Financial Performance - Net earnings for the 13-week period ended September 27, 2025, were $476 million, compared to $490 million for the same period in 2024, reflecting a decrease of approximately 2.9%[49] - Basic earnings per share for the first quarter of fiscal 2026 were $0.99, down from $1.00 in the first quarter of fiscal 2025, indicating a decline of 1%[49] - Comprehensive income for the first quarter of fiscal 2026 was $445 million, a decrease of 32.9% from $663 million in the first quarter of fiscal 2025[50] - Total sales for the 13-week period ended September 27, 2025, were $21,148 million, compared to $20,484 million for the same period in 2024, reflecting a year-over-year increase of 3.2%[72] - Total operating income for the 13-week period ended September 27, 2025, was $800 million, compared to $808 million for the same period in 2024[72] Tax and Benefits - The effective tax rate for the first quarter of fiscal 2026 was 20.6%, lower than the statutory rate of 21.0%, primarily due to foreign income tax benefits[62] - As of September 27, 2025, the gross amount of unrecognized tax benefits was $68 million, with related accrued interest of $18 million[64] - Sysco recorded a benefit of $131 million related to foreign tax credits under the Tax Cuts and Jobs Act of 2017; potential reversal may occur if the company loses its legal challenge[65] - Sysco entered into a contract to purchase approximately $200 million of Transferable Tax Credits to offset fiscal 2026 federal income taxes[66] Share-Based Compensation - Share-based compensation costs recognized in the first quarter of fiscal 2026 totaled $31 million, slightly higher than $30 million in the same period of fiscal 2025[61] - A total of 721,368 stock options were granted to employees in the first 13 weeks of fiscal 2026, with a weighted average grant-date fair value of $19.53 per option[57] - Employees were granted 451,638 performance share units (PSUs) in the first 13 weeks of fiscal 2026, with a weighted average grant-date fair value of $86.23 per PSU[58] - The company had a total of $219 million of unrecognized compensation cost related to share-based compensation arrangements as of September 27, 2025, expected to be recognized over 2.18 years[61] - The number of securities excluded from the diluted earnings per share calculation due to anti-dilutive effects was approximately 1,718,000 for the first 13 weeks of fiscal 2026[49] Assets and Expenditures - Capital expenditures for the 13-week period ended September 27, 2025, totaled $160 million, an increase from $122 million in the same period in 2024[73] - Total assets as of September 27, 2025, were $27,044 million, up from $26,774 million as of June 28, 2025[73] Segment Performance - The company’s U.S. Foodservice Operations segment reported sales of $14,780 million for the 13-week period ended September 27, 2025[72] - The International Foodservice Operations segment reported sales of $3,966 million for the same period, compared to $3,794 million in the prior year[72] Market Risks - Sysco's market risks include interest rate risk, foreign currency exchange rate risk, fuel price risk, and investment risk, with no significant changes reported since June 28, 2025[140]

Core Insights - Sysco Corporation (SYY) started fiscal 2026 strongly, showing significant progress in sales performance, margin management, and supply chain operations [1] - The company's bottom line exceeded estimates, driven by robust local business performance, particularly in the U.S. Foodservice (USFS) local segment, which outperformed broader industry trends [2][3] Financial Performance - Sysco's adjusted earnings were $1.15 per share, surpassing the Zacks Consensus Estimate of $1.12, marking a 5.5% year-over-year increase [4][10] - Total sales reached $21.1 billion, a 3.2% increase year-over-year, nearly aligning with estimates, with foreign exchange contributing 0.4% to sales growth [4][10] - Gross profit rose 3.9% to $3.9 billion, with gross margin improving by 13 basis points to 18.5% [5] - Operating expenses increased by 5.3% year-over-year to $3.1 billion, while adjusted operating income rose 2.9% to $898 million [6] Segment Performance - U.S. Foodservice Operations saw sales rise 2.9% to $14.8 billion, with gross profit growing 2.8% to $2.8 billion [7] - International Foodservice Operations reported a 4.5% sales increase to $4 billion, with gross profit climbing 6.7% to $826 million [8][9] - The SYGMA segment's sales increased by 4.1% year-over-year to $2.129 billion, while the Other segment's sales decreased by 3.2% to $273 million [11] Financial Health - Sysco ended the quarter with cash and cash equivalents of $844 million and total liquidity of $3.5 billion [12] - Cash flow from operations was $86 million, while free cash flow was negative $50 million [12] - The company returned $259 million to shareholders through dividends during the quarter [13] Fiscal 2026 Outlook - Sysco reaffirmed its guidance for fiscal 2026, expecting sales growth of 3-5% and adjusted earnings per share growth of 1-3% [14] - The guidance includes a $100 million headwind related to lower incentive compensation from the previous year, with adjusted EPS growth anticipated to be 5-7% excluding this impact [14] Stock Performance - Sysco shares have declined by 2.9% over the past three months, compared to a 7.3% decline in the industry [15]

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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