Sysco 2015 Annual Report Download - page 4

For the full year, Sysco sales increased
five percent to a record $49 billion, while
adjusted operating income* and adjusted
earnings per share* grew three percent
and five percent, respectively. We generated
$1 billion in free cash flow* in the fiscal
year and importantly, we returned over
$700 million in dividends to our sharehold-
ers while increasing the dividend for the
46th time in our 45-year history.
It is important to note that we achieved
these results with minimal disruption from
the US Foods merger planning and litigation
processes that continued throughout the
entire fiscal year.
Our improved operating performance for
the year can be attributed to:
• Accelerating local case growth, which
was achieved through a combination of
promotions like our Test Drive promo-
tions, email marketing campaigns and
improved relationship management
tools that help us earn even more of
our customers’ business;
• Effectively implementing our category
management process across a full range
of products, resulting in competitive
prices for our customers and procure-
ment efficiencies for Sysco and our
supplier partners;
• Improving penetration on the sale of our
high-value, Sysco-branded products,
especially with the customers that we
serve in local markets where we provide
the most value;
• Making significant progress in developing
and increasing our offerings for Hispanic
customers, the fastest-growing segment
in the U.S. restaurant industry, by tripling
our outreach efforts to 15 markets; and
• Implementing collaborative and mutually
beneficial joint business-planning pro-
cesses with a small but increasing num-
ber of corporate-managed accounts to
leverage Sysco’s full capability, so that
they can benefit from a range of products
across the Sysco family of companies.
Volatility in food-cost inflation had a mean-
ingful impact on our fiscal 2015 results. We
experienced about five percent food-cost
inflation during the first three quarters of
2015, and we managed it very well. However,
food-cost inflation in the fourth quarter was
essentially flat, which unfavorably affected
sales and gross-profit growth.
While it’s impossible to predict the future
of the economic environment in which we
operate, we believe that Sysco remains well
positioned to succeed. Whether the overall
industry grows over the next few years at
one percent real growth – consistent with
the past few years – or closer to the two
percent in Technomic’s recently released
five-year forecast, Sysco will continue to
differentiate our product and service offer-
ings in a manner that will allow us to both
profitably grow our market share and pro-
vide an improved return on invested capital
for our shareholders.
And, while pleased with our progress and
accomplishments in fiscal 2015, we recog-
nize that there is still much work to do if
we are to fully realize our vision: to be
our customers’ most valued and trusted
business partner.
We continue to pursue our vision through
a long-term business strategy with five key
focus areas:
• Partnership – Profoundly enriching the
experience of doing business with Sysco,
• Productivity – Continuously improving
productivity in all areas of our business,
• Products – Enhancing our offerings
through a customer-centric innovation
program,
• People – Implementing a company-wide
talent management process, and
• Expansion – Exploring, assessing and
pursuing new businesses and markets.
With that strategy as our guide, we have
begun to realize the benefits of several
years of transformative change to our
business through a portfolio of business
initiatives that include category manage-
ment, revenue management and gaining
customer insights. We are now beginning
to embed these initiatives in how we do
business each and every day by putting
the customer first and working cohesively
as One Sysco.
Using the knowledge that we continue to
acquire through our ongoing customer
insights work, we are currently updating
our three-year strategic business plan.
Specifically, we see opportunities to further
accelerate our case growth, especially with
locally managed customers through more
impactful product and service differentia-
tion, together with enhanced sales and
technology capabilities.
To Our Stockholders,
Sysco’s financial and operational results for fiscal 2015
reflect a period of solid core business performance and
excellent progress on several key initiatives that now
provide a strong foundation for ongoing value creation.
Our favorable operating performance was driven by local
and corporate-managed sales growth, category management
benefits and improving expense management.
A Fresh Perspective
Sysco Corporation 2015 Annual Report
2
* See Non-GAAP Reconciliations within our Annual Report
on Form 10-K for the year ended June 27, 2015 for an
explanation of these non-GAAP measures.