Slide 1: Sysco 4Q & FY14 Earnings Results
Sysco 4Q & FY14 Earnings Results August 11, 2014
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements made in this press release or in our earnings call for the fourth quarter of fiscal 2014 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
Slide 3: FY14 Highlights
FY14 Highlights Sales for the fiscal year grew 5% to $47 billion and adjusted1 net earnings were $1 billion Cash flow from operations for the fiscal year was $1.5 billion, and free cash flow excluding the impact of certain items was $1.1 billion Adjusted1 operating expense per case declined si
Slide 4: 4Q14 Highlights
4Q14 Highlights Results Adjusted for Reported Certain Items1 $ Millions, except YOY % YOY % 4Q14 4Q14 share data Change Change Sales $12,287 5.9% $12,287 5.9% Gross Profit $2,156 4.0% $2,156 4.0% Operating $1,731 7.4% $1,673 4.9% Expenses Operating $425 (7.7%) $482 1.2% Income Net Earnings $254 (10.
Slide 5: Inflation Drives Increased Sales; Restaurant Traffic Remains Stagnant
Inflation Drives Increased Sales; Restaurant Traffic Remains Stagnant Restaurant Spend/Traffic (1) U.S. Retail Data(2) % Change vs. Year Ago % Change vs. Year Ago 4.0% 10.0% 3.2% 2.9% 9.0% 3.0% 2.5% 2.4% 8.0% 2.1% 2.2% 2.1% 1.9% 2.0% 7.0% 2.0% 1.7% 1.3% 6.0% 5.6% 0.9% 5.0% 1.0% 4.0% 4.3% 0.0% 3.0% 2
Slide 6: Technology Transformation Progress
Technology Transformation Progress Implemented new ERP platform in our Salt Lake City and Albuquerque operating companies in July Brings total SAP companies to 12 Each go-live progressively more successful Focus for the remainder of the calendar year: Implement SAP software version upgrade
Slide 7: Business Transformation Progress
Business Transformation Progress Lower Cost Structure Lower Product Costs Improved sourcing participation Routing optimization implemented at majority of Enhanced category management locations of size capabilities Significant progress optimizing New sales tools fleet and equipment Enhanc
Slide 8: US Foods Merger Update
US Foods Merger Update Future senior leadership team announced that will guide the combined company post-merger FTC discussions continue to be productive Expect merger to close late in 3Q14 or some time in 4Q14 8
Slide 9: Key Takeaways
Key Takeaways Focused on Creating value for our customers; Achieving our Business Transformation goals; and US Foods merger integration planning Remain on track to achieved our Business Transformation financial target for FY15 Progress achieved provides a solid foundation from which to m
Slide 10: 4Q14 Highlights
4Q14 Highlights Results Adjusted for Reported Certain Items1 $ Millions, except YOY % YOY % 4Q14 4Q14 share data Change Change Sales $12,287 5.9% $12,287 5.9% Gross Profit $2,156 4.0% $2,156 4.0% Operating $1,731 7.4% $1,673 4.9% Expenses Operating $425 (7.7%) $482 1.2% Income Net Earnings $254 (10.
Slide 11: Inflation Contributes Significantly to Sales Growth
Inflation Contributes Significantly to Sales Growth (1) Sales Growth Case Growth 5.9% 5.7% 4.1% 4.3% 4.1% 3.0% 3.2% 2.2% 1Q14 2Q14 3Q14 4Q14 Organic Acquisitions 1Q14 2Q14 3Q14 4Q14 Inflation Case Growth/Mix Fx (1) Includes Broadline and SYGMA 11
Slide 12: Inflation Contributes to Gross Profit Performance, Pressures Gross Margin
Inflation Contributes to Gross Profit Performance, Pressures Gross Margin Gross Profit ($ Growth) YOY Decline in Gross Margin (bps) 4.0% (9) (19) 2.7% (28) (32) (31) 1.8% (60) (60) (68) 0.7% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 Q114 Q214 Q314 Q414 12
Slide 13: 4Q14 Adjusted Operating Expenses
4Q14 Adjusted Operating Expenses (YOY change; $ in millions; excludes certain items) 4Q14 Reported operating expense +7.4% Adjusted1 operating expense +4.9% 18 17 21 21 $1,673 13.6% of $1,596 Sales 13.8% of Sales 4Q13 Delivery Corporate Acquisitions Other 4Q14 1 See Non-GAAP reconciliations at t
Slide 14: FY14 Highlights
FY14 Highlights Results Adjusted for Reported Certain Items1 $ Millions, except YOY % YOY % FY14 FY14 share data Change Change Sales $46,517 4.7 % $46,517 4.7% Gross Profit $8,181 2.3% $8,181 2.3% Operating $6,594 4.0% $6,444 3.2% Expenses Operating $1,587 (4.3%) $1,737 (0.9%) Income Net Earnings $9
Slide 15: FY14 Adjusted Operating Expenses
FY14 Adjusted Operating Expenses (YOY change; $ in millions; excludes certain items) FY14 Reported operating expense +4.0% Adjusted1 operating expense +3.2% 53 40 31 39 44 106 101 $6,444 $6,243 13.9% of Sales 14.1% of Sales FY13 Business Acquisitions Depreciation/ Delivery Corporate Other Other
Slide 16: We Reduced Adjusted Cost/Case by Six Cents
We Reduced Adjusted Cost/Case by Six Cents Adjusted Cost per Case1 $ Change FY14 vs. FY13 $0.10 The decline in cost per case $0.05 was primarily due to: Business Transformation $0.00 benefits Partially offset by: -$0.05 Increased delivery costs -$0.10 -$0.15 Total SG&A Operations 1 Represents op
Slide 17: Business Transformation Project Costs
Business Transformation Project Costs YTD YTD (in millions) 4Q14 4Q13 FY14 FY13 Operating expense $79 $88 $277 $331 Capital investment $5 $6 $33 $20 Cash outlay $62 $73 $223 $274 17
Slide 18: We Exceeded Our Targeted FY14 Business Transformation Benefits
We Exceeded Our Targeted FY14 Business Transformation Benefits Reduce Cost Lower Product Costs $550-650 Structure million Routing optimization Improved sourcing implemented at participation majority of locations Enhanced category of size FY15 management Significant progress capabilities opti
Slide 19: Prudently Managing Capital Expenditures
Prudently Managing Capital Expenditures (Gross CAPEX; $ millions) 4th Quarter Year-to-Date $523 $512 $136 $132 FY 2014 FY 2013 FY 2014 FY 2013 Technology Fleet Facilities Technology Fleet Facilities Capital expenditures, net of asset sales, were flat year-over-year 19
Slide 20: Free Cash Flow Continues to Improve
Free Cash Flow Continues to Improve YTD YTD $ Millions FY14 FY13 % Chg Cash Flow from Operations $1,493 $1,512 (1.2%) 1 Capital Expenditures, net (497) (496) 0.2% Free Cash Flow2 $995 $1,015 (2.0%) Adjusted Free Cash Flow3 $1,080 $1,050 2.8% Dividends Paid $667 $648 2.9% 1) Capital expenditures are
Slide 21: FY15 Guidance
FY15 Guidance Long-term sales growth expectations: 4-6% annually We expect to achieve our targeted annualized benefits of $550-650 million in FY15 Our objective is to hold operating cost per case flat year-over-year in our North America Broadline business Corporate expenses will be higher, r
Slide 22: Update on Proposed Merger with US Foods
Update on Proposed Merger with US Foods Integration planning efforts continue; focused on Day one readiness Value creation – confidence in previously announced synergies Long-term organizational design – post-merger leadership team announced Merger benefits our customers and helps us becom
Slide 23: Good things come from Sysco
Good things Sysco od ‘come from
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 25: Non-GAAP Reconciliations
Non-GAAP Reconciliations 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 charges from restructuring our execut
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations 13-Week 13-Week 13-Week 13-Week Period Ended Period Ended Period Change Period June 28, 2014 June 29, 2013 in Dollars % Change Operating expenses (GAAP) $ 1,731,334 $ 1,612,377 $ 118,957 7.4 % Impact of restructuring executive retirement plans (1,006) (3,382) 2,376 -70.3 Imp
Slide 27: Non-GAAP Reconciliations
Non-GAAP Reconciliations 52-Week 52-Week 52-Week 52-Week Period Ended Period Ended Period Change Period June 28, 2014 June 29, 2013 in Dollars % Change Operating expenses (GAAP) $ 6,593,913 $ 6,338,129 $ 255,784 4.0 % Impact of restructuring executive retirement plans (3,329) (20,990) 17,661 -84.1 I
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation 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 includes proceeds
Slide 29: Non-GAAP Reconciliation
Non-GAAP Reconciliation Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Cost per Case Sysco measures its expense performance on a cost per case basis. This metric is calculated by taking the total operating expense of our North American Broadline companies, di