Sysco Corp. Reports 5.9 Percent Sales Increase In Fourth Quarter, 7.8 Percent For Fiscal 2012

Sysco Corp. announced financial results for its 13-week fourth quarter, and 52-week fiscal year 2012, ending June 30, 2012.

Sales were $11.0 billion, an increase of 5.9 percent from $10.4 billion in the fourth quarter of fiscal 2011.

Operating income was $515 million, a decrease of 8.1 percent, compared to $561 million in last year's fourth quarter.

Adjusted operating income, which reflects the performance of our underlying business, was $608 million, an increase of 2.2 percent compared to last year's fourth quarter.

Diluted earnings per share (EPS) were $0.53, which was 7.0 percent lower compared to $0.57 in last year's fourth quarter.

Earnings were impacted by certain items primarily related to a multi-employer pension plan (MEPP) withdrawal. Excluding these certain items, diluted EPS was $0.551. Further adjusting for business transformation expenses and the impact of COLI, adjusted diluted EPS was $0.62, an increase of 3.3 percent compared to the prior year period.

Sales for the fiscal year were $42.4 billion, an increase of 7.8 percent from $39.3 billion in fiscal 2011.

Operating income was $1.9 billion, which was a decrease of 2.1 percent, compared to the prior year period.

Adjusted operating income was $2.1 billion, an increase of 3.0 percent from the prior year.

Diluted EPS was $1.90, a decrease of 3.1 percent compared to EPS of $1.96 in the prior year.

Excluding certain items primarily related to MEPP withdrawals, diluted EPS was $1.93. Further adjusting for business transformation expenses and the impact of COLI, adjusted diluted EPS was $2.13, an increase of 4.4 percent from the prior year.

Cash flow from operations was $1.4 billion, an increase of 29 percent from $1.1 billion in fiscal year 2011.

Capital expenditures totaled $785 million, including spending related to new state of the art facilities opened during the year in Central Texas and Boston.

"Market conditions remained challenging throughout the year due to increasing product costs and an uneven economic recovery. Nevertheless, we successfully supported our customers and grew our share of market," said Bill DeLaney, Sysco's president and chief executive officer in a prepared statement. "We are making meaningful progress on our business transformation initiatives and believe the benefits will both improve our financial performance over time and further enhance our leadership position in the industry."

Sales for the fourth quarter were $11.0 billion, an increase of 5.9 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 3.3 percent. Inflation in the fourth quarter was mainly driven by increases in the poultry, meat and canned/dry goods categories. Sales from acquisitions (within the last 12 months) increased sales by 0.6 percent, and the impact of changes in foreign exchange rates for the fourth quarter decreased sales by 0.5 percent. Case volume for the company's Broadline and SYGMA operations combined grew 3.4 percent during the quarter including acquisitions, and 3.3 percent excluding acquisitions.

Gross profit for the fourth quarter was $2.0 billion, an increase of 2.9 percent, compared to the prior year. Operating expenses in the fourth quarter increased $103 million, or 7.4 percent, compared to operating expenses in the prior year period. This was due in part to a $38 million increase in gross business transformation expenses, a $20 million increase in payroll expense, and a $6 million increase in fuel expense. The increase also included certain items in the fourth quarter totaling $23 million which were primarily related to an MEPP withdrawal thus creating an unfavorable year-over-year variance.

Adjusted operating expenses were $1.4 billion, an increase of 3.3 percent from the same period last year.

Operating income was $515 million in the fourth quarter, decreasing $45 million, or 8.1 percent compared to operating income in the prior year. Adjusted operating income was $608 million, an increase of 2.2 percent from the same period last year.

Net earnings for the fourth quarter were $309 million, a decrease of $27 million, or 8.0 percent, compared to net earnings in the prior year. Diluted EPS in the fourth quarter of fiscal 2012 was $0.53 which was a decrease of 7.0 percent compared to last year's fourth quarter. Excluding certain items, diluted EPS was $0.55, a decrease of 1.8 percent compared to the prior year period. Further adjusting for business transformation expenses and the impact of COLI, adjusted diluted EPS was $0.62, which was an increase of 3.3 percent compared to the prior year period.

Sales for fiscal 2012 were $42.4 billion, an increase of 7.8 percent compared to sales in the same period last year. Food cost inflation for the period was 5.5 percent. Inflation for the fiscal year period was broad based, driven mainly by increased prices in the meat, canned/dry and frozen categories. Inflation declined steadily throughout the year from a high of 7.3 percent in the first quarter of fiscal 2012. In addition, sales from acquisitions (within the last 12 months) increased sales by 0.7 percent. The impact of foreign exchange rates was not meaningful to the change in sales for fiscal 2012. Case volume for the company's broadline and SYGMA operations combined grew 3.0 percent during fiscal year 2012 including acquisitions, and 2.5 percent excluding acquisitions.

Gross profit for fiscal 2012 was $7.7 billion, an increase of 3.8 percent, compared to the prior year. Operating expenses increased $323 million, or 5.9 percent, compared to operating expenses in the prior year period. This was due mainly to a $147 million increase in payroll expense, a $91 million increase in gross business transformation expenses and a $40 million increase in fuel expense. These increases were partially offset by a $27 million decline in corporate sponsored pension plan expense and a $20 million decline in charges related to MEPP withdrawals in fiscal 2012 compared to fiscal 2011.

Adjusted operating expenses were $5.6 billion an increase of 4.1 percent from the prior year.

Operating income was $1.9 billion in fiscal year 2012, which was a decrease of 2.1 percent, compared to operating income in the prior year. Adjusted operating income was $2.1 billion an increase of 3.0 percent from the prior year.

Net earnings for the fiscal year 2012 were $1.1 billion, a decrease of $30 million, or 2.6%, compared to net earnings in the prior year period. Diluted EPS in fiscal 2012 was $1.90, which was a 3.1 percent decrease, compared to last year's diluted EPS of $1.96. Excluding certain items, diluted EPS was $1.93, a decrease of 2.5 percent. Further adjusting for business transformation expenses and the impact of COLI, adjusted diluted EPS was $2.13, an increase of 4.4 percent compared to the prior year period.

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