Sysco Corporation Q2 FY2026 earnings call

Management Statement and Operational Highlights

• Strong Results: Sysco delivered strong 2Q 2026 results enabled by improving case volume trends, strengthening gross margin performance, and disciplined expense management. Full year adjusted EPS is expected at the high end of the previously provided range of $4.50 to $4.60.
• U.S. Foodservice Details: U.S. Foodservice local case volume improved with 1.2% growth in Q2, 140 basis points better than Q1. National contract business had mixed growth with certain units like Foodservice Management and healthcare growing, but national restaurant segment was soft.
• Gross Margin: Gross margins expanded due to strategic sourcing efforts and procurement. Focus on the value tier of the product hierarchy to unlock growth.
• Expense Control: Supply chain productivity improved, with warehouse and driver colleague retention up, driving productivity.
• Growth Initiatives: AI360 CRM tool is live with high engagement; Sysco Your Way and Perks loyalty program showing growth; acquisition of Ginsburg Foods expanded distribution in the Northeast.

Segment Performance

• U.S. Foodservice: Delivered nearly $21,000,000,000 in total revenue, a 3% growth vs prior year. U.S. Foodservice local case volume was up 1.2% in the quarter, an improvement of 140 basis points versus Q1. National contract business saw mixed growth with Foodservice Management, Travel and Entertainment, and healthcare units growing, but national restaurant segment softened due to declining restaurant foot traffic.
• International: Reported sales growth of 7.3%, and 9.9% excluding the divestiture of Mexico. Local case volume in the international segment was up 4.5%.
• SYGMA: Saw sales growth of 0.5% and operating income growth of 10.5%.

Guidance

• Full year adjusted EPS expected at the high end of $4.50 to $4.60 range.
• Expect local case growth of at least 2.5% in both Q3 and Q4.
• National contract customers case volume growth >2% for remainder of fiscal year.
• Net sales growth expected to be 3% to 5% for FY 2026, driven by inflation, volume growth, and M&A.

Risks

• Macro Environment: Declining foot traffic to restaurants negatively impacts national chain customers.
• Weather Events: Recent winter storms could impact performance, though the full effect will be known at quarter end.
• Execution Risks: Dependence on successful execution of growth initiatives like AI360 tool and loyalty program revamp.

Question and Answer

• Q: Variation in local case growth monthly and impact of winter storms? A: Sysco's performance vs industry strengthened each month in Q2. January started strong, but recent winter storms could affect Q3 performance.
• Q: Sales growth for FY 2026 and industry optimism? A: Anticipate two-year stack improvement, confident in Sysco-specific initiatives (sales retention, AI360, loyalty program) driving at least 2.5% local growth.
• Q: Growth from new accounts vs existing, Salesforce tracking? A: New customer win rate high, customer loss rate improved; AI360 and training are optimizing sales headcount pacing for growth.