Sysco Corporation Barclays 19th Annual Global Consumer Conference

Thank you. Okay, great. Thank you, Jeff.

Yep. Appreciate it. Pleasure. Okay, good afternoon, everyone.

Thank you for joining us during the lunch hour. We appreciate your being here. The highlight of my professional career is my ability to present this slide. We are providing you some forward-looking statements, and you've all read it, so I can now move on from the highlight of my career. Again, we're glad to be here, the 19th annual Barclays Global Consumer Staples Conference. We do have a lot to talk about today. The press release that we put out this morning, hopefully, you had a chance to read some of it. If not, don't worry, we're going to cover all of that material today, Brandon and myself, while we are up here. I'm going to ask your permission in advance.

I'm going to go very fast through certain slides that are more about the company that you perhaps have seen before, so we can get to the new news, the important news, the things of the day. Here's an example of a slide you've seen before. We are the largest in the industry from a broadline distribution perspective. We're also number one in what we call specialty distribution. That's our produce business, our protein business, our Italian business, Asian foods business, and we own an equipment supply company called Edward Don & Company. Those things together are what we call specialty. It's about a $10 billion business for Sysco. One quick reminder, 60% of what we are is restaurants. Approximately 40% of what we do is something we call non-commercial. That's healthcare, education, travel and hospitality, and the like.

We'll go into more of these in detail, or each of these in more detail. Sysco, we grow consistently. You can see on the chart our strong track record of consistently growing our business. The other thing we grow every year is our dividend. We've grown our dividend 56 consecutive years. We are a dividend aristocrat. We will consistently continue to grow our dividend. For core Sysco, we have ample opportunities to continue our growth trajectory. We can take additional share in the broadline channel. I remind investors that the big three combined in our space have less than 40% total share. It is still a very fragmented industry, and if you get past the top five, six, seven distributors, it drops off significantly to family-owned, multi-$100 million-per-year annual turnover revenue companies. It is a very fragmented space. We can and will take more share in broadline.

We have defined specialty as a $10 billion growth opportunity for the company. We have defined our international business as a $10 billion growth opportunity. This is before we enter into the cash and carry channel through what we have in front of us, the Restaurant Depot acquisition, which we will talk more about today. We are a profitable company. We are the most profitable on a rate basis in our space, and we will be and are a growth company. This chart shows just the different customer profiles that we are in. As I mentioned before, we hold the leadership space in each of the businesses that we compete within, except for one. We are number 2 in healthcare. We are taking share in healthcare. You can see on the chart it is growing at a healthy clip, and we are improving our relevance and capabilities within healthcare.

That non-commercial space, which are the three on the right-hand side of the page, growing at a very healthy rate, and these are more profitable customers than large national restaurants. It is a very attractive business for Sysco. K–12, university, the office complex that you work in is getting food delivered from a company like Sysco. We are the largest, and we are becoming increasingly more relevant to these customers. Why? Our national and many of these entities are international, so our national and international scale. Our tech integration, we are creating direct technological connections with these companies for inventory feeds, country of origin, product attributes, sustainability, and things of that nature. Our food safety, data quality, data integrity, our sustainability, and cybersecurity capabilities. These are the things that these large customers are looking for, and ever increasingly, they are reaching out to Sysco. Let us talk about our local business.

We view it as the most important business in the company. The why is because of its profitability rate. Local restaurant customers, we are meaningfully more profitable. What is local, for those that might be newer to the space? These are mom-and-pop restaurants. They own one, two, three, four, five restaurants. Some of them are a little bit bigger than that, but the vast majority of these customers are small entrepreneurs, mom-and-pop owners. We had been underperforming in our local segment, you can see on the left-hand side of the chart, for about a year to a year and a half, not meeting our own internal expectations. I have been very open on this stage in prior years about the why behind that. We implemented a new compensation system two summers ago. It was the Right Comp program. We rolled it out less effectively than we could have.

We ended up losing a few more people than we would have liked in the subsequent year, and that hurts in this space. We are in a relationships-based business where a sales rep has a direct relationship with their customer, and if they leave the company, they tend to bring some customers with them, and that is what happened during that duration. Here is the main punchline. That problem is done. It is behind us. Our colleague retention is at all-time highs. Our colleague productivity is steadily improving. We have selling tools out in the market, one of them called AI 360, which is a sales agent in the palm of the hand of our sales reps through an app we have co-developed that gives them suggestions on what to sell to that specific customer on that specific day.

We have selling initiatives like Sysco Your Way and Perks that are resonating in the market, and Sysco brand is building momentum. When I put all of these things together, Brandon and I can measure them through selling productivity and job satisfaction, both of which are up into the right. The punchline outcome of that is we have meaningfully improved our local business. We just exited our Q4 above our goal of 2.5% case growth. We have guided FY 2027, the year we are now 2 months into, at 2.5% volume growth in local for the full year. That is a step up from prior year on a 2-year stack basis each quarter as the year progresses. We are on track to deliver against our Q1 commitment quarter to date. Let us talk in more detail about the net new news for the day. Jeff just mentioned this. We are only 2 months into the year, but we are reaffirming our guidance for FY 2027.

Just a reminder on what that guidance is. It is a step up versus our last couple of years' performance. On the revenue side, 6%-7% growth. On the profit side, earnings per share growth, 9%-11%. Let us anchor on the midpoint on the profit for a second. That is a 10% earnings growth on a 53-week basis. We are crystal clear about this. It is a footnote. We have said it over and over and over again. This includes the 53rd week. So if you want to take 2 points off the right-hand side, that is about what the 53rd week is worth. We are talking an 8% earnings per share growth for FY 2027, which is at the high end of the long-term guidance range that we put out a few years ago.