Sysco falls after profit guidance lands slightly short of expectations

[Emerging Financial Data - Stock Market, Prosperity, Bull Market - Blue Version]
DKosig

Sysco (NYSE:SYY [https://seekingalpha.com/symbol/SYY]) traded lower in early action on Tuesday despite topping revenue, adjusted EBITDA, and EPS estimates with its FQ1 earnings report.

Revenue rose 3.3% year-over-year to $21.5 billion to edge past the consensus mark by $70 million. U.S. foodservice volume was up 2.9% during the quarter. The U.S. foodservice segment results were noted to be impacted by slight volume growth and continued investments across capacity and headcount.

Adjusted EBITDA increased 0.1% to $1.1 billion during the quarter.

Gross profit increased 3.9% to $3.9 billion during the quarter. Sysco's (NYSE:SYY [https://seekingalpha.com/symbol/SYY]) gross margin rate increased 13 basis points to 18.5% of sales. Operating expenses increased 5.3%, driven by business capacity and sales headcount investments. Adjusted operating expenses increased 4.3% during the quarter. Adjusted operating income increased 2.9% to $898 million. Non-GAAP EPS of $1.15 beat the consensus mark of $1.12 and last year's tally of $1.09.

As of the end of the quarter, the company had a cash balance of $844 million and total liquidity of $3.5 billion.

"We are pleased with the start to our fiscal 2026, with solid improvement in our sales performance, margin management, and supply chain operations. Our Q1 adjusted EPS performance exceeded expectations, fueled by strong improvement in our local business. Our broadline local business was positive for the quarter and improved sequentially each period of the quarter," highlighted Sysco (SYY [https://seekingalpha.com/symbol/SYY]) CFO Kenny Cheung. "Momentum is building at Sysco, and the positive outcomes we are seeing reinforce our confidence in our full-year guide," he added.

On the guidance front, Sysco (SYY [https://seekingalpha.com/symbol/SYY]) backed its prior outlook for full-year revenue of $84 billion to $85 billion (midpoint $84.5 billion) vs. $84.5 billion consensus and sees full-year EPS of $4.50 to $4.60 (midpoint $4.55) vs. $4.58 consensus.

Shares of Sysco (SYY [https://seekingalpha.com/symbol/SYY]) were down 4.0% in premarket action on Tuesday.

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