Sysco (NYSE: SYY) holds EPS guidance but sees sales growth at low end of range

Posted by Doug Wharley on Nov 3rd, 2026

What happened

Sysco Corporation (NYSE: SYY) said first-quarter sales rose 2.8% to $21.7 billion and kept its fiscal 2027 adjusted EPS growth guidance at 9%-11%.

Chief Financial Officer Brandon Sewell said full-year sales growth is now expected at the lower end of the company's 6%-7% range because inflation is lower for the industry. Product cost inflation was 0.3% across the company. The local volume growth assumption of about 2.5% is unchanged.

Gross profit rose 3.8% to $4.1 billion and gross margin widened 18 basis points to 18.6%. Sysco credited local volume growth, tariff-related benefits, strategic sourcing efficiencies and Sysco Brand penetration. All comparisons are with the same 13-week period a year earlier. This quarter ended Sept. 26.

Key numbers

Metric	Latest	Change	Source
Sales	$21.7 billion	from $21.1 billion, +2.8%	SEC 8-K, Sysco first-quarter fiscal 2027 press release
GAAP operating income	$717 million	from $800 million, -10.4%	SEC 8-K, Sysco first-quarter fiscal 2027 press release
Adjusted operating income	$927 million	from $898 million, +3.2%	SEC 8-K, Sysco first-quarter fiscal 2027 press release
Adjusted diluted EPS	$1.19	from $1.15, +3.5%	SEC 8-K, Sysco first-quarter fiscal 2027 press release
Adjusted EBITDA	$1.13 billion	from $1.07 billion, +5.4%	SEC 8-K, Sysco first-quarter fiscal 2027 press release
Free cash flow	$230 million	from -$50 million, +$280 million	SEC 8-K, Sysco first-quarter fiscal 2027 press release

Read more: Sysco (SYY) company research

Where GAAP and adjusted profit part ways

GAAP operating income fell 10.4% to $717 million from $800 million. Sysco said acquisition costs for Jetro Restaurant Depot drove the drop. Adjusted operating income rose 3.2% to $927 million from $898 million.

The adjusted figure adds back $102 million of restructuring, transformation and other costs and $108 million of acquisition-related costs. A year earlier those items were $56 million and $42 million. Adjusted operating margin held at 4.3%, up 1 basis point.

Adjusted operating expenses grew 4.0%, slightly faster than gross profit. That left little operating leverage, even as gross margin widened.

Net earnings rose 10.5% to $526 million and diluted EPS rose 10.1% to $1.09. Both include a $234 million gain on deal contingent rate lock transactions. Sysco entered them to reduce interest rate risk on permanent debt issued to finance the Jetro purchase.

Adjusted net earnings rose 4.2% to $574 million, and adjusted EPS rose 3.5% to $1.19 from $1.15. Sysco said the adjusted EPS result was in line with its expectations. Interest expense rose 51.7% to $261 million, including $90 million of amortization on bridge loan debt issuance costs.

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Segment results

U.S. Foodservice sales rose 2.4% to $15.1 billion, with total case volume up 2.6% and local case volume up 2.7%. Segment adjusted operating income rose 2.7% to $941 million, while GAAP operating income rose 1.6% to $894 million.

International Foodservice sales rose 5.1% to $4.2 billion and adjusted operating income rose 12.2% to $165 million. GAAP operating income in that segment fell 28.1% to $82 million, after $47 million of restructuring and transformation costs and $36 million of acquisition-related costs.

SYGMA sales rose 1.1% to $2.2 billion, but its operating income fell 16.0% to $21 million.

Why it matters

OptimistFi has argued that Sysco compounds only if its distribution footprint keeps winning food-away-from-home spend and management turns that volume into gross profit, operating leverage and cash. This quarter delivers on volume, gross profit and cash. Operating leverage is still unproven.

Cash from operations was $278 million against $86 million a year earlier, and free cash flow was $230 million against negative $50 million. Capital expenditures, net of sale proceeds, were $48 million.

The caveat sits in the GAAP line and the outlook. Operating income fell, and the net earnings gain includes the rate lock gain. Chief Executive Kevin Hourican cited continued softness in restaurant foot traffic, higher than expected fuel costs and lower than expected U.S. food cost inflation.

OptimistFi reads the quarter as mixed for the case.

Balance sheet and the Jetro deal

Sysco ended the quarter with $3.2 billion of cash and $5.8 billion of total liquidity. Cash was $1.79 billion at fiscal year-end on June 27. The cash flow statement shows $1 billion of proceeds from common stock issuances in the quarter.

Net debt to adjusted EBITDA was about 2.4 times. Sysco returned $264 million to shareholders through dividends.

Management named preparing for the expected close of the Jetro Restaurant Depot deal as one of three priorities for the year. The release warns that regulatory approvals may not be obtained, and closing conditions may not be met on time or at all.

What's next

Sysco will host a conference call with a slide presentation at 10 a.m. Eastern on Tuesday, Nov. 3, with a webcast at investors.sysco.com.

The adjusted EPS guidance includes $100 million of net cost savings enabled by AI technology, with benefits accelerating in the second half. If adjusted operating margin stays flat as those savings arrive, operating leverage stays unproven. A rise would support it.

A failure to win regulatory approval for the Jetro deal, a risk the release lists, would change the story.