Sysco Corporation · NYSE:SYY
Sysco — CAGNY 2024
43 slides from Sysco's conference presentation, Feb 20, 2024
Slide 1: CAGNY 2024
February 20, 2024 S/sco At the heart of food and service CAGNY 2024
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 and Growing Share
Sysco is the Backbone of the Food Away From Home Industry and Growing Share FY2023 Total Sysco Sales 8% Travel and Leisure 15% Other 7% Healthcare 62% Restaurants 8% Education and Government $76.3B ~725K In Annual Sales Customer Locations Operations IFG 334 72K+ Distribution Colleagues Across Center
Slide 6: Sysco has Consistently Grown Sales for 50+ Years
Sysco has Consistently Grown Sales for 50+ Years Fiscal Year Sales ($ bn) $90 Overview $80 • Sysco has grown sales 51 $70 out of the last 54 years $60 • Robust cross-selling opportunities with Broadline $50 scale & specialty expansion $40 • International segment continues to drive strong $30 growth
Slide 7: Food Away From Home Continues to Gain Share
Food Away From Home Continues to Gain Share Percentage of Combined Monthly Sales (2000 - 2023) 70% 65% 60% 55% 50% 45% 40% 35% 30% Grocery Stores Food Services and Drinking Places Source: The United States Census Bureau Advance Monthly Sales for Retail and Food Services 7
Slide 8: Market Leader in the Highly Fragmented and Growing Foodservice Distribution Industry
Market Leader in the Highly Fragmented and Growing Foodservice Distribution Industry Total Addressable Market Since 2000 $354 B $360 B $300 B 17% $268 B $224 B $231 B $197 B $161 B 2000 2005 2010 2015 2020 2021 2022 2023 $360B 8 Technomic U.S. Foodservice Industry Wallchart for Calendar Year, update
Slide 9: Sysco is the Industry Leader with Breadth, Depth, Scale, and Reach
Sysco is the Industry Leader with Breadth, Depth, Scale, and Reach Sysco is the Industry Leader with Breadth, Depth, Scale, and Reach Sports & Restaurants Recreation Lodging Catering & Events Entertainment Healthcare & Retail Travel & Leisure Education Government Senior Living 9
Slide 10: 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 11: Sysco is a Global Leader in Food Distribution with 334 Distribution Centers
Sysco is a Global Leader in Food Distribution with 334 Distribution Centers Worldwide 192 DCs in the U.S/Territories, 105 in Europe, and 28 in Canada Sysco’s Leading Market Position: 334 DCs #1 USA 142 Canada DCs UK 70 DCs Ireland Costa Rica Competitor #1 Competitor #2 Bahamas 11
Slide 12: Sysco Leads Where It Matters
Sysco Leads Where It Matters Specialty Fresh Produce #1#1 Specialty Meat Broadline Food SELLS THE MOST SELLS THE MOST Distributor TECH: Shop International LARGEST Ordering Platform Growth TOP RATED NPS ONLY Sysco Brand Sales Associates LARGEST & HIGHEST RATED BY CUSTOMERS 12
Slide 13: Sysco is Winning with National and Local Customers
Sysco is Winning with… National Customers Advantages & Local Customers Advantages Industry Leading National Scale Sales Force Fulfillment Powerful Digital Strength Tools Sysco Your Way & Targeted Sales Sysco Perks! Expertise Increased & Improved Localized Product Technology Assortment Integration 13
Slide 14: Sysco Brand Products Generate Over $19 Billion in Sales
Sysco Brand Products Generate Over $19 Billion in Sales To put it in perspective… And we have 11 brands >$500M $13.1B sales FY2023 ~$5B $11.2B sales FY2023 ~$1B $7.4B sales FY2023 $5.9B sales FY2023 ~$500M Nearly Half of Local Cases Driven by Sysco Brand
Slide 15: Sysco vs. Competition
Sysco vs. Competition Consistent Industry Distribution Investment History of Growing ESG Targets Leading Network Grade Credit Share Dividend in Margins Rating Repurchases Compensation Average Core Peers 15
Slide 16: Connecting the World to Share Food and Care for One Another
CONNECTING 7 = WORLD TO SHARE FOOD AND = FOR ONE ANOTHER
Slide 17: Kenny Cheung, Chief Financial Officer
Kenny Cheung Chief Financial Officer
Slide 18: Record Performance in FY23 and Confidence in FY24
Record Performance in FY23 and Confidence in FY24 Adj. EPS1 Overview Net Sales (billions) 43%-45% CAGR • 16% 3-YR sales CAGR from $4.20- FY2021 to FY2024E 16% $4.40 CAGR $4.01 • 43%-45% 3-YR adj. EPS $80.0 CAGR from FY2021 to FY2024E $76.3 $68.6 $3.25 • FY24 Guidance of mid single digit sales growth
Slide 19: Sysco Drives Positive Operating Leverage Through…
Sysco Drives Positive Operating Leverage Through… Gross Profit OPEX Adj Operating Income1 Improvement Reduction Drivers % of Sales Drivers 4.1% Sysco Brand Productivity 3.9% Penetration Improvements 3.6% Centralized Supply Chain 2.6% Pricing Tool Improvements Specialty Mix Retention Increases Increa
Slide 20: Superior Performance Relative to Peers
Superior Performance Relative to Peers Impressive Sales Flow Impressive Sales Flow Through to Gross Profits Through to Earnings Sustained Cash Flow Generation FY2023 Gross Margin 1 FY2023 Adj. EBITDA Margin 1,3 FY2023 Free Cash Flow ($ in millions) 1,2,3 18.3% $2,116 5.0% ~1.3x >2.7x ~1.5x 13.9% 3.3
Slide 21: Capital Structure and Investment Allocation Priorities
Capital Structure and Investment Allocation Priorities Invest for 1 Growth Invest for Growth Maintain a 2 Maintain a Strong Balance Sheet Strong Balance Sheet 3 Shareholder Return 2 21 1
Slide 22: Balanced Approach to Capital Allocation (FY2024 Est.)
Balanced Approach to Capital Allocation (FY2024 Est.) Invest for Growth Shareholder Return Share ~$800M CAPEX ~$1.25B Buybacks ~$1.2B M&A ~$1B Dividends 2 22
Slide 23: Disciplined Investments to Support Growth
Disciplined Investments to Support Growth 7 new buildings to deliver new capacity in high-potential markets and cuisine segments 23
Slide 24: Strong Track Record of Capital Return to Shareholders
Strong Track Record of Capital Return to Shareholders Consistent Dividend Growth Robust Share Repurchase Program Best in Class Capital Return Profile “Dividend Aristocrat” Cumulative Dividends1 Cumulative cash returned from Cumulative capital return over last 5 years as a % ($ bn) $4.5 share repurch
Slide 25: M&A Focused on Higher Margin Specialty Acquisitions
M&A Focused on Higher Margin Specialty Acquisitions August 2021 October 2021 February 2022 August 2023 November 2023 Greco & Sons Revenues ($ bn) ~65% $1.3 Sysco M&A Focus Enhance Our Product Portfolio, $0.8 Capabilities and Footprint Acquisition FY2023 25
Slide 26: Sysco is a Dividend Aristocrat, Growing Dividends for 54 Years
Sysco is a Dividend Aristocrat, Growing Dividends for 54 Years Key Characteristics of Dividend Aristocrats • Part of the S&P 500 • Dividend growth for a minimum of 25 consecutive years • Consistent cash flows to weather economic fluctuations • Strong history of returning cash back to shareholders th
Slide 27: Strong Cash Generation Drives Shareholder Returns
Strong Cash Generation Drives Shareholder Returns Cumulative Cash Returned to Shareholders $17.2 B $15.0 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 FY2024 (Expected) Dividends Shares Repurchased Over $17 Billion of Cash
Slide 28: 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 29: We are Adding to Sysco's Industry Leading Core Strengths
We are Adding to Sysco’s Industry Leading Core Strengths FY2023 Total Sysco Sales 8% Travel and Leisure 15% Other 7% Healthcare 62% Restaurants 8% Education and Government $76.3B ~725K In Annual Sales Customer Locations 334 72K+ Distribution Centers Colleagues Across the Globe Industry Leading Core
Slide 30: Sysco Has Multiple Vectors of Long-Term Profitable Growth…
Sysco Has Multiple Vectors of Long-Term Profitable Growth… 30
Slide 31: …Including Through a Lens of Responsible Growth
…Including Through a Lens of Responsible Growth • Philanthropy & Community Giving PEOPLE • Diversity, Equity & Inclusion • Health & Wellness • Responsible Sourcing PRODUCTS • Human Rights • Animal Welfare • Sustainable Agriculture PLANET • Energy & Carbon • Waste Reduction Compensation for All Leade
Slide 32: SYY has a Strong, Diverse and Experienced Board
SYY has a Strong, Diverse and Experienced Board Kevin Hourican Ed Shirley Daniel Brutto Non-Executive Chairman of the Board Sustainability Committee Chair President and CEO, Sysco Chairman of the Board, Sysco Former President, UPS International and Senior Vice President, United Parcel Service France
Slide 33: Why Sysco? Leading the Industry with Size and Scale Advantages
WHY SYSCO? Leading the Industry with Size and Scale Advantages Food Away from Home is a Growth Industry Sysco:#1 Food Distributor Growing Share Profitably and Consistently Industry Leading Profit Margins Strong Balance Sheet & Robust Free Cash Flow
Slide 34: At the heart of food and service
S/sco At the heart of food and service
Slide 35: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS food and service
Slide 36: Impact of Certain Items
Impact of Certain Items The discussion of our results includes certain non-GAAP financial measures, including EBITDA and adjusted EBITDA, that we believe provide important perspective with respect to underlying business trends. Other than EBITDA and free cash flow, any non-GAAP financial measures wi
Slide 37: Non-GAAP Reconciliation: Impact of Certain Items
Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items (Dollars in Thousands, Except for Share and Per Share Data) 52-Week 52-Week 53-Week Period Ended Period Ended Period Ended Jul. 1, 2023 Jul. 2, 2022 Jul. 3, 2021 Sales (GAAP) $ 76,324,675
Slide 38: Non-GAAP Reconciliation: Impact of Certain Items (continued)
Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items (Dollars in Thousands, Except for Share and Per Share Data) continued Diluted earnings per share (GAAP) $ 3.47 $ 2.64 $ 1.02 Impact of inventory valuation adjustment (0.01) (1) 0.14 (1) -
Slide 39: Non-GAAP Reconciliation: Impact of Certain Items, 26-Week Periods
Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items (Dollars in Thousands) 26-Week 26-Week 26-Week 26-Week Period Ended Period Ended Period Ended Period Ended Dec. 30, 2023 Dec. 31, 2022 Jan. 1, 2022 Dec. 26, 2020 Sales (GAAP) $ 38,908,396
Slide 40: Projected Adjusted EPS Guidance
Projected Adjusted EPS Guidance Adjusted earnings per share is a non-GAAP financial measure; however, we cannot predict with certainty certain items that would be included in the most directly comparable GAAP measure for the relevant future periods. Due to these uncertainties, we cannot provide a qu
Slide 41: 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 42: Impact of Certain Items on EBITDA (FY23 vs. FY22)
Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items on Earnings Before Interest, Taxes, Depreciation and Amortization (FY23 vs. FY22) (In Thousands) 52-Week 52-Week Period Ended Period Ended Change Jul. 1, 2023 Jul. 2, 2022 in Dollars %/bps
Slide 43: 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.