Sysco Corp. announced financial results for its 13-week first fiscal quarter ended Oct. 1, 2011.
Sales were $10.6 billion, an increase of 8.6 percent from $9.8 billion in the first quarter of fiscal 2011.
Operating income was $509 million, an increase of 0.6 percent, compared to $506 million in last year's first quarter, and Sysco's highest first quarter on record.
Adjusted operating income increased 6.1 percent, excluding gross business transformation expenses and the impact of corporate-owned life insurance (COLI).
Diluted earnings per share (EPS) were $0.51, which included a $0.04 negative impact from gross business transformation expenses. Last year's first quarter EPS was also $0.51, but included a $0.02 benefit from COLI and a $0.02 negative impact from gross business transformation expenses.
Adjusted diluted EPS was $0.55, an increase of 7.8 percent, excluding gross business transformation expenses and the impact of COLI.
"I am encouraged by our underlying business performance during the quarter as softening consumer sentiment contributed to ongoing challenges for the foodservice industry," said Bill DeLaney, Sysco's president and chief executive officer in a prepared statement. "Our associates remain committed to supporting our customers by meeting and exceeding their expectations each and every day."
Sales for the first quarter were $10.6 billion, an increase of 8.6 percent compared to sales in the same period last year. Food cost inflation, as measured by the estimated change in Sysco's product costs, was 7.3 percent. Inflation continued to be broad-based, but was impacted most significantly by increased prices for dairy, meat and canned/dry products. This compares to inflation of 3.3 percent in the prior year period, and 5.9 percent in the fourth quarter of fiscal 2011. In addition, sales from acquisitions (within the last 12 months) increased sales by 0.7 percent, and the impact of changes in foreign exchange rates for the first quarter increased sales by 0.7 percent. Case volume for the company’s broadline and SYGMA operations combined grew nearly 2 percent during the quarter including acquisitions, and more than 1 percent excluding acquisitions.
Gross profit for the first quarter was $1.9 billion, an increase of 5.5 percent, compared to the prior year. Operating expenses in the first quarter increased $98 million, or 7.3 percent, compared to operating expenses in the prior year period. This was due mainly to a $40 million increase in payroll expense, a $16 million increase in gross business transformation expenses, a $14 million increase in fuel expense and a $13 million lower benefit from COLI, partially offset by a $7 million decline in expenses for the corporate-sponsored pension plan. Excluding gross business transformation expenses and the impact of COLI, adjusted operating expenses increased 5.3 percent. Management believes that excluding these items better represents the company's underlying business performance.
Operating income was $509 million in the first quarter, increasing $3 million, or 0.6 percent compared to operating income in the prior year. Excluding gross business transformation expenses and the impact of COLI, adjusted operating income increased 6.1 percent.
Net earnings for the first quarter were $303 million, an increase of $4 million, or 1.2 percent, compared to net earnings in the prior year. Diluted EPS in the first quarter of fiscal 2012 was $0.51, which included a $0.04 negative impact from gross business transformation expenses. Last year's first quarter EPS was also $0.51, but included a $0.02 benefit from COLI and a $0.02 negative impact from gross business transformation expenses. Excluding gross business transformation expenses and the impact of COLI, first quarter fiscal 2012 adjusted EPS was $0.55, an increase of 7.8 percent compared to the prior year.
Cash flow from operations was $255 million for the first quarter of fiscal 2012. Capital expenditures totaled $227 million for the first quarter, including $45 million related to the company's business transformation project. The primary areas for investment included facility replacements and expansions, replacements to Sysco's fleet, and technology.
