Sysco Corporation announced financial results for its second fiscal quarter ended December 27, 2014. Financial comparisons compared to the same period in the prior year.
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Sales for the second quarter were $12.1 billion, an increase of 7.6%. Food cost inflation was 6%, as measured by the estimated change in Sysco's product costs, driven mainly by inflation in the meat and dairy categories.
In addition, sales from acquisitions (within the last 12 months) increased sales by 0.8%, and the impact of changes in foreign exchange rates for the second quarter decreased sales by 0.9%. Case volume for the company's Broadline and SYGMA operations combined grew 3.6% during the quarter including acquisitions, and approximately 3.3% excluding acquisitions.
Gross profit for the second quarter was $2.1 billion, an increase of 6.1%. Gross margin declined 23 basis points to 17.25%.
Adjusted operating expenses for the second quarter increased $108 million, or 6.8%, due to a $115 million increase in payroll expense. Payroll expense increased mainly due to higher incentive accruals, higher pay for our sales organization as a result of higher gross profit, higher delivery costs and acquired operations.
Operating expenses for the second quarter increased $157 million, or 9.7%, primarily due to an increase in payroll expense noted above and a $48 million increase in certain items. Certain items increased primarily due to higher merger and integration planning costs.
Adjusted operating income for the second quarter was $396 million, an increase of $12 million, or 3.1%. Operating income was $315 million, a decrease of $36 million, or 10.3%.
Adjusted interest expense was $25 million, a decrease of $5 million from the same period last year. Interest expense was $77 million, including the impact of $52 million in debt financing costs related to the proposed U.S. Foods merger.
Adjusted net earnings were $245 million, an increase of $13 million, or 5.5%. Adjusted diluted EPS was $0.41, which was 5.1% higher compared to the same period last year.
Net earnings for the second quarter were $158 million, a decrease of $53 million, or 25.1%, compared to the same period last year. Diluted EPS was $0.27, which was 25.0% lower compared to the same period last year. ■