Sysco Corporation · NYSE:SYY
Sysco — Morgan Stanley Global Consumer and Retail Conference 2023
35 slides from Sysco's conference presentation, Dec 5, 2023
Slide 1: Morgan Stanley Global Consumer and Retail Conference
December 5, 2023 Morgan Stanley Global Consumer and Retail Conference
Slide 2: Kevin Hourican, President & Chief Executive Officer
KEVIN HOURICAN President & Chief Executive Officer
Slide 3: FY24 Guidance
FY24 Guidance Net Sales2 ~$80 billion, Mid-single digits growth Adjusted EPS1,2 $4.20-$4.40, ~5-10% growth 1See Non-GAAP reconciliations at the end of the presentation 2Guidance as of 12/05/2023
Slide 4: Sysco is the Backbone of the Food Away From Home Industry and Growing Share
Sysco is the Backbone of the Food Away From Home Industry and Growing Share FY2023 Total Sysco Sales 8% Travel and Leisure 15% Other 7% Healthcare 62% Restaurants 8% Education and Government $76.3B ~725K In Annual Sales Customer Locations Operations IFG 334 72K+ Distribution Colleagues Across Center
Slide 5: 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 $353 B 17% $300 B $268 B $224 B $231 B $197 B $161 B $353 B 2000 2005 2010 2015 2020 2021 2022 5 Technomic U.S. Foodservice Industry Wallchart for Calendar Year, updated May 2023
Slide 6: Sysco has Consistently Grown Sales for 50+ Years
Sysco has Consistently Grown Sales for 50+ Years Fiscal Year Sales ($ bn) Overview $90 • Sysco has grown sales 51 $80 out of the last 54 years $70 • Robust cross-selling opportunities with Broadline $60 scale & specialty expansion $50 • International segment continues to drive strong $40 growth $30
Slide 7: Sysco vs. Competition
Sysco vs. Competition Industry Investment Consistent Growing ESG Targets in Leading Grade Credit History of Share Dividend Compensation Margins Rating Repurchases Average Core Peers 7
Slide 8: Kenny Cheung, Chief Financial Officer
Kenny Cheung Chief Financial Officer
Slide 9: Superior Performance Relative to Peers
Superior Performance Relative to Peers Impressive Sales Flow Impressive Sales Flow Through to Gross Profits Through to Earnings Sustained Cash Flow Generation FY2023 Gross Margin 1 FY2023 Adj. EBITDA Margin 1,3 FY2023 Free Cash Flow ($ in millions) 1,2,3 18.3% $2,116 5.0% ~1.3x >2.7x ~1.5x 13.9% 3.3
Slide 10: Capital Structure and Allocation
Capital Structure and Allocation Investment Priority Progress • Capital investments in our technology, fleet and buildings • Closed on Edward Don acquisition in November to add to specialty equipment and supplies and closed on BIX 1 Invest for Growth • Produce acquisition in August to strengthen spe
Slide 11: Strong Track Record of Capital Return to Shareholders
Strong Track Record of Capital Return to Shareholders Consistent Dividend Growth Robust Share Repurchase Program Best in Class Capital Return Profile “Dividend Aristocrat” Cumulative Dividends1 Cumulative cash returned from Cumulative capital return over last 5 years as a % ($ bn) $4.5 share repurch
Slide 12: M&A Focused on Higher Margin Specialty Acquisitions
M&A Focused on Higher Margin Specialty Acquisitions August 2021 October 2021 February 2022 August 2023 November 2023 Greco & Sons Sysco M&A Philosophy Revenues Overview ($ bn) Greco & Sons ~+65% 1. Acquire businesses that increase Sysco’s customer Greco & Sons Revenue growth since acquisition propos
Slide 13: Investment Thesis: Sysco is Leading the Industry and Accelerating Growth
Investment Thesis Sysco is Leading the Industry and Accelerating Growth Healthy Balance Sheet: Supporting our customers’ Expect to grow meaningfully only Investment-Grade needs while partnering with faster than the total market Food Service Distributor suppliers on specific goals Focused on ROIC and
Slide 14: S/sco
S/sco At the heart of food and service
Slide 15: Appendix
Appendix
Slide 16: Our Recipe for Growth
—— Ss_eess—=éte | QP RECIPE FOR GROWTH the Industry with \q Leading Scale Advantages | Size and onsultants we Global Sales C ewes Cost to Deliver ts Driving Value Tech Investmen food and Service
Slide 17: Our Recipe for Growth
Our Recipe for Growth Sysco Is a Purpose-Driven Organization, Defining the Future of Our Industry PURPOSE | Our Why MISSION | Our What IDENTITY | Our Role Connecting the World to Delivering success for our Together we define the future of Share Food and Care for One customers through industry-leadin
Slide 18: Connecting the World to Share Food and Care for One Another
CONNECTING 7 = WORLD TO SHARE FOOD AND = FOR ONE ANOTHER
Slide 19: Sysco is the Industry Leader with Breadth, Depth, Scale, and Reach
Sysco is the Industry Leader with Breadth, Depth, Scale, and Reach Sports & Restaurants Recreation Lodging Catering & Events Entertainment Healthcare & Retail Travel & Leisure Education Government Senior Living 19
Slide 20: Sysco Brand Products Generate Over $19 Billion in Sales
Sysco Brand Products Generate Over $19 Billion in Sales To put it in perspective… And we have 11 brands >$500M $15.3B sales FY2022 ~$5B $10.4B sales FY2022 ~$1B $7.1B sales FY2022 $5.4B sales FY2022 ~$500M Nearly Half of Local Cases Driven by Sysco Brand
Slide 21: Food Away From Home Continues to Gain Share
Food Away From Home Continues to Gain Share Percentage of Combined Monthly Sales (2000 - 2023) 70% 65% 60% 55% 50% 45% 40% 35% 30% Grocery Stores Food Services and Drinking Places Source: The United States Census Bureau Advance Monthly Sales for Retail and Food Services 21
Slide 22: Our Approach to Sustainability
Our Approach to Sustainability PEOPLE PRODUCTS PLANET Achieved 62% ethnic and gender diversity Established responsible sourcing Expanded Sysco Sustainable Agriculture in U.S. associate workforce in 2022 guidelines for five key commodities program and sustainable agriculture through participation in
Slide 23: We Aspire to Create a Global Culture that is Decidedly Diverse, Equitable and Inclusive
We Aspire to Create a Global Culture that is Decidedly Diverse, Equitable and Inclusive Launched One Planet. One Table. Assortment, the U.S. foodservice industry’s largest offering of sustainably focused products. Customers can now easily discover more sustainable options for their menus within our
Slide 24: M&A Focused on Higher Margin Specialty Acquisitions
M&A Focused on Higher Margin Specialty Acquisitions August 2021 February 2022 August 2023 November 2023 Greco & Sons Coastal Companies Bix Produce Don & Company • Importer and distributor of a • Created a strong FreshPoint • Leading produce specialty and • Chicago-based leading full line of premium
Slide 25: Sysco is a Dividend Aristocrat, Growing Dividends for 54 Years
Sysco is a Dividend Aristocrat, Growing Dividends for 54 Years Key Characteristics of Dividend Aristocrats • Part of the S&P 500 • Dividend growth for a minimum of 25 consecutive years • Consistent cash flows to weather economic fluctuations • Strong history of returning cash back to shareholders th
Slide 26: Sysco is a Dividend Aristocrat, Increasing Dividends for 54 Years
Sysco is a Dividend Aristocrat, increasing Dividends for 54 Years Dividends Per Share1,2 Overview $2.20 $2.00 • Sysco has increased dividends since inception $1.80 $1.60 • We are committed to maintaining our dividend $1.40 17% CAGR aristocrat status and we are $1.20 since the only food distributor t
Slide 27: Engaged, Diverse and Experienced Board
Engaged, Diverse and Experienced Board Kevin Hourican Ed Shirley Daniel Brutto Non-Executive Chairman of the Board Sustainability Committee Chair President and CEO, Sysco Chairman of the Board, Sysco Former President, UPS International and Senior Vice President, United Parcel Service Ali Dibadj Larr
Slide 28: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS food and service
Slide 29: 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 free cash flow, any non-GAAP financial measures will be denot
Slide 30: Projected Adjusted EPS Guidance
Projected Adjusted EPS Guidance Adjusted earnings per share is a non-GAAP financial measure; however, we cannot predict with certainty certain items that would be included in the most directly comparable GAAP measure for the relevant future periods. Due to these uncertainties, we cannot provide a qu
Slide 31: Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) EBITDA represents net earnings (loss) plus (i) interest expense, (ii) income tax expense and benefit, (iii) depreciation and (iv) amortization. The net earnings (loss) component of our EBITDA calculation is impacted by Certain I
Slide 32: Impact of Certain Items on EBITDA (FY23 vs. FY22)
Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items on Earnings Before Interest, Taxes, Depreciation and Amortization (FY23 vs. FY22) (In Thousands) 52-Week 52-Week Period Ended Period Ended Change Jul. 1, 2023 Jul. 2, 2022 in Dollars %/bps
Slide 33: Free Cash Flow, YTD23 vs. YTD22
Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Free Cash Flow, YTD23 vs. YTD22 (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.
Slide 34: Net Debt to Adjusted EBITDA
Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Net Debt to Adjusted EBIDTA (In Thousands) Net Debt to Adjusted EBITDA is a non-GAAP financial measure frequently used by investors and credit rating agencies. Our Net Debt to Adjusted EBITDA ratio is calculated
Slide 35: 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 forecast in fiscal 2024. 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
Sysco — Morgan Stanley Global Consumer and Retail Conference 2023 on 6ix