Sysco Corporation · NYSE:SYY
Sysco — Q2 FY2013 Earnings Presentation
24 slides from Sysco's earnings presentation, Feb 4, 2013
Slide 1: Sysco 2Q13 Earnings Results
Sysco 2Q13 Earnings Results February 4, 2013 Slide 18 revised and updated as of 11:30 am Central on Feb. 4, 2013
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements made in our earnings call for the second quarter of fiscal 2013 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 Reform Act of 1995. Such
Slide 3: Bill DeLaney, President & CEO
Bill DeLaney President & CEO 3
Slide 4: 2Q13 Highlights
2Q13 Highlights Adjusted Results1 Reported YOY % YOY % $ Millions, except share data 2Q13 2Q13 Change Change Sales $10,797 5.4% $10,797 5.4% Gross Profit $1,918 3.9% $1,918 3.9% Operating Expenses $1,432 3.7% $1,535 8.2% Operating Income $486 4.6% $383 (10.4%) Net Earnings $286 4.7% $221 (11.5%) Dil
Slide 5: A Robust Acquisition Environment
A Robust Acquisition Environment Annualized Acquired Sales of Approximately $775 million To Date 5
Slide 6: Enhancing our brand and broadening our reach
Enhancing our brand and broadening our reach 71% of customers say Food Network helps them stay on top of trends 70% of Sysco customers are watching Food Network at least one time per week 6
Slide 7: Business Transformation Update
Business Transformation Update North Texas and West Texas progressing following November conversion Successes include improved functionality of the order entry system Proceeding with additional changes to further enhance the functionality of the system SBS supporting a broader array of centr
Slide 8: Key Takeaways
Key Takeaways The acquisition pipeline is robust; we expect to exceed our goal of increasing sales from acquisitions Sysco has the capabilities and experience to help its customers not just weather the uneven trends in the industry, but succeed in spite of them Investments we are making in our
Slide 9: Chris Kreidler, EVP & CFO
Chris Kreidler EVP & CFO Good things ‘come from
Slide 10: Case Growth and Inflation Drive Sales Growth
Case Growth and Inflation Drive Sales Growth (1) Case Growth Inflation 4.0% 3.6% 8.0% 3.4% 7.3% 3.5% 7.0% 2.9% 2.9% 6.3% 3.0% 2.8% 6.0% 5.5% 2.5% 5.0% 2.0% 1.8% 4.0% 3.3% 1.5% 3.0% 2.5% 2.2% 1.0% 2.0% 0.5% 1.0% 0.0% 0.0% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 (1) – Includes Broa
Slide 11: Inflation Has Moderated; Gross Margin Pressure Eases
Inflation Has Moderated; Gross Margin Pressure Eases ($ in millions) Inflation 8% 7% 7.3% 6% 6.3% 5% 5.5% 4% 3% 3.3% 2% 2.5% 2.2% 1% 0% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 YOY Decline in Gross Margin (bps) -10 -30 (26) (33) -50 (53) (54) -70 -90 (75) -110 (95) 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 11
Slide 12: 2Q13 Operating Expenses
2Q13 Operating Expenses (YOY change; $ in millions) $7 $26 $17 $21 2Q13 $45 Reported operating $1,535 expense +8.2% $1,419 Adjusted1 operating expense +3.7% 2Q12 Business Certain Payroll Fuel Other 2Q13 Transf. Items 1 See Non-GAAP reconciliations at the end of this presentation. 12
Slide 13: 2Q13 Highlights
2Q13 Highlights Adjusted Results1 Reported YOY % YOY % $ Millions, except share data 2Q13 2Q13 Change Change Sales $10,797 5.4% $10,797 5.4% Gross Profit $1,918 3.9% $1,918 3.9% Operating Expenses $1,432 3.7% $1,535 8.2% Operating Income $486 4.6% $383 (10.4%) Net Earnings $286 4.7% $221 (11.5%) Dil
Slide 14: Executing on our Goal of Increasing Sales Through Acquisitions
Executing on our Goal of Increasing Sales Through Acquisitions Annualized acquired sales ($ in millions) $775 $435 $326 $270 $75 $41 FY08 FY09 FY10 FY11 FY12 FY13 (YTD) Acquired Company Sales as % of 0.2% 0.9% 0.1% 1.1% 0.6% >1% Sysco Sales # of Deals 4 4 3 5 9 10 14 Note: Retained sales may be less
Slide 15: Business Transformation Project Costs
Business Transformation Project Costs (in millions) 2Q13 2Q12 1H13 1H12 Operating expense $81 $36 $159 $73 Capital investment $3 $33 $10 $79 15
Slide 16: Capital Expenditures
Capital Expenditures ($ millions) The decline in capex is driven by: A decrease in business transformation capital spend; A reduction in the number of major facilities projects this year; and A more disciplined capital allocation and approval process $434 $207 $262 $106 2Q13 2Q12 1H13 1H12 Tec
Slide 17: Free Cash Flow Improved in 1H13
Free Cash Flow Improved in 1H13 $ Millions 1H13 1H12 Cash Flow from Operations $387 $539 Capital Expenditures $262 $434 Free Cash Flow $125 $105 Dividends Paid $316 $307 17
Slide 18: Guidance
Guidance Charges related to restructuring executive retirement plans will result in approximately $24 million in charges in FY13, of which $12 million will be recognized in the second half of FY13 Retirement-related expenses are expected to increase in FY13 by $35 to 45 million, including $24 mi
Slide 19: Good things come from Sysco
Good things Sysco od ‘come from
Slide 20: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 21: 2Q13 Non-GAAP Reconciliation
2Q13 Non-GAAP Reconciliation Sysco’s results of operations are impacted by certain items which include charges from restructuring our executive retirement plans, charges from the withdrawal from multiemployer pension plans, severance charges and charges from facility closures. Management believes th
Slide 22: 2Q13 Non-GAAP Reconciliation
2Q13 Non-GAAP Reconciliation 13-Week 13-Week 13-Week 13-Week Period Ended Dec. Period Ended Dec. Period Change Period 29, 2012 31, 2011 in Dollars % Change Operating expenses (GAAP) $ 1,534,915 $ 1,418,652 $ 116,263 8.2 % Impact of Restructuring Executive Retirement Plans (12,163) - (12,163) NM Impa
Slide 23: 2Q13 Non-GAAP Reconciliation
2Q13 Non-GAAP Reconciliation 26-Week 26-Week 26-Week 26-Week Period Ended Dec. Period Ended Dec. Period Change Period 29, 2012 31, 2011 in Dollars % Change Operating expenses (GAAP) $ 3,059,677 $ 2,856,912 $ 202,765 7.1 % Impact of Restructuring Executive Retirement Plans (12,163) - (12,163) NM Impa
Slide 24: 2Q13 Non-GAAP Reconciliation
2Q13 Non-GAAP Reconciliation Free cash flow represents net cash provided from operating activities less purchases of plant and equipment. Sysco considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the bu