Sysco Corporation · NYSE:SYY
Sysco — Deutsche Bank Global Consumer Conference 2024
42 slides from Sysco's conference presentation, Jun 4, 2024
Slide 1: Deutsche Bank Global Consumer Conference 2024
Deutsche Bank Global Consumer Conference 2024 June 4, 2024 | Paris
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 under the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the views of manage
Slide 3: Kevin Hourican, Chair of the Board and Chief Executive Officer
KEVIN HOURICAN CHAIR OF THE BOARD AND CHIEF EXECUTIVE OFFICER
Slide 4: Market Leader in the Highly Fragmented and Growing Foodservice Distribution Industry
Market Leader in the Highly Fragmented and Growing Foodservice Distribution Industry Total Addressable Market Since 2000 $371 B $353 B $360 B $300 B 17% $268 B $224 B $231 B $197 B $161 B $371B 2000 2005 2010 2015 2020 2021 2022 2023 2024 Source: Technomic U.S. Foodservice Industry Wallchart for Cal
Slide 5: Sysco Business at a Glance
Sysco Business at a Glance Sales by Segment Other SYGMA 1% 334 >74,000 10% ~$79 billion Distribution Global in Annual Sales Facilities Colleagues International Foodservice ~7,500 ~725K Operations #1 Market 19% Sales Customer Professionals Share1 Locations U.S. Foodservice Operations 70% 1 Leading ma
Slide 6: Sysco Has Consistently Grown Sales for 50+ Years
Sysco Has Consistently Grown Sales for 50+ Years Sales by Customer Type Travel and Leisure Fiscal Year Sales Other 8% $80 15% Billions $70 $60 Healthcare 7% $50 $40 Education and $30 Government $20 8% $10 Restaurants $0 62% 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1
Slide 7: We Have Gained Share Domestically and Internationally
We Have Gained Share Domestically and Internationally Ireland: #1 Position United States: #1 Position 18.2% 14.9% 17.1% $4B 15.4% TAM $360B TAM 2019 2023 2019 2023 Great Britain: #1 Position 12.7% 10.1% Canada: #1 Position $26B TAM 25.2% 24.0% 2019 2023 $22B Sweden: #2 Position TAM 20.3% 19.7% 2019
Slide 8: Our Leadership Team is Focused on Improving Today, While Transforming for Tomorrow
Our Leadership Team is Focused on Improving Today, While Transforming for Tomorrow Improving Our Core Business Continue to Advance Our Recipe For Growth Local Case Growth Merchandising Leverage Supply Chain Efficiency and Costs
Slide 9: Improving Our Core Business Performance
Improving Our Core Business Performance Supply Chain Efficiency Local Case Growth Merchandising Leverage and Cost Margin Operating Volume Management Expenses
Slide 10: Actions Being Taken to Drive Local Sales / Volume Growth
Actions Being Taken to Drive Local Sales / Volume Growth Incremental Sales Consultant Total Team Optimize Sales Sales Performance Selling – Driving Consultant Headcount Management Specialty Compensation – CRM tools
Slide 11: Our Salespeople Remain a Differentiating Asset and Core to Sysco's Growth Strategy
Incremental Sales Headcount Our Salespeople Remain a Differentiating Asset and Core to Sysco’s Growth Strategy USBL Local Sales Headcount +1,200 to +1,500 FTEs ~7,200 to Competitive Advantage of Local Salespeople ~7,500 ~6,000 Attribute Score (0 – 10 Scale) Gap vs. Other Broadliners Sales rep relati
Slide 12: We Have Substantially Grown Our Specialty Portfolio
We Have Substantially Grown Our Specialty Portfolio. We Believe Specialty Will Continue to Deliver Strong Top and Bottom-Line Growth Over the Next Three Years. $9.3B Share of Specialty Market $8.0B $6.8B Sysco Specialty Share of Specialty Market $3.8B 9.8% 8.4% 7.7% 5.9% FY21 FY22 FY23 FY24 Anticipa
Slide 13: Accelerated Growth When We Leverage Total Team Selling
Total Team Selling Driving Specialty Accelerated Growth When We Leverage Total Team Selling Average Sales per Customer, Annualized USBL + Two Specialty Companies 6X more Avg. Sales per Customer USBL + One Specialty Company 3X more Avg. Sales per Customer USBL Only
Slide 14: Actions Being Taken to Improve Merchandising Leverage
Actions Being Taken to Improve Merchandising Leverage Strategic Sysco Brand – Price Optimization – Italian and Asian Sourcing New Architecture, Relevant & Agile Expansion International Pricing Expansion & CMU focus
Slide 15: Sysco Brand Products Represent a $22 Billion Global Portfolio
Sysco Brand Products Represent a $22 Billion Global Portfolio Sysco Brand Sales as a % We have 11 brands >$500M1 of Local Cases2 ~$5B ~$1B 47.2% 46.8% 44.5% ~$500M 1 - US Foodservice Sales. 2 - U.S. Broadline
Slide 16: Actions Being Taken to Improve Supply Chain Efficiency and Cost
Actions Being Taken to Improve Longer-term, we are Supply Chain Efficiency and Cost focused on key items that improve operating expense • Routing Technology • Omni-channel • DC Automation Employee Supply Chain Colleague Product Retention Productivity Safety Shrink
Slide 17: Our Five Global Supply Chain Levers
Our Five Global Supply Chain Levers Are Derived From Being Brilliant at the Basics and Layering in Technology to Go Further Retention Productivity Safety Shrink Transportation Improvement Efficiency Excellence Reduction Optimization >15% >15% Pieces per >13% PPLH Incident Reduction Trip+ Low to poin
Slide 18: Our Recipe For Growth
Our Recipe For Growth DIGITAL NPS Improvement Personalization Engine & Website Improvement Pricing Automation STRATEGY | How We Win We will grow, profitably, faster than the overall market PRODUCTS AND SOLUTIONS Italian & Asian Expansion Sysco Brand Acceleration Strategic Sourcing SUPPLY CHAIN Impro
Slide 19: Why Sysco?
Why Sysco? Sysco will Deliver Strong Financial Results in the Backdrop of a Resilient Industry Food Away from Home is a Stable and Growing Sector Sysco is Gaining Market Share with Industry Leading Profitability Metrics Strong Balance Sheet and Robust Free Cash Flow A Highly Skilled and Purpose-Driv
Slide 20: Kenny Cheung, Executive Vice President and Chief Financial Officer
KENNY CHEUNG EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
Slide 21: Achievements – Advancing Our #1 Position
Achievements – Advancing Our #1 Position Net Sales Operating Cash Flow ($B) ($B) Attractive Return Profile ~$3 ~6% ~$79 ~5% CAGR CAGR #1 Market Share + $60 $2.4 Industry Leading • Gross Margins • EBITDA Margins • Free Cash Flow • ROIC • Investment Grade Balance Sheet FY19 FY24E FY19 FY24E Note: Year
Slide 22: Framing Our Algorithm for Growth
Framing Our Algorithm for Growth Sustainable Growth Operational Excellence Balanced Capital Return • Leverage competitive advantages to • Optimize gross profit dollars • Balanced capital allocation drive volume growth in our core • Realize positive operating leverage between investing, capital busin
Slide 23: Sysco's Financial Growth Algorithm
Sysco’s Financial Growth Algorithm Sales Growth Adj. EPS Growth1,3 Total Shareholder Return2 4 – 6% 6 – 8% 9 – 11% 6 – 8% Adj. Operating Income Growth3 Algorithm for growth is based on 3-Year plan. 1 Includes impact of global minimum tax headwinds to EPS growth in FY25. 2 Assumes no change in P/E mu
Slide 24: Driving Sustainable Sales Growth
Sustainable Growth Driving Sustainable Sales Growth Accelerating Top-line Growth Assumptions Growth Vectors 90% Core Drivers + 1.5% - 3.5% Volume Local/Chain (+Low to Mid-Single Digit Sales Growth) + 2% Inflation Specialty1 (+High-Single Digit Sales Growth) + 0.5% M&A International (+Mid to High-Sin
Slide 25: Customer Mix Benefits
Sustainable Growth Customer Mix Benefits National Customers Advantages & Local Customers Advantages +Low to +Mid Route Density Higher Margin Customer Single Digit Sales Growth Steady, Contract Driven FCF Sysco Brand Penetration TARGET CONTRIBUTION LOCAL/NATIONAL CUSTOMERS Portfolio Diversification E
Slide 26: Accretive Specialty Growth
Sustainable Growth +High Single Accretive Specialty Growth Digit Sales Growth $9B+ +11% TARGET CONTRIBUTION SPECIALTY FY24E Net Sales FY19-24E Net Sales CAGR • Largest specialty meat business Enhanced Margin Significant Cross Selling in the U.S. Profile Opportunities • Largest fresh produce business
Slide 27: Focus on International
Sustainable Growth Focus on International +Mid to +High International Net Sales ($B) Single Digit +25% $14.4 Sales Growth $11.5 Case Study: Ireland TARGET CONTRIBUTION Recipe for Growth Benefits INTERNATIONAL from Global Operating Model • Contributing high growth with #1 market share • Local penetra
Slide 28: Systematic and Disciplined Approach to M&A
Sustainable Growth 0.5% Sales Growth Systematic and Disciplined Approach to M&A TARGET CONTRIBUTION M&A M&A Philosophy Framework & Objective • Enhance Sysco’s customer proposition • Businesses that benefit from and enhance our strategic advantages • Retain competitive advantages • Synergy potential
Slide 29: GSC Expense Discipline Through Next 3 Years
Operational Excellence GSC Expense Discipline Through Next 3 Years GSC Expenses (% of Sales) GSC Corporate Expenses 2.0% • Target: ~1% of sales by FY27E, and GSC (HQ) costs 1.6% improving each year Target: ~1% of Sales • Cost out opportunities: GSC cost discipline, 1.2% refine professional fees and
Slide 30: Underpinned by Balanced Capital Allocation
Underpinned by Balanced Capital Allocation 1 2 3 Capex Commitment to Balanced Investments ~1% IG with Leverage Shareholder of Annual Sales Target of Return with 2.5 – 2.75x1 Growing Dividend Maintain Invest for Return Cash to a Strong Growth Shareholders Balance Sheet 1 In arriving at Adjusted EBITD
Slide 31: Solid FCF Growth & Conversion Rates Expected
Operational Excellence Solid FCF Growth & Conversion Rates Expected Free Cash Flow1 ($B) Adj. EBITDA/FCF1 Conversion Rates Target FY25E-FY27E $2.0 +15% $1.7 ~50% • FCF will fuel capital allocation priorities of investing in the business and returning cash back to shareholders FY19 LTM 1 See Non-GAAP
Slide 32: Attractive Performance and Return Profile
Attractive Performance and Return Profile Sysco delivers better performance and returns relative to Consumer Staples peers, providing attractive value opportunity for potential investors Revenue Growth EPS Growth ROIC2,5 Dividend Yield3 NTM P/E4 Next 3-Year CAGR1 Next 3-Year CAGR1 16.4% 2.7% 17.7x 1
Slide 33: Compelling Investment Opportunity
Compelling Investment Opportunity 1 Market leader in foodservice with key strategic advantages and significant scale, benefitting from food away from home trends 2 Resilient business model, balanced across end geographies, channels and product mixes 3 Multiple vectors of growth in core volumes and t
Slide 34: Sysco: At the heart of food and service
S/sco At the heart of food and service
Slide 35: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS [: the heart of food and service
Slide 36: Impact of Certain Items
Impact of Certain Items The discussion of our results includes certain non-GAAP financial measures, including EBITDA and adjusted EBITDA, that we believe provide important perspective with respect to underlying business trends. Other than EBITDA and free cash flow, any non-GAAP financial measures wi
Slide 37: International Foodservice Operations Non-GAAP Reconciliation
International Foodservice Operations Non-GAAP Reconciliation (Unaudited) Impact of Certain Items (In Thousands) Last Twelve 52-Week Months Ended Period Ended Change Mar. 30, 2024 Jun. 29, 2019 in Dollars %/bps Change Sales (GAAP) $ 14,422,243 $ 11,493,040 $ 2,929,203 25.5% Gross Profit (GAAP) 2,884,
Slide 38: Non-GAAP Reconciliation: 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. Sysco considers f
Slide 39: Non-GAAP Reconciliation: Impact of Certain Items on EBITDA
Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items on Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) EBITDA represents net earnings (loss) plus (i) interest expense, (ii) income tax expense and benefit, (iii) depre
Slide 40: Adjusted EBITDA to Free Cash Flow Conversion and Projected Guidance
Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Adjusted EBITDA to Free Cash Flow Conversion, Projected Adjusted Operating Income, and Projected Adjusted Earnings Per Share Guidance Adjusted EBITDA to Free Cash Flow Conversion is a non-GAAP financial measure f
Slide 41: Non-GAAP Reconciliation: Adjusted Return on Invested Capital
Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Adjusted Return on Invested Capital (In Thousands) Although adjusted return on invested capital (ROIC) is considered a non-GAAP financial measure, Sysco management considers adjusted ROIC to be a measure that pro
Slide 42: Net Debt to Adjusted EBITDA Leverage Ratio Targets
Net Debt to Adjusted EBITDA Leverage Ratio Targets We expect to achieve our net debt to adjusted EBITDA leverage ratio forecasts. We cannot predict with certainty when we will achieve these results or whether the calculation of our EBITDA will be on an adjusted basis in future periods to exclude the
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