Sysco Corporation · NYSE:SYY
Sysco — Investor Day (December 2009)
150 slides from Sysco's investor day presentation, Dec 14, 2009
Slide 1: Investor Day, December 14, 2009
December 14, 2009 Neil Russell Vice President, Investor Relations
Slide 2: Forward-Looking Statements
2 Forward-Looking Statements Certain statements made herein are forward-looking statements under the Private Securities Litigation Reform Act of 1995. They include statements regarding: the expected cost, timing and benefits of the Business Transformation Project, including the company's ability to
Slide 3: Bill DeLaney, Chief Executive Officer
December 14, 2009 Bill DeLaney Chief Executive Officer
Slide 4: Agenda
2 Sysco Overview A Brief Look Back- First Four Decades as a Public Company Update - Current Business Environment and Outlook Moving Forward Agenda
Slide 5: Sysco's Leadership Position
3 The global leader in foodservice distribution Forty year history of consistent success FY 2009 sales of $37 billion Serve $200+ billion foodservice and hospitality market Commitment to operational excellence Sysco's Leadership Position
Slide 6: Leadership Position (Continued)
Leadership Position (Continued) 4 Broad reach - 400,000 customers Depth of product selection - over 400,000 products, including approximately 40,000 Sysco Brand products 47,000 talented and committed employees Deliver over 1.2 billion cases of food and related products every year Only major publicly
Slide 7: Diversified customer mix
5 10% (CHART) 11% Customer Type Sysco has a diversified customer mix FY09 Sales By Customer Type
Slide 8: Diversified product mix
6 18% 18% 14% 11% 10% 8% 8% 5% 3% 3% Products Sysco has a diversified product mix (CHART) 2% <1% - Medical Canned & Dry Products Frozen Fruits, Vegetables, and Bakery Dairy Poultry Fresh Produce Paper & Disposables Janitorial Beverage Seafood 2% Equipment Fresh & Frozen Meats 19% FY09 Sales By Produ
Slide 9: Sysco's Competitive Landscape
7 Sysco's Competitive Landscape ($200+ Billion Primary Market) Sysco 17% US Foodservice 9% PFG: 5% Remaining Top 50 13% Other 56% Market Overview Source: 2008 ID Access Report
Slide 10: Competitive Advantages
8 Competitive Advantages Approximately 8,000 Marketing Associates 50,000 Comprehensive Business Reviews Annually Premier Customer Service 98% service rate Differentiated Brand Supply Chain Initiatives XY Routing Warehouse Systems RDC's Transportation Management Continuous Investment in the Business
Slide 11: Agenda
9 Sysco Overview A Brief Look Back- First Four Decades as a Public Company Update - Current Business Environment and Outlook Moving Forward Agenda
Slide 12: Sysco History - 1970's
Sysco History - 1970's Foodservice industry - early years Completed 30 acquisitions FY79 industry size = $49B FY79 SYY sales of $1B FY79 operating income = $31M FY79 net income = $16M 10 Sysco market share 2%
Slide 13: Sysco History - 1980's
Sysco History - 1980's Completed 47 acquisitions Acquisition of CFS Continental filled out U.S. geographical presence FY89 industry size = $87B FY89 SYY sales of $7B FY89 SYY operating income = $229M FY89 SYY net income = $108M 11 Sysco market share 8%
Slide 14: Sysco History - 1990's
Sysco History - 1990's Completed 22 acquisitions First specialty meat company acquired FY99 industry sales = $140B FY99 SYY sales of $17B FY99 SYY operating income = $668M FY99 SYY net income = $362M 12 Sysco market share 12%
Slide 15: Sysco History - 2000's
Sysco History - 2000's Completed 54 acquisitions to date FreshPoint in 2000 establishes specialty produce company SERCA in 2002 and Pallas Foods in 2009 establishes international presence FY09 industry sales = $215B FY09 SYY sales of $37B FY09 SYY operating income = $1.9B FY09 SYY net income = $1.1B
Slide 16: Sysco's Growth Has Outpaced the Industry
14 10 Year CAGR - Sysco vs. Total Industry (1) Note: (1) Foodservice industry sales were converted to a Sysco fiscal year basis by taking the average of current and prior calendar years. Sources: Technomic, Sysco internal reporting (CHART) Sysco's Growth Has Outpaced the Industry
Slide 17: Agenda
Sysco Overview A Brief Look Back - First Four Decades as a Public Company Update - Current Business Environment and Outlook Moving Forward 15 Agenda
Slide 18: Current Business Environment & Outlook
16 Current Business Environment & Outlook October 2008 - September 2009 most difficult period in industry history Volume trends appear to be stabilizing Still down versus two years ago Deflation remains an issue - currently 3% - 4% Cautious optimism looking forward Pace and extent of recovery not cl
Slide 19: Agenda
Sysco Overview A Brief Look Back- First Four Decades as a Public Company Update - Current Business Environment and Outlook Moving Forward 17 Agenda
Slide 20: Moving Forward
18 Moving Forward Sysco remains committed to enhancing economic value Improve daily execution by leveraging existing competitive advantages Optimize core business by transforming key business processes Explore and assess opportunities to expand core business and enhance capabilities Adjacent busines
Slide 21: Optimizing Our Core Business
19 Optimizing Our Core Business Balance market share growth and profitability Leverage our scale advantages while remaining highly responsive to customer needs More effectively integrate enterprise-wide capabilities Utilize technology to facilitate business transformation Invest in value added capab
Slide 22: Focus on Core Business
20 Focus on Core Business Enhance existing customer relationships Retention of current accounts Account penetration Grow number of customers Grow by acquisitions Improve productivity in all aspects of the business Sysco's Primary Market =$200+ Billion Illustration (CHART) Existing Customers $37 B Sy
Slide 23: Good things
Good things Sysco
Slide 24: Ken Spitler, Vice Chairman, President & COO
Ken Spitler Vice Chairman, President, & COO December 14, 2009
Slide 25: Who We Were
Who We Were... Founded by John Baugh in 1969, SYSCO - a Systems and Services Company - became a public company on March 3, 1970 A company founded on strong values, ethics, and the overall goal of helping our customers succeed By the late 70s, Sysco Employed 1,100 sales representatives out of a 5,200
Slide 26: Early Years
Early Years Approximately 2,000 items Pricing remained relatively stable Not as many customers; not as many competitors All of an MA's work was done by hand Product lines quickly grew to include limited produce, a few cleaning supplies and paper supplies and paper supplies and paper supplies and pap
Slide 27: A History of Growth and Innovation
4 A History of Growth and Innovation Jan. 1981 - Listing on the NYSE 1984 - SYGMA was created 1986 - Introduced line of disposable ware 1988 - Acquired CFS Continental to more effectively serve the contiguous US 1994 - ARAMARK awarded Sysco significant additional business March 2002 - acquisition of
Slide 28: Business Segments
5 5 Of the two-thirds sales that are restaurants, approximately 50% are independent restaurants and 50% are chain restaurants On average, Sysco has 35% - 40% of its best independent customers' share of wallet SYGMA serves only chain customers Broadline, our core business, serves multiple customer ty
Slide 29: Who We Are Today
Who We Are Today... Over 400,000 products, including approximately 40,000 Sysco Brand products 186 distribution facilities serving approximately 400,000 customers Leading foodservice provider in North America Deliver over 1.2 billion cases of food and related products every year 6
Slide 30: Operational Excellence
Sysco Operational Excellence
Slide 31: Strong Sales Growth
8 (CHART) 20-year CAGR 9% Strong Sales Growth
Slide 32: Operating Income
Operating Income Operating Income 9 20-year CAGR 11%
Slide 33: Cases Per Error
Cases Per Error 10 Cases Cases Per Error1 Note: (1) One error per number of cases shipped. For example, in FY01, Sysco experienced one error for every 381 cases shipped, but reduced that rate to one error for every 1,359 cases shipped in FY09. Cases Per Error has improved 257% since FY01
Slide 34: Warehouse Cases Per Manhour
Warehouse Cases Per Manhour 11 Warehouse Cases Per Manhour has improved 53% since FY00 Note: Data for Sysco US Broadline companies
Slide 35: Cases Per Trip
Cases Per Trip 12 Improvements drive real savings Cases Per Trip has improved 22% since FY00 Note: Data for Sysco US Broadline companies
Slide 36: Case Per Trip Improvement
Case Per Trip Improvement 13 For example, if 50,000 cases are delivered each day at a typical US Broadline company FY2009: 711 cases per trip = 70 trucks FY2000: 585 cases per trip = 85 trucks Approximately 15 less trucks on the road each day at 72 US Broadline facilities Results in 1,080 fewer rout
Slide 37: Inventory Shrink
Inventory Shrink 14 $42 million in savings in FY091 Improvement over time Note: Shrink percentages shown reflect U.S. Broadline only. (1) Savings based on comparison of actual shrink expense to proforma expense at FY00 levels. Shrink Expense has decreased 57% since FY00
Slide 38: Focus On Safety Yields Benefits
Focus On Safety Yields Benefits 15 Note: Industry rates for 2008 and beyond have not yet been published. (1) Data reflects Sysco's fiscal year (2) Data reflects calendar year (3) Annualized data as of 1st fiscal quarter 2010 (CHART)
Slide 39: Case Volumes Stabilizing
Case Volumes Stabilizing 16 Update: Good News Percent Change in Case Volume June 28 - November 28 (CHART) 0%
Slide 40: We're Not Standing Still
We're Not Standing Still ... 17 Operations Technology Current initiatives deliver near-term incremental value Continuous improvement is at the core of what we do every day Leverage Sales Growth and Take Market Share Marketing
Slide 41: Marketing Initiatives
Marketing Initiatives Create rich web interface to enhance customer experience Serve new segment of customers seeking better purchasing tools 18 Improved Order Management System Implement Sophisticated Pricing Strategy Guidance for marketing associates to optimize pricing by market and customer Leve
Slide 42: Improve Existing Operating Processes
Improve Existing Operating Processes 19 Standardize and simplify warehouse system settings across all operating companies Utilize discrete engineered labor standards for warehouse activities Complete rollout of activity-based compensation Reduce miles driven through improved route mapping Equipment
Slide 43: Current Technology Initiatives
Current Technology Initiatives 20 Improve order selection process Update pallet scanning technology Improve productivity, efficiency and customer satisfaction Projects in various stages of implementation, expect completion by the end of FY11 Update Existing Technology Implement New Technology Comput
Slide 44: Laying The Foundation For Future Growth
Laying The Foundation For Future Growth Sysco's core principles The value of the Sysco enterprise is more important than any one Operating Company- and therefore must be optimized first Continually improve efficiency and productivity Provide customers the finest quality products at the best price He
Slide 45: Good things
Good things Sysco
Slide 46: Larry Pulliam, EVP Foodservice Operations
Larry Pulliam Executive Vice President - Foodservice Operations December 14, 2009
Slide 47: Leveraging Our Capabilities
Leveraging Our Capabilities 2 Utilize Broadline capabilities to operate more efficiently Develop processes to help customers succeed Identify opportunities for savings Utilize scale more effectively Provide opportunities for profitable sales growth Contract Sales SYGMA Specialty Companies (Meat, Pro
Slide 48: Contract Sales Growth Opportunities
Contract Sales Growth Opportunities 3 Source: Technomic, Inc.; internal data Note: (1) Sysco's Primary Market includes the United States and Canada. Foodservice Independents include small chains. Note: (1) Sysco's Primary Market includes the United States and Canada. Foodservice Independents include
Slide 49: Aggressively Pursuing New Business
Aggressively Pursuing New Business 4 New Business Targeted Potential Opportunity With Existing Customers Pursuing Profitable Sales Growth
Slide 50: New Tools To Help Customers Succeed
New Tools To Help Customers Succeed Customer Supply Chain Specialty Companies Sourcing 5 Sysco Broadline Companies One face to the customer
Slide 51: Corporate Multi Unit Business Review Process
Corporate Multi Unit Business Review Process Process Process 6 Meet customers' needs to retain and grow business Supply Chain Sourcing Specialty Companies
Slide 52: SYGMA And Specialty Companies
SYGMA And Specialty Companies 8 Specialty Meat Companies
Slide 53: Specialty companies and SYGMA coverage
9 1 International Food Group 17 Hotel Supply 33 Produce 20 SYGMA 1 Asian 15 Meat 2 RDC Broad Geographic Coverage
Slide 54: Improving Profitability at SYGMA
Improving Profitability at SYGMA 10 Profitable Sales Growth Operating Efficiencies and Expense Reduction Increase organic growth opportunities Annual business reviews with top customers Increase warehouse productivity Decrease occupancy costs per case/increase energy savings Reduce miles driven Opti
Slide 55: Specialty Meat Companies
Specialty Meat Companies 11 In 1999 Sysco began acquiring the finest "Center of the Plate" specialty meat purveyors across the country Answers high demand from customers for the highest quality portion-cut fresh steaks and chops 1999 2001 2003 2005 2007 2009
Slide 56: Specialty Meat Companies
Specialty Meat Companies 12
Slide 57: Specialty Meats Initiatives
Specialty Meats Initiatives 13 Transition outlying territories and routes to Broadline companies Aligning Sysco Specialty Meat Companies (SSMC) sales reps to manage the Broadline "Center of the Plate" category in remote markets SSMC group collaborating with Sysco Multi-Unit team to accelerate growth
Slide 58: Specialty Produce Companies
Specialty Produce Companies 14 In 2000, Sysco began the specialty produce division by acquiring FreshPoint Since 2000, FreshPoint has acquired and integrated 13 produce distributors Answered certain customers' need for more frequent deliveries of perishable produce products, customized value added p
Slide 59: Specialty Produce Companies
Specialty Produce Companies Specialty Produce Companies 15
Slide 60: FreshPoint Initiatives
FreshPoint Initiatives 16 Leverage Value Added network to support Sysco and SYGMA to obtain Corporate Multi Unit (CMU) business Leverage central procurement and food safety capabilities to grow sales with CMU accounts Review acquisition growth opportunities to increase distribution capabilities Depl
Slide 61: Guest Supply
Guest Supply 17 Profitable Sales Growth Operating Efficiencies Complete efficiency improvement program at all warehouses Reduce inventories through SKU rationalization Continue consolidation of distribution centers Increase sales to management companies Create buying guide to increase account penetr
Slide 62: International
International 18 Profitable Sales Growth Operating Efficiencies Sell deeper into existing accounts Expand into new countries and concepts Improve purchasing process to reduce inventory levels Optimize capacity and configuration of existing facilities to accommodate growth Focus on expanded relations
Slide 63: Summary
Summary Substantial opportunities exist for contract sales Continue to refine SYGMA model to improve profitability Leveraging our capabilities to grow profitably Integrate Broadline capabilities to improve efficiency Utilize scale more effectively Help our customers succeed 19
Slide 64: Good things
Good things Sysco
Slide 65: Bill Day, SVP Merchandising and Supply Chain
December 14, 2009 Bill Day Senior Vice President Merchandising and Supply Chain Management
Slide 66: Delivering Value To Our Key Stakeholders
Delivering Value To Our Key Stakeholders 2 Merchandising Sourcing Demand Planning & Inventory Management RDC Strategy and Operations Transportation Management Supply Chain Management Merchandising and Supply Chain Organization
Slide 67: Merchandising and Supply Chain Mission
Merchandising and Supply Chain Mission Create Competitive Advantage to Support Profitable Sales Growth 3 Strengthen Strategic Supplier Relationships Support Operating Companies Reinvigorate Sysco Brand
Slide 68: Create Value for Key Stakeholders
Create Value for Key Stakeholders Create Value for Key Stakeholders 4
Slide 69: Strategic Supplier Relationships
Strategic Supplier Relationships Strategic Supplier Relationships 5
Slide 70: Collaborative Growth Planning
6 Collaborative Growth Planning Social Media Research (test traffic drivers) NE Flour Expansion Baked Goods Growth Program New efficient replenishment programs launch Continue to leverage current programs to grow earnings and build on RDC success FY 2011 Plans Finalized Quarterly Update Illustration
Slide 71: What the Supplier Needs From Sysco
Today Tomorrow's Differential Growth OpCo Support Access to Reporting Needs MA Training Corporate Influence OpCo Participation MA Training Supply Chain Collaboration Corporate Category Management National Commercial Event Input Merchandising Funds for Case Generating Events Supply Chain Intimacy OpC
Slide 72: Perform Category Management
Perform Category Management Perform Category Management 8
Slide 73: New Partnerships Add Value
New Partnerships Add Value 9 Supplies on the Fly ECOLAB More than 10,000 new accounts Estimated $11 to $12 billion market $260 million in Sysco U.S. Broadline sales
Slide 74: History of Sysco Brand
History of Sysco Brand 10 John Baugh, Sysco Founder, created the Sysco Brand in 1980 First true foodservice distributor brand In conjunction with the Sysco Brand, formed Sysco's Quality Assurance Program - setting quality standards in the industry The Sysco Brand portfolio expanded over the years to
Slide 75: Redefine Sysco Brand Strategy
Redefine Sysco Brand Strategy 11 Historically, Sysco Brand experienced rapid growth and was very successful In recent years, we lost focus on the Brand, but have recently established a strategy to reinvigorate the Brand, including: Simplifying and standardizing the Brand for Marketing Associates and
Slide 76: Sysco Brand Adds Significant Value
Sysco Brand Adds Significant Value 12 12
Slide 77: Brand Positions Have Been Refined
RELIANCE - Good value for the price, more consistent than other economy labels and provides a lower cost option for all types of food service operations. Brand Positions Have Been Refined Economy Labels CLASSIC - Good or better quality than national and leading distributor brands; providing more val
Slide 78: Quality Assurance Program
Quality Assurance Program Quality Assurance Program 14
Slide 79: Sysco's National Supply Chain Map
Sysco's National Supply Chain Map 15 Sysco Operates 186 Distribution Locations 47,000 Employees Serving 400,000 Customers
Slide 80: When Our Customers Win, We Win
When Our Customers Win, We Win Sysco is moving from a fragmented state, to an end-to-end vision By transforming its supply chain, Sysco is building an infrastructure of systems, facilities, people and processes that lower costs, that are reliable, safe, resilient, agile and green Demand management a
Slide 81: RDC Network
RDC Network 17 OpCo RDC *Projected Cross Docking DALLAS/FORT WORTH, TX AREA* ATLANTA, GA* FRONT ROYAL, VA ALACHUA, FL SALT LAKE CITY, UT* HAMLET, IN
Slide 82: RDC Service Levels - Northeast
RDC Service Levels - Northeast Northeast Network Customer Service Levels (Cases) RDC Items vs. Supplier Direct 18 (CHART)
Slide 83: RDC Service Levels - South
19 South Network Customer Service Level (Cases) RDC Items vs. Supplier Direct RDC Service Levels - South (CHART)
Slide 84: Transportation Key Metrics
Transportation Key Metrics 20 U.S. Broadline U.S. Broadline (CHART)
Slide 85: Transportation Management
Transportation Management 21 21 Fuel Savings achieved through utilization of alternative modes In millions 1 Note: (1) Reflects savings compared to shipment using truck transportation only Intermodal refers to the combination of rail and truck shipping methods. FY 2009 Fuel Savings
Slide 86: RDC Capabilities and Benefits
RDC Capabilities and Benefits 22 22
Slide 87: Inside the RDC
Inside the RDC Inside the RDC 23
Slide 88: Inside the RDC
Inside the RDC Inside the RDC 24
Slide 89: Inside the RDC
Inside the RDC Inside the RDC 25
Slide 90: Recap
Recap Forming strategic relationships with our suppliers through sales planning and supply chain collaboration Re-focusing, simplifying and re-building Sysco Brand Supporting our Operating Companies with training, promotions, supplier sales coordination, product and customer support Building a world
Slide 91: Good things
Good things Sysco
Slide 92: Jim Hope, EVP Business Transformation
Jim Hope Executive Vice President - Business Transformation December 14, 2009
Slide 93: Business Transformation
Business Transformation 2 Sales & Marketing Improve sales force productivity Enhance customer experience Reduce cost to serve Shared Services Centralize task- based work Support sales force Data Management Develop enterprise-wide view Leverage data to make better decisions Improve Execution Reduce C
Slide 94: This Is More Than Just An IT Project
This Is More Than Just An IT Project SAP is the foundation Innovative Processes Vision Transformation Develop a foundation that is bold and transformational Capture the most benefits with the least complexity Generate significant ROI Create value for shareholders, employees and customers Key Project
Slide 95: Guiding Principles
Guiding Principles Create strategic competitive advantage Optimize the core business by reducing complexity, redundancy and inefficiency of business processes and supporting technologies Operate as a seamless single collaborative entity Redefine the customer experience to further differentiate our p
Slide 96: The Roadmap
The Roadmap Vision and Detailed Requirements Preliminary Design Detailed Design Business Blueprinting Realization Preparation Go-Live and Support February - March 2009 April - June 2009 June - September 2009 Dec. 2008 - Early 2009 3-4 years Build Integrate and Test Final Prep/ Cut-Over We Are Here 5
Slide 97: Deployment Approach
Deployment Approach One Broadline operating company deployed in early 2011 A five month stabilization period follows Thereafter, deploy waves of multiple operating companies through 2013 Broadline companies will be deployed first RDCs, SYGMA and Canada will be deployed last 6
Slide 98: Sales Force Productivity
7 7 Sales Force Productivity Current Daily MA Activities Administration 40% Sales 25% Travel 25% Consultation 10%
Slide 99: Significantly Enhance the Customer Experience
Significantly Enhance the Customer Experience Sysco will have a comprehensive customer interaction approach influenced by customer satisfaction and customer profitability Self-Service Customer Service Representatives Inside Sales New Market Manager Customer Resource Manager Business Specialist Custo
Slide 100: Profitably Manage Customer Segments
Profitably Manage Customer Segments Enhanced Order Management System CSR Inside Sales New Market Manager Customer Resource Manager Business Specialist Customer Service Models: High Touch Frequent Customer Resource Manager attention Provides most visibility into Customer's spend and buying patterns s
Slide 101: Current eSysco Web Interface
Current eSysco Web Interface 10 Handles significant sales volume, but updates are necessary to grow sales and enhance customer experience
Slide 102: Future Web Interface
Future Web Interface 11 Will provide a rich online customer experience
Slide 103: Product Information
Product Information 12 Detailed information about product nutrition, similar products, recipes and videos
Slide 104: Shared Services
Shared Services Helps Sysco become the easiest to do business with Intended to accelerate integration and time-to-benefit of future acquisitions 13 Includes all major business areas, including sales, finance, procurement, supply chain, maintenance, earnings optimization and human resources Utilizes
Slide 105: Data Management Improves Transparency
Data Management Improves Transparency 14 Make better decisions faster
Slide 106: What We Expect The Future State To Be
What We Expect The Future State To Be Suppliers more involved in planning processes Enhanced category management Sysco is easier to do business with 15 Increased opportunities for profitable sales growth Increased productivity and efficiency Better information to make better decisions Consistent, ea
Slide 107: Significant Opportunities Remain
16 Significant Opportunities Remain Business Transformation Retain existing customers Grow share of wallet Take market share (CHART) Existing Customers Potential Opportunities $37 B Sysco FY09 Sales Sysco's Primary Market = $200+ billion Illustration Opportunities to Grow Share of Wallet
Slide 108: Good things
Good things Sysco
Slide 109: Chris Kreidler, EVP and Chief Financial Officer
Chris Kreidler Executive Vice President, Chief Financial Officer December 14, 2009
Slide 110: Financial Perspective
Financial Perspective Sysco's History Strong industry growth Sales growth in excess of industry growth Attractive earnings growth Continuous investment in the business Solid balance sheet Strong ROIC 2 Remain committed to continuous improvement Sysco's Future Moderate industry growth Sales growth in
Slide 111: Sysco's History - Financial Perspective
Sysco's History Financial Perspective
Slide 112: Steady Industry Sales Growth
4 (CHART) 20-year CAGR 5% Steady Industry Sales Growth Industry Sales ($ billions)
Slide 113: Strong Sysco Sales Growth
5 (CHART) 20-year CAGR 9% Strong Sysco Sales Growth Sysco Sales ($ billions) Sysco has outpaced industry growth by ~4 points annually
Slide 114: Strong Cash Flow Generation
6 Strong Cash Flow Generation Cash Flow from Operations ($ billions) (CHART) 6 20-Year CAGR 10%
Slide 115: Sustained Earnings Growth
Sustained Earnings Growth Sustained Earnings Growth 7 Sysco has NEVER reported an annual loss in its 40-Year History 20-year CAGR 12% Sysco Net Earnings ($ billions)
Slide 116: Prudent and Disciplined Use of Cash
Prudent and Disciplined Use of Cash 8 8 (CHART) $ in billions
Slide 117: Top Tier Return On Invested Capital
9 Top Tier Return On Invested Capital Return on Invested Capital (CHART) 9 LTM (1) S&P Average 13% Note: (1) Last twelve months as of 9/30/09
Slide 118: Plenty of Liquidity
Plenty of Liquidity 10 Operating cash flow of $1.6 billion in FY2009 Corporate issuer rating of AA- Highest ratings for short-term debt Standard & Poor's = A1+, Moody's = P-1 Strong credit ratings Sysco has substantial liquidity and a strong balance sheet Zero debt maturities in FY10-11 and only $65
Slide 119: Solid Capital Structure
11 (CHART) (CHART) $2.5 B $1.1 B $1.4 B Debt Maturity by Year (Face Value, $Millions) Solid Capital Structure
Slide 120: Sysco's Future - Financial Perspective
Sysco's Future Financial Perspective
Slide 121: Sysco Has Consistently Grown Faster Than The Industry
13 Indexed Sales Growth 5-Year CAGRs Sysco Has Consistently Grown Faster Than The Industry Industry growth is moderating (CHART)
Slide 122: Focus On Increasing Market Share
Focus On Increasing Market Share 14 Sysco 2009 Sales Illustration (CHART) Existing Customers Potential Opportunities $37 B Sysco FY09 Sales Sysco's Primary Market = $200+ Billion Opportunities to Grow Share of Wallet New growth opportunities driven by business transformation
Slide 123: Business Transformation Provides New Opportunities
Business Transformation Provides New Opportunities Opportunities Opportunities 15 Provides Path To Improved Profitability Increase Sales Reduce Operating Costs Make Better Decisions
Slide 124: Business Transformation Requires Multi-Year Investment
Business Transformation Requires Multi- Year Investment 16 (CHART) Total cash expenditures estimated to be $900 million, including $750-$800 million in incremental spend Estimated Total Cash Expenditures ($ millions)
Slide 125: Business Transformation Yields Significant Long-Term Benefits
Business Transformation Yields Significant Long-Term Benefits 17 2010 2011 2012 2013 2014 2015 Incremental EPS Impact ($0.05) ($0.09) ($0.17) $0.00 $0.23 $0.34 Cumulative EPS Impact ($0.07) ($0.15) ($0.33) ($0.33) ($0.10) $0.24 EPS Impact YOY ($0.04) ($0.04) ($0.09) $0.17 $0.23 $0.11 Projected Incre
Slide 126: Sysco Expects to Generate Significant Cash
Sysco Expects to Generate Significant Cash 18 18
Slide 127: Good things
Good things Sysco
Slide 128: Bill DeLaney, Chief Executive Officer
December 14, 2009 Bill DeLaney Chief Executive Officer
Slide 129: Enhancing Economic Value - Return On Invested Capital
Enhancing Economic Value 2 Return On Invested Capital
Slide 130: Enhancing Economic Value
3 Enhancing Economic Value Opportunities Capabilities Expectations
Slide 131: Opportunities
4 Opportunities Sysco's primary market exceeds $200 billion Sysco market share is approximately 17% Well positioned for profitable sales growth - now and in the future Leverage existing competitive advantages Optimize core business model Identify core expansion opportunities
Slide 132: Capabilities
5 Capabilities 40 year history of consistent success Committed to operational excellence Dominant market leadership position Talented and committed employees Differentiated brand Sound technology platform Substantial operating cash flow
Slide 133: Base Case Scenario: FY2010 - FY2015 Assumptions
No major strategic acquisitions or divestiture activity assumed in the base case scenario Business transformation project will be dilutive to earnings through FY 2012, neutral in FY 2013, and accretive thereafter Average annual nominal industry growth of 2% - 3% Short-term outlook is cautious - exte
Slide 134: Assumptions Used In Establishing Objectives
Assumptions Used In Establishing Objectives 7 7
Slide 135: Annual Food Away From Home Inflation
8 Annual Food Away From Home Inflation Inflation Inflation Food Away From Home (1) Historical Inflation Rates Note: (1) Food away from home consumer price index includes corporate cafeterias, healthcare institutions, educational institutions, and restaurants. Source: U.S. Bureau of Labor Statistics
Slide 136: Industry Growth Has Averaged ~4% Over Last Decade
9 Indexed Industry Sales Growth 5-Year CAGR1 Industry Growth Has Averaged ~4% Over Last Decade Industry growth is moderating (CHART) Note: (1) Indexed sales growth. Foodservice industry sales were converted to a Sysco fiscal year by taking an average of current and prior calendar years. Source: Tech
Slide 137: Assumptions Used In Establishing Objectives
Assumptions Used In Establishing Objectives 10 10
Slide 138: Sysco Has Consistently Found A Way To Gain Industry Share
11 Sysco Has Consistently Found A Way To Gain Industry Share (CHART)
Slide 139: Assumptions Used In Establishing Objectives
Assumptions Used In Establishing Objectives 12 12
Slide 140: Expectations: FY2010 - FY2015
13 Expectations: FY2010 - FY2015 Average annual nominal industry growth of 2% - 3% Short-term outlook is cautious - extent and pace of industry recovery is difficult to predict Long-term outlook is for modest industry growth Business transformation project will be dilutive to earnings through FY 201
Slide 141: Base Case Scenario
14 Base Case Scenario (CHART) Consensus range = $1.77-$1.95 FY10 EPS Consensus(1) Sales Dollar Growth Expanded Operating Margins - Steady State Expanded Operating Margins - Business Transformation FY15 EPS Objective Source: (1)Thomson First Call as of December 7, 2009 Note: Based on assumptions in S
Slide 142: Closing Thoughts
15 Closing Thoughts Today's challenging business environment creates opportunities for Sysco We intend to capitalize on those opportunities We have established clear objectives for achieving profitable sales growth for the next five years We are committed to obtaining those objectives
Slide 143: Good things
Good things Sysco
Slide 144: Sysco Participants
Sysco Participants 1 Bill Day Senior Vice President, Merchandising and Supply Chain Mr. Day began his Sysco career in 1983 as a staff accountant at Sysco Memphis. In 1991, he led the deployment of the company's current operating system, Sysco Uniform Systems. He was promoted to assistant controller
Slide 145: Sysco Participants
Sysco Participants 2 Kirk Drummond Senior Vice President, Finance and Treasurer Mr. Drummond began his Sysco career in 1986 as controller of Sysco Grand Rapids. In 1989 he transferred to Sysco Atlanta as chief financial officer and controller, a position he held until 1992 when he assumed the added
Slide 146: Sysco Participants
Sysco Participants 3 Kathy Gish Vice President, Assistant Treasurer Mrs. Gish began her Sysco career in 1998 as senior director, treasury. In 2000 she was appointed to assistant treasurer. In 2005, she was named vice president and assistant treasurer with responsibilities for Sysco's global treasury
Slide 147: Sysco Participants
Sysco Participants 4 Chris Kreidler Executive Vice President, Chief Financial Officer Mr. Kreidler joined Sysco in October 2009 after serving as executive vice president and CFO at C&S Wholesale Grocers. Prior to joining C&S, he was a senior finance executive at Yum! Brands, Inc. He joined the compa
Slide 148: Sysco Participants
Sysco Participants 5 Mark Palmer Vice President, Corporate Communications and Organization Effectiveness Mr. Palmer joined Sysco in 2006 after serving as managing director and corporate communications practice group leader at Public Strategies, Inc. He began his communications career in 1982, produc
Slide 149: Sysco Participants
Sysco Participants 6 Steve Smith Executive Vice President, South and West U.S. Foodservice Operations Mr. Smith began his Sysco career in 1980 as manager of multi-unit accounts at the company's Jackson, Mississippi operation. He transferred in 1981 as vice president to a Sysco division in El Paso. H
Slide 150: Sysco Participants
Sysco Participants 7 Chuck Staes Senior Vice President, Foodservice Operations, Northeast and North Central Regions Mr. Staes joined Sysco in 1986 when his family's produce distribution business merged with Sysco Chicago. He became vice president of merchandising in 1992 and was promoted to executiv