16th Annual ICR XChange Conference January 14, 2014

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Transcription:

16th Annual ICR XChange Conference January 14, 2014 Bill DeLaney President, Chief Executive Officer Chris Kreidler Executive Vice President, Chief Financial Officer

Forward-Looking Statements Statements included in this document and the related oral presentation that look forward in time or that express beliefs, expectations, or hopes are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are all statements other than statements of historical facts. The words anticipates, may, can, plans, believes, estimates, expects, projects, intends, likely, will, should, to be and any similar expressions or other words of similar meaning are intended to identify those assertions as forward-looking statements. These forward looking statements include but are not limited to our estimates regarding synergies from our proposed merger with US Foods and other current expectations regarding the impact of the proposed merger and the integration of US Foods. Such forward-looking statements reflect the views of management at the time such statements are made and are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ materially from current expectations, including but not limited to the ability of the parties to satisfy the conditions precedent and consummate the proposed merger, the timing of consummation of the proposed merger, the ability of the parties to secure regulatory approvals in a timely manner or on the terms desired or anticipated, the ability of Sysco to integrate the acquired operations, which is difficult to predict with accuracy at this time, the ability to implement the anticipated business plans of the combined company following closing and achieve anticipated benefits and savings, risks related to disruption of management s attention from ongoing business operations due to the pending merger, the effect of the announcement of the proposed merger on either party s relationships with their respective customers, vendors, lenders, operating results and businesses generally, including potential loss of customers or sales, the outcome of any legal proceedings related to the proposed merger, the general risks associated with the respective businesses of Sysco and US Foods, including the risk of interruption of supplies due to lack of long-term contracts, intense competition, severe weather, crop conditions, work stoppages, inflation risks, the impact of fuel prices, adverse publicity, labor issues, and risks impacting the economy generally, including the risks that the current general economic conditions will deteriorate, or that consumer confidence in the economy may not increase and decreases in consumer spending, particularly on food-away-from-home, may not reverse. For a discussion of additional factors impacting Sysco's business, see Sysco s Annual Report on Form 10-K for the year ended June 29, 2013, as filed with the Securities and Exchange Commission and the Company's subsequent filings with the SEC. For a discussion of additional factors impacting US Foods business, see US Foods filings with the SEC. Neither Sysco nor US Foods undertakes to update or revise any forward-looking statements, based on new information or otherwise. Additional Information for US Foods Stockholders In connection with the proposed transaction, Sysco currently intends to file a Registration Statement on Form S-4 that will include a consent solicitation statement of US Foods. Sysco also plans to file other relevant materials with the SEC. Stockholders of US Foods are urged to read the consent solicitation statement/prospectus contained in the Registration Statement and other relevant materials because these materials will contain important information about the proposed transaction. These materials will be made available to the stockholders of US Foods at no expense to them. The consent solicitation statement/prospectus, Registration Statement and other relevant materials, including any documents incorporated by reference therein, may be obtained free of charge at the SEC s website at www.sec.gov or for free from Sysco at www.sysco.com/investors or by emailing investor_relations@corp.sysco.com. The consent solicitation statement/prospectus and Registration Statement s are not currently available. You may also read and copy any reports, statements and other information filed by Sysco with the SEC at the SEC public reference room at 100 F Street N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at (800) 732-0330 or visit the SEC's website for further information on its public reference 2

Bill DeLaney President & CEO

Sysco s Growth Has Outpaced the Market 25% Sales Growth (CAGR for the period shown) 20% 17.1% 20.3% Market Sysco 15% 10% 10.9% 9.8% 6.9% 6.8% 6.7% 5% 5.0% 3.8% 2.4% 0% 1973-1980 1981-1990 1991-2000 2001-2010 2011-2012 1.6X 2.9 2.0X 1.8X 2.8X Source: Industry data adjusted to Sysco s fiscal year basis, and based on Technomic (market estimates as of May 2013), CRFA, Irish Food Board and internal reports for CY12. 4

We Continue to Expand our Capabilities 2000 Acquired first produce company 2002 Expansion of Canadian operations 2011 Formed Sysco Ventures 2013 Announced Intent to Merge with US Foods 1985 SYGMA formed 2001 Acquired Guest Supply 2009 First acquisition in Ireland 2012 Acquired European Imports Traditional Foodservice 1999 Acquired first meat company Over Time We Grow our Business by Turning Adjacencies into Core Offerings 5

Key Areas of Strategic Focus Sustainable Profitable Growth Operating Margin Asset Optimization and Free Cash Flow 6

Key Initiatives Customer Insights - Loyalty - Segment Focus - Corporate Brand Sales Channels - Sysco 360 (CRM) - Inside Sales - Sysco Market Enterprise Structure - Merchandising - Marketing - Operations - Finance & HR Sysco Ventures - Platform - Technology Solutions - icare Category Management - Optimize Product Assortment & Innovation - Leverage Buying Power - Accelerate Sales Growth Technology Platform 7

Two Great Companies Bringing Together the Best of Both 8

Consistent with Sysco s Strategic Focus Sustainable Profitable Growth Leverage customer insights Enhance and expand channels Increase customer retention Execute fold-in and regional acquisitions Build human capital Expand international growth Asset Optimization and Free Cash Flow Invest prudently in the core Increase working capital efficiency Increase capital efficiency Operating Margin Reduce operating costs Lower product costs Continue to develop Sysco Ventures Further develop enterprise structure Integrate higher margin products Use our capital structure as a competitive advantage 9

A Transformational Acquisition Benefits all stakeholders Customers Combined strengths deliver greater value, more services and innovation for customers Strengthen our role as our customers most valued and trusted business partner Suppliers Achieve shared efficiencies with suppliers Platform for enhanced innovation and development of exclusive products Employees Greater opportunities for career development Enhanced financial stability drives benefits to employees Shareholders Leverage revenue growth through best-in-class operating efficiencies and lowest-cost to serve Strong EPS growth and substantial cash flow 10

Chris Kreidler EVP & CFO

Transaction Financing Structure Approximate Total Transaction Value: Equity Cash 0.5B US Foods Net Debt Total Enterprise Value 3.0B Equity holders of US Foods will own approx. 87 million shares or, 13%, of combined company at closing, and A representative of each of US Foods majority shareholders will join Sysco s Board of Directors $4.7B Sysco to assume or refinance $8.2B Represents 9.9x US Foods LTM adjusted EBITDA of $826 million 1 1 US Foods LTM adjusted EBITDA of $826 million is as of September 28, 2013 12

Synergy Estimates are Realistic and Achievable At least $600 million in annual synergies after three to four years in five key areas, including: General & Administrative Cost of Goods Sold Warehouse and Distribution Productivity Selling and Field Productivity Distribution Network Current estimates developed using both bottom up and top down approach Estimates developed by functional area, but Based generally on public data Integration team will further refine synergy estimates Estimates will be refined using people and knowledge from both companies We hope to identify more synergies in areas we have not reviewed yet (e.g. shared business services) 13

At Least $600 Million in Estimated Annual Synergies General & Admin. Identify duplicative resources Network rationalization Delivery consolidation & efficient routing Field leadership Distribution Network Synergy COGS Leverage combined spend Determine combined category management approach Leverage one sales model Combine evolving ecommerce and social media initiatives Selling and Field Productivity Warehouse and Distribution Productivity Apply warehouse best practices Technology driven efficiencies Inbound freight optimization 14

Confident in Achieving a Successful Integration Integration Team Announced leadership team Members will include key employees from both companies Leverage experience and partnership with McKinsey Committed to achievement of synergies Synergies Annual cost synergies of at least $600 million Synergy estimates are realistic and achievable These synergies will phase in over 3-4 years Total expenses to achieve synergies of $700 - $800 million, spread over three years Regulatory Review Expect 9-12 month review process Agency to conduct review not yet determined We expect a collaborative process We are confident this deal is good for consumers 15

Integration Leadership Team Announced Steering Committee Sr. Execs from Both Companies Overall leadership of the integration Business teams Integration Leader (Chris Kreidler) IMO will lead, plan and track the integration Track 1 Track 2 Track 3 Track 4 Business Area Business Area Integration Management Office (IMO) Business Area Business Area Day 1 readiness Synergy identification Organization design and structure Business Area Business Area Business Area Business Area Functional teams Organizational Design Technology & Systems Talent & Staffing Culture Cross-cutting work that informs and guides the business teams 16

Combination Creates Significant Shareholder Value Earnings Immediately accretive to earnings after adjusting for transaction-related costs and amortization of intangibles Synergies Annual synergies of at least $600 million realized after three to four years Cash Flow Approximate sales of $65 billion Approximate cash flows of $2 billion Balance Sheet Balance sheet flexibility retained Commitment to maintaining a strong investment grade credit rating 17