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SYSCO CORP (SYY)·Q4 2025 Earnings Summary

Executive Summary

  • Adjusted EPS of $1.48 beat S&P consensus ($1.39) on strategic sourcing and international margin strength; GAAP EPS was $1.10 due to a $92M non-cash goodwill impairment at Guest Worldwide, equal to ~$0.17 per share . S&P Global values; subject to change.*
  • Revenue of $21.14B slightly exceeded consensus ($21.03B), while adjusted EBITDA of $1.29B beat consensus ($1.28B); U.S. local case trends improved sequentially, with a strong June exit rate . S&P Global values; subject to change.*
  • FY26 guidance introduced: sales growth 3–5% ($84–$85B), adjusted EPS $4.50–$4.60, tax 23.5–24%, D&A ~$870M, interest ~$700M, other expense ~$45M, capex ~$700M; includes $100M ($0.16/sh) headwind from lapping lower FY25 incentive comp .
  • Stock narrative catalyst: management’s confidence in profitable local case growth in FY26 (retention stabilized; AI-powered CRM; Perks 2.0; pricing agility pilots) and continued international double‑digit profit growth .

What Went Well and What Went Wrong

  • What Went Well

    • International delivered 20.1% adjusted operating income growth; broad-based strength across Canada, Great Britain, Ireland, and Latin America; seventh consecutive quarter of double-digit profit growth .
    • Strategic sourcing lifted gross profit and margins; gross margin expanded 19 bps YoY to 18.9% in Q4; management: “a strong contribution in Q4 from our strategic sourcing efforts” .
    • Sigma (SYGMA) had record year; Q4 sales +5.9%, FY sales +8.3%, operating income +12.5% . CEO: “It was a record year for our Sigma business from top and a bottom-line perspective” .

  • What Went Wrong

    • U.S. local case volume fell 1.5% YoY; U.S. Foodservice operating income decreased 2.0% (adjusted −0.8%) as negative industry foot traffic and capacity/headcount investments weighed on segment results .
    • GAAP EPS impacted by $92M non-cash goodwill impairment at Guest Worldwide; “$82 million, net of tax, or $0.17 per share” .
    • Q3 trend context: industry traffic weakness and weather event impacts led to prior-quarter miss vs expectations; Q4 improvement was off a soft Q3 base .

Financial Results

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Billions)$20.151 $19.598 $21.138
Diluted EPS (GAAP) ($)$0.82 $0.82 $1.10
Adjusted Diluted EPS ($)$0.93 $0.96 $1.48
Gross Margin (%)18.1% 18.3% 18.9%
Operating Margin (GAAP, %)3.53% 3.47% 4.21%
Adjusted Operating Margin (%)3.89% 3.94% 5.18%
EBITDA ($USD Billions)$0.931 $0.910 $1.117
Adjusted EBITDA ($USD Billions)$0.969 $0.969 $1.286

Segment breakdown (Sales and Adjusted Operating Income):

SegmentQ2 2025 Sales ($MM)Q2 2025 Adj OI ($MM)Q3 2025 Sales ($MM)Q3 2025 Adj OI ($MM)Q4 2025 Sales ($MM)Q4 2025 Adj OI ($MM)
U.S. Foodservice$14,044 $859 $13,800 $790 $14,759 $1,058
International$3,728 $129 $3,457 $128 $3,927 $197
SYGMA$2,116 $— (GAAP OI $19) $2,084 $— (GAAP OI $17) $2,164 $— (GAAP OI $27)
Other$263 $— (GAAP OI $4) $257 $— (GAAP OI $(3)) $288 $10
Global Support Center$—$(228) $—$(159) $—$(197)

Key KPIs and operational metrics:

KPIQ2 2025Q3 2025Q4 2025
U.S. Foodservice Case Growth (%)+1.4% −2.0% −0.3%
Local Case Growth (%)−0.9% −3.5% −1.5%
Sysco Brand as % of Cases (U.S. Broadline)36.0% 35.5% 35.4%
Sysco Brand as % of Cases (Local)46.1% 45.6% 46.0%
Product Cost Inflation (Enterprise)~2.1% ~2.1% ~3.5%

Actual vs S&P Global consensus (beat/miss context):

MetricQ2 2025 EstimateQ2 2025 ActualQ3 2025 EstimateQ3 2025 ActualQ4 2025 EstimateQ4 2025 Actual
EPS ($)0.92*0.93 1.02*0.96 1.39*1.48
Revenue ($MM)20,101*20,151 20,047*19,598 21,031*21,138
EBITDA ($MM)979*969 1,046*969 1,276*1,286
Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales GrowthFY254–5% (Q2 reiteration) ~3% (Q3 update) Lowered (Q3)
Adjusted EPS GrowthFY256–7% (Q2 reiteration) At least +1% (Q3 update) Lowered (Q3)
Net SalesFY26N/A~$84–$85B (3–5% growth) Introduced
Adjusted EPSFY26N/A$4.50–$4.60 (incl. ~$0.16 headwind) Introduced
Tax RateFY26N/A~23.5%–24% Introduced
D&AFY26N/A~$870M Introduced
Interest ExpenseFY26N/A~$700M Introduced
Other ExpenseFY26N/A~$45M Introduced
CapexFY26N/A~$700M (<1% of sales) Introduced
DividendsFY26N/A~$1B (6% YoY increase per share) Introduced
Share RepurchasesFY26N/A~$1B (flex with M&A) Introduced
Net Leverage TargetFY262.5–2.75x (framework) End FY26 within 2.5–2.75x Maintained in guidance

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2025)Previous Mentions (Q3 2025)Current Period (Q4 2025)Trend
AI/Technology initiativesFocus on route optimization; no AI tool disclosed Pricing agility pilot; Cash & Carry pilot AI360 AI-powered CRM rollout planned; strong colleague feedback Accelerating
Supply chain/serviceNPS improved; on-time delivery improving Weather/tariff noise; preparations for volatility Fill rates and on-time improving; capacity expansions (e.g., London facility) Improving
Tariffs/macroFoot traffic −2%; expect modest improvement Industry traffic down; tariff task force stood up FY26 assumes similar macro; cautious but stable Stabilizing (cautious)
Pricing agilityNot discussedPilot to speed frontline price decisions Pilot expanding; margin discipline emphasized Expanding carefully
Local salesforce retention/productivityRetention improved; new account wins rising Turnover headwinds peaking in Sep; Q4/July improving Retention stabilized; ~4% headcount growth planned Turning positive
International performanceAdj OI +26.5% 6th consecutive double-digit OI growth 7th consecutive double-digit OI growth; adj OI +20.1% Sustained strength
Capital allocationUpsized buybacks to $1.25B; dividends $1B Return ~$2.25B in FY25 FY26 plan: ~$1B dividends, ~$1B buybacks Maintained

Management Commentary

  • CEO: “Sysco's Q4 results exceeded expectations, as improved financial outcomes were driven by Sysco-specific initiatives and improved restaurant industry traffic… drivers of our progress accelerated during the quarter, with the momentum continuing in July” .
  • CEO on growth drivers: “Perks will evolve… into a hard-hitting, exceptional customer service program… Next up is an AI-empowered sales tool… price agility… expanding our pilot to additional geographies” .
  • CFO introducing FY26: “We expect sales growth of approximately 3% to 5% to approximately $84 billion to $85 billion and adjusted EPS growth of approximately 1% to 3%… This includes an approximate $100 million ($0.16 per diluted share) headwind…” .
  • International outlook: “We expect a continuation of strong international financial performance in fiscal 2026” .
  • Facility expansion: Sysco Tampa Bay grand opening (sixth broadline in FL; ninth site in past year) supports growth capacity .

Q&A Highlights

  • Local momentum and share: Management cited a strong June and continued July momentum; new accounts opened were the highest this year, with improving service levels (fill rates, on-time delivery) as leading indicators .
  • International durability: No expected moderation; local case growth ~4%+ and margins doubling over recent years; continued investment and bolt-on M&A performing ahead of deal models .
  • Pricing agility: Designed to improve volume profitably without compressing margins; rollout paced by sales training; Perks 2.0 nationwide this summer; AI360 rollout coast-to-coast .
  • Industry churn: Elevated churn driven by value-seeking customers and increased price transparency; Sysco leaning on scale and sourcing to compete, while focusing retention on best customers .
  • Cost per case/SG&A: Base cost increases driven by deliberate investments in sales headcount and capacity; expected to leverage as local volumes improve .
  • Consolidation/AI: AI to boost back-office efficiency and frontline productivity; continued survey of M&A tuck-ins and specialty expansion opportunities; scale matters in last-mile delivery .

Estimates Context

  • Q4 beats: Adjusted EPS $1.48 vs S&P consensus $1.39; revenue $21,138MM vs $21,032MM; adjusted EBITDA $1,286MM vs $1,276MM . S&P Global values; subject to change.*
  • Prior quarters: Q3 missed EPS ($0.96 vs $1.02) and revenue ($19,598MM vs $20,047MM); Q2 slightly beat EPS ($0.93 vs $0.92) and revenue ($20,151MM vs $20,101MM) . S&P Global values; subject to change.*
  • Implications: Estimate revisions likely to reflect FY26 EPS phasing (explicit ~$0.16 headwind), stronger international margins, and sequential local volume improvement; mix and sourcing benefits support margin assumptions .

Key Takeaways for Investors

  • Sequential improvement: Q4 showed margin and EPS acceleration vs Q3, underpinned by sourcing and international strength; management flagged strong June exit and July continuation .
  • FY26 guide credibility: Explicit headwind disclosure ($100M/$0.16 per share) and detailed P&L line guidance (tax, D&A, interest, capex) support transparency; local initiatives expected to drive profitable case growth .
  • International as growth engine: Seventh consecutive quarter of double-digit profit growth; continued local case gains and sourcing-driven margins suggest sustained outperformance .
  • U.S. local inflection setup: Retention stabilized; ~4% sales headcount increase planned; Perks 2.0 and AI360 rollout aim to accelerate productivity and penetration without sacrificing margin .
  • Mix headwinds moderating: National non-commercial strength offsets restaurant softness; pricing agility and brand penetration dynamics managed to protect gross profit per case .
  • Balance sheet and returns: ~$3.8B liquidity, net debt/adj EBITDA ~2.85x; FY26 plan to return ~$2B via dividends and buybacks within leverage target .
  • Capacity expansion: New facilities (e.g., Tampa Bay) and London expansion enhance throughput and route density, supporting share capture in key metros .

Notes:

  • All document-based figures and statements are cited to Sysco’s Q4 FY2025 8-K/press release and earnings call; estimate comparisons use S&P Global consensus. Values retrieved from S&P Global.*