Slide 1: Sysco Fiscal 4Q15 and Fiscal 2015 Financial Results
Sysco Fiscal 4Q15 and Fiscal 2015 Financial Results August 10, 2015
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements made in this press release or in our earnings call for the third quarter of fiscal 2015 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 R
Slide 3: Bill DeLaney, President and CEO
Bill DeLaney President and CEO
Slide 4: Fiscal 2015 Accomplishments
Fiscal 2015 Accomplishments Record sales of $49 billion, +5% Adjusted operating income +3%, and EPS +5% Free cash flow of $1 billion Adjusted ROIC of 13.1% Increased our dividend and distributed nearly $700 million to shareholders Recently announced $3 billion share buyback over 2 years
Slide 5: Fiscal 4Q15 Highlights
Fiscal 4Q15 Highlights Broadline1 case growth +3.6% Gross profit +3%; gross margin +35 bps Operating expense trends improved Cost per case2 was flat compared to prior year on a constant currency basis 1 Excludes SYGMA 2 Cost per case for North American Broadline 5
Slide 6: Key Drivers – Fiscal 4Q15 and Full-Year 2015
Key Drivers – Fiscal 4Q15 and Full-Year 2015 Increasing acceleration of local case growth Category management process implementation Improved Sysco-brand penetration Growing Hispanic customer segment offering Successful joint business planning program Managed volatile inflation environme
Slide 7: Market & Economic Trends Are Mixed
Market & Economic Trends Are Mixed Consumer Confidence National Restaurant Association 115.0 Restaurant Performance Index 105 110.0 Pre-recession Level (2006) 104 102.5 106 103 105.0 103.8 102 100.0 101 101.5 95.2 95.0 94.5 100 90.3 90.9 99 90.0 98 85.0 97 96 80.0 95 Jul-14 Oct-14 Jan-15 Apr-15 Jul-
Slide 8: Chris Kreidler, EVP and CFO
Chris Kreidler EVP and CFO Good things
Slide 9: Fiscal 4Q15 Financial Highlights
Fiscal 4Q15 Financial Highlights Adjusted1 Reported $M, except per share Fiscal YOY % Fiscal YOY % data 4Q15 Change 4Q15 Change Sales $12,402 0.9 % $12,402 0.9 % Gross Profit $2,220 3.0 % $2,220 3.0 % Operating $1,711 2.2 % $2,099 21 % Expenses Operating $509 5.8 % $121 (72 %) Income Net Earnings $3
Slide 10: Fiscal 2015 Financial Performance Highlights
Fiscal 2015 Financial Performance Highlights Sales, gross profit and adjusted operating expense – each +5%; 1st half of FY15: Sales and gross profit benefited from inflation and supported operating expense growth that grew too fast 2nd half of FY15: Inflation moderated, constraining sales and
Slide 11: Sales Growth Moderated in Fiscal 4Q15
Sales Growth Moderated in Fiscal 4Q15 Sales and Case Growth Sysco’s Estimated Product Cost 10.0% 7.0% Inflation 9.0% 6.0% 6.0% 8.0% 7.6% 4.9% 7.0% 5.0% 5.9% 6.2% 6.0% 5.7% 4.1% 4.0% 3.7% 5.0% 4.1% 3.2% 4.2% 4.0% 3.0% 4.1% 4.3% 2.1% 3.0% 3.6% 2.2% 2.0% 3.0% 2.0% 2.3% 2.5% 2.2% 0.9% 0.8% 0.9% 1.0% 1.0
Slide 12: Improved Gross Margin Performance in Fiscal 4Q15
Improved Gross Margin Performance in Fiscal 4Q15 Gross Margin % 18.0% 17.90% Gross margin improvement 17.8% driven mainly by U.S. Broadline 17.6% performance Stronger relative mix of 17.4% locally-managed sales 17.2% Benefits from category 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 management Nat
Slide 13: Expenses Related To Certain Items
Expenses Related To Certain Items ($ in millions) F4Q15 FY15 Certain Items Related to US Foods Merger: Operating Expense: Termination fees $ 313 $ 313 Integration planning and litigation costs 63 231 Write-off of merger integration capital 11 11 Interest expense on merger debt 41 138 Total US Foods
Slide 14: Fiscal 4Q15 Adjusted Operating Expense, Income, EPS
Fiscal 4Q15 Adjusted Operating Expense, Income, EPS Adjusted operating expense +$36 million, or 2% Mainly due to higher payroll, driven by increased case volume and incentive accruals Cost per case Down $0.01/case on constant currency basis Adjusted operating income +5.8% Adjusted operat
Slide 15: Strong Cash Flow Performance
Strong Cash Flow Performance ($MM) FY15 FY14 $ Chg. Cash Flow from Operations $ 1,555 $1,492 $ 63 Capital Expenditures, net1 ($ 518) ($ 497) ($ 21) Free Cash Flow $ 1,037 $995 $ 42 Dividends Paid $ 695 $667 $ 28 Both cash flow from operations and free cash flow YOY growth were negatively impacted
Slide 16: Strategic Investments in Capital Expenditures
Strategic Investments in Capital Expenditures Gross Capex Gross Capex by Quarter ($MM) ($MM) $600 $200 $523 $543 $179 $180 $500 $160 $139 $140 $133 $400 $125 $122 $117 $119 $120 $106 $300 $100 $80 $200 $60 $40 $100 $20 $0 $0 FY14 FY15 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 Facilities Fleet IT-Other
Slide 17: Improved Performance Contributed to ROIC Growth
Improved Performance Contributed to ROIC Growth Adjusted Return on Invested Capital 17.1% 14.9% 13.3% 13.1% 12.4% Jun. FY11 Jun. FY12 Jun. FY13 Jun. FY14 Jun. FY15 1) See non-GAAP reconciliations 17
Slide 18: Fiscal 2016 Guidance
Fiscal 2016 Guidance FY16 is a 53-week fiscal year (extra week in Q4) Little to no inflation in early FY16 will create modest sales and gross profit headwind over the next quarter or two Impact of merger termination in 1Q16: $ in millions Cash Expense Termination fees $ 313 $ - 1% bond call pr
Slide 19: Fiscal 2016 Guidance Continued
Fiscal 2016 Guidance Continued $2B in new debt issuance around the end of fiscal 1Q16 $1.5B to fund accelerated share repurchase; $0.5B to term out commercial paper Will result in adjusted interest expense being higher in FY16 vs. FY15 Impact of share buyback estimated to add $0.03-$0.04 to
Slide 20: Bill DeLaney, President and CEO
Bill DeLaney President and CEO
Slide 21: Pleased With Our Progress … More Work To Do
Pleased With Our Progress … More Work To Do Our Vision: To be our customers’ most valued and trusted business partner Our strategy is sound Enrich the experience of doing business with Sysco Enhance productivity and innovation Attract and develop the best people Explore opportunities for
Slide 22: Updating Our Three-Year Strategic Business Plan
Updating Our Three-Year Strategic Business Plan Opportunities to accelerate locally-managed case growth Product and service differentiation Enhanced sales and technology capabilities Build on recent success in stabilizing gross margin Product innovation Grow Sysco Brand Improve pricing
Slide 23: Good things
Good things Sysco
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations 24
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 multiemployer withdrawal charges (MEP
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) 13-Week 13-Week 13-Week 13-Week Impact of Certain Items Period Ended Period Ended Period Change Period (In Thousands, Except for Share and Per Share Data) Jun. 27, 2015 Jun. 28, 2014 in D
Slide 27: Non-GAAP Reconciliations
Non-GAAP Reconciliations Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) 52-Week 52-Week 52-Week 52-Week Impact of Certain Items Period Ended Period Ended Period Change Period (In Thousands, Except for Share and Per Share Data) Jun. 27, 2015 Jun. 28, 2014 in D
Slide 28: Non-GAAP Reconciliations
Non-GAAP Reconciliations 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 Reconciliations
Non-GAAP Reconciliations Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Cost per Case Cost per case is an important metric management uses to measure our expense performance. This metric is calculated by taking the total operating expense of our North America
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Return on Invested Capital (ROIC) and Adjusted ROIC (In Thousands) We calculate ROIC as net earnings divided by (i) stockholder’s equity, computed as the average of adjusted stockholders’