Sysco Corporation · NYSE:SYY
Sysco — Q2 2014 Earnings Presentation
19 slides from Sysco's earnings presentation, Feb 3, 2014
Slide 1: Sysco Second Quarter Fiscal 2014 Earnings Results
Sysco Second Quarter Fiscal 2014 Earnings Results February 3, 2014
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements made in this presentation or the accompanying earnings call 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 forw
Slide 3: 2Q14 Highlights
2Q14 Highlights Adjusted for Adjusted for Reported Certain Items Underlying Results1 Business Results1 $ Millions, except YOY % YOY % YOY % 2Q14 2Q14 2Q14 share data Change Change Change Sales $11,238 4.1% $11,238 4.1% $11,238 4.1% Gross Profit $1,965 0.7% $1,965 0.7% $1,965 0.7% Operating $1,613 2.
Slide 4: Foodservice Sales and Traffic Softened
Foodservice Sales and Traffic Softened Restaurant Spend/Traffic (1) U.S. Retail Data(2) % Change vs. Year Ago % Change vs. Year Ago 10.0% 3.5% 3.2% 9.0% 2.9% 3.0% 8.0% 2.5% 2.4% 2.5% 7.0% 2.1% 2.1% 2.2% 2.1% 1.9% 6.0% 4.6% 2.0% 1.7% 1.5% 5.0% 1.5% 1.2% 1.3% 4.0% 1.0% 3.0% 4.1% 0.5% 2.0% 0.0% 1.0% 0.
Slide 5: Business Transformation Progress
Business Transformation Progress Technology Category Operations Transformation Management Transformation Resumed deployment Majority of wave one Routing optimization rollout categories launched accelerated Boise – November Wave two is expected to Preparing to launch a new Phoenix & Las
Slide 6: Integration Planning Leadership Team Announced
Integration Planning Leadership Team Announced Steering Committee (Sr. Execs from Both Overall leadership of integration planning Companies) Integration Leader (Chris Kreidler) Integration Management Office IMO will lead, plan and track the (IMO) integration Business teams Merchandising/ Corporate
Slide 7: Key Takeaways
Key Takeaways We are focused on Creating greater value for our customers, Delivering our annual business plan, Driving transformational change within our company, and US Foods merger integration planning Expect market conditions will improve modestly in calendar year 2014 and that Sysco’
Slide 8: 2Q14 Highlights
2Q14 Highlights Adjusted for Adjusted for Reported Certain Items Underlying Results1 Business Results1 $ Millions, except YOY % YOY % YOY % 2Q14 2Q14 2Q14 share data Change Change Change Sales $11,238 4.1% $11,238 4.1% $11,238 4.1% Gross Profit $1,965 0.7% $1,965 0.7% $1,965 0.7% Operating $1,613 2.
Slide 9: Case Growth Drives Sales Growth
Case Growth Drives Sales Growth (1) Case Growth Sales Growth 5.0% 7.0% 4.5% 4.1% 4.3% 5.7% 4.0% 6.0% 5.0% 3.5% 4.1% 3.0% 5.0% 3.0% 4.0% 4.0% 2.5% 1.7% 3.0% 2.0% 1.5% 2.0% 1.0% 1.0% 0.5% 0.0% 0.0% -0.5% -1.0% 3Q13 4Q13 1Q14 2Q14 3Q13 4Q13 1Q14 2Q14 Organic Acquisitions Inflation Case Growth/Mix Fx (1
Slide 10: Gross Margin Pressure Persists
Gross Margin Pressure Persists ($ in millions) YOY Decline in Gross Margin (bps) Customer mix has -10 negatively impacted our gross margin due to: -30 (26) -50 (33) (34) Increased sales in our lower gross margin (54) -70 (60) corporate-managed (66) (68) business -90 (95) -110 Soft sales in our 3
Slide 11: Business Transformation Project Costs
Business Transformation Project Costs (in millions) 2Q13 2Q14 1H13 1H14 Operating expense $81 $63 $159 $130 Capital investment $3 $10 $10 $14 In FY14, Business Transformation: Expense expected to be $300-350 million Capital expected to be $30-40 million 11
Slide 12: Free Cash Flow Increased 64% in 1H14
Free Cash Flow Increased 64% in 1H14 $ Millions 1H13 1H14 Cash Flow from Operations $387 $458 Capital Expenditures, net1 $258 $247 Free Cash Flow $128 $211 Dividends Paid $316 $328 1) Net of proceeds from sale of equipment 12
Slide 13: Capital Expenditures
Capital Expenditures ($ millions) The increase in capex is mainly due to a new facility under construction (Southwest Ontario) $270 $262 $135 $106 2Q13 2Q14 1H13 1H14 Technology Fleet Facilities Technology Fleet Facilities 13
Slide 14: Good things come from Sysco
Good things Sysco od ‘come from
Slide 15: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 16: 2Q14 Non-GAAP Reconciliations
2Q14 Non-GAAP Reconciliations Sysco’s results of operations are impacted by certain items which include charges from restructuring our executive retirement plans, multiemployer pension charge, severance charges, US Foods merger costs, change in estimate of self insurance and charges from facility cl
Slide 17: 2Q14 Non-GAAP Reconciliation
2Q14 Non-GAAP Reconciliation 13-Week 13-Week 13-Week 13-Week Period Ended Period Ended Dec. 29, Period Change Period Dec. 28, 2013 2012 in Dollars % Change Operating expenses (GAAP) $ 1,613,174 $ 1,569,459 $ 43,715 2.8 % Impact of Restructuring Executive Retirement Plans (1,035) (12,163) 11,128 -91.
Slide 18: 2Q14 Non-GAAP Reconciliation
2Q14 Non-GAAP Reconciliation 26-Week 26-Week 26-Week 26-Week Period Ended Period Ended Dec. 29, Period Change Period Dec. 28, 2013 2012 in Dollars % Change Operating expenses (GAAP) $ 3,200,463 $ 3,120,472 $ 79,991 2.6 % Impact of Restructuring Executive Retirement Plans (1,550) (12,163) 10,613 -87.
Slide 19: 2Q14 Non-GAAP Reconciliation
2Q14 Non-GAAP Reconciliation Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Acquired Operations on Operating Expenses (In Thousands, Except for Share and Per Share Data) Sysco’s operating expenses in the second quarter and first 26 weeks of fiscal 2