Zacks_Analysts' Blog : Sysco Reports In Line - Analyst Blog

Sysco Corp. (SYY) delivered fourth-quarter 2011 earnings (excluding one-time items) of 57 cents per share, in line with the Zacks Consensus Estimate. However, it exceeded the prior-year earnings of 53 cents, excluding the additional week, multi-employer pension plan (MEPP) charge and tax benefit of 4 cents.

In fiscal 2011, adjusted earnings were $1.98 per share, excluding the negative impact from the MEPP charge of 4 cents and a tax benefit of 2 cents. It exceeded the Zacks Consensus Estimate by a penny, while surpassing the prior-year earnings of $1.00, which also excludes the 4 cent benefit from the extra week of operations and a 5 cent benefit from the company's IRS settlement.

Revenue and Operating Income

Excluding the extra week in fiscal 2010, Sysco's sales advanced 8.5% on a year-over-year basis, to $10.4 billion in the fourth-quarter, while it jumped 7.7% to $39.3 billion in fiscal 2011. Acquisition growth and favorable currency translation partially offset by food cost inflation boosted quarterly sales.

Operating income increased 3.4% and 1.7% in the quarter and the year, respectively, excluding the extra week and MEPP charge in 2010. However, on a reported basis, Sysco's operating income declined 4.0% and 2.2%, respectively, to $561 million in the fourth-quarter, and $1.93 billion for the year.

Other Financial Updates

After paying $212 million related to an IRS settlement in fiscal 2011, the company generated $1.1 billion of cash from operations.

Sysco incurred capital expenditures of $182 million in the quarter and $636 million in the year related to investments on facility replacements and expansions, technology, and additions and replacements to Sysco's fleet.

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, the global leader in selling, marketing and distributing food products, operates 177 distribution facilities serving approximately 400,000 customers. For fiscal year 2011 that ended July 2, 2011 the company generated record sales of more than $39 billion.

Sysco shares maintain a Zacks #3 Rank, which translates into a short-term 'Hold' recommendation.