HOUSTON, Feb. 1, 2010 — Sysco Corporation (NYSE:SYY) today announced financial results for its 13-week second quarter ended December 26, 2009.
Second Quarter Fiscal 2010 Highlights
Sales were $8.9 billion, a decrease of 3.1% from $9.1 billion in the second quarter of fiscal 2009.
Operating income was $462 million, an increase of 9.6% compared to $422 million in last years second quarter.
Diluted earnings per share (EPS) was $0.45, an increase of 12.5% compared to $0.40 in last years second quarter.
First Half Fiscal 2010 Highlights
Sales were $17.9 billion, a decrease of 5.7% from $19.0 billion in the first half of fiscal 2009.
Operating income was $960 million, an increase of 3.6% compared to $927 million in last years first half.
Diluted EPS was $1.00, an increase of 16.3% compared to $0.86 in last years first half.
I am encouraged by our operating performance this quarter, said Bill DeLaney, Syscos chief executive officer. While the business environment remains challenging, deflation pressures appear to be moderating from highs we saw early in the quarter and case volume trends continue to improve. I want to recognize our associates for their efforts during the quarter, as they continued to provide excellent service to our customers, improve productivity and maintain strong cost controls.
Second Quarter Fiscal 2010 Summary
Sales for the second quarter were $8.9 billion, a decrease of 3.1% compared to the same period last year. Food cost deflation, as measured by the estimated change in Syscos cost of goods, was 3.5% percent for the quarter. Sales from acquisitions (within the last 12 months) increased sales by 0.6%. The impact of changes in foreign exchange rates for the quarter increased sales by 1.2%.
Operating expenses declined $96 million, or 7.2%, for the second quarter of fiscal 2010 compared to the prior year period. The decrease in operating expenses was primarily a result of a $37 million favorable change in the value of Corporate Owned Life Insurance (COLI) and a $25 million decline in payroll expense related to reduced headcount. Operating income increased $40 million, or 9.6%, to $462 million during the second quarter, and operating margin was 5.2%.
Net earnings for the second quarter were $268 million, an increase of $31 million, or 12.9%. Diluted EPS was $0.45, aided by a $0.01 favorable impact from COLI, compared to $0.40 in the prior year period which included a $0.05 negative impact from COLI.
First Half Fiscal 2010 Summary
Sales for the first half of fiscal 2010 were $17.9 billion, a decrease of 5.7% compared to the same period last year. Food cost deflation, as measured by the estimated change in Syscos cost of goods, was 3.4% percent for the first half of the year. Sales from acquisitions (within the last 12 months) increased sales by 0.6%. The impact of changes in foreign exchange rates for the first half of the year increased sales by 0.3%.
Operating expenses declined $227 million, or 8.4%, for the first half of fiscal 2010 compared to the prior year period. The decrease in operating expenses was primarily a result of a $95 million decline in payroll expense related to reduced headcount and lower incentive compensation, as well as an $81 million favorable change in the value of COLI. Operating income increased $33 million, or 3.6%, to $960 million during the first half of fiscal 2010, and operating margin was 5.3%.
Net earnings for the first half of fiscal 2010 were $595 million, an increase of $80 million, or 15.6%. Diluted EPS was $1.00, aided by a $0.04 favorable impact from COLI and a $0.05 tax benefit related to the companys IRS settlement announced in the first quarter of fiscal 2010. Diluted EPS in the prior year period was $0.86 which included a $0.09 negative impact from COLI.
Capital Spending
Capital expenditures totaled $138 million and $248 million for the second quarter and first half of fiscal 2010, respectively. The primary areas for investments included facility replacements and expansions, technology, and additions and replacements to Syscos fleet. For the fiscal 2010 year, the company projects capital expenditures will be in the range of $600 million to $650 million.
Conference Call & Webcast
Syscos second quarter fiscal 2010 earnings conference call will be held on Monday, February 1, 2010 at 10:00 a.m. EST. A live webcast of the call, as well as a copy of this press release, will be available online at www.sysco.com in the Investor Relations section.
Sysco Corp.