SYY - Earnings call transcript Q4 2024

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Operator

Welcome to Sysco's Fourth Quarter Fiscal Year 2024 Conference Call.

As a reminder, today's call is being recorded.

We will begin with opening remarks and introductions. I would like to turn the call over to Kevin Kim, Vice President of Investor Relations. Please go ahead.

Kevin Kim

welcome Fourth and XXXX Fiscal everyone, Call. Earnings morning, to Quarter Sysco's Year Good we Hourican, Cheung, have the call, today's On Kevin Chief Officer. Officer; Financial Board our Executive and Chief Kenny our and of Chair

differ Before actual we made presentation of a beliefs, state Private in that meaning the intentions, Litigation that results future company's Act management's statements or Securities during of within or the this manner. the expectations please begin, note could statements predictions and are Reform material forward-looking the

Additional subsequent factors those in filings. this and contained issued limited about the found sysco.com. on news release is A the that information not to morning. in could factors SEC at SEC differ in contained our filings materials Form cause the the X, XX-K for can annual from This earlier company's statements in of is year copy these risk ended results includes, report but section the be Investors forward-looking to, in XXXX, July

Non-GAAP to can financial The Investors non-GAAP presentation end and comments the these today in reconciliation found website. measures of are presentation measures our in of our section and corresponding included at of slides. GAAP slides is the included the our be the measures in

time, During this quarter I'd unless compared Hourican. like in call the are turn to Instructions] otherwise same Kevin At discussion to today, to the [Operator the stated, results all | prior over year. the

Kevin Hourican

thank you and everyone, us morning, joining Good today. for

overall the guidance. of case year including financial interest, our chain the of and performance supply traffic Kenny And to Sysco's QX fiscal the key as the as to topics key for During following well details XXXX topics: food-away-from-home will we XXXX productivity. our growth, provide morning, foot cover on inflation, finally, including market; local buying trends, call the this our cover status will quarter and relative restaurants, updates

$XX USFS USFS was pleased of get Sysco XXXX. growth to in a share X.X%. revenue more the of and started fiscal in growth line revenue volume Sysco for driven X.X% speak I'm The the #X. year, moment. will on of this business XXXX. delivered to report billion of Let's of I by a highlights that growth profitably Slide took fiscal versus with market top inflation X.X% key

the we at performance $X.XX of Importantly, was per the guide our softer delivered half XXXX. in due earnings ratio above share for guidance I'm for the $X.XX the of the quarter adjusted fiscal our Kenny delivered year and than this initial of despite midpoint the that higher year. full the beginning The we fiscal calls the the midpoint safe a of of provided second year $X.XX that we pleased and year. for environment economic

financial enabling strong performance QX, and again, negative our to displayed foot agility once our accountability, a traffic During despite restaurants. year-over-year team,

in by an I days of did the on the would the you down what past successfully consistent As update approximately market was said taking to by weeks. names This Traffic is despite have this intro, quarter. and year-over-year my to the for many year-over-year restaurant versus our declining X.X% market. with was We quarter for traffic. providing I X% couple like grow from restaurants heard food-away-from-home to of start industry. the over overall foot share the able volume Sysco the health

That goal our growth. stated above grew business we performance the our for than X.Xx year, full the for market. the market year of was more X.XXx fact, In

and the the share on the distributors versus Slides several overall. performances strong the versus external taking The X.XXx important multiple industry was total versus sources largest seen factors performance and market X. via growth in is well of Sysco's a X as specialty industry The FreshPoint industry-leading in calibrated result are including is our market. of marketplace. Edward Sysco expanding meat foodservice acquisitions business combination as is Broadline the Greco our like winning and our recent with our platforms, overall specialty portfolio our winning where specifically Don. businesses the and specialty as The

winning in hospitality. the versus the total with business our space Lastly, and wins management notable market foodservice sales national is

the pleased the And with overall local are with our with not we segment. We our are performance said, growth total versus market. satisfied in that important

we in improve I'll XXXX. those at Investor case a our As are can moment. to local in confident we covered more plans fiscal Day, that we speak our performance

and within quarter, the case growth for For national the local the compelling year. profitable fourth positive X.X% accounts; Continued following delivered Sysco growth last performance: of case

Importantly, our period. local cases international the for X% grew in

year-over-year a of QX a June grew with had business positive X% during is we within last trends customer QX signed SYGMA cases fourth as a quarter. recent negative have XX of exit and This profitable exit, volume that new velocity from have growth. week shippage our started SYGMA to we of reversal

growth SYGMA profit in and expect We be volume to business a fiscal XXXX.

the Sysco portfolio well-balanced health non-restaurant sectors segment. our foot by less has international like space. a strong confidence of these, with are in is management foodservice care At market consumer for and a restaurant non-restaurant our business business well-balanced including and traffic. Many asset impacted like the strong times share Sysco,

Our quarter per was and for with year-over-year strong, the rate GP GP X.X% case growing profit versus prior X.X% gross growing year.

will more was that this that result of the on we a product to corporate those our for in deployed a excellent slower in The corporate management expenses efficiency speak our Kenny line. with operating with expense than an do expense down expense to QX quarter reductions to top into of continues team continue the detail. year-over-year Overall notably, will Most strategic Benefits continues reduction and from job innovation. merchant improve and were increasing expenses work year. Our sourcing XX% year-over-year basis. XXXX,

in year-over-year, year X.X% resulted enabling in operating us midpoint exceed increase of factors income these to the told, adjusted a our All guidance. full EPS our

biggest our the levers highlighted productivity of you theme P&L: that like within Day a our color would improvements. our on financial volume the supply quarter, performance Now and Investor to and continue for more chain the Local I of I've two provide bit growth

growth. volume with started get Let's

Specifically, I'll case the progress on are making we in on deliver volume Slide XXXX increased actions fiscal profitable to highlight local #X.

hired second full professionals. throughout In The in being year positively will become with throughout fiscal about them knowledgeable the impacting our XXX hired start me in The the ramped successfully sales of XXXX they hired more we year XXXX, and new status. begin with product XXXX hiring colleague P&L their many offerings. half. territories colleague incremental as fiscal cohorts grow new let hiring net First, our

positively we Day, mentioned results. to on XXXX, XXX Investor professionals net those to hire we our fiscal in with As our sales XXXX expected additional an impact cohorts new fiscal plan

train in colleagues. these are our We confident hire ability to and new

training sales and more sales hiring our in staff. supplementing trainers are we program fact, industry-leading by administrative In

and of up to efficient One training the an these new curve in ensure as colleagues productivity a top priorities our the they company deserve get that manner. is ramp that

schedule cohort-by-cohort executive new they on leadership is personal to to are ensure support are successful. that Our team need provided taking maturing trainees be to track they and to we that they ownership the and ensure resources

strong community Our the greatly ever-important new training along be community for appreciate support. our in with goes product that supplier their colleague will assisting supplier hiring. We

for colleagues. year, new of new day we program compensation our a first U.S. sales our introduced fiscal Broadline the On

place have will compensation help program. so, remixed behaviors of sales pay potential the motivate and we the Sysco's that increased our the within In the the to specific ratios base have of advance staff process put earnings incentive We our P&L. to in doing incentives

as in new management and felt of program of program compensation our we be communication will customers new will our change progresses, I well anticipate is confident be QX. major Benefits and are for movement The program our but that this the don't and the any underway, good this colleagues, P&L. year

Our Bertrand, Total continues our and May, opportunity Team At growth advance global our compelling to Selling ever generalists for Investor specialists. Day our Team than our COO, produce covered Greg via program. Total partnering their sales Selling program consultant better in with the protein

Broadline May, Xx businesses buys As only a more than that customer. per he Sysco presented one our plus customer specialty Broadline in spends a of week from

Winning earn the with fair we Specialty share market. a our opportunity as specialty for is of to billion-plus work $XX Sysco

years the it selling was our capabilities, us a more we combination domestically and a Broadline, specialty of expand versus both through will supply continue go-to-market overall activities. M&A specialty and chains, for is Specialty to and strategy important large volume systems, integrating our assemble as coming to very the assets, moat In effort. programs Sysco industry taken than the compelling has internationally compensation XX a years, and work this between Specialty the greenfield

ability our and to Foods For serve the are This our large business example, will Northeast. Asian Pennsylvania center. distribution to addition Allentown, the market we improve greatly in opened Asian growing adding recently our

compelling business of Lastly, case delivered quarter. local our the for X% growth International

our beginning outcomes. programs are running like Sysco Your the positively internationally play Way to with impact Sysco and Perks We

told, All and We Sysco XX.X% in are deliver to case profit segment International products the enabled local compelling these geographies. technology our growth improved to quarter. the brand strong also a growth important bringing

top Sysco line bottom We expect tailwind XXXX. be international a continue and for in fiscal to

that and have Now the of growth covered our health to status turn local we chain. performance, our supply let's case

is As in I've full that can and this the times, business key on being success to customers. ship in many time our distributor said consistently the to

on-time that making our customers. we quarter, team improved past advanced in I'm for the of routing delivery. on on-time progress operations and for improving rates they a our the work levels to service hard excellence. improvement with Over focus continued dedicated proud and We our the have are in to our make

satisfaction as delivery see You up with year. versus impact NPS is scores our the prior can on

inventory at continue the in-stock supply addition work in we'll as our versus XXXX. suppliers. We is to collaboratively occurs both good to a chain well one improving additional our to on rates. being work first-time with and as aspects, Progress improve when progress made in service levels, merchandising core teams agility of prior In guidance make fill delivery and disruption year our improved our

evaluation advantage of increased XXXX. Sysco a are for our the advance importance efforts. these point performance and leadership are fill to further Fill historically, through have strength working for metrics in that rates rates We we

retention. The fourth lever quarter-over-quarter more up many liability the the tail. performance improved they improve shrink and safety colleague colleagues. I've one workers' compared to is retention mentioned cost the in As our prior the productivity these is items like supply to year, product increase comp sequentially number a long rates improved of auto quarter. to doubled increased our have in Many and showing metrics, reduced and year improved of times, throughout than Retention chain

improvement driving 'XX. our we in reflect and fiscal the are now P&L in will positively So 'XX

the are topic making supply capacity. throughput cover chain we Our last that our in expand update our to is to progress

our XX to Allentown, serve. help our better the levels service we will serve more During lowering first cost population-dense and increasing our DC facility than opened by Pennsylvania. fold-out northeast corridor This Sysco QX, in years in

profitability industry-leading entire want more exceeded the at wrap-up than year. team I of for metrics, for our EPS the the we grew to guide As a year. and business Sysco my our midpoint remarks, strong thank overall X.XXx prepared I the We market

continued Importantly, customer in we technology making have to programs business Perks. and Sysco important areas Way strategy, like and advance progress Your improved our like

focused upon Lastly, fiscal will Kenny the beyond, and we XXXX share the against most to a important well are that for ensure things to in deliver moment. and we guidance are positioned success

turn as XXXX. TFR guidance with to who's to So quarter call you. of details going year to fiscal the Kenny, for over now fiscal that, over I'll well and the Kenny, our the highlight as

Kenny Cheung

off Thank you, customers, would like start everyone. colleagues, good by partners. shareholders Kevin, and I thanking and our morning, to

performance results ability softer to macro quarter's further in solid deliver This environment. relatively financial demonstrate a our

enhance on focus performance operational discipline. Our core drivers,

paper. you business draw don't the have way same we plans said As on always before, them up materialize exact

past the This develop the guidance. look as the structural our to a I'm is was returns. organization, operational initial no that however, model these grow confident belt operating profitably focus share positions profit create choices, we ahead. tighten across discipline different. deliver There at year to time, long-term helping on muscle memory We on difficult stronger and us

of our reflect operating the QX faster in income for year with the positive growth sales. operating income seventh higher as and the growth growing positive than coming of EPS across quarter expenses sales operating faster profit gross volume guidance and Altogether, adjusted and operating than growing $X.XX leverage, midpoint as than range. well financials full rendered consecutive these

levers multiple gross efficiency, on our the profit operating and we Given both across business, improved expenses.

billion chain of productivity profit GP growth, were and expense into shareholders XX% the in and managing pricing returned growth dollar back our our $X.X which X% coupled deliver included corporate These help was year-over-year. sourcing efforts improvements. of with supply down continued business to driven reinvest us record focus over expense, optimal improvements, FY'XX. by Operating levels over on back

a Now of XX. on summary turning the results quarter, reported our to Slide for starting

volume, and growing growing the local U.S. SYGMA X.X%. total X.X%. growing X.X%; in respect X.X% X.X% volumes approximately For by enterprise to and We volume gross year sales U.S. volumes X.X%, International X%. prior up produced fourth for DON With our and increased grew to driven U.S. X.X% mix. flat increased billion foodservice by quarter, foodservice margins positively X.X%; due profit, and of was gross $X.X foodservice the XX.X% local impacted volume by

effectively bps in our incremental gross by sourcing at expectations. Our driven dollar continue in segments. gross U.S. brand, U.S. to profit decreased progress ability efforts local strategic in inflation, our XX.X% consistent total international X.X% to by XX.X% to U.S. with for manage profit the Broadline and XX in improvement product The improvement rates to which Sysco reflected our to from came enterprise, also penetration and XX bps Specific results. in was our

multiple customers units. improve We local with despite businesses continue with from pressure units with single to local

have actions the year. growing strong history we course trade We over have mix Sysco of the management and the brand improve penetration to a of

the $X.X supply for of a efficiencies. X.X% bps operating corporate were quarter improving the the operating quarter, billion margins. and reflecting Adjusted from Adjusted was sales, improvement or to $X.X prior for XX.X% year, expense expense chain billion XX income

as expansion. margins margin with and on the rate growing expanded both executing successfully operating growth, growth income we to continued a remains the adjusted increase our deliver grew basis. operating positive for company. teams income XX.X% playbook International segment substantial adjusted driver with and included noteworthy, dollar Sysco share Most best demonstrating the segment in This practices. and a For leverage our This year, operating X.X% a

from profit growth enhancements on customers. XX.X% new SYGMA growth profit continuing benefited contributing after Adjusted from also focus OI to growth and

which total billion the our and adjusted ended which pleased $XX.X ended quarter. substantial X.X%. also is is leverage debt in liquidity, strengthened or up billion quarter, further increased with approximately at the We threshold. We net the health $X.X For headroom EBITDA net which sheet, above this year debt target. $X.X the year in our ratio, minimum to I am with balance a of within billion our X.Xx

FY'XX. Our maturities until without any debt well is laddered billion $X over

our flow, cash XX. a flow billion record. over to in approximately free flow Slide cash in which Turning and operating $X.X was $X on new billion We generated cash

XX% adjusted to and flow EBITDA cash robust cash XX%, over from rate power. conversion Our the over free showing conversion operating company's flow was earnings was

of This and repurchases $X.X was through Our billion to strong this financial of dividends. return position $X.X to shareholders enabled billion over us done share year. $X billion

both Despite in range. landscape, top with are we line results current FY macroeconomic to and line grow the in poised bottom line 'XX, algorithm the financial

X-year from a our sales refresher our for growth adjusted cost growth to year. As to in Investor X% X% growth per of algorithm X% back of EPS and Day May, X%

algorithm deliver can to on we We consistent this believe a achievable continue confident as is be one we basis. and

guidance Let's Slide as XX. a XXXX deeper go bit seen on on

year. expect are includes for we the sales X% growth we digits growth to FY'XX, During of net of low which X%. and Net X%, of growth seeing sales positive volume approximately now single inflation

a line growth year. to in, also EPS of the financial X% with benefit slight range. We algorithm All X%, guiding are to we during in adjusted anticipate from the M&A

at nonoperational Investor expense. a we items EPS growth the As rate will be below-the-line and by Day, interest with XXXX higher tax highlighted impacted

are achievable. these confident We are targets

in phasing for industry last improvements into expect we year, modest QX traffic continue of from traffic Regarding to half the FY'XX. back similar this the trends quarter with

professionals meaningful as the with focus, sales other term. ROIC over professional year and our Consistent the with sales yield progresses. our in expect also long benefits will investments from returns We investments growth hiring initiatives our

performance in improving As earlier, focused Kevin on remain FY local stated we case 'XX.

sales will closely ensuring bonus, consultant operating expenses incentives with structure performance-driven correspond base results. more comp more will the example, sales less For and to shift raising

self-headcount focused will in in adding be disciplined on we growth. local be areas, profitable and high-growth sales will We

Turning to expenses.

generation. chain We further on We in improvements cash from cash past of supply year of and strong across based operating expect leverage corporate highlighting conversion this continuation profit improvement expenses. FY'XX with ended a rate, importance the flow the our

continuation management. of a 'XX, conversion working we in FY rates For expect strong capital

of XXXX, depending shareholders the We cash did activity all free we expect volume XXXX. distribute as flow to of our essentially in in to M&A on

an capital in we important strategy aristocrat to is as expect back as dividend $X part related of over to cash FY'XX. status value we to our dividends shareholders our pay Returning billion allocation

Additionally, dependent with M&A approximately repurchases share are of fluctuations on we targeting billion plans. $X

of leverage to operate expect net to to also is is The rate. X.XXx several increase approximately up to our for other We for within minimum XX%. rate to year. stated tax X.X FY'XX We tax important elements. expected wanted driven target modeling on global by guidance the provide The step

million. be expected $XX for sales. $XXX X% to D&A of to approximately year. to to is expense expected million expected up adjusted $XXX the be is and Interest to be Other million is is CapEx expense step approximately approximately expected

at look each will ROIC. through We both lens of growth and driving investment the

will company, the a we over growth. both ROIC will value investment dollars decisions, accrete guide continue and As rate which our dynamically operating margin focus shareholder and time on as

In by performance we I'm advantages have Sysco. tremendous of the closing, our as at continually with impressed size ahead. opportunities I'm pleased quarterly scale

We are before, shareholders. performance benefits with Consistent stronger for The I focus the to enhance continually the growing game highly formula winning advantages industry long leader us compounding mentioned operating create Sysco's industry. our is in market. model, to in combined our a this allows fragmented on competitive a

as the also education and as a categories, restaurants advantages in scale industry X/X customer is types industry-leading advantage. X/X Sysco's our structural Our health such reflected recession-resistant are in leader margins. and diversification with in care across

gives so ROIC at we're as strong take high flow they opportunities to rates cash industry-leading present capital us robust sheet advantage themselves. able Our growth of investment-grade balance and attractive operating access the

a continue Sysco. engine our profitable We be of international U.S. results, growth segment business. a growth our international contributing see as for can to And can to performance is be rates than believe you higher our benefit, in proving

a look fiscal on embark to we year, progress ahead. our new As forward I

for We are today. that, win. we your are Thank positioned to time ready With now you for questions.

Operator

to UBS. Carden with go We'll Instructions] first [Operator Mark

Mark Carden

start, Or confined to commentary would I have the is in to the concerns, on the it guys trade wanted around a impacting dig middle down election demographic? demand seeing still to So impact customer quarters a food-away-from-home to you trade lower out end and of demand then to expect incremental into bit. of largely top uncertainty And on for end much ahead? Are your some here? you broader economic

Kevin Hourican

question. for Mark, it's the Kevin. Thanks

reasonably So performance relative out, restaurant to forms It's just that's what's we're seeing being trade all just of impacted. across types. happening macro consistent down, the trade with not QSR

consistent declines pretty traffic So by segment.

We as have of QSR a white highest-end serving and you tremendous know, data, to the between. all everything amount the in way tablecloth down

start to X% I for in better facts just prepared getting down in I'll We So with don't that restaurants quarter, much traffic my near remarks. as the the term. mentioned anticipate

election, traffic starting coming inflation the of calendar XXXX, while cumulative over past of beginning improvement. indicated, anticipate as the fiscal We over moderated guide, through impact some has years impact price X would for the Kenny years, indicated fiscal macro-backdrop down? be improvement second in it's the increases. the interest the so in Why inflation type cumulative hopefully, It's of down catalyst past Probably a X year, be year. that you our will a believe in the of past we XXXX significantly half still our over rates

those business I'm quarter. in specifically We doing backdrop that as We're can pleased well FSM a hospitality. profitably non-restaurant we're two and we most always, our actions really segment, recent go our that very grow travel slower performance with in As this did even taking. we in spaces. into in just and the convert

not Our I the notably. actions taking. current local. the that in satisfied local And rate on business performance today's call, we're of within with local our growing in U.S., We're international communicated

to a XXXX. have improve throughout strong We plan

Mark Carden

with now few trending challenging Great. those become an retention And new to quarters in your Does the sales And sales follow-up, relative then you're tougher a for less to to ramp macro? on hires. as increasingly expectations? become tougher into any your does experience? new any direct force a hold salespeople foodservice is How it

Kevin Hourican

monthly, weekly, retention. We callouts Mark, for on basis. thanks daily, turnover or our retention No the a quarterly notable follow-up. track on

up of that solid competitor, have to that of sales success them is come what productivity If is they rep sales a if hiring they be retention the of it the training, workforce, we don't A background, the from they We anticipate change that point, were where of We depends lot training a will folks to your ramping colleagues. them the up key dynamic, the at culinary for product providing new they from. to colleague faster. on can need. ramp come 'XX

If there's training knowledge they a they're business, a food food the goes sales need but lot that. learn that to colleague, good along of with space, product

back on success. communicated actually working that's focus, half, to So introduced fiscal the the XXXX the that but meaningful we'll second XXX on intense, real that some why tied productivity net more about those in we throughout impact key is sure the new that the hiring of compensation of call. majority in new training cohorts, up that of will focus was the did what today's curve, we population half hiring key that That's the the questions you get that I'm positively up the colleague is brought XXXX. them model. to a real we we've did for XXXX, Related,

new we're will and retention results. optimistic of comp very to net-net, tied closely new comp that model confident We colleagues But will positively model. monitor impact the that

Kenny Cheung

which add One compensation grow us on plan, remarks, Cheung. in a the I commensurate more the as to to Mark, mentioned allows it's One prepared sales expenses. variable incentive model. earlier, and thing is, with shifting to we're

and So matches cash, working capital. of helps also inflows outflows which

will those thing more, products, Specialty the this Sysco-branded And growth, possibly, by local like. of Team Total the is, case and example, that growing be rewards epitome construct growth Selling, plan right? a mean I profit. other what plan the The is the for of is and Paying

the they P&L. our for win-win a make and opportunity more So value it's on win the to to sales for have as professional our company truly create to

Operator

Deutsche Next, Lauren we'll from hear Bank. with Silberman

Lauren Silberman

foodservice challenged. the the promotional Gross Are then about And down in look you it is margin, drive in on was industry I activity promotional margin business. discounts? an Obviously, U.S. helpful. increase environment. gross like would restaurant upfronts be acquisition, wanted discussion to more customer to seeing or first ask any

Kevin Hourican

Yes, types be Lauren, cases therefore, be fact. get to sizes and work And hard to that question. to profitable be their restaurants, per impacted all operator able traffic good of put distributors are truck. negatively to to cases With down would by all on going

So yes, it's and competitive Sysco, you're a is when intensity profit well the down. rate environment operate the increases competitive in margin industry. traffic We, aware, highest as at

We disciplined in for are customers. extremely our process of evaluating pricing strategies

We will sell cost. below not cases

We are very disciplined in that regard.

system, pricing guardrail. for Our within and process but tool in enables the competitively sell pricing our RCs pricing to marketplace

said, So margin. pleased going gross your bottom quarter, with management Kenny, over you. toss the recent further our performance strong enable results. that profit on a during to for Kenny overall to comment to in line With most helps I'm

Kenny Cheung

Lauren, this is Kenny.

year-on-year. gross So gross a grew for gross step per X% margins profit, profit here. case grew the and few X%, and Taking back, a things on profit quarter gross

here. dollars us, for really matters So

slightly year-on-year question on margin, Now, your to driver down the margin answer because the of front, mix. is directly key of the

take if CMU step continue So dilute and a accretive, margin we that possibly it's does action, rate. margin to and extent share take back, to the some space in it grow you dollar while

to which continue again. and we'll have said, grow that we both take with tangible local CMU So actions share,

short-term drive you conversion includes driving slightly brand fiscal the have product remainder year-over-year, well. we and may product brand. And the It for the down as have year. opportunities, and additional as press well incentives the innovation plan for other penetration piece tables, in Sysco to This tangible more of as targeted and categories, seen was is actions

that drive I'm can to So our penetrate despite we confident annually, $XX pretty the space P&L. have we margin on continue already billion the fact that Sysco and roughly sales for

Lauren Silberman

if if trends where on fiscal expect and start should should could about throughout relatively XQ? slowdown similar what some thoughts running you in ask XQ to helpful. the and The I saw June are case July. comments of have Very expect we cadence to trends we Great. growth. restaurants on then a in seen And quarter, Any just in if the XQ that's

Kevin Hourican

exit QX today. We I guidance of our I'd anticipate say to providing profitably the the and conditions, to been won't we mentioned, comment macro-environmental on into we July grow and but in successful this half are business very of improvement are the in that that factored conditions QX some softer the similar that's specifically, velocity fiscal we and opportunity have year. environmental second as And be

customer the increased currently an doors prospecting Sysco, of our in have by on talked count, key model focused New grow very XX% and a incent not colleagues. focus compensation program that. that that and for customer substantial The the restaurant one is of profitable motivate elements of and thoughts? are customer to Sysco sales Kenny Kenny, we're to about, served additional is new we our new acquisition opportunity a way. any

Kenny Cheung

Sure.

pacing from to standpoint, this a from So patterns Kevin traffic foot last quarter color, into we're provide just as quarter. said, I agree, seeing similar industry

program completed about to we the volume the of compensation at FY'XX. about just And X% rolled was most the recently year out half X%, in the well. of new you within if guidance think digits. as And single in that, of that, low think as now of have back you for was the the pieces So particular, hires

half from seeing the fiscal in So financial we of started benefit the this year. investment back

Operator

Securities. We'll go to with next Jake Bartlett Truist

Jake Bartlett

My that on which not question has mentioned changed And was encouraging. understand sales retention the force is the investments. I materially, you

that disruption, to, maybe and them. account and provides the would for competitors some among changes switching making, create that investors come take of disruption of, the in there's salespeople, think opportunity concern kind large a some that you're I investments

to bit we of a on of question Just seen? that little is, the I kind should weaker mean, reason near get in a sales assets these wanted So might term? disruption the expect be is why your impact gain comments initiative that investments. near-term one

Kevin Hourican

to the Jake, these the that Kevin. on sales confidence in against provided can and colleagues, impact toss then I'll the for little how model. guidance very more our for guidance Kenny macro about Okay. who new the commentary about year It's the a comp color delivering just we factors start bit year. talk good. I'll two our

the to colleagues, back SEs. net go let's sales So XXX again new

Let's this. do we're the on refresh a doing why

over Our this territory of few we're than past growth serving, a be like business, have in is relationships to customers them that grown given new and would years, sizes we the number the larger the business. our

grow We kitchen. backroom desire can of the restaurant; weekly accounts business conversations to in they're for basis; to help that of them having our SEs facing in quality that with and if helping the restaurant's business and that they're the about a on customers' ours challenges profitably and our happen only issues be their

restaurant, So too in that's the territory large. net-net grown objective, had sizes increase boots the the on ground

having alluding time So put good outweighs of the base disruption little let bit positive but to, your yields territory the context. just a increased in Jake, me realignment that, of is question that of short-term the

SEs, go go starter job that SE has new current existing to one person colleague their Sysco. to customer that, get an one new customer net this SEs expect like done main by up XX%, then backfill existing XX%, excuse give grow be that would to right, And They're net this their new is It's me, giving not up -- customers. up existing a to probably So to approximately The then to XX% hire. who territory. new We business. of business. current giving they customers

I you're to disruption new growth that is alluding So to context winning this majority the given provided it's real, customers the manageable Sysco. is from net-net but and that the coming of

are hiring. July a of hired The gradual This classes ramp-up And it's are compensation cohorts. the in switch, X. a it's time. a that So streets why is They performance right? These that's live time. on not tied went change over of flip hit over to the

the modeling, about opportunity talked to earnings this It a they Kenny make incentives. making base AKA, on about I comp remixed So to more sales base to with in pay, with our But consistent dollars what we change. we through putting program. one colleagues. the for lowered refresh Again, here. clear has incentive colleague pay net performance. before at more the uncapped money bonus, be that their potential financial one are month positive program their thing, want new as sales than Sysco into is be into done in will were very have a We've every his

top a top very is For of performers, want. performers the this change. that our good our very, change type change It's

commission. to COVID, on If you back they were prior remember, full

top Our program that. to more does performance, their and they be performers, on paid of want this

against. succeed newer those on through performing improve deliverables to money need that needs For impact a provide that performance And to behavior and coaching resources for colleague them outcomes, that population we type positive, lower-performing they of or improve they expect make we to need that focused to a make it's and colleague, them to the to make. that and they outcomes to want their colleague key their

focused closely. be comments. new additional leadership that sales help you model population of very, prepared in Kenny, today, put QX, have I of successful is meaningful that very remarks to half of would change over any more that model. in management why second And impact. the team, going year for on forward them be X, this which that very focus, to And colleague started Our my positive we're QX change of extremely the said a Jake, we monitor comp that to a this we'll July

Kenny Cheung

Sure. Kevin. Thanks,

we this news. ROIC headline hires, the that's is said So before, positive, the sales as

We investing on are to deliberate we terms add, investment. where meaning markets in return optimal and high-growth of ensure when in

hit full some of timing, isn't your kind Now mentioned, timing, the double is the Jake, given a of given timing not terms early Kevin of on there as of flip a ramp, question switch. return in on the rendered

margins are guidance. which P&L all, we on expand our from the consultants the So is sales is news guide. return we're confident other and good bottom standpoint, achieve levers an All for the on to have confident our we ensure line, the with in we leverage in the in all enterprise

Operator

from to now Heinbockel John go Guggenheim. We'll

John Heinbockel

of start I margin, with to to was that Because going back Kevin, right? what want unusual gross seen sort U.S. others. and versus from an you So, decline we've

understand -- was So I guess bulk XX customer that basis the product. bulk the it, mix, of both and the points as of I

to and you So your half of be 'XX what -- And put sure back U.S. territory is not of here going guide negative we're the that into bit? the you I'm Do growth. year? idea that then a sort for assume in flattish one-off you little the fair? rebound on or for of think in that Did a sort is a

Kevin Hourican

toss to for Kevin. Kenny 'XX performance. it's start, I'll John, on the comments I'll the

percentage drivers. Sysco are primary and So mix customer brand two mix it's the

improved to on a we're of is performance. our As need see mix our Kenny we CMU satisfied said, our faster rate gross customer that It's improve Key our profitably to our and margin We've some space. pressure we've in overall. growth business. comments recent grew with the profitably we local shift, with not business. in wins profitability CMU, grown. pleased case most the grown our which have the performance that national real local the margin CMU there performance And solid than applied We're some local local within quarter,

local our chase to chase profitably. to to cases. We're cases We not responsibly are and going business going grow

will be We disciplined.

be impacting we business will, case pragmatic our positively thoughtful, but improve will our need XXXX and and anticipate performance. local and that to We we performance, we

Kenny one some did color to part, If of second commentary The piece brand, I about that. add early key could brand. Sysco just Sysco

slightly Sysco products. the basis to brand X%. a brand a minor One Sysco our dollars was national X.X%, up as mix Sysco pieces, were year-over-year. clear, on GP to reduction there of To pieces was percentage percent of but up Year-over-year, was Sysco from brand down why backdrops be brand

year-over-year national Here's and Fill basis. the improved of basis a key point. brand a suppliers rates quarter-over-quarter have on

less stocks So out there's national happening brand substitution of from brand. Sysco into

to impact. up. It's improvement moderate good thing a stepped slight While supplier our our good business. on want to a thing including fill margin that time it's that ship national and fill rate rate, has a Sysco, meantime, for negative In on actually national for a has the our suppliers. good suppliers it impact operations. We has a our thing And that's

motivating We increase value confident customers, bringing that our by Kenny their and to Brand to innovation house penetration. be can our those through it to to product our Sysco customers are talked Sysco upon evaluations brand. focused providing we colleagues performance through

about 'XX? you comments to for for over Kenny, So the any modeling

Kenny Cheung

John. Yes,

to we talked as -- brand about, talked consultants further leverage Kevin new sales about So Sysco as the you the modeling as that on side. compensation is, the drive models, think that the investments, Kevin way about, our GP should start realizing actions from benefits

case action to Specialty us talked XXXX. for for thing we that And per the year-on-year also is dollar also well business basis well. haven't on expand about has as GP us. very is us grown for for expect specialty. a should accretive a GP And You

local So and both also of -- all of three drive dollar things, growth the Sysco case terms brand for sales all specialty us. will and per GP -- in

John Heinbockel

to that you optimistic case you would ultimately. then think opportunity target growth, wallet opportunity maybe curious sort -- touch exit you there's quick on going 'XX? is some right. X% when range, local just of get account some a that particularly make What a guess, or consultants. a that an you is improvement target The to follow-up. for but do a free one? rate? Kevin, up All want rate of X% think mean, of a in I existing to back going as share. headwind headwind, sort you for have here to I into maybe think I that fair about sales Or And the And know existing -- existing time I the macro reasonable Is fiscal exit

Kevin Hourican

Yes.

I'll your one toss is case Just part the to guidance first, that guidance. that the we a of He's about going in first Kenny. talks be always to of part growth who have the provided question

is penetration Day. I opportunity we'll So covered total that would Investor existing Bertrand part. at the our The that for improvement opportunity do that case customer two team Greg highlight selling main levers

from Those Xx with the SSMG size business Broadline a from and have a them those an on FreshPoint bring going customer or account have getting business, into produce And sample Team our of cases. that Sysco. into perspective. a Selling now an truck is FreshPoint that positive. are protein very account, when on or are spends ticket from expert are We Sysco Total higher And specialty truck that we a cases and rep Meat sold customers that cases we truck bring sales sales are specialty distributors average meaningful probably large existing a are a that those today can more on Specialty

team meaningfully we So focused are selling total on that opportunity.

product of are tremendous data, buying customers it and type have using that We know not Sysco. exactly and we from which

on We those an have ongoing lists. prospect We basis. prospect can track lists

compensation by reward can it Our properly We by track that calibrated systems site. are behavior. geography. can track to it We

existing on It's one operator We customers. within winning are opportunity tremendously our moving number the to with specialty. on improve needle focused for cases

be success neighborhoods. second is tremendous to neighborhoods though, Your vector, that despite just previously Way, to Way our Your still has The Sysco doors most again Sysco are perspective. prior upside covered, of years Those share operator urban tended where these from historically likely of under-penetrated neighborhoods both we a Sysco where cases and because and per number market areas underrepresented often most multiple has

we've and are Sysco of quoted Your have And goals. more We've we many lots customers. to market those share Way, statistics that our have got internal targets potential. many externally existing of still growth hitting increase those neighborhoods that

most two Your Total the Selling Way I'm about. Team penetration So penetration opportunities. and Sysco those are excited opportunities things

Kenny. to For I'll your Kenny, growth, think how to toss on case of modeling question local to over you.

Kenny Cheung

Yes, John.

entire our single So believe expect we as are as these low part for confident low digits guide, year. and the are you growth well, can as digits the to company for achievable. targets roughly be volume local Again, of single we which

Operator

Wells Kelly to Fargo. with We'll go now Edward

Edward Kelly

on. new market around may year. which to both wanted then the they half. look like the cadence how corporate, thinking the how color I things the maybe associates the the and not quite back obviously, like as some on improvement bit at down you're guess, is. guidance I Kenny, volume start the offsets, as some well But be you're I'm meaningful have volume, year, a look about expecting through you guidance If a in the sure improvement with of from early for that I

you consensus same how QX each specifically, with we do the the you around are have consensus the up comfortable number think the So of about guidance? expectation cadence And amount because quarter.

Kenny Cheung

Yes.

first. So answer your last let one me

the QX in in guidance and So well. the as confident confident am I'm I full number number, year

is before recap, range within about algo guide talked your 'XX to Just Investor for that on the Day. we

question of So the up your And the that's is forecast, second your phasing around cadence one. Ed? and number the the point more -- first

Edward Kelly

yes. Yes,

Kenny Cheung

Yes.

so back -- number is do standpoint, here. in the let take the modestly industry That's will an we we of one. it half That From traffic standpoint, year. shipping mentioned, a from our point that improve pieces me So as expectation. in

given the year just investments X out benefits SEs, terms the were see that compensation In in July rolled should -- benefit half as the well in that that back in the the we the Kevin model of rolled the high those of out half we back as as well. -- from as

should expect corporate throughout of, which down this and initially, QX took our that have we is in we call be rolls XX%, into over P&L, year, good holder that leverage the QX, the year therefore, QX. from of another we terms that assets in In momentum it, productivity, meaning

the supply the is And on per a not that X rollover, productivity then chain just along expect it's well well. gift because next that piece as keeps giving, robust labor do we Ed, and progress also quarters And as from on productivity. a have standpoint, we hour continued

since years chain supply the had. across and month productivity highest the was QX actually fact, couple In past of COVID

for be of us a new year. benefit have day starts into that that expect standpoint, fiscal more do from year. but consistent we a you side, the Obviously, wage So productivity to the inflation the throughout X

consistent we that throughout more half we the the fact back expect year, to productivity expect So in the bounce the given of second back industry the volume half year.

Edward Kelly

business. the on follow-up there QX. optimistic a Obviously, Got don't macro very just it. international. special. over quick I is you're anything this inflected then Sales still about And in think

the So and curious, momentum there. talk 'XX maybe in I'm just about business expectations for

Kevin Hourican

question. good about Yes, for asking Thank international. you

the in our a year-over-year year-over-year, growth the improvement is that right from You're the not improvement performance, macro. profit

growth mentioned, international. improved effort several The that is concerted growth it, One international chain in be Your technology sales efficient, helping of gross countries, it's it over-indexed to self-help, profit the Ed, being again, Way is We're countries, that we which resources a did productivity more running helping which within local was adding is, play, I countries of which added, being Perks Europe from X% the not which on local case added, is your Sysco Sysco brand putting to in International activities CMU Sysco local with expansion. as tremendously, P&L call supply introduced our were on self-help have in has on specifically. helped international case improvement terms our before, in is Productivity our being National. in in the force larger

real in So our profitably business CMU and focus we're local. grow a on maintain, improving retain with meaningful going to

into countries in We we're local expect International? have started continue of improvement that XXXX. those say business. And we in business international Kenny, and to their a that's that our like results, about U.S. you'd now each with pleased leaning and team is the with helping really to there with anything

Kenny Cheung

Yes.

operating we for have So working. model global a that's International,

As replicating and it's markets. we're international across working success the of recipe for growth,

look the if I do interesting at think XX% just growth, you think full year, top X% I line is were not bottom market. we one line, one fact it's

sitting market, example, operating for double between and at on every income, every year, for Americas portfolio, and Europe you If International our international, America. grew digit right, market across look the within, Europe

it. So it's market one leading not just

pervasive we So is board expect to that the we're and continue XXXX. the in benefit across that seeing

Operator

We'll with Harbour move to Brian Stanley. Morgan next

Brian Harbour

the comments see But actions your XQ, on you throughout benefit side, year? actions just there corporate of, there of some on corporate So right? just you in year. that's the a fiscal in you costs. half the the think improvement first kind ongoing course know Kenny, are do still this still, I can took cost specifically, of

Kenny Cheung

on me let but answer the yes, resounding one. backstep Yes, is this a take a

So in it's are digital, as and I indirect we've think deployment, million. about. And to down we for automation, it corporate But done third-party well. also X% down the looking important structural did includes driven your note, we expense This by XX% quarter, quarter-over-quarter, QX. service as talked shared Brian, the cost was That was savings for more, that question, more. to we procurement $XXX

to carries year. the ensure over and continue answer last execute million-plus done productively play the we've to it robust So we we to is, new across $XXX Part a of pipeline have fiscal, year. the into

Kevin Hourican

focused improvement expect U.S., in improvement already profit opportunities. which they've to structural we have is cost done on, great driving Specifically the particular, very and International, continue. we're outsized in that that international, work, International, we versus domestic

Brian Harbour

Okay.

even the you driving items out through Your of, that? that X% outlook, kind you same recently? the fairly Or that it, elaborate Is some on could that, of called inflation most is year?

Kevin Hourican

Even year, about, talks this throughout Kenny category Yes. always ups downs the different will have by category. and baskets. XX there is Kevin, we be

be some will down. Some will up, be

that roughly X%, right We now. way, there expect the we're which, by approximately

We are the consistent have and at we that modeled level right year. now, be reasonably at throughout it it, expect level we to that and

Operator

Bank Kendall to America. We'll of Toscano with move next

Kendall Toscano

last drive Just investment needing a restaurants you our curious, to to improvement volumes. bit an a order see in I little prices down in industry quarter know maybe take about talked

starting of some backdrop out? you investment if of, the any year, restaurant assuming back And price curious next the in operators? to macro kind is that when seen, you've play half that are So improves of by that there assuming that is the

Kevin Hourican

that What Thank what we, with Kevin. the it's to economics, can are advancing improved that customers, them with et to them save when with question. cetera, economic, do our appropriate money, of with customers menu, purchasing purchasing and it's to products you their sharing products obviously. favorability value precooked Kendall, their Sysco It's Sysco, prices, decide the help do to we focus for up providing our et started them driving on things menu cetera. them we what save for time, in brand,

we do. Those to here the things We're do. the are will those can we are So things help.

within specifically are movements, we relates QSR. seeing to, we're it Yes, movement? As seeing

has impact that prices the and customer that have them. and lot think that written upon lower-income I sector a has lot a the raised a had been about said

activity seeing it is of menu for experience. within believe of do the And activity. they're with we the about serving, QSR the value. there a that I being the I them believe again, product space. it lot of us, will Sysco, other quality You're that happening the out value in-restaurant help providing types, that quality restaurant

didn't as year, menu vectors thought we year guide. about As one the this our change within lower the of we model into prices

Mortgage impact second as has on in this be through interest coming you're well rates psychological down, later half, moderately expect We the better they half consumers for aware. in a reductions. consumer confidence mostly than to Hopefully, that first began rate calendar year. the

rates is more second So rates it price. than half more interest to our mortgage and optimism to tied is menu

And then is we, main Sysco in point my and profitably business our here, can grow market these want I this conditions. what to end,

We we take profitably. can have share

We have acquire. can new that customers we

John are that we the market conditions. built and to this -- year. I'll with that have for back into in opportunities we going business back protein, Heinbockel's grow was question, you penetration the for to have and me, toss these all of have year profitably Kendall, excuse you obviously produce We a to guide And if follow-up.

Kendall Toscano

decline one in private Just you that? was, talk what mentioned question another Did had I about you quick label -- drove a penetration. know I

Kevin Hourican

improvement national rate fill The primary Sysco. is driver supplier to in inbound Yes.

of So isn't most in job is stock alternative at alternatives. brand we able ship, our do when that products facilities. because Sysco And substitute brand we national often, supplier great to a a have brand a keeping our Sysco substitute

substitutes. good thing. Nobody is likes for fulfillment rates the supplier a and that have national don't a it's like So increased overall, good thing improved. It Customers industry them.

operations when warehouse Our curveballs to substitute. we get on them have do

profit headwind Sysco on So But term, good thing. grew our pieces, percent Sysco our net-net, we small Sysco grew the a of are brand. Sysco short-term a we It's it's on We cases, Long bullish brand. brand. Brand. again,

our to performance XXXX. trade of are We all as earlier, for we've mentioned our fiscal increased the working penetration on customer providing I objectives importance And deals on management of Brand Sysco types.

Operator

And conclude conference our participation. gentlemen, call. for time question-and-answer Sysco's session ladies you Thank that to due and fourth will constraints, quarter your and

wonderful time, disconnect everyone at may day. lines You your and this a have

Sysco (SYY) 30 Jul 242024 Q4 Earnings call transcript