Sysco Corporation · NYSE:SYY
Sysco — Q3 FY2018 Earnings Presentation
28 slides from Sysco's earnings presentation, May 2018
Slide 1: Sysco Earnings Results | 3Q18
Sysco Earnings Results | 3Q18
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Statements made in this presentation or in our earnings call for the third quarter of fiscal 2018 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 Re
Slide 3: Tom Bené, President & CEO
TOM BENÉ PRESIDENT & CEO
Slide 4: Sysco reported strong top-line results driven by solid case growth
SYSCO REPORTED STRONG TOP-LINE RESULTS DRIVEN BY SOLID CASE GROWTH 1 Total Sysco 3Q18 Sales $14.3B 6.1% Adj. Operating Income $536M 7.1% Adj. EPS $0.67 31.4% 1 See Non-GAAP reconciliations at the end of the presentation. 4
Slide 5: Strong top-line performance driven by local customers, Sysco brand and M&A
DESPITE ADVERSE WEATHER, STRONG TOP-LINE PERFORMANCE DRIVEN BY LOCAL CUSTOMERS, SYSCO BRAND AND M&A ACTIVITY SYSCO BRAND M&A Total Sysco 3Q18 Gross Profit Contributions 3Q18 to begin in $2.7B 5.6% 4Q18 46% of Local cases +62 bps 5
Slide 6: Strategic investments and supply chain drove increased expenses this quarter
STRATEGIC INVESTMENTS AND SUPPLY CHAIN DROVE INCREASED EXPENSES THIS QUARTER INVESTMENT IN SYSCO LABS SUPPLY CHAIN SALESFORCE Customer- Cross- centric functional Innovation Pace over Culture perfection Utilize data and insights to target Continue to enhance our Supply chain transformation growth opp
Slide 7: U.S. Foodservice Operations delivered strong top-line results
U.S. FOODSERVICE OPERATIONS DELIVERED STRONG TOP-LINE RESULTS… 1 U.S. Foodservice Operations 3Q18 Sales $9.7B 5.1% Gross Profit $1.9B 4.1% Adj. OPEX $1.2B 5.9% Adj. Operating Income $697M 1.2% 1 See Non-GAAP reconciliations at the end of the presentation. 7
Slide 8: International Foodservice Operations delivered improved operating income despite adverse weather
INTERNATIONAL FOODSERVICE OPERATIONS DELIVERED IMPROVED OPERATING INCOME, DESPITE ADVERSE WEATHER 1 International Foodservice Operations 3Q18 Sales $2.8B 10.7% Gross Profit $583M 12.9% Adj. OPEX $539M 13.0% Adj. Operating Income $45M 11.6% 1 See Non-GAAP reconciliations at the end of the presentatio
Slide 9: The fundamentals of our business are solid
THE FUNDAMENTALS OF OUR BUSINESS ARE SOLID ENRICHING THE CUSTOMER EXPERIENCE • Remain confident in our ability to achieve the high end of the $600- $650 million range of adjusted operating income improvement • Remain confident in ability to deliver new three-year plan • Continue to invest in people,
Slide 10: Joel Grade, EVP & CFO
JOEL GRADE EVP & CFO UF, ee
Slide 11: 3Q18 Financial Highlights
3Q18 FINANCIAL HIGHLIGHTS Adjusted1 Adjusted1 $MM, except 3Q18 YoY % Change YTD18 YoY % Change per share data Sales $14,350 6.1% $43,411 6.0% Gross Profit $2,676 5.6% $8,169 4.8% Operating $2,140 5.2% $6,392 4.6% Expense Operating $536 7.1% $1,777 5.5% Income Net Earnings $356 28.9% $1,162 19.7% Dil
Slide 12: Operating Performance
OPERATING PERFORMANCE 1 1 1 2 Total Sysco Adj. Operating Leverage 3Q18 YTD18 Average 6.0% 4.8% 4.0% 4.5% 3.6% 4.1% 5.6% 4.8% 4.1% 2.0% 2.0% 5.2% 4.6% 2.6% 1.7% 0.0% FY15 FY16 FY17 GP growth OPEX growth … Anticipate improved leverage in 4Q18 1 See Non-GAAP reconciliations at the end of this presentat
Slide 13: 3Q18 and YTD18 Cash Flow
3Q18 AND YTD18 CASH FLOW Quarterly Cash Flow ($M)1 Year-to-Date Cash Flow ($M) 1 $1,000 $1,200 $1,100 $800 $1,000 $600 $900 $400 $800 $700 $200 $600 $0 $500 3Q17 3Q18 YTD17 YTD18 Cash from Ops Free Cash Flow Cash from Ops Free Cash Flow 3Q18 cash flow decline driven by deferred tax payment from 2Q18
Slide 14: Business Updates
BUSINESS UPDATES BUSINESS UPDATES • Over time, expect effective tax rate of 25%-26% • We anticipate FY18 effective tax rate to be slightly lower • CapEx expected to be somewhat lower than previously announced 1.4%-1.5% of sales for FY18 14
Slide 15: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS
Slide 16: Impact of Certain Items
IMPACT OF CERTAIN ITEMS Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items Sysco’s results of operations for fiscal 2018 and 2017 are impacted by restructuring costs consisting of: (1) expenses associated with our revised business technolo
Slide 17: Impact of Certain Items, 3Q18
IMPACT OF CERTAIN ITEMS, 3Q18 Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items (In Thousands, Except for Share and Per Share Data) 13-Week 13-Week Period Ended Period Ended Period Change Period Mar. 31, 2018 Apr. 1, 2017 in Dollars % Cha
Slide 18: Impact of Certain Items, 3Q18 (Continued)
IMPACT OF CERTAIN ITEMS, 3Q18 (CONTINUED) Diluted earnings per share (GAAP) $ 0.63 $ 0.44 $ 0.19 43.2% Impact of restructuring costs (1) 0.04 0.07 (0.03) -42.9% Impact of acquisition-related costs (2) 0.05 0.04 0.01 25.0% Impact of loss on extinguishment of debt 0.10 - 0.10 NM Tax impact of restruct
Slide 19: Impact of Certain Items, YTD18
IMPACT OF CERTAIN ITEMS, YTD18 Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items (In Thousands, Except for Share and Per Share Data) 39-Week 39-Week Period Ended Period Ended Period Change Period Mar. 31, 2018 Apr. 1, 2017 in Dollars % Ch
Slide 20: Impact of Certain Items, YTD18 (Continued)
IMPACT OF CERTAIN ITEMS, YTD18 (CONTINUED) Diluted earnings per share (GAAP) $ 1.85 $ 1.52 $ 0.33 21.7% Impact of restructuring costs (1) 0.12 0.21 (0.09) -42.9% Impact of acquisition-related costs (2) 0.13 0.13 - NM Impact of loss on extinguishment of debt 0.10 - 0.10 NM Tax impact of restructuring
Slide 21: Impact of Certain Items on Applicable Segments
IMPACT OF CERTAIN ITEMS ON APPLICABLE SEGMENTS Sysco Corporation and its Consolidated Subsidiaries Segment Results Non-GAAP Reconciliation (Unaudited) Impact of Certain Items on Applicable Segments (In Thousands, Except for Share and Per Share Data) 13-Week 13-Week Period Ended Period Ended Period C
Slide 22: Adjusted Operating Leverage
ADJUSTED OPERATING LEVERAGE Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Total Sysco Operating Leverage (impact of Certain Items, extra week and Brakes) (In Thousands) 39-Week 39-Week Period Ended Period Ended Period Change Period Mar. 31, 2018 Apr. 1, 2017
Slide 23: Adjusted Operating Leverage (Continued)
ADJUSTED OPERATING LEVERAGE (CONTINUED) 53-Week 52-Week Period Ended Period Ended Period Change Period Jul. 2, 2016 Jun. 27, 2015 in Dollars % Change Gross profit $ 9,040,472 $ 8,551,516 $ 488,956 5.7% Less 1 week fourth quarter gross profit (178,774) - (178,774) NM Comparable gross profit using a 5
Slide 24: Adjusted Operating Leverage (Continued)
ADJUSTED OPERATING LEVERAGE (CONTINUED) Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Total Sysco Operating Leverage (impact of Certain Items, extra week and Brakes) (In Thousands) (a) 11 quarter average gross profit (GAAP) 9.5% (b) 11 quarter average gross
Slide 25: Adjusted Operating Leverage (Continued)
ADJUSTED OPERATING LEVERAGE (CONTINUED) 13-Week Period 13-Week 13-Week 13-Week 13-Week 13-Week 13-Week 13-Week 13-Week 13-Week Period 13-Week 13-Week Ended Period Ended Period Change Period Period Ended Period Ended Period Change Period Period Ended Ended Period Change Period Sep. 30, 2017 Oct. 1, 2
Slide 26: Adjusted Operating Leverage (Continued)
ADJUSTED OPERATING LEVERAGE (CONTINUED) 13-Week Period 13-Week 13-Week 13-Week 13-Week 13-Week 13-Week 13-Week 13-Week 13-Week Period 13-Week 13-Week Ended Period Ended Period Change Period Period Ended Period Ended Period Change Period Period Ended Ended Period Change Period Dec. 31, 2016 Dec. 26,
Slide 27: Adjusted Operating Leverage (Continued)
ADJUSTED OPERATING LEVERAGE (CONTINUED) 13-Week Period 13-Week 13-Week 13-Week 13-Week 13-Week 13-Week 13-Week 13-Week 13-Week Period 13-Week 13-Week Ended Period Ended Period Change Period Period Ended Period Ended Period Change Period Period Ended Ended Period Change Period Mar. 26, 2016 Mar. 28,
Slide 28: Free Cash Flow
FREE CASH FLOW Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Free Cash Flow (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. Sy