Zacks_Analysts' Blog : Sysco Exceeds Estimates - Analyst Blog

Sysco Corp. (SYY) delivered first-quarter 2012 earnings (excluding one-time items) of 55 cents per share, which exceeded the Zacks Consensus Estimate of 52 cents. It also exceeded the prior-year earnings of 51 cents per share.

The first quarter 2012 results exclude the negative impact from gross business transformation expenses of 4 cents, while the first quarter 2011 earnings exclude 2 cents of negative impact from gross business transformation expenses and 2 cents gain from corporate-owned life insurance (COLI).

Revenue and Operating Income

Sysco's sales advanced 8.6% on a year-over-year basis, to $10.6 billion in the first-quarter. Acquisition growth and favorable currency translation contributed to the sales growth by 0.7% each. However, food cost inflation increased to 7.3% in the quarter versus 3.3% in the prior-year quarter, which negatively impacted the quarterly sales.

Sales exceeded the Zacks Consensus Estimate of $10.4 billion.

Operating income increased 6.1% in the quarter, excluding gross business transformation expenses and the impact of COLI. Sysco's operating income increased 0.6% in the quarter on a reported basis.

Other Financial Updates

Sysco generated $255 million of cash from operations, while $227 million of capital expenditure in the first quarter of 2012 related to facility replacements and expansions, replacements to Sysco's fleet, and technology. The company’s capital expenditure included $45 million related to the company's business transformation project.

Cash and cash equivalents were $284 million at the end of October 1, 2011, while long-term debt was $2,384 million.

Headquartered in Houston, Texas, Sysco's multi-year business transformation project is on track, employing 300 full-timers. The company is through with the design and technology development work. Presently, it is testing systems and processes.

Sysco, the global leader in selling, marketing and distributing food products, operates 177 distribution facilities serving approximately 400,000 customers. For fiscal year 2011 that ended July 2, 2011 the company generated record sales of more than $39 billion.