JP Foodservice reports better operating results

January 27, 1995|By Timothy J. Mullaney | Timothy J. Mullaney,Sun Staff Writer

JP Foodservice Inc. of Columbia marked its first quarterly report as a public company with an upbeat report that showed sales up nearly 9 percent and operating earnings up 13 percent.

The restaurant supply firm's performance was in line with analysts' expectations.

"The company has basically nailed its September quarter and December quarter projections," said Mark Allen, an analyst at Robinson Humphrey Co., an investment bank in Atlanta.

Mr. Allen took note of the fact that earnings growth outpaced sales growth. "There's inherent operating leverage in the business," he said.

JP Foodservice actually posted a $1.9 million net loss for the quarter that ended Dec. 31, the second of its fiscal year, because of special charges stemming from the financial restructuring that included the company's initial public offering in November.

The recapitalization was needed to reduce the debt from a 1989 leveraged buyout that created the company, which used to be a division of Sara Lee Corp.

However, the company earned nearly $4.9 million during the quarter before the special charges, after results were adjusted to account for the company's new debt structure.

That works out to 17 cents a share. Sales were $272.4 million.

"I think it was a real strong quarter," JP Foodservice Chief Financial Officer Lewis Hay III said, adding that sales actually rose 12 percent in December and January sales are also up 12 percent so far. "Especially considering that we were spending a lot of time on the IPO and didn't have our full attention on the business."

Smith Barney Inc. analyst Ronald B. Morrow said the quarter led him to raise his fiscal 1995 earnings estimate for the company to 75 cents a share in operating earnings, up from 74 cents.

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