Sysco Tops Estimates on 16% Profit Growth

Restaurant food distributor Sysco reported strong earnings Monday as it was able to contain costs to offset rising food-price inflation. Net income climbed 16% to $267 million, good for EPS of $0.43, versus EPS of $0.37 a year ago. Revenue rose 8.5% to $9.41 billion. Consensus analyst estimates were for EPS of $0.41 on sales of $9.4 billion. Sysco's operating expenses rose just 3.9% to $1.33 billion from $1.28 billion a year ago, as the company consolidated operations into central distribution centers and redesigned delivery routes to be more fuel efficient. According to CEO Richard J. Schnieders, "Sales growth was in line with our expectations and we're pleased to have leveraged it into 16% EPS growth," (full earnings call transcript later today). Food-cost inflation was 5.9% Y/Y, "as estimated by the change in Sysco's cost of goods." The company plans to increase its sales staff 4%-5% in 2008, in order to improve customer service with its more than 400,000 clients, a list which includes the likes of Wendy's and Aramark. Sysco's shares were unmoved in pre-market trading as of 7:45 AM ET; they are lower by nearly 9% YTD.

Sources: Press release, Bloomberg, MarketWatch, Reuters
Commentary: Six Long-Term Texas-Based Value Picks • Sysco 4Q Profit Up 19%, Beats Street • Sysco Earnings Boost Shares
Stocks/ETFs to watch: SYY. Competitors: PFCG. ETFs: PBJ, PSL
Earnings call transcript: Sysco F4Q07 (Qtr End 6/30/07) Earnings Call Transcript

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