Slide 1: Sysco Earnings Results 1Q19
Sysco Earnings Results | 1Q19
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Statements made in this presentation or in our earnings call for the first quarter of fiscal 2019 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: Strategic priorities carry our vision and values forward
OUR STRATEGIC PRIORITIES HELP US CARRY OUR VISION AND VALUES FORWARD FOR DISCIPLINED, PROFITABLE GROWTH 4
Slide 5: Sysco reported improved year-over-year operating performance
SYSCO REPORTED IMPROVED YEAR-OVER-YEAR OPERATING PERFORMANCE 1 Total Sysco 1Q19 Sales $15.2B 3.9% Gross Profit $2.9B 3.9% Adj. Operating Income $691.7M 5.1% Adj. EPS $0.91 22% 1 See Non-GAAP reconciliations at the end of the presentation. 5
Slide 6: Solid top-line growth driven by U.S. foodservice segment
SYSCO SAW SOLID TOP-LINE GROWTH, DRIVEN BY OUR U.S. FOODSERVICE SEGMENT, DESPITE ADVERSE WEATHER IMPACTS CUSTOMER GROWTH Total Sysco FY18 U.S. Broadline total case 5.7% growth 6.1 U.S. Broadline local case growth 5.2% 6
Slide 7: Broader economic and industry trends impact operating environment
BROADER ECONOMIC AND INDUSTRY TRENDS IMPACT OUR OPERATING ENVIRONMENT Consumer U.S. consumer confidence remains high, which has driven healthy Confidence consumer spending Positive implications for longer-term consumer demand, such as Consumer faster than anticipated growth in U.S. GDP of 3.5% for t
Slide 8: Operating environment continues to result in expense challenges
THE CURRENT OPERATING ENVIRONMENT CONTINUES TO RESULT IN EXPENSE CHALLENGES, IMPACTING OUR BUSINESS Tightening labor market Ongoing challenges in the warehouse and transportation areas of our supply chain 8
Slide 9: Accelerating focus on managing costs with multiple initiatives
WE ARE ACCELERATING OUR FOCUS ON MANAGING COSTS AND HAVE IMPLEMENTED MULTIPLE INITIATIVES ACROSS THE BUSINESS Finance This initiative increases centralization and standardization of our end- Transformation to-end global processes and workflow and utilizes digital automation Roadmap on a modern finan
Slide 10: U.S. Foodservice operations delivered strong top-line results
U.S. FOODSERVICE OPERATIONS DELIVERED STRONG TOP-LINE RESULTS U.S. Foodservice Operations 1Q19 Sales $10.4B 5.6% Gross Profit $2.1B 5.2% OPEX $1.3B 5.8% Operating Income $816M 4.3% 10
Slide 11: Expect U.S. case volume to soften in year-over-year growth
EXPECT U.S. CASE VOLUME TO SOFTEN IN YEAR-OVER-YEAR GROWTH SUMMARY Due to the annualization of two Due to the annualization of the large national accounts HFM and Doerle acquisitions customers1 1 Added in the prior year 11
Slide 12: Continued gross profit growth in U.S. Foodservice
CONTINUED GROSS PROFIT GROWTH IN OUR U.S. FOODSERVICE SEGMENT Growth of 47.2% of local cases + 64 bps micro-chains U.S. Foodservice 1Q19 Local, emerging Sysco Brand concepts Gross Profit $2.1B 5.2% 12
Slide 13: Mixed results in international operations
MIXED RESULTS IN OUR INTERNATIONAL OPERATIONS, DRIVEN BY SOFT REVENUE & SUPPLY CHAIN COST CHALLENGES 1 International Foodservice Operations 1Q19 Sales $2.9B 0.6% Gross Profit $616M 0.1% Adj. OPEX $520M Flat Adj. Operating Income $95M 0.2% 1 See Non-GAAP reconciliations at the end of the presentation
Slide 14: Our fundamentals remain solid
OUR FUNDAMENTALS REMAIN SOLID SUMMARY Delivered improved year-over-year results, despite challenges to our operating environment Our overall fundamentals are solid, and we remain confident in our ability to achieve our three-year plan financial objectives We remain focused on delivering agains
Slide 15: Joel Grade, EVP & CFO
JOEL GRADE EVP & CFO
Slide 16: 1Q19 Financial Highlights
1Q19 FINANCIAL HIGHLIGHTS Adjusted1 $MM, except per 1Q19 YoY % Change share data Sales $15,215 3.9% Gross Profit $2,904 3.9% Operating Expense $2,212 3.6% Operating Income $692 5.1% Net Earnings $479 21.5% Diluted EPS $0.91 22.4% 1 See Non-GAAP reconciliations at the end of the presentation. 16
Slide 17: Operating Performance
OPERATING PERFORMANCE Total Sysco Adj. Operating Leverage1 5 Quarter 1 2 1Q19 Average 5.7% 6.0% 5.5% 5.6% 5.4% 3.9% 3.9% 5.0% 4.8% 3.8% 4.0% 3.4% 3.6% 2.0% 2.7% 3.6% 4.1% 0.0% 1Q18 2Q18 3Q18 4Q18 1Q19 GP growth OPEX growth … Anticipate 150bps gap for FY18-FY20 three-year plan 1 See Non-GAAP reconcil
Slide 18: 1Q19 Cash Flow
1Q19 CASH FLOW 1 1Q18 1Q19 Cash from Ops $82.7M $271.1M $188.4M Free Cash Flow -$51.7M $170.7 $222.4M 1 See Non-GAAP reconciliations at the end of the presentation. 18
Slide 19: Items Impacting Earnings Per Share
ITEMS IMPACTING EARNINGS PER SHARE SUMMARY EPS Growth Positively EPS Growth Impacted By: Offset By: Total Sysco 1Q19 Increased Higher interest operating income expense than prior year 1 Lower tax rate Adj. EPS Slightly fewer stock option exercises $0.91 22% than prior year 1 See Non-GAAP rec
Slide 20: Summary
SUMMARY SUMMARY 1Q19 results reflect continued momentum from our underlying business, including solid local case growth and strong gross profit dollar growth Continued work to do to manage overall costs and achieve the full financial objectives of our three-year plan Committed to serving our c
Slide 21: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS
Slide 22: Impact of Certain Items
IMPACT OF CERTAIN ITEMS Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Impact of Certain Items Our discussion below of our results includes certain non-GAAP financial measures that we believe provide important perspective with respect to underlying business t
Slide 23: Impact of Certain Items, 1Q19
IMPACT OF CERTAIN ITEMS, 1Q19 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 Sep. 29, 2018 Sep. 30, 2017 in Dollars % Ch
Slide 24: Impact of Certain Items, 1Q19 (Segment)
IMPACT OF CERTAIN ITEMS, 1Q19 (SEGMENT) 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 Change P
Slide 25: Adjusted Operating Leverage
ADJUSTED OPERATING LEVERAGE Sysco Corporation and its Consolidated Subsidiaries Non-GAAP Reconciliation (Unaudited) Total Sysco Operating Leverage (impact of Certain Items) (In Thousands) (a) 5 quarter average gross profit (GAAP) 4.8% (b) 5 quarter average operating expenses (GAAP) 3.5% (c) 5 quarte
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 Ended Period Ended Period Change Period Period Ended Period Ended Period Change Period Jun. 30, 2018 Jul. 1, 2017 in Dollars % Change Mar. 31, 2018 Apr. 1, 2017 in Dollars % Change Gross pr
Slide 27: 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 28: Operating Leverage Target
OPERATING LEVERAGE TARGET Gross Profit and Operating Expense Targets We expect to achieve our gross profit and operating expense targets under our 3-year strategic plan by fiscal 2020. We cannot predict with certainty when we will achieve these results or whether the calculation of our gross profit
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