Sysco Corporation · NYSE:SYY
Sysco — CAGNY 2023
46 slides from Sysco's conference presentation, Feb 21, 2023
Slide 1: CAGNY 2023
February 21, 2023 S/sco At the heart of food and service CAGNY 2023
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 & 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 and Accelerating Growth
Sysco is the Backbone of the Food Away From Home Industry and Accelerating Growth FY2022 Total Sysco Sales Operations IFG 7% Travel and Leisure 14% Other 8% Healthcare 63% Restaurants 8% Education And Government $68.6B ~700K In Annual Sales Customer Locations 7,500+ 71K+ Colleagues Across Sales Cons
Slide 6: Food Away From Home Continues to Gain Share
30% 35% 40% 45% 50% 55% 60% 65% 70% Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Grocery Stores Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Food Services and Drinking Places Jan-16 Jan-17 Jan-18 Jan-19 Percentage of Combined Mon
Slide 7: 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 7
Slide 8: Sysco Leads in Local & Specialty
Sysco Leads in Local & Specialty
Slide 9: Sysco Brand Products Generate Over $18 Billion in Sales
Sysco Brand Products Generate Over $18 Billion in Sales1 To put it in perspective… And we have 11 brands >$500M $15.3B sales FY2022 ~$5B $10.4B sales FY2022 ~$1B $7.1B sales FY2022 $5.4B sales FY2022 ~$500M Nearly Half of Local Cases Driven by Sysco Brand1 1 Fiscal Year 2022 financials
Slide 10: Sysco is Winning with National Customers
Healthcare Sysco is Winning with Restaurants National Customers GROWTH DRIVERS MARGIN DRIVERS National Scale Sysco Brand Fulfillment Strength Specialty Products Targeted Sales Margin Optimization Expertise Education
Slide 11: 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 Sysco US Ops Total Market
Slide 12: 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 13: Digital
Digital eCommerce Pricing Digital Sales Activation Personalization
Slide 14: Products & Solutions
Products & Solutions Strategic Sourcing Sysco Brands Growth Cuisine Segments (Italian, Asian) Perks!
Slide 15: Supply Chain
Supply Chain Omnichannel Performance Culture Routing & Transportation Optimization Driver & Selector Academies
Slide 16: Customer Teams
Customer Teams Sysco Your Way Team Selling Product Specialists
Slide 17: Future Horizons
Future Horizons Structural Cost-Out M&A Sustainability
Slide 18: Great Products at the Right Price
vi Great Products at the Right Price | Always Leading the Industry | Atthe he: fogd and ice
Slide 19: Neil Russell
Neil Russell Senior Vice President - Corporate Affairs and Interim CFO
Slide 20: 1H 2023 Consolidated Financial Results
1H 2023 Consolidated Financial Results Net Sales Adj. EBITDA1 Adj. EPS1 (billions) (billions) Overview • Sales increased 15.1% versus the prior year $1.76 $37.7 $1.7 • Gross margin increased 24 basis points to 18.1% $1.5 $1.40 • Adjusted EBITDA and adjusted EPS $32.8 grew 14.7% and 25.7%, respective
Slide 21: Operating Cost Improvements; Reduced Snap-Back and Productivity Costs
Operating Cost Improvements; Reduced Snap-Back and Productivity Costs Overview $29 M • $60M of operating expense reductions $10 M within the last two quarters • Continue to invest in transformation $41 M $41 M efforts • Snap-back costs eliminated during $22 M second quarter of FY23 • Productivity co
Slide 22: Driving Efficiencies with Structural Cost-Out
Driving Efficiencies with Structural Cost-Out Achieved: $750M • Incremental Cost-Out Expected for FY23 and Beyond • Cost-Out Included in FY23 Adjusted EPS Growth Assumptions
Slide 23: Historical FY Adjusted EPS Performance
Historical FY Adjusted EPS Performance $4.07 1 $3.55 $3.25 $3.14 $2.48 $2.10 $2.01 $1.84 $1.44 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023E Mid-Point FY Guidance +25% Growth1 1Midpoint of FY 2023 adjusted EPS guidance of $4.00-$4.15. 23 See Non-GAAP reconciliations at the
Slide 24: Capital Structure and Allocation
Capital Structure and Allocation Investment Priority Progress • Continued 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
Slide 25: Disciplined Investments to Support Growth
Disciplined Investments to Support Growth 7 new buildings underway to deliver new capacity in high-potential markets and cuisine segments 25
Slide 26: 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 27: Sysco is a Dividend Aristocrat, Growing Dividend for 53+ Years
Sysco is a Dividend Aristocrat, Growing Dividend for 53+ Years Key Characteristics of Dividend Aristocrats1 • 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 t
Slide 28: Sustainability
Sustainability Sysco
Slide 29: Connecting the World to Share Food and Care for One Another
CONNECTING 7c WC ) SHARE FOOD AND = FOR ONE ANOTHER
Slide 30: Our Approach to Sustainability
Our Approach to Sustainability • Philanthropy & Community Giving PEOPLE • Diversity, Equity & Inclusion • Health & Wellness • Responsible Sourcing PRODUCTS • Human Rights • Animal Welfare • Sustainable Agriculture PLANET • Energy & Carbon • Waste Reduction 30
Slide 31: Climate Action Supports Customers and Drives Progress in the Supply Chain
Climate Action Supports Customers and Drives Progress in the Supply Chain Suppliers Customers Customers ask Sysco to provide climate data and set reduction targets to maintain relationships. Prospective customers are increasingly looking to distributor partners who have climate goals. 31
Slide 32: We are Making Real Progress with Our Climate Commitments
We are Making Real Progress with Our Climate Commitments April 2022 July 2022 November 2022 2030 Created first Southern Installed a solar panel Delivery of the first Reduce Sysco’s Global Plains Grassland system to meet 15% electric Class 8 tractor Direct Emissions Program, providing of energy needs
Slide 33: We Aspire to Create a Global Culture that is Decidedly Diverse, Equitable and Inclusive
We Aspire to Create a Global Culture that is Decidedly Diverse, Equitable and Inclusive Achieved 62% gender and ethnic diversity for U.S.-based colleagues in FY22. First Supplier Diversity Summit Gathered ~500 diverse suppliers last spring. 250+ Global DEI Ambassadors champion and amplify our DEI in
Slide 34: Engaged, Diverse and Experienced Board
Engaged, Diverse and Experienced Board Kevin Hourican Ed Shirley Daniel Brutto Ali Dibadj Non-Executive Chairman of the Board Corporate Social Responsibility Committee Chair President and CEO, Sysco Chairman of the Board, Sysco Former President, UPS International and Chief Executive Officer, Senior
Slide 35: 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 36: At the heart of food and service
&A S/sco At the heart of food and service
Slide 37: Non-GAAP Reconciliations
NON-GAAP Reconciliations food and service
Slide 38: 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 39: Non-GAAP Reconciliation: Impact of Certain Items, 2Q23
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) 26-Week 26-Week Period Ended Period Ended Change Dec. 31, 2022 Jan. 1, 2022 in Dollars % Change Sales (GAAP) $ 37
Slide 40: Non-GAAP Reconciliation: Impact of Certain Items, 2Q23 (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) 3.65% 3.28% 37 bps Operating margin adjusted for Certain Items (Non-GAAP) 3.85%
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: Non-GAAP Reconciliation: Impact of Certain Items on EBITDA
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) 26-Week 26-Week Period Ended Period Ended Change Dec. 31, 2022 Jan. 1, 2022 in Dollars %/bp
Slide 43: 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 44: 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 45: Non-GAAP Reconciliation: Impact of Certain Items (continued)
Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items (In Thousands) continued Net earnings (GAAP) $ 686,773 $ 949,622 $ 1,142,503 $ 1,430,766 $ 1,674,271 $ 215,475 $ 524,209 $ 1,358,768 Impact of restructuring and transformational projects c
Slide 46: Non-GAAP Reconciliation: Impact of Certain Items (continued)
Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items (In Thousands) continued Tax impact of inventory valuation adjustment (21) - - - - - - - (0.04) Tax impact of MEPP charge (21) - - (0.02) - - - - - Tax impact of loss on extinguishment of