Sysco Corporation · NYSE:SYY
Sysco — Q4 FY2017 Earnings Presentation
47 slides from Sysco's earnings presentation, Aug 14, 2017
Slide 1: Sysco 4Q17 & FY17 Earnings Results
Sysco 4Q17 & FY17 Earnings Results 08.14.17
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements made in this presentation or in our earnings call for the fourth quarter of fiscal 2017 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: Bill Delaney, CEO
BILL DELANEY CEO
Slide 4: Sysco Reported Strong Fourth Quarter and Excellent Fiscal 2017 Financial Results
Sysco Reported Strong Fourth Quarter and Excellent Fiscal 2017 Financial Results (Including Brakes) 4Q17 (comparable 13-week) FY17(comparable 52 week) Adjusted Adjusted Adjusted Adjusted Sales Operating 1 Sales Operating 1 1 EPS 1 EPS Income Income $14.4B $667M $0.72 $55.4B $2.4B $2.48 +14% +14% +20
Slide 5: We Aspire to be our Customers' Most Valued and Trusted Business Partner
We Aspire to be our Customers’ Most Valued and Trusted Business Partner Financial Talent • “One Sysco” • Category Management Objectives • Revenue Management • Customer • Highly Capable • Customer Facing • Disciplined Insights Technology • Profitable • Diverse • Productivity • Sustainable Customer St
Slide 6: We are Very Excited About Sysco's Future
We are Very Excited About Sysco’s Future • Higher End of $600-$650 Million Operating Income Range • New Three-Year Plan Later This Calendar Year • Tom Bené Will Become New President and CEO • Success Driven by Dedication and Commitment of Associates 08.14.17 4Q17 & FY17 Earnings 6 © Sysco Corporatio
Slide 7: Tom Bené, President & COO
TOM BENÉ PRESIDENT & COO
Slide 8: Fiscal 2017 was a Successful Year
Fiscal 2017 was a Successful Year Addition of Brakes in Europe Successful Transition to Enhanced ERP Customer Centric Approach Local Case Growth Grew Gross Profit & Managed Expenses 08.14.17 4Q17 & FY17 Earnings 8 © Sysco Corporation. All rights reserved.
Slide 9: U.S. Foodservice Operations had a Solid Year
U.S. Foodservice Operations had a Solid Year… Sales $37.6B 1.5% Gross Profit $7.6B 4.0% Adjusted OPEX 1 $4.6B 1.7% Adjusted Operating Income 1 $2.9B 7.8% 08.14.17 4Q17 & FY17 Earnings 9 1 See Non-GAAP reconciliations at the end of this presentation. © Sysco Corporation. All rights reserved.
Slide 10: As we Strive to Deliver Disciplined, Profitable Growth
…As we Strive to Deliver Disciplined, Profitable Growth Provide Value to Local Customer US Foodservice Operations • Improved MA capabilities Local Case Growth1 Gross Margin1 • Consultative services • E-commerce capabilities 2.4% 48bps • Customer Insights 13 quarters of consecutive growth Solid Expen
Slide 11: Expanding our International Presence
Expanding our International Presence Europe Canada Latin America FY17 Brakes EPS accretion1 $0.14 • Pleased with performance • Excited about new facilities in U.K. Sweden both Costa Rica and Panama • Focused on accelerating • Performed • Favorable results reasonably well in a growth of local custome
Slide 12: Joel Grade, CFO
JOEL GRADE CFO
Slide 13: 4Q17 Financial Highlights (comparable 13 week)
4Q17 Financial Highlights (comparable 13 week) Adjusted1 (Excluding Adjusted1 (Including Brakes) Brakes) $MM, except per 4Q17 YOY % Change 4Q17 YOY % Change share data Sales $13,102 3.4% $14,421 13.8% Gross Profit $2,421 4.2% $2,760 18.7% Operating Expense $1,785 2.6% $2,093 20.2% Operating Income $
Slide 14: FY17 Financial Highlights (comparable 52 week)
FY17 Financial Highlights (comparable 52 week) Adjusted1 (Excluding Adjusted1 (Including Brakes) Brakes) $MM, except per 4Q17 YOY % Change 4Q17 YOY % Change share data Sales $50,200 1.6% $55,371 12.1% Gross Profit $9,224 4.1% $10,558 19.1% Operating Expense $7,015 1.7% $8,206 19.0% Operating Income
Slide 15: Strong Operating Performance
Strong Operating Performance Total Sysco Operating Leverage (excluding Brakes)1 8.0% 6.8% 7.0% 6.0% 6.0% 6.1% 5.0% 6.0% 4.7% 5.0% 4.3% 4.2% 4.5% 4.1% 4.0% 3.4% 3.0% 3.1% 2.9% 3.0% 3.1% 2.0% 2.3% 2.6% 2.2% 1.0% 1.8% 1.7% 1.9% 1.9% 1.5% 0.4% 0.0% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
Slide 16: Cash Flow & Balance Sheet
Cash Flow & Balance Sheet Annual Cash Flow1 $2,500 $2,000 $1,500 $1,000 $500 $- FY14 FY15 FY16 FY17 Net cash provided by operating activities (GAAP) Free Cash Flow (Non-GAAP) • Cash Flow1 • Balance Sheet • Cash from operations was $2.2 billion, up approximately • Net working capital days – improveme
Slide 17: FY18 Outlook
FY18 Outlook • Inflation to Continue for the Balance of the Calendar Year • CAPEX Expected to be Approximately 1.3% - 1.4% of Sales • Facilities Expansion & Improvement • Customer Facing Technology Investments • Technology to Support Shared Services • Continue to Grow the Dividend • Opportunistic Sh
Slide 18: Summary
Summary • Strong Year • Strong Local Case Growth • Excellent Gross Profit Dollar Growth • Good Cost Management • Healthy Spread Between Gross Profit and Expense Growth • Free Cash Flow of $1.6 billion • Committed to Serving our Customers • Delivering a High Level of Execution in all Areas of our Bus
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 Sysco’s results of operations are impacted by restructuring costs consisting of (1) expenses associated with our revised business technology strategy announced in f
Slide 21: Impact of Certain Items with Brakes – 4Q17
Impact of Certain Items with Brakes – 4Q17 Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of extra week and Certain Items (In Thousands, Except for Share and Per Share Data) 13-Week 14-Week Period Period Ended Period Ended Period Change %/bps July 1, 2
Slide 22: Impact of Certain Items with Brakes – 4Q17 (con't.)
Impact of Certain Items with Brakes – 4Q17 (con’t.) 13-Week 14-Week Period Period Ended Period Ended Period Change %/bps July 1, 2017 July 2, 2016 in Dollars Change Operating margin (GAAP) 3.87% 4.01% -14 bps Operating margin excluding Certain Items (Non-GAAP) 4.62% 4.60% 2 bps Operating margin excl
Slide 23: Impact of Certain Items with Brakes – 4Q17 (con't.)
Impact of Certain Items with Brakes – 4Q17 (con’t.) 13-Week 14-Week Period Period Ended Period Ended Period Change %/bps July 1, 2017 July 2, 2016 in Dollars Change Diluted earnings per share (GAAP) $ 0.57 $ 0.38 $ 0.19 50.0% Impact of MEPP charge 0.07 - 0.07 NM Impact of restructuring costs (1) 0.0
Slide 24: Impact of Certain Items with Brakes – FY17
Impact of Certain Items with Brakes – FY17 Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of extra week and Certain Items (In Thousands, Except for Share and Per Share Data) 52-Week 53-Week Period Period Ended Period Ended Period Change %/bps Jul. 1, 2
Slide 25: Impact of Certain Items with Brakes – FY17 (con't.)
Impact of Certain Items with Brakes – FY17 (con’t.) 52-Week 53-Week Period Period Ended Period Ended Period Change %/bps Jul. 1, 2017 Jul. 2, 2016 in Dollars Change Operating margin (GAAP) 3.71% 3.67% 3 bps Operating margin excluding Certain Items (Non-GAAP) 4.25% 3.99% 26 bps Operating margin exclu
Slide 26: Impact of Certain Items with Brakes – FY17 (con't.)
Impact of Certain Items with Brakes – FY17 (con’t.) 52-Week 53-Week Period Period Ended Period Ended Period Change %/bps Jul. 1, 2017 Jul. 2, 2016 in Dollars Change Diluted earnings per share (GAAP) $ 2.08 $ 1.64 $ 0.44 26.8% Impact of MEPP charge 0.06 - 0.06 NM Impact of restructuring costs (1) 0.2
Slide 27: Adjusted Operating Income Target
Adjusted Operating Income Target Adjusted Operating Income Target We expect to achieve our adjusted operating income target by fiscal 2018. Due to the uncertainties within these projected amounts, we cannot provide a quantitative reconciliation of these non-GAAP measures to the most directly compara
Slide 28: Segment – FY17
Segment – FY17 Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of extra week and Certain Items (In Thousands, Except for Share and Per Share Data) 52-Week Period 53-Week Period Ended Ended Period Change Period Jul. 1, 2017 Jul. 2, 2016 in Dollars %/bps
Slide 29: Segment – FY17 (con't)
Segment – FY17 (con’t) 52-Week Period 53-Week Period Ended Ended Period Change Period Jul. 1, 2017 Jul. 2, 2016 in Dollars %/bps Change International Foodservice Operations Sales (GAAP) $ 10,613,059 $ 5,436,209 $ 5,176,850 95.2% Gross Profit (GAAP) 2,275,819 938,942 1,336,877 NM Gross Margin (GAAP)
Slide 30: Segment – FY17 (con't)
Segment – FY17 (con’t) 52-Week Period 53-Week Period Ended Ended Period Change Period Jul. 1, 2017 Jul. 2, 2016 in Dollars %/bps Change Corporate Gross Profit (GAAP) $ (7,267) $ (8,453) $ 1,186 -14.0% Operating expenses (GAAP) $ 1,117,868 $ 1,150,193 $ (32,325) -2.8% Impact of restructuring costs (3
Slide 31: Cost per Case
Cost per Case Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Cost per Case Cost per case is an important metric management used to measure our expense performance. This metric is calculated by taking the total operating expense of our U.S. Broadline companies
Slide 32: Impact of Certain Items ex Brakes – 4Q17
Impact of Certain Items ex Brakes – 4Q17 Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of extra week, Certain Items and Brakes (In Thousands, Except for Share and Per Share Data) 13-Week 14-Week Period Period Ended Period Ended Period Change %/bps Jul
Slide 33: Impact of Certain Items ex Brakes – 4Q17 (con't.)
Impact of Certain Items ex Brakes – 4Q17 (con’t.) 13-Week 14-Week Period Period Ended Period Ended Period Change %/bps July 1, 2017 July 2, 2016 in Dollars Change Operating income (GAAP) $ 557,959 $ 546,825 $ 11,134 2.0% Impact of MEPP charge 35,600 - 35,600 NM Impact of restructuring costs (1) 42,5
Slide 34: Impact of Certain Items ex Brakes – 4Q17 (con't.)
Impact of Certain Items ex Brakes – 4Q17 (con’t.) 13-Week 14-Week Period Period Ended Period Ended Period Change %/bps July 1, 2017 July 2, 2016 in Dollars Change Diluted earnings per share (GAAP) $ 0.57 $ 0.38 $ 0.19 50.0% Impact of MEPP charge 0.07 - 0.07 NM Impact of restructuring costs (1) 0.08
Slide 35: Impact of Certain Items ex Brakes – FY17
Impact of Certain Items ex Brakes – FY17 Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of extra week, Certain Items and Brakes (In Thousands, Except for Share and Per Share Data) 52-Week 53-Week Period Period Ended Period Ended Period Change %/bps Jul
Slide 36: Impact of Certain Items ex Brakes – FY17 (con't.)
Impact of Certain Items ex Brakes – FY17 (con’t.) 52-Week 53-Week Period Period Ended Period Ended Period Change %/bps Jul. 1, 2017 Jul. 2, 2016 in Dollars Change Operating income (GAAP) $ 2,053,171 $ 1,850,500 $ 202,671 11.0% Impact of MEPP charge 35,600 - 35,600 NM Impact of restructuring costs (1
Slide 37: Impact of Certain Items ex Brakes – FY17 (con't.)
Impact of Certain Items ex Brakes – FY17 (con’t.) 52-Week 53-Week Period Period Ended Period Ended Period Change %/bps Jul. 1, 2017 Jul. 2, 2016 in Dollars Change Diluted earnings per share (GAAP) $ 2.08 $ 1.64 $ 0.44 26.8% Impact of MEPP charge 0.06 - 0.06 NM Impact of restructuring costs (1) 0.29
Slide 38: Operating Leverage
Operating Leverage Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Total Sysco Operating Leverage (excluding Brakes) (In Thousands) 13-Week 13-Week 13-Week 13-Week Period Ended Period Ended Period Change Period July 1, 2017 July 2, 2016 in Dollars % Change Gro
Slide 39: Operating Leverage (con't)
Operating Leverage (con’t) 13-Week 13-Week 13-Week 13-Week Period Ended Period Ended Period Change Period Apr. 1, 2017 Mar. 26, 2016 in Dollars % Change Gross profit $ 2,534,135 $ 2,142,825 $ 391,310 18.3% Impact of Brakes (298,947) - (298,947) NM Gross profit excluding the impact of Brakes (Non- GA
Slide 40: Operating Leverage (con't)
Operating Leverage (con’t) 13-Week 13-Week 13-Week 13-Week Period Ended Period Ended Period Change Period Oct. 1, 2016 Sep. 26, 2015 in Dollars % Change Gross profit $ 2,691,919 $ 2,237,995 $ 453,924 20.3% Impact of Brakes (343,051) - (343,051) NM Gross profit excluding the impact of Brakes (Non- GA
Slide 41: Operating Leverage (con't)
Operating Leverage (con’t) 13-Week 13-Week 13-Week 13-Week Period Ended Period Ended Period Change Period Mar. 26, 2016 Mar. 28, 2015 in Dollars % Change Gross profit $ 2,142,825 $ 2,057,498 $ 85,327 4.1% Operating expenses (GAAP) $ 1,765,207 $ 1,730,190 $ 35,017 2.0% Impact of certain items (4) (60
Slide 42: Operating Leverage (con't)
Operating Leverage (con’t) 13-Week 13-Week 13-Week 13-Week Period Ended Period Ended Period Change Period Sep. 26, 2015 Sep. 27, 2014 in Dollars % Change Gross profit $ 2,237,995 $ 2,188,717 $ 49,278 2.3% Operating expenses (GAAP) $ 1,744,521 $ 1,723,104 $ 21,417 1.2% Impact of certain items (6) (13
Slide 43: Operating Leverage (con't)
Operating Leverage (con’t) 13-Week 13-Week 13-Week 13-Week Period Ended Period Ended Period Change Period Mar. 28, 2015 Mar. 29, 2014 in Dollars % Change Gross profit $ 2,057,498 $ 1,994,741 $ 62,757 3.1% Operating expenses (GAAP) $ 1,730,190 $ 1,662,116 $ 68,074 4.1% Impact of certain items (8) (49
Slide 44: Free Cash Flow History
Free Cash Flow History 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 equip
Slide 45: Free Cash Flow FY17
Free Cash Flow FY17 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 equipmen
Slide 46: ROIC
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; and (ii) long- term debt, computed as th
Slide 47: ROIC Target
ROIC Target Adjusted Return on Invested Capital (ROIC) Target We have an ROIC target of 15% that we expect to achieve by fiscal 2018. We cannot predict with certainty when we will achieve these results or whether the calculation of our ROIC in such future period will be on an adjusted basis due to t