- Company name
- Sysco
- Sector
- Food distribution
- About
- Sysco is the largest foodservice distributor in the world. It buys food and non-food products from thousands of suppliers and delivers them to about 670,000 customer locations from 333 distribution facilities. Restaurants give about 59% of sales; hospitals, schools, government, hotels and other customers give the rest. US Foodservice gives about 70% of sales, International about 19% and SYGMA, which serves restaurant chains, about 10%. Sysco makes money from a small margin on a very large volume, and it earns more on local, independent restaurants and on its own Sysco Brand products than on national chains. Sales in the fiscal year to June 27, 2026 were $84.6 billion, and operating income was $3.1 billion. Sysco has agreed to buy Jetro Restaurant Depot, which runs 166 cash and carry warehouse stores for independent restaurants in 35 states.
- Thesis
- The market prices Sysco lower because of the size and the debt of the Jetro Restaurant Depot purchase. Sysco will pay $21.6 billion in cash and 91.5 million shares, a total value of about $29.1 billion. It will borrow about $21 billion, and it paused its share buybacks until it reduces debt. S&P and Fitch have a negative outlook on Sysco's BBB rating, and Moody's has its Baa2 rating under review. The Federal Trade Commission asked for more information on the deal on May 27, 2026, which can delay it. Investors also doubt that a distributor with a small margin can run large warehouse stores well. For the gap to close, four things must be true. The FTC must clear the deal, and the deal must close by the third quarter of Sysco's fiscal year 2027, that is, by about March 2027. Sysco must keep its fiscal 2027 outlook of 6% to 7% sales growth and 9% to 11% adjusted EPS growth, with about 2.5% local case growth in the US. After closing, it must reach the $250 million of yearly cost savings in three years and reduce net leverage by at least 1.0 times within 24 months. The first test is the Q1 report on November 3, 2026. If the deal closes on time and leverage falls on plan, the gap can close over the next four to eight quarters. The main risk is that the FTC blocks the deal or forces Sysco to sell stores.
- Risks
- The FTC has asked for more information on the Jetro Restaurant Depot deal. The FTC or a state can try to block it or ask Sysco to sell assets. If the deal does not close, Sysco must redeem most of the new notes and pay fees for nothing.
The deal adds about $21 billion of debt. S&P and Fitch have a negative outlook on Sysco's BBB rating, and Moody's has the Baa2 rating under review. Sysco paused share buybacks. If profit grows slower than planned, debt falls slower and a rating cut can raise interest costs.
Sysco has never run cash and carry warehouse stores. The planned $250 million of yearly savings and the plan to open more than 125 new stores over at least 20 years depend on a good integration of a business with its own culture and systems.
Restaurants give about 59% of sales. If consumers eat out less, local restaurant volume, which gives Sysco its best margins, can fall. US local case volume fell 1.4% in fiscal year 2025 before it grew again in fiscal year 2026.
Sysco has an interim CFO, Brandon Sewell. A change in the finance team during a large integration adds execution risk.
- Balance sheet
- Cash: $1.8B
Debt: $13.5B
Net debt: $11.7B
EBITDA, last 12 months: $4.0B
Net debt / EBITDA: 2.9× (medium)
Interest cover: 4.3×
Debt due within 12 months: $1.2B
Ratings: Moody's Baa2, S&P BBB (negative outlook), Fitch BBB (negative outlook)
Sysco funds itself with unsecured senior notes guaranteed by its US Broadline subsidiaries, commercial paper and a $3.0 billion revolving credit facility. At June 27, 2026, debt was $13.5 billion, including finance leases. At August 4, 2026, commercial paper was $700 million in the US and $663 million in Europe, and nothing was drawn on the revolving credit facility. EBITDA is Sysco's EBITDA for fiscal year 2026, and interest cover is operating income divided by interest expense for the same year. A $1.0 billion note matured on July 15, 2026. The revolving credit facility, signed on April 16, 2026, ends in April 2031 and grows to $4.0 billion after the deal closes. The balance sheet does not yet show the deal financing. In 2026, Sysco signed a $3.0 billion delayed-draw term loan. From September 2026, it raised $14.65 billion of new US dollar notes, 1.0 billion euros of junior subordinated notes, C$1.5 billion of notes and about $1.0 billion of new shares. These replace most of the $22 billion bridge loan commitment of March 30, 2026. Sysco aims to cut net leverage by at least 1.0 times in the first 24 months after closing and has a long-term target of about 2.75 times. The ratings are from the 10-K, as of August 4, 2026.
As of 2026-06-27.
- Checkpoints
- Nov 3, 2026: Q1 fiscal 2027 results: local volume and deal timing. Pending. Watch: US local case growth near 2.5%, a kept fiscal 2027 outlook and no new delay of the deal pass; a lower outlook or a later closing date fails.
Q1 2027 (estimate): FTC decision and closing of Jetro Restaurant Depot. Pending. Watch: Clearance without large store sales and closing by about March 2027 pass; an FTC suit or large forced sales fail.
2028 (estimate): Net leverage down by 1.0 times after closing. Pending. Watch: Net leverage at least 1.0 times lower within 24 months after closing and stable investment-grade ratings pass; a rating cut fails.
- Recent events
- 2026-10-13: Sysco said that it will report Q1 results for fiscal year 2027 on November 3, 2026.
2026-10-06: Sysco closed the sale of $10.75 billion of senior notes, $3.9 billion of US dollar junior subordinated notes and 1.0 billion euros of junior subordinated notes to pay for Jetro Restaurant Depot. If the deal does not close, Sysco must redeem most of these notes. It also sold C$1.5 billion of senior notes on September 25, 2026.
2026-09-16: Sysco sold 12.3 million new shares at $81.00 per share, for net proceeds of about $967 million, to pay part of the cash price of Jetro Restaurant Depot.
2026-08-20: Sysco added two directors with experience in AI, supply chains and foodservice, and changed its Technology Committee into an AI Transformation and Technology Committee. It said that AI tools give part of the $100 million of cost savings planned for fiscal year 2027.
2026-08-04: Sysco reported results for fiscal year 2026, which ended June 27, 2026. Sales grew 3.9%, and adjusted EPS grew 3.4% to $4.61. In Q4, US local case volume grew 2.6%. For fiscal year 2027, which has 53 weeks, Sysco expects sales growth of 6% to 7% and adjusted EPS growth of 9% to 11%.
2026-05-27: The Federal Trade Commission sent Sysco and Jetro Restaurant Depot a second request for information on the deal. This extends the antitrust waiting period until 30 days after both companies comply.
2026-04-28: Sysco reported Q3 results for fiscal year 2026. Sales grew 4.7%, and US local case volume grew 3.3%. Adjusted EPS fell 2.1% to $0.94 because of higher incentive pay.