Sysco Earnings Call Insights: Guidance Details and Pricing Analysis
Sysco Corporation (NYSE:SYY) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.
Edward Kelly – Credit Suisse: Couple of things for you. I was just hoping maybe we could start with the guidance and the 2015 guidance not being valid. You haven’t really changed (indiscernible) from a business transformation standpoint, from a cost savings standpoint. So, it sounds like it’s, I guess, more sort of industry related. When you gave the guidance things weren’t great, right. So, I am just trying to figure out what the moving pieces are on the difference today. And maybe you could just sort of help us frame that?
William J. DeLaney – President and CEO: I’ll start; I’ll let Chris kind of get into little more specific way. Obviously, we’ve given that a lot of thought as well. So, if you go back to the way we presented it we had three buckets; we said A plus B equals C and with A, B a view of what we thought we could continue to grow the underlying business at steady state. The implied guidance there was 4%, 5% growth. And then we had the $550 million to $650 million in cost savings both on the operation side as well as product. With the goal being to get back to what Sysco’s historically have been, is been a company that’s been able to produce consistent earnings growth. I would say this to you, obviously, the markets have been difficult, but we’ve some execution challenges, as we‘ve acknowledged here today. I think the biggest thing I would say to you is the market and just the environment itself, I think it’s just proven to be a lot tougher than what we thought was going to be. We had baked in like I said 4% to 5% expectation that we will be able to continue to grow the business ex the transformational cost savings and that’s not the case. So, sure, there has been a lot of distractions and lot of change going on, but on the one hand its disappointing to pull the guidance back, on the other hand, I think it reinforces the direction we’re going in which is – we have to changes this business model because if we hadn’t gone down this road with business transformation in the broader sense, we probably looking at flat to very modest single-digit earnings growth. So, I don’t want put it all on the consumer or the economy, but clearly this market is tougher than what we anticipated at the time, we put the guidance though. I’ll let Chris give you his insights.
R. Chris Kreidler – EVP and CFO: The only thing I’ll add is unfortunately just math, which is as Bill said A plus B has to equal or should equal to C. We didn’t expect A to be stagnant or go backwards and so when you lose a year on three year guidance, it just mean your growth rates have to be that much higher and when I just do the math with everything we’ve got going on, we expect to do good things. We expect there to be improvement. But I don’t expect to see enough improvement to overcome that first year. So as I said, we don’t expect to achieve it in fiscal ’15…