Services

Sysco Earnings Improve; Buyback Salves Impact of Failed Acquisition

Sysco truck
Sysco Corp.
Sysco Corp. (NYSE: SYY) reported fourth fiscal-quarter and full-year 2015 results before markets opened Monday. For the quarter, the food distributor posted quarterly adjusted diluted earnings per share (EPS) of $0.52 on revenues of $12.4 billion. In the same period a year ago, the company reported EPS of $0.50 on revenues of $12.29 billion. Fourth-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.51 and $12.7 billion in revenues.

For the full year, Sysco reported revenues of $48.7 billion and EPS of $1.84, compared with 2014 revenues of $46.52 billion and EPS of $1.76. Analysts were looking for EPS of $1.82 on revenues of $48.99 billion.

The company’s proposed merger with U.S. Foods was terminated in late June following a court ruling upholding a Federal Trade Commission (FTC) request for a preliminary injunction to block the transaction. For the quarter, Sysco recorded $312.5 million in break-up fees to U.S. Foods and Performance Food Group.

CEO Bill DeLaney said:

[W]e delivered solid earnings growth on an adjusted basis by providing our customers with excellent service, growing our business with both our locally and corporate managed customers, and stabilizing our gross margins by successfully implementing several value-added commercial initiatives. Our expense management improved in the fourth quarter and contributed to our six percent growth in adjusted operating income. … As previously announced, we plan to repurchase an incremental $3 billion in Sysco shares over the next two years, including $1.5 billion through an accelerated share repurchase in Fiscal 2016. We will also continue to further evaluate opportunities to optimize our capital structure.

Adjusted operating income for the year rose 3.4% to $1.8 billion, though expenses rose 4.8% to $2.1 billion. On a GAAP basis, operating income fell from $424.5 million in fiscal 2014 to $121 million. On an adjusted basis, excluding break-up fees and other items, operating income rose 5.8% to $509.25 million.

The stock was trading up about 1.4% Monday morning, at $37.45 in a 52-week range of $35.45 to $41.45. The consensus price target on the stock is $39.67.

ALSO READ: 6 Analyst Stock Picks Called to Rise 50% to 100%

Get Ready To Retire (Sponsored)

Start by taking a quick retirement quiz from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes, or less.

Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.

Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future

Get started right here.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.