Slide 1: Sysco 2Q FY23 Earnings Results
Sysco 2Q FY23 Earnings Results January 31, 2023
Slide 2: Forward Looking Statements
Forward Looking Statements Statements made in this presentation or in our earnings call for the second quarter of fiscal year 2023 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 o
Slide 3: Kevin Hourican, President & CEO
KEVIN HOURICAN President & CEO
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 ACCELERATING GROWTH > $68 Billion Annual Sales ~700,000 Customers > 71,000 Colleagues > 7,500 Sales Consultants 5 * Represents fiscal year 2022
Slide 6: Fiscal 2Q 2023 Highlights
Sysco’s 2Q 2023 Delivered Continued Above-Market Growth and Profitability Increases Across the Business Fiscal 2Q 2023 Highlights +1.35x +15.9% 3.0x Gross profit dollar growth driven by 1H growth vs. broader U.S. market effective management of food cost Net Debt to Adjusted EBITDA ratio1 resulting i
Slide 7: Sysco Continues to Outperform Total Foodservice Industry Resulting in Share Gains
Sysco Continues to Outperform Total Foodservice Industry Resulting in Share Gains Since the start of the pandemic, Sysco has performed better than the total foodservice market USFS Ops YoY Revenue growth vs Technomic Market Estimated YoY growth FY22 H1'23 35% 15% 27% 11% >1.3X 1.35X 35% 15% Total Ma
Slide 8: Recipe For Growth Strategy Will Drive Our Future Success
Recipe For Growth Strategy Will Drive Our Future Success 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 Share Delivering success for our Together we define the future of Food and Care for On
Slide 9: Supply Chain - Improving Efficiency
Supply Chain - Improving Efficiency Employee Turnover % Pieces Per Hour Productivity Overview U.S. Broadline (Q1 2023 vs Q2 2023) (Excess Overtime) U.S. Broadline • Steady progress on improving 380 bps supply chain efficiency and improvements expected to $41 M accelerate in 2H 2023 • Improved retent
Slide 10: Neil Russell, Interim CFO
Neil Russell Interim CFO
Slide 11: 2Q 2023 Consolidated Financial Results
2Q 2023 Consolidated Financial Results Overview Net Sales Adj. EBITDA1 Adj. EPS1 • Sales increased 13.9% versus the (billions) (millions) prior year to $18.6 billion • Gross margin increased 29 basis points to 18.0% driven by increased $831 volumes and management of food $18.6 cost inflation $671 $0
Slide 12: 2Q 2023 U.S. Foodservice Results
2Q 2023 U.S. Foodservice Results Net Sales Adj. Operating Overview (billions) Income1 (millions) • U.S. Foodservice segment generated strong sales growth, overall share gains and improved profitability $13.1 $791 • Sales increased 13.7% $11.5 • Local case volume grew 3.2% while total case volume gre
Slide 13: 2Q 2023 SYGMA Results
2Q 2023 SYGMA Results SYGMA Net Sales Operating Income Overview (billions) (millions) • SYGMA sales grew 9.2% to 1.9 billion $7 • Gross margin of 7.8% increased 5 basis $1.9 points from prior year $1.8 • Continued profit recovery versus prior year led to $7 million of operating income -$7 Q2 2022 Q2
Slide 14: 2Q 2023 International Results
2Q 2023 International Results Net Sales Adj. Operating Overview (billions) Income1 (millions) • International sales increased 17.0%, or 28.6% on a constant currency basis1 $3.3 $79 • Gross profit increased 10.3% to $625 million, and gross margin decreased 115 basis points to 19.0%. On a constant $2.
Slide 15: Historical 2Q Adjusted Operating Income
Historical 2Q Adjusted Operating Income1 $682 M $627 M $603 M $579 M $558 M $496 M $437 M $396 M $234 M 2Q15 2Q16 2Q17 2Q18 2Q19 2Q20 2Q21 2Q22 2Q23 Q2 Record Performance Now Exceeding Historical Profits Performance 1 See Non-GAAP reconciliations at the end of the presentation. 15
Slide 16: First Half 2023 Cash Flow
First Half 2023 Cash Flow Cash from Operations Free Cash Flow1 Overview (millions) (millions) • Cash flow from operations was $503 million, a 34% increase • Capital expenditures, net of proceeds from sales $503 of plant and equipment, were $284 million, with continued investments in our Recipe For G
Slide 17: Capital Structure and Allocation
Capital Structure and Allocation Investment Priority Progress • Capital investments in our technology, fleet and buildings expected to moderate in 2H 2023 1 Invest for Growth • Strong pipeline of tuck-in acquisitions focused on Broadline, Specialty and Cuisine-type opportunities as well as underpene
Slide 18: Sysco Has Consistently Increased Returns to Shareholders
Sysco Has Consistently Increased Returns to Shareholders Cumulative Cash Returned to Shareholders $14.3 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 (Q2 YTD) Dividends Shares Repurchased Over $14 Billion of Cash Returned
Slide 19: Kevin Hourican, President & CEO
KEVIN HOURICAN President & CEO
Slide 20: Sysco is Winning, Leading the Industry
Sysco is Winning, Leading the Industry • First half sales growth of +15%, Adjusted EPS1 growth of +26% • Remain on target to grow more than 1.35x in FY23 • Progress on improving operating expenses • Strong start to January volume performance • Remain committed to strong investment grade rated balanc
Slide 21: Investment Thesis: Leading the Industry and Accelerating Growth
Investment Thesis Sysco is Leading the Industry and Accelerating Growth Expect to grow >1.5X faster Fortress Balance Sheet: CSR: Tangible than the total market by the only Investment-Grade Science-Based end of fiscal 2024 Food Service Distributor Climate Goal LT financial guidance Compelling shareho
Slide 22: At the heart of food and service
Sysco At the heart of food and service
Slide 23: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS /; the heart of food and service
Slide 24: 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, that we believe provide important perspective with respect to underlying business trends. Other than free cash flow and EBITDA, any non-GAAP financial measures will
Slide 25: Non-GAAP Reconciliation: Impact of Certain Items, 2Q23 vs. 2Q22
Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items, 2Q23 vs. 2Q22 (Dollars in Thousands, Except for Share and Per Share Data) 13-Week 13-Week Period Ended Period Ended Change Dec. 31, 2022 Jan. 1, 2022 in Dollars % Change Sales (GAAP) $ 18
Slide 26: Non-GAAP Reconciliation: Impact of Certain Items (continued)
Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items, 2Q23 vs. 2Q22 (Dollars in Thousands, Except for Share and Per Share Data) continued Operating margin (GAAP) 3.45% 2.73% 72 bps Operating margin adjusted for Certain Items (Non-GAAP) 3.67%
Slide 27: Segment Results Non-GAAP Reconciliation
Sysco Corporation and its Consolidated Subsidiaries Segment Results Non-GAAP Reconciliation (Unaudited) Impact of Certain Items on Applicable Segments, 2Q23 vs. 2Q22 (Dollars in Thousands) 13-Week 13-Week Period Ended Period Ended Change Dec. 31, 2022 Jan. 1, 2022 in Dollars %/bps Change U.S. FOODSE
Slide 28: 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, 2Q23 vs. 2Q22 (Dollars in Thousands) continued OTHER Sales (GAAP) $ 300,952 $ 244,453 $ 56,499 23.1% Gross Profit (GAAP) 77,311 54,809 22,502 41.1%
Slide 29: Non-GAAP Reconciliation: Impact of Certain Items, Multi-Year
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 30: 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 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 (2Q23 vs. 2Q22)
Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items on Earnings Before Interest, Taxes, Depreciation and Amortization (2Q23 vs. 2Q22) (In Thousands) 13-Week 13-Week Period Ended Period Ended Change Dec. 31, 2022 Jan. 1, 2022 in Dollars %/bp
Slide 33: 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 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 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