Sysco Corp. (SYY) posted fiscal 2010 third quarter results Monday. The company reported a 9.5% growth in earnings to $247.6 million, or 42 cents per share from $226.2 million or 38 cents per share in the year-ago period. Quarterly results also edged past the Zacks Consensus Estimate of 41 cents per share derived from 6 covering analysts.

Sysco’s sales in the quarter grew 2.4% to $8.9 billion from $8.7 billion recorded in the prior-year quarter. The growth was primarily driven by higher case volumes, favorable foreign exchange translation and positive impact from acquisitions. However, overall sales were partially offset by food cost deflation.

During the quarter, Sysco’s gross margin improved marginally by 10 basis points (bps) year-over-year to 18.8%. Operating expenses increased 1.6% year-over-year to $1.3 billion, mainly due to higher incentive compensation and foreign currency translation impact. However, increased sales and gross margin more than offset the increase in operating expenses. Consequently, operating income expanded 6.6% year-over-year to $432.1 million, while operating margin improved by 20 bps to 4.8%.

At the end of the quarter, Sysco had cash and cash equivalents of $652.8 million, compared to $899.1 million in the year-ago quarter. During the first nine months of the current fiscal year, the company deployed $438.1 million towards capital expenditure and $431.9 million towards dividend payments.

Meanwhile, the Zacks Consensus Estimate on Sysco’s earnings for the fourth quarter of fiscal 2010 is currently pegged at 56 cents per share, which has remained constant over the past three months. However, for the entire fiscal 2010, the Zacks Consensus Estimate has moved up a penny over the past month to $1.93 per share as 2 of 7 covering analysts raised expectations.

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. The company also includes equipment and supplies for the foodservice and hospitality industries. Sysco operates 186 distribution facilities and serves approximately 400,000 customers.
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