Sysco Corporation · NYSE:SYY
Sysco — Q2 FY2019 Earnings Presentation
29 slides from Sysco's earnings presentation, February 2019
Slide 1: Sysco Earnings Results 2Q19
Sysco Earnings Results | 2Q19
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Statements made in this presentation or in our earnings call for the second quarter of fiscal 2019 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: Tom Bené, Chairman, President & CEO
TOM BENÉ CHAIRMAN, PRESIDENT & CEO
Slide 4: Our strategic priorities help us carry our vision and values forward
OUR STRATEGIC PRIORITIES HELP US CARRY OUR VISION AND VALUES FORWARD FOR DISCIPLINED, PROFITABLE GROWTH 4
Slide 5: Sysco reported solid top-line growth for the quarter
SYSCO REPORTED SOLID TOP-LINE GROWTH FOR THE QUARTER 1 Total Sysco 2Q19 Sales $14.8B 2.5% Gross Profit $2.8B 2.7% Adj. Operating Income $603.3M 4.8% Adj. EPS $0.75 -4.0% 1 See Non-GAAP reconciliations at the end of the presentation. 5
Slide 6: Broader economic and industry drivers, which impact our business
BROADER ECONOMIC AND INDUSTRY DRIVERS, WHICH IMPACT OUR BUSINESS CUSTOMER GROWTH Total Sysco FY18 Despite the recent and somewhat CONSUMER CONFIDENCE volatile financial markets, U.S. consumer confidence remains fairly strong 6.1 Positive implications for restaurant RESTAURANT SALES sales, including
Slide 7: M&A is a key lever of our growth strategy
M&A IS A KEY LEVER OF OUR GROWTH STRATEGY Strategically acquire companies in existing markets IRELAND • Grow our share with local operators • Achieve supply chain synergies CENTRAL • Fill potential gaps in our ILLINOIS product offerings and capabilities We recently announced two transactions, which
Slide 8: We recently implemented organizational and executive leadership changes
WE RECENTLY IMPLEMENTED ORGANIZATIONAL AND EXECUTIVE LEADERSHIP CHANGES To increase agility, Reduction of 10% of reduce costs and salaried corporate accelerate decision support positions making Further aligns Sysco Essential to sharpen with customer first focus on strategic operating model prioritie
Slide 9: U.S. Foodservice Operations delivered solid top-line results
U.S. FOODSERVICE OPERATIONS DELIVERED SOLID TOP-LINE RESULTS U.S. Foodservice Operations 2Q19 Sales $10.1B 4.2% Gross Profit $2.0B 4.5% OPEX $1.3B 4.7% Operating Income $737M 4.2% 9
Slide 10: Enriching our customers' experience through Sysco brand, Cutting Edge Solutions and digital
ENRICHING OUR CUSTOMERS’ EXPERIENCE THROUGH SYSCO BRAND, CUTTING EDGE SOLUTIONS AND DIGITAL CAPABILITIES SYSCO BRAND E-COMMERCE PLATFORMS We continue to make progress on improving our customer facing tools, including a refreshed delivery app and improvement to our digital shopping platform. Local Be
Slide 11: International operations performed in line with our expectations
INTERNATIONAL OPERATIONS PERFORMED IN LINE WITH OUR EXPECTATIONS 1 International Foodservice Operations 2Q19 Sales $2.9B 0.8% Gross Profit $590M -1.6% Adj. OPEX $507M -2.6% Adj. Operating Income $83M 5.1% 1 See Non-GAAP reconciliations at the end of the presentation. 11
Slide 12: We recently launched Sysco France at SIRHA in Lyon
WE RECENTLY LAUNCHED SYSCO FRANCE AT SIRHA IN LYON SYSCO FRANCE • Business integration of Brake France and Davigel progressing well • Launched new Sysco France branding at SIRHA World Hospitality and Food Service Event • Another important step to building our position as a leading European foodservi
Slide 13: The fundamentals in the industry and in our business are solid
THE FUNDAMENTALS IN THE INDUSTRY AND IN OUR BUSINESS ARE SOLID SUMMARY • Our overall fundamentals are solid, and we remain focused on delivering against our strategic priorities. • Continued work to do to achieve our three-year plan financial objectives. • We continue to invest in technology and our
Slide 14: Joel Grade, EVP & CFO
JOEL GRADE EVP & CFO
Slide 15: 2Q19 Financial Highlights
2Q19 FINANCIAL HIGHLIGHTS $MM, except per share data 2Q19 YoY % Change Sales $14,766 2.5% Gross Profit $2,772 2.7% Adj. Operating Expense1 $2,168 2.1% Adj. Operating Income1 $603 4.8% Adj. Net Earnings1 $393 (4.5%) Adj. Diluted EPS1 $0.75 (4.0%) 1 See Non-GAAP reconciliations at the end of the prese
Slide 16: Operating Performance
OPERATING PERFORMANCE Total Sysco Adj. Operating Leverage1 6 Quarter 1 1,2 2Q19 Average 5.7% 6.0% 5.5% 5.6% 5.4% 3.9% 2.7% 5.0% 4.4% 3.8% 4.0% 2.7% 3.4% 3.6% 2.0% 2.7% 2.1% 3.8% 2.1% 0.0% 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 GP growth OPEX growth … Anticipate 150bps gap for FY18-FY20 three-year plan 1 See
Slide 17: Pulling forward cost improvement initiatives to drive adjusted operating income growth
WE ARE PULLING FORWARD COST IMPROVEMENT INITIATIVES AND IMPLEMENTING ADDITIONAL ACTIONS TO DRIVE ADJUSTED OPERATING INCOME GROWTH Finance This initiative increases centralization and standardization of our end- Transformation to-end global processes and workflow and utilizes digital automation Roadm
Slide 18: Increased items related to strategic investments in our business
WE SAW INCREASED CERTAIN ITEMS RELATED TO STRATEGIC INVESTMENTS IN OUR BUSINESS LONG-TERM GROWTH INITIATIVES Integration of Businesses European Multi-temperature Initiative Finance Transformation Roadmap Canadian Regionalization Primarily in our International segment 18
Slide 19: 2Q19 Cash Flow
2Q19 CASH FLOW 1ST 26 1ST 26 WEEKS OF WEEKS OF 2Q181 2Q191 Cash from Ops $933.2M $917.8M -$15.4M Free Cash Flow $678.5M $700.9M $22.4M 1 See Non-GAAP reconciliations at the end of the presentation. 19
Slide 20: Summary
SUMMARY SUMMARY Our second quarter results were in line with our expectations Continued work to do to manage overall costs and achieve the financial objectives of our three-year plan Committed to supporting our customers and executing on a high level for continued improvement of our financial
Slide 21: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS
Slide 22: Impact of Certain Items
IMPACT OF CERTAIN ITEMS Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items Our discussion below of our results includes certain non-GAAP financial measures that we believe provide important perspective with respect to underlying business t
Slide 23: Impact of Certain Items, 2Q19
IMPACT OF CERTAIN ITEMS, 2Q19 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 Ended Period Ended Period Change Period DeC. 29, 2018 DeC. 30, 2017 in Dollars % Ch
Slide 24: Impact of Certain Items, 2Q19 (Segment)
IMPACT OF CERTAIN ITEMS, 2Q19 (SEGMENT) 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 Change P
Slide 25: Adjusted Operating Leverage
ADJUSTED OPERATING LEVERAGE Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Total Sysco Operating Leverage (impact of Certain Items) (In Thousands) (a) 6 quarter average gross profit (GAAP) 4.4% (b) 6 quarter average operating expenses (GAAP) 4.0% (c) 6 quarte
Slide 26: Adjusted Operating Leverage (Continued)
ADJUSTED OPERATING LEVERAGE (CONTINUED) 13-Week Period 13-Week 13-Week 13-Week 13-Week 13-Week 13-Week 13-Week Ended Period Ended Period Change Period Period Ended Period Ended Period Change Period Jun. 30, 2018 Jul. 1, 2017 in Dollars % Change Mar. 31, 2018 Apr. 1, 2017 in Dollars % Change Gross pr
Slide 27: Operating Income Growth
OPERATING INCOME GROWTH Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Operating Income Growth (In Thousands) Year Ended 26-Week Period Ended Cumulative 4- Cumulative 2- Cumulative 6- June 30, 2018 July 1, 2017 Quarter Growth December 29, 2018 December 30, 20
Slide 28: 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
Slide 29: Follow me-to-4
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