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$SYY General Update: Sysco responds to district court's ruling on merger with US Foods. "While we respect Court's decision, we are profoundly disappointed with this outcome. We diligently pursued this transaction for nearly two years because we strongly believed merger of Sysco & US Foods would be procompetitive & good for customers” said Bill, CEO
$SYY agreed to acquire Kent Frozen Foods, a UK-based foodservice distributor. The acquisition, which is conditional upon approval from the Competition and Markets Authority, will see Kent Frozen Foods join Sysco's other UK businesses, including Brakes, Fresh Direct and M&J Seafood.
$SYY's has acquired the remaining 50% of Mayca Distribuidores in a cash transaction for an undisclosed price. Jose Maroto will continue in his role as CEO of Mayca and add new responsibilities as $SYY’s VP of Business Development, Central and South America. Osael Maroto, Mayca’s operations manager, will assume the role of President.
Food-service network $SYY reported 14% jump in net earnings to $367.6MM, or $0.69 per share in 1Q18, driven by solid growth in US operations. On an adjusted basis, net earnings climbed 10% to $0.74 per share. Meanwhile, net sales during the quarter rose 5% to $14.7Bil.
$SYY said Sheila Talton has been elected to its BoD, expanding the size of the Board to 15 members. Talton will stand for reelection at Sysco's next Annual Meeting of Stockholders, scheduled for Nov 17, 2017. Sheila currently serves as President and CEO of Gray Matter Analytics.
$SYY said going forward it continues to see opportunities for profitable, disciplined and sustainable growth, despite the competitive market environment. One of the high points of the planned capital expenditure in the coming quarters will be investments for the transformation of the newly acquired Brakes business.
In 2018, $SYY expects to achieve adjusted operating income growth at the higher end of its $600MM-$650MM outlook, excluding the Brakes acquisition. Capital expenditure is expected to increase to 1.3-1.4% of sales next year, including Brakes. The company sees opportunities to invest , especially in facilities and technology, in the coming quarters.
$SYY said the strong financial performance in 4Q17 is attributable mainly to the acquisition of European food distributor Brakes Group. The company intends to continue the focus on driving efficiency from its supply chain, to ensure better service to customers. Going ahead, margins are anticipated to come under pressure from rising inflation.
$SYY said its gross profit increased 10% to $2.8Bil in 4Q17, and gross margin advanced 80 basis points to 19.14%. The operating income was $558MM during the quarter, up 2% compared to last year. The company said its fiscal 2017 fourth quarter had one week lesser than the same period of 2016.
Food products distributor $SYY reported a 42% growth in 4Q17 profit as sales advanced 5.7% to $14.1Bil. Earnings rose to $0.57 per share from $0.38 per share in 4Q16. Non-GAAP EPS was $0.72, up 13% compared to last year. Sales of the International Foodservice segment surged 80%, while those of the US Foodservice operations dropped 3.8%.
$SYY appointed Brian Todd as SVP, merchandising, effective Aug. 1, 2017, following Bill Day's decision to retire. Day will remain in his current position through July 31, 2017, and work closely with Todd and the company's senior executive team to ensure an orderly transition of his responsibilities.
$SYY said that on international opportunities, the company is feeling good about the earnings momentum it has in Canada currently. In Latin America, there are a couple of JVs like Bahamas, which are smaller in scale but fruitful in terms of what $SYY is seeing over the medium to long term in terms of growth potential.
Regarding capital allocation, $SYY said reinvesting is one of the company's key priority, which reflects in its CapEx. Additionally, dividend is also an area of focus along with pursuing strategic M&A opportunities both in the core space and adjacencies and additional geographies.
In 3Q17, $SYY saw its gross margin jump 89 basis points to 18.74%, as operating income soared 15.5% to $436MM. The Butcher’s Block meat supplier reported cash flow from operations of $1.0Bil for the first 39 weeks of FY17, with capex, net of proceeds from sales of plant and equipment, totaling $395MM for the period.