of 7.9% when excluding the impact of the Mexico joint venture [12][22] Cost Management - Operating expenses increased by 5.3%, driven by investments in business capacity and sales headcount [6][22] - Product cost inflation was recorded at 3.4%, primarily affecting meat and seafood categories, but effective management helped mitigate its impact on gross profit [5][22] Balance Sheet and Cash Flow - As of the end of the quarter, Sysco had a cash balance of $844 million and total liquidity of $3.5 billion [17] - The company returned $259 million to shareholders via dividends during the first quarter, with cash flow from operations at $86 million and free cash flow negative at $50 million [17][18]

Group 1 - Sysco Corporation is collaborating with the MICHELIN Guide to announce the latest Texas recipients of Michelin stars, with a ceremony scheduled for October 29, 2025, in Houston [1][2] - The MICHELIN Guide is recognized globally for its prestigious ratings and reviews, representing a high standard in culinary achievement [2] - Sysco's South Texas Region President, Ryan Forth, emphasized the importance of honoring chefs for their contributions to creating memorable dining experiences [2][3] Group 2 - Sysco provides a wide range of products and innovative solutions to the foodservice community, supporting chefs in enhancing their menu concepts [3][7] - The MICHELIN Guide Young Chef Award will be presented by Sysco at the upcoming ceremony, highlighting the significance of emerging culinary talent [4][5] - Sysco has been in partnership with the MICHELIN Guide since November 2024, celebrating Texas chefs and their achievements [5] Group 3 - Sysco is the global leader in distributing food and related products to various sectors, including restaurants, healthcare, and educational facilities, with over $81 billion in sales for fiscal year 2025 [6][7] - The company operates 339 distribution centers across 10 countries, serving approximately 730,000 customer locations with a workforce of 75,000 [6][7] - Sysco offers customized supply chain solutions and culinary support to help customers innovate and optimize their operations [7]

Core Insights - Sysco Corporation is expected to report an increase in both revenues and earnings for the first quarter of fiscal 2026, with revenues estimated at $21.1 billion, reflecting a 3% growth year-over-year [1] - The consensus estimate for earnings per share is stable at $1.12, indicating a 2.8% increase from the previous year's figure [2] Factors Influencing Upcoming Results - Improved customer retention is supporting Sysco's recovering local case performance, as the company rebuilds long-term relationships after previous salesforce turnover [3] - The International segment is anticipated to remain a growth driver, supported by expanded sales headcount and localized assortment [4] - Digital advancements, including an AI-powered CRM platform and the Perks 2.0 loyalty program, are enhancing sales efficiency and customer engagement, likely contributing to stronger retention and profitability [5] Challenges Facing Sysco - Rising product costs and higher operating expenses are negatively impacting profitability [6] - Soft restaurant traffic, weaker consumer confidence, and macroeconomic uncertainty are dampening demand [6] - Increased competition and currency volatility in international markets are exerting pressure on pricing and overall profitability [6] Earnings Prediction Insights - The current model does not predict an earnings beat for Sysco, as it holds a Zacks Rank of 4 (Sell) and an Earnings ESP of 0.00% [7]

Core Thesis - Sysco Corporation is viewed as a defensive compounder with a stable cash-generating profile, but its stock performance has lagged behind broader markets, returning 8% over the past year compared to the S&P 500's 16% [2][3] Financial Performance - As of October 13th, Sysco's share price was $78.27, with trailing and forward P/E ratios of 22.32 and 18.18 respectively [1] - The company has a median return on invested capital of about 13% over the past decade, indicating consistent reinvestment efficiency [3] Market Position - Sysco serves over 700,000 customers and is recognized as the world's largest foodservice distributor, providing unmatched distribution reach and procurement leverage [2][4] - The company's high debt-to-equity ratio of approximately 781% reflects its balance sheet structure rather than financial distress, supported by predictable cash flows [3] Growth Outlook - Growth expectations for Sysco are steady at 4-6% annually, with management guiding for mid-single-digit revenue growth and modest margin improvement through automation and supply chain optimization [4] - The stock is currently priced around $82 per share, close to fair value estimates of $80, indicating a mature profile rather than explosive upside potential [5] Competitive Advantage - Sysco's competitive moat is characterized by its scale and deep customer integration, which competitors find difficult to replicate [4][5]

Core Insights - Sysco Corporation (SYY) is a major player in the foodservice distribution industry, with a market cap of $38.2 billion, and is set to announce its fiscal first-quarter earnings for 2026 on October 28 [1] Financial Performance Expectations - Analysts anticipate SYY to report a profit of $1.12 per share for the upcoming quarter, reflecting a 2.8% increase from $1.09 per share in the same quarter last year [2] - For the full fiscal year, EPS is expected to be $4.57, marking a 2.5% increase from $4.46 in fiscal 2025, with a projected rise to $5.02 in fiscal 2027, representing a 9.9% year-over-year growth [3] Stock Performance - Over the past 52 weeks, SYY stock has increased by 5.8%, underperforming the S&P 500 Index's 14.8% gains but outperforming the Consumer Staples Select Sector SPDR Fund's 3.1% losses [4] - Following a better-than-expected Q4 performance, SYY's shares dropped by 2.5% on July 29, despite reporting revenue of $21.1 billion and adjusted EPS of $1.48, both exceeding consensus estimates [5] Analyst Ratings - The consensus opinion on SYY stock is moderately bullish, with 11 out of 17 analysts recommending a "Strong Buy" and six advising a "Hold," indicating an average price target of $86.07, suggesting a potential upside of 7.7% from current levels [6]

Core Insights - Kyndryl has been recognized as Sysco's inaugural Tech Partner of the Year for its excellence in delivering a multiyear ERP upgrade and modernization of Sysco's IT environment, enhancing reliability and efficiency in Sysco's distribution operations [1][3][4] Company Overview - Sysco is the global leader in selling, marketing, and distributing food and related products to customers who prepare meals away from home, operating 339 distribution centers across 10 countries and serving approximately 730,000 customer locations [5][6] - In fiscal year 2025, Sysco generated sales exceeding $81 billion [5] Partnership Impact - The partnership with Kyndryl aims to create a simpler and more flexible technology foundation, ensuring uninterrupted delivery of food and supplies to various customers, including restaurants, hotels, and hospitals [2][3] - Kyndryl's contributions have allowed Sysco to accelerate its IT roadmap while reducing operating costs, demonstrating a collaborative approach rather than a vendor-client relationship [3][4] Future Outlook - Kyndryl expresses commitment to continue supporting Sysco in delivering exceptional experiences across the foodservice and supply chain industry, focusing on critical innovations and operational efficiency [4]