Sysco Corporation · NYSE:SYY
Sysco — Q1 FY2016 Earnings Presentation
29 slides from Sysco's earnings presentation, Nov 2, 2015
Slide 1: Sysco 1Q16 Earnings Results
Sysco 1Q16 Earnings Results November 02, 2015
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements made in this presentation or in our earnings call for the first quarter of fiscal 2016 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 Re
Slide 3: Bill DeLaney, President and CEO
Bill DeLaney President and CEO
Slide 4: 3-Year Financial Target Review
3-Year Financial Target Review Accelerating local case growth Operating income growth¹: At least $400 million Improving gross margins Fiscal 2018 Leveraging supply chain costs ROIC¹: 15% Reducing administrative costs 1 Future calculations of operating income growth and ROIC may be on an adjusted bas
Slide 5: 1Q16 Overview
1Q16 Overview Good quality of business results Strong locally and corporate-managed case growth Sound gross margin management Deflation and foreign exchange restrained sales, gross profit and earnings growth 5
Slide 6: Industry & Economic Trends Are Mixed
Industry & Economic Trends Are Mixed Consumer Confidence Unemployment Rate & Non-Farm Payroll 115.0 7.0% U.S. Unemployment Rate 500,000 110.0 Change in U.S. Non-Farm Payroll Pre-recession Level (2006) 6.5% 106 5.9% 400,000 105.0 6.0% 5.6% 103.8 102.6 99.8 5.5% 100.0 5.5% 5.3% 5.1% 300,000 94.5 5.0%
Slide 7: 1Q16 Financial Highlights
1Q16 Financial Highlights Adjusted1 Reported $MM, except per share YOY % YOY % 1Q16 1Q16 data Change Change Sales $12,563 0.9% $12,563 0.9% Gross Profit $2,238 2.3% $2,238 2.3% Operating $1,732 3.1% $1,745 1.2% Expense Operating $506 -0.5% $493 6.0% Income Net Earnings $312 0.9% $244 -12.3% Diluted
Slide 8: US Broadline Performance
US Broadline Performance US Broadline performance was the key driver of overall results 2.0% local case growth 1.1% deflation in US Broadline 4.6% gross profit growth 2.7% operating expense growth 6.4% operating income growth 8
Slide 9: Business Driver Highlights
Business Driver Highlights Category management continues to drive benefits Sysco brand penetration continues to improve Revenue management pilots promising Underlying business has good momentum and we are on-track to deliver on our long-term objectives 9
Slide 10: Joel Grade, EVP and CFO
e500 : Picku5 | I ine Jj oel Grade EVP and CFO
Slide 11: 1Q16 Financial Highlights
1Q16 Financial Highlights Adjusted1 Reported $MM, except per share YOY % YOY % 1Q16 1Q16 data Change Change Sales $12,563 0.9% $12,563 0.9% Gross Profit $2,238 2.3% $2,238 2.3% Operating $1,732 3.1% $1,745 1.2% Expense Operating $506 -0.5% $493 6.0% Income Net Earnings $312 0.9% $244 -12.3% Diluted
Slide 12: 1Q16 Sales
1Q16 Sales Sales increased approximately 1% compared to the prior year Deflation of 0.2% vs. inflation of 4.9% in prior year FX Impact was -2.0% Strong USD vs. CND Sales were +3.0% on a Total Broadline Case Growth: +3.3% constant currency basis US Broadline remains strong Corporate-man
Slide 13: Impact of Inflation on Sales Growth
Impact of Inflation on Sales Growth Sysco’s Estimated Product Cost Inflation 6.0% 1Q16 US Broadline 4.9% deflation: -1.1% 4.1% 3.7% 2.1% 0.8% 0.9% 0.1% -0.2% 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Sales growth moderated in 1Q16 due to modest deflation Dairy, meat, seafood and poultry categ
Slide 14: Improved Gross Margin Performance in 1Q16
Improved Gross Margin Performance in 1Q16 YOY % Change in Gross Profit 7.0% 6.0% 6.1% 6.0% Gross profits were +4.3% on 5.0% 4.0% a constant currency basis 4.0% 3.1% 3.0% 3.0% 2.7% 2.3% 1.8% 2.0% 1.0% 0.7% 0.0% 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Gross margin improvement Gross Margin Seasona
Slide 15: Expenses Related To Certain Items
Expenses Related To Certain Items ($ in millions) 1Q16 Certain Items: Operating Expense: Severance and Restructuring $3.2 US Foods Merger Termination Costs $9.8 Interest Expense: US Foods Merger Termination Costs $94.8 Total Certain Items $107.8 15
Slide 16: 1Q16 Adjusted Operating Expense
1Q16 Adjusted Operating Expense¹ Adjusted operating expense +$52 million, or 3.1% Mainly due to higher payroll, driven by increased case volume and long-term incentive accruals Adjusted operating expense +5.2% on a constant currency basis Early signs of productivity improvement and cost redu
Slide 17: 1Q16 Operating Income, Net Income, EPS
1Q16 Operating Income, Net Income, EPS¹ Adjusted operating income -0.5% Adjusted operating income was +1.2% on a constant currency basis Adjusted net earnings +0.9% Increase in other income due to the elimination of the non-Sysco portion of the results associated with our Joint Ventures Adjust
Slide 18: Constant Currency Comparisons
Constant Currency Comparisons Adjusted1 Constant Currency $M, except per share YOY % YOY % 1Q16 1Q16 data Change Change Sales $12,563 0.9% $12,819 3.0% Gross Profit $2,238 2.3% $2,282 4.3% Operating $1,732 3.1% $1,767 5.2% Expense Operating $506 -0.5% $515 1.2% Income Net Earnings $312 0.9% $317 2.8
Slide 19: Cash Flow Performance
Cash Flow Performance ($MM) 1Q16 1Q15 $ Chg. Cash Flow from Operations ($261) $ 63 ($324) Capital Expenditures, net1 ($120 ) ($ 118) $2 Free Cash Flow ($381) ($ 55) ($326) Cash Impact of Certain Items ($260) ($41) ($219) Dividends Paid $179 $ 170 $9 The negative cash impact of certain items on both
Slide 20: Free Cash Flow
Free Cash Flow Free Cash Flow Seasonality 2012-2015 $700,000 2012 2013 2014 2015 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 Q1 Q2 Q3 Q4 -$100,000 Free Cash Flow is seasonal, increasing Sequentially each quarter throughout the fiscal year 20 1 See Non-GAAP reconciliations at the end of
Slide 21: Strategic Investments in Capital Expenditures
Strategic Investments in Capital Expenditures Gross Capex CapEx as a % of Sales $MM $121 $119 1.2% 1.1% 1.1% 1.0% 1Q15 1Q16 2013 2014 2015 Q116 CapEx as a % of Sales Facilities Fleet IT-Other 21
Slide 22: Bill DeLaney, President and CEO
Bill DeLaney President and CEO
Slide 23: Pleased With Our Progress … More Work To Do
Pleased With Our Progress … More Work To Do Encouraged by quality of business performance Ramping 3-year plan initiatives – commercial initiatives already seeing traction Making strides in developing and refining cost reduction plans Remain confident that we have the right strategy and peopl
Slide 24: Good things
Good things SV¥SCO
Slide 25: Non-GAAP Reconciliations
e500 E " PicKUNS | I P si E y/ thescg Non-GAAP Reconciliations
Slide 26: Impact of Certain Items
Impact of Certain Items Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items (In Thousands, Except for Share and Per Share Data) Sysco’s results of operations are impacted by certain items which include severance charges, merger and integrat
Slide 27: Free Cash Flow and Adjusted Free Cash Flow
Free Cash Flow and Adjusted Free Cash Flow Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Free Cash Flow and Adjusted Free Cash Flow (In Thousands) Free cash flow represents net cash provided from operating activities less purchases of plant and equipment and
Slide 28: ROIC
ROIC Return on Invested Capital (ROIC) Target We have an ROIC target of 15% that we expect to achieve by fiscal 2018. We cannot predict with certainty when we will achieve these results or whether the calculation of our ROIC in such future period will be on an adjusted basis due to the effect of cer
Slide 29: Constant Currency Impact
Constant Currency Impact Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Foreign Currency on Results of Operations Metrics (In Thousands, Except for Share and Per Share Data) Sysco’s results of operations are impacted by the strengthening U.S. dollar