Sysco Corporation · NYSE:SYY
Sysco — Q2 FY2018 Earnings Presentation
29 slides from Sysco's earnings presentation, January 2018
Slide 1: Sysco Earnings Results | 2Q18
Sysco Earnings Results | 2Q18
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Statements made in this presentation or in our earnings call for the second quarter of fiscal 2018 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: Tom Bené, President & CEO
TOM BENÉ PRESIDENT & CEO
Slide 4: Sysco reported strong top-line results driven by solid case growth
SYSCO REPORTED STRONG TOP-LINE RESULTS DRIVEN BY SOLID CASE GROWTH 1 Total Sysco 2Q18 Sales $14.4B 7% Adj. Operating Income $579M 4% Adj. EPS $0.782 34.5% 1 See Non-GAAP reconciliations at the end of the presentation. 2 Further adjusting to remove the beneficial change in our U.S. statutory tax rate
Slide 5: U.S. Foodservice operations delivered strong top-line results
U.S. FOODSERVICE OPERATIONS DELIVERED STRONG TOP-LINE RESULTS… 1 U.S. Foodservice Operations 2Q18 Sales $9.7B 6.6% Gross Profit $1.9B 5.1% OPEX $1.2B 5.9% Operating Income $706M 3.6% 1 See Non-GAAP reconciliations at the end of the presentation. 5
Slide 6: Enriching our customers' experience through Sysco branded products and digital capabilities
ENRICHING OUR CUSTOMERS’ EXPERIENCE THROUGH SYSCO BRANDED PRODUCTS AND DIGITAL CAPABILITIES SYSCO BRAND US BROADLINE Local Case 15 quarters of Growth consecutive growth 4.8% Digital continues to grow 46% of +37 bps Local cases 6
Slide 7: Supply chain and strategic investments drove expenses this quarter
SUPPLY CHAIN AND STRATEGIC INVESTMENTS DROVE EXPENSES THIS QUARTER INVESTMENT IN SUPPLY CHAIN SALESFORCE Volume driven costs Start-up costs related to new Utilize data and insights to target national business growth opportunities Increase in fuel price 7
Slide 8: International Foodservice operations delivered mixed results
INTERNATIONAL FOODSERVICE OPERATIONS DELIVERED MIXED RESULTS 1 International Foodservice Operations 2Q18 Sales $2.9B 9.3% Gross Profit $600M 4.1% Adj. OPEX $521M 11.9% Adj. Operating Income $79M 28.8% 1 See Non-GAAP reconciliations at the end of the presentation. 8
Slide 9: We had mixed results across our international business
WE HAD MIXED RESULTS ACROSS OUR INTERNATIONAL BUSINESS Europe Canada Latin America • U.K.: Inflation of ~6%, investment in • Operating leverage gap of 2 • Solid growth in Costa Rica supply chain transformation and points and continued expansion of customer experience initiatives cash and carry • Str
Slide 10: The fundamentals of our business are strong
THE FUNDAMENTALS OF OUR BUSINESS ARE STRONG ENRICHING THE CUSTOMER EXPERIENCE • Continue to make progress on customer and operational strategies to improve our customers’ experience • Remain confident in our ability to deliver financial objectives for FY18 • On track to achieve initial three- year f
Slide 11: Joel Grade, EVP & CFO
JOEL GRADE EVP & CFO UF, ee
Slide 12: 2Q18 Financial Highlights
2Q18 FINANCIAL HIGHLIGHTS Adjusted1 Adjusted1 $MM, except 2Q18 YoY % Change YTD18 YoY % Change per share data Sales $14,411 7.1% $29,062 6.0% Gross Profit $2,699 5.0% $5,493 4.4% Operating $2,120 5.3% $4,252 4.2% Expense Operating $579 3.9% $1,241 4.8% Income Net Earnings $412 29.2% $806 16.0% Dilut
Slide 13: Operating Performance
OPERATING PERFORMANCE 1 1 1 2 Total Sysco Adj. Operating Leverage 2Q18 YTD18 Average 6.0% 4.8% 4.0% 4.5% 3.6% 4.1% 5.0% 4.4% 4.0% 2.0% 2.0% 5.3% 4.2% 2.3% 1.7% 0.0% FY15 FY16 FY17 GP growth OPEX growth … Anticipate improved leverage in the 2nd half of the year 1 See Non-GAAP reconciliations at the e
Slide 14: 2Q18 and YTD18 Cash Flow
2Q18 AND YTD18 CASH FLOW Quarterly Cash Flow ($M) Year-to-Date Cash Flow ($M) $1,000 $1,000 $800 $800 $600 $600 $400 $400 $200 $200 $0 $0 2Q17 2Q18 YTD17 YTD18 Cash from Ops Free Cash Flow Cash from Ops Free Cash Flow 1 See Non-GAAP reconciliations at the end of this presentation. 14
Slide 15: Business Updates
BUSINESS UPDATES BUSINESS UPDATES • Expect stronger second half of the year • Evaluating options for cash benefit related to tax reform, current annual estimate is $200- $300M • FY18 tax reform impact on EPS expected to be +$0.09 - +$0.13 15
Slide 16: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS
Slide 17: Impact of Certain Items
IMPACT OF CERTAIN ITEMS Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items Sysco’s results of operations for fiscal 2018 and 2017 are impacted by restructuring costs consisting of: (1) expenses associated with our revised business technolo
Slide 18: Impact of Certain Items, 2Q18
IMPACT OF CERTAIN ITEMS, 2Q18 Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items (In Thousands, Except for Share and Per Share Data) 13-Week 13-Week Period Period Ended Period Ended Period Change %/bps Dec. 30, 2017 Dec. 31, 2016 in Dollar
Slide 19: Impact of Certain Items, 2Q18 (Continued)
IMPACT OF CERTAIN ITEMS, 2Q18 (CONTINUED) 13-Week 13-Week Period Period Ended Period Ended Period Change %/bps Dec. 30, 2017 Dec. 31, 2016 in Dollars Change Diluted earnings per share (GAAP) $ 0.54 $ 0.50 $ 0.04 8.0% Impact of restructuring costs (1) 0.04 0.07 (0.03) -42.9% Impact of acquisition-rel
Slide 20: Impact of Certain Items, YTD18
IMPACT OF CERTAIN ITEMS, YTD18 Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items (In Thousands, Except for Share and Per Share Data) 26-Week 26-Week Period Period Ended Period Ended Period Change %/bps Dec. 30, 2017 Dec. 31, 2016 in Dolla
Slide 21: Impact of Certain Items, YTD18 (Continued)
IMPACT OF CERTAIN ITEMS, YTD18 (CONTINUED) 26-Week 26-Week Period Period Ended Period Ended Period Change %/bps Dec. 30, 2017 Dec. 31, 2016 in Dollars Change Diluted earnings per share (GAAP) $ 1.23 $ 1.08 $ 0.15 13.9% Impact of restructuring costs (1) 0.08 0.14 (0.06) -42.9% Impact of acquisition-r
Slide 22: Impact of Certain Items on Applicable Segments
IMPACT OF CERTAIN ITEMS ON APPLICABLE SEGMENTS Sysco Corporation and its Consolidated Subsidiaries Segment Results Non-GAAP Reconciliation (Unaudited) Impact of Certain Items on Applicable Segments (In Thousands, Except for Share and Per Share Data) 13-Week 13-Week Period Ended Period Ended Period C
Slide 23: Adjusted Operating Leverage
ADJUSTED OPERATING LEVERAGE Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Total Sysco Operating Leverage (impact of Certain Items, extra week and Brakes) (In Thousands) 26-Week 26-Week Period Ended Period Ended Period Change Period Dec 30, 2017 Dec 31, 2016
Slide 24: Adjusted Operating Leverage (Continued)
ADJUSTED OPERATING LEVERAGE (CONTINUED) 53-Week 52-Week Period Ended Period Ended Period Change Period Jul. 2, 2016 Jun. 27, 2015 in Dollars % Change Gross profit $ 9,040,472 $ 8,551,516 $ 488,956 5.7% Less 1 week fourth quarter gross profit (178,774) - (178,774) NM Comparable gross profit using a 5
Slide 25: Adjusted Operating Leverage (Continued)
ADJUSTED OPERATING LEVERAGE (CONTINUED) Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Total Sysco Operating Leverage (impact of Certain Items, extra week and Brakes) (In Thousands) (a) 10 quarter average gross profit (GAAP) 9.9% (b) 10 quarter average gross
Slide 26: Adjusted Operating Leverage (Continued)
ADJUSTED OPERATING LEVERAGE (CONTINUED) 13-Week Period 13-Week 13-Week 13-Week 13-Week Period 13-Week 13-Week 13-Week 13-Week 13-Week 13-Week 13-Week Ended Period Ended Period Change Period Ended Period Ended Period Change Period Period Ended Period Ended Period Change Period Sep. 30, 2017 Oct. 1, 2
Slide 27: Adjusted Operating Leverage (Continued)
ADJUSTED OPERATING LEVERAGE (CONTINUED) 13-Week Period 13-Week 13-Week 13-Week 13-Week Period 13-Week Period 13-Week 13-Week 13-Week 13-Week 13-Week 13-Week Ended Period Ended Period Change Period Ended Ended Period Change Period Period Ended Period Ended Period Change Period Dec. 31, 2016 Dec. 26,
Slide 28: Adjusted Operating Leverage (Continued)
ADJUSTED OPERATING LEVERAGE (CONTINUED) 13-Week Period 13-Week 13-Week 13-Week 13-Week Period 13-Week Period 13-Week 13-Week 13-Week 13-Week 13-Week 13-Week Ended Period Ended Period Change Period Ended Ended Period Change Period Period Ended Period Ended Period Change Period Mar. 26, 2016 Mar. 28,
Slide 29: Free Cash Flow
FREE CASH FLOW Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Free Cash Flow (In Thousands) Free cash flow represents net cash provided from operating activities less purchases of plant and equipment and includes proceeds from sales of plant and equipment. Sy