Sysco Corporation · NYSE:SYY
Sysco — FY2018 Earnings Presentation
30 slides from Sysco's earnings presentation, August 2018
Slide 1: Sysco Earnings Results 4Q18 & FY18
Sysco Earnings Results | 4Q18 & FY18
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Statements made in this presentation or in our earnings call for the fourth 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 R
Slide 3: Tom Bené, President & CEO
TOM BENÉ PRESIDENT & CEO
Slide 4: Three-Year Plan Objectives (2015-2018)
THREE-YEAR PLAN OBJECTIVES (2015-2018) • Enhance overall service levels Improve customer • Improve sales retention experience • Drive higher customer loyalty Enhance • Advance workplace safety associate • Improve associate retention and engagement engagement • Provide attractive career growth opport
Slide 5: Exceeded All Metrics for Initial Three-Year Plan
EXCEEDED ALL METRICS FOR INITIAL THREE-YEAR PLAN THREE-YEAR PLAN ACTUALS AS OF 1 (FY15-FY18) FY18 Accelerate local case growth 2 - 3% 3.0%3 Achieve gross profit growth1 4% 4.2%4 Limit adjusted operating expense growth1 3% 2.2%4 Adjusted Operating income growth1 $600 - $650M $665M Adjusted ROIC1 15%
Slide 6: Our Four Strategic Priorities Will Accelerate Our Current Growth
OUR FOUR STRATEGIC PRIORITIES WILL ACCELERATE OUR CURRENT GROWTH & POSITION US WELL FOR THE FUTURE 6
Slide 7: Strong Top-Line Results Driven by Local Customer Growth
SYSCO REPORTED STRONG TOP-LINE RESULTS DRIVEN BY LOCAL CUSTOMER GROWTH, NEW NATIONAL CUSTOMERS AND ACQUISITIONS CUSTOMER M&A GROWTH Total Sysco FY18 Local Sales National $58.7B 6.1% 7
Slide 8: Strong Gross Profit Growth Delivered Through Execution
STRONG GROSS PROFIT GROWTH DELIVERED THROUGH EXECUTION IN KEY STRATEGIC FOCUS AREAS Acceleration of local cases 3.6% Total Sysco FY18 46% of Local Sysco Brand cases +59 bps Cutting Edge Solutions Delivered 1M new cases Gross Profit Assortment New categories $11.1B 5.0% Revenue Management Pricing 8
Slide 9: Strategic Investments and Supply Chain Costs Drove Increased Expenses
STRATEGIC INVESTMENTS AND SUPPLY CHAIN COSTS DROVE INCREASED EXPENSES THIS QUARTER INVESTMENT IN TECHNOLOGY SUPPLY CHAIN MARKETING SOLUTIONS ASSOCIATES Customer- Cross- centric functional Innovation Pace over Culture perfection Supply chain transformation Utilize data and insights to target Continue
Slide 10: Operational Improvement Is a Direct Result of Associates' Effort
OPERATIONAL IMPROVEMENT IS A DIRECT RESULT OF THE HARD WORK AND EFFORT OF OUR 67,000+ ASSOCIATES 1 Total Sysco FY18 Sales $58.7B 6.1% Adj. Operating Income $2.5B 8.4% Adj. EPS $3.14 26.6% 1 See Non-GAAP reconciliations at the end of the presentation. 10
Slide 11: U.S. Foodservice Operations Delivered Strong Top-Line Results
U.S. FOODSERVICE OPERATIONS DELIVERED STRONG TOP-LINE RESULTS, PARTLY OFFSET BY SOME EXPENSE CHALLENGES 1 U.S. Foodservice Operations FY18 Sales $39.6B 5.4% Gross Profit $7.9B 4.6% Adj. OPEX $4.8B 4.7% Adj. Operating Income $3.1B 4.3% 1 See Non-GAAP reconciliations at the end of the presentation. 11
Slide 12: Investments in International Business for Future Growth
WE CONTINUE TO MAKE INVESTMENTS IN OUR INTERNATIONAL BUSINESS TO POSITION OURSELVES FOR FUTURE GROWTH 1 International Foodservice Operations FY18 Sales $11.5B 8.5% Gross Profit $2.4B 7.1% Adj. OPEX $2.1B 9.7% Adj. Operating Income $320M 7.7% 1 See Non-GAAP reconciliations at the end of the presentat
Slide 13: The Fundamentals of Our Business Are Solid
THE FUNDAMENTALS OF OUR BUSINESS ARE SOLID SUMMARY • Excited about the results achieved in FY18 towards our three-year plan • Our success is a direct result of the dedication and hard work of our associates • Pleased with the results for the year and remain confident in our ability to deliver the fi
Slide 14: Joel Grade, EVP & CFO
JOEL GRADE EVP & CFO UF, ee
Slide 15: 4Q18 & FY18 Financial Highlights
4Q18 & FY18 FINANCIAL HIGHLIGHTS Adjusted1 Adjusted1 $MM, except 4Q18 YoY % Change FY18 YoY % Change per share data Sales $15,316 6.2% $58,727 6.1% Gross Profit $2,917 5.7% $11,085 5.0% Operating $2,145 2.5% $8,537 4.0% Expense Operating $771 15.7% $2,548 8.4% Income Net Earnings $498 28.2% $1,660 2
Slide 16: Operating Performance
OPERATING PERFORMANCE 1 Total Sysco Adj. Operating Leverage Three-Year 6.0% 1 2 4.8% 5.0% 4Q18 Plan CAGR 4.1% 3.6% 4.0% 4.5% 5.7% 4.2% 4.0% 2.0% 2.0% 1.7% 0.0% 2.5% 2.2% FY15 FY16 FY17 FY18 GP growth OPEX growth … Anticipate 150bps gap for FY18-FY20 three-year plan 1 See Non-GAAP reconciliations. 2
Slide 17: Fiscal 2018 Cash Flow
FISCAL 2018 CASH FLOW Annual Cash Flow1 $2,500 $2,000 $1,500 $1,000 $500 $- FY14 FY15 FY16 FY17 FY18 Net cash provided by operating activities (GAAP) Free Cash Flow (Non-GAAP) Slight decline in free cash flow primarily driven by pension-plan contribution 1 See Non-GAAP reconciliations at the end of
Slide 18: Business Updates
BUSINESS UPDATES BUSINESS UPDATES • FY18 is the 1st year of our current three-year plan; confident in our ability to achieve $650-$700M of adjusted operating income improvement • Anticipate modest levels of inflation will likely continue for the next few quarters • FY19 CapEx expected to be approxim
Slide 19: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS
Slide 20: 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 21: Three-Year Plan Results (FY15 – FY18)
THREE-YEAR PLAN RESULTS - (FY15 – FY18) Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items (In Thousands, Except for Share and Per Share Data) We have completed the final year of our initial three-year plan that was established in fiscal 2
Slide 22: Impact of Certain Items, FY18
IMPACT OF CERTAIN ITEMS, FY18 Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items (In Thousands, Except for Share and Per Share Data) 52-Week 52-Week Period Ended Period Ended Period Change Period Jun. 30, 2018 Jul. 1, 2017 in Dollars % Cha
Slide 23: Impact of Certain Items, FY18 (Continued)
IMPACT OF CERTAIN ITEMS, FY18 (CONTINUED) Diluted earnings per share (GAAP) $ 2.70 $ 2.08 $ 0.62 29.8% Impact of MEPP charge - 0.06 (0.06) NM Impact of restructuring costs (1) 0.21 0.29 (0.08) -27.6% Impact of acquisition-related costs (2) 0.20 0.19 0.01 5.3% Impact of loss on extinguishment of debt
Slide 24: 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) 52-Week 52-Week Period Ended Period Ended Period C
Slide 25: Impact of Certain Items, 4Q18
IMPACT OF CERTAIN ITEMS, 4Q18 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 Jun. 30, 2018 Jul. 1, 2017 in Dollars % Cha
Slide 26: Impact of Certain Items, 4Q18 (Continued)
IMPACT OF CERTAIN ITEMS, 4Q18 (CONTINUED) Diluted earnings per share (GAAP) $ 0.85 $ 0.57 $ 0.28 50.1% Impact of MEPP charge - 0.07 (0.07) NM Impact of restructuring costs (1) 0.09 0.08 0.01 12.5% Impact of acquisition-related costs (2) 0.07 0.06 0.01 16.7% Tax Impact of MEPP charge (3) - (0.02) 0.0
Slide 27: 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) 52-Week 52-Week Period Ended Period Ended Period Change Period Jun. 30, 2018 Jul. 1, 2017
Slide 28: 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 29: Adjusted ROIC
ADJUSTED ROIC Adjusted Return on Invested Capital (ROIC) We calculate ROIC as net earnings divided by (i) stockholder’s equity, computed as the average of adjusted stockholders’ equity at the beginning of the year and at the end of each fiscal quarter during the year excluding the impact of foreign
Slide 30: 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