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Sysco operates in one of the most basic of industries, the distribution of food and related products and services to restaurants, nursing homes, hospitals, hotels, motels, schools, colleges, cruise ships, sports parks and summer camps, wherever a meal is prepared away from home.
Fourth Quarter Results
The Houston, Texas-based company's posted net income for the fourth quarter of $334.11 million, up from $303.39 million in the prior-year quarter. On a per share basis, earnings advanced 12.2% to $0.55 from $0.49 in the year-ago quarter and breezed past the average estimate of six analysts polled by First Call/Thomson Financial of $0.52 per share.
Sales for the quarter amounted to $9.73 billion, 5.4% higher than the previous year's sales of $9.23 billion, but missed five Wall Street analysts' consensus estimate of $9.87 billion for the fourth quarter.
Food cost inflation, as estimated by the change in Sysco's cost of goods, was 6.2% for the quarter.
Segmental Results
For the fourth quarter, Broadline segment sales totaled $7.73 billion, higher than last year's sales of $7.29 billion, while sales at SYGMA segment advanced to $1.20 billion from $1.14 billion last year. Other segment sales totaled $916.31 million, marginally down from $922.44 million in the year-ago quarter.
Other Metrics
Operating income for the latest quarter rose 9.7% to $558.66 million from the year-earlier quarter, while as a percentage of sales, operating margin increased 22 basis points.
Operating income for the fourth quarter was unfavorably impacted by a net $16.4 million in additional expenses related to the combined impact of changes in the cash surrender value of corporate-owned life insurance, increased provisions related to multi-employer pension plans, company-sponsored pension expense and stock compensation expense.
Gross profit for the fourth quarter was $1.90 billion, up 5.6% from $1.80 billion in the year-ago quarter, while operating expenses rose 4.0% to $1.34 billion from $1.29 billion in the prior-year quarter, which, according to the company, shows continues management of high food cost inflation.
Commenting on the results, chairman and chief executive officer Richard Schnieders said, "For the eighth time in the last ten years -- and the eighth quarter in a row -- we have generated double digit earnings per share growth. The accomplishment is particularly notable this year as we overcame significant obstacles, including market forces such as prolonged inflation and high fuel costs."
Full-Year Highlights
For fiscal 2008, Sysco reported net income of $1.11 billion or $1.81 per share, higher than $1.0 billion or $1.60 per share in the prior-year period. Street was looking for full-year earnings of $1.78 per share.
Sales for the full-year increased 7.1% to $37.52 billion from $35.04 billion recorded last year and missed analysts estimate of $37.67 million.
"I'm pleased with our operating results in fiscal 2008, and I am encouraged that we leveraged 7.1% sales growth into 13.1% growth in earnings per share while continuing to invest in our business. Key to this performance was solid execution of our business plan, especially in the area of cost containment,'' Schnieders added.
Outlook
The company noted that capital expenditure for fiscal 2008 was about $109 million lower than last year due to delays on certain projects that will shift significant expenditures to fiscal 2009. Hence, the company expects capital expenditures for fiscal 2009 to be in a range of $675 million to $725 million.
Stock Quote
In Monday's regular trading session, SYY is trading at $31.25, up $1.38 or 4.62% on a volume of 3.14 million shares. In the past 52-week period, the stock has been trading in a range of $26.45 to $35.90.
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