Sysco Corporation (NYSE:SYY) today announced financial results for
its 13-week second fiscal quarter ended December 31, 2016.¹
Second Quarter Fiscal 2017 Highlights
- Sales increased 10.7% to $13.5 billion; excluding Brakes, sales
decreased 0.2% to $12.1 billion
- Gross profit increased 19.2% to $2.6 billion; gross margin
increased 137 basis points to 19.11%; excluding Brakes, gross
profit increased 2.9% to $2.2 billion and gross margin increased 55
basis points to 18.29%
- Operating income increased 13.8% to $492 million; adjusted
operating income increased 27.7% to $558 million; excluding Brakes,
adjusted operating income increased 12.6% to $492 million
- Earnings Per Share (EPS) increased $0.02 to $0.50; adjusted EPS
increased $0.10 to $0.58; excluding Brakes, adjusted EPS increased
$0.03 to $0.51
First Half Fiscal 2017 Highlights
- Sales increased 11.0% to $27.4 billion; excluding Brakes, sales
increased 0.4% to $24.8 billion
- Gross profit increased 19.8% to $5.3 billion; gross margin
increased 141 basis points to 19.19%; excluding Brakes, gross
profit increased 3.9% to $4.6 billion and gross margin increased 63
basis points to 18.41%
- Operating income increased 14.4% to $1.1 billion; adjusted
operating income increased 25.6% to $1.2 billion; excluding Brakes,
adjusted operating income increased 14.1% to $1.1 billion
- Earnings Per Share (EPS) increased $0.20 to $1.08; adjusted EPS
increased $0.25 to $1.25; excluding Brakes, adjusted EPS increased
$0.14 to $1.14
“I am pleased with the quality of our second quarter
performance, which was driven by disciplined volume growth and
sound margin and expense management,” said Bill DeLaney, Sysco
chief executive officer. “We are encouraged by our consistently
strong financial results over the past two years and are confident
that our ongoing focus on supporting the needs of our customers
positions us well for future success.”
Second Quarter Fiscal 2017 Results
U.S. Foodservice Operations
Sales for the second quarter were $9.1 billion, a decrease of
0.5% compared to the same period last year. Gross profit increased
3.6% to $1.8 billion; gross margin increased 81 basis points to
20.07%. Operating expenses increased $7.5 million, or 0.7%,
compared to the same period last year. Adjusted operating expenses
increased $7.6 million, or 0.7%, compared to the same period last
year. Operating income was $681 million, an increase of $56
million, or 9.0%, compared to the same period last year. Adjusted
operating income was $682 million, an increase of $56 million, or
9.0%, compared to the same period last year.
Local case growth within U.S. Broadline operations grew 1.6% for
the second quarter. Total case volume was flat.
International Foodservice Operations
Sales for the second quarter were $2.6 billion, compared to $1.3
billion in the same period last year. Operating income was $85
million, an increase of $43 million, compared to the same period
last year. Adjusted operating income was $111 million, an increase
of $68 million, compared to the same period last year. The
significant improvement in both sales and operating income is
primarily attributable to the Brakes Group acquisition.
First Half Fiscal 2017 Results
U.S. Foodservice Operations
Sales for the first half of fiscal 2017 were $18.6 billion, an
increase of 0.1% compared to the same period last year. Gross
profit increased 4.0% to $3.7 billion; gross margin increased 74
basis points to 20.12%. Operating expenses increased $28 million,
or 1.2%, compared to the same period last year. Adjusted operating
expenses increased $29 million, or 1.3%, compared to the same
period last year. Operating income was $1.4 billion, an increase of
$115 million, or 8.7%, compared to the same period last year.
Adjusted operating income was $1.4 billion, an increase of $114
million, or 8.7%, compared to the same period last year.
Local case growth within U.S. Broadline operations grew 1.7% for
the first half of fiscal 2017. Total case volume grew 0.9%.
International Foodservice Operations
Sales for the first half of fiscal 2017 were $5.3 billion,
compared to $2.7 billion in the same period last year. Operating
income was $164 million, an increase of $70 million, compared to
the same period last year. Adjusted operating income was $214
million, an increase of $118 million, compared to the same period
last year. The significant improvement in both sales and operating
income is primarily attributable to the Brakes Group
acquisition.
Capital Spending and Cash Flow
Capital expenditures, net of proceeds from sales of plant and
equipment, totaled $274 million for the first half of fiscal 2017,
which was $37 million higher compared to the same period last
year.
Cash flow from operations was $605 million for the first half of
fiscal 2017, which was $136 million higher compared to the same
period last year. Free cash flow for the first half of fiscal 2017
was $331 million, which was $99 million higher compared to the same
period last year. The significant improvements in both cash flow
from operations and free cash flow are due mainly to higher
earnings, improved working capital, and payments made in the prior
year related to the proposed merger with US Foods. Offsetting these
benefits somewhat are higher year-over-year cash taxes.
Conference Call & Webcast
Sysco’s second quarter fiscal 2017 earnings conference call will
be held on Monday, February 6, 2017, at 10:00 a.m. Eastern to
discuss our financial results and offer an update to our three-year
plan. A live webcast of the call, a copy of this news release and a
slide presentation will be available online at
investors.sysco.com.
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13-Week Period Ended |
26-Week Period Ended |
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Financial Comparison: |
December 31, 2016 |
Change |
December 31, 2016 |
Change |
|
Sales |
$13.5 billion |
10.7 |
% |
$27.4 billion |
11.0 |
% |
|
Gross Profit |
$2.6 billion |
19.2 |
% |
$5.3 billion |
19.8 |
% |
|
Gross Margin |
19.11% |
137 bps |
19.19% |
141 bps |
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|
GAAP: |
|
|
|
|
|
Operating Expenses |
$2.1 billion |
20.6 |
% |
$4.2 billion |
21.2 |
% |
|
Certain Items |
$65.5 million |
1537.5 |
% |
$125 million |
635.3 |
% |
|
Operating Income |
$492 million |
13.8 |
% |
$1.1 billion |
14.4 |
% |
|
Operating Margin |
3.66% |
10 bps |
3.86% |
12 bps |
|
Net Earnings |
$275 million |
1.0 |
% |
$599 million |
15.9 |
% |
|
Diluted Earnings Per Share |
$0.50 |
4.2 |
% |
$1.08 |
22.7 |
% |
|
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|
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Non-GAAP(1): |
|
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|
Operating Expenses |
$2 billion |
17.1 |
% |
$4.1 billion |
18.2 |
% |
|
Operating Income |
$558 million |
27.7 |
% |
$1.2 billion |
25.6 |
% |
|
Operating Margin |
4.15% |
55 bps |
4.32% |
50 bps |
|
Net Earnings |
$319 million |
15.8 |
% |
$695 million |
18.4 |
% |
|
Diluted Earnings Per Share |
$0.58 |
20.8 |
% |
$1.25 |
25.0 |
% |
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Case Growth: |
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|
|
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|
U.S. Broadline |
-0.1% |
|
0.9% |
|
|
Local |
1.6% |
|
1.7% |
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Sysco Brand Sales as a % of
Cases: |
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|
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|
|
U.S. Broadline |
37.21% |
50 bps |
37.42% |
25 bps |
|
Local |
44.97% |
80 bps |
45.11% |
56 bps |
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Note: |
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(1) A reconciliation of non-GAAP measures is included in this
release. |
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Individual components in the table above may not sum to the
totals due to rounding. |
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About Sysco
Sysco is the global leader in selling, marketing and
distributing food products to restaurants, healthcare and
educational facilities, lodging establishments and other customers
who prepare meals away from home. Its family of products also
includes equipment and supplies for the foodservice and hospitality
industries. The company operates 198 distribution facilities
serving approximately 425,000 customers. For fiscal year 2016 that
ended July 2, 2016, the company generated sales of more than $50
billion. Subsequent to fiscal year 2016, the company completed the
acquisition of the Brakes Group, a leading European foodservice
distributor with operations in the United Kingdom, Ireland, France,
Sweden, Spain, Belgium and Luxembourg.
For more information, visit www.sysco.com or connect with Sysco
on Facebook at www.facebook.com/SyscoCorporation or Twitter at
https://twitter.com/Sysco. For important news and information
regarding Sysco, visit the Investor Relations section of the
company's Internet home page at www.investors.sysco.com, which
Sysco plans to use as a primary channel for publishing key
information to its investors, some of which may contain material
and previously non-public information. Investors should also
follow us at www.twitter.com/SyscoStock and download the Sysco IR
App, available on the iTunes App Store and the Google Play Market.
In addition, investors should continue to review our news releases
and filings with the Securities and Exchange Commission. It
is possible that the information we disclose through any of these
channels of distribution could be deemed to be material
information.
Forward-Looking Statements
Statements made in this news release or in our earnings call for
the second quarter of fiscal 2017 that look forward in time or that
express management’s beliefs, expectations or hopes are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements reflect the views of management at the time such
statements are made and are subject to a number of risks,
uncertainties, estimates, and assumptions that may cause actual
results to differ materially from current expectations. These
statements include our outlook for fiscal 2017 and our ability to
deliver earnings growth, our plans and expectations related to our
three-year financial objectives, including our adjusted operating
income and net working capital targets, and the key levers for
realizing these goals, expectations regarding the Brakes Group
acquisition and related benefits, including its impact on future
earnings per share, and expectations regarding deflation trends.
The success of our plans and expectations regarding our operating
performance, including expectations regarding our three-year
financial objectives, are subject to the general risks associated
with our business, including the risks of interruption of supplies
due to lack of long-term contracts, severe weather, crop
conditions, work stoppages, intense competition, technology
disruptions, dependence on large regional and national customers,
inflation risks, the impact of fuel prices, adverse publicity, and
labor issues. Risks and uncertainties also include risks impacting
the economy generally, including the risks that the current general
economic conditions will deteriorate, or consumer confidence in the
economy or consumer spending, particularly on food-away-from-home,
may decline. Market conditions may not improve. If sales from our
locally managed customers do not grow at the same rate as sales
from regional and national customers, our gross margins may
decline. Our ability to meet our long-term strategic objectives
depends largely on the success of our various business initiatives,
including efforts related to revenue management, expense
management, our digital e-commerce strategy and any efforts related
to restructuring or the reduction of administrative costs. There
are various risks related to these efforts, including the risk that
these efforts may not provide the expected benefits in our
anticipated time frame, if at all, and may prove costlier than
expected; the risk that the actual costs of any initiatives may be
greater or less than currently expected; and the risk of adverse
effects to our business, results of operations and liquidity if
past and future undertakings, and the associated changes to our
business, do not prove to be cost effective or do not result in the
cost savings and other benefits at the levels that we anticipate.
Our plans related to and the timing of any initiatives are subject
to change at any time based on management’s subjective evaluation
of our overall business needs. If we are unable to realize the
anticipated benefits from our efforts, we could become cost
disadvantaged in the marketplace, and our competitiveness and our
profitability could decrease. Periods of high inflation, either
overall or in certain product categories, can have a negative
impact on us and our customers, as high food costs can reduce
consumer spending in the food-away-from-home market, and may
negatively impact our sales, gross profit, operating income and
earnings, and periods of deflation can be difficult to manage
effectively. Fluctuations in inflation and deflation, as well as
fluctuations in the value of foreign currencies, are beyond our
control and subject to broader market forces. Expanding into
international markets presents unique challenges and risks,
including compliance with local laws, regulations and customs and
the impact of local political and economic conditions, including
the impact of Brexit, and such expansion efforts, including our
Brakes acquisition, may not be successful. Any business that we
acquire, including the Brakes transaction, may not perform as
expected, and we may not realize the anticipated benefits of our
acquisitions. The Brakes Group acquisition will require a
significant commitment of time and company resources, and realizing
the anticipated benefits from the transaction may take longer than
expected. Expectations regarding the financial statement
impact of any acquisitions may change based on management’s
subjective evaluation. For a discussion of additional factors
impacting Sysco’s business, see the company’s Annual Report on Form
10-K for the year ended July 2, 2016, as filed with the Securities
and Exchange Commission, and the company’s subsequent filings with
the SEC. Sysco does not undertake to update its forward-looking
statements, except as required by applicable law.
Sysco Corporation and its Consolidated
Subsidiaries |
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CONSOLIDATED RESULTS OF OPERATIONS
(Unaudited) |
|
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(In
Thousands, Except for Share and Per Share
Data) |
|
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|
13-Week Period
Ended |
|
26-Week Period
Ended |
|
|
|
Dec. 31, 2016 |
|
Dec. 26 2015 |
|
Dec. 31, 2016 |
|
Dec. 26 2015 |
|
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|
|
|
|
|
|
|
|
Sales |
|
$ |
13,457,268 |
|
|
$ |
12,153,626 |
|
|
$ |
27,425,922 |
|
|
$ |
24,716,237 |
|
|
Cost of sales |
|
|
10,885,405 |
|
|
|
9,996,812 |
|
|
|
22,162,140 |
|
|
|
20,321,428 |
|
|
Gross profit |
|
|
2,571,863 |
|
|
|
2,156,814 |
|
|
|
5,263,782 |
|
|
|
4,394,809 |
|
|
Operating expenses |
|
|
2,079,446 |
|
|
|
1,724,231 |
|
|
|
4,204,532 |
|
|
|
3,468,752 |
|
|
Operating income |
|
|
492,417 |
|
|
|
432,583 |
|
|
|
1,059,250 |
|
|
|
926,057 |
|
|
Interest expense |
|
|
72,231 |
|
|
|
47,235 |
|
|
|
145,854 |
|
|
|
174,142 |
|
|
Other expense (income),
net |
|
|
(2,320 |
) |
|
|
(7,764 |
) |
|
|
(9,536 |
) |
|
|
(23,004 |
) |
|
Earnings before income
taxes |
|
|
422,506 |
|
|
|
393,112 |
|
|
|
922,932 |
|
|
|
774,919 |
|
|
Income taxes |
|
|
147,339 |
|
|
|
120,713 |
|
|
|
323,878 |
|
|
|
258,100 |
|
|
Net earnings |
|
$ |
275,167 |
|
|
$ |
272,399 |
|
|
$ |
599,054 |
|
|
$ |
516,819 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share |
|
$ |
0.50 |
|
|
$ |
0.48 |
|
|
$ |
1.09 |
|
|
$ |
0.89 |
|
|
Diluted
earnings per share |
|
|
0.50 |
|
|
|
0.48 |
|
|
|
1.08 |
|
|
|
0.88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average shares
outstanding |
|
|
545,132,762 |
|
|
|
566,881,538 |
|
|
|
550,285,268 |
|
|
|
581,790,230 |
|
|
Diluted shares
outstanding |
|
|
550,372,067 |
|
|
|
571,452,124 |
|
|
|
555,663,073 |
|
|
|
586,121,013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per
common share |
|
$ |
0.33 |
|
|
$ |
0.31 |
|
|
$ |
0.64 |
|
|
$ |
0.61 |
|
|
Sysco Corporation and its Consolidated
Subsidiaries |
|
|
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEETS (Unaudited) |
|
|
|
|
|
|
|
|
|
(In
Thousands, Except for Share Data) |
|
|
|
|
|
|
|
|
|
|
Dec. 31, 2016 |
|
July 2, 2016 |
|
Dec. 26, 2015 |
|
|
|
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|
ASSETS |
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
847,292 |
|
|
$ |
3,919,300 |
|
|
$ |
595,602 |
|
|
Accounts
and notes receivable, less allowances of $48,612, $37,880 and
$57,631 |
|
|
3,963,458 |
|
|
|
3,380,971 |
|
|
|
3,353,453 |
|
|
Inventories |
|
|
3,031,548 |
|
|
|
2,639,174 |
|
|
|
2,736,382 |
|
|
Prepaid
expenses and other current assets |
|
|
142,319 |
|
|
|
114,454 |
|
|
|
83,263 |
|
|
Prepaid
income taxes |
|
|
26,589 |
|
|
|
- |
|
|
|
10,326 |
|
|
Total
current assets |
|
|
8,011,206 |
|
|
|
10,053,899 |
|
|
|
6,779,026 |
|
Plant and equipment at cost, less depreciation |
|
|
4,331,129 |
|
|
|
3,880,442 |
|
|
|
3,936,612 |
|
Other assets |
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
3,714,355 |
|
|
|
2,121,661 |
|
|
|
1,977,921 |
|
|
Intangibles, less amortization |
|
|
1,094,927 |
|
|
|
207,461 |
|
|
|
163,089 |
|
|
Deferred
income taxes |
|
|
193,663 |
|
|
|
207,320 |
|
|
|
- |
|
|
Other
assets |
|
|
284,786 |
|
|
|
251,021 |
|
|
|
232,820 |
|
|
Total
other assets |
|
|
5,287,731 |
|
|
|
2,787,463 |
|
|
|
2,373,830 |
|
Total assets |
|
$ |
17,630,066 |
|
|
$ |
16,721,804 |
|
|
$ |
13,089,468 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
Notes
payable |
|
$ |
22,600 |
|
|
$ |
89,563 |
|
|
$ |
83,037 |
|
|
Accounts
payable |
|
|
3,549,554 |
|
|
|
2,935,982 |
|
|
|
2,710,469 |
|
|
Accrued
expenses |
|
|
1,471,195 |
|
|
|
1,289,312 |
|
|
|
1,071,632 |
|
|
Accrued
income taxes |
|
|
- |
|
|
|
110,690 |
|
|
|
- |
|
|
Current
maturities of long-term debt |
|
|
8,937 |
|
|
|
8,909 |
|
|
|
7,076 |
|
|
Total
current liabilities |
|
|
5,052,286 |
|
|
|
4,434,456 |
|
|
|
3,872,214 |
|
Other liabilities |
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
8,313,651 |
|
|
|
7,336,930 |
|
|
|
4,265,857 |
|
|
Deferred
income taxes |
|
|
175,795 |
|
|
|
26,942 |
|
|
|
111,822 |
|
|
Other
long-term liabilities |
|
|
1,533,390 |
|
|
|
1,368,482 |
|
|
|
852,655 |
|
|
Total
other liabilities |
|
|
10,022,836 |
|
|
|
8,732,354 |
|
|
|
5,230,334 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
Noncontrolling interest |
|
|
78,905 |
|
|
|
75,386 |
|
|
|
45,493 |
|
Shareholders' equity |
|
|
|
|
|
|
|
|
|
|
Preferred
stock, par value $1 per share, Authorized 1,500,000 shares, issued
none |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Common
stock, par value $1 per share, Authorized 2,000,000,000 shares,
issued 765,174,900 shares |
|
|
765,175 |
|
|
|
765,175 |
|
|
|
765,175 |
|
|
Paid-in
capital |
|
|
1,320,068 |
|
|
|
1,281,140 |
|
|
|
1,022,816 |
|
|
Retained
earnings |
|
|
9,256,137 |
|
|
|
9,006,138 |
|
|
|
8,922,498 |
|
|
Accumulated other comprehensive loss |
|
|
(1,582,596 |
) |
|
|
(1,358,118 |
) |
|
|
(1,045,177 |
) |
|
Treasury
stock at cost 224,792,348 205,577,484 and 198,552,842 |
|
|
(7,282,745 |
) |
|
|
(6,214,727 |
) |
|
|
(5,723,885 |
) |
|
Total
shareholders' equity |
|
|
2,476,039 |
|
|
|
3,479,608 |
|
|
|
3,941,427 |
|
Total liabilities and shareholders' equity |
|
$ |
17,630,066 |
|
|
$ |
16,721,804 |
|
|
$ |
13,089,468 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sysco Corporation and its Consolidated
Subsidiaries |
|
|
|
|
|
|
|
CONSOLIDATED CASH FLOWS (Unaudited) |
|
|
|
|
|
|
|
(In Thousands) |
|
|
|
|
|
|
|
|
|
|
26-Week Period
Ended |
|
|
|
|
Dec. 31, 2016 |
|
Dec. 26, 2015 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
Net earnings |
|
$ |
599,054 |
|
|
$ |
516,819 |
|
|
Adjustments to reconcile net earnings to cash provided by
operating activities: |
|
|
|
|
|
|
|
Share-based compensation expense |
|
|
42,758 |
|
|
|
44,045 |
|
|
Depreciation and amortization |
|
|
448,959 |
|
|
|
281,400 |
|
|
Amortization of debt issuance and other debt-related costs |
|
|
13,143 |
|
|
|
13,637 |
|
|
Loss on extinguishment of debt |
|
|
- |
|
|
|
86,460 |
|
|
Deferred income taxes |
|
|
(18,313 |
) |
|
|
153,423 |
|
|
Provision for losses on receivables |
|
|
7,840 |
|
|
|
10,093 |
|
|
Other non-cash items |
|
|
663 |
|
|
|
(15,468 |
) |
|
Additional changes in certain assets and liabilities, net of
effect of businesses acquired: |
|
|
|
|
|
|
|
(Increase) in receivables |
|
|
24,605 |
|
|
|
(50,853 |
) |
|
(Increase) in inventories |
|
|
(175,184 |
) |
|
|
(69,370 |
) |
|
Decrease in prepaid expenses and other current assets |
|
|
1,491 |
|
|
|
9,812 |
|
|
Increase (decrease) in accounts payable |
|
|
(51,381 |
) |
|
|
(140,499 |
) |
|
(Decrease) in accrued expenses |
|
|
(145,644 |
) |
|
|
(388,667 |
) |
|
(Decrease) increase in accrued income taxes |
|
|
(116,560 |
) |
|
|
92,638 |
|
|
(Increase) in other assets |
|
|
(32,751 |
) |
|
|
(9,556 |
) |
|
Increase (decrease) in other long-term liabilities |
|
|
27,425 |
|
|
|
(52,942 |
) |
|
Excess tax benefits from share-based compensation
arrangements |
|
|
(21,181 |
) |
|
|
(12,091 |
) |
|
Net cash provided by operating activities |
|
|
604,924 |
|
|
|
468,881 |
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
Additions to plant and equipment |
|
|
(285,692 |
) |
|
|
(248,233 |
) |
|
Proceeds from sales of plant and equipment |
|
|
11,639 |
|
|
|
10,827 |
|
|
Acquisition of businesses, net of cash acquired |
|
|
(2,910,461 |
) |
|
|
(98,154 |
) |
|
Decrease in restricted cash |
|
|
- |
|
|
|
168,274 |
|
|
Net cash used for investing activities |
|
|
(3,184,514 |
) |
|
|
(167,286 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
Bank and commercial paper borrowings (repayments), net |
|
|
999,579 |
|
|
|
- |
|
|
Other debt borrowings |
|
|
30,939 |
|
|
|
2,012,353 |
|
|
Other debt repayments |
|
|
(118,631 |
) |
|
|
(19,155 |
) |
|
Senior note redemption repayments |
|
|
- |
|
|
|
(5,050,000 |
) |
|
Debt issuance costs |
|
|
(5,094 |
) |
|
|
(20,881 |
) |
|
Cash paid for settlement of cash flow hedge |
|
|
- |
|
|
|
(6,134 |
) |
|
Cash received from the termination of interest rate swap
agreement |
|
|
- |
|
|
|
14,496 |
|
|
Proceeds from stock option exercises |
|
|
113,921 |
|
|
|
131,969 |
|
|
Accelerated share and treasury stock purchases |
|
|
(1,180,313 |
) |
|
|
(1,521,638 |
) |
|
Dividends paid |
|
|
(343,385 |
) |
|
|
(348,436 |
) |
|
Excess tax benefits from share-based compensation
arrangements |
|
|
21,181 |
|
|
|
12,091 |
|
|
Net cash used for financing activities |
|
|
(481,803 |
) |
|
|
(4,795,335 |
) |
|
|
|
|
|
|
|
|
|
Effect of exchange rates on cash |
|
|
(10,613 |
) |
|
|
(40,702 |
) |
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
|
(3,072,006 |
) |
|
|
(4,534,442 |
) |
|
Cash and cash equivalents at beginning of period |
|
|
3,919,300 |
|
|
|
5,130,044 |
|
|
Cash and cash equivalents at end of period |
|
$ |
847,292 |
|
|
$ |
595,602 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
|
Interest |
|
$ |
128,887 |
|
|
$ |
106,600 |
|
|
Income taxes |
|
|
459,681 |
|
|
|
33,156 |
|
|
|
|
|
|
|
|
|
|
|
|
Sysco Corporation and its Consolidated
Subsidiaries |
Non-GAAP Reconciliation (Unaudited) |
Impact of Certain Items |
|
Sysco’s results of operations are impacted by restructuring
costs consisting of (1) severance charges, (2) professional fees
related to our three-year strategic plan, (3) restructuring
expenses within our Brakes Group operations and (4) expenses
associated with our revised business technology strategy announced
in fiscal 2016, as a result of which we recorded accelerated
depreciation on our existing system and incurred costs to convert
to legacy systems. Our results of operations are also
impacted by the following acquisition-related items: (1) intangible
amortization expense (2) transaction costs and (3) integration
costs. All acquisition-related costs in fiscal 2017 that have
been excluded relate to the Brakes acquisition. Fiscal 2016
acquisition-related costs, however, include (i) termination costs
in connection with the merger that had been proposed with US Foods,
Inc. (US Foods) and (ii) financing costs related to the senior
notes that were issued in fiscal 2015 to fund the proposed US Foods
merger. These senior notes were redeemed in the first quarter of
fiscal 2016, triggering a redemption loss of $86.5 million, and we
incurred interest on these notes through the redemption date.
The Brakes acquisition also resulted in non-recurring tax expense
in fiscal 2017, primarily from non-deductible transaction
costs. These fiscal 2017 and fiscal 2016 items are
collectively referred to as "Certain Items." |
|
Management believes that adjusting its operating expenses,
operating income, operating margin as a percentage of sales,
interest expense, net earnings and diluted earnings per share to
remove these Certain Items provides an important perspective with
respect to our underlying business trends and results and provides
meaningful supplemental information to both management and
investors that (1) is indicative of the performance of the
company's underlying operations and facilitates comparisons on a
year-over-year basis and (2) removes those items that are difficult
to predict and are often unanticipated, and which as a result, are
difficult to include in analysts' financial models and our
investors' expectations with any degree of specificity. |
|
Although Sysco has a history of growth through acquisitions,
the Brakes Group is significantly larger than the companies
historically acquired by Sysco, with a proportionately greater
impact on Sysco’s consolidated financial statements.
Accordingly, Sysco is excluding from its non-GAAP financial
measures for the relevant period solely those acquisition costs
specific to the Acquisition. We believe this approach
significantly enhances the comparability of Sysco’s results for the
second quarter and first 26 weeks of fiscal 2017 to the same period
in fiscal 2016. Also, given the significance of the
Acquisition, management believes that presenting Sysco’s financial
measures, excluding the Brakes Group operating results (including
for this purpose Brakes financing costs, which are not included in
the Brakes Group GAAP operating results and are also not Certain
Items), enhances comparability of the period over period financial
performance of Sysco’s legacy business and allows investors to more
effectively measure Sysco’s progress against the financial goals
under Sysco’s three year strategic plan. |
|
Set forth below is a reconciliation of sales, operating
expenses, operating income, interest expense, net earnings and
diluted earnings per share to adjusted results for these measures
for the periods presented. Individual components of diluted
earnings per share may not add to the total presented due to
rounding. Adjusted diluted earnings per share is
calculated using adjusted net earnings divided by diluted shares
outstanding. |
Sysco
Corporation and its Consolidated Subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Reconciliation
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Impact of Certain Items and Brakes |
|
|
|
|
|
|
|
|
|
|
|
(In
Thousands, Except for Share and Per Share Data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13-Week Period Ended
Dec. 31, 2016 |
|
|
13-Week Period Ended
Dec 26, 2015 |
|
|
13-Week Period Change
in Dollars |
|
13-Week Period
% Change |
Sales |
|
$ |
13,457,268 |
|
|
$ |
12,153,626 |
|
|
$ |
1,303,642 |
|
|
10.7 |
% |
Impact of Brakes |
|
|
(1,328,900 |
) |
|
|
- |
|
|
|
(1,328,900 |
) |
|
NM |
|
Sales excluding
the impact of Brakes (Non-GAAP) |
|
$ |
12,128,368 |
|
|
$ |
12,153,626 |
|
|
$ |
(25,258 |
) |
|
-0.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
$ |
2,571,863 |
|
|
$ |
2,156,814 |
|
|
$ |
415,049 |
|
|
19.2 |
% |
Impact of Brakes |
|
|
(353,133 |
) |
|
|
- |
|
|
|
(353,133 |
) |
|
NM |
|
Gross profit
excluding the impact of Brakes (Non-GAAP) |
|
$ |
2,218,730 |
|
|
$ |
2,156,814 |
|
|
$ |
61,916 |
|
|
2.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin |
|
|
19.11 |
% |
|
|
17.75 |
% |
|
|
1.37 |
% |
|
7.7 |
% |
Impact of Brakes |
|
|
0.82 |
% |
|
|
0.00 |
% |
|
|
0.82 |
% |
|
NM |
|
Gross margin
excluding the impact of Brakes (Non-GAAP) |
|
|
18.29 |
% |
|
|
17.75 |
% |
|
|
0.55 |
% |
|
3.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses (GAAP) |
|
$ |
2,079,446 |
|
|
$ |
1,724,231 |
|
|
$ |
355,215 |
|
|
20.6 |
% |
Impact of restructuring
costs (1) |
|
|
(40,089 |
) |
|
|
(4,281 |
) |
|
|
(35,808 |
) |
|
NM |
|
Impact of
acquisition-related costs (2) |
|
|
(25,370 |
) |
|
|
- |
|
|
|
(25,370 |
) |
|
NM |
|
Operating
expenses adjusted for certain items (Non-GAAP) |
|
$ |
2,013,987 |
|
|
$ |
1,719,950 |
|
|
$ |
294,037 |
|
|
17.1 |
% |
Impact of Brakes |
|
|
(309,313 |
) |
|
|
- |
|
|
|
(309,313 |
) |
|
NM |
|
Impact of Brakes
restructuring costs (3) |
|
|
1,907 |
|
|
|
- |
|
|
|
1,907 |
|
|
NM |
|
Impact of Brakes
acquisition-related costs (2) |
|
|
20,292 |
|
|
|
- |
|
|
|
20,292 |
|
|
NM |
|
Operating
expenses adjusted for certain items and excluding the impact of
Brakes (Non-GAAP) |
|
$ |
1,726,873 |
|
|
$ |
1,719,950 |
|
|
$ |
6,923 |
|
|
0.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (GAAP) |
|
$ |
492,417 |
|
|
$ |
432,583 |
|
|
$ |
59,834 |
|
|
13.8 |
% |
Impact of restructuring
costs (1) |
|
|
40,089 |
|
|
|
4,281 |
|
|
|
35,808 |
|
|
NM |
|
Impact of
acquisition-related costs (2) |
|
|
25,370 |
|
|
|
- |
|
|
|
25,370 |
|
|
NM |
|
Operating
income adjusted for certain items (Non-GAAP) |
|
$ |
557,876 |
|
|
$ |
436,864 |
|
|
$ |
121,012 |
|
|
27.7 |
% |
Impact of Brakes |
|
|
(43,820 |
) |
|
|
- |
|
|
|
(43,820 |
) |
|
NM |
|
Impact of Brakes
restructuring costs (3) |
|
|
(1,907 |
) |
|
|
- |
|
|
|
(1,907 |
) |
|
NM |
|
Impact of Brakes
acquisition-related costs (2) |
|
|
(20,292 |
) |
|
|
- |
|
|
|
(20,292 |
) |
|
NM |
|
Operating income adjusted for certain items and excluding
the impact of Brakes (Non-GAAP) |
|
$ |
491,857 |
|
|
$ |
436,864 |
|
|
$ |
54,993 |
|
|
12.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin (GAAP) |
|
|
3.66 |
% |
|
|
3.56 |
% |
|
|
0.10 |
% |
|
2.8 |
% |
Operating
margin excluding Certain Items (Non-GAAP) |
|
|
4.15 |
% |
|
|
3.59 |
% |
|
|
0.55 |
% |
|
15.3 |
% |
Operating
margin excluding Certain Items and Brakes (Non-GAAP) |
|
|
4.06 |
% |
|
|
3.59 |
% |
|
|
0.46 |
% |
|
12.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense (GAAP) |
|
$ |
72,231 |
|
|
$ |
47,235 |
|
|
$ |
24,996 |
|
|
52.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(GAAP) |
|
$ |
275,167 |
|
|
$ |
272,399 |
|
|
$ |
2,768 |
|
|
1.0 |
% |
Impact of restructuring
cost (1) |
|
|
40,089 |
|
|
|
4,281 |
|
|
|
35,808 |
|
|
NM |
|
Impact of
acquisition-related costs (2) |
|
|
25,370 |
|
|
|
- |
|
|
|
25,370 |
|
|
NM |
|
Tax impact of
restructuring cost (5) |
|
|
(15,111 |
) |
|
|
(1,315 |
) |
|
|
(13,796 |
) |
|
NM |
|
Tax impact of
acquisition-related costs (5) |
|
|
(6,726 |
) |
|
|
- |
|
|
|
(6,726 |
) |
|
NM |
|
Net earnings
adjusted for certain items
(Non-GAAP) |
|
$ |
318,789 |
|
|
$ |
275,365 |
|
|
$ |
43,424 |
|
|
15.8 |
% |
Impact of Brakes |
|
|
(31,876 |
) |
|
|
- |
|
|
|
(31,876 |
) |
|
NM |
|
Impact of Brakes
restructuring costs (3) |
|
|
(1,441 |
) |
|
|
- |
|
|
|
(1,441 |
) |
|
NM |
|
Impact of Brakes
acquisition-related costs (2) |
|
|
(15,533 |
) |
|
|
- |
|
|
|
(15,533 |
) |
|
NM |
|
Impact of interest
expense on debt issued for the Brakes acquisition (6) |
|
|
19,947 |
|
|
|
- |
|
|
|
19,947 |
|
|
NM |
|
Tax impact of interest
expense on debt issued for the Brakes acquisition (5) |
|
|
(7,540 |
) |
|
|
- |
|
|
|
(7,540 |
) |
|
NM |
|
Net earnings
adjusted for certain items and excluding the impact of Brakes
(Non-GAAP) |
|
$ |
282,346 |
|
|
$ |
275,365 |
|
|
$ |
6,981 |
|
|
2.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share (GAAP) |
|
$ |
0.50 |
|
|
$ |
0.48 |
|
|
$ |
0.02 |
|
|
4.2 |
% |
Impact of restructuring
costs (1) |
|
|
0.07 |
|
|
|
0.01 |
|
|
|
0.06 |
|
|
NM |
|
Impact of
acquisition-related costs (2) |
|
|
0.05 |
|
|
|
- |
|
|
|
0.05 |
|
|
NM |
|
Tax impact of
restructuring cost (5) |
|
|
(0.03 |
) |
|
|
- |
|
|
|
(0.03 |
) |
|
NM |
|
Tax impact of
acquisition-related costs (5) |
|
|
(0.01 |
) |
|
|
- |
|
|
|
(0.01 |
) |
|
NM |
|
Diluted EPS
adjusted for certain items (Non-GAAP) (4) |
|
$ |
0.58 |
|
|
$ |
0.48 |
|
|
$ |
0.10 |
|
|
20.8 |
% |
Impact of Brakes |
|
|
(0.06 |
) |
|
|
- |
|
|
|
(0.06 |
) |
|
NM |
|
Impact of Brakes
restructuring costs (3) |
|
|
(0.00 |
) |
|
|
- |
|
|
|
(0.00 |
) |
|
NM |
|
Impact of Brakes
acquisition-related costs (2) |
|
|
(0.03 |
) |
|
|
- |
|
|
|
(0.03 |
) |
|
NM |
|
Impact of interest
expense on debt issued for the Brakes acquisition (6) |
|
|
0.04 |
|
|
|
- |
|
|
|
0.04 |
|
|
NM |
|
Tax impact of interest
expense on debt issued for the Brakes acquisition (5) |
|
|
(0.01 |
) |
|
|
- |
|
|
|
(0.01 |
) |
|
NM |
|
Diluted EPS
adjusted for certain items and excluding the impact of Brakes
(Non-GAAP) (4) |
|
$ |
0.51 |
|
|
$ |
0.48 |
|
|
$ |
0.03 |
|
|
7.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted shares
outstanding |
|
|
550,372,067 |
|
|
|
571,452,124 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes $28 million in accelerated depreciation
associated with our revised business technology strategy and $12
million related to severance charges, professional fees on 3-year
financial objectives, restructuring expenses within our Brakes
operations and costs to convert to legacy systems in conjunction
with our revised business technology strategy. |
(2) Fiscal 2017 includes $19 million related to intangible
amortization expense from the Brakes acquisition, which is included
in the results of Brakes and $6 million in transaction costs.
Fiscal 2016 includes US Foods merger termination costs. |
(3) Includes Brakes Acquisition restructuring charges. |
(4) Individual components of diluted earnings per share may
not add to the total presented due to rounding. Total diluted
earnings per share is calculated using adjusted net earnings
divided by diluted shares outstanding. |
(5) The tax impact of adjustments for Certain Items are
calculated by multiplying the pretax impact of each Certain Item by
the statutory rates in effect for each jurisdiction where the
Certain Item was incurred. |
(6) Sysco Corporation issued debt to fund the
Acquisition. The interest expense arising from the debt
issued is attributed to the incremental impact of Brakes operating
results, even though it is not a direct obligation of the Brakes
Group and is not considered a Certain Item. |
NM
represents that the percentage change is not meaningful. |
|
|
|
|
|
|
|
|
|
|
|
|
Sysco
Corporation and its Consolidated Subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Reconciliation
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Impact of Certain Items and Brakes |
|
|
|
|
|
|
|
|
|
|
|
(In
Thousands, Except for Share and Per Share Data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26-Week Period Ended
Dec. 31, 2016 |
|
|
26-Week Period Ended
Dec 26, 2015 |
|
|
26-Week Period Change
in Dollars |
|
26-Week Period
% Change |
Sales |
|
$ |
27,425,922 |
|
|
$ |
24,716,237 |
|
|
$ |
2,709,685 |
|
|
11.0 |
% |
Impact of Brakes |
|
|
(2,612,423 |
) |
|
|
- |
|
|
|
(2,612,423 |
) |
|
NM |
|
Sales excluding
the impact of Brakes (Non-GAAP) |
|
$ |
24,813,499 |
|
|
$ |
24,716,237 |
|
|
$ |
97,262 |
|
|
0.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
$ |
5,263,782 |
|
|
$ |
4,394,809 |
|
|
$ |
868,973 |
|
|
19.8 |
% |
Impact of Brakes |
|
|
(696,184 |
) |
|
|
- |
|
|
|
(696,184 |
) |
|
NM |
|
Gross profit
excluding the impact of Brakes (Non-GAAP) |
|
$ |
4,567,598 |
|
|
$ |
4,394,809 |
|
|
$ |
172,789 |
|
|
3.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin |
|
|
19.19 |
% |
|
|
17.78 |
% |
|
|
1.41 |
% |
|
7.9 |
% |
Impact of Brakes |
|
|
0.79 |
% |
|
|
0.00 |
% |
|
|
0.79 |
% |
|
NM |
|
Gross margin
excluding the impact of Brakes (Non-GAAP) |
|
|
18.41 |
% |
|
|
17.78 |
% |
|
|
0.63 |
% |
|
3.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses (GAAP) |
|
$ |
4,204,532 |
|
|
$ |
3,468,752 |
|
|
$ |
735,780 |
|
|
21.2 |
% |
Impact of restructuring
costs (1) |
|
|
(78,374 |
) |
|
|
(7,470 |
) |
|
|
(70,904 |
) |
|
NM |
|
Impact of
acquisition-related costs (2) |
|
|
(47,079 |
) |
|
|
(9,816 |
) |
|
|
(37,264 |
) |
|
NM |
|
Operating
expenses adjusted for certain items (Non-GAAP) |
|
$ |
4,079,079 |
|
|
$ |
3,451,466 |
|
|
$ |
627,613 |
|
|
18.2 |
% |
Impact of Brakes |
|
|
(632,156 |
) |
|
|
- |
|
|
|
(632,156 |
) |
|
NM |
|
Impact of Brakes
restructuring costs (3) |
|
|
4,981 |
|
|
|
- |
|
|
|
4,981 |
|
|
NM |
|
Impact of Brakes
acquisition-related costs (2) |
|
|
39,790 |
|
|
|
- |
|
|
|
39,790 |
|
|
NM |
|
Operating
expenses adjusted for certain items and excluding the impact of
Brakes (Non-GAAP) |
|
$ |
3,491,694 |
|
|
$ |
3,451,466 |
|
|
$ |
40,228 |
|
|
1.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (GAAP) |
|
$ |
1,059,250 |
|
|
$ |
926,057 |
|
|
$ |
133,193 |
|
|
14.4 |
% |
Impact of restructuring
costs (1) |
|
|
78,374 |
|
|
|
7,470 |
|
|
|
70,904 |
|
|
NM |
|
Impact of
acquisition-related costs (2) |
|
|
47,079 |
|
|
|
9,816 |
|
|
|
37,264 |
|
|
NM |
|
Operating
income adjusted for certain items (Non-GAAP) |
|
$ |
1,184,703 |
|
|
$ |
943,343 |
|
|
$ |
241,360 |
|
|
25.6 |
% |
Impact of Brakes |
|
|
(64,029 |
) |
|
|
- |
|
|
|
(64,029 |
) |
|
NM |
|
Impact of Brakes
restructuring costs (3) |
|
|
(4,981 |
) |
|
|
- |
|
|
|
(4,981 |
) |
|
NM |
|
Impact of Brakes
acquisition-related costs (2) |
|
|
(39,790 |
) |
|
|
- |
|
|
|
(39,790 |
) |
|
NM |
|
Operating income adjusted for certain items and excluding
the impact of Brakes (Non-GAAP) |
|
$ |
1,075,903 |
|
|
$ |
943,343 |
|
|
$ |
132,560 |
|
|
14.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin (GAAP) |
|
|
3.86 |
% |
|
|
3.75 |
% |
|
|
0.12 |
% |
|
3.1 |
% |
Operating
margin excluding Certain Items (Non-GAAP) |
|
|
4.32 |
% |
|
|
3.82 |
% |
|
|
0.50 |
% |
|
13.2 |
% |
Operating
margin excluding Certain Items and Brakes (Non-GAAP) |
|
|
4.34 |
% |
|
|
3.82 |
% |
|
|
0.52 |
% |
|
13.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense (GAAP) |
|
$ |
145,854 |
|
|
$ |
174,142 |
|
|
$ |
(28,288 |
) |
|
-16.2 |
% |
Impact of acquisition
financing costs |
|
|
- |
|
|
|
(94,835 |
) |
|
|
94,835 |
|
|
NM |
|
Interest
expense adjusted for certain items (Non-GAAP) |
|
$ |
145,854 |
|
|
$ |
79,307 |
|
|
$ |
66,547 |
|
|
83.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(GAAP) |
|
$ |
599,054 |
|
|
$ |
516,819 |
|
|
$ |
82,235 |
|
|
15.9 |
% |
Impact of restructuring
cost (1) |
|
|
78,374 |
|
|
|
7,470 |
|
|
|
70,904 |
|
|
NM |
|
Impact of
acquisition-related costs (2) |
|
|
47,079 |
|
|
|
9,816 |
|
|
|
37,263 |
|
|
NM |
|
Impact of acquisition
financing costs |
|
|
- |
|
|
|
94,835 |
|
|
|
(94,835 |
) |
|
NM |
|
Tax impact of
restructuring cost (5) |
|
|
(19,072 |
) |
|
|
(2,787 |
) |
|
|
(16,285 |
) |
|
NM |
|
Tax impact of
acquisition-related costs (5) |
|
|
(10,528 |
) |
|
|
(3,662 |
) |
|
|
(6,866 |
) |
|
NM |
|
Tax impact of
acquisition financing costs (5) |
|
|
- |
|
|
|
(35,383 |
) |
|
|
35,383 |
|
|
NM |
|
Net earnings
adjusted for certain items
(Non-GAAP) |
|
$ |
694,907 |
|
|
$ |
587,108 |
|
|
$ |
107,799 |
|
|
18.4 |
% |
Impact of Brakes |
|
|
(50,728 |
) |
|
|
- |
|
|
|
(50,728 |
) |
|
NM |
|
Impact of Brakes
restructuring costs (3) |
|
|
(3,887 |
) |
|
|
- |
|
|
|
(3,887 |
) |
|
NM |
|
Impact of Brakes
acquisition-related costs (2) |
|
|
(31,047 |
) |
|
|
- |
|
|
|
(31,047 |
) |
|
NM |
|
Impact of interest
expense on debt issued for the Brakes acquisition (6) |
|
|
39,682 |
|
|
|
- |
|
|
|
39,682 |
|
|
NM |
|
Tax impact of interest
expense on debt issued for the Brakes acquisition (5) |
|
|
(15,000 |
) |
|
|
- |
|
|
|
(15,000 |
) |
|
NM |
|
Net earnings
adjusted for certain items and excluding the impact of Brakes
(Non-GAAP) |
|
$ |
633,927 |
|
|
$ |
587,108 |
|
|
$ |
46,819 |
|
|
8.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share (GAAP) |
|
$ |
1.08 |
|
|
$ |
0.88 |
|
|
$ |
0.20 |
|
|
22.7 |
% |
Impact of restructuring
costs (1) |
|
|
0.14 |
|
|
|
0.01 |
|
|
|
0.13 |
|
|
NM |
|
Impact of
acquisition-related costs (2) |
|
|
0.08 |
|
|
|
0.02 |
|
|
|
0.06 |
|
|
NM |
|
Impact of acquisition
financing costs |
|
|
- |
|
|
|
0.16 |
|
|
|
(0.16 |
) |
|
NM |
|
Tax impact of
restructuring cost (5) |
|
|
(0.03 |
) |
|
|
- |
|
|
|
(0.03 |
) |
|
NM |
|
Tax impact of
acquisition-related costs (5) |
|
|
(0.02 |
) |
|
|
(0.01 |
) |
|
|
(0.01 |
) |
|
NM |
|
Tax impact of
acquisition financing costs (5) |
|
|
- |
|
|
|
(0.06 |
) |
|
|
0.06 |
|
|
NM |
|
Diluted EPS
adjusted for certain items (Non-GAAP) (4) |
|
$ |
1.25 |
|
|
$ |
1.00 |
|
|
$ |
0.25 |
|
|
25.0 |
% |
Impact of Brakes |
|
|
(0.09 |
) |
|
|
- |
|
|
|
(0.09 |
) |
|
NM |
|
Impact of Brakes
restructuring costs (3) |
|
|
(0.01 |
) |
|
|
- |
|
|
|
(0.01 |
) |
|
NM |
|
Impact of Brakes
acquisition-related costs (2) |
|
|
(0.06 |
) |
|
|
- |
|
|
|
(0.06 |
) |
|
NM |
|
Impact of interest
expense on debt issued for the Brakes acquisition (6) |
|
|
0.07 |
|
|
|
- |
|
|
|
0.07 |
|
|
NM |
|
Tax impact of interest
expense on debt issued for the Brakes acquisition (5) |
|
|
(0.03 |
) |
|
|
- |
|
|
|
(0.03 |
) |
|
NM |
|
Diluted EPS
adjusted for certain items and excluding the impact of Brakes
(Non-GAAP) (4) |
|
$ |
1.14 |
|
|
$ |
1.00 |
|
|
$ |
0.14 |
|
|
14.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted shares
outstanding |
|
|
555,663,073 |
|
|
|
586,121,013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes $56 million in accelerated depreciation
associated with our revised business technology strategy and $22
million related to severance charges, professional fees on 3-year
financial objectives, restructuring expenses within our Brakes
operations and costs to convert to legacy systems in conjunction
with our revised business technology strategy. |
(2) Fiscal 2017 includes $38 million related to intangible
amortization expense from the Brakes acquisition, which is included
in the results of Brakes and $9 million in transaction costs.
Fiscal 2016 includes US Foods merger termination costs. |
(3) Includes Brakes Acquisition restructuring charges. |
(4) Individual components of diluted earnings per share may
not add to the total presented due to rounding. Total diluted
earnings per share is calculated using adjusted net earnings
divided by diluted shares outstanding. |
(5) The tax impact of adjustments for Certain Items are
calculated by multiplying the pretax impact of each Certain Item by
the statutory rates in effect for each jurisdiction where the
Certain Item was incurred. The adjustments also include $7
million in non-deductible transaction costs and $4 million in other
one-time costs related to the Brakes acquisition. |
(6) Sysco Corporation issued debt to fund the
Acquisition. The interest expense arising from the debt
issued is attributed to the incremental impact of Brakes operating
results, even though it is not a direct obligation of the Brakes
Group and is not considered a Certain Item. |
NM
represents that the percentage change is not meaningful. |
|
|
|
|
|
|
|
|
|
|
|
|
Sysco
Corporation and its Consolidated Subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Reconciliation
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Impact of Certain Items |
|
|
|
|
|
|
|
|
|
|
|
|
(In
Thousands, Except for Share and Per Share Data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13-Week Period
Ended |
|
26-Week Period
Ended |
|
|
Dec. 31, 2016 |
|
Dec. 26, 2015 |
|
Dec. 31, 2016 |
|
Dec. 26, 2015 |
U.S.
Foodservice Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales (GAAP) |
|
$ |
9,085,565 |
|
|
$ |
9,135,326 |
|
|
$ |
18,566,681 |
|
|
$ |
18,543,249 |
|
Gross Profit
(GAAP) |
|
|
1,823,023 |
|
|
|
1,759,390 |
|
|
|
3,736,138 |
|
|
|
3,593,744 |
|
Gross Margin
(GAAP) |
|
|
20.07 |
% |
|
|
19.26 |
% |
|
|
20.12 |
% |
|
|
19.38 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses (GAAP) |
|
$ |
1,141,701 |
|
|
$ |
1,134,174 |
|
|
$ |
2,309,585 |
|
|
$ |
2,281,859 |
|
Impact of restructuring
costs |
|
|
(470 |
) |
|
|
(561 |
) |
|
|
(470 |
) |
|
|
(1,433 |
) |
Operating
expenses adjusted for certain items (Non-GAAP) |
|
$ |
1,141,231 |
|
|
$ |
1,133,613 |
|
|
$ |
2,309,115 |
|
|
$ |
2,280,426 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (GAAP) |
|
$ |
681,321 |
|
|
$ |
625,216 |
|
|
$ |
1,426,552 |
|
|
$ |
1,311,885 |
|
Impact of restructuring
costs |
|
|
470 |
|
|
|
561 |
|
|
|
470 |
|
|
|
1,433 |
|
Operating
income adjusted for certain items (Non-GAAP) |
|
$ |
681,791 |
|
|
$ |
625,777 |
|
|
$ |
1,427,022 |
|
|
$ |
1,313,318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
Foodservice Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales (GAAP) |
|
$ |
2,625,949 |
|
|
$ |
1,280,775 |
|
|
$ |
5,354,310 |
|
|
$ |
2,671,034 |
|
Gross Profit
(GAAP) |
|
|
576,215 |
|
|
|
221,198 |
|
|
|
1,174,621 |
|
|
|
466,660 |
|
Gross Margin
(GAAP) |
|
|
21.9 |
% |
|
|
17.3 |
% |
|
|
21.9 |
% |
|
|
17.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses (GAAP) |
|
$ |
491,401 |
|
|
$ |
178,986 |
|
|
$ |
1,010,372 |
|
|
$ |
372,528 |
|
Impact of restructuring
costs (1) |
|
|
(5,590 |
) |
|
|
(586 |
) |
|
|
(10,271 |
) |
|
|
(1,829 |
) |
Impact of
acquisition-related costs (2) |
|
|
(20,293 |
) |
|
|
- |
|
|
|
(39,790 |
) |
|
|
- |
|
Operating
expenses adjusted for certain items (Non-GAAP) |
|
$ |
465,518 |
|
|
$ |
178,400 |
|
|
$ |
960,312 |
|
|
$ |
370,699 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (GAAP) |
|
$ |
84,814 |
|
|
$ |
42,212 |
|
|
$ |
164,249 |
|
|
$ |
94,132 |
|
Impact of restructuring
costs (1) |
|
|
5,590 |
|
|
|
586 |
|
|
|
10,271 |
|
|
|
1,829 |
|
Impact of
acquisition-related costs (2) |
|
|
20,293 |
|
|
|
- |
|
|
|
39,790 |
|
|
|
- |
|
Operating
income adjusted for certain items (Non-GAAP) |
|
$ |
110,697 |
|
|
$ |
42,798 |
|
|
$ |
214,309 |
|
|
$ |
95,961 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SYGMA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales (GAAP) |
|
$ |
1,520,182 |
|
|
$ |
1,506,836 |
|
|
$ |
3,024,874 |
|
|
$ |
2,952,741 |
|
Gross Profit
(GAAP) |
|
|
113,431 |
|
|
|
111,790 |
|
|
|
228,407 |
|
|
|
222,110 |
|
Gross Margin
(GAAP) |
|
|
7.46 |
% |
|
|
7.42 |
% |
|
|
7.55 |
% |
|
|
7.52 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses (GAAP) |
|
$ |
110,276 |
|
|
$ |
106,131 |
|
|
$ |
220,344 |
|
|
$ |
211,328 |
|
Impact of restructuring
costs |
|
|
- |
|
|
|
(77 |
) |
|
|
- |
|
|
|
(82 |
) |
Operating
expenses adjusted for certain items (Non-GAAP) |
|
$ |
110,276 |
|
|
$ |
106,054 |
|
|
$ |
220,344 |
|
|
$ |
211,246 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (GAAP) |
|
$ |
3,155 |
|
|
$ |
5,659 |
|
|
$ |
8,062 |
|
|
$ |
10,782 |
|
Impact of restructuring
costs |
|
|
- |
|
|
|
77 |
|
|
|
- |
|
|
|
82 |
|
Operating
income adjusted for certain items (Non-GAAP) |
|
$ |
3,155 |
|
|
$ |
5,736 |
|
|
$ |
8,062 |
|
|
$ |
10,864 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales (GAAP) |
|
$ |
225,572 |
|
|
$ |
230,689 |
|
|
$ |
480,057 |
|
|
$ |
549,213 |
|
Gross Profit
(GAAP) |
|
|
60,096 |
|
|
|
56,379 |
|
|
|
128,380 |
|
|
|
115,252 |
|
Gross Margin
(GAAP) |
|
|
26.64 |
% |
|
|
24.44 |
% |
|
|
26.74 |
% |
|
|
20.98 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses (GAAP) |
|
$ |
56,304 |
|
|
$ |
49,999 |
|
|
$ |
116,585 |
|
|
$ |
98,102 |
|
Impact of restructuring
costs |
|
|
- |
|
|
|
(52 |
) |
|
|
- |
|
|
|
(63 |
) |
Operating
expenses adjusted for certain items (Non-GAAP) |
|
$ |
56,304 |
|
|
$ |
49,947 |
|
|
$ |
116,585 |
|
|
$ |
98,039 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (GAAP) |
|
$ |
3,793 |
|
|
$ |
6,380 |
|
|
$ |
11,794 |
|
|
$ |
17,150 |
|
Impact of restructuring
costs |
|
|
- |
|
|
|
52 |
|
|
|
- |
|
|
|
63 |
|
Operating
income adjusted for certain items (Non-GAAP) |
|
$ |
3,793 |
|
|
$ |
6,432 |
|
|
$ |
11,794 |
|
|
$ |
17,213 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
(GAAP) |
|
$ |
(901 |
) |
|
$ |
8,472 |
|
|
$ |
(3,762 |
) |
|
$ |
(2,891 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses (GAAP) |
|
$ |
279,765 |
|
|
$ |
254,941 |
|
|
$ |
547,645 |
|
|
$ |
504,935 |
|
Impact of restructuring
costs (3) |
|
|
(34,029 |
) |
|
|
(3,005 |
) |
|
|
(67,633 |
) |
|
|
(4,062 |
) |
Impact of
acquisition-related costs (4) |
|
|
(5,078 |
) |
|
|
- |
|
|
|
(7,290 |
) |
|
|
(9,816 |
) |
Operating
expenses adjusted for certain items (Non-GAAP) |
|
$ |
240,658 |
|
|
$ |
251,936 |
|
|
$ |
472,722 |
|
|
$ |
491,057 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (GAAP) |
|
$ |
(280,666 |
) |
|
$ |
(246,884 |
) |
|
$ |
(551,407 |
) |
|
$ |
(507,892 |
) |
Impact of restructuring
costs (3) |
|
|
34,029 |
|
|
|
3,005 |
|
|
|
67,633 |
|
|
|
4,062 |
|
Impact of
acquisition-related costs (4) |
|
|
5,078 |
|
|
|
- |
|
|
|
7,290 |
|
|
|
9,816 |
|
Operating
income adjusted for certain items (Non-GAAP) |
|
$ |
(241,559 |
) |
|
$ |
(243,879 |
) |
|
$ |
(476,484 |
) |
|
$ |
(494,014 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Sysco |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales (GAAP) |
|
$ |
13,457,268 |
|
|
$ |
12,153,626 |
|
|
$ |
27,425,922 |
|
|
$ |
24,716,237 |
|
Gross Profit
(GAAP) |
|
|
2,571,863 |
|
|
|
2,157,229 |
|
|
|
5,263,782 |
|
|
|
4,394,875 |
|
Gross Margin
(GAAP) |
|
|
19.11 |
% |
|
|
17.75 |
% |
|
|
19.19 |
% |
|
|
17.78 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses (GAAP) |
|
$ |
2,079,446 |
|
|
$ |
1,724,231 |
|
|
$ |
4,204,532 |
|
|
$ |
3,468,752 |
|
Impact of restructuring
costs (1) (3) |
|
|
(40,089 |
) |
|
|
(4,281 |
) |
|
|
(78,374 |
) |
|
|
(7,470 |
) |
Impact of
acquisition-related costs (2) (4) |
|
|
(25,370 |
) |
|
|
- |
|
|
|
(47,079 |
) |
|
|
(9,816 |
) |
Operating
expenses adjusted for certain items (Non-GAAP) |
|
$ |
2,013,987 |
|
|
$ |
1,719,950 |
|
|
$ |
4,079,079 |
|
|
$ |
3,451,466 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (GAAP) |
|
$ |
492,417 |
|
|
$ |
432,583 |
|
|
$ |
1,059,250 |
|
|
$ |
926,057 |
|
Impact of restructuring
costs (1) (3) |
|
|
40,089 |
|
|
|
4,281 |
|
|
|
78,374 |
|
|
|
7,470 |
|
Impact of
acquisition-related costs (2) (4) |
|
|
25,370 |
|
|
|
- |
|
|
|
47,079 |
|
|
|
9,816 |
|
Operating
income adjusted for certain items (Non-GAAP) |
|
$ |
557,876 |
|
|
$ |
436,864 |
|
|
$ |
1,184,703 |
|
|
$ |
943,343 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Fiscal 2017 includes Brakes Acquisition-related
restructuring charges and other severance charges. |
(2) Fiscal 2017 Includes $19 million and $38 million for 13
and 26 weeks, respectively, related to intangible amortization
expense from the Brakes acquisition, which is included in the
results of the Brakes Group. |
(3) Fiscal 2017 $28 million and $56 million for the 13 and 26
weeks, respectively, in accelerated depreciation associated with
our revised business technology strategy. Also includes $13 million
and $6 million for the 13 and 26 weeks, periods related to
professional fees on 3-year financial objectives and costs to
convert to legacy systems in conjunction with our revised business
technology strategy. |
(4) Fiscal 2017 Includes $7 million and $5 million for
the 13 and 26 weeks periods, related to transaction costs from the
Brakes acquisition. Fiscal 2016 includes US Foods merger
termination costs. |
|
Sysco Corporation and its Consolidated
Subsidiaries |
Non-GAAP Reconciliation
(Unaudited) |
Free Cash Flow |
(In Thousands) |
|
Free cash flow represents net cash provided from operating
activities less purchases of plant and equipment and includes
proceeds from sales of plant and equipment. Sysco considers
free cash flow to be a liquidity measure that provides useful
information to management and investors about the amount of cash
generated by the business after the purchases and sales of
buildings, fleet, equipment and technology, which may potentially
be used to pay for, among other things, strategic uses of cash
including dividend payments, share repurchases and
acquisitions. However, free cash flow may not be available
for discretionary expenditures, as it may be necessary that we use
it to make mandatory debt service or other payments. Free
cash flow should not be used as a substitute for the most
comparable GAAP measure in assessing the company’s liquidity for
the periods presented. An analysis of any non-GAAP financial
measure should be used in conjunction with results presented in
accordance with GAAP. In the table that follows, free cash
flow for each period presented is reconciled to net cash provided
by operating activities. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26-Week Period Ended
Dec 31, 2016 |
|
26-Week Period Ended
Dec 26, 2015 |
|
26-Week Period Change
in Dollars |
|
26-Week Period
% Change |
Net cash
provided by operating activities (GAAP) |
|
$ |
604,924 |
|
|
$ |
468,881 |
|
|
$ |
136,043 |
|
|
29.0 |
% |
Additions to plant and
equipment |
|
|
(285,692 |
) |
|
|
(248,233 |
) |
|
|
(37,459 |
) |
|
-15.1 |
|
Proceeds from sales of
plant and equipment |
|
|
11,639 |
|
|
|
10,827 |
|
|
|
812 |
|
|
7.5 |
|
Free Cash Flow
(Non-GAAP) |
|
$ |
330,871 |
|
|
$ |
231,475 |
|
|
$ |
99,396 |
|
|
42.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For more information contact:
Neil Russell
Investor and Media Contact
T 281-584-1308
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