Sysco Reports First Quarter Double Digit Earnings Growth

Houston, Texas-headquartered Sysco Corporation, North America’s largest distributor of foodservice products, on November 7 announced financial details for its 13-week first fiscal quarter 2017, which ended October 1, 2016. The figures reflect the performance of the Brakes Group. Acquired earlier this year, the London-based foodservice distributor is active in the United Kingdom, Ireland, France, Sweden, Spain, Belgium and Luxembourg.

Here are Sysco’s highlights:

  • Sales increased 11.2% to $14.0 billion; excluding Brakes, sales rose 1.0% to $12.7 billion
  • Gross profit increased 20.3% to $2.7 billion; gross margin rose146 basis points to 19.27%; excluding Brakes, gross profit increased 5.0% to $2.3 billion; gross margin advanced 70 basis points to 18.52%
  • Operating income increased 14.9% to $567 million; adjusted operating income rose 23.8% to $627 million; excluding Brakes, adjusted operating income increased 15.3% to $584 million
  • Earnings Per Share (EPS) increased $0.17 to $0.58; adjusted EPS increased $0.15 to $0.67; excluding Brakes adjusted EPS gained $0.11 to $0.63

“I am pleased with our first quarter performance, which built upon the favorable results we have achieved over the past several quarters,” said CEO Bill DeLaney. “We continued to focus on supporting the needs of our customers and achieved strong earnings growth through solid execution in a softening industry environment. We remain committed to achieving our three-year plan financial goals.”

US Foodservice Operations

Sales for the first quarter were $9.5 billion, an increase of 0.8% compared to the same period last year. Gross profit rose 4.3% to $1.9 billion; gross margin increased 68 basis points to 20.18%. Operating expenses increased $20 million, or 1.8%, compared to the same period last year, due mainly to higher payroll expenses, which were driven by higher case volume. Adjusted operating expenses increased $21 million, or 1.8%, compared to the same period last year. Operating income was $745 million, an increase of $59 million, or 8.5%, compared to the same period last year. Adjusted operating income was $745 million, an increase of $58 million, or 8.4%, compared to the same period last year.

Case volume for the company’s US Broadline operations grew 1.8% during the quarter. Local case growth within US Broadline operations increased 1.9%.

International Foodservice Operations

Sales for the first quarter were $2.7 billion, compared to $1.4 billion in the same period last year. Operating income was $79 million, an increase of $28 million, compared to the same period in 2015. Adjusted operating income was $104 million, an increase of $50 million, compared to the same period last year. The significant improvement in both sales and operating income is primarily attributable to the Brakes Group acquisition.