Sysco announces fiscal Q1 net earnings of US$287M on sales of US$11.1B, compared with year-ago earnings of US$303M on sales of US$10.6B
November 5, 2012
– Sysco Corporation (NYSE:SYY) today announced financial results for its 13-week first fiscal quarter ended September 29, 2012.
First Quarter Fiscal 2013 Highlights
Sales were $11.1 billion, an increase of 4.7% from $10.6 billion in the first quarter of fiscal 2012, and Sysco's highest quarter on record.
Operating income was $479 million, a decrease of 6.0%, compared to $509 million in last year's first quarter.
Adjusted1 operating income, which reflects the performance of our underlying business, was $563 million, an increase of 2.0% compared to last year's first quarter.
Diluted earnings per share (EPS) were $0.49, which was 3.9% lower compared to $0.51 in last year's first quarter. Earnings were impacted by certain items1, primarily related to severance charges, which equated to a $0.01 negative impact to EPS.
Excluding certain items and business transformation expenses, adjusted diluted EPS was $0.58, an increase of 3.6% compared to the prior year period.
"Solid sales growth and effective overall operating expense management contributed to increased adjusted EPS in our underlying business for the quarter. Volume gains drove our top line growth as food cost inflation moderated from the historically high levels experienced in recent quarters," said Bill DeLaney, Sysco's president and chief executive officer. "Regarding our multiyear business transformation initiative, we recently achieved a significant milestone by successfully and simultaneously deploying for the first time our new technology platform in two operating companies."
1 See Non-GAAP Reconciliations below for more information.
First Quarter Fiscal 2013 Summary
Sales for the first quarter were $11.1 billion, an increase of 4.7% compared to sales in the same period last year. Food cost inflation was 2.2%, as measured by the estimated change in Sysco's product costs, driven mainly by inflation in the meat and poultry categories, partially offset by deflation in the dairy category. In addition, sales from acquisitions (within the last 12 months) increased sales by 0.5%, and the impact of changes in foreign exchange rates for the first quarter decreased sales by 0.3%. Case volume for the company's Broadline and SYGMA operations combined grew 2.9% during the quarter, including acquisitions, and 2.6%, excluding acquisitions.
Gross profit for the first quarter was $2.0 billion, an increase of 2.9%, compared to the prior year. Operating expenses in the first quarter increased $87 million, or 6.0%, compared to operating expenses in the prior year period. This was due mainly to a $41 million increase in gross business transformation expenses and a $30 million increase in payroll expense. Excluding certain items and business transformation expenses, adjusted operating expenses increased 3.2%.
Operating income was $479 million in the first quarter, decreasing $31 million, or 6.0% compared to operating income in the prior year. Excluding certain items and business transformation expenses, adjusted operating income increased 2.0%.
Net earnings for the first quarter were $287 million, a decrease of $16 million, or 5.3%, compared to the prior year. Diluted EPS in the first quarter of fiscal 2013 was $0.49, which was 3.9% lower compared to last year's first quarter. Excluding certain items and business transformation expenses, adjusted diluted EPS was $0.58, which was an increase of 3.6% compared to the prior year.
Cash Flow and Capital Spending
Cash flow from operations was $213 million for the first quarter of fiscal 2013, compared to $255 million in the first quarter of fiscal 2012. The decline was primarily related to increased tax payments. Capital expenditures totaled $156 million for the first quarter. The primary areas for investment included facility replacements and expansions, replacements to Sysco's fleet, and technology.
Free cash flow doubled in the first quarter of fiscal 2013 to $58 million compared to the first quarter of fiscal 2012.
Conference Call & Webcast
Sysco's first quarter fiscal 2013 earnings conference call will be held on Monday, November 5, 2012, at 10:00 a.m. Eastern. A live webcast of the call, a copy of this press release and a slide presentation, will be available online at www.sysco.com in the Investors section.
Sysco is the global leader in selling, marketing and distributing food products to restaurants, healthcare and educational facilities, lodging establishments and other customers who prepare meals away from home. Its family of products also includes equipment and supplies for the foodservice and hospitality industries. The company operates 185 distribution facilities serving over 400,000 customers. For the fiscal year 2012 that ended June 30, 2012, the company generated record sales of over $42 billion. For more information about Sysco visit the company's Internet home page at www.sysco.com. For investor relations news follow us at www.twitter.com/SyscoStock or download the new Sysco IR App, available on the iTunes and the Google Play Market.
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