Sysco Corporation · NYSE:SYY
Sysco — Q3 FY2015 Earnings Presentation
23 slides from Sysco's earnings presentation, May 4, 2015
Slide 1: Sysco 3Q15 Earnings Results
Sysco 3Q15 Earnings Results May 4, 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: 3Q15 Highlights
3Q15 Highlights Adjusted1 Reported $M, except per share YOY % YOY % 3Q15 3Q15 data Change Change Sales $11,747 4.2% $11,747 4.2% Gross Profit $2,057 3.1% $2,057 3.1% Operating $1,680 4.5% $1,730 4.1% Expenses Operating $377 (2.7%) $327 (1.6%) Income Net Earnings $238 7.0% $177 (2.2%) Diluted EPS $0.
Slide 4: Business Transformation Update
Business Transformation Update Already exceeded original 3-year, $600 million target for annualized savings Continued rollout and successful execution of Category Management Focused on growing volumes via innovation and strategic partnership with suppliers Moving forward with a cohesive, ent
Slide 5: M&A Update
M&A Update Pacific Star Recently completed the transaction to acquire 50% of this leading foodservice distributor in Mexico Tannis Trading (subsequent to Q3 close) Expands our presence in Canada’s 4th largest market US Foods Trial related to the FTC’s motion for a preliminary injunction begins
Slide 6: CFO Transition
CFO Transition Joel Grade has been named Sysco Executive Vice President and Chief Financial Officer, effective Sept. 1, 2015 A veteran Sysco leader with nearly 20 years of experience in key finance and commercial roles Deep knowledge of our local operations and people Chris Kreidler will rem
Slide 7: Key Takeaways
Key Takeaways Encouraged by continued case growth in our locally- and corporate-managed business Leadership team making good progress in driving out initiatives to enhance gross profit dollar growth and expense management The steps being taken will reinforce our leadership position in the ever
Slide 8: 3Q15 Highlights
3Q15 Highlights Adjusted1 Reported $MM, except per share YOY % YOY % data 3Q15 3Q15 Change Change Sales $11,747 4.2% $11,747 4.2% Gross Profit $2,057 3.1% $2,057 3.1% Operating $1,680 4.5% $1,730 4.1% Expenses Operating $377 (2.7%) $327 (1.6%) Income Net Earnings $238 7.0% $177 (2.2%) Diluted EPS $0
Slide 9: Sales Growth Impacted by Inflation and Forex
Sales Growth Impacted by Inflation and Forex Sales and Case Growth Sysco’s Estimated Product Cost 10.0% 7.0% Inflation 6.0% 9.0% 6.0% 8.0% 7.6% 4.9% 5.0% 7.0% 5.9% 6.2% 4.1% 6.0% 5.7% 4.0% 3.7% 5.0% 4.1% 3.2% 4.2% 3.0% 4.0% 4.1% 4.3% 2.1% 3.0% 3.6% 2.0% 3.0% 2.0% 2.3% 2.5% 0.8% 0.9% 2.2% 1.0% 1.0% 0
Slide 10: Steady Gross Margin Performance
Steady Gross Margin Performance YOY % Change in Gross Profit $ and Gross Margin (Bps) $ Bps Growth 8.0% 0.80 Category management 6.0% 6.1% contributed significantly 6.0% 0.60 to gross profit 4.0% 4.0% 2.7% 3.1% 0.40 Local case growth in the 2.0% 1.8% 0.20 Broadline segment 0.7% remained positive
Slide 11: 3Q15 Certain Items and Operating Expenses
3Q15 Certain Items and Operating Expenses Certain items totaled $91 million $50 million in operating expense $41 million in interest expense Adjusted1 operating expense increased $73 million (+4.5%) Driven mainly by a $61 million increase in payroll expense Adjusted operating expense inc
Slide 12: Favorable Tax Rate in 3Q15
Favorable Tax Rate in 3Q15 Effective tax rate 34% vs. 39% in 3Q14 3Q15 rate impacted by the favorable resolution of a state tax matter. 3Q14 rate elevated due to the non-deductible portion of legal settlement Normalized tax rate is approximately 37% Lower than historical rates due to o Incr
Slide 13: Cash Flow
Cash Flow 39 Weeks 39 Weeks ($MM) $ Chg. FY15 FY14 Cash Flow from Operations $860 $848 $12 Capital Expenditures, net1 ($422) ($364) ($58) Free Cash Flow2 $439 $484 ($46) Adjusted Free Cash Flow3 $617 $531 $86 +16% Dividends Paid $517 $498 $19 Adjusted Free Cash Flow grew 16% during the first 3 quart
Slide 14: Strategic Investments in Capital Expenditures
Strategic Investments in Capital Expenditures ($M) Gross Capex – 39WKS ($MM) ($M) Net Capex $500 $200 $450 $437 $179 $180 $387 $400 $160 $350 $139 $140 $133 $125 $122 $117 $119 $300 $120 $250 $100 $200 $80 $150 $60 $100 $40 $50 $20 $0 $0 FY14 FY15 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 IT- Capital Spend
Slide 15: Guidance
Guidance Unless we repurchase shares during the fourth quarter, we estimate that our diluted shares outstanding may be greater than 597 million shares for the fiscal year Plan to pay off $300 million in bonds that come due in mid- June Expect to be at the high end of our range for net capital
Slide 16: Good things
Good things SV¥SCO
Slide 17: Non-GAAP Reconciliations
Non-GAAP Reconciliations 17
Slide 18: 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 19: 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) Mar. 28, 2015 Mar. 29, 2014 in D
Slide 20: 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) 39-Week 39-Week 39-Week 39-Week Period Ended Period Ended Period Change Period Mar. 28, 2015 Mar. 29, 2014 in D
Slide 21: Non-GAAP Reconciliations
Non-GAAP Reconciliations Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items and Management Incentive Accruals (In Thousands) Sysco’s results of operations are impacted by Certain Items as noted in previous non-GAAP reconciliations. Our ope
Slide 22: 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 23: 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