Sysco Corporation · NYSE:SYY
Sysco — Q3 FY2014 Earnings Presentation
21 slides from Sysco's earnings presentation, May 5, 2014
Slide 1: Sysco 3Q14 Earnings Results
Sysco 3Q14 Earnings Results May 5, 2014 Filed by Sysco Corporation Commission File No. 001-06544 Pursuant to Rule 425 under the Securities Act of 1933 Subject Company: USF Holding Corp. Sysco 3Q14 Earnings Results
Slide 2: Forward-Looking Statements
2 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 fo
Slide 3: 3Q14 Highlights
3Q14 Highlights 3 1 See Non-GAAP reconciliations at the end of this presentation. Reported Adjusted for Certain Items Results $ Millions, except share data 3Q14 YOY % Change 3Q14 YOY % Change Sales $11,277 3.2% $11,277 3.2% Gross Profit $1,995 2.7% $1,995 2.7% Operating Expenses $1,662 3.5% $1,606 3
Slide 4: Consumer Spending Rebounded as Weather Improved
Consumer Spending Rebounded as Weather Improved 4 Restaurant Spend Restaurant Traffic Restaurant Spend/Traffic (1) % Change vs. Year Ago U.S. Retail Data (2) % Change vs. Year Ago 1) Source: NPD Crest 2) Source: U.S. Dept. of Commerce Consumer Spending Rebounded as Weather Improved
Slide 5: Business Transformation Progress
Business Transformation Progress 5 Technology Product Costs Operating Costs Successfully converted 5 operating companies this fiscal year Significant progress in System stability Performance and scalability Functionality Working to ensure smoother transitions for each successive converting operating
Slide 6: Key Takeaways
6 We are focused on Creating value for our customers; Driving transformational change within our company; and US Foods merger integration planning Expect market conditions will improve modestly for the remainder of calendar 2014 and that Sysco’s operating performance results will show steady improve
Slide 7: 3Q14 Highlights
Reported Adjusted for Certain Items Results $ Millions, except share data 3Q14 YOY % Change 3Q14 YOY % Change Sales $11,277 3.2% $11,277 3.2% Gross Profit $1,995 2.7% $1,995 2.7% Operating Expenses $1,662 3.5% $1,606 3.3% Operating Income $333 (1.4%) $388 0.3% Net Earnings $181 (10.2%) $223 (5.0%) D
Slide 8: Case Growth Drives Sales Growth
Case Growth Drives Sales Growth (1) (1) – Includes Broadline and SYGMA 3.0% 5.7% 4.1% 5.0% 4.1% 3.2% Jan/Feb Sales +1.7% YOY Mar Sales +5.5% YOY 4Q13 1Q14 2Q14 3Q14 Case Growth Organic Acquisitions 4.3% 4Q13 1Q14 2Q14 3Q14 Sales Growth Inflation Case Growth/Mix Fx 3.0% 8 Case Growth Drives Sales Gro
Slide 9: Gross Margin Pressure Moderated
Gross Margin Pressure Moderated 9 ($ in millions) (32) (19) (28) (60) (68) (60) (9) -110 -90 -70 -50 -30 -10 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 YOY Decline in Gross Margin (bps) Low inflation business; in locally-managed Strengthening trends Margin management; aided by: margin erosion mainly Deceler
Slide 10: Initiatives Continue to Drive Lower Cost per Case
10 Initiatives Continue to Drive Lower Cost per Case retirement-related expense due to prior year restructuring Partially offset by lower sales organization costs, and a decrease in Increased corporate expense and Increased delivery and warehouse costs, including weather impact; Increased case volum
Slide 11: FY14 Retirement-Related Expenses Lower Than Expected
11 FY14 Retirement-Related Expenses Lower Than Expected FY14 Guidance Year-over-Year Variance H (L) (in millions) Current Prior Pension & other (121) (121) 401(k) & other 45-55 61-71 Underlying retirement-related expense (65-75) (50-60) Certain items (20) (20) Total retirement-related expenses (85-9
Slide 12: Business Transformation Project Costs
(in millions) 3Q14 3Q13 YTD FY14 YTD FY13 Operating expense $71 $83 $198 $242 Capital investment $14 $4 $29 $14 Cash outlay $61 $67 $161 $201 12 Business Transformation Project Costs In FY14, Business Transformation: Expense expected to be $275-300 million Capital expected to be $30-40 million Cash
Slide 13: Capital Expenditures
Capital Expenditures 13 ($ millions) $373 $111 3 rd Quarter Year-to-Date $117 $387 In 3Q14: Recent equipment and fleet optimization projects contributed to lower spend, and ERP stabilization activities drove higher business transformation spend FY 2014 FY 2013 Technology Fleet Facilities FY 2014 FY
Slide 14: Free Cash Flow Continues to Improve
14 $ Millions YTD FY14 YTD FY13 % Chg Cash Flow from Operations $848 $759 11.7% Capital Expenditures, net 1 364 361 0.8% Free Cash Flow 2 $484 $398 21.5% Dividends Paid $498 $482 3.3% Free Cash Flow Continues to Improve 1) Capital expenditures are net of proceeds from sales of plant and equipment 2)
Slide 15: Update on Proposed Merger with US Foods
15 Integration planning efforts underway; focused on Day one readiness; Value creation; and Long-term organizational design Merger benefits our customers and helps us become more efficient in an evolving and competitive marketplace Customers have many choices in this fiercely competitive marketplace
Slide 16: Slide 16
Slide 17: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 18: 3Q14 Non-GAAP Reconciliations
18 3Q14 Non-GAAP Reconciliations Sysco’s results of operations are impacted by certain items which include charges from restructuring our executive retirement plans, multiemployer pension charges, severance charges, US Foods merger and integration planning costs, change in estimate of self-insurance
Slide 19: 3Q14 Non-GAAP Reconciliation 13-Week Period
19 3Q14 Non-GAAP Reconciliation 13-Week Period Ended Mar. 29, 2014 13-Week Period Ended Mar. 30, 2013 13-Week Period Change in Dollars 13-Week Period % Change Operating expenses (GAAP) $ 1,662,116 $ 1,605,280 $ 56,836 3.5 % Impact of restructuring executive retirement plans (773) (5,444) 4,671 -85.8
Slide 20: 3Q14 Non-GAAP Reconciliation 39-Week Period
20 3Q14 Non-GAAP Reconciliation 39-Week Period Ended Mar. 29, 2014 39-Week Period Ended Mar. 30, 2013 39-Week Period Change in Dollars 39-Week Period % Change Operating expenses (GAAP) $ 4,862,579 $ 4,725,752 $ 136,827 2.9 % Impact of restructuring executive retirement plans (2,323) (17,608) 15,285
Slide 21: 3Q14 Non-GAAP Reconciliation Free Cash Flow
21 3Q14 Non-GAAP Reconciliation 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. Sysco considers free cash flow to be a liquidity measure that provides useful information to management