Sysco Corporation · NYSE:SYY
Sysco — CAGNY Conference 2016
34 slides from Sysco's conference presentation, Feb 16, 2016
Slide 1: CAGNY Conference
CAGNY Conference February 16, 2016
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements made herein that look forward in time or express management’s expectations or beliefs with respect to the occurrence of future events are forward‐looking statements under the Private Securities Litigation Reform Act of 1995. They include, but are not lim
Slide 3: Contents
Contents Market and Strategy Update – Bill DeLaney, CEO Business Update – Tom Bené, President and COO Financial Overview – Joel Grade, CFO PAGE 3 © 2016 All Rights Reserved. Sysco Corporation.
Slide 4: Our vision
Our vision CAGNY CONFERENCE 02.16.16 PAGE 4 © 2016 All Rights Reserved. Sysco Corporation.
Slide 5: Market Update
Market Update CAGNY Conference Bill DeLaney, CEO February 16, 2016
Slide 6: Industry leader in a $265 billion market
Industry leader in a $265 billion market US and Canada foodservice market size v (excluding alcohol) vGrowth forecasted across all segments Forecasted Top 2015 forecasted top 2015-20 Real $B; nominal growth Segments distributor sales1 ($B) CAGR (Percent) 2.7% Restaurants $265 LSR 87 2.1% CAGR $260 $
Slide 7: Our industry is fragmented and highly competitive
Our industry is fragmented and highly competitive Competitive landscape – U.S. and Canada • Sysco has a significant leadership position • Top 3 Broadline distributors represent ~28-32% of the market • Numbers 4-10 represent ~8-10% • Smaller distributors, cash & carry, specialty distributors and club
Slide 8: Strategy Update
Strategy Update CAGNY Conference Bill DeLaney, CEO February 16, 2016
Slide 9: Sysco is well positioned for the future
Sysco is well positioned for the future Improve customer • Enhance overall service levels experience • Improve sales retention • Drive higher customer loyalty Enhance associate • Advance workplace safety engagement • Improve associate retention and engagement • Provide attractive career growth oppor
Slide 10: Our three-year strategic plan
Our three-year strategic plan To Be Our Customers’ Most Valued and Trusted Business Partner Grow gross Leverage Reduce profit supply chain administrative • Accelerate local costs costs case growth • Improve margins CAGNY Our People CONFERENCE 02.16.16 PAGE 10 Enablers: Business Technology © 2016 All
Slide 11: We have good momentum in the business
We have good momentum in the business • Effectively leveraging customer insights • Several commercial initiatives are contributing to improved financial performance • Making good progress on enhancing customer experience while improving safety and productivity • Continuing to look for opportunities
Slide 12: Business Update
Business Update CAGNY Conference Tom Bené, President and COO February 16, 2016
Slide 13: Our three-year strategic plan
Our three-year strategic plan To Be Our Customers’ Most Valued and Trusted Business Partner Grow gross Leverage Reduce profit supply chain administrative • Accelerate local costs costs case growth • Improve margins CAGNY Our People CONFERENCE 02.16.16 PAGE 13 Enablers: Business Technology © 2016 All
Slide 14: Our business segments and geography are diverse
Our business segments and geography are diverse U.S. • Serves both local and CMU customers Broadline • Strong local relationships Specialty • Enhanced/differentiated product portfolio companies • Provide expertise and service • Canada provides solid foundation International • Represents future growt
Slide 15: Solid local case growth and execution of our key commercial strategies is driving gross profit improvement
Solid local case growth and execution of our key commercial strategies is driving gross profit improvement US. Broadline recent trend in Total Sysco gross margin change local case growth1 Year over year change, % Total Sysco year over year change in gross margin, bps 3.5% 3.0% 50 2.5% 35 2.0% 23 1.5
Slide 16: Remaining focused on our customer strategies has enabled us to improve performance
Remaining focused on our customer strategies has enabled us to improve performance Know our customers Execute Grow profitably flawlessly to with our customers serve our customers Build a compelling CAGNY suite of products CONFERENCE and services 02.16.16 PAGE 16 © 2016 All Rights Reserved. Sysco Cor
Slide 17: Execution of our key strategies is driving case growth with our local customers
Execution of our key strategies is driving case growth with our local customers Category Category Innovation Innovation • Innovation accelerates new case growth • Sysco brand +43bps to 44% of Local sales in 2Q16 Hispanic Ethnic segment growth Segment outpacing core local business Strategy • Hispanic
Slide 18: Four key initiatives are contributing to our business improvement
Four key initiatives are contributing to our business improvement Revenue Management Category Sysco Brand Management Disciplined Mix Tools and Approach Management Insights VP, RevMan Variety Corp Field … FY15 FY18 Value CMU Business Services Innovation Shared Services Customer CAGNY CONFERENCE 02.16
Slide 19: Our customer engagement model is enabling our customers to order how, when and where they want
Our customer engagement model is enabling our customers to order how, when and where they want Email Multi-lingual Social media Chat Customer Leads Gen Text Experience CAGNY CONFERENCE 02.16.16 PAGE 19 © 2015 All Rights Reserved. MOBILE MA Sysco Corporation.
Slide 20: Sysco Mobile is improving the customer experience of doing business with Sysco
Sysco Mobile is improving the customer experience of doing business with Sysco Enhanced mobile features… …has driven increased usage Average customer order size on Sysco Mobile is 7.5% larger than orders taken by marketing associates Customers using Sysco Mobile has increased 30+% month over month f
Slide 21: Our Supply Chain agenda is focused on our customers, safety and driving productivity
Our Supply Chain agenda is focused on our customers, safety and driving productivity… Service levels Safety Cost per case • Improve • Food safety • Improve customer and workplace productivity service levels safety and efficiency CAGNY CONFERENCE 02.16.16 PAGE 21 © 2016 All Rights Reserved. Sysco Cor
Slide 22: Thinking about our customer-centric approach from an end-to-end perspective
…And, we are thinking about our customer-centric approach from an end-to-end perspective Transport and Replenish Forecast Receive inventory demand Warehouse Deliver CAGNY CONFERENCE Manage fleet and indirect Manage facilities, 02.16.16 PAGE 22 sourcing construction and real estate © 2016 All Rights
Slide 23: We are seeing solid business performance with momentum continuing to build
We are seeing solid business performance with momentum continuing to build 1H16 Levers YOY % Change Accelerate Local Case Growth +2.8% Grow Gross Profit/Expand Gross Margin +36bps Leveraging Supply Chain & Reducing CAGNY Administrative Expense -$0.01 CONFERENCE (Operating Expense¹ - USBL cost/case)
Slide 24: Financial Overview
Financial Overview CAGNY Conference Joel Grade February 16, 2016
Slide 25: Our three-year strategic plan
Our three-year strategic plan To Be Our Customers’ Most Valued and Trusted Business Partner Grow gross Leverage supply Reduce profit chain costs administrative costs 55-65% 20-25% 15-20% of $400+ million of $400+ million of $400+ million Improve ROIC to 15% CAGNY Our People CONFERENCE 02.16.16 PAGE
Slide 26: Targeted operating income improvements by year
Targeted operating income improvements by year Operating Income Benefit FY18 FY17 FY16 Cumulative CAGNY Capture by 20-30% 50-60% 100% CONFERENCE Year, % 02.16.16 PAGE 26 © 2016 All Rights Reserved. Operating income impact is Sysco Corporation. net of incremental costs
Slide 27: We plan to achieve our ROIC target of 15% by focusing on key activities
We plan to achieve our ROIC target of 15% by focusing on 3 key activities 1) Improve working capital management 1 2) Continue to manage capital spend in a rigorous 2 manner 3) Continually assess business segment strategic 3 value and ROIC CAGNY CONFERENCE 02.16.16 PAGE 27 The path to 15% ROIC will n
Slide 28: 1H16 results demonstrate we are on-track
1H16 results demonstrate we are on-track Adjusted1 Constant Currency1 $ millions, except per YOY % YOY % share data 1H16 1H16 Change Change Sales $24,716 0.8% $25,166 2.6% Gross Profit $4,395 2.8% $4,472 4.6% Operating Expense $3,451 2.5% $3,515 4.4% Operating Income $943 4.2% $957 5.7% Net Earnings
Slide 29: We have a sound strategic plan and are executing well
We have a sound strategic plan and are executing well • Improved business performance - we are building momentum • Assessing opportunities to exceed our plan • Making good progress toward our financial objectives CAGNY CONFERENCE 02.16.16 PAGE 29 © 2016 All Rights Reserved. Sysco Corporation.
Slide 30: Q&A
Q&A
Slide 31: Non-GAAP Reconciliations
Non-GAAP Reconciliations CAGNY Conference February 16, 2016
Slide 32: Non-GAAP Reconciliation: Impact of Certain Items
Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items (In Thousands, Except for Share and Per Share Data) Sysco’s results of operations are impacted by certain items which include restructuring costs (consisting of severance charges, facility
Slide 33: Non-GAAP Reconciliation: Impact of Foreign Currency
Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Foreign Currency on Results of Operations Metrics (In Thousands, Except for Share and Per Share Data) Sysco’s results of operations are impacted by the strengthening U.S. dollar in translating our forei
Slide 34: Adjusted Return on Invested Capital (ROIC) Target
Adjusted Return on Invested Capital (ROIC) Target We have an ROIC target of 15% that we expect to achieve by fiscal 2018. We cannot predict with certainty when we will achieve these results or whether the calculation of our ROIC in such future period will be on an adjusted basis due to the effect of