Sysco Corporation (SYY) reported first-quarter fiscal 2027 sales of $21.7 billion, a 2.8% increase from a year earlier, as U.S. Foodservice local volume rose 2.7% and gross profit climbed 3.8% to $4.1 billion.

The global food-away-from-home distributor said the start of the year was in line with its expectations, citing volume growth, expanding gross margins and expense control. Chief Executive Officer Kevin Hourican said the company delivered profitable growth in the U.S. and International segments despite soft restaurant foot traffic, higher-than-expected fuel costs and lower-than-expected U.S. food-cost inflation.

GAAP operating income fell 10.4% to $717 million, which the company attributed to acquisition costs related to Jetro Restaurant Depot. Adjusted operating income increased 3.2% to $927 million. Net earnings rose 10.5% to $526 million, or $1.09 a share, after a $234 million gain on deal-contingent rate-lock transactions tied to financing for the planned Jetro purchase. Adjusted net earnings increased 4.2% to $574 million, and adjusted diluted earnings per share increased 3.5% to $1.19.

Gross margin increased 18 basis points to 18.6%. Product-cost inflation was 0.3% at the enterprise level, primarily in meat. The company said the gross-profit increase was driven by local volumes, tariff benefits, strategic sourcing and Sysco Brand penetration. Operating expenses rose 7.5% on acquisition-related costs, higher volumes and investment in growth areas; adjusted operating expenses rose 4.0%.

U.S. Foodservice sales increased 2.4% to $15.1 billion. Total case volume in the segment rose 2.6%. Gross profit in U.S. Foodservice increased 3.2% to $2.9 billion, and gross margin rose 14 basis points to 19.2%. Operating income in the segment increased 1.6% to $894 million; adjusted operating income rose 2.7% to $941 million.

International Foodservice sales increased 5.1% to $4.2 billion, or 6.0% on a constant-currency basis. Gross profit rose 7.4% to $887 million, and gross margin expanded 45 basis points to 21.3%. Operating income in the segment decreased 28.1% to $82 million. Adjusted operating income increased 12.2% to $165 million.

Cash from operations was $278 million in the 13 weeks ended September 26, 2026. Free cash flow was $230 million. The company returned $264 million to shareholders through dividends. Cash and cash equivalents were $3.2 billion at quarter-end, with total liquidity of $5.8 billion. Net debt to adjusted EBITDA was approximately 2.4 times.

Chief Financial Officer Brandon Sewell said the company remains confident in delivering 9%-11% adjusted EPS growth in fiscal 2027, with local volume assumptions of approximately 2.5% unchanged. Full-year sales growth is now expected at the lower end of the 6%-7% range, he said, reflecting a lower inflation environment. Guidance includes an expected $100 million of AI-related cost savings, with benefits accelerating in the second half.

Hourican said the company is preparing for the anticipated closure of the Jetro Restaurant Depot transaction.