Sysco Corporation · NYSE:SYY
Sysco — CAGNY 2020
34 slides from Sysco's conference presentation, February 2020
Slide 1: CAGNY 2020
CAGNY 2020
Slide 2: Forward Looking Statements
Forward Looking Statements Statements made in this presentation or in our earnings call for the second quarter of fiscal 2020 that look forward in time or that express management’s beliefs, expectations or hopes are forward-looking statements within the meaning of the Private Securities Litigation R
Slide 3: Kevin Hourican, President & CEO
KEVIN HOURICAN PRESIDENT & CEO
Slide 4: Sysco is the Industry Leader in Foodservice Distribution With a Platform for Growth
Sysco is the Industry Leader in Foodservice Distribution With a Platform for Growth • Platform for long-term growth • Strong balance sheet • Continually return value to shareholders • Socially responsible investment
Slide 5: Our Four Strategic Priorities Will Accelerate Our Current Growth
Our Four Strategic Priorities Will Accelerate Our Current Growth and Position Us Well for the Future
Slide 6: Our Future Profitable Growth Acceleration Will Be Driven by Three Key Principles
Our Future Profitable Growth Acceleration Will Be Driven by Three Key Principles Enhancing Being the most Pursuing multiple customer facing efficient operator avenues of tools growth Enabled by the power of our people
Slide 7: We Are Pursuing Multiple Avenues of Growth
We Are Pursuing Multiple Avenues of Growth Examples include: • Accelerating Organic Growth • Share of wallet • Metro markets • M&A • International All while maintaining a disciplined approach to profitable growth
Slide 8: M&A Is a Key Lever of Sysco's Growth Strategy
M&A Is a Key Lever of Sysco’s Growth Strategy Expansion of Acquired Acquired J&M Acquired Acquired Traditional Acquired first Canadian Acquired Supplies on Acquired Fully Acquired Wholesale/ Waugh Armstrong & Foodservice Acquired CFS produce company Operations European Imports the Fly Doerle Mayca I
Slide 9: We Will Continue to Lead in Returning Value to Shareholders
We Will Continue to Lead in Returning Value to Shareholders Profitable share gaining topline growth Meaningful cash generation Dividend growth Total Shareholder Return
Slide 10: Neil Russell, VP, Corporate Affairs
NEIL RUSSELL VP, CORPORATE AFFAIRS
Slide 11: Sysco Brand Portfolio Delivers Significant Overall Value
Sysco Brand Portfolio Delivers Significant Overall Value in Quality, Variety and Price to Our Customers … …including five $1B brands …and three $500M brands
Slide 12: re 2. £ u“ ci) i ° < u cd) <= ré] i] =
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Slide 13: gris y
gris y | Renew—Sysco Earth’Plus Ben afforde ood for your business while reducing your environme fe y s Whi a eing your envitenms 7 Ke
Slide 14: Four Decades of Progress
Four Decades of Progress Integrated Energy Social Named Published Supplier Pest Management Management Audit VP Agriculture CDP 2025 Responsibility Audits Program Program Programs Sustainability Reporting Goals 1980 2002 2012 2013 2015 2018 2019 2005 2006 2008 2008 Operational Share our Strength Firs
Slide 15: People
o 2 Me jf People measured by our actions In Fiscal Year 2019 Sysco continued to make progress against the public goals we announced in 2018. These goals + Double associate participation in health and . well-being programs help define the blueprint to elevate our + Expand products in our portfolio wi
Slide 16: Provided million meals and cash contributions
[ Provided million meals and million in cash contributions ‘Added new MWBE suppliers; increased year-over-year purchases by / Increased total U.S. associate ethnic and gender diversity to Launched Sysco Simply brand, emphasizing vegan and vegetarian dining
Slide 17: Developed a short list of commodities for further evaluation
’ Developed a short list of commodities for further evaluation as “key commodities” Increased the number of total assessments in our Social Audit Program by nearly Number of suppliers with a perfect score grew to
Slide 18: Launched solar garden sites
Launched 3 solar garden sites, supporting 10% of Sysco’s US. electricity usage — halfway to our goal Improved energy efficiency by 4.2% since 2014
Slide 19: Joel Grade, EVP & CFO
JOEL GRADE EVP & CFO
Slide 20: 2Q20 Financial Results
2Q20 Financial Results Total Sysco 2Q201 Sales $15.0B 1.8% Gross Profit $2.8B 2.0% Adj. Operating Expense1 $2.2B 1.5% Adj. Operating Income1 $627M 3.9% 1 Adj. EPS $0.85 13.2% 1 See Non-GAAP reconciliations at the end of the presentation.
Slide 21: Updated FY18-FY20 Three-year Plan Guidance
Updated FY18-FY20 Three-year Plan Guidance Guidance As Anticipated Updated Three- Disclosed on FY18-FY20 Year Plan1 August 12, 2019 Results Guidance Local Cases 3.0%-3.3% 3.3% On-Plan Total Cases 2.5%-3.0% 2.5% On-Plan On-plan despite continued disciplined Sales 3.5%-4.0% 3.7% On-Plan approach to pr
Slide 22: FY18-FY20 Adj. Operating Income Reset Breakout
FY18-FY20 Adj. Operating Income Reset Breakout ~ 40% Solid leadership in place Through the remainder of FY20 and we are deploying International additional subject matter Underperformance experts ~ 20% Managing underperformance U.S. Addressable within 90 days through improved revenue management Under
Slide 23: We Are Improving Our Customer-Facing Technology
We Are Improving Our Customer-Facing Technology 1. Grow share of wallet 2. Sales support technology 3. Drive efficiencies 4. Reduce complexity
Slide 24: Our Cash Generation Capabilities Are Strong; Funding Future Investments
Our Cash Generation Capabilities Are Strong; Funding Future Investments Investment Cycle With Growth Comes: Generate Cash Enhancing customer facing tools Being the most efficient operator Pursuing multiple avenues of growth Invest to Grow
Slide 25: Sysco Places a Priority on Returning Value to Shareholders
Sysco Places a Priority on Returning Value to Shareholders 16% 3-Year TSR 1 $1.8B Total Value Returned 51 Consecutive Annual Dividend Increases 17% ROIC 2,3 Returned $1.8 billion in value to shareholders through 1 Returns represent average annualized return as of February 10, 2020 2 See Non-GAAP rec
Slide 26: While Following a Disciplined Approach to Capital Allocation
While Following a Disciplined Approach to Capital Allocation 1. Invest in the business 2. Grow the dividend 3. Strategic M&A 4. Paydown debt/ Opportunistic Share Repurchase
Slide 27: We Are Leveraging Our Momentum in the Business for the Next 50 Years
We Are Leveraging Our Momentum in the Business for the Next 50 Years • Strong fundamentals • Consistent execution • Well positioned for future growth
Slide 28: Q&A
Q&A
Slide 29: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 30: Impact of Certain Items
IMPACT OF CERTAIN ITEMS Our discussion below and elsewhere herein of our results includes certain non-GAAP financial measures that we believe provide important perspective with respect to underlying business trends. Other than free cash flow, any non-GAAP financial measures will be denoted as adjust
Slide 31: Operating Income Target
OPERATING INCOME TARGET We expect to achieve our gross profit, operating income and earnings per share targets under our revised 3- year strategic plan ending fiscal 2020. Our targets and expectations include adjusted operating income and adjusted diluted earnings per share targets. We have revised
Slide 32: Impact of Certain Items, 2Q20
IMPACT OF CERTAIN ITEMS, 2Q20 Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items (Dollars in Thousands, Except for Share and Per Share Data) 13-Week 13-Week Period Ended Period Ended Period Change Period Dec. 28, 2019 Dec. 29, 2018 in Doll
Slide 33: Operating Income Growth FY18-FY20
OPERATING INCOME GROWTH FY18-FY20 Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Operating Income Growth (In Thousands) Year Ended 3-year Plan Change June 27, 2020 July 1, 2017 $ Results CAGR Operating income (GAAP) $ 2,539,614 $ 2,054,616 $ 484,998 7.3% Impa
Slide 34: ROIC
ROIC Adjusted Return on Invested Capital (ROIC) (Dollars in Thousands) We calculate ROIC as net earnings from the trailing twelve months (TTM) divided by (i) stockholder’s equity, computed as the average of adjusted stockholders’ equity at the beginning of the TTM period and at the end of each fisca