Sysco Corporation · NYSE:SYY
Sysco — Bernstein Strategic Decisions 2019
26 slides from Sysco's conference presentation, 2019
Slide 1: Bernstein Strategic Decisions 2019
Bernstein Strategic Decisions 2019
Slide 2: Forward Looking Statements
Forward Looking Statements Statements made in this presentation 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 forward-looking statements reflect the
Slide 3: Tom Bené, Chairman, President & CEO
TOM BENÉ CHAIRMAN, PRESIDENT & CEO
Slide 4: Our Vision
To be our customers’ most Our VISION valued and trusted business partner
Slide 5: We operate the business in four major segments
WE OPERATE THE BUSINESS IN FOUR MAJOR SEGMENTS THAT COMPRISE THE SYSCO PORTFOLIO OF BUSINESSES % OF FY18 Core market TOTAL REVENUE U.S. U.S. broadline serves as the foundation Foodservice Specialty companies enhance our portfolio of Operations products 68% International Canada, Europe and Latin Amer
Slide 6: Sysco has consistently driven strong results in a large, growing industry
SYSCO HAS CONSISTENLY DRIVEN STRONG RESULTS IN A LARGE, GROWING INDUSTRY Sales ($B) Foodservice Industry Growth Rates $58.7B $60.0 $55.0 5-year Real CAGR 2019-2024 $50.0 $45.0 Noncommercial 1.2% $40.0 $35.0 Travel&Leisure 1.4% $30.0 $25.0 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 F
Slide 7: Recent restaurant trends are softening
RECENT RESTAURANT TRENDS ARE SOFTENING Black Box and Knapp Track Same-Store Sales & Traffic Trends In April, the restaurant industry Restaurant saw a decline in same-store sales Industry growth and same-store traffic 7
Slide 8: The U.S. market is the foundation of our business
THE U.S. MARKET IS THE FOUNDATION OF OUR BUSINESS, WITH MEANINGFUL GROWTH POTENTIAL VALUE ADDED TRANSFORMATIONAL INNOVATIVE PRODUCTS INITIATIVES SOLUTIONS Finance “SHOP” Transformation e-Commerce App Roadmap Smart Spending Delivery Service Centers 8
Slide 9: Our international initiatives are progressing well
OUR INTERNATIONAL INITIATIVES ARE PROGRESSING WELL Integration of Businesses Supply Chain & Multi-temperature Initiatives Canada Regionalization Long-term Platform for Growth 9
Slide 10: M&A is a key lever of our growth strategy
M&A IS A KEY LEVER OF OUR GROWTH STRATEGY • Grow our share with local IRELAND Strategically operators acquire companies • Achieve supply chain synergies in existing markets • Fill potential gaps in our product offerings and capabilities U.S. • Develop platforms for further growth Thoughtfully expand
Slide 11: Three-year plan financial objectives
THREE-YEAR PLAN FINANCIAL OBJECTIVES Updated FY 2018-20201 3-year plan Investor Day – December 7, 2017: 1 See Non-GAAP reconciliations at the end of the presentation. 11
Slide 12: Summary
SUMMARY Foodservice industry data shows same store sales declined and traffic was down in April We expect to see softness in volume and decreased gross profit growth in Q4 FY19 Our overall fundamentals are solid, and we remain focused on delivering against our updated three-year plan financial
Slide 13: Joel Grade, EVP & CFO
~ & JOEL GRADE EVP & CFO
Slide 14: 3Q19 Financial Highlights by Segment
3Q19 FINANCIAL HIGHLIGHTS BY SEGMENT U.S. Foodservice Operations International Foodservice Operations $MM, except per share $MM, except per share 3Q19 YoY % Change 3Q19 YoY % Change data data Sales $10,105 4.1% Sales $2,758 (1.5%) Gross Profit $2,009 5.1% Gross Profit $565 (3.1%) Adj. Operating Expe
Slide 15: Strong Operating Performance 3Q19
STRONG OPERATING PERFORMANCE Total Sysco Adj. Operating Leverage1 7.0% 7 Quarter 1 3Q19 1,2 5.7% 5.5% 5.6% Average 5.0% 3.8% 3.9% 5.0% 5.4% 2.7% 2.9% 3.0% 3.4% 3.6% 1.0% 2.7% 2.1% 2.9% 4.2% -1.0% -0.4% -3.0% -0.4% 3.2% 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 GP growth OPEX growth … Although it will vary
Slide 16: We have a proven track record of cash flow generation
WE HAVE A PROVEN TRACK RECORD OF CASH FLOW GENERATION Fiscal 2019 year-to-date cash flow: 1ST 39 1ST 39 WEEKS OF WEEKS OF FY181 FY191 Cash from Ops $1.12B $1.37B $244.3M Free Cash Flow $765.2M $1.00B $233.5M 1 See Non-GAAP reconciliations at the end of the presentation. 1 See Non-GAAP reconciliation
Slide 17: We follow a disciplined approach to capital allocation
WE FOLLOW A DISCIPLINED APPROACH TO CAPITAL ALLOCATION 1 Invest in the business 2 Grow the dividend 3 Strategic M&A Pay Down Debt / 4 Opportunistic Share Repurchase For the full year fiscal 2019, we expect a capital expenditures forecast of approximately 1.1% of sales 17
Slide 18: Summary
SUMMARY Small adjustments to three-year plan Continued work to do to manage overall costs Committed to supporting our customers and executing at a high level for continued improvement of our financial performance 18
Slide 19: Q&A
Q&A
Slide 20: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS
Slide 21: Impact of Certain Items
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 trends. Other than free cash flow, any non-GAAP financial measures will be denoted as adjusted measures and exclu
Slide 22: Operating Income Target
OPERATING INCOME TARGET We expect to achieve our gross profit, operating income and earnings per share 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, operating income and/or e
Slide 23: Impact of Certain Items, 3Q19 (Segment)
IMPACT OF CERTAIN ITEMS, 3Q19 (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 24: 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) 7 quarter average gross profit (GAAP) 4.2% (b) 7 quarter average operating expenses (GAAP) 3.7% (c) 7 quarte
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 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 26: 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