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Sysco Reports Third Quarter Net Earnings Of $201 Million And Diluted EPS Of $0.34 ($0.40 After Adjusting For Certain Items)

Stocks in this article: SYY

1 See Non-GAAP Reconciliations below for more information.

Third Quarter Fiscal 2013 Summary

Sales for the third quarter were $10.9 billion, an increase of 4.0% compared to sales in the same period last year. Food cost inflation was 2.4%, as measured by the estimated change in Sysco's product costs, driven mainly by inflation in the produce and poultry categories. In addition, sales from acquisitions (within the last 12 months) increased sales by 1.8%, and the impact of changes in foreign exchange rates for the third quarter decreased sales by 0.1%. Case volume for the company's Broadline and SYGMA operations combined grew 1.7% during the quarter, including acquisitions, and declined approximately 0.2%, excluding acquisitions.

Gross profit for the third quarter was $1.9 billion, an increase of 2.1%, compared to the prior year. Operating expenses in the third quarter increased $140 million, or 9.8%, compared to operating expenses in the prior year period. This increase was due primarily to a $46 million increase in certain items, including a $41 million charge from an MEPP withdrawal; a $34 million increase in gross business transformation expenses; and a $22 million increase in payroll expense. Excluding certain items and business transformation expenses, adjusted operating expenses increased 4.4%.

Operating income was $337 million in the third quarter, decreasing $102 million, or 23.2% compared to operating income in the prior year. Excluding certain items and business transformation expenses, adjusted operating income decreased 4.4%.

Net earnings for the third quarter were $201 million, a decrease of $58 million, or 22%, compared to the prior year. Diluted EPS in the third quarter of fiscal 2013 was $0.34, which was 22.7% lower compared to last year's third quarter. Excluding certain items and business transformation expenses, adjusted diluted EPS was $0.49, which was a decrease of 2.0%, compared to the prior year.

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