Sysco Corporation · NYSE:SYY
Sysco — Jefferies Consumer Summit 2018
27 slides from Sysco's conference presentation, 2018
Slide 1: Jefferies Consumer Summit 2018
Jefferies Consumer Summit | 2018
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Statements made in this presentation 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 forward-looking statements reflect the
Slide 3: Tom Bené, President & CEO
TOM BENÉ PRESIDENT & CEO
Slide 4: Our Vision
To be our customers’ most Our VISION valued and trusted business partner
Slide 5: Sysco Is the Leading Foodservice Distributor
SYSCO IS THE LEADING FOODSERVICE DISTRIBUTOR Sales ($B) Foodservice Industry Growth Rates $60.0 $55.0 $55.4 5-year Real CAGR 2017-2022 $50.0 $45.0 Noncommercial 1.1% $40.0 $35.0 Travel&Leisure 1.8% $30.0 $25.0 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Retailers 2.4% Restaurant
Slide 6: Four Major Segments Comprise the Sysco Portfolio of Businesses
WE OPERATE THE BUSINESS IN FOUR MAJOR SEGMENTS THAT COMPRISE THE SYSCO PORTFOLIO OF BUSINESSES % OF FY17 Core market TOTAL REVENUE U.S. U.S. broadline serves as the foundation Foodservice Specialty companies enhance our portfolio of Operations products 68% International Canada, Europe and Latin Amer
Slide 7: Our Four Strategic Priorities Will Accelerate Current Growth
OUR FOUR STRATEGIC PRIORITIES WILL ACCELERATE OUR CURRENT GROWTH & POSITION US WELL FOR THE FUTURE 7
Slide 8: Key Strategic Priorities Will Deliver Solid Operating Performance Over Three Years
FOCUSING ON THESE KEY STRATEGIC PRIORITIES WILL DELIVER SOLID OPERATING PERFORMANCE OVER THE NEXT THREE YEARS Cases 3.0% LOCAL: +3.5% Sales 4.0% - 4.5% Gross Profit 4% Operating Income 9% $650M - $700M1 EPS 16% 1 See Non-GAAP reconciliations at the end of the presentation. 8
Slide 9: Joel Grade, EVP & CFO
JOEL GRADE EVP & CFO UF, ee
Slide 10: Our Three-Year Plan Delivers Targeted Financial Results; EPS Improves 4 Points
OUR THREE-YEAR PLAN DELIVERS TARGETED FINANCIAL RESULTS; EPS IMPROVES 4 POINTS POST TAX REFORM POST TAX REFORM INVESTOR DAY UPDATED THREE-YEAR PLAN 1 THREE-YEAR PLAN (FY18-FY20) 1 (FY18-FY20) Cases; Total & Local 3.0%, 3.5% 3.0%, 3.5% Sales 4.0% - 4.5% 4.0% - 4.5% Gross Profit 4.0% 4.0% Operating In
Slide 11: Long Term Objective Is a 1.5 Point Operating Leverage Gap
OUR LONG TERM OBJECTIVE IS TO ACHIEVE A 1.5 POINT OPERATING LEVERAGE GAP 1 1 1 2 Total Sysco Adj. Operating Leverage 3Q18 YTD18 Average 6.0% 4.8% 4.0% 4.5% 3.6% 4.1% 5.6% 4.8% 4.1% 2.0% 2.0% 5.2% 4.6% 2.6% 1.7% 0.0% FY15 FY16 FY17 GP growth OPEX growth … Anticipate improved leverage in 4Q18 1 See No
Slide 12: We Will Reduce Costs Through a Variety of Different Levers
WE WILL REDUCE COSTS THROUGH A VARIETY OF DIFFERENT LEVERS Finance Technology Smart Spending Roadmap Agile Transformation Optimizing our Canadian business 12
Slide 13: Proven Track Record of Cash Flow Generation
WE HAVE A PROVEN TRACK RECORD OF CASH FLOW GENERATION… Annual Cash Flow1 ($M) $2,400 $1,800 $1,200 $600 $- FY15 FY16 FY17 Net cash provided by operating activities (GAAP) Free Cash Flow (Non-GAAP) … and we expect to generate improved cash flows with a continued adjusted cash conversion ratio2 greate
Slide 14: Disciplined Approach to Capital Allocation
WE WILL FOLLOW A DISCIPLINED APPROACH TO CAPITAL ALLOCATION 1 Invest in the business 2 Grow the dividend 3 Strategic M&A Pay Down Debt / 4 Opportunistic Share Repurchase 14
Slide 15: Financial Updates
FINANCIAL UPDATES • Tax Reform reinvestments are consistent with capital allocation • Contribution to fund and de-risk our defined benefit retirement plan • Increased our contributions to the Sysco 401(k) plan • Remain confident in our ability to deliver financial objectives for FY18 • On track to a
Slide 16: We Will Continue to Leverage Strong Momentum in the Business
WE WILL CONTINUE TO FURTHER LEVERAGE STRONG MOMENTUM IN THE BUSINESS LEVERAGE STRONG MOMENTUM IN THE BUSINESS1 • Grow FY20 Adjusted Operating Income by $650-$700M compared to FY17 • Expect future adjusted operating leverage gap of approximately 1.5 points • Well positioned for future growth 1 See No
Slide 17: Q&A
Q&A
Slide 18: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS
Slide 19: Impact of Certain Items
IMPACT OF CERTAIN ITEMS Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items and Brakes Sysco’s results of operations for fiscal 2018 and 2017 are impacted by restructuring costs consisting of: (1) expenses associated with our revised busine
Slide 20: Sales, Gross Profit, Operating Expense, Operating Income, EPS Targets
SALES, GROSS PROFIT, OPERATING EXPENSE, OPERATING INCOME, EARNINGS PER SHARE TARGETS Sales, Gross Profit, Operating Expense, Operating Income and Earnings per Share Targets We expect to achieve our sales, gross profit, operating expense, operating income and earnings per share (EPS) targets under ou
Slide 21: 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) 39-Week 39-Week Period Ended Period Ended Period Change Period Mar. 31, 2018 Apr. 1, 2017
Slide 22: 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 23: Adjusted Operating Leverage (Continued)
ADJUSTED OPERATING LEVERAGE (CONTINUED) Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Total Sysco Operating Leverage (impact of Certain Items, extra week and Brakes) (In Thousands) (a) 11 quarter average gross profit (GAAP) 9.5% (b) 11 quarter average gross
Slide 24: 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 13-Week 13-Week Period 13-Week 13-Week Ended Period Ended Period Change Period Period Ended Period Ended Period Change Period Period Ended Ended Period Change Period Sep. 30, 2017 Oct. 1, 2
Slide 25: 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 13-Week 13-Week Period 13-Week 13-Week Ended Period Ended Period Change Period Period Ended Period Ended Period Change Period Period Ended Ended Period Change Period Dec. 31, 2016 Dec. 26,
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 13-Week 13-Week Period 13-Week 13-Week Ended Period Ended Period Change Period Period Ended Period Ended Period Change Period Period Ended Ended Period Change Period Mar. 26, 2016 Mar. 28,
Slide 27: 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