Sysco Profit Drops, Hurt by US Foods-Related Costs

Sysco Corp. (NYSE: SYY) reported fourth fiscal-quarter and full-year 2015 results before markets opened Monday.

SYY closed Friday’s trading at $36.96, up $0.68 or 1.88 percent on a volume of 11.24 million shares.

“I am pleased with our results for fiscal 2015 and particularly encouraged by our performance in the fourth quarter”, said Bill DeLaney, Sysco president and chief executive officer.

Adjusted earnings topped analysts’ expectations. DeLaney highlighted the company’s growth of 6% in adjusted operating income that he credited to the improved management of expenses. Excluding the aforementioned merger-related costs, among other items, earnings increased to 52 cents from 49 cents. A reconciliation of non-GAAP measures is included in this release.

Revenue was higher by 0.9% to end the quarter at $12.4 billion. Food cost inflation was flat as modest inflation in the meat, poultry and frozen categories was offset by modest deflation in the dairy, produce and seafood categories. The strong dollar hit sales by 1.4%, the company said.

Broadline sales for the quarter rose 2 percent to $9.87 billion, while sales at SYGMA declined 8 percent to $1.47 billion. Case volume for Broadline and SYGMA operations combined grew 2.2% and approximately 1.9% excluding acquisitions. However, analysts were expecting a profit of $0.51 per share on revenue of $12.7 billion. Gross margin improved to 17.9% from 17.5% a year earlier.

At least $235.2 million in profits for the quarter went towards costs to plan the merger, fight for its approval by federal regulators, and ultimately pay $312.5 million in break up fees after calling it quits in June.

Cash and cash equivalents were $5.13 billion as of Jun 27, compared with $5.09 billion as of Mar 28, 2015.

Operating expenses during the quarter jumped 21%-mainly due to $313 million in merger-termination charges. Operating income decreased 72 percent to $121.00 million.

The average estimate among 11 Estimize users was for earnings of $0.53 per share and revenue of $12.71 billion.

In all, Sysco for the period reported $73 million in profit, down from its $254.2 million during the same period one year ago.

Adjusted earnings of $1.84 per share lagged the Zacks Consensus Estimate by one cent in fiscal 2015.