Sysco Corp. announced financial results for its 13-week third fiscal quarter ending March 31, 2012.
"I am pleased with our volume growth trends as we grew our business throughout the quarter by remaining focused on supporting the success of our customers," said Bill DeLaney, Sysco's president and chief executive officer in a prepared statement. "Adjusted earnings growth fell short of our expectations, however, and our leadership team is fully committed to improving upon this aspect of our performance as we complete our fourth quarter and approach the beginning of the new fiscal year."
"I am pleased with our volume growth trends as we grew our business throughout the quarter by remaining focused on supporting the success of our customers," said Bill DeLaney, Sysco's president and chief executive officer. "Adjusted earnings growth fell short of our expectations, however, and our leadership team is fully committed to improving upon this aspect of our performance as we complete our fourth quarter and approach the beginning of the new fiscal year."
Sales for the third quarter were $10.5 billion, an increase of 7.6 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 5.5 percent. While the company's overall rate of inflation has recently eased somewhat, inflation remains at a high level, with double-digit price increases in the meat and poultry categories. 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 third quarter decreased sales by 0.2 percent. Case volume for the company's broadline and SYGMA operations combined grew 2.9 percent during the quarter including acquisitions, and 2.3 percent excluding acquisitions.
Gross profit for the third quarter was $1.9 billion, an increase of 2.1 percent, compared to the prior year. Operating expenses in the third quarter increased $28 million, or 2.0 percent, compared to operating expenses in the prior year period. This was due mainly to a $29 million increase in payroll expense, a $24 million increase in gross business transformation expenses and a $10 million increase in fuel expense. These increases were partially offset by a $36 million charge in the prior year quarter related to the withdrawal of an operating company from a multi-employer pension plan (MEPP), which created a favorable year-over-year variance. Adjusted operating expenses increased 2.6 percent.
Operating income was $439 million in the third quarter, increasing $11 million, or 2.7 percent compared to operating income in the prior year. Adjusted operating income increased 0.9 percent.
Net earnings for the third quarter were $260 million, an increase of $1 million, or 0.4 percent, compared to net earnings in the prior year. Diluted earnings per share (EPS) in the third quarter of fiscal 2012 was $0.44 which was flat compared to last year's third quarter. Adjusted EPS was $0.49, an increase of 2.1 percent compared to the prior year period.
Sales for the first 39 weeks of fiscal 2012 were $31.3 billion, an increase of 8.4 percent compared to sales in the same period last year. Food cost inflation for the period was 6.3 percent. Inflation continued to be broad-based, but was impacted most significantly by increased prices for meat and canned/dry products. 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 39 weeks increased sales by 0.1 percent. Case volume for the company's broadline and SYGMA operations combined grew 2.7 percent during the first 39 weeks including acquisitions, and 2.1 percent excluding acquisitions.
Gross profit for the first 39 weeks was $5.7 billion, an increase of 4.1 percent, compared to the prior year. Operating expenses in the first 39 weeks increased $220 million, or 5.4 percent, compared to operating expenses in the prior year period. This was due mainly to a $127 million increase in payroll expense, a $52 million increase in gross business transformation expenses and a $34 million increase in fuel expense. Adjusted operating expenses increased 4.5 percent.
Operating income was $1.4 billion in the first 39 weeks, increasing $4 million, or 0.3 percent compared to operating income in the prior year. Adjusted operating income increased 3.2 percent.
Net earnings for the first 39 weeks were $812 million, a decrease of $3 million, or 0.4 percent, compared to net earnings in the prior year period. Diluted EPS in the first 39 weeks of fiscal 2012 was $1.38 compared to last year's diluted EPS of $1.39. Adjusted EPS for the first 39 weeks of fiscal 2012 was $1.50, an increase of 4.2 percent compared to adjusted EPS of $1.44 in the prior year period.
Cash flow from operations was $908 million for the first 39 weeks of fiscal 2012 compared to $666 million in the prior year period. Capital expenditures totaled $199 million for the third quarter, and $633 million in the first 39 weeks of the fiscal year. This includes spending related to the company's business transformation project of $39 million for the third quarter and $118 million for the first 39 weeks of fiscal 2012. The primary areas for investment included facility replacements and expansions, replacements to Sysco's fleet, and technology.
