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    SYY
    Earnings call· Jun 2026(Q4 FY26)

    SYSCO Q4 FY26 earnings call SYY

    Aug 4, 2026 Source

    Executive summary

    Sysco Q4 FY26 — Strong Performance Exceeds Expectations, Guides for Double-Digit EPS Growth

    Sysco delivered strong Q4 FY26 results, exceeding expectations with robust top and bottom-line performance driven by local and international volume growth. The company is confident in its business momentum, guiding for 9% to 11% adjusted EPS growth in FY27, supported by AI-driven efficiency improvements and the strategic Restaurant Depot acquisition.

    Highlights

    5

    • Total revenue exceeded $22 billion, representing a 4.7% growth rate in Q4 FY26.

    • Adjusted EPS of $1.53 in Q4 FY26 surpassed expectations, contributing to a full-year adjusted EPS of $4.61.

    • USFS local volumes grew 2.6% in Q4 FY26, showing a 130 basis points sequential improvement on a 2-year stacked basis.

    • The International segment achieved its 11th consecutive quarter of double-digit adjusted operating income growth, up 15.7% in Q4 FY26.

    • Free cash flow for FY26 grew 16.3% to $2.1 billion, highlighting strong quality of earnings.

    Concerns

    3

    • Gross margin declined 17 basis points to 18.7% in Q4 FY26, attributed to a challenging prior-year comparison and increased fuel costs.

    • Industry-wide softness in national restaurants partially offset growth in the national contract business.

    • Elevated fuel costs impacted both food input costs and inbound transportation expenses in Q4 FY26.

    Guidance & targets

    15
    CategoryTargetConfidence
    Adjusted EPS Growth
    9% to 11%
    high materiality
    High
    Adjusted EPS
    $5.02 to $5.12
    high materiality
    High
    Reported Net Sales Growth
    6% to 7%
    high materiality
    High
    Total Revenue
    ~$90 billion
    high materiality
    High
    USFS Local Case Growth
    approximately 2.5%
    medium materiality
    High
    International Segment Profit Growth
    double-digit profit growth
    medium materiality
    High
    Shareholder Returns (Dividends)
    approximately $1 billion
    medium materiality
    High
    Adjusted Corporate Expenses
    approximately $900 million
    low materiality
    High
    Adjusted Interest Expense
    approximately $675 million
    low materiality
    High
    Adjusted Other Expense
    approximately $50 million
    low materiality
    High
    Effective Tax Rate
    approximately 23.7% to 24.2%
    low materiality
    High
    Adjusted Depreciation and Amortization
    approximately $850 million
    low materiality
    High
    Capital Expenditure (CapEx)
    approximately 0.8% of sales or $720 million
    medium materiality
    High
    Adjusted EPS
    $1.18 to $1.20
    medium materiality
    High
    Restaurant Depot Acquisition Close
    by Q3 FY27
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    US Foodservice (USFS)
    The USFS segment delivered balanced top-line growth and continued to grow adjusted operating income. Local volumes showed strong sequential improvement, driven by colleague retention, productivity, and AI-powered selling tools. Sysco Brand penetration increased, particularly in the value tier.
    Local volumes: 2.6%National volumes: 2.6%Local volumes 2-year stacked improvement: 130 bpsLocal cases H1 FY26: 0.5%Local cases H2 FY26: 2.9%Sysco Brand mix: 46.4% (+30 bps YoY)Value tier item sales growth: 4x faster than overall business
    		———Growing adjusted operating income
    International
    The International segment achieved its 11th consecutive quarter of double-digit adjusted operating income growth, fueled by volume growth across all geographies. Margins have significantly expanded since FY22, with expectations for continued strong performance.
    Local cases: 4.5%Adjusted operating income margins: >4% (from ~2% in FY22)
    		—Sales growth: 6.7%—Adjusted operating income growth: 15.7%
    SYGMA
    SYGMA delivered solid results with strong sales and operating income growth, driven by continued improvements in supply chain operations.
    		—Sales growth: 3.1%—Operating income growth: 11.1%

    Operational metrics

    22
    Adjusted EPS
    $1.53
    Q4 FY26

    Exceeded previously communicated expectations.

    Adjusted EPS
    $4.61
    FY26

    Above full year guidance range, even after pausing share repurchase.

    Total Revenue
    $22 billion
    Q4 FY26

    Reflects positive case growth across local, national, and international business units.

    Total Revenue Growth
    4.7%
    Q4 FY26

    Driven by positive case growth across all segments.

    Adjusted Operating Profit Growth
    4.1%
    Q4 FY26

    Outpacing gross profit growth, reflecting contributions from continued productivity gains within the supply chain.

    Adjusted EBITDA Growth
    4.7%
    Q4 FY26

    Reflects strong operating leverage and cost efficiencies.

    Gross Profit Growth
    3.7%
    Q4 FY26

    Reflecting focus on strategic sourcing and Sysco Brand penetration.

    Adjusted Operating Expense Growth
    3.6%
    Q4 FY26

    Outpaced by gross profit growth, contributing to positive operating leverage.

    Net Debt Leverage Ratio
    2.7x
    Q4 FY26

    Ended the quarter with a healthy financial profile.

    Dividends Paid
    $1 billion
    FY26

    Rewarded shareholders through dividend payments.

    Shares Repurchased
    $200 million
    FY26

    Repurchased shares despite pausing the program for the year due to the Restaurant Depot transaction.

    Quarterly Dividend per Share
    $0.552% growth
    Go-forward

    Board approved a $0.01 increase to the April dividend.

    Inflation Rate
    2.8%
    Q4 FY26

    Overall inflation rate for the enterprise.

    Inflation Rate
    1.3%
    Q4 FY26

    Inflation rate specifically for the US Broadline business.

    Adjusted Operating Expenses as % of Sales
    13.5%20 bps decrease from prior year
    Q4 FY26

    Reflecting strong operating leverage within the business.

    Corporate Adjusted Expenses Change
    -9.8%
    Q4 FY26

    Included benefits from cost-out efforts and lower insurance and other costs.

    On-time Delivery Performance
    10 pointsincrease
    Q4 FY26

    Increased versus customer promise windows, driven by routing efficiency improvements.

    AI-driven Efficiency Savings
    $100 million
    FY27

    Inclusive of cost-out announced in Q3, net of investment.

    AI-driven Efficiency Savings
    $160 million
    FY27

    Represents the run-rate value of identified cost-out efforts.

    International Adjusted Operating Income Margins
    >4%from ~2% in FY22
    FY26

    More than doubled since FY22, with no structural barriers to reaching U.S. profitability.

    Restaurant Depot Sales Growth
    approximately 4%
    Most recent calendar quarter

    Reported by Restaurant Depot leadership.

    Restaurant Depot Operating Margins
    in line with expectations
    Most recent calendar quarter

    Reported by Restaurant Depot leadership.

    Industry KPIs

    4
    MetricValueDetails
    Sg a rate13.5%% of sales
    Gross margin drivers18.7%%
    Private label own brand penetration46.4%%
    Category level comps and inflation deflation2.8%%

    Deals & partnerships

    1
    Restaurant DepotAcquisition of a cash-and-carry foodservice distributor to expand into the local, profitable segment and leverage combined supply chain capabilities.

    The acquisition aims to unlock profitable growth, increase exposure to the local segment, expand Restaurant Depot's low-cost format to 125+ net new geographies, and leverage combined buying power. Sysco is committed to not raising prices at Restaurant Depot stores. Received a second request from the FCC.

    Capital programs

    1
    AI-driven efficiency improvement programunderway
    Start: Q3 FY26

    Benefit: $100M in-year savings in FY27, $160M run-rate savings, improved customer service, reduced structural operating expenses

    Organization-wide efficiency improvement program driven by AI transformation, identified across sales, merchandising, supply chain, and back office. Expected to deliver significant operating margin expansion over time.

    Risks & headwinds

    4
    Industry-wide softness in national restaurantsOngoing

    Foot traffic to restaurants remains down year-over-year.

    Mitigation: Focus on growing contract business in healthcare, travel, hospitality, and food service management; optimizing performance with large national chain restaurants.

    Elevated fuel costsQ4 FY26, modeled into FY27 guidance

    Impacted food input costs and inbound transportation expenses.

    Mitigation: 80% of bulk fuel purchases are hedged for the next fiscal year; purposeful choices made to absorb some cost to keep food affordable; FY27 plan accounts for this backdrop.

    Macro and industry foot traffic environmentFY27

    Remains challenged.

    Mitigation: FY27 guidance assumes similar conditions; company-specific initiatives (AI efficiencies, local case growth) expected to drive performance despite macro environment.

    Restaurant Depot acquisition regulatory riskExpected to close by Q3 FY27

    Received a second request from the FCC.

    Mitigation: Confident government review will conclude deal is positive for restaurants and competition; actively answering government questions.

    What to watch in Q1 FY27

    5

    USFS Local Case Growth

    Q1 FY27 and throughout FY27
    Current2.6% in Q4 FY26
    TargetApproximately 2.5% for FY27

    Why it matters

    Key indicator of core business health and market share gains in the most profitable segment.

    We expect to deliver year-over-year local case growth of approximately 2.5% in USFS, driven by continued productivity gains with sales professionals based on improving tenure.

    Q&A highlights

    6

    Can you elaborate on the incremental cost savings from tech and AI initiatives, their distribution across focus areas, future runway, and how they impact EPS and the share buyback pause?

    Management confirmed $100 million in-year savings for FY27 (net of investment), back-half weighted and primarily U.S. focused, with a $160 million run-rate value identified. Examples include improved inventory forecasting for working capital benefits and indirect expense reduction. They emphasized that these savings will build over time and more than cover the EPS impact of pausing the share buyback program.

    “The $100 million is net of investment as it will flow directly to the bottom line in 2027. Brandon quoted the run rate value is $160 million of the work we have already identified. We continue to find new sources of value.”

    asked by Kelly Bania · answered by Kevin Hourican

    2 min read6 chapters

    Detailed Narrative

    01

    USFS Local Business Momentum

    Sysco's USFS local volumes demonstrated strong sequential improvement, growing 2.6% in Q4 FY26 and 2.9% in the second half of FY26. This acceleration was driven by enhanced colleague retention and productivity, alongside successful growth initiatives like Sysco Your Way and Perks 2.0. The AI360 selling tool is proving effective, boosting sales colleague confidence and productivity, which has led to compelling new customer win rates and improved customer loss rates, with penetration performance exceeding the overall industry in Q4.

    02

    Sysco Brand Penetration and Strategy

    The company achieved a positive Sysco Brand mix in its local business, increasing 30 basis points year-over-year to 46.4% in Q4 FY26. This progress is attributed to a focused plan, including strengthening the value tier assortment, which saw item sales growth 4x faster than the overall business without cannibalizing existing products. AI tools are also optimizing Sysco Brand strategic pricing and prompting sales colleagues with conversion opportunities, contributing positively to profitability.

    03

    International Segment Strength and Growth

    Sysco's International segment delivered its 11th consecutive quarter of double-digit adjusted operating income growth, up 15.7% in Q4 FY26, fueled by 4.5% local case growth across all international geographies. The segment's adjusted operating income margins have more than doubled from approximately 2% in FY22 to over 4% in FY26, with management asserting no structural barriers to achieving the profitability profile of the U.S. business over time⏳.

    04

    AI-Driven Efficiency Program

    Sysco has launched an organization-wide efficiency improvement program leveraging AI technology across sales, merchandising, supply chain, and back office functions. This initiative is expected to deliver approximately $100 million in-year savings in FY27 (net of investment), with a run-rate value of $160 million. The company anticipates announcing multi-year operating margin expansion commitments from these efforts later in the year, aiming to improve service, efficiency, and reduce structural operating expenses.

    05

    Restaurant Depot Acquisition Update

    The acquisition of Restaurant Depot is progressing, with an expected close by Q3 FY27, pending FCC approval. Management remains confident in the deal's strategic merits, projecting faster growth, over 140 basis points of EBITDA margin expansion, and $250 million in cost synergies. The combined entity is expected to be EPS accretive from day one, with accelerating accretion as debt is reduced. Restaurant Depot reported approximately 4% sales growth in its most recent calendar quarter with operating margins in line with expectations.

    06

    Supply Chain Productivity and Operational Improvements

    Sysco's supply chain achieved its productivity targets for the year, with warehouse and delivery operations increasing on-time delivery performance by 10 points in Q4 FY26. This marks the third consecutive year of meaningful reductions in miles driven and improved pieces per mile. Further positive contributions to the P&L are anticipated in FY27 from upgrades to routing software, which will simultaneously enhance customer experience and efficiency.

    AI-generated summary of the company’s earnings call. Not investment advice.