Sysco Corporation · NYSE:SYY
Sysco — Q3 FY2017 Earnings Presentation
34 slides from Sysco's earnings presentation, May 8, 2017
Slide 1: Sysco 3Q17 Earnings Results
Sysco 3Q17 Earnings Results 05.08.17
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements made in this presentation or in our earnings call for the third quarter of fiscal 2017 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: Bill Delaney, CEO
BILL DELANEY CEO
Slide 4: Sysco Reported Strong Financial Results for the Third Quarter of Fiscal 2017
Sysco Reported Strong Financial Results (Including Brakes) for the Third Quarter of Fiscal 2017 Adjusted Sales Operating Adjusted EPS1 Income1 13% 14% 11% $13.5B $500M $0.51 05.08.17 3Q17 Earnings 4 1 See Non-GAAP reconciliations at the end of this presentation. © Sysco Corporation. All rights reser
Slide 5: We are Operating in an Environment Which has Modest Economic Growth
We are Operating in an Environment Which has Modest Economic Growth Stable Employment Levels Energy Downturn Effecting Regional Markets Consumer Confidence Generally Favorable 05.08.17 3Q17 Earnings 5 © Sysco Corporation. All rights reserved.
Slide 6: Our Business Strategy is Built on Disciplined, Profitable, Sustainable Growth
Our Business Strategy is Built on Disciplined, Profitable, Sustainable Growth PARTNERSHIP PRODUCTIVITY Profoundly enrich the Continuously experience of doing improve business productivity in all with Sysco areas of our business PRODUCTS PEOPLE Enhance offerings Leverage talent, through a customer- s
Slide 7: We are Very Excited About Sysco's Future
We are Very Excited About Sysco’s Future Strong Business Momentum On Track to Achieve Adjusted Operating Income Target Currently Developing New Three-Year Plan Through 2020 05.08.17 3Q17 Earnings 7 © Sysco Corporation. All rights reserved.
Slide 8: Tom Bené, President & COO
TOM BENÉ PRESIDENT & COO
Slide 9: U.S. Foodservice Operations had a Strong Quarter
U.S. Foodservice Operations had a Strong Quarter… Sales $9.2B 2.2% Gross Profit $1.8B 4.0% Adjusted OPEX 1 $1.1B 2.3% Adjusted Operating Income 1 $690M 7.0% 05.08.17 3Q17 Earnings 9 1 See Non-GAAP reconciliations at the end of this presentation. © Sysco Corporation. All rights reserved.
Slide 10: As we Strive to Deliver Disciplined, Profitable Growth
…As we Strive to Deliver Disciplined, Profitable Growth Provide Value to Local Customer US Foodservice Operations • Innovative product offerings Local Case Growth Gross Margin • Value-added services • E-commerce capabilities 12 quarters 35bps Solid Expense Management • Improvement of $0.01 per case1
Slide 11: Our Strategy Around Accelerating Growth with Local Customers Continues to Deliver
Our Strategy Around Accelerating Growth with Local Customers Continues to Deliver USBL Local Case Growth 3.5% Targeted Resources Technology • Improved Capabilities Training • Value-added Selling • Delivering Benefits to our Customers 05.08.17 3Q17 Earnings 11 © Sysco Corporation. All rights reserved
Slide 12: International Foodservice Operations are Expanding and Performing Well
International Foodservice Operations are Expanding and Performing Well Europe Canada Latin America U.K. • Performed well in a • Pleased with performance • Excited about new facilities in challenging macro environment • Focused on supporting both Costa Rica and Panama • Continues to make progress gro
Slide 13: Joel Grade, CFO
JOEL GRADE CFO
Slide 14: 3Q17 Financial Highlights
3Q17 Financial Highlights Adjusted1 (Excluding Adjusted1 (Including Brakes) Brakes) $MM, except per 3Q17 YOY % Change 3Q17 YOY % Change share data Sales $12,284 2.3% $13,524 12.7% Gross Profit $2,235 4.3% $2,534 18.3% Operating Expense $1,738 1.9% $2,034 19.3% Operating Income $497 13.6% $500 14.3%
Slide 15: Strong Operating Performance
Strong Operating Performance Total Sysco Operating Leverage (excluding Brakes)1 8.0% 6.8% 7.0% 6.0% 6.0% 6.1% 5.0% 6.0% 4.7% 5.0% 4.3% 4.5% 4.1% 4.0% 3.4% 3.0% 3.1% 2.9% 3.0% 3.1% 2.0% 2.3% 2.2% 1.0% 1.8% 1.7% 1.9% 1.9% 1.5% 0.4% 0.0% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 GP growth
Slide 16: Cash Flow & Balance Sheet
Cash Flow & Balance Sheet Quarterly Cash Flow1 $1,200 $1,000 $800 $600 $400 $200 $- $(200) 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 $(400) Q1 Q2 Q3 Q4 $(600) Net cash provided by operating activities (GAAP) Free Cash Flow (Non-GAAP) • Cash Flow1
Slide 17: Summary
Summary High Quality Quarter Strong Local Case Growth Solid Gross Profit Growth Good Cost Management 05.08.17 3Q17 Earnings 17 © Sysco Corporation. All rights reserved.
Slide 18: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS
Slide 19: 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 are impacted by restructuring costs consisting of (1) expenses associated with our revised business technology strategy announced in f
Slide 20: Impact of Certain Items – Q3
Impact of Certain Items – Q3 Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items and Brakes (In Thousands, Except for Share and Per Share Data) 13-Week 13-Week 13-Week 13-Week Period Period Ended Period Ended Period Change %/bps Apr. 1, 201
Slide 21: Impact of Certain Items – Q3 (con't.)
Impact of Certain Items – Q3 (con’t.) 13-Week 13-Week 13-Week 13-Week Period Period Ended Period Ended Period Change %/bps Apr. 1, 2017 Mar 26, 2016 in Dollars Change Operating income (GAAP) $ 435,962 $ 377,618 $ 58,344 15.5% Impact of restructuring costs (1) 40,064 59,443 (19,380) NM Impact of acqu
Slide 22: Impact of Certain Items – Q3 (con't.)
Impact of Certain Items – Q3 (con’t.) 13-Week 13-Week 13-Week 13-Week Period Period Ended Period Ended Period Change %/bps Apr. 1, 2017 Mar 26, 2016 in Dollars Change Diluted earnings per share (GAAP) $ 0.44 $ 0.38 $ 0.06 15.8% Impact of restructuring costs (1) 0.07 0.11 (0.04) -36.4% Impact of acqu
Slide 23: Segment
Segment 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 Period Ended 13-Week 13-Week Period Change Period Apr. 1, 2017 Mar. 26, 2016 in Dollars %/bps Change U.S. Foodservice Op
Slide 24: Segment (con't)
Segment (con’t) 13-Week Period Ended 13-Week 13-Week Period Change Period Apr. 1, 2017 Mar. 26, 2016 in Dollars %/bps Change SYGMA Sales (GAAP) $ 1,535,550 $ 1,497,365 $ 38,185 2.6% Gross Profit (GAAP) 119,481 114,657 4,824 4.2% Gross Margin (GAAP) 7.78% 7.66% 12 bps Operating expenses (GAAP) $ 112,
Slide 25: Segment (con't)
Segment (con’t) 13-Week Period Ended 13-Week 13-Week Period Change Period Apr. 1, 2017 Mar. 26, 2016 in Dollars %/bps Change Corporate Gross Profit (GAAP) $ 1,584 $ (4,035) $ 5,619 NM Operating expenses (GAAP) $ 284,330 $ 310,654 $ (26,324) -8.5% Impact of restructuring costs (3) (33,286) (58,320) 2
Slide 26: Cost per Case
Cost per Case Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Cost per Case Cost per case is an important metric management used to measure our expense performance. This metric is calculated by taking the total operating expense of our U.S. Broadline companies
Slide 27: Adjusted Operating Income Target
Adjusted Operating Income Target Adjusted Operating Income Target We expect to achieve our adjusted operating income target by fiscal 2018. Due to the uncertainties within these projected amounts, we cannot provide a quantitative reconciliation of these non-GAAP measures to the most directly compara
Slide 28: Operating Leverage
Operating Leverage Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Total Sysco Operating Leverage (excluding Brakes) (In Thousands) 13-Week 13-Week 13-Week 13-Week Period Ended Period Ended Period Change Period Apr. 1, 2017 Mar. 26, 2016 in Dollars % Change Gr
Slide 29: Operating Leverage (con't)
Operating Leverage (con’t) 13-Week 13-Week 13-Week 13-Week Period Ended Period Ended Period Change Period Oct. 1, 2016 Sep. 26, 2015 in Dollars % Change Gross profit $ 2,691,919 $ 2,237,995 $ 453,924 20.3% Impact of Brakes (343,051) - (343,051) NM Gross profit excluding the impact of Brakes (Non- GA
Slide 30: Operating Leverage (con't)
Operating Leverage (con’t) 13-Week 13-Week 13-Week 13-Week Period Ended Period Ended Period Change Period Mar. 26, 2016 Mar. 28, 2015 in Dollars % Change Gross profit $ 2,142,825 $ 2,057,498 $ 85,327 4.1% Operating expenses (GAAP) $ 1,765,207 $ 1,730,190 $ 35,017 2.0% Impact of certain items (4) (60
Slide 31: Operating Leverage (con't)
Operating Leverage (con’t) 13-Week 13-Week 13-Week 13-Week Period Ended Period Ended Period Change Period Sep. 26, 2015 Sep. 27, 2014 in Dollars % Change Gross profit $ 2,237,995 $ 2,188,717 $ 49,278 2.3% Operating expenses (GAAP) $ 1,744,521 $ 1,723,104 $ 21,417 1.2% Impact of certain items (6) (13
Slide 32: Operating Leverage (con't)
Operating Leverage (con’t) 13-Week 13-Week 13-Week 13-Week Period Ended Period Ended Period Change Period Mar. 28, 2015 Mar. 29, 2014 in Dollars % Change Gross profit $ 2,057,498 $ 1,994,741 $ 62,757 3.1% Operating expenses (GAAP) $ 1,730,190 $ 1,662,116 $ 68,074 4.1% Impact of certain items (8) (49
Slide 33: 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
Slide 34: Free Cash Flow (con't)
Free Cash Flow (con’t) 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. Sysco considers free cash flow to be a liquidi