Slide 1: Sysco 2Q17 Earnings Results
Sysco 2Q17 Earnings Results February 6, 2017
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements made in this presentation or in our earnings call for the second 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: 2nd Fiscal Quarter Results
2nd Fiscal Quarter Results Quality quarter and solid first half of the year Disciplined volume growth Sound margin and expense management Contributions from Brakes Focus on improving customers’ experience and increasing SYSCO 2Q17 productivity in all areas EARNINGS RESULTS 02.06.17 PAGE 4
Slide 5: Industry & Economic Trends Remain Uneven
Industry & Economic Trends Remain Uneven U.S. Consumer Confidence - Two Years Unemployment Rate & Non-Farm Payroll 120.0 Trend 7.0% 500,000 113.3 U.S. Unemployment Rate 6.5% Change in U.S. Non-Farm Payroll 110.0 Average 6.0% 400,000 100.0 5.4% 5.3% 4.9% 5.5% 5.0% 5.0% 5.0% 4.9% 300,000 5.0% 90.0 4.9
Slide 6: Raising Three-Year Target To $600-$650 Million
Raising Three-Year Target To $600-$650 Million1 Progress at the halfway point New Target through FY18 Accelerate local case growth Adjusted Operating Achieve gross Income profit growth +$350 million1 SYSCO 2Q17 EARNINGS RESULTS Limit expense 02.06.17 growth PAGE 6 © 2016 All Rights Reserved. Sysco C
Slide 7: Tom Bené, President & COO
Tom Bené President & COO
Slide 8: Operating Performance Achieved By Continued Strong Execution On The Key Levers Of Our Three-Year Plan
Operating Performance Achieved By Continued Strong Execution On The Key Levers Of Our Three-Year Plan To Be Our Customers’ Most Valued and Trusted Business Partner GROW LEVERAGE REDUCE Gross Profit Supply Chain Administrative Costs Costs Accelerate Local Case Growth Improve Margins Achieve Finan
Slide 9: U.S. Foodservice Segment Is Focused On Delivering Disciplined Case Growth
U.S. Foodservice Segment Is Focused On Delivering Disciplined Case Growth By Providing Value To Our Local Customers Product Menu Planning E-Commerce Innovation + Mobile Cutting Edge Business Solutions Review SYSCO 2Q17 EARNINGS RESULTS 02.06.17 PAGE 9 Disciplined Case Growth © 2016 All Rights Reserv
Slide 10: Category Management And Revenue Management Enable Solid Gross Profit Growth
Leveraging Core Processes Within Category Management And Revenue Management Continues To Enable Solid Gross Profit Growth Category Management Gross Profit Sysco Brand Growth SYSCO 2Q17 EARNINGS RESULTS 02.06.17 Revenue Management PAGE 10 © 2016 All Rights Reserved. Sysco Corporation.
Slide 11: Solid Expense Management Led To A $0.02 Improvement In Cost Per Case
Solid Expense Management Led To A $0.02 Improvement In Cost Per Case1 OPCO Standardize best practices in transportation and t warehousing to improve quality, cost and safety Productivity Use best-in-class capacity planning to defer capital. Facilities t Standardize maintenance, construction and real
Slide 12: International Foodservice Operations Performing Well
International Foodservice Operations Performing Well International Foodservice Operations1 Sales increased $1.3 billion Adjusted Operating Income improved $68 million Brakes U.K. – Progress in supply chain management France – Steady growth, solid topline and balanced approach to cost Swe
Slide 13: Joel Grade, CFO
Joel Grade CFO
Slide 14: 2Q17 Financial Highlights (Including Brakes)
2Q17 Financial Highlights (Including Brakes) Adjusted1 Reported $MM, except per share YOY % YOY % data 2Q17 2Q17 Change Change Sales $13,457 10.7% $13,457 10.7% Gross Profit $2,572 19.2% $2,572 19.2% Operating Expense $2,014 17.1% $2,079 20.6% Operating Income $558 27.7% $492 13.8% SYSCO 2Q17 EARNIN
Slide 15: YTD17 Financial Highlights (Including Brakes)
YTD17 Financial Highlights (Including Brakes) Adjusted1 Reported $MM, except per share YOY % YOY % data YTD17 YTD17 Change Change Sales $27,426 11.0% $27,426 11.0% Gross Profit $5,264 19.8% $5,264 19.8% Operating Expense $4,079 18.2% $4,205 21.2% Operating Income $1,185 25.6% $1,059 14.4% SYSCO 2Q17
Slide 16: Strong Operating Performance
Strong Operating Performance Total Sysco Operating Leverage (excluding Brakes)1 8.0% 6.8% 7.0% 6.0% 6.0% 5.0% 6.0% 6.1% 4.7% 5.0% 4.5% 4.1% 4.0% 3.4% 3.0% 3.1% 2.9% 3.0% 3.1% 2.0% 2.3% 2.2% 1.0% 1.8% 1.7% 1.9% 0.4% 1.5% 0.0% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 GP growth OPEX growth SYS
Slide 17: Cash Flow & Balance Sheet
Cash Flow & Balance Sheet1 Quarterly Cash Flow $1,200 $1,000 $800 $600 $400 $200 $- $(200) 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2013 2014 2015 2016 $(400) Q1 Q2 Q3 Q4 $(600) Net cash provided by operating activities (GAAP) Free Cash Flow (Non-GAAP) Cash flow Cash
Slide 18: Brakes Update and Summary
Brakes Update and Summary Brakes1 Brakes accretion was approximately $0.07 for the second quarter; $0.11 for the first half of FY17 Expect Brakes to be modestly dilutive to EPS in the third quarter, and modestly accretive in the fourth quarter Quality quarter reflecting continued momentum fr
Slide 19: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 20: Operating Income Growth
Operating Income Growth Operating Income Growth Year Ended 26-Week 26-Week Cumulative Period Change Period Ended Period Ended Period Change 18-month July 2, 2016 June 27, 2015 $ Dec. 31, 2016 Dec 26, 2015 $ Change $ Sales $ 50,366,919 $ 48,680,752 $ 1,686,167 $ 27,425,922 $ 24,716,237 $ 2,709,685 Im
Slide 21: Qualitative Reconciliation For The Raise To $600-$650M
Qualitative Reconciliation For The Raise To $600- $650M Adjusted Operating Income Target We expect to archive 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 th
Slide 22: Segment Reporting Structure
Segment Reporting Structure Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items (In Thousands, Except for Share and Per Share Data) 13-Week Period Ended 26-Week Period Ended Dec. 31, 2016 Dec. 26, 2015 Dec. 31, 2016 Dec. 26, 2015 U.S. Foods
Slide 23: Segment Reporting Structure
Segment Reporting Structure Other Sales (GAAP) $ 225,572 $ 230,689 $ 480,057 $ 549,213 Gross Profit (GAAP) 60,096 56,379 128,380 115,252 Gross Margin (GAAP) 26.6% 24.4% 26.7% 21.0% Operating expenses (GAAP) $ 56,304 $ 49,999 $ 116,585 $ 98,102 Impact of restructuring costs - (52) - (63) Operating ex
Slide 24: 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 uses to measure our expense performance. This metric is calculated by taking the total operating expense of our U.S. Broadline companies
Slide 25: 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) severance charges, (2) professional fees related to our three-year strategic pla
Slide 26: Impact Of Certain Items – 2Q17
Impact Of Certain Items – 2Q17 Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items and Brakes (In Thousands, Except for Share and Per Share Data) 13-Week 13-Week 13-Week 13-Week Period Ended Period Ended Period Change Period Dec. 31, 2016 D
Slide 27: Impact Of Certain Items – 2Q17 (Continued)
Impact Of Certain Items – 2Q17 (Continued) Operating margin (GAAP) 3.66% 3.56% 0.10% 2.8% Operating margin excluding Certain Items (Non-GAAP) 4.15% 3.59% 0.55% 15.3% Operating margin excluding Certain Items and Brakes (Non-GAAP) 4.06% 3.59% 0.46% 12.8% Interest expense (GAAP) $ 72,231 $ 47,235 $ 24,
Slide 28: Impact Of Certain Items – YTD FY17
Impact Of Certain Items – YTD FY17 Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items and Brakes (In Thousands, Except for Share and Per Share Data) 26-Week 26-Week 26-Week 26-Week Period Ended Period Ended Period Change Period Dec. 31, 20
Slide 29: Impact Of Certain Items – YTD FY17 (Continued)
Impact Of Certain Items – YTD FY17 (Continued) Operating margin (GAAP) 3.86% 3.75% 0.12% 3.1% Operating margin excluding Certain Items (Non-GAAP) 4.32% 3.82% 0.50% 13.2% Operating margin excluding Certain Items and Brakes (Non-GAAP) 4.34% 3.82% 0.52% 13.6% Interest expense (GAAP) $ 145,854 $ 174,142
Slide 30: Operating Performance
Operating Performance 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 Dec. 31, 2016 Dec. 26, 2015 in Dollars % Chang
Slide 31: Operating Performance (Continued)
Operating Performance (Continued) 13-Week 13-Week 13-Week 13-Week Period Ended Period Ended Period Change Period July 2, 2016 June 27, 2015 in Dollars % Change Gross profit $ 2,502,838 $ 2,220,164 $ 282,674 12.7% Less 1 week fourth quarter gross profit (178,774) - (178,774) NM Comparable gross profi
Slide 32: Operating Performance (Continued)
Operating Performance (Continued) 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
Slide 33: Operating Performance (Continued)
Operating Performance (Continued) 13-Week 13-Week 13-Week 13-Week Period Ended Period Ended Period Change Period Dec. 27, 2014 Dec. 28, 2013 in Dollars % Change Gross profit $ 2,085,137 $ 1,964,951 $ 120,186 6.1% Operating expenses (GAAP) $ 1,769,691 $ 1,613,174 $ 156,517 9.7% Impact of certain item
Slide 34: 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
Slide 35: Adjusted Brakes Accretion
Adjusted Brakes Accretion Adjusted Brakes Accretion Target 13-Week 26-Week Period Ended Period Ended Dec. 31, 2016 Dec. 31, 2016 Diluted EPS adjusted for certain items(Non-GAAP) $ 0.58 $ 1.25 Impact of Brakes (0.06) (0.09) Impact of Brakes restructuring costs (0.00) (0.01) Impact of Brakes acquisiti