Sysco Corporation · NYSE:SYY
Sysco — Investor Day (2017)
137 slides from Sysco's investor day presentation, 2017
Slide 1: Investor Day 2017
INVESTOR DAY 2017 | Sysco
Slide 2: Neil Russell
NEIL RUSSELL VP, INVESTOR RELATIONS & COMMUNICATIONS
Slide 3: Forward Looking Statements
FORWARD LOOKING STATEMENTS Certain statements made herein 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 views
Slide 4: Agenda
AGENDA • 8:30-8:35am: Neil Russell - VP, Investor Relations & Communications • 8:35-9:20am: Tom Bené - President & Chief Operating Officer / Incoming CEO • 9:20-9:40am: Bill Goetz - SVP, Sales & Marketing • 9:40-10:15am: Greg Bertrand - SVP, U.S. Foodservice Operations • 10:15-10:25am: Break • 10:25
Slide 5: Tom Bené
TOM BENÉ PRESIDENT & COO / INCOMING CEO
Slide 6: Our Vision
To be our customers’ most Our VISION valued and trusted business partner
Slide 7: Our core values represent who we are
OUR CORE VALUES REPRESENT WHO WE ARE, WHAT WE STAND FOR… & WHAT WE ASPIRE TO BE Integrity Inclusiveness Excellence Teamwork Responsibility Committed to doing Creating an open, diverse In everything we do Working as one to help To our customer, the right thing and respectful environment our customers
Slide 8: Corporate social responsibility efforts focused on people, products and planet
OUR CORPORATE SOCIAL RESPONSIBILITY (CSR) EFFORTS ARE FOCUSED ON PEOPLE, PRODUCTS & THE PLANET PRODUCTS Human & Labor Rights Animal Welfare Responsible Sourcing PEOPLE Charitable Giving Diversity & Inclusion Health & Wellness PLANET Sustainable Agriculture Energy Waste 8
Slide 9: Strong leadership team with many years of experience
WE HAVE A STRONG LEADERSHIP TEAM WITH MANY YEARS OF KNOWLEDGE & OPERATING EXPERIENCE YEARS OF YEARS OF SYSCO INDUSTRY EXPERIENCE EXPERIENCE Brian Beach SVP, Sysco Labs & Customer Experience 7 7 Tom Bene President & Chief Operating Officer / Incoming CEO 4 27 Greg Bertrand SVP, U.S. Foodservice Opera
Slide 10: Customer-centric approach leverages expertise across functions
OUR CUSTOMER-CENTRIC APPROACH LEVERAGES OUR EXPERTISE ACROSS FUNCTIONS Enabling our companies to serve our customers flawlessly Customers Operating Operate the Execute companies business flawlessly Enable the Provide Business units operating resources companies & support Create tools, processes Corp
Slide 11: Sysco's Business & FY18-FY20 Three Year Plan
SYSCO’S BUSINESS & FY18 – FY20 THREE YEAR PLAN
Slide 12: Consistently delivered strong results and shareholder returns
WE HAVE CONSISTENTLY DELIVERED STRONG RESULTS, WHICH HAVE TRANSLATED INTO SOLID RETURNS FOR SHAREHOLDERS FY16 – FY17 FINANCIAL TO BE OUR CUSTOMERS’ RESULTS1 MOST VALUED AND TRUSTED BUSINESS PARTNER • Local Cases 2.5% GROW LEVERAGE SUPPLY CHAIN REDUCE ADMINISTRATIVE • Gross Profit 4.0% GROSS PROFIT •
Slide 13: Presence in roughly $375B fragmented foodservice market
SYSCO HAS A PRESENCE IN A ROUGHLY $375B, LARGE & FRAGMENTED FOODSERVICE MARKET While also serving customers in another 81 countries 13
Slide 14: Technomic's foodservice industry real growth rates
TECHNOMIC’S FOODSERVICE INDUSTRY REAL GROWTH RATES 5-year Real CAGR 2017-2022 Noncommercial 1.1% Travel & Leisure 2.0% • We are focused on gaining share across multiple higher-growth Retailers 2.9% segments Restaurants 1.7% Small Chains & Independents 1.5% • Accelerate growth and gain 101-500 Chains
Slide 15: Four major segments comprise the Sysco portfolio
WE OPERATE THE BUSINESS IN FOUR MAJOR SEGMENTS THAT COMPRISE THE SYSCO PORTFOLIO OF BUSINESSES % OF TOTAL Core market REVENUE U.S. U.S. broadline serves as the foundation Foodservice Specialty companies enhance our portfolio Operations of products 68% International Foodservice Geographic expansion 1
Slide 16: U.S. market is the foundation of our business
THE U.S. MARKET IS THE FOUNDATION OF OUR BUSINESS, WITH MEANINGFUL GROWTH POTENTIAL Broad Fresh Fresh Meat, Assortment Produce Poultry, Seafood Serves diverse customer base of Deep knowledge CAPABILITIES local and contract customers Specialized solutions UNIQUE Efficient model Operational Flexibilit
Slide 17: International growth opportunities
INTERNATIONAL REPRESENTS GROWTH OPPORTUNITIES IN EXISTING MARKETS & TARGETED GEOGRAPHIC EXPANSION LATIN CANADA EUROPE AMERICA International Americas International Europe Estimated Market Size ~ $25B ~ $100B ~ $250B • Grow gross profit & • Positioned for longer-term • Platform for future optimize cos
Slide 18: SYGMA serves at-scale chain customers
SYGMA OPERATES IN THE SYSTEMS DISTRIBUTION SPACE & SPECIALIZES IN SERVING AT-SCALE CHAIN CUSTOMERS EXAMPLE CUSTOMERS 2016 U.S. foodservice Systems distributors market size $45B $B, excluding alcohol 16% $279B total Source: Technomic, Nov 2016, company info & financials 18
Slide 19: Guest Supply leading supplier to lodging industry
GUEST SUPPLY IS THE LEADING GLOBAL MANUFACTURER & DISTRIBUTOR OF SUPPLIES TO THE LODGING INDUSTRY • 30,000 hotels in 113 countries • Leading presence in U.S. market Global Lodging $10B Opportunity • Manufacture personal care amenity 175,000 Hotels products & textile products 16MM Rooms • Distribute
Slide 20: Sysco Labs is our innovation team
SYSCO LABS IS OUR INNOVATION TEAM, LEVERAGING AGILE & DESIGN THINKING TO REIMAGINE THE CUSTOMER EXPERIENCE Customer-centric Innovation Culture Cross-functional Pace over perfection Customers in the room and Silicon Valley thinking Cross-functional Rapid design, build out, and involved throughout des
Slide 21: Foodservice trends re-defining customer needs
FOODSERVICE TRENDS ARE RE-DEFINING CUSTOMER NEEDS Shifting Consumer Expectations Technology Foodservice Increased Innovation Operators Costs Operators who are most prepared to leverage these trends will accelerate Source: Technomic Industry Trends Report 21
Slide 22: Consumer expectations on food source and quality increasing
CONSUMERS' EXPECTATIONS REGARDING FOOD SOURCE & QUALITY ARE SIGNIFICANTLY INCREASING Healthy Consumers: Healthy options an Operators: Health and Wellness 67% important factor when choosing 89% will have a great or moderate a restaurant2 influence on future purchases1 Local Consumers: Say they are mo
Slide 23: Younger generations fueling demand for ethnic products
YOUNGER GENERATIONS ARE FUELING THE DEMAND FOR ETHNIC PRODUCTS & CUISINE TYPES Ethnic Items and Flavors Trend Demand for Ethnic by Generation 23
Slide 24: Technology increasingly important in foodservice
TECHNOLOGY IS ALSO PROGRESSIVELY MORE IMPORTANT IN FOODSERVICE & HELPS OPERATORS COMPETE 50% $5.2B of restaurant in estimated 2016 Cost efficiencies & searches are done orders went through labor cost savings are on mobile devices Food Delivery Apps, pushing technology a 45% growth1 use by operators
Slide 25: Building on solid foundation to accelerate value creation
BUILDING ON OUR SOLID FOUNDATION, WE ARE EVOLVING TO FURTHER ACCELERATE VALUE CREATION & GROWTH Strong Depth customer of product relationships offering Enterprise scale Highly efficient & scope supply chain Strong cash flow Best in class & balance sheet salesforce Sysco is rooted in a strong foundat
Slide 26: Four strategic priorities
OUR FOUR STRATEGIC PRIORITIES WILL ACCELERATE OUR CURRENT GROWTH & POSITION US WELL FOR THE FUTURE 26
Slide 27: Enriching the customer experience
ENRICHING THE CUSTOMER EXPERIENCE IS A CRITICAL COMPONENT OF OUR STRATEGY ENRICHING THE CUSTOMER EXPERIENCE • Leverage robust data / insights capabilities to change the conversation • Evolve our consultative sales model to deliver value-added solutions • Deliver new technology solutions to drive enh
Slide 28: Delivering operational excellence
DELIVERING OPERATIONAL EXCELLENCE IS KEY TO ACHIEVING OUR COST & PRODUCTIVITY GOALS DELIVER OPERATIONAL EXCELLENCE: • Improve productivity through automation and enhanced technology • Deepen our utilization of continuous improvement and process tools • Drive consistency and cost reduction through le
Slide 29: The Sysco way of operating
THE SYSCO WAY OF OPERATING WILL CREATE A MORE AGILE ENVIRONMENT THAT WILL ACCELERATE CUSTOMER VALUE OPTIMIZE THE BUSINESS: “THE SYSCO WAY” • Foster an “Innovation Culture” by quickly testing new ideas with willingness to fail smart, fail fast • Develop a global support model to drive value across ou
Slide 30: Activating the power of our people
ACTIVATING THE POWER OF OUR PEOPLE WILL UNLOCK SIGNIFICANT GROWTH ACTIVATE THE POWER OF OUR PEOPLE: • Ensure the “Voice of the Customer” is at the heart of everything we do Note: will develop • Empower individuals to act in the best graphics for these pages… interest of our customers and Sysco • Fos
Slide 31: M&A is a key lever of growth strategy
M&A IS A KEY LEVER OF OUR GROWTH STRATEGY • Grow our share with local Strategically operators acquire • Achieve supply chain synergies companies in existing markets • Fill potential gaps in our product offerings and capabilities • Develop platforms for further Thoughtfully growth expand into new • L
Slide 32: Key strategic priorities deliver solid operating performance over three years
FOCUSING ON THESE KEY STRATEGIC PRIORITIES WILL DELIVER SOLID OPERATING PERFORMANCE OVER THE NEXT THREE YEARS Cases 3.0% LOCAL: +3.5% Sales 4.0% - 4.5% Gross Profit 4% Operating Income 9% $650M - $700M1 EPS 12% 1 See Non-GAAP reconciliations at the end of the presentation. 32
Slide 33: Sysco, one company, many solutions
SYSCO, ONE COMPANY, MANY SOLUTIONS, ENABLING CUSTOMER SUCCESS 33
Slide 34: Bill Goetz
BILL GOETZ SVP, SALES & MARKETING
Slide 35: Insights inform sales and marketing agenda
WE USE INSIGHTS TO INFORM ALL ASPECTS OF OUR SALES AND MARKETING AGENDA Insights led to our recent rebranding that tells our story to the marketplace Through Insights, we have developed unique and differentiated value propositions by segment To further innovate, we are leveraging Sysco Labs to re-im
Slide 36: Multi-faceted approach to understand the customer
WE HAVE A MULTI-FACETED APPROACH TO GATHER A DEEPER UNDERSTANDING OF THE CUSTOMER of millennials are seeking ethnic- Consumer Trends 51% inspired dining options of independents report that they are currently using POS systems. Half of Develop Operator Trends 2/3 respondents indicate that they are us
Slide 37: Insight-based approach across customer lifecycle
OUR INSIGHT BASED APPROACH INFORMS OUR STRATEGIES THROUGHOUT THE ENTIRE CUSTOMER LIFECYCLE Innovate through customer-centric approach to new products, tools + technology, and reimagined customer journeys Deep Grow from deep relationships and the right products + Customer solutions delivered through
Slide 38: Insights led to rebranding effort
INSIGHTS LED TO OUR RECENT REBRANDING EFFORT TO TELL OUR STORY TO CUSTOMERS & PROSPECTS… At the heart of food and service …we have passion for our business and for our customers ENRICH THE CUSTOMER EXPERIENCE 38
Slide 39: Value propositions define key differentiation points
GROUNDED IN CUSTOMER RESEARCH, OUR VALUE PROPOSITIONS DEFINE OUR KEY DIFFERENTIATION POINTS… Sysco delivers Sysco provides Sysco supports fresh food and fresh ideas support and solutions the local community …that help acquire, develop and increase share of wallet with current customers ENRICH THE CU
Slide 40: Healthcare value propositions: end to end solutions
HEALTHCARE VALUE PROPOSITIONS – END TO END SOLUTIONS • NetIMPAC: Centralized menu planning Delivering Fresh • NetRecipe: 22,000+ recipes Food and Ideas • eNutrition: 237,000 products • Order Guide Management Providing Support • KEYS: Foodservice staff training & Solutions • Emergency Response Proces
Slide 41: Customer needs driving sales model evolution
CUSTOMER NEEDS ARE DRIVING OUR SALES MODEL EVOLUTION Multi-Unit Local “Manage compliance” “Partner for growth” • Fewer points of contact • Omni-channel approach SERVICES • Tools for managing unit compliance combining MAs and digital tools • Consolidated invoicing and reporting • Consulting / menu •
Slide 42: Multi-unit sales model focused on prioritized segments
OUR MULTI-UNIT SALES MODEL IS FOCUSED ON OPTIMIZING AND GROWING PRIORITIZED SEGMENTS Developing Solutions & Centralized Services Innovations Identify Optimal Strategic Partnership Segments Selling Grow & Optimize ENRICH THE CUSTOMER EXPERIENCE 42
Slide 43: Optimal multi-unit segments for profitable growth
WE HAVE IDENTIFIED THE OPTIMAL MULTI-UNIT SEGMENTS FOR PROFITABLE GROWTH TECHNOMIC 5-YEAR CAGR (2017-2022) Restaurants Fast casual 6% Healthcare Senior Living 6% Travel / Leisure Recreation ~2% Retail Supermarket 5% ENRICH THE CUSTOMER EXPERIENCE 43
Slide 44: Centralizing support services for multi-unit customers
WE ARE CENTRALIZING SUPPORT SERVICES FOR OUR MULTI-UNIT CUSTOMERS… • Limited time offers • Business transfer CENTRALIZATION • Order guide management • Customer location additions SERVICES • Pricing/audit inquiries • New customer onboarding • Financial inquiries …to create consistency and enhanced cu
Slide 45: Customer needs driving sales model evolution
CUSTOMER NEEDS ARE DRIVING OUR SALES MODEL EVOLUTION Multi-Unit Local “Manage compliance” “Partner for growth” • Fewer points of contact • Omni-channel approach SERVICES • Tools for managing unit compliance combining MAs and digital tools • Consolidated invoicing and reporting • Consulting / menu •
Slide 46: Leveraging Sysco Labs to reimagine customer journey
WE ARE LEVERAGING SYSCO LABS TO REIMAGINE THE ENTIRE CUSTOMER JOURNEY FROM START TO FINISH Discover Onboard Shop Receive Order ` • Customer-centric, outside looking in • Research and data-driven • Agile, collaborative, cross-functional • Innovation model leveraging rapid design and iterative approac
Slide 47: Transforming local sales model to accelerate growth
WE ARE TRANSFORMING OUR LOCAL SALES MODEL TO ACCELERATE GROWTH CUSTOMER-CENTRIC APPROACH Identify targeted opportunities Omni-channel approach Product & business expertise Consistent & market relevant pricing Enhanced coaching & training ENRICH THE CUSTOMER EXPERIENCE 47
Slide 48: Multicultural segments lead restaurant growth
MULTICULTURAL SEGMENTS CONTINUE TO LEAD RESTAURANT GROWTH Segment Segment Growth Market Size Hispanic 3x industry growth $9B Italian 1.5x industry growth $10B Asian 3x industry growth $8B Focusing on high impact ethnic segments to further differentiate our offerings ENRICH THE CUSTOMER EXPERIENCE 48
Slide 49: Proven plan for multicultural customer
WE HAVE A PROVEN PLAN TO MEET THE NEEDS OF THE MULTICULTURAL CUSTOMER Execute 4 Point Plan Unique sales model in key geographies Build culturally relevant brand Develop a robust supplier base Engagement in the local Hispanic communities DOUBLE DIGIT SALES GROWTH Following a similar approach to Itali
Slide 50: Continue to grow by supporting customer needs
WE WILL CONTINUE TO GROW OUR BUSINESS BY SUPPORTING OUR CUSTOMERS’ NEEDS & EXPECTATIONS ENRICHING THE CUSTOMER EXPERIENCE • Leveraging the power of our brand Differentiated tools • Improve loyalty through differentiated solutions and capabilities foster ease of doing business • Evolve sales model to
Slide 51: Greg Bertrand
GREG BERTRAND SVP, U.S. FOODSERVICE OPERATIONS
Slide 52: U.S. foodservice business key driver of profitability
OUR U.S. FOODSERVICE BUSINESS IS A KEY DRIVER OF SYSCO’S OVERALL PROFITABILITY Portfolio of U.S. Operations Legend Broadline U.S. broadline serves as the foundation: Delivers a comprehensive assortment to a wide base of customers Specialty companies enhance our Hawaii portfolio of products: Provide
Slide 53: U.S. foodservice business: FreshPoint
OUR U.S. FOODSERVICE BUSINESS IS A KEY DRIVER OF SYSCO’S OVERALL PROFITABILITY Portfolio of U.S. Operations Legend FreshPoint U.S. broadline serves as the foundation: Delivers a comprehensive assortment to a wide base of customers Specialty companies enhance our portfolio of products: Provide our cu
Slide 54: U.S. foodservice business: specialty meat
OUR U.S. FOODSERVICE BUSINESS IS A KEY DRIVER OF SYSCO’S OVERALL PROFITABILITY Portfolio of U.S. Operations Legend Specialty meat U.S. broadline serves as the foundation: Delivers a comprehensive assortment to a wide base of customers Specialty companies enhance our portfolio of products: Provide ou
Slide 55: U.S. foodservice business: SOTF / European imports
OUR U.S. FOODSERVICE BUSINESS IS A KEY DRIVER OF SYSCO’S OVERALL PROFITABILITY Portfolio of U.S. Operations Legend Specialty meat SOTF / European Imports U.S. broadline serves as the foundation: Delivers a comprehensive assortment to a wide base of customers Specialty companies enhance our portfolio
Slide 56: U.S. foodservice business: full portfolio
OUR U.S. FOODSERVICE BUSINESS IS A KEY DRIVER OF SYSCO’S OVERALL PROFITABILITY Portfolio of U.S. Operations Legend Broadline FreshPoint Specialty meat SOTF / European Imports U.S. broadline serves as the foundation: Delivers a comprehensive assortment to a wide base of customers Specialty companies
Slide 57: Improving U.S. foodservice through strategies across operations
WE ARE IMPROVING OUR U.S. FOODSERVICE BUSINESS THROUGH A NUMBER OF STRATEGIES ACROSS OUR OPERATIONS Leverage our Differentiate Transform our Optimize our portfolio our product sales model supply chain assortment Our portfolio of We continue to We are enabling We are delivering an companies provide f
Slide 58: Specialty companies enhance product assortment
SPECIALTY COMPANIES ENHANCE OUR PRODUCT ASSORTMENT, CREATE SERVICE FLEXIBILITY, AND PROVIDE DEEPER KNOWLEDGE Each type of company provides customers with a different value proposition Broadline Fresh Produce Fresh Meat and Seafood • Distributes a broad assortment of • Specializes in fresh produce •
Slide 59: OneSysco integrated go-to-market approach
OUR ONESYSCO PROGRAM IS AN INTEGRATED GO TO MARKET APPROACH ACROSS OUR BROADLINE & SPECIALTY COMPANIES… OneSysco leverages broadline & specialty capabilities Deliver on fresh & local needs of our customers Broadline Produce Leverage Broadline & specialty companies to provide customized service offer
Slide 60: Improving U.S. foodservice through strategies across operations
WE ARE IMPROVING OUR U.S. FOODSERVICE BUSINESS THROUGH A NUMBER OF STRATEGIES ACROSS OUR OPERATIONS Leverage our Differentiate Transform our Optimize our portfolio our product sales model supply chain assortment Our portfolio of We continue to We are enabling We are delivering an companies provide f
Slide 61: Category management grounded in deep insights
CATEGORY MANAGEMENT IS GROUNDED IN DEEP INSIGHTS FROM THE CUSTOMER, MARKETPLACE AND OUR SUPPLIERS… Variety means giving more Value means delivering the Innovation means bringing breadth of assortment & best quality we can in a new products to market to offering new, on-trend items competitive way me
Slide 62: Evolving approach to be more customer-centric
WE ARE EVOLVING OUR APPROACH TO BECOME EVEN MORE CUSTOMER-CENTRIC… National Regional Local Consistent national …augmented by …and enhanced with assortment to meet regional products local items essential customer needs… and brands… …while driving additional operational efficiencies in how we source &
Slide 63: Sysco brand portfolio delivers value
SYSCO BRAND PORTFOLIO DELIVERS SIGNIFICANT OVERALL VALUE IN QUALITY, VARIETY AND PRICE TO OUR CUSTOMERS • Deliver a broad assortment of quality products and recognized brands across multiple categories • Improve profitability for our customers through multiple quality tiers and innovative and exclus
Slide 64: Brand revitalization delivers simpler, relevant offering
BRAND REVITALIZATION IS DELIVERING A SIMPLER, MORE RELEVANT OFFERING AND NEW SALES TOOLS FOR OUR MAS The Wholesome Farms Story Wholesome Farms offers products that are honestly dairy— the first ingredient is always milk, cream, or egg. Wholesome Farms provides nourishing and consistent dairy ingredi
Slide 65: Assortment enhanced by exclusive items
OUR ASSORTMENT IS ENHANCED BY EXCLUSIVE ITEMS THAT HELP CUSTOMERS DIFFERENTIATE THROUGH INNOVATIVE PRODUCTS Beyond Meat® • New on-trend items The Beyond Burger™ that keep menus fresh and drive customer traffic • Products that deliver labor-saving, versatility and better-for-you solutions September 2
Slide 66: Improving U.S. foodservice through strategies across operations
WE ARE IMPROVING OUR U.S. FOODSERVICE BUSINESS THROUGH A NUMBER OF STRATEGIES ACROSS OUR OPERATIONS Leverage our Differentiate Transform our Optimize our portfolio our product sales model supply chain assortment Our portfolio of We continue to We are enabling We are delivering an companies provide f
Slide 67: Transitioning to consultative sales approach
WE ARE TRANSITIONING TO AN INCREASINGLY CONSULTATIVE SALES APPROACH SUPPORTED BY NEW TOOLS & CAPABILITIES Capabilities & Processes & tools Sales support development Technology and Training and Resources that processes that allow development programs are differentiated sales teams more time to to adv
Slide 68: Innovative processes and tools give sales team more time to sell
SYSCO’S INNOVATIVE PROCESSES & TOOLS PROVIDE OUR SALES TEAM MORE TIME TO SELL & SUPPORT OUR CUSTOMERS Support our MAs through processes & Enhancing our eCommerce capabilities tools that improve their productivity Provide customers with a choice to order how, when, and where they want Data-driven ter
Slide 69: Advancing sales capabilities for consultative selling
SYSCO IS ADVANCING OUR SALES CAPABILITIES TO ENABLE CONSULTATIVE SELLING FOR OUR LOCAL CUSTOMERS… Prioritized customer-facing activities Sample Trainings • New MA orientation program ▪ Building capabilities ▪ Learning & Development • MA Accelerator program programs focused on new capability developm
Slide 70: Providing marketing associates support and resources
WE ARE PROVIDING MARKETING ASSOCIATES WITH THE SUPPORT & RESOURCES TO DRIVE SALES GROWTH Resources Services & Support • Business reviews and chef’s visits Culinary • Menu development & savings opportunities Team • New product introductions and innovative recipe ideas • Category specific expertise an
Slide 71: Improving U.S. foodservice through strategies across operations
WE ARE IMPROVING OUR U.S. FOODSERVICE BUSINESS THROUGH A NUMBER OF STRATEGIES ACROSS OUR OPERATIONS Leverage our Differentiate Transform our Optimize our portfolio our product sales model supply chain assortment Our portfolio of We continue to We are enabling We are delivering an companies provide f
Slide 72: Evolving supply chain through near and long term strategies
WE ARE EVOLVING OUR SUPPLY CHAIN THROUGH NEAR TERM & LONG TERM STRATEGIES Centers of excellence drive innovation & best practices Continuous Center of Near term strategies improvement & Excellence & capability innovation building • Safety • Operational efficiency Supply Chain • Leveraging assets Ope
Slide 73: Increasing operational efficiency and delivery flexibility
WE ARE FOCUSED ON CONTINUING TO INCREASE OPERATIONAL EFFICIENCY AND PROVIDE MORE DELIVERY FLEXIBILITY Operations Customer Benefits Minimizing errors Reducing miles & • Reliability in order & waste by applying fuel through routing fulfillment LEAN practices best practices • Consistency in delivery ex
Slide 74: Executing long term strategies for changing customer needs
EXECUTING LONG TERM STRATEGIES TO MEET THE CHANGING NEEDS OF OUR CUSTOMERS… Leveraging capabilities and scale across our OneSysco portfolio Optimizing our network to broaden the product assortment & create further flexibility Introducing alternative methods for last mile delivery to provide customer
Slide 75: U.S. operations continue to deliver strong results
U.S. OPERATIONS WILL CONTINUE TO DELIVER STRONG RESULTS THROUGH A VARIETY OF CUSTOMER-CENTRIC INITIATIVES DELIVERING STRONG RESULTS • Leveraging our portfolio to provide our customers with the products & services that meet their needs • Differentiating our product assortment by increasing the breadt
Slide 76: Break
BREAK
Slide 77: Paul Moskowitz
PAUL MOSKOWITZ EVP, HUMAN RESOURCES
Slide 78: Activating the power of our people to deliver our plan
ACTIVATING THE POWER OF OUR PEOPLE WILL ALLOW US TO DELIVER OUR PLAN ACTIVATE THE POWER OF OUR PEOPLE: • Ensure the “Voice of the Customer” is at the heart of everything we do • Empower individuals to act in the best interest of our customers and Sysco • Foster an open, diverse, and respectful envir
Slide 79: Empowered and highly capable individuals / teams
EMPOWERED & HIGHLY CAPABLE INDIVIDUALS / TEAMS Customers Operating Operate the Execute Operate the business business Execute flawlessly flawlessly hg companies Strong, Significant Deep pipeline Enable Enable the the Provide Provide experienced culinary, of talent Business units operating resources l
Slide 80: Diversity and inclusion a key business imperative
DIVERSITY & INCLUSION IS A KEY BUSINESS IMPERATIVE THAT HELPS US TO REFLECT OUR CUSTOMERS & COMMUNITIES More than Millennials half of US will be 50% restaurants of the US are owned by workforce women within 5 years +45% of restaurant +75% of the global managers are women workforce within 10 years Ou
Slide 81: Investment in sales training has improved performance
SIGNIFICANT INVESTMENT IN TRAINING OUR SALES ORGANIZATION HAS RESULTED IN IMPROVED PERFORMANCE Continued Investment in Targeted Training Experienced MAs participate in Accelerator Training – and showed significant performance increases ROBUST & A new MA experiences STANDARDIZED ONBOARDING & 30 weeks
Slide 82: Culture foundational for engagement and delivering plan
OUR CULTURE IS FOUNDATIONAL FOR DRIVING ENGAGEMENT & DELIVERING ON OUR PLAN Our Strengths Our Focus • Excellent cultural health • Staying connected with • Strong customer focus associates • Significant pride in and loyalty • Real-time, all-the-time to Sysco feedback • Operationally disciplined • Agi
Slide 83: Promoting a performance culture
BY PROMOTING A PERFORMANCE CULTURE, WE ALIGN COMPANY & ASSOCIATE RESULTS Sales Operations Leadership • Sales and Gross Profit • Cases per Hour • Case Growth Growth • Accuracy • Gross Profit KEY METRICS • Case Growth • Delivery Stops • Operating Profit • E-commerce • EPS & ROIC / Equity incentives •
Slide 84: Activating our people to achieve objectives
ACTIVATING THE POWER OF OUR PEOPLE WILL ALLOW US TO ACHIEVE OUR OBJECTIVES ACHIEVE OUR OBJECTIVES • Strengthen the capabilities of our frontline associates and management team while promoting inclusion • Continue to engage our associates and create a more customer-centric environment • Maintain alig
Slide 85: Wayne Shurts
WAYNE SHURTS EVP & CTO
Slide 86: Technology a key enabler of our strategy
TECHNOLOGY WILL CONTINUE TO BE A KEY ENABLER OF OUR STRATEGY Enrich the Customer Experience Use Technology to Drive Business Results Deliver Technology Faster and Better 86
Slide 87: Great eCommerce progress from improved digital tools
GREAT ECOMMERCE PROGRESS HAS RESULTED FROM IMPROVEMENTS TO OUR DIGITAL TOOLS… ECOMMERCE GROWTH 40% of local is done through eCommerce 2x more than last year HOW? • We delivered major enhancements to our tools • MySysco: an easy 1 stop shop for all our e-tools • Search enhancements • Image and conten
Slide 88: Improved business results
…AND HAS RESULTED IN IMPROVED BUSINESS RESULTS MA /customer Greater share of Supplies On The conversations are wallet, higher Fly grew 25% changing sales and last year improved loyalty 88
Slide 89: Continue to enhance our eCommerce tools
WE WILL CONTINUE TO ENHANCE OUR ECOMMERCE TOOLS Driving improved levels of loyalty: • Personalization • Targeted offers • Reviews and recommendations… Transforming eCommerce from an ordering site to a shopping site 89
Slide 90: eCommerce extends beyond order entry
ECOMMERCE AT SYSCO EXTENDS WELL BEYOND ORDER ENTRY Streamlined Payment Reporting Inventory Management Technology 90
Slide 91: Discover journey
THE DISCOVER JOURNEY WILL MAKE IT EASY TO FIND AND DO BUSINESS WITH SYSCO Discover - Shopping for a food service supplier 91
Slide 92: Receive journey
THE RECEIVE JOURNEY WILL MAKE IT EASIER FOR CUSTOMERS TO PLAN FOR, RECEIVE AND SETTLE DELIVERIES Receive - Exactly when and what goods are arriving? 92
Slide 93: Technology offerings inside the restaurant
OUR TECHNOLOGY OFFERINGS ALSO EXTEND TO INSIDE THE RESTAURANT Sysco’s in-restaurant technology solutions Guest Manager Point of Sale Reservations Reporting 93
Slide 94: Technology leveraging data to drive improved results
TECHNOLOGY IS ENABLING SYSCO TO BETTER LEVERAGE DATA TO DRIVE IMPROVED RESULTS… • Revenue management analytics • Predict customer churn • Develop product recommendations • Logistics and network optimization • Warehouse management 94
Slide 95: Technology helping drive out costs
…AND IS ALSO HELPING US TO DRIVE OUT COSTS • Robotic Process Automation • Standardizing our core financial systems • Re-platforming mission critical systems to the cloud 95
Slide 96: Transforming technology team to agile organization
WE ARE TRANSFORMING OUR TECHNOLOGY TEAM TO AN AGILE ORGANIZATION • Failing and learning fast • Customer in the Room • Iterative Development • Product vs. project centric • Self-sufficient Agile Teams • Respond Rapidly to Doubled eCommerce Changing Needs 1 0 % + increase in team adoption growth eng a
Slide 97: Technology a key enabler to Sysco's strategy
TECHNOLOGY IS A KEY ENABLER TO SYSCO’S STRATEGY WINNING FORMULA • Enrich the customer experience • Use technology to drive business results • Deliver technology faster and better 97
Slide 98: Lunch Break
LUNCH BREAK WILL RESUME AT 1:00PM EST
Slide 99: Joel Grade
JOEL GRADE EVP & CFO
Slide 100: Sysco way includes cost-mindset focused on simplification
THE SYSCO WAY OF OPERATING INCLUDES A COST-MINDSET THAT FOCUSES ON SIMPLIFICATION & VALUE CREATION TO ACHIEVE OUR PLAN Ongoing focus on cost Financial overview of three-year plan (FY18-FY20) 105
Slide 101: Next evolution of cost reductions: holistic approach
THE NEXT EVOLUTION OF COST REDUCTIONS IS BASED ON A HOLISTIC APPROACH PRIORITIZATION Understand what the work is, prioritize to drive business results or manage risk, rationalize unnecessary activities OPTIMIZATION GOVERNANCE Maximized value in intersection of Governance, transparency, cost where an
Slide 102: Reduce costs through different levers
WE WILL REDUCE COSTS THROUGH A VARIETY OF DIFFERENT LEVERS Finance Technology Smart Spending Roadmap Agile Transformation Optimizing our Canadian business OPTIMIZE THE BUSINESS 102
Slide 103: Finance technology roadmap
FINANCE TECHNOLOGY ROADMAP: A PROGRAM FOCUSED ON DRIVING STANDARDIZATION, EFFICIENCY & EFFECTIVENESS KEY DRIVERS Increased standardization of end-to-end global processes Workflow and digital automation on a modern finance platform Seamless customer, vendor, and associate experience OPTIMIZE THE BUSI
Slide 104: Smart spending focused on G&A categories
SMART SPENDING IS FOCUSED ON G&A CATEGORIES, TAKING A DETAILED LOOK AT SPEND & DRIVING SAVINGS Unprecedented Development of transaction-level visibility reveals cost drivers and visibility potential savings opportunities Combination of traditional P&L owners and new category owners to Dual ownership
Slide 105: The agile transformation at Sysco
THE AGILE TRANSFORMATION AT SYSCO Agile will generate return on investment FY 18 FY 19 FY 20 through shorter development cycles, waste reduction and delivery of better solutions as a result of increased collaboration among business, technology Launch Scale Transform and customers Shorter development
Slide 106: Optimizing the Canadian business
WE ARE OPTIMIZING THE CANADIAN BUSINESS TO IMPROVE EFFICIENCIES Leverage best Right-size Network practices structure Optimization OPTIMIZE THE BUSINESS 106
Slide 107: Shared services is strategic platform for centralization
SHARED SERVICES (SBS) IS OUR STRATEGIC PLATFORM FOR CENTRALIZATION Higher service levels and response times Improved compliance and controls Operational efficiency Speed to market Upside from additional shared services All designed to enhance the customer experience OPTIMIZE 107 THE BUSINESS
Slide 108: Financial Overview
FINANCIAL OVERVIEW
Slide 109: Strong momentum in first nine quarters of three-year plan
WE HAVE STRONG MOMENTUM IN THE BUSINESS FOR THE FIRST NINE QUARTERS OF OUR INITIAL THREE-YEAR PLAN… THREE-YEAR PLAN ACTUALS AS OF 1 (FY15-FY18) 1Q18 Accelerate local case growth 2 - 3% 2.5% Achieve gross profit growth1 4% 4% Limit operating expense growth1 3% 2% Guiding to the Operating income growt
Slide 110: Key underlying operating assumptions: FY18-FY20 plan
KEY UNDERLYING OPERATING ASSUMPTIONS: FY18-FY20 PLAN • Inflation: 1% - 2% Topline • Total case growth: 3.0% • Local case growth: 3.5% Acquisition • Continue to pursue core portfolio acquisitions (0.5% - 1.0% of sales) Investment • Ongoing assessment of other strategic opportunities Shares • Reduce d
Slide 111: Three-year plan delivers targeted financial results
OUR THREE-YEAR PLAN DELIVERS TARGETED FINANCIAL RESULTS 2 FY20 FY17 3yr CAGR (Approx.) Sales ($B) $55.4 $63.0 4% - 4.5% $B $10.6 $11.8 4% Gross Profit % 19.1% 18.8% $B $8.2 $8.8 2.5% Adj. Expenses1 % 14.8% 14.0% Adj. Operating $B $2.4 $3.0 9% Income1 % 4.3% 5.0% Net Earnings1 ($B) $1.4 $1.8 9% EPS1
Slide 112: Key strategic priorities enable solid operating performance
FOCUSING ON THESE KEY STRATEGIC PRIORITIES WILL ENABLE US TO DELIVER SOLID OPERATING PERFORMANCE FY 20 IMPACT Grow gross profit 55-65% Gross operating Leverage supply chain 10-15% income costs benefit Reduce administrative 20-25% costs Net Operating Income Improvement: $650 - $700M1 1 See Non-GAAP r
Slide 113: Operating income growth evenly paced through FY18-FY20
THE GROWTH OF OPERATING INCOME WILL BE EVENLY PACED THROUGHOUT FY18-FY20 Adjusted Operating Income1 ($B) CAGR: 9% $3.0 $2.4 2017 2018 2019 2020 Fiscal ’18 results adjusted for ~ $50M in one-time depreciation 1 See Non-GAAP reconciliations at the end of the presentation 113
Slide 114: Continue historical strong operating performance
WE PLAN TO CONTINUE OUR HISTORICAL STRONG OPERATING PERFORMANCE Total Sysco Operating Leverage 1 3yr CAGR 1 6.0% FY18 – FY20 4.8% 4.0% 4.1% 4.0% 4.5% 3.6% 2.0% 2.0% 1.7% 2.5% 0.0% FY15 FY16 FY17 GP growth OPEX growth Maintain a healthy gap between gross profit dollar and operating expenses driving g
Slide 115: Proven track record of cash flow generation
WE HAVE A PROVEN TRACK RECORD OF CASH FLOW GENERATION… Annual Cash Flow1 ($M) $2,400 $1,800 $1,200 $600 $- FY15 FY16 FY17 Net cash provided by operating activities (GAAP) Free Cash Flow (Non-GAAP) … and we expect to generate improved cash flows with a continued adjusted cash conversion ratio2 greate
Slide 116: Disciplined approach to capital allocation
WE WILL FOLLOW A DISCIPLINED APPROACH TO CAPITAL ALLOCATION Approximately 1.2% - 1 Invest in the business 1.3% of sales Preferred payout ratio 2 Grow the dividend of 50-60% over time 3 Strategic M&A Pay Down Debt / 4 Opportunistic Share Repurchase 116
Slide 117: Strong balance sheet provides flexibility
OUR STRONG BALANCE SHEET PROVIDES FLEXIBILITY Current • Solid investment-grade credit rating Balance • Substantial flexibility to pursue strategic Sheet transactions where appropriate Debt • Moody’s: A3 Ratings • S&P: BBB+ 117
Slide 118: Sufficient debt capacity for acquisitions
WE HAVE SUFFICIENT LEVELS OF DEBT CAPACITY FOR ACQUISITIONS… … and will continue to use a balanced approach around capital allocation while maintaining flexibility for future investments 118
Slide 119: Leveraging strong momentum in the business
CONTINUING TO FURTHER LEVERAGE STRONG MOMENTUM IN THE BUSINESS LEVERAGE STRONG MOMENTUM IN THE BUSINESS1 • Grow FY20 Operating Income by $650-$700M • Continue to grow EPS faster than operating income • Operating leverage gap of approximately 1.5 points • Operating income margin of 5% • Target 16% RO
Slide 120: Tom Bené
TOM BENÉ PRESIDENT & COO / INCOMING CEO
Slide 121: Four strategic priorities
OUR FOUR STRATEGIC PRIORITIES WILL ACCELERATE OUR CURRENT GROWTH & POSITION US WELL FOR THE FUTURE 121
Slide 122: Q&A
Q&A
Slide 123: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS
Slide 124: Impact of Certain Items
IMPACT OF CERTAIN ITEMS Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items and Brakes Sysco’s results of operations for fiscal 2018 are impacted by restructuring costs consisting of (1) expenses associated with our revised business technol
Slide 125: Impact of Certain Items (cont'd)
IMPACT OF CERTAIN ITEMS (CONT’D) Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items and Brakes (cont’d) Sysco’s fiscal year ends on the Saturday nearest to June 30th. This resulted in a 52-week year ending June 27, 2017 for fiscal 2017, a
Slide 126: Case Growth
CASE GROWTH Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of extra week on selected metrics Jul. 2, 2016 Jul. 1, 2017 Jul. 2, 2016 (52 Weeks Jul. 1, 2017 Impact of extra (52 Weeks Basis) (53 Weeks) Impact of Basis) (Non- 2-year (52 Weeks) (GAAP) week
Slide 127: Operating Leverage
OPERATING LEVERAGE Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Total Sysco Operating Leverage (impact of Certain Items, extra week and Brakes) (In Thousands) (a) 2-year average gross profit (GAAP) 11.2% (b) 2-year average gross profit excluding the impact
Slide 128: Operating Leverage (cont'd)
OPERATING LEVERAGE (CONT’D) Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Total Sysco Operating Leverage (impact of Certain Items, extra week and Brakes) (In Thousands) 53-Week 52-Week Period Ended Period Ended Period Change Period Jul. 2, 2016 Jun. 27, 2015
Slide 129: Operating Income Growth
OPERATING INCOME GROWTH Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Operating Income Growth (In Thousands) Year Ended Year Ended Period Cumulative 24-month Period Change Period Change Change $ 2-year July 1, 2017 July 2, 2016 $ July 2, 2016 June 27, 2015 $
Slide 130: Operating Income Growth (cont'd)
OPERATING INCOME GROWTH (CONT’D) Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Operating Income Growth (In Thousands) 13-Week Period Ended Cumulative Cumulative 24-month 27-month Period Change Change $ Change $ September 30, 2017 October 1, 2016 $ results re
Slide 131: Impact of Certain Items, Brakes and Extra Week in Fiscal Year 2016
IMPACT OF CERTAIN ITEMS, BRAKES AND EXTRA WEEK IN FISCAL YEAR 2016 Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items, Brakes and extra week in fiscal year 2016 (In Thousands, Except for Share and Per Share Data) Year Ended Year Ended Peri
Slide 132: Impact of Certain Items, Brakes and Extra Week (cont'd)
IMPACT OF CERTAIN ITEMS, BRAKES AND EXTRA WEEK IN FISCAL YEAR 2016 (CONT’D) Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items, Brakes and extra week in fiscal year 2016 (In Thousands, Except for Share and Per Share Data) Year Ended Year E
Slide 133: Impact of Certain Items, Brakes and Extra Week (cont'd)
IMPACT OF CERTAIN ITEMS, BRAKES AND EXTRA WEEK IN FISCAL YEAR 2016 (CONT’D) Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items, Brakes and extra week in fiscal year 2016 (In Thousands, Except for Share and Per Share Data) Year Ended Year E
Slide 134: ROIC
ROIC Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Adjusted Return on Invested Capital (ROIC) (In Thousands) We calculate ROIC as net earnings divided by (i) stockholder’s equity, computed as the average of adjusted stockholders’ equity at the beginning of t
Slide 135: Operating Leverage
OPERATING LEVERAGE Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Total Sysco Operating Leverage (impact of Certain Items, extra week and Brakes) (In Thousands) (a) 27 month average gross profit (GAAP) 10.5% (b) 27 month average gross profit excluding the imp
Slide 136: Free Cash Flow
FREE CASH FLOW Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Free Cash Flow and Adjusted 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 sale
Slide 137: Adjusted Sales, Gross Profit, Operating Expense, Operating Income, EPS Targets
ADJUSTED SALES, GROSS PROFIT, OPERATING EXPENSE, OPERATING INCOME, EARNINGS PER SHARE AND ADJUSTED OPERATING INCOME TARGETS Sales, Gross Profit, Operating Expense, Operating Income and Earnings per Share Targets We expect to achieve our sales, gross profit, operating expense, operating income and ea