10-Q · April 28, 2026
Sysco reported Q3 fiscal 2026 results with revenue of $20.5 billion, marking a 4.7% increase year-over-year. While adjusted diluted EPS was stable at $0.94, down from $0.99 the previous year, operating income saw a…
Earnings analysis · 10-K
SYY earnings analysis
Filed August 20, 2026 · Our reading of the company's report
The latest report
Sysco delivered modest fiscal 2026 growth, with revenue up 3.9%, gross margin improving to 18.50% and free cash flow rising 16.3% to $2.114B, but GAAP EPS declined 1.9% as operating expenses, interest expense and…
Read full summary
Sysco delivered modest fiscal 2026 growth, with revenue up 3.9%, gross margin improving to 18.50% and free cash flow rising 16.3% to $2.114B, but GAAP EPS declined 1.9% as operating expenses, interest expense and transaction-related costs increased. The strategy remains focused on market-share leadership, local-customer growth, supply-chain and digital productivity, and approximately $100M of fiscal 2027 AI-enabled savings. The JRD acquisition could materially expand Sysco’s addressable channel, but its $21.6B cash consideration, pending FTC second request and expected increase in leverage create significant execution, regulatory and financing risk. Overall, the operating outlook is constructive but is balanced by weak restaurant traffic, pressured reported earnings and transaction risk.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
Reported figures
- Earnings per share
- $3.66
What stood out
-
Leading share with multiple growth pillars
Sysco estimates it serves approximately 18% of the approximately $377B U.S. foodservice market, and Technomic projects that market to reach approximately $390B by calendar year-end 2026. Its strategy centers on Digital, Products and Solutions, Supply Chain, Customer Teams and Future Horizons, including expansion through acquisitions.
-
Sales and gross profit outpaced revenue
Fiscal 2026 sales increased 3.9% to $84.553B, while gross profit rose 4.5% to $15.639B. Gross margin improved 10 basis points to 18.50%, helped by strategic sourcing and local-customer volume growth.
-
International and local volumes lead growth
International Foodservice was the fastest-growing major segment, with sales up 7.6% to $16.042B and operating income up 5.9% to $463M; local case volume increased approximately 4.3%. U.S. Foodservice case volume rose 1.4%, including 1.7% local-customer growth.
-
Strong cash generation despite investment
Free cash flow increased 16.3% to $2.114B from $1.818B, supported by operating cash flow of $2.638B and a reduction in net cash capital expenditures to $524M from $692M. Management expects fiscal 2027 capital expenditures of approximately $720M.
-
Accelerating growth and AI productivity roadmap
Management expects fiscal 2027 net sales growth of 6%-7%, with approximately $100M of cost savings from technology, artificial intelligence and efficiency initiatives. Sysco also expects volume growth, including local case volume growth, as salesforce tenure and productivity improve.
-
JRD adds a new independent-restaurant channel
Sysco agreed to acquire Jetro Restaurant Depot, which operates 167 warehouse stores across 35 states and serves more than 725,000 independent restaurants and foodservice operators. The transaction is intended to expand Sysco into the cash-and-carry channel and is expected to close by the third quarter of fiscal 2027, subject to regulatory clearance.
What to watch
-
JRD regulatory and financing risk
The FTC issued a second request for information on May 27, 2026, extending the HSR waiting period, and regulators could delay, block or impose costly conditions on the JRD transaction. The transaction has a $21.6B cash purchase price, is expected to require $21B of new debt and hybrid debt plus $1B of cash, equity or equity-linked securities, and carries a potential $1.164B termination fee.
-
Leverage and interest burden may rise
Total debt was approximately $13.5B at June 27, 2026, including $792M maturing within twelve months as described in the risk factors. The planned JRD financing reduced the bridge facility from $22B to $19B, while fiscal 2027 interest expense is expected to be approximately $770M versus $717M in fiscal 2026.
-
Weak restaurant traffic and consumer demand
Sysco experienced negative year-over-year restaurant foot-traffic trends in fiscal 2026 and expects foot traffic and the broader macroeconomic environment in fiscal 2027 to remain generally consistent. The filing warns that inflation, weaker discretionary spending and reduced dining-out frequency can pressure demand, sales and margins; current macro headlines also point to increasing consumer strain.
-
Reported earnings remain under pressure
GAAP diluted EPS declined 1.9% to $3.66 from $3.73, while operating income increased only 0.2% to $3.095B. Operating expenses rose 5.6%, interest expense rose 12.9% to $717M, and other expense increased to $102M, including a $54M loss on JRD-related rate locks.
-
Mix and private-label penetration risk
Sysco’s U.S. Broadline Sysco-brand penetration declined 59 basis points to 35.4%, despite management’s view that branded products generate higher gross margins. The filing also warns that faster growth in lower-margin multi-unit customers could reduce gross and operating margins.
Management's outlook
The 10-K expects fiscal 2027 net sales growth of 6%-7%, inflation of approximately 1.5%-2.0%, approximately $100M of technology- and AI-enabled cost savings, an effective tax rate of approximately 23.7%-24.2%, interest expense of approximately $770M, and capital expenditures of approximately $720M. The 10-K does not provide a numeric EPS range; the previously issued outlook reiterated in the accompanying August 20, 2026 8-K was 9%-11% adjusted EPS growth.
Earlier filings 1
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.