Sysco Corporation · NYSE:SYY
Sysco — Barclays Global Consumer Staples Conference 2017
38 slides from Sysco's conference presentation, Sep 7, 2017
Slide 1: Barclays Global Consumer Staples Conference
Barclays Global Consumer Staples Conference Joel Grade, CFO Neil Russell, VP of Investor Relations and Communications 09.07.17
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 within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the
Slide 3: Joel Grade, CFO
JOEL GRADE CFO
Slide 4: Foundational to Sysco's Success
Foundational to Sysco’s Success 09.07.17 Barclays Consumer 4 © Sysco Corporation. All rights reserved.
Slide 5: Sysco is the Global Leader in Foodservice Distribution
Sysco is the Global Leader in Foodservice Distribution 49 49 > 500,000 Dividend CUSTOMER Dividend increases LOCATIONS Increases since 1970 ~ $55 ~$55 Billion Since 1970 > 65,000 ~300 Billion in annual sales Employees Distribution in Annual > 65,000 Facilities Sales ~ $1.6 EMPLOYEES Billion in Annual
Slide 6: Our Three-Year Roadmap Focuses on Profitable Growth
Our Three-Year Roadmap Focuses on Profitable Growth… …We Remain on Track to Achieve Our Objectives 09.07.17 Barclays Consumer 6 © Sysco Corporation. All rights reserved.
Slide 7: One Company, Many Solutions for Customer Success
One Company, Many Solutions for Customer Success The right products. Services and solutions that help our customers. Deep customer insights. Delivered through multiple channels for our customers. Innovation and tools to enhance customer experience. Barclays Consumer 7 © Sysco Corporation. All rights
Slide 8: Strategic Portfolio of Businesses
Strategic Portfolio of Businesses Strategic value U.S. broadline serves as the foundation: Delivers a comprehensive assortment to a wide base of customers U.S. operations Specialty companies enhance our portfolio of products: Provide our customers with differentiated fresh meat, seafood, produce, an
Slide 9: Significant Opportunities for Growth
Significant Opportunities for Growth U.S. market is the foundation of our business with meaningful growth potential Brakes acquisition provides platform for growth in Europe Canada, our first international expansion, is a substantial market Continue to expand our presence in Latin America 09.07.17 B
Slide 10: Disciplined, Profitable Case Growth for U.S. Broadline
Disciplined, Profitable Case Growth for U.S. Broadline • Continued Focus on Local Case Growth • Local Case Growth for 13 Consecutive Quarters • Multi-Unit Case Growth will Accelerate through FY18 09.07.17 Barclays Consumer 10 © Sysco Corporation. All rights reserved.
Slide 11: Long-Term Growth Outlook for Brakes
Long-Term Growth Outlook for Brakes • Platform for long-term growth • Quality business with strong operational and sales teams • Expect FY18 to be transitional year • Continued uncertainty in the U.K. market • France and Sweden are growing • Ireland is in the process of integrating and progressing w
Slide 12: Macro Environment Remains Supportive
Macro Environment Remains Supportive • The U.S. economy continues to expand Macro • Modestly rising economic activity • Strengthening labor market Consumer • Consumer confidence rising Strength • International geographies have varied levels of strength but generally parallel the U.S. market Industry
Slide 13: Hurricane Harvey
Hurricane Harvey • Isolated impact from Hurricane Harvey • Diverse and extended network; vast majority not in impacted regions • Extensive process to manage corporate and shared service functions continued support of operating companies • Deliveries in the Gulf Coast Region before, during and after
Slide 14: 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 December • Tom Bené Will Become New President and CEO • Success Driven by Dedication and Commitment of Associates 09.07.17 Barclays Consumer 14 © Sysco Corporation. All
Slide 15: Neil Russell, VP Investor Relations & Communications
NEIL RUSSELL VP, INVESTOR RELATIONS & COMMUNICATIONS
Slide 16: FY17 Financial Highlights
FY17 Financial Highlights (comparable 52 week) Adjusted1 (Excluding Adjusted1 (Including Brakes) Brakes) $MM, except per FY17 YOY % Change FY17 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 17: 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 18: Cash Flow & Balance Sheet
Cash Flow & Balance Sheet Annual Cash Flow1 $2,500 $2,000 $1,500 $1,000 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 – improvement by nearly
Slide 19: Capital Allocation Priorities
Capital Allocation Priorities • Invest in the Business • FY18 CAPEX Expected to be Approximately 1.3% - 1.4% of Sales • Facilities Expansion & Improvement • Customer Facing Technology Investments • Technology to Support Shared Services • Grow the Dividend • Strategic M&A • Opportunistic Share Repurc
Slide 20: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS
Slide 21: 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 22: 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 23: 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 24: 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 25: 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 26: 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 27: 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 28: 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 29: 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 30: 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 31: 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 32: 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 33: 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 34: 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 35: 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 36: 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 37: 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 38: 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
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