Sysco Corporation · NYSE:SYY
Sysco — Bernstein Strategic Decisions Conference 2020
27 slides from Sysco's conference presentation, May 29, 2020
Slide 1: Bernstein Strategic Decisions 2020
Bernstein Strategic Decisions 2020 May 29
Slide 2: Forward Looking Statements
Forward Looking Statements Statements made in this presentation or in our earnings call for the third quarter of fiscal 2020 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 Re
Slide 3: Kevin Hourican, President & CEO
KEVIN HOURICAN President & CEO
Slide 4: Current COVID-19 Business Environment
Current COVID-19 Business Environment • We are prioritizing the health and well-being of our associates • We have the financial ability to weather this storm and emerge stronger • We have identified 4 key areas of focus 4
Slide 5: Our Strategic Approach
Our Strategic Approach 1. Strengthen Overall Liquidity 2. Stabilize our Business 3. Create New Sources of Revenue 4. Ensure Sysco’s Success Post COVID-19 5
Slide 6: Strengthen Overall Liquidity
Strengthen Overall Liquidity More than $7 billion of Available Liquidity Financial Flexibility Competitive Opportunities 6
Slide 7: Stabilize our Business
Stabilize our Business Remove Costs from the System • Both temporary and structural changes Narrow Focus to Critical Projects Reduce Capital Investments Including more than $500 million of cost removal in 4Q alone 7
Slide 8: Create New Sources of Revenue
Create New Sources of Revenue Helping Our Restaurant Customers Pivot to a New Selling Model Delivering More Products and Solutions Supplying to Government Agencies and Retail Grocers Leveraging our Private Trucking Fleet 8
Slide 9: We Are Helping Our Customers Succeed
We Are Helping Our Customers Succeed Popup Customers Grocery & Stock-up Stock-up Popups Popups Grocery Popups Over 16,000 Total Popup Customers 9
Slide 10: Ensure Sysco's Success Post COVID-19
Ensure Sysco’s Success Post COVID-19 Developing Joint Business Plans with Key Suppliers to Ensure Inventory Readiness for Recovery Increase Speed of our Business Transformation Accelerating Key Strategic Initiatives 10
Slide 11: Accelerating Key Strategic Initiatives
Accelerating Key Strategic Initiatives Key Capabilities of Shop Pricing System Implementation Go-to-market Sales Transformation 11
Slide 12: Sysco Stands Ready as THE Industry Leader as Business Conditions Improve
Sysco Stands Ready as THE Industry Leader as Business Conditions Continue to Improve Sysco is Positioned to Win in the Marketplace Strong Balance Sheet Ability to Invest in Service Levels and Product Availability Growth Through Increase of New Customers and Further Penetration of Current Customers 1
Slide 13: Joel Grade, EVP & CFO
a. JOEL GRADE EVP & CFO
Slide 14: 3Q20 Total Sysco Results
3Q20 Total Sysco Results Total Sysco 3Q20 Sales $13.7B 6.5% 1 Gross Profit $2.6B 6.9% 1 Adj. Operating Income $377M 39.2% 1 $0.45 Adj. EPS 43.0% 1 See Non-GAAP reconciliations at the end of the presentation. 14
Slide 15: COVID-19 Business Update
COVID-19 Business Update Sales and volume trough at end of March Sequential weekly improvement throughout April and May Swift temporary and permanent cost reduction initiatives Continued focus on receivables Ample liquidity to support business recovery and market share gains 15
Slide 16: Sequential Weekly Improvement for Total Sysco Sales in April and May
Sequential Weekly Improvement for Total Sysco Sales in April and May 100 80 +22pps Increase 60 40 20 0 January February 16
Slide 17: Sysco Has a History of Strong Sales Growth
Sysco Has a History of Strong Sales Growth Total Foodservice Industry Total Sysco Sales Billions Billions $320 $70 0.9% 5.0% $310 10-Year CAGR $60 10-Year CAGR $300 $50 $290 $40 $280 $30 $270 $20 $260 $10 $250 $- 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2009 2010 2011 2012 2013 2014 20
Slide 18: Free Cash Flow
Free Cash Flow 39 Weeks 39 Weeks of FY19 of FY20 Cash from Ops $1.4B $1.1B $0.3B Free Cash Flow1 $1.0B $0.5B $0.5B While our cash flow is down materially year-over-year, it remained positive at the end of Q3 1 See Non-GAAP reconciliations at the end of the presentation. 18
Slide 19: Our Capital Allocation Priorities
Our Capital Allocation Priorities 1 Invest in the business 2 Grow the dividend 3 Strategic M&A 4 Paydown debt/ Opportunistic share repurchase While we have temporarily restricted some priorities, our plan is to return to our traditional methodology shown above as quickly as feasible 19
Slide 20: Financial Update
Financial Update Amendment to revolving credit facility 364-day credit facility $500M Revolver paydown 20
Slide 21: Recent Business Impacts
Recent Business Impacts 4Q20 shift in customer mix & pricing to avoid product spoilage will drive gross margin decrease of 150-200bps vs. prior year $500M Operating expense reductions for 4Q20, including both temporary and permanent reductions Negative adj. operating income for 4Q20 Higher interest
Slide 22: We Have the Stability and Flexibility to Navigate This Business Environment
We Have the Stability and Flexibility to Navigate This Business Environment • We have confidence in our ability to achieve continued success and growth over the long term • We were in a strong financial position prior to the pandemic, and we will weather this storm to emerge an even stronger company
Slide 23: Sysco: At the heart of food and service
S/sco At the heart of food and service
Slide 24: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS 24
Slide 25: Impact of Certain Items
Impact of Certain Items Sysco’s results of operations for fiscal 2020 and fiscal 2019 were impacted by restructuring and transformational project costs consisting of: (1) expenses associated with our various transformation initiatives; (2) severance and facility closure charges; and (3) restructurin
Slide 26: Impact of Certain Items, 3Q20
Impact of Certain Items, 3Q20 Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items (Dollars in Thousands, Except for Share and Per Share Data) 13-Week 13-Week Period Ended Period Ended Change March 28, 2020 March 30, 2019 in Dollars % Change
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
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