Sysco Corporation announced financial results for the third quarter ended March 26, 2016. Sales were $12 billion, an increase of 2.2% compared to the same period last year.
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Overall food cost deflation was 0.4% (0.8% in U.S. broadline), as measured by the estimated change in Sysco's product costs, with deflation in the meat, seafood and poultry categories partially offset by modest inflation in other categories.
In addition, sales from acquisitions completed within the last 12 months increased sales by 0.9%, and the impact of changes in foreign exchange rates decreased sales by 1.0%. Case volume for the company’s U.S. broadline operations increased 3.6% during the quarter.
Local case growth within U.S. broadline operations increased 3.4%. Gross profit was $2.1 billion, an increase of 4.1% compared to the same period last year. Gross margin increased 34 basis points to 17.9%.
Adjusted operating expenses increased $25 million, or 1.5%, compared to the same period last year, due mainly to higher case volume-related expenses and incentive expense. Adjusted operating income was $438 million, an increase of $60 million, or 16.0%, compared to the same period last year.
Adjusted interest expense was $47 million, an increase of $19 million compared to the same period last year, reflecting the increased adjusted debt, the proceeds from which were used primarily to fund the company’s accelerated share repurchase program.
Adjusted net earnings were $261 million, an increase of $24 million, or 10.0%, compared to the same period last year. Adjusted diluted EPS was $0.46, which was 15.0% higher compared to the same period last year.
Operating expenses increased $35 million, or 2.0%, compared to the same period last year, due mainly to higher case volume-related expenses and incentive expense.
Operating income was $378 million, an increase of $50 million, or 15.4%, compared to the same period last year. Interest expense was $58 million, a decrease of $12 million compared to the same period last year.
Net earnings were $217 million, an increase of $40 million, or 22.7%, compared to the same period last year. Diluted EPS was $0.38, which was 26.7% higher compared to the same period last year. ■