Slide 1: Sysco Fiscal 3Q 2023 Earnings Results
May 2, 2023 Sysco Fiscal 3Q 2023 Earnings Results
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, President & Chief Executive Officer
KEVIN HOURICAN President & Chief Executive Officer
Slide 4: Food Supply Chain Food Sales & Marketing
Food Supply Chain Food Sales & Marketing
Slide 5: Sysco is the Backbone of the Food Away From Home Industry
Sysco is the Backbone of the Food Away From Home Industry and Growing Share FY2022 Total Sysco Sales $68.6B ~700K In Annual Sales Customer Locations Operations IFG 7,500+ 71K+ Colleagues Across Sales Consultants the Globe 5
Slide 6: Continued Above-Market Growth and Profitability Increases: Fiscal 3Q 2023 Highlights
Continued Above-Market Growth and Profitability Increases Fiscal 3Q 2023 Highlights +11.7% +27.8% +26.8% 2.8x Revenue growth compared to Adjusted operating income growth Adjusted EPS growth Net Debt to Adjusted EBITDA fiscal 3Q 2022 compared to fiscal 3Q 2022 compared to fiscal 3Q 2022 Ratio1 +6.1%
Slide 7: Sysco is Winning in the Marketplace
Sysco is Winning in the Marketplace Sysco has Outperformed the Total Foodservice Market US Foodservice Operations Revenue Indexed to 2019 vs Technomic Market Estimated Indexed to 2019 100 index Q1'FY21 Q2'FY21 Q3'FY21 Q4'FY21 Q1'FY22 Q2'FY22 Q3'FY22 Q4'FY22 Q1'FY23 Q2'FY23 Q3'FY23 Sysco US Ops Total
Slide 8: Supply Chain – Improving Efficiency
Supply Chain – Improving Efficiency Employee Turnover % Pieces Per Hour U.S. Broadline (Q2 2023 vs Q3 2023) Overview U.S. Broadline 130 bps • Productivity (Excess Overtime) costs reduced all the way down to zero in Q3. • Progress made on improving supply +765 bps chain efficiency. We expect to deliv
Slide 9: 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 10: Recipe For Growth is Delivering Important Wins
Recipe For Growth is Delivering Important Wins • Improved efficiency –improved • In >300 neighborhoods • Invitation-only loyalty club with retention & improved labor across five countries white-glove service productivity driving improved overall expenses • Program delivering • Includes deliveries up
Slide 11: Kenny Cheung, Chief Financial Officer
Kenny Cheung Chief Financial Officer
Slide 12: Welcome Kenny Cheung as CFO
Welcome Kenny Cheung as CFO Background & Bio Chief Financial Officer • Nearly 20 years of financial and operational executive experience. Effective April 17, 2023 • Most recently served as Executive Vice President, Chief Financial Officer at The Hertz Corporation, “I look forward to working leading
Slide 13: Neil Russell, Chief Administrative Officer
Neil Russell C h i e f A d m i n i s t r a t i v e O f f i c er
Slide 14: 3Q 2023 Consolidated Financial Results
3Q 2023 Consolidated Financial Results Net Sales Adj. EBITDA1 Adj. EPS1 Overview (billions) (millions) • Sales increased 11.7% versus the prior year to $18.9 billion $18.9 $900 $0.90 • 8th consecutive quarter of double-digit revenue growth $756 $16.9 $0.71 • Gross profit grew 13.9% to $3.4 billion a
Slide 15: 3Q 2023 U.S. Foodservice Results
3Q 2023 U.S. Foodservice Results Net Sales Adj. Operating Overview (billions) Income1 • U.S. Foodservice segment generated (millions) double-digit sales growth, overall share gains and continued gross profit per case $13.3 $867 growth $12.0 • Local case volume grew 4.2% and total case volume grew 6.
Slide 16: 3Q 2023 International Results
3Q 2023 International Results Net Sales Adj. Operating Overview (billions) Income1 • Sales increased 18.0%, or 25.3% on a (millions) constant currency basis1 $3.3 • Gross profit increased 12.7% to $643 $67 million, or 19.8% to $683 million on a constant currency basis1 $2.8 • Gross margin decreased
Slide 17: 3Q 2023 SYGMA Results
3Q 2023 SYGMA Results SYGMA Net Sales Operating Income Overview (billions) (millions) • SYGMA sales grew 9.9% to $2.0 billion • Gross profit increased 12.8% to $166 $25 million $2.0 • Gross margin of 8.4% increased 22 basis points $1.8 • Operating expenses declined 1.6% $4 Q3 2022 Q3 2023 Q3 2022 Q3
Slide 18: Historical 3Q Adjusted Operating Income
Historical 3Q Adjusted Operating Income1 +18.7% $736 M Increase in Adjusted Operating $620 M Income1 $575 M $536 M $500 M $438 M $377 M $377 M $256 M 3Q15 3Q16 3Q17 3Q18 3Q19 3Q20 3Q21 3Q22 3Q23 1 18 8See Non-GAAP reconciliations at the end of the presentation. 1
Slide 19: Year-to-Date 2023 Cash Flow
Year-to-Date 2023 Cash Flow Cash from Operations Free Cash Flow1 Overview (millions) (millions) • Cash flow from operations was $1.4 billion, a 91% increase • Capital expenditures, net of $1,426 $980 proceeds from sales of plant and equipment, were $446 million, with continued investments in our Rec
Slide 20: Capital Structure and Allocation
Capital Structure and Allocation Investment Priority Progress • Capital investments in our technology, fleet and buildings 1 Invest for Growth • Strong pipeline of tuck-in acquisitions focused on Broadline, Specialty and Cuisine-type opportunities as well as underpenetrated markets in the U.S., U.K.
Slide 21: Sysco Has Consistently Increased Returns to Shareholders
Sysco Has Consistently Increased Returns to Shareholders Cumulative Cash Returned to Shareholders $14.6 B $13.5 B $12.0 B $11.1 B $9.4 B $7.6 B $5.9 B $3.3 B $0.7 B FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 (Q3 YTD) Dividends Shares Repurchased Over $14 Billion of Cash Returned
Slide 22: We are Making Real Progress with Our Climate Commitments
We are Making Real Progress with Our Climate Commitments April 2023 Earth Day: Sysco unveiled its first electric vehicle hub in Riverside, CA, advancing its industry leading climate change commitment • EV Hub to power 40 Electric Tractors & 40 Electric Refrigerated Trailers • Supported by Battery En
Slide 23: Kevin Hourican, President & CEO
KEVIN HOURICAN President & CEO
Slide 24: Sysco is Winning, Leading the Industry
Sysco is Winning, Leading the Industry • Q3 delivered record adjusted operating income, growing 28% to $736M • Remain on target to grow 1.35x in FY23 • March presented lower market growth and inflation • Recipe for Growth initiatives are driving profitable growth • Ended Q3 with 2.8x net debt to adj
Slide 25: Investment Thesis: Sysco is Leading the Industry and Accelerating Growth
Investment Thesis Sysco is Leading the Industry and Accelerating Growth Fortress Balance Sheet: Sustainability: Tangible Expect to grow meaningfully only Investment-Grade Science-Based faster than the total market Food Service Distributor Climate & DEI Goals LT financial guidance Compelling sharehol
Slide 26: At the heart of food and service
S/sco At the heart of food and service
Slide 27: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS [ the heart of food and service
Slide 28: Impact of Certain Items
Impact of Certain Items Our discussion of our results includes certain non-GAAP financial measures, such as EBITDA and adjusted EBITDA, which we believe provide important perspective with respect to underlying business trends. Other than free cash flow and EBITDA, any non-GAAP financial measures wil
Slide 29: Non-GAAP Reconciliation: Impact of Certain Items, 3Q23 vs. 3Q22
Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items, 3Q23 vs. 3Q22 (Dollars in Thousands, Except for Share and Per Share Data) 13-Week 13-Week Period Ended Period Ended Change Apr. 1, 2023 Apr. 2, 2022 in Dollars % Change Sales (GAAP) $ 18,
Slide 30: Non-GAAP Reconciliation: Impact of Certain Items, 3Q23 vs. 3Q22 (continued)
Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items, 3Q23 vs. 3Q22 (Dollars in Thousands, Except for Share and Per Share Data) continued Operating margin (GAAP) 3.68% 2.93% 75 bps Operating margin adjusted for Certain Items (Non-GAAP) 3.90%
Slide 31: Segment Results Non-GAAP Reconciliation
Sysco Corporation and its Consolidated Subsidiaries Segment Results Non-GAAP Reconciliation (Unaudited) Impact of Certain Items on Applicable Segments, 3Q23 vs. 3Q22 (Dollars in Thousands) 13-Week 13-Week Period Ended Period Ended Change Apr. 1, 2023 Apr. 2, 2022 in Dollars %/bps Change U.S. FOODSER
Slide 32: Segment Results Non-GAAP Reconciliation (continued)
Sysco Corporation and its Consolidated Subsidiaries Segment Results Non-GAAP Reconciliation (Unaudited) Impact of Certain Items on Applicable Segments, 3Q23 vs. 3Q22 (Dollars in Thousands) continued OTHER Sales $ 301,978 $ 267,050 $ 34,928 13.1% Gross Profit $ 79,451 $ 55,397 $ 24,054 43.4% Gross Ma
Slide 33: Non-GAAP Reconciliation: Impact of Certain Items
Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items (In Thousands) As noted in a previous reconciliation within this presentation, our discussion of our results includes certain non-GAAP financial measures, defined as Certain Items. The mul
Slide 34: 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 35: 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 36: Impact of Certain Items on EBITDA (3Q23 vs. 3Q22)
Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items on Earnings Before Interest, Taxes, Depreciation and Amortization (3Q23 vs. 3Q22) (In Thousands) 13-Week 13-Week Period Ended Period Ended Change Apr. 1, 2023 Apr. 2, 2022 in Dollars %/bps
Slide 37: Projected Adjusted EBITDA Guidance
Projected Adjusted EBITDA Guidance Adjusted EBITDA is a non-GAAP financial measure; however, we cannot predict with certainty the particular certain items that would be excluded from the calculation of this measure for future periods. Due to these uncertainties, we cannot provide a quantitative reco
Slide 38: 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 39: 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 2023. 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