Sysco Corporation announced financial results for its fiscal quarter ended September 26, 2015. Sales for the first quarter were $12.6 billion, an increase of 0.9% compared to the same period last year.
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Overall food cost deflation was 0.2% (1.1% in US Broadline) as measured by the estimated change in Sysco's product costs, with deflation in the dairy, meat, poultry and seafood categories, partially offset by modest inflation in other categories.
In addition, sales from acquisitions (completed within the last 12 months) increased sales by 0.4%, and the impact of changes in foreign exchange rates decreased sales by 2.0%.
Case volume for the company's U.S. Broadline operations grew 3.4% during the quarter. Local case growth within U.S. Broadline operations grew 2.0%. Gross profit was $2.2 billion, an increase of 2.3% compared to the same period last year. Gross margin increased 23 basis points to 17.81%.
On a GAAP basis, first quarter 2015 operating income was $493 million, an increase of 6.0% from the prior year, and diluted EPS was $0.41, a decrease of 12.8% from the prior year.
Non-GAAP operating income, net earnings and EPS
Adjusted operating expenses increased $52 million, or 3.1%, compared to the same period last year, due mainly to higher payroll expenses, which were driven by higher case volume and incentive accruals. Adjusted operating income was $506 million, a decrease of $3 million, or 0.5%, compared to the same period last year.
Adjusted interest expense was $32 million, an increase of $5 million compared to the same period last year. Adjusted net earnings were $312 million, an increase of $3 million, or 0.9%, compared to the same period last year. Adjusted diluted EPS was $0.52, which was flat compared to the same period last year.
GAAP operating income, net earnings and EPS
Operating expenses increased $21 million, or 1.2%, compared to the same period last year, due mainly to higher payroll expenses, which were driven by higher case volume, incentive accruals and $10 million in merger termination expenses.
Operating income was $493 million, an increase of $28 million, or 6.0%, compared to the same period last year. Interest expense was $127 million, including the impact of $95 million in merger termination-related debt costs.
Net earnings were $244 million, a decrease of $34 million, or 12.3%, compared to the same period last year. Diluted EPS was $0.41, which was 12.8% lower compared to the same period last year. ■