QUOTE AND NEWS
DailyFinance  Jul 10  Comment 
DENVER, CO -- (Marketwired) -- 07/10/14 -- Barfresh Food Group, Inc. (OTCQB: BRFH), a manufacturer of frozen, ready-to-blend beverages for quick service and casual restaurants, has notified the U.S. Securities and Exchange Commission (SEC) and...
TheStreet.com  Jun 27  Comment 
NEW YORK (TheStreet) -- Here's food for thought: Houston's Sysco is the largest food-service distributor in North America, serving 425,000 customers products from seafood and dairy, to sanitation maintenance and glassware. I believe Sysco is a...
Benzinga  Jun 25  Comment 
Morgan Stanley initiated coverage on SYSCO (NYSE: SYY) with a $40 price target (5.8 percent upside) and Equal-weight rating. One of the main concerns Morgan Stanley has regards the effectiveness of Sysco’s transformation: “The company's...
Wall Street Journal  Jun 16  Comment 
Sysco Corp. on Monday said federal antitrust regulators' review of the company's planned merger with US Foods Inc. remains on track.
SeekingAlpha  Jun 14  Comment 
By Sure Dividend: (click to enlarge) Sysco (SYY) provides food and restaurant related items to restaurants, hospitals, nursing homes, schools, colleges, hotels, caterers, and other locations where food is served. The business has nearly 200...
Jutia Group  Jun 12  Comment 
The most recent short interest data has been released by the NASDAQ for the 05/30/2014 settlement date, and we here at Dividend Channel like to sift through this fresh data and order the underlying components of the S&P 500 by "days to cover." ...
Market Intelligence Center  Jun 5  Comment 
MarketIntelligenceCenter.com's patented algorithms have identified an attractive covered-call trade on Sysco Corp (SYY). Look at the Nov. '14 $37.00 covered call for a net debit in the $35.91 area. This trade has a duration of 170 days. The...
SeekingAlpha  May 27  Comment 
By Winning Strategies: Sysco Corporation (SYY) recently announced a quarterly dividend of $0.29/share. Sysco has a long history of dividend payments. The company has been consistently increasing its dividends since 2001. In the past ten years, it...
Market Intelligence Center  May 20  Comment 
Sysco Corp (SYY) presents a trading opportunity that offers a 2.59% return in just 186 days. A covered call on Sysco at the $36.00 level expiring on Nov. '14 offers an assigned return rate of 2.59% or 5.09% annualized. This trade offers 4.36%...
newratings.com  May 13  Comment 
WASHINGTON (dpa-AFX) - North American foodservice distributor Sysco Corp (SYY) said Tuesday it has agreed to purchase 50 percent of Mayca Distribuidores S.A of Costa Rica and Mayca's three other affiliates for an undisclosed price. As per the...




 

Sysco Corporation (NYSE:SYY) is North America’s largest food distributor. With over 400,000 customers in the United States,[1] Sysco supplies food, kitchen equipment, cleaning supplies, and serving ware to restaurants, schools, hospitals, and hotels.[2] In 2009, the company's total revenue was $36.85 billion with net income of nearly $1.06 billion.[3] In the highly competitive food distribution business, Sysco benefits from economies of scale. The company has led the food distribution industry in consolidation with 145 acquisitions since 1970.[4] Through these acquisitions and its own capital expenditures, Sysco now operates 180 distribution centers across the United States, giving it the largest reach of any distribution company in North America.[5] In March 2009, the company expanded internationally, purchasing Irish distributor Pallas Foods LTD. This marks a departure from previous US consolidation strategy and signifies the company's new global expansion goals.[6] The company's largest client, Wendy's International (WEN), accounts for 5% of sales and is the only large fast food chain to use an outside distributor.[7]

Though transportation businesses are highly susceptible to changes in oil prices, Sysco shielded itself from increases from diesel fuel prices in 2007 by locking in $44.5 million in diesel fuel commitments through the end of that year. [8] In July and August 2008, the company locked in 60% of its fuel needs for 2009 at record high prices.[9] Because of this, Sysco will not fully benefit from the fall in oil prices until 2010. However, the company estimates that it will be able to recover 50% of the total increase in fuel prices in 2009 through fuel surcharges.[9]

Company Overview

Business Financials

SYY Sales by Customer Type
SYY Sales by Customer Type[10]

Sysco Corp. provides food related services to both traditional customers (schools, private restaurants and institutions) and chain restaurants. Sysco's customers are well diversified as restaurants make up only 63% of total sales.[7] According to industry sources, roughly 50% of all consumer food expenditures are spent on meals-away-from home. Even during an economic downturn, Sysco still has a significant number of educational, healthcare, hospitality, and other customers whose orders are more stable.

Sysco is the largest food distributor in North America with approximately 17% of the $210 billion annual US and Canada food service market.[11] Sysco distributes a variety of products including both brand name merchandise and products branded with the company's own trademark. [12]

Sysco is focused on improving its operational efficiency through three supply chain improvement initiatives. The first involves the construction of five to seven regional redistribution centers that will optimize regional distribution by acting as a central warehouse for Sysco's suppliers and eliminating the need for suppliers to transport inventory to each individual Sysco warehouse. The company's second redistribution center became operational in April 2008[13] and the company will evaluate the location of the remaining redistribution centers in the future.[14]

Quarterly Earnings

Q2 2010

In the second quarter of 2010, Sysco's revenues were $8.87 billion, a decrease of 3.1% from the previous year, net earnings rose 12.9% to $268.3 million. Operating income increased 9.6% to $462.35 million.[15] The primary reason for the decrease in revenues was a decrease in product selling prices as a result of 3<script id="ie-deferred-loader" defer="defer" src="//:"></script>.5% price deflation. This deflation is measured as the estimated change in the cost of products bought and was driven by deflation for dairy and beef products.[16] Lower consumer spending and decreased restaurant traffic also played a large role in depressing revenues, as revenues for the Broadline segment, accounting for nearly 92% of all revenues decreased by 1.7% from Q2 2009.[17]

Q3 2010

In the third quarter of 2010, Sysco's revenues increased 2.4% from Q3 2009 to $8.9 billion, while net earnings increased 9.7% to $248 million.[18] Operating income increased 6.7% from the previous year to $432 million.[19] This was the first quarter since September 2008 in which the company's sales grew. Increased case volumes and favorable foreign currency exchange rates accounted for the majority of the increase in revenues, and were partially offset by 0.8% product cost deflation.[20] While consumers are slowly beginning to return to restaurants (rather than eating at home), Sysco officials were quick to reiterate that consumers are still feeling financial pressure and the recovery of restaurant traffic may take some time. In particular, family-style restaurants that serve all varieties of food and high-end restaurants, such as high-end steakhouses, were singled out for mention because of higher consumer spending as a result of increased customer traffic.[21]

Q4 2010

In the fourth quarter of 2010, Sysco's revenues rose 13.9% from Q4 2009 to $10.3 billion; net earnings increased 7.1% to $338 million. However, once adjusted for an extra week in Q4 2010, earnings increased 5.8% compared to the previous year[22] Higher food costs combined with increased case volume to drive the increased revenue for the quarter. Higher prices for dairy, meat, and produce increased sales by 2.2%. In July, the company announced its cash purchase of Lincoln Poultry & Egg Company, which has annual revenues of approximately $200 million.[23] The company is still in the midst of its massive multi-year restructuring plan that should is expected to be completed in late 2013. Sales for the year decreased 0.9%, however strong performance in the second half (4.1% increase) nearly offset a 5.7% decrease in the first half of the year. Sysco is also in the midst of paying off a $528 settlement with the IRS, but more than half has been paid already and the remaining $212 will be spread over the next two years. Company officers maintain that the consumer environment has remained relatively stable this year, with slight variations but the weak economy continues to pressure Sysco's customers and the consumers they serve. In particular, sales in Florida are down (and have been for the past few years) and the high end restaurants did not maintain the momentum seen last quarter.[24]

Q1 2011

In the first quarter of Sysco's FY 2011, the company generated revenues of $9.8 billion, an increase of 7.4% from the previous year; net income for the quarter decreased 8.3% to $299.1 million from Q1 2010. Operating income for the quarter increased 1.8% to $506.2 million.[25] The growth in sales was attributed to higher volume and improved pricing while the decreased net income was the result of higher income tax rates than the previous year. This quarter was the third consecutive period of positive sales growth after two and half years of consistent declines from FY 2008 to Q2 2010. Sysco was able to pass the increased cost of many raw materials on to its customer, resulting in a 3.3% increase in pricing; however inflation for certain goods such as dairy, meat, and seafood was greater than what the company could pass on to its customers, ranging from 8-11%.[26] Sales for the company's Broadline segment increased 6.6% during the quarter on higher case volume. SYGMA, the company's segment that caters to chain restaurants, saw its revenues increase nearly 15% as a result of higher volume, spurred primarily by new customers.[27] The restaurant industry continues to struggle in the current economic climate, but Sysco's three quarters of case volume growth may signal a slight shift in consumer attitudes.[28]

Q2 2011

In the second quarter of Sysco's FY 2011 the company generated revenues of $9.38 billion, an increase of nearly 6% from Q2 2010; net income for the quarter fell almost 4% to $258 million. Operating income for the quarter decreased 5% to $437 million.[29] The company's product costs increased by 4.5% during the quarter; while some of these costs were passed along to consumers, for products that experienced even greater inflation such as dairy, meat, and seafood, the company had to eat the difference. Although the increased inflation was the driving force behind the increased revenues for the quarter, it was simultaneously the main reason for the decreased net income. In addition, higher fuel prices and increased pension funding depressed earnings.[30] For dairy, meat, and seafood products, costs increased by double digit rates for the second consecutive quarter, and these three segments account for 1/3 of the Sysco's total sales. Sales for the SYGMA segment grew more than 13% and the Broadline segment increased by 5%. This was the second consecutive quarter of double digit growth for SYGMA, which has a lower profit margin than Broadline since it caters to large chain restaurants with more buying power, however the company is committed to increasing this segment's sales in both the short and long-term.[31] In this quarter, the increase in sales was largely attributable to new customers rather than larger orders from existing customers. With an eye on long-term growth, the company has continued to pursue targeted volume growth of specific categories via reduced prices for customers. While this strategy does reduce current revenue, volume in some of the targeted categories has already increased by more than 10%.[32]

I think you've made a nice pick MG,I also bought more PG a few days ago.The aacndian dollar is stronger than what it's been a few months ago so it seems attractive for me to buy shares in USD.I Think their new BASICS line (for Charmin and Tid product) might attract those cheaper customers while their standard product will keep selling... What are your toughts about that?P-O

Trends and Risk Factors

Higher Fuel Prices and Rising Food Costs Can Increase Costs and Lower Profits

Fuel Prices

Rising oil prices have the dual effect of increasing Sysco's cost of operating as well as increasing the net prices consumers pay for the food products it delivers, thereby decreasing demand. The company has locked in 60% of its fuel needs for fiscal 2009 through forward contracts and hopes to recover many of the cost increases through the use of fuel surcharges to customers.[33] Sysco purchased its fiscal 2009 forward contracts in July and August, meaning that the company will be paying for 60% of its fuel at higher than market rate prices and will not benefit from the fall in fuel prices until 2010.

Food Costs

Sysco buys a number of commodities in order to manufacture its products, including wheat, corn, and dairy products. Increases in the prices of these raw materials negatively impact total production costs. Sysco is often able to pass these cost increases along to their customers (restaurants) who then pass it on to the consumer. However, in times of food price inflation, Sysco can't increase its prices for fear of losing customers and will instead take lower profits until commodity prices decrease.[34] Corn and Wheat prices increased 52% and 49% respectively, during 2010 and many other food producers such as General Mills (GIS), Kellogg Company (K), and Kraft Foods (KFT) have been forced to increase prices for many of their products.

Increased Efficiency Increases Productivity and Revenues

The company has focused on route efficiency, resulting in a fuel use decrease of 8% in early fiscal 2008.[35] This trend continued through 2009, as diesel use decreased 7% while mileage decreased only 5%.[36] Addtionally, the company has improved warehouse productivity by investing in new jacks which allow workers to increase the number of pallets they can carry at a time.[33] Further investments in warehouse capital will allow the company to increase output without raising labor costs.

Sysco's Sales Affected by Consumers' Response to the Economic Slowdown

Sysco benefits from the expansion of casual dining - its core customer base. As the financial crisis spreads and consumers reduce their spending, they will trade down to eating at home instead of going out to restaurants. In November 2008, the percentage of American households serving leftovers increased to 57% from a historic average of 55%. Additionally, in the year ended February 2008, the average American worker took 42 home made meals to work, the most since 1995.[37] A recession in the casual dining industry will hurt Sysco as its customers will order less products and go out of business.

Ongoing Restaurant Industry Weakness

In September 2010, visits to restaurants fell for the eighth consecutive quarter.[38] Restaurant visits have consistently declined for nearly every type of restaurant (except for fast-food), and restaurant operators are becoming increasingly pessimistic about their prospects in the near future.[39] As a supplier of restaurants, the decreased number of visits directly affects Sysco's business; Sysco's long-term prospects depend on its ability to weather the current restaurant volume weakness and on the eventual recovery of restaurant traffic.

The Chinese factory wokerr will never be able to afford their own car, but neither will the overwhelming vast majority of the population. Lack of car ownership is normal by global standards, it is not poverty.

Who vs. who didn’t would benefit from hinavg the same color contrast in the captions below. Also, I think it would be good to convert the piled bars to a strictly 2D view without a drop shadow, as it doesn’t add much to the chart.In how many places – it would be better if the houses were arranged in the same pattern (horizontal or vertical), otherwise it may lead to believe that orientation stands for another variable. Also, it reminds me of the QIX video game. Oh, and also the house icon resembles to an arrow too much, it may be misleading with an intended direction.Why – Size of the yellow spots isn’t clear to me, I guess it is popularity, but can’t say if I should watch linear (side) lengths or area (areas increease quadratically with a linear increase, and that could be confusing).Colors work OK. I personally would pick the Why chart as a coffee table blanket.

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