Will AI accelerate the long-term algorithm or sustain confidence? Also, provide color on the building blocks for US Broadline's EBIT growth in FY27, especially after a softer Q4.

Kevin Hourican stated AI work will enable Sysco to consistently achieve the high end of its long-term algorithm, with potential for future revisions. Brandon Sewell explained Q4 USFS margin pressure was due to a tough prior-year comparison and unhedged inbound fuel costs. For FY27, he expects strong USFS profit growth driven by the $100 million cost savings (leaning USFS), positive Sysco Brand mix, full-year local sales growth, and continued supply chain operational improvements. “The work we're going to do with AI, a compounding nature of the efficiency improvement will allow us to be at that high end of the algorithm that we've put out on an ongoing basis.”

Is the impact of inbound fuel costs on USFS gross margins a pricing strategy or timing issue? What is the expected cadence for local and national case growth in FY27?

Kevin Hourican clarified that inbound fuel costs (from suppliers) impacted Q4 gross margin but are modeled into FY27 guidance. He noted they make purposeful pricing choices to remain competitive. For local case growth, approximately 2.5% is expected consistently throughout FY27, with a strong start in July. National is projected to see overall volume growth, with strong performance in healthcare/education/food service management offsetting continued pressure in national restaurants. “The guidance that we have put forward for '27 includes the 'environmental conditions' of Q4. So this is not something that should be a pressure point. It's built into our guidance for '27.”

What are the biggest opportunities for local case growth, specifically reducing customer loss rate and increasing lines per account (penetration), and how quickly can these develop?

Kevin Hourican stated new customer win rates are strong and need to be sustained. Loss rate has improved due to better colleague retention, with further opportunity. Penetration with existing customers saw substantial Q4 progress, driven by AI360's ability to identify cross-sell opportunities and pre-approve pricing, leading to stronger penetration performance than the industry. These trends are expected to continue in FY27. “The exit velocity of our Q4 for taking share versus the industry, and our penetration performance in Q4 was stronger than the overall industry. And these are trends we expect to continue into 2027.”

SYY

Sysco (SYY) Q4 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q4 FY26)· Consumer Staples· Aug 4, 2026

Source: earnings call transcript

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

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

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

Category	Target	Timeline	Confidence
Adjusted EPS Growth	9% to 11% high materiality	FY27	High
Adjusted EPS	$5.02 to $5.12 high materiality	FY27	High
Reported Net Sales Growth	6% to 7% high materiality	FY27	High
Total Revenue	~$90 billion high materiality	FY27	High
USFS Local Case Growth	approximately 2.5% medium materiality	FY27	High
International Segment Profit Growth	double-digit profit growth medium materiality	FY27	High
Shareholder Returns (Dividends)	approximately $1 billion medium materiality	FY27	High
Adjusted Corporate Expenses	approximately $900 million low materiality	FY27	High
Adjusted Interest Expense	approximately $675 million low materiality	FY27	High
Adjusted Other Expense	approximately $50 million low materiality	FY27	High
Effective Tax Rate	approximately 23.7% to 24.2% low materiality	FY27	High
Adjusted Depreciation and Amortization	approximately $850 million low materiality	FY27	High
Capital Expenditure (CapEx)	approximately 0.8% of sales or $720 million medium materiality	FY27	High
Adjusted EPS	$1.18 to $1.20 medium materiality	Q1 · FY27	High
Restaurant Depot Acquisition Close	by Q3 FY27 high materiality	Q3 · FY27	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
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%

SYY operating KPIs by quarter

SYY operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Jun 2025 Q4 FY25	Sep 2025 Q1 FY26	Change vs prior quarter
Employees	75K I am thankful for our leadership team and our entire 75,000 colleague population for the strong efforts in 2025. Source: earnings call transcript	75K I'm thankful for our leadership team and our entire 75,000-colleague population for the strong efforts to start the year. Source: earnings call transcript	0%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Deals & partnerships

Restaurant Depot Acquisition 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

AI-driven efficiency improvement program underway

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

Industry-wide softness in national restaurants Ongoing

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 costs Q4 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 environment FY27

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 risk Expected 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

USFS Local Case Growth

Q1 FY27 and throughout FY27

Current 2.6% in Q4 FY26

Target Approximately 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.

Find out whether SYY delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.