04.11.2013 15:45:49

Sysco First Quarter Results Top Estimates

(RTTNews) - Food-distribution giant Sysco Corp. (SYY) reported Monday a profit for the first quarter that edged down from last year, despite sales growth, hurt by higher food costs and expenses. Adjusted earnings per share and quarterly revenues topped analysts' expectations.

Further, the company said it expects to achieve its financial objectives for fiscal 2014 through strong execution of both its business plan and key strategic initiatives.

"Our first quarter results were achieved in a market environment that remains very challenging for many of our customers, especially those who operate in the casual dining restaurant segment. While overall sales growth compared to the prior year was solid, gross profit growth was modest," President and CEO Bill DeLaney said in a statement.

The Houston, Texas-based company reported net earnings of $285.59 million or $0.48 per share for the first quarter, lower than $286.60 million or $0.49 per share in the prior-year quarter.

Excluding items, adjusted earnings for the quarter was $0.49 per share, compared to last year's $0.49 per share.

On average, 12 analysts polled by Thomson Reuters expected the company to report earnings of $0.48 per share for the quarter. Analysts' estimates typically exclude special items.

Excluding impact of business transformation project costs, adjusting earnings from underlying business was $0.56 per share, compared to last year's $0.58 per share.

Sales for the quarter grew 5.7 percent to $11.71 billion from $11.09 billion in the same quarter last year, and topped ten Wall Street analysts' consensus estimate of $11.62 billion.

Contributions from acquisitions in the last 12 months increased sales by 2.3 percent, while sales were decreased by 0.5 percent due to changes in foreign exchange rates.

Food cost inflation, as measured by the estimated change in Sysco's product costs, was 2.1 percent for the quarter, due to inflation in the poultry category.

Broadline sales for the quarter totaled $9.55 billion, higher than last year's sales of $9.06 billion, and sales at SYGMA grew to $1.52 billion from $1.42 billion in the year-ago quarter. Other segment sales totaled $711.88 million, up from $660.60 million in the prior-year quarter.

Case volume for the company's Broadline and SYGMA operations combined grew 4.1 percent during the quarter, including acquisitions, and increased about 1.8 percent, excluding acquisitions.

Operating income for the quarter remained flat with last year at $478 million, while adjusted operating income decreased 2.7 percent. Gross profit margin contracted 68 basis points to 17.63 percent from last year.

Total operating expenses increased 2.3 percent to $1.59 billion from $1.55 billion in the year-ago quarter.

"Particularly encouraging, however, was our expense management performance which was largely driven by successfully executing our broad array of ongoing Business Transformation initiatives," DeLaney noted.

"Looking forward, strong execution of both our business plan and key strategic initiatives is paramount to our providing best in class service to our customers and achieving our financial objectives for fiscal 2014," DeLaney added.

In Monday's regular trading session, SYY is currently trading at $34.39, up $1.83 or 5.62% on a volume of 0.57 million shares.

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