Zacks_Analysts' Blog : Sysco Misses Estimates - Analyst Blog

Sysco's earnings (excluding one-time items) surged 10.2% to $1.95 per share in fiscal 2010 from $1.77 in fiscal 2009.

Reported earnings per share climbed 7.5% from the year-ago quarter to 57 cents, and 12.4% over the previous year to $1.99.

Revenue and Operating Income

On a year-over-year basis, Sysco's adjusted sales advanced 5.8% to $9,609.3 million in the fourth-quarter, but slipped 0.9% to $36,504.3 million for fiscal 2010. However, on a reported basis, Sysco's sales jumped 13.9% and 1.1% in the quarter and year, respectively. Volume growth and favorable currency translation partially offset by food cost inflation boosted the quarterly sales result.

Adjusted operating income increased 0.4% and 3.3% in the quarter and the year, respectively. However, on a reported basis, Sysco's operating income spiked 8.1% to $584 million in the fourth-quarter, and 5.5% to $2.0 billion for the year.

Other Financial Updates

After paying $528 million related to IRS settlement in the fiscal 2010, the company generated $885 million of cash from operating activities.

Sysco incurred capital expenditures of $157 million in the quarter and $595 million in the year, related to investments in technology including business transformation project, fleet replacement and purchase of a facility for future services operation and replacement or expansion of facilities in Vancouver, Toronto, Houston, Philadelphia and Plainfield, New Jersey.

Sysco anticipates capital expenditures in the range of $700–$750 million for the fiscal year 2011.

In fiscal 2010, the company paid $580 million of dividends to its shareholders.

Headquartered in Houston , Texas , Sysco's multi-year business transformation project is on track, employing 300 full-timers. The company is through with the design and technology development work. Presently, it is testing systems and processes.

Sysco anticipates commencing its first operating company in early 2011 and another 5–10 operating companies by the end of 2013.

Sysco, the global leader in selling, marketing and distributing food products, operates 180 distribution facilities and serves approximately 400,000 customers. Management hinted that Sysco continues to look for an attractive acquisition market.

Sysco shares maintain a Zacks #3 Rank, which translates into a short-term 'Hold' recommendation. Our long-term recommendation for the stock remains Neutral.