Sysco Corporation · NYSE:SYY
Sysco — Q3 FY2014 Earnings Presentation
21 slides from Sysco's earnings presentation, May 5, 2014
Slide 1: Sysco 3Q14 Earnings Results
Sysco 3Q14 Earnings Results May 5, 2014
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements made in this presentation or the accompanying earnings call 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 forw
Slide 3: 3Q14 Highlights
3Q14 Highlights Adjusted for Certain Reported Items Results1 $ Millions, except YOY % YOY % 3Q14 3Q14 share data Change Change Sales $11,277 3.2% $11,277 3.2% Gross Profit $1,995 2.7% $1,995 2.7% Operating $1,662 3.5% $1,606 3.3% Expenses Operating $333 (1.4%) $388 0.3% Income Net Earnings $181 (10.
Slide 4: Consumer Spending Rebounded as Weather Improved
Consumer Spending Rebounded as Weather Improved Restaurant Spend/Traffic (1) U.S. Retail Data(2) % Change vs. Year Ago % Change vs. Year Ago 10.0% 4.0% 9.0% 3.2% 2.9% 8.0% 3.0% 2.5% 2.4% 7.0% 2.1% 2.1% 2.2%2.1% 1.9% 6.0% 2.0% 1.7% 4.1% 1.5% 1.2%1.3% 5.0% 3.8% 0.9% 4.0% 1.0% 3.0% 0.0% 2.0% 1.0% -1.0%
Slide 5: Business Transformation Progress
Business Transformation Progress Technology Product Costs Operating Costs Successfully converted On track to achieve Majority of route 5 operating companies FY14 and FY15 optimization complete this fiscal year objectives by end of FY14 Significant progress in Where implemented, All of pi
Slide 6: Key Takeaways
Key Takeaways We are focused on Creating value for our customers; Driving transformational change within our company; and US Foods merger integration planning Expect market conditions will improve modestly for the remainder of calendar 2014 and that Sysco’s operating performance results wi
Slide 7: 3Q14 Highlights
3Q14 Highlights Adjusted for Certain Reported Items Results1 $ Millions, except YOY % YOY % 3Q14 3Q14 share data Change Change Sales $11,277 3.2% $11,277 3.2% Gross Profit $1,995 2.7% $1,995 2.7% Operating $1,662 3.5% $1,606 3.3% Expenses Operating $333 (1.4%) $388 0.3% Income Net Earnings $181 (10.
Slide 8: Case Growth Drives Sales Growth
Case Growth Drives Sales Growth (1) Sales Growth Case Growth 4.3% 5.7% 4.1% Jan/Feb Sales +1.7% YOY Mar Sales +5.5% YOY 5.0% 4.1% 3.0% 3.0% 3.2% 4Q13 1Q14 2Q14 3Q14 Organic Acquisitions 4Q13 1Q14 2Q14 3Q14 Inflation Case Growth/Mix Fx (1) – Includes Broadline and SYGMA 8
Slide 9: Gross Margin Pressure Moderated
Gross Margin Pressure Moderated ($ in millions) YOY Decline in Gross Margin (bps) -10 Deceleration in gross (9) margin erosion mainly -30 (19) (28) aided by: (32) -50 Margin management; -70 (60) (60) Strengthening trends (68) -90 in locally-managed business; -110 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q
Slide 10: Initiatives Continue to Drive Lower Cost per Case
Initiatives Continue to Drive Lower Cost per Case Operating expenses increased $57 million or 3.5% due to: Increased case volume, and new costs from acquired companies; Increased delivery and warehouse costs, including weather impact; and Increased corporate expense Partially offset by lower
Slide 11: FY14 Retirement-Related Expenses Lower Than Expected
FY14 Retirement-Related Expenses Lower Than Expected Year-over-Year Variance FY14 Guidance H (L) (in millions) Current Prior Pension & other (121) (121) 401(k) & other 45-55 61-71 Underlying retirement-related expense (65-75) (50-60) Certain items (20) (20) Total retirement-related expenses (85-95)
Slide 12: Business Transformation Project Costs
Business Transformation Project Costs YTD YTD (in millions) 3Q14 3Q13 FY14 FY13 Operating expense $71 $83 $198 $242 Capital investment $14 $4 $29 $14 Cash outlay $61 $67 $161 $201 In FY14, Business Transformation: Expense expected to be $275-300 million Capital expected to be $30-40 million
Slide 13: Capital Expenditures
Capital Expenditures ($ millions) In 3Q14: Recent equipment and fleet optimization projects contributed to lower spend, and ERP stabilization activities drove higher business transformation spend 3rd Quarter Year-to-Date $387 $373 $117 $111 FY 2014 FY 2013 FY 2014 FY 2013 Technology Fleet Facili
Slide 14: Free Cash Flow Continues to Improve
Free Cash Flow Continues to Improve YTD YTD $ Millions FY14 FY13 % Chg Cash Flow from Operations $848 $759 11.7% Capital Expenditures, net1 364 361 0.8% 2 Free Cash Flow $484 $398 21.5% Dividends Paid $498 $482 3.3% 1) Capital expenditures are net of proceeds from sales of plant and equipment 14 2)
Slide 15: Update on Proposed Merger with US Foods
Update on Proposed Merger with US Foods Integration planning efforts underway; focused on Day one readiness; Value creation; and Long-term organizational design Merger benefits our customers and helps us become more efficient in an evolving and competitive marketplace Customers have many
Slide 16: Good things come from Sysco
Good things Sysco od ‘come from
Slide 17: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 18: 3Q14 Non-GAAP Reconciliations
3Q14 Non-GAAP Reconciliations Sysco’s results of operations are impacted by certain items which include charges from restructuring our executive retirement plans, multiemployer pension charges, severance charges, US Foods merger and integration planning costs, change in estimate of self-insurance, c
Slide 19: 3Q14 Non-GAAP Reconciliation
3Q14 Non-GAAP Reconciliation 13-Week 13-Week 13-Week 13-Week Period Ended Period Ended Period Change Period Mar. 29, 2014 Mar. 30, 2013 in Dollars % Change Operating expenses (GAAP) $ 1,662,116 $ 1,605,280 $ 56,836 3.5 % Impact of restructuring executive retirement plans (773) (5,444) 4,671 -85.8 Im
Slide 20: 3Q14 Non-GAAP Reconciliation
3Q14 Non-GAAP Reconciliation 39-Week 39-Week 39-Week 39-Week Period Ended Period Ended Period Change Period Mar. 29, 2014 Mar. 30, 2013 in Dollars % Change Operating expenses (GAAP) $ 4,862,579 $ 4,725,752 $ 136,827 2.9 % Impact of restructuring executive retirement plans (2,323) (17,608) 15,285 -86
Slide 21: 3Q14 Non-GAAP Reconciliation
3Q14 Non-GAAP Reconciliation 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. Sysco considers free cash flow to be a liquidity measure that provides useful information to management an