INVESTOR DAY | 2017/media/Files/S/Sysco... · U.S. Foodservice Operations. International. Foodservice. Operations. OTHER. Geographic expansion. Restaurant segment penetration. Lodging

INVESTOR DAY | 2017

NEIL RUSSELLVP, INVESTOR RELATIONS & COMMUNICATIONS

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FORWARD LOOKING STATEMENTS

Certain statements made herein that look forward in time or that express management’s beliefs, expectations or hopes are forward-looking statements within the meaning of the Private SecuritiesLitigation Reform Act of 1995. 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. These statements include, but are not limited to, statements regarding: Sysco’s targetedfinancial and operational results for FY18-FY20 and the estimated CAGR during that period for those metrics; the financial assumptions underlying the strategic business plan for FY18-FY20;Sysco’s marketing strategy focusing on optimizing and growing our local and multi-unit account segments and enriching the customer experience through our consultative sales model, newtechnology solutions and enhanced flexibility in our sales and support models; our plans to deliver operational excellence through leveraging our portfolio of businesses, differentiating our productofferings, transforming our sales model and optimizing our supply chain; our plans to engage the power of our people by empowering our workforce, maintaining an open, diverse and respectfulwork environment for all, promoting an accountable, performance-driven culture and focusing on the voice of the customer;our expectations regarding the benefits of our efforts to optimize our business by fostering an innovation culture, developing a global support model, intensifying a cost-mindset focused onsimplification and value creations and driving agility in all aspects of our business; our expectations concerning the benefits of various marketing, supply chain and business technology initiatives;and our expectations regarding the benefits of, and the sufficiency of our liquidity for, future acquisitions.

The success of these plans and expectations are subject to the general risks associated with our business, including the risks of interruption of supplies due to lack of long-term contracts, severeweather, crop conditions, work stoppages, intense competition, technology disruptions, dependence on large regional and national customers, inflation risks, the impact of fuel prices, adversepublicity, and labor issues. Risks and uncertainties also include risks impacting the economy generally, including the risks that the current general economic conditions will deteriorate, or consumerconfidence in the economy or consumer spending, particularly on food-away-from-home, may decline. Market conditions may not improve. If sales from our locally managed customers do notgrow at the same rate as sales from regional and national customers, our gross margins may decline. Our ability to meet our long-term strategic objectives depends largely on the success of ourvarious business initiatives, including efforts related to revenue management, expense management, our digital e-commerce strategy and any efforts related to restructuring or the reduction ofadministrative costs. There are various risks related to these efforts, including the risk that these efforts may not provide the expected benefits in our anticipated time frame, if at all, and mayprove costlier than expected; the risk that the actual costs of any initiatives may be greater or less than currently expected; and the risk of adverse effects to our business, results of operationsand liquidity if past and future undertakings, and the associated changes to our business, do not prove to be cost effective or do not result in the cost savings and other benefits at the levels thatwe anticipate. Our plans related to and the timing of any initiatives are subject to change at any time based on management’s subjective evaluation of our overall business needs. If we are unableto realize the anticipated benefits from our efforts, we could become cost disadvantaged in the marketplace, and our competitiveness and our profitability could decrease. Capital expendituresmay vary based on changes in business plans and other factors, including risks related to the implementation of various initiatives, the timing and successful completion of acquisitions,construction schedules and the possibility that other cash requirements could result in delays or cancellations of capital spending. Periods of high inflation, either overall or in certain productcategories, can have a negative impact on us and our customers, as high food costs can reduce consumer spending in the food-away-from-home market, and may negatively impact our sales,gross profit, operating income and earnings, and periods of deflation can be difficult to manage effectively. Fluctuations in inflation and deflation, as well as fluctuations in the value of foreigncurrencies, are beyond our control and subject to broader market forces. Expanding into international markets presents unique challenges and risks, including compliance with local laws,regulations and customs and the impact of local political and economic conditions, including the impact of Brexit, and such expansion efforts may not be successful. Any business that we acquire,including the Brakes Group, may not perform as expected, and we may not realize the anticipated benefits of our acquisitions or realizing such benefits may take longer than expected.Expectations regarding the financial statement impact of any acquisitions may change based on management’s subjective evaluation. For a discussion of additional factors impacting Sysco’sbusiness, see the company’s Annual Report on Form 10-K for the year ended July 1, 2017, as filed with the SEC, and the company’s subsequent filings with the SEC. Sysco does not undertake toupdate its forward-looking statements, except as required by applicable law.

AGENDA• 8:30-8:35am: Neil Russell - VP, Investor Relations & Communications

• 8:35-9:20am: Tom Bené - President & Chief Operating Officer / Incoming CEO

• 9:20-9:40am: Bill Goetz - SVP, Sales & Marketing

• 9:40-10:15am: Greg Bertrand - SVP, U.S. Foodservice Operations

• 10:15-10:25am: Break

• 10:25-10:40am: Paul Moskowitz - EVP, Human Resources

• 10:40-11:10am: Wayne Shurts - EVP, Chief Technology Officer

• 11:10-11:25am: Break / Transition to CX Room

• 11:25-12:55pm: Lunch / Customer Experience Room

• 1:00-1:30pm: Joel Grade - EVP, Chief Financial Officer

• 1:30-1:40pm: Tom Bené - President & Chief Operating Officer / Incoming CEO

• 1:40-2:00pm: Q&A

TOM BENÉPRESIDENT & COO / INCOMING CEO

Our VISIONTo be our customers’ most valued and trusted business partner

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IntegrityCommitted to doing

the right thing

TeamworkWorking as one to help our customers succeed

ExcellenceIn everything we do

ResponsibilityTo our customer,

associates, shareholders and communities

OUR CORE VALUES REPRESENT WHO WE ARE, WHAT WE STAND FOR… & WHAT WE ASPIRE TO BE

InclusivenessCreating an open, diverse

and respectful environment

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PEOPLE

PRODUCTS

PLANET

Charitable GivingDiversity & InclusionHealth & Wellness

Human & Labor RightsAnimal WelfareResponsible Sourcing

Sustainable AgricultureEnergyWaste

OUR CORPORATE SOCIAL RESPONSIBILITY (CSR) EFFORTS ARE FOCUSED ON PEOPLE, PRODUCTS & THE PLANET

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WE HAVE A STRONG LEADERSHIP TEAM WITH MANY YEARS OF KNOWLEDGE & OPERATING EXPERIENCE

YEARS OF INDUSTRY

EXPERIENCE

SVP, Sysco Labs & Customer Experience

President & Chief Operating Officer / Incoming CEO

SVP, U.S. Foodservice Operations

EVP, Supply Chain

SVP, Sales & Marketing

EVP & Chief Financial Officer

SVP, Int’l Foodservice Operations, Europe

EVP, Administration & Corporate Secretary

EVP, Human Resources

EVP & Chief Technology Officer

SVP, Int’l Foodservice Operations, Americas

SVP, Merchandising

YEARS OF SYSCOEXPERIENCE

7

4

26

4

6

21

5

10

7

5

22

21

7

27

26

37

6

21

25

10

25

31

28

35

Brian Beach

Tom Bene

Greg Bertrand

Scott Charlton

Bill Goetz

Joel Grade

Ajoy Karna

Russell Libby

Paul Moskowitz

Wayne Shurts

Scott Sonnemaker

Brian Todd

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Enabling our companies to serve our customers flawlessly

Operatingcompanies

Business units

Corporate functions

Customers

Create tools,processes& strategy

Enable theoperatingcompanies

Provideresources& support

Operate thebusiness

Executeflawlessly

OUR CUSTOMER-CENTRIC APPROACH LEVERAGES OUR EXPERTISE ACROSS FUNCTIONS

SYSCO’S BUSINESS &FY18 – FY20 THREE YEAR PLAN

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2.5%

4.0%

11%

21%

13%

16%

1 See Non_GAAP reconciliations at the end of the presentation; 2-year average of adjusted fiscal 2016 and 2017 results; 2 FY17 ROIC; excluding Brakes; 3 2-year annualized average ending June 2017

• Local Cases

• Gross Profit

• Adjusted Operating Income

• Adjusted EPS

• Adjusted ROIC2

• Total Shareholder Return3

FY16 – FY17 FINANCIALRESULTS1TO BE OUR CUSTOMERS’

MOST VALUED AND TRUSTED BUSINESS PARTNER

LEVERAGE SUPPLY CHAIN

COSTS

REDUCE ADMINISTRATIVE

COSTS

GROWGROSS PROFIT

• Accelerate local case growth

• Improve margins

A C H I E V E F I N A N C I A L O B J E C T I V E S

OUR PEOPLEBUSINESS TECHNOLOGY

WE HAVE CONSISTENTLY DELIVERED STRONG RESULTS, WHICH HAVE TRANSLATED INTO SOLID RETURNS FOR SHAREHOLDERS

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SYSCO HAS A PRESENCE IN A ROUGHLY $375B, LARGE & FRAGMENTED FOODSERVICE MARKET

While also serving customers in another 81 countries

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Source: Technomic LTF, July 2017; Retailers include Supermarkets, Convenience Stores and Other Retailers; Travel&Leisure includes Recreation, Lodging, Transportation and Caterers; Noncommercial includes Education, Healthcare, Refreshment Services, Military and Other

1.1%

2.0%

2.9%

1.7%

1.5%

1.9%

1.8%

1.7%

Noncommercial

Travel & Leisure

Retailers

Restaurants

Small Chains & Independents

101-500 Chains

Top 100 Chains

Total Foodservice

5-year Real CAGR 2017-2022

TECHNOMIC’S FOODSERVICE INDUSTRY REAL GROWTH RATES

• We are focused on gaining share across multiple higher-growth segments

• Accelerate growth and gain market share with local customers

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SYGMA

U.S. Foodservice Operations

InternationalFoodserviceOperations

OTHER

Geographic expansion

Restaurant segment penetration

Lodging segment penetration

Technology-focused division

Core marketU.S. broadline serves as the foundationSpecialty companies enhance our portfolio of products 68%

19%

11%

2%

WE OPERATE THE BUSINESS IN FOUR MAJOR SEGMENTS THAT COMPRISE THE SYSCO PORTFOLIO OF BUSINESSES

% OF TOTAL REVENUE

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Serves diverse customer base of local and contract customers

Efficient model

Deep knowledge

Specialized solutions

Operational Flexibility

BroadAssortment

UN

IQU

E C

AP

AB

ILIT

IES

FreshProduce

Fresh Meat,Poultry, Seafood

THE U.S. MARKET IS THE FOUNDATION OF OUR BUSINESS, WITH MEANINGFUL GROWTH POTENTIAL

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International Americas International Europe

• Positioned for longer-term growth in Latin America

• Enter and grow in sizeable street segment in Mexico

• Platform for future European expansion

• Leverage scale to drive operating efficiencies

Estimated Market Size

Key Points

CANADA LATIN AMERICA EUROPE

• Grow gross profit & optimize cost structure in Canada

~ $25B ~ $100B ~ $250B

INTERNATIONAL REPRESENTS GROWTH OPPORTUNITIES IN EXISTING MARKETS & TARGETED GEOGRAPHIC EXPANSION

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16%

$279B total

Systems distributors

Source: Technomic, Nov 2016, company info & financials

EXAMPLECUSTOMERS

2016 U.S. foodservice market size $B, excluding alcohol

SYGMA OPERATES IN THE SYSTEMS DISTRIBUTION SPACE & SPECIALIZES IN SERVING AT-SCALE CHAIN CUSTOMERS

$45B

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Global Lodging$10B Opportunity175,000 Hotels16MM Rooms

• 30,000 hotels in 113 countries

• Leading presence in U.S. market

• Manufacture personal care amenity products & textile products

• Distribute 30,000+ operating supplies, furniture, fixtures, and equipment

GUEST SUPPLY IS THE LEADING GLOBAL MANUFACTURER & DISTRIBUTOR OF SUPPLIES TO THE LODGING INDUSTRY

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Customer-centricCustomers in the room and involved throughout design

and build phases

Pace over perfectionRapid design, build out, and continuous iteration; with willingness to fail smart,

fail fast

Cross-functionalCross-functional

engagement to drive diverse thinking and

solutioning

Innovation CultureSilicon Valley thinking(art of the possible),big ideas, challenging

status quo - with clear focus

SYSCO LABS IS OUR INNOVATION TEAM, LEVERAGING AGILE & DESIGN THINKING TO REIMAGINE THE CUSTOMER EXPERIENCE

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Source: Technomic Industry Trends Report

Foodservice Operators

FOODSERVICE TRENDS ARE RE-DEFINING CUSTOMER NEEDS

Operators who are most prepared to leverage these trends will accelerate

TechnologyInnovation

IncreasedCosts

Shifting Consumer

Expectations

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1 Technomic clean-sustainable report 20162 NRA Forecast 2016

Local

96% 88% 85% 75% 42%

Fine Dining Fast Casual Casual Family QSR

Consumers: Say they are more likely to choose restaurants offering local food2

Operators: Locally sourced food becoming more important2

% of operators adding new locally sourced menu items

89%Operators: Health and Wellness will have a great or moderate influence on future purchases1

Consumers: Healthy options an important factor when choosing a restaurant2

67%

Healthy

68%

CONSUMERS' EXPECTATIONS REGARDING FOOD SOURCE & QUALITY ARE SIGNIFICANTLY INCREASING

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YOUNGER GENERATIONS ARE FUELING THE DEMAND FOR ETHNIC PRODUCTS & CUISINE TYPES

Ethnic Items and Flavors Trend

Demand for Ethnic by Generation

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TECHNOLOGY IS ALSO PROGRESSIVELY MORE IMPORTANT IN FOODSERVICE & HELPS OPERATORS COMPETE

of restaurant searches are done on mobile devices

50%in estimated 2016

orders went through Food Delivery Apps,

a 45% growth1

$5.2B

1Cowen and Co Investment

Cost efficiencies & labor cost savings are pushing technology use by operators

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Best in classsalesforce

Depthof product offering

Enterprise scale & scope

Highly efficient supply chain

Sysco is rooted in a strong foundation and a history of

profitable growth

Strong cash flow & balance sheet

Strongcustomer

relationships

BUILDING ON OUR SOLID FOUNDATION, WE ARE EVOLVING TO FURTHER ACCELERATE VALUE CREATION & GROWTH

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OUR FOUR STRATEGIC PRIORITIES WILL ACCELERATE OUR CURRENT GROWTH & POSITION US WELL FOR THE FUTURE

ENRICHTHE CUSTOMER EXPERIENCE 27

• Leverage robust data / insights capabilities to change the conversation

• Evolve our consultative sales model to deliver value-added solutions

• Deliver new technology solutions to drive enhanced customer loyalty

• Provide enhanced flexibility in our service and support models

• Develop innovative, fresh, on-trend products as ONE Sysco

ENRICHING THE CUSTOMER EXPERIENCE

ENRICHING THE CUSTOMER EXPERIENCE IS A CRITICAL COMPONENT OF OUR STRATEGY

DELIVEROPERATIONAL EXCELLENCE 28

• Improve productivity through automation and enhanced technology

• Deepen our utilization of continuous improvement and process tools

• Drive consistency and cost reduction through leveraging our shared services approach

• Increase product and service capabilities through the optimization of our supply chain network

DELIVER OPERATIONAL EXCELLENCE:

DELIVERING OPERATIONAL EXCELLENCE IS KEY TO ACHIEVING OUR COST & PRODUCTIVITY GOALS

OPTIMIZETHE BUSINESS 29

THE SYSCO WAY OF OPERATING WILL CREATE A MORE AGILE ENVIRONMENT THAT WILL ACCELERATE CUSTOMER VALUE

OPTIMIZE THE BUSINESS: “THE SYSCO WAY”

• Foster an “Innovation Culture” by quickly testing new ideas with willingness to fail smart, fail fast

• Develop a global support model to drive value across our businesses

• Intensify a cost-mindset that focuses on simplification and value creation

• Drive agility in all aspects of how we operate to accelerate change in the business

ACTIVATETHE POWER OF OUR PEOPLE 30

ACTIVATING THE POWER OF OUR PEOPLE WILL UNLOCK SIGNIFICANT GROWTH

Note: will develop

graphics for these pages…

• Ensure the “Voice of the Customer” is at the heart of everything we do

• Empower individuals to act in the best interest of our customers and Sysco

• Foster an open, diverse, and respectful environment for all associates

• Sustain a highly engaged, accountable and performance driven culture

ACTIVATE THE POWER OF OUR PEOPLE:

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M&A IS A KEY LEVER OF OUR GROWTH STRATEGY

Strategically acquire

companies in existing markets

• Grow our share with local operators

• Achieve supply chain synergies• Fill potential gaps in our product

offerings and capabilities

Thoughtfully expand into new

markets

• Develop platforms for further growth

• Leverage local market knowledge and expertise to help grow our business

We continue to enhance our M&A capabilities

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LOCAL: +3.5%3.0%

4.0% -4.5%

4%

9%

12%

$650M - $700M1

Cases

FOCUSING ON THESE KEY STRATEGIC PRIORITIES WILL DELIVER SOLID OPERATING PERFORMANCE OVER THE NEXT THREE YEARS

1 See Non-GAAP reconciliations at the end of the presentation.

Sales

Gross Profit

Operating Income

EPS

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SYSCO, ONE COMPANY, MANY SOLUTIONS, ENABLING CUSTOMER SUCCESS

BILL GOETZSVP, SALES & MARKETING


To further innovate, we are leveraging Sysco Labs to re-imagine the Customer Experience and our sales model

Through Insights, we have developed unique and differentiated value propositions by segment

Insights led to our recent rebranding that tells our story to the marketplace

WE USE INSIGHTS TO INFORM ALL ASPECTS OF OUR SALES AND MARKETING AGENDA


Develop strategies &

solutions

WE HAVE A MULTI-FACETED APPROACH TO GATHER A DEEPER UNDERSTANDING OF THE CUSTOMER

of millennials are seeking ethnic-inspired dining options

of independents report that they are currently using POS systems. Half of respondents indicate that they are using social media

Consistency in service interaction across operating companies cited as the #1 requirement for multi-unit customers

51%

2/3

#1

Consumer Trends

Operator Trends

Customer Voice


Deep Customer Insights

Acquirenew customers with the right value proposition and strength of our brand

Innovatethrough customer-centric approach to new products, tools + technology, and reimagined customer journeys

Growfrom deep relationships and the right products + solutions delivered through multiple channels

OUR INSIGHT BASED APPROACH INFORMS OUR STRATEGIES THROUGHOUT THE ENTIRE CUSTOMER LIFECYCLE


INSIGHTS LED TO OUR RECENT REBRANDING EFFORT TO TELL OUR STORY TO CUSTOMERS & PROSPECTS…

…we have passion for our business and for our

customers

At the heart of food and service


GROUNDED IN CUSTOMER RESEARCH, OUR VALUE PROPOSITIONS DEFINE OUR KEY DIFFERENTIATION POINTS…

…that help acquire, develop and increase share of wallet with current customers

Sysco provides support and solutions

Sysco supports the local community

Sysco delivers fresh food and fresh ideas


HEALTHCARE VALUE PROPOSITIONS – END TO END SOLUTIONS

Delivering Fresh Food and Ideas

• NetIMPAC: Centralized menu planning

• NetRecipe: 22,000+ recipes

• eNutrition: 237,000 products

Providing Support & Solutions

Supports our Communities and

Industry

• Order Guide Management

• KEYS: Foodservice staff training

• Emergency Response Process: Harvey & Irma

• Board level positions in key industry associations

• Holistic local and regional industry educational programs


CUSTOMER NEEDS ARE DRIVING OUR SALES MODEL EVOLUTION

Disciplined, profitable growth

Multi-Unit Local

“Manage compliance”• Fewer points of contact• Tools for managing unit compliance• Consolidated invoicing and reporting• Centralized services

“Standard, consistent”• Standard, limited set of products• Consistency across all units

SERVICES

PRODUCTS

“Partner for growth”• Omni-channel approach

combining MAs and digital tools• Consulting / menu

development• Flexible deliveries

“Variety, flexibility”• Breadth of products• Local / regional products• Labor savings

Increase share of wallet


OUR MULTI-UNIT SALES MODEL IS FOCUSED ON OPTIMIZINGAND GROWING PRIORITIZED SEGMENTS

Developing Solutions & Innovations

Identify Optimal Segments

Strategic Partnership Selling

Centralized Services

Grow &Optimize


Restaurants

Healthcare

Travel / Leisure

Retail

Fast casual 6%

Senior Living 6%

Supermarket 5%

Recreation ~2%

WE HAVE IDENTIFIED THE OPTIMAL MULTI-UNIT SEGMENTS FOR PROFITABLE GROWTH

TECHNOMIC 5-YEAR CAGR (2017-2022)


CENTRALIZATIONSERVICES

WE ARE CENTRALIZING SUPPORT SERVICES FOR OUR MULTI-UNIT CUSTOMERS…

…to create consistency and enhanced customer experience

• Limited time offers

• Order guide management

• Pricing/audit inquiries

• Financial inquiries

• Business transfer

• Customer location additions

• New customer onboarding


CUSTOMER NEEDS ARE DRIVING OUR SALES MODEL EVOLUTION

Disciplined, profitable growth

Multi-Unit Local

“Manage compliance”• Fewer points of contact• Tools for managing unit compliance• Consolidated invoicing and reporting• Centralized services

“Standard, consistent”• Standard, limited set of products• Consistency across all units

SERVICES

PRODUCTS

“Partner for growth”• Omni-channel approach

combining MAs and digital tools• Consulting / menu

development• Flexible deliveries

“Variety, flexibility”• Breadth of products• Local / regional products• Labor savings

Increase share of wallet


Discover Onboard Shop Receive Order

`

WE ARE LEVERAGING SYSCO LABS TO REIMAGINE THE ENTIRE CUSTOMER JOURNEY FROM START TO FINISH

The customer is part of the design, build and re-imagination of a solution

• Customer-centric, outside looking in

• Research and data-driven

• Agile, collaborative, cross-functional

• Innovation model leveraging rapid design and iterative approach, prioritizing pace over perfection

• Solutions that reflect customer thinking and desires, simplifying interactions with Sysco


Identify targeted opportunities

Omni-channel approach

Product & business expertise

Consistent & market relevant pricing

Enhanced coaching & training

CUSTOMER-CENTRICAPPROACH

WE ARE TRANSFORMING OUR LOCAL SALES MODEL TO ACCELERATE GROWTH


MULTICULTURAL SEGMENTS CONTINUE TO LEAD RESTAURANT GROWTH

Hispanic

Italian

Asian

3x industry growth

1.5x industry growth

3x industry growth

$9B

$10B

$8B

Focusing on high impact ethnic segments to further differentiate our offerings

Segment Segment Growth Market Size


Unique sales model in key geographies

Build culturally relevant brand

Develop a robust supplier base

Engagement in the local Hispanic communities

Execute 4 Point Plan

DOUBLE DIGIT SALES GROWTH

Following a similar approach to Italian and Asian segments

WE HAVE A PROVEN PLAN TO MEET THE NEEDS OF THE MULTICULTURAL CUSTOMER


Differentiated tools and capabilities foster ease of doing business and improve customer

loyalty

• Leveraging the power of our brand

• Improve loyalty through differentiated solutions

• Evolve sales model to meet the changing needs of our customers

• Insights and innovations are the foundation for future growth

ENRICHING THE CUSTOMER EXPERIENCE

WE WILL CONTINUE TO GROW OUR BUSINESS BY SUPPORTING OUR CUSTOMERS’ NEEDS & EXPECTATIONS

GREG BERTRANDSVP, U.S. FOODSERVICE OPERATIONS


OUR U.S. FOODSERVICE BUSINESS IS A KEY DRIVER OF SYSCO’S OVERALL PROFITABILITY

Portfolio of U.S. Operations

Specialty companies enhance our portfolio of products: Provide our customers with differentiated fresh meat, seafood, produce, and specialty items

U.S. broadline serves as the foundation: Delivers a comprehensive assortment to a wide base of customers

Legend

Broadline

Puerto RicoWe have developed the most comprehensive specialty portfolio through acquisitions over the last 20+ years

Alaska

Hawaii






Legend

FreshPoint







Legend

Specialty meat







Legend


Specialty meat

SOTF / European Imports






Legend

Broadline

FreshPoint

Specialty meat

SOTF / European Imports


Alaska

Hawaii

57

We continue to focus on our

customer-centric strategy through

the breadth of our assortment

We are enabling our salesforce with

the tools, processes, and

support needed to meet our

customers’ needs

We are delivering an improved customer

experience and increased efficiency

through ongoing operational

enhancements

Differentiate our product assortment

Transform our sales model

Optimize our supply chain

Leverage our portfolio

Our portfolio of companies provide

our customers with the products and services that meet their needs

WE ARE IMPROVING OUR U.S. FOODSERVICE BUSINESS THROUGH A NUMBER OF STRATEGIES ACROSS OUR OPERATIONS


Fresh Meat and SeafoodFresh ProduceBroadline

Each type of company provides customers with a different value proposition

• Distributes a broad assortment of products

• Single provider for foodservice products and distribution

• Specializes in fresh produce

• Tomato repack, produce processing, broadline splits and repack

• Specialize in fresh meat, seafood, and poultry

• Repack, grinding, aging, cutting, processing / manufacturing, certifications

SPECIALTY COMPANIES ENHANCE OUR PRODUCT ASSORTMENT, CREATE SERVICE FLEXIBILITY, AND PROVIDE DEEPER KNOWLEDGE


Deliver on fresh & local needs of our customers

Leverage Broadline & specialty companies to provide customized service

offerings

Provide our customers with a clear interface to our companies through the

collaborative approach of our OneSysco program

Broadline

Meat & Seafood

Produce

…and serves as a platform for future growth

OneSysco leverages broadline & specialty capabilities

OUR ONESYSCO PROGRAM IS AN INTEGRATED GO TO MARKET APPROACH ACROSS OUR BROADLINE & SPECIALTY COMPANIES…

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customers’ needs




enhancements








CATEGORY MANAGEMENT IS GROUNDED IN DEEP INSIGHTS FROM THE CUSTOMER, MARKETPLACE AND OUR SUPPLIERS…

Variety means giving more breadth of assortment & offering new, on-trend items that customers want

Value means delivering the best quality we can in a competitive way

Innovation means bringing new products to market to meet our customers’ changing needs

…enabling a national assortment that delivers variety, value, and innovation


RegionalNationalConsistent national assortment to meet

essential customer needs…

…augmented by regional products

and brands…

Local…and enhanced with

local items

WE ARE EVOLVING OUR APPROACH TO BECOME EVEN MORE CUSTOMER-CENTRIC…

…while driving additional operational efficiencies in how we source & distribute products


• Deliver a broad assortment of quality products and recognized brands across multiple categories

• Improve profitability for our customers through multiple quality tiers and innovative and exclusive products

• Enable labor savings for our customers through value-added product solutions

• Adhere to the highest levels of food safety in the industry

SYSCO BRAND PORTFOLIO DELIVERS SIGNIFICANT OVERALL VALUE IN QUALITY, VARIETY AND PRICE TO OUR CUSTOMERS

…including four $1B brands


BRAND REVITALIZATION IS DELIVERING A SIMPLER, MORE RELEVANT OFFERING AND NEW SALES TOOLS FOR OUR MAS

The Wholesome Farms StoryWholesome Farms offers products that are honestly dairy— the first ingredient is always milk, cream, or egg. Wholesome Farms provides nourishing and consistent dairy ingredients, straight from the farm.

Example selling tools• Brand Promise & Positioning • Point of sale flyers• Laptop Slammers• Banners and Posters• Branded Packaging• Brand videos• Food magazine featured articles• National trade advertising• National training at general sales meetings


September 2017 Cutting Edge Solutions magazine

Beyond Meat® The Beyond Burger™

COLEMAN® Organic Small Bird Chicken

OUR ASSORTMENT IS ENHANCED BY EXCLUSIVE ITEMS THAT HELP CUSTOMERS DIFFERENTIATE THROUGH INNOVATIVE PRODUCTS

• New on-trend items that keep menus fresh and drive customer traffic

• Products that deliver labor-saving, versatility and better-for-you solutions

66







customers’ needs




enhancements









Capabilities & development

Training and development programs to advance capabilities in high-value activities

& drive successful customer interactions

Processes & tools

Technology and processes that allow

sales teams more time to sell and provide

customers flexible ordering options

Sales support

Resources that are differentiated and bring value to our customers

WE ARE TRANSITIONING TO AN INCREASINGLY CONSULTATIVE SALES APPROACH SUPPORTED BY NEW TOOLS & CAPABILITIES


SYSCO’S INNOVATIVE PROCESSES & TOOLS PROVIDE OUR SALES TEAM MORE TIME TO SELL & SUPPORT OUR CUSTOMERS

Provide customers with a choice to order how, when, and where they want

Pricing guidance & market pricing intelligence

Streamlined payment technology

Data-driven territory planning

Support our MAs through processes & tools that improve their productivityEnhancing our eCommerce capabilities

• Creating applications to be agile, easy, and intuitive

• Increasing adoption of eCommerce as a sales channel


▪ Building capabilities

▪ Highly effective Sales organization

▪ Learning & Development programs

Prioritized customer-facing activities

Sample Trainings

• New MA orientation program

• MA Accelerator program focused on new capability development

• Sales leadership training for skill building (e.g. coaching and technology)

Optimizing use of MA time to provide additional value to our customers

SYSCO IS ADVANCING OUR SALES CAPABILITIES TO ENABLE CONSULTATIVE SELLING FOR OUR LOCAL CUSTOMERS…


MAs act as the liaison between Sysco’s team of experts and customer accounts

Specialists

Culinary Team

Business Resources

• Business reviews and chef’s visits

• Menu development & savings opportunities

• New product introductions and innovative recipe ideas

• Category specific expertise and guidance

• Business building activities (e.g., social media presence)

• Product development support & product cuttings

• Menu design resources

• Restaurant technologies

• Marketing collateral for product presentations

Resources Services & Support

WE ARE PROVIDING MARKETING ASSOCIATES WITH THE SUPPORT & RESOURCES TO DRIVE SALES GROWTH

71







customers’ needs




enhancements








DELIVEROPERATIONAL EXCELLENCE

72

WE ARE EVOLVING OUR SUPPLY CHAIN THROUGH NEAR TERM & LONG TERM STRATEGIES

Center of Excellence & innovation

Field execution

Best practices & tools

Continuous improvement &

capability building

Near term strategies

• Safety

• Operational efficiency

• Leveraging assets

Long term strategies

• One Sysco

• Network optimization

• Alternative delivery methods

Centers of excellence drive innovation & best practices

Supply Chain Operations


Reducing miles & fuel through routing best practices

Operations

Driving efficiencies in our facilities through optimized slotting

Minimizing errors & waste by applying LEAN practices

Increasing transparency through technology and real time data

Customer Benefits

• Reliability in order fulfillment

• Consistency in delivery experience

• Transparency of order status

• Timely arrival of deliveries

…while aggressively managing cost per piece over the next three years

WE ARE FOCUSED ON CONTINUING TO INCREASE OPERATIONAL EFFICIENCY AND PROVIDE MORE DELIVERY FLEXIBILITY

DELIVEROPERATIONAL EXCELLENCE

74

Introducing alternative methods for last mile delivery to provide customers with additional options

EXECUTING LONG TERM STRATEGIES TO MEET THE CHANGING NEEDS OF OUR CUSTOMERS…

Leveraging capabilities and scale across our OneSyscoportfolio

Optimizing our network to broaden the product assortment & create further flexibility

Adopting innovative technologies to increase efficiency, including investment in Tesla


U.S. OPERATIONS WILL CONTINUE TO DELIVER STRONG RESULTSTHROUGH A VARIETY OF CUSTOMER-CENTRIC INITIATIVES

DELIVERING STRONG RESULTS

• Leveraging our portfolio to provide our customers with the products & services that meet their needs

• Differentiating our product assortment by increasing the breadth of our offerings & through innovation

• Transforming our sales model to a more consultative approach supported by tools, processes, and resources

• Optimizing our supply chain to improve the customer experience and increase efficiency

BREAK

PAUL MOSKOWITZEVP, HUMAN RESOURCES


• Ensure the “Voice of the Customer” is at the heart of everything we do

• Empower individuals to act in the best interest of our customers and Sysco

• Foster an open, diverse, and respectful environment for all associates

• Sustain a highly engaged, accountable and performance driven culture

ACTIVATE THE POWER OF OUR PEOPLE:

ACTIVATING THE POWER OF OUR PEOPLE WILL ALLOW US TO DELIVER OUR PLAN


hg

EMPOWERED & HIGHLY CAPABLE INDIVIDUALS / TEAMS




Operate the business Execute flawlessly

Strong, experienced

leaders

Significant culinary,

specialty, sales and marketing

expertise

Deep pipeline of talent

Operatingcompanies

Business units

Corporate functions

Customers




Operate thebusiness

Executeflawlessly


Our goal is to hire and retain the best talent from the market

DIVERSITY & INCLUSION IS A KEY BUSINESS IMPERATIVE THAT HELPS US TO REFLECT OUR CUSTOMERS & COMMUNITIES

More than half of US

restaurantsare owned by

women

+45% of restaurant managers are women

Millennials will be 50%

of the US workforce

within 5 years

+75% of the global workforce within 10 years

Strategic Talent Acquisition Partnerships Inclusion

Strategies+ +


Experienced MAs participate inAccelerator Training – and showed

significant performance increases

ROBUST & STANDARDIZED ONBOARDING &

TRAINING

1.7X higher Gross Profit $

Growth

1.1X higher Case Growth

Continued Investment in Targeted Training

A new MA experiences30 weeks of supervised

preparation

Building a support network for our MAs to drive business results and achieve success

SIGNIFICANT INVESTMENT IN TRAINING OUR SALES ORGANIZATION HAS RESULTED IN IMPROVED PERFORMANCE


OUR CULTURE IS FOUNDATIONAL FOR DRIVING ENGAGEMENT & DELIVERING ON OUR PLAN

Our Strengths• Excellent cultural health• Strong customer focus • Significant pride in and loyalty

to Sysco• Operationally disciplined• Growing talent from within

Our Focus• Staying connected with

associates• Real-time, all-the-time

feedback• Agile ways of working• Capturing the best talent in

a candidate-driven marketplace

Strong Partnerships Across the Organization


BY PROMOTING A PERFORMANCE CULTURE, WE ALIGN COMPANY & ASSOCIATE RESULTS

Sales Operations Leadership

KEY METRICS

• Sales and Gross Profit Growth

• Case Growth

• E-commerce

RECOGNITION• Torchbearers

• Pacesetters

• Cases per Hour

• Accuracy

• Delivery Stops

• Haul of Fame

• Case Growth

• Gross Profit

• Operating Profit

• EPS & ROIC / Equity incentives

• Operating Company Wall of Fame


• Strengthen the capabilities of our frontline associates and management team while promoting inclusion

• Continue to engage our associates and create a more customer-centric environment

• Maintain alignment of rewards and recognition with our business objectives

ACHIEVE OUR OBJECTIVES

ACTIVATING THE POWER OF OUR PEOPLE WILL ALLOW US TO ACHIEVE OUR OBJECTIVES

WAYNE SHURTSEVP & CTO

86

TECHNOLOGY WILL CONTINUE TO BE A KEY ENABLER OF OUR STRATEGY

Deliver Technology Faster and Better

Use Technology to Drive Business Results

Enrich the Customer Experience

87

40% of local is done through eCommerce

2x more than last year

HOW?

• We delivered major enhancements to our tools

• MySysco: an easy 1 stop shop for all our e-tools

• Search enhancements

• Image and content enhancements

ECOMMERCE GROWTH

GREAT ECOMMERCE PROGRESS HAS RESULTED FROM IMPROVEMENTS TO OUR DIGITAL TOOLS…

88

…AND HAS RESULTED IN IMPROVED BUSINESS RESULTS

MA /customer conversations are

changing

Greater share of wallet, higher

sales and improved loyalty

Supplies On The Fly grew 25%

last year

89

WE WILL CONTINUE TO ENHANCE OUR ECOMMERCE TOOLS

Driving improved levels of loyalty:

• Personalization

• Targeted offers

• Reviews and recommendations…

Transforming eCommerce from an ordering site to a shopping site

90

ECOMMERCE AT SYSCO EXTENDS WELL BEYOND ORDER ENTRY

Streamlined Payment Technology

Reporting Inventory Management

91

THE DISCOVER JOURNEY WILL MAKE IT EASY TO FIND AND DO BUSINESS WITH SYSCO

Discover - Shopping for a food service supplier

92

THE RECEIVE JOURNEY WILL MAKE IT EASIER FOR CUSTOMERS TO PLAN FOR, RECEIVE AND SETTLE DELIVERIES

Receive - Exactly when and what goods are arriving?

93

Guest Manager Point of Sale Reservations Reporting

Sysco’s in-restaurant technology solutions

OUR TECHNOLOGY OFFERINGS ALSO EXTEND TO INSIDE THE RESTAURANT

94

TECHNOLOGY IS ENABLING SYSCO TO BETTER LEVERAGE DATA TO DRIVE IMPROVED RESULTS…

• Revenue management analytics

• Predict customer churn

• Develop product recommendations

• Logistics and network optimization

• Warehouse management

95

…AND IS ALSO HELPING US TO DRIVE OUT COSTS

• Robotic Process Automation

• Standardizing our core financial systems

• Re-platforming mission critical systems to the cloud

96

WE ARE TRANSFORMING OUR TECHNOLOGY TEAM TO AN AGILE ORGANIZATION

Operating as an agile organization has increased our responsiveness to evolving customer and business needs

Doubled eCommerce adoption growth 10%+ increase in team

engagement

• Failing and learning fast

• Product vs. project centric

• Customer in the Room

• Self-sufficient Agile Teams

• Iterative Development

• Respond Rapidly to Changing Needs

10%+ increase in team engagement

Doubled eCommerce adoption growth

55%+ decrease in time to market

97

TECHNOLOGY IS A KEY ENABLER TO SYSCO’S STRATEGY

• Enrich the customer experience

• Use technology to drive business results

• Deliver technology faster and better

WINNING FORMULA

LUNCH BREAK

WILL RESUME AT 1:00PM EST

JOEL GRADEEVP & CFO

Financial overview of three-year plan (FY18-FY20)

Ongoing focus on cost

THE SYSCO WAY OF OPERATING INCLUDES A COST-MINDSET THAT FOCUSES ON SIMPLIFICATION & VALUE CREATION TO ACHIEVE OUR PLAN

105


THE NEXT EVOLUTION OF COST REDUCTIONS IS BASED ON A HOLISTIC APPROACH

Optimize our cost structure

PRIORITIZATIONUnderstand what the work is, prioritize to

drive business results or manage risk,

rationalize unnecessary activities

GOVERNANCEGovernance, transparency, cost

controls, monitoring mechanisms,

culture

STANDARDIZATIONBest practices, tools,

benchmarks, standard role

profiles

CENTRALIZATIONCenters of expertise, greater

efficiency and consistency,

eliminate redundancy

OPTIMIZATIONMaximized value in intersection of

where and how work gets done

(e.g. technology investments)


Agile Transformation

Finance Technology Roadmap

Smart Spending

Optimizing our Canadian business

WE WILL REDUCE COSTS THROUGH A VARIETY OF DIFFERENT LEVERS


Seamless customer, vendor, and associate experience

Increased standardization of end-to-end global processes

Workflow and digital automation on a modern finance platform

KEY DRIVERS

FINANCE TECHNOLOGY ROADMAP: A PROGRAM FOCUSED ON DRIVING STANDARDIZATION, EFFICIENCY & EFFECTIVENESS


Unprecedented visibility

Dual ownership

Granular budgeting

Performance management

Development of transaction-level visibility reveals cost drivers and potential savings opportunities

Combination of traditional P&L owners and new category owners to increase accountability for G&A spend across Sysco

Creation of detailed, driver-based budgets at the lowest leveland a repeatable process to ensure spend aligns with priorities

Institution of process and systems to further develop a culture of cost management and ensure Smart Spending savings are captured

SMART SPENDING IS FOCUSED ON G&A CATEGORIES, TAKING A DETAILED LOOK AT SPEND & DRIVING SAVINGS


Agile will generate return on investment through shorter development cycles, waste reduction and delivery of better solutions as a result of increased collaboration among business, technology and customers Launch

FY 18

Scale

FY 19

Transform

FY 20

THE AGILE TRANSFORMATION AT SYSCO

Shorter development cycles Waste reduction Better solutions


Leverage best practices

Right-sizestructure

Network Optimization

WE ARE OPTIMIZING THE CANADIAN BUSINESS TO IMPROVE EFFICIENCIES

OPTIMIZETHE BUSINESS

107

SHARED SERVICES (SBS) IS OUR STRATEGIC PLATFORM FOR CENTRALIZATION

Higher service levels and response times

Improved compliance and controls

Operational efficiency

Speed to market

Upside from additional shared services

All designed to enhance the customer experience

FINANCIAL OVERVIEW

109

2 - 3%Accelerate local case growth

4%Achieve gross profit growth1

3%Limit operating expense growth1

$600 - $650MOperating income growth1

2.5%

4%

2%

$469M

ROIC1 15% 16%2

WE HAVE STRONG MOMENTUM IN THE BUSINESS FOR THE FIRST NINE QUARTERS OF OUR INITIAL THREE-YEAR PLAN…

1 See Non-GAAP reconciliations at the end of this presentation. 2 FY17 results

Guiding to the high end of the

range

Working Capital 4 days 4 days

ACTUALS AS OF 1Q181

THREE-YEAR PLAN (FY15-FY18)

110

KEY UNDERLYING OPERATING ASSUMPTIONS: FY18-FY20 PLAN

• Inflation: 1% - 2%• Total case growth: 3.0%• Local case growth: 3.5%

• Continue to pursue core portfolio acquisitions (0.5% - 1.0% of sales)• Ongoing assessment of other strategic opportunities

• Reduce diluted shares outstanding• Continue to evaluate opportunistic share repurchases

• Annual CAPEX investment of 1.2% - 1.3% of Sales• Working capital improvement of 2 days

Topline

Acquisition Investment

Shares Outstanding

CAPEX / Working Capital

111

FY17 FY202

(Approx.) 3yr CAGR

Sales ($B) $55.4 $63.0 4% - 4.5%

Gross Profit$B $10.6 $11.8 4%

% 19.1% 18.8%

Adj. Expenses1$B $8.2 $8.8 2.5%

% 14.8% 14.0%

Adj. Operating Income1

$B $2.4 $3.0 9%

% 4.3% 4.8%

Net Earnings1 ($B) $1.4 $1.8 9%

EPS1 $2.48 $3.40 - $3.50 12%

ROIC1 13% 16%

OUR THREE-YEAR PLAN DELIVERS TARGETED FINANCIAL RESULTS

1: See Non-GAAP reconciliations at the end of this presentation for FY17 results; 2: Estimated results

112

FOCUSING ON THESE KEY STRATEGIC PRIORITIES WILL ENABLE US TO DELIVER SOLID OPERATING PERFORMANCE

$650 - $700M1

Gross operating

income benefit

Leverage supply chain costs

55-65%

10-15%

20-25%

Net Operating Income Improvement:

Reduce administrative costs

Grow gross profit

FY 20 IMPACT

1 See Non-GAAP reconciliations at the end of the presentation

113

THE GROWTH OF OPERATING INCOME WILL BE EVENLY PACED THROUGHOUT FY18-FY20

$2.4

$3.0

2017 2018 2019 2020

Adjusted Operating Income1 ($B)

CAGR: 9%

Fiscal ’18 results adjusted for ~ $50M in one-time depreciation1 See Non-GAAP reconciliations at the end of the presentation

114

WE PLAN TO CONTINUE OUR HISTORICAL STRONG OPERATING PERFORMANCE

1 See Non-GAAP reconciliations at the end of this presentation. FY17 excludes Brakes

4.5% 3.6%4.1%

4.8%

2.0% 1.7%

0.0%

2.0%

4.0%

6.0%

FY15 FY16 FY17

Total Sysco Operating Leverage1

GP growth OPEX growth

3yr CAGR FY18 – FY201

4.0%

2.5%

1 See Non-GAAP reconciliations at the end of this presentation. FY17 excludes Brakes

Maintain a healthy gap between gross profit dollar and operating expenses driving growth in adjusted operating income

115

$-

$600

$1,200

$1,800

$2,400

FY15 FY16 FY17

Annual Cash Flow1 ($M)

Net cash provided by operating activities (GAAP) Free Cash Flow (Non-GAAP)

… and we expect to generate improved cash flows with a continued adjusted cash conversion ratio2 greater than 100% over the next three years

1 See Non-GAAP reconciliations at the end of this presentation.; 2 Adjusted cash conversion ratio defined as adjusted free cash flow divided by adjusted net earnings

WE HAVE A PROVEN TRACK RECORD OF CASH FLOW GENERATION…

116

1

2

3

4

Approximately 1.2% -1.3% of sales

Preferred payout ratio of 50-60% over time

WE WILL FOLLOW A DISCIPLINED APPROACH TO CAPITAL ALLOCATION

Invest in the business

Grow the dividend

Strategic M&A

Pay Down Debt /Opportunistic Share Repurchase

117

OUR STRONG BALANCE SHEET PROVIDES FLEXIBILITY

• Solid investment-grade credit rating• Substantial flexibility to pursue strategic

transactions where appropriate

• Moody’s: A3 • S&P: BBB+

Current Balance Sheet

Debt Ratings

118

WE HAVE SUFFICIENT LEVELS OF DEBT CAPACITY FOR ACQUISITIONS…

… and will continue to use a balanced approach around capital allocation while maintaining flexibility for future investments

119

CONTINUING TO FURTHER LEVERAGE STRONG MOMENTUM IN THE BUSINESS

• Grow FY20 Operating Income by $650-$700M

• Continue to grow EPS faster than operating income

• Operating leverage gap of approximately 1.5 points

• Operating income margin of 5%

• Target 16% ROIC by the end of 2020

• Our business is well positioned for future growth

LEVERAGE STRONG MOMENTUM IN THE BUSINESS1

1 See Non-GAAP reconciliations at the end of this presentation.

TOM BENÉPRESIDENT & COO / INCOMING CEO

121

OUR FOUR STRATEGIC PRIORITIES WILL ACCELERATE OUR CURRENT GROWTH & POSITION US WELL FOR THE FUTURE

Q&A

NON-GAAPRECONCILIATIONS

IMPACT OF CERTAIN ITEMS

Sysco Corporation and its Consolidated SubsidiariesNon-GAAP Reconciliation (Unaudited)Impact of Certain Items and Brakes

Sysco’s results of operations for fiscal 2018 are impacted by restructuring costs consisting of (1) expenses associated with our revised business technology strategy announced in fiscal 2016, as a result of which we incurred costs to convert to a modernized version of our established platform, (2) professional fees related to our three-year strategic plan, (3) restructuring expenses within our Brakes Group operations, (4) severance charges related to restructuring and (5) business technology costs. Sysco’s results of operations for fiscal 2017 are impacted by restructuring costs consisting of (1) expenses associated with our revised business technology strategy, as a result of which we recorded accelerated depreciation on our existing system and incurred costs to convert to a modernized version of our established platform, (2) professional fees related to our three-year strategic plan, (3) restructuring expenses within our Brakes Group operations, (4) severance charges related to restructuring, (5) facility closure costs, and (6) business technology transformation costs. Our results of operations are also impacted by the following acquisition-related items: (1) intangible amortization expense; (2) transaction costs; and (3) integration costs. All acquisition-related costs in fiscal 2018 and fiscal 2017 that have been excluded relate to the Brakes acquisition. Sysco's results of operations in fiscal 2017 are also impacted by multi-employer pension (MEPP) withdrawal charges. Fiscal 2016 and fiscal 2015 results of operations, however, include (1) expenses associated with our revised business technology strategy announced in fiscal 2016, as a result of which we recorded accelerated depreciation on our existing system and incurred costs to convert to a modernized version of our established platform, (2) professional fees related to our three-year strategic plan, (3) Brakes related acquisition costs, (4) termination costs in connection with the merger that had been proposed with US Foods, Inc. (US Foods), (5) severance charges related to restructuring, (6) facility closure costs, and (7) financing costs related to the Brakes acquisition and senior notes that were issued in fiscal 2015 to fund the proposed US Foods merger. These senior notes were redeemed in the first quarter of fiscal 2016, triggering a redemption loss of $86.5 million, and we incurred interest on these notes through the redemption date. Fiscal 2016 also includes losses on foreign currency remeasurement and hedging. The Brakes acquisition also resulted in non-recurring tax expense in fiscal 2017, primarily from non-deductible transaction costs. These fiscal 2018, fiscal 2017, fiscal 2016 and fiscal 2015 items are collectively referred to as "Certain Items.“

Management believes that adjusting its operating expenses, operating income, operating margin as a percentage of sales, interest expense, net earnings and diluted earnings per share to remove these Certain Items provides an important perspective with respect to our underlying business trends and results and provides meaningful supplemental information to both management and investors that (1) is indicative of the performance of the company's underlying operations and facilitates comparisons on a year-over-year basis and (2) removes those items that are difficult to predict and are often unanticipated, and which as a result, are difficult to include in analysts' financial models and our investors' expectations with any degree of specificity.

124

IMPACT OF CERTAIN ITEMS (CONT’D)

Sysco Corporation and its Consolidated SubsidiariesNon-GAAP Reconciliation (Unaudited)Impact of Certain Items and Brakes (cont’d)

Sysco’s fiscal year ends on the Saturday nearest to June 30th. This resulted in a 52-week year ending June 27, 2017 for fiscal 2017, a 53-week year ending July 2, 2016 for fiscal 2016 and a 52-week year ending June 30, 2015 for fiscal 2015. Because the fourth quarter of fiscal 2016 contained an additional week as compared to fiscal 2017, our Consolidated Results of Operations for fiscal 2017, and any related case growth metrics, are not directly comparable to the prior year. Management believes that adjusting the fiscal 2016 results for the estimated impact of the additional week provides more comparable financial results on a year-over-year basis. As a result, the case growth and operating metrics for fiscal 2017 presented in the table below reflect a comparison to fiscal 2016 as adjusted by one-fourteenth of the total metric for the fourth quarter. Failure to make these adjustments causes the year-over-year changes in these metrics to be understated.

Although Sysco has a history of growth through acquisitions, the Brakes Group is significantly larger than the companies historically acquired by Sysco, with a proportionately greater impact on Sysco’s consolidated financial statements. Accordingly, Sysco is excluding from its non-GAAP financial measures for the relevant period solely those acquisition costs specific to the Brakes acquisition. We believe this approach significantly enhances the comparability of Sysco’s results for fiscal 2018, fiscal 2017 and fiscal 2016. Also, given the significance of the Brakes acquisition, management believes that presenting Sysco’s financial measures, excluding the Brakes Group operating results (including for this purpose Brakes financing costs, which are not included in the Brakes Group GAAP operating results and are also not Certain Items), enhances comparability of the period over period financial performance of Sysco’s legacy business and allows investors to more effectively measure Sysco’s progress against the financial goals under Sysco’s three year strategic plan.

Set forth below is a reconciliation of sales, operating expenses, operating income, net earnings and diluted earnings per share to adjusted results for these measures for the periods presented. Individual components of diluted earnings per share may not add to the total presented due to rounding. Adjusted diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.

125

CASE GROWTH

Sysco Corporation and its Consolidated SubsidiariesNon-GAAP Reconciliation (Unaudited)Impact of extra week on selected metrics

Jul. 1, 2017(52 Weeks) (GAAP)

Impact of extra week

Jul. 1, 2017 (52 Weeks Basis)

(Non-GAAP)

Jul. 2, 2016(53 Weeks)

(GAAP)Impact of

extra week

Jul. 2, 2016 (52 Weeks

Basis) (Non-GAAP)

2-year Average

Case Growth:Total U.S. Broadline -1.0% 1.9% 0.9% 5.0% -2.0% 3.0% 2.0%

Local -0.1% 2.5% 2.4% 4.7% -2.0% 2.7% 2.5%

Jul. 2, 2016(14 Weeks) (GAAP)

Impact of extra week

Jul. 2, 2016 (13 Weeks Basis)

(Non-GAAP)Case Growth:Total Broadline 4.7% -2.3% 2.4%

Local 10.3% -7.9% 2.4%

126

OPERATING LEVERAGE

Sysco Corporation and its Consolidated SubsidiariesNon-GAAP Reconciliation (Unaudited)Total Sysco Operating Leverage (impact of Certain Items, extra week and Brakes)(In Thousands)

(a) 2-year average gross profit (GAAP) 11.2%(b) 2-year average gross profit excluding the impact of Brakes (Non-GAAP) 3.9%

(c) 2-year average operating expenses (GAAP) 8.2%(d) 2-year average operating expenses adjusted for certain items and excluding the impact of Brakes (Non-GAAP) 1.9%

Gross profit $ 10,557,507 $ 9,040,472 $ 1,517,035 16.8%Impact of Brakes (1,333,852) - (1,333,852) NMLess 1 week fourth quarter sales - (178,774) 178,774 NMComparable gross profit using a 52 week basis and excluding the impact of Brakes (Non-GAAP) $ 9,223,655 $ 8,861,698 $ 361,957 4.1%

Operating expenses (GAAP) $ 8,504,336 $ 7,189,972 $ 1,314,364 18.3%Impact of certain items (298,660) (158,748) (139,912) 88.1%Operating expenses adjusted for certain items (Non-GAAP) $ 8,205,676 $ 7,031,224 $ 1,174,452 16.7%Impact of Brakes (1,190,795) - (1,190,795) NMLess 1 week fourth quarter operating expenses - (133,899) 133,899 NMOperating expenses adjusted for certain items, extra week and excluding the impact of Brakes (Non-GAAP) $ 7,014,882 $ 6,897,325 $ 117,557 1.7%

52-Week Period Ended

53-Week Period Ended Period Change

in DollarsPeriod

% ChangeJul. 1, 2017 Jul. 2, 2016

127

OPERATING LEVERAGE (CONT’D)


Gross profit $ 9,040,472 $ 8,551,516 $ 488,956 5.7%Less 1 week fourth quarter gross profit (178,774) - (178,774) NMComparable gross profit using a 52 week basis $ 8,861,698 $ 8,551,516 $ 310,182 3.6%

Operating expenses (GAAP) $ 7,189,972 $ 7,322,154 $ (132,182) -1.8%Impact of certain items (158,748) (562,468) 403,719 NMSubtotal-Operating expenses excluding certain items (Non-GAAP) $ 7,031,224 $ 6,759,686 $ 271,537 4.0%

Less 1 week fourth quarter operating expense (133,899) - (133,899) NMOperating expenses adjusted for certain items and extra week (Non-GAAP) $ 6,897,325 $ 6,759,686 $ 137,639 2.0%

Gross profit $ 8,551,516 $ 8,181,035 $ 370,481 4.5%

Operating expenses (GAAP) $ 7,322,154 $ 6,593,913 $ 728,241 11.0%Impact of certain items (562,468) (146,508) (415,959) NMOperating expenses adjusted for certain items (Non-GAAP) $ 6,759,687 $ 6,447,405 $ 312,282 4.8%

Adjusted Operating Income Target



in DollarsPeriod

% ChangeJun. 27, 2015 Jun. 28, 2014

We expect to target and maintain an adjusted operating leverage gap of 1.5 basis points through fiscal 2020. We cannot predict with certainty when we will achieve these results or whether the calculation of our operating leverage in such future periods will be on an adjusted basis due to the effect of certain items, which would be excluded from such calculation. Due to these uncertainties, to the extent our future calculation of operating leverage is on an adjusted basis excluding certain items, we cannot provide a quantitative reconciliation of this non-GAAP measure to the most directly comparable GAAP measure without unreasonable effort. However, we would expect to calculate adjusted operating leverage, if applicable, in the same manner as we have calculated this historically and all components of our adjusted operating leverage calculation would be impacted by Certain Items as shown in the foregoing calculation.



in DollarsPeriod

% ChangeJul. 2, 2016 Jun. 27, 2015

128

OPERATING INCOME GROWTH

129

Sysco Corporation and its Consolidated SubsidiariesNon-GAAP Reconciliation (Unaudited)Operating Income Growth(In Thousands)

July 1, 2017 July 2, 20162-year Average

Sales $ 55,371,139 $ 50,366,919 $ 5,004,220 $ 50,366,919 $ 48,680,752 $ 1,686,167

Impact of Brakes (5,170,787) - (5,170,787) - - - Sales excluding the impact of Brakes (Non-GAAP) $ 50,200,352 $ 50,366,919 $ (166,567) $ 50,366,919 $ 48,680,752 $ 1,686,167

Gross profit $ 10,557,507 $ 9,040,472 $ 1,517,035 $ 9,040,472 $ 8,551,516 $ 488,956 Impact of Brakes (1,333,852) - (1,333,852) - - - Gross profit excluding the impact of Brakes (Non-GAAP) $ 9,223,655 $ 9,040,472 $ 183,183 $ 9,040,472 $ 8,551,516 $ 488,956 Gross margin 19.07% 17.95% 1.12% 17.95% 17.57% 0.38%Impact of Brakes 0.69% 0.00% 0.69% - - - Gross margin excluding the impact of Brakes (Non-GAAP) 18.37% 17.95% 0.42% 17.95% 17.57% 0.38%

Operating expenses (GAAP) $ 8,504,336 $ 7,189,972 $ 1,314,364 $ 7,189,972 $ 7,322,154 $ (132,182)MEPP Charge (35,600) - (35,600) - - - Impact of restructuring costs (1) (161,011) (123,134) (37,877) (123,134) (7,801) (115,333)Impact of acquisition-related costs (2) (102,049) (35,614) (66,434) (35,614) (554,667) 519,052 Operating expenses adjusted for certain items (Non-GAAP) $ 8,205,676 $ 7,031,224 $ 1,174,452 $ 7,031,224 $ 6,759,686 $ 271,537 Impact of Brakes (1,282,800) - (1,282,800) - - - Impact of Brakes restructuring costs (3) 13,732 - 13,732 - - - Impact of Brakes acquisition-related costs (2) 78,273 - 78,273 - - - Operating expenses adjusted for certain items and excluding the impact of Brakes (Non-GAAP)

$ 7,014,881 $ 7,031,224 $ (16,343) $ 7,031,224 $ 6,759,686 $ 271,537

Operating income (GAAP) $ 2,053,171 $ 1,850,500 $ 202,671 $ 1,850,500 $ 1,229,362 $ 621,138 $ 823,809 MEPP Charge 35,600 - 35,600 - - - 35,600 Impact of restructuring costs (1) 161,011 123,134 37,877 123,134 7,801 115,333 153,210 Impact of acquisition-related costs (2) 102,049 35,614 66,434 35,614 554,667 (519,052) (452,618) Operating income adjusted for certain items (Non-GAAP) $ 2,351,831 $ 2,009,248 $ 342,583 $ 2,009,248 $ 1,791,830 $ 217,419 $ 560,001 Impact of Brakes (51,053) - (51,053) - - - (51,053) Impact of Brakes restructuring costs (3) (13,732) - (13,732) - - - (13,732) Impact of Brakes acquisition-related costs (2) (78,273) - (78,273) - - - (78,273) Operating income adjusted for certain items and excluding the impact of Brakes (Non-GAAP)

$ 2,208,773 $ 2,009,248 $ 199,525 $ 2,009,248 $ 1,791,830 $ 217,419 $ 416,943 9.93% 12.13% 11.03%

Period Cumulative 24-month Change $

results

(3) Includes Brakes Acquisition restructuring charges.

July 1, 2017Period Change

$June 27, 2015July 2, 2016July 2, 2016Period Change

$

Year Ended Year Ended

(1) Includes $111 million in accelerated depreciation associated with our revised business technology strategy and $46 million related to professional fees on 3-year financial objectives, restructuring expenses within our Brakes operations, costs to convert to legacy systems in conjuction with our revised business technology strategy and severance charges related to restructuring. Includes professional fees on 3-year financial objectives, and costs to convert to legacy systems in conjunction with our revised business technology strategy in fiscal 2017 and fiscal 2016(2) Fiscal 2017 includes $76 million related to intangible amortization expense from the Brakes acquisition, which is included in the results of Brakes and $24 million in transaction costs. Fiscal 2016 includes US Foods merger integration and termination costs.

OPERATING INCOME GROWTH (CONT’D)

Sysco Corporation and its Consolidated SubsidiariesNon-GAAP Reconciliation (Unaudited)Operating Income Growth(In Thousands)

Sales $ 14,650,424 $ 13,968,654 $ 681,770

Impact of Brakes (1,463,902) (1,283,524) (180,378) Sales excluding the impact of Brakes (Non-GAAP) $ 13,186,522 $ 12,685,130 $ 501,392

Gross profit $ 2,793,668 $ 2,691,919 $ 101,749 Impact of Brakes (370,695) (343,051) (27,643) Gross profit excluding the impact of Brakes (Non-GAAP) $ 2,422,973 $ 2,348,868 $ 74,106 Gross margin 19.07% 19.27% -0.20%Impact of Brakes 0.69% 0.75% -0.06%Gross margin excluding the impact of Brakes (Non-GAAP) 18.37% 18.52% -0.14%

Operating expenses (GAAP) $ 2,170,576 $ 2,125,086 $ 45,490 MEPP Charge - - - Impact of restructuring costs (1) (19,053) (38,285) 19,232 Impact of acquisition-related costs (2) (19,745) (21,710) 1,965 Operating expenses adjusted for certain items (Non-GAAP) $ 2,131,778 $ 2,065,091 $ 66,687 Impact of Brakes (350,010) (322,843) (27,167) Impact of Brakes restructuring costs (3) - 3,074 (3,074) Impact of Brakes acquisition-related costs (2) 5,232 19,498 (14,266) Operating expenses adjusted for certain items and excluding the impact of Brakes (Non-GAAP)

$ 1,787,000 $ 1,764,821 $ 22,179

Operating income (GAAP) $ 623,092 $ 566,833 $ 56,259 $ 823,809 $ 880,068 MEPP Charge - - - 35,600 35,600 Impact of restructuring costs (1) 19,053 38,285 (19,232) 153,210 133,978 Impact of acquisition-related costs (2) 19,745 21,710 (1,965) (452,618) (454,583) Operating income adjusted for certain items (Non-GAAP) $ 661,890 $ 626,828 $ 35,062 $ 560,001 $ 595,063 Impact of Brakes (20,685) (20,208) (476) (51,053) (51,529) Impact of Brakes restructuring costs (3) - (3,074) 3,074 (13,732) (10,657) Impact of Brakes acquisition-related costs (2) (5,232) (19,498) 14,266 (78,273) (64,007) Operating income adjusted for certain items and excluding the impact of Brakes (Non-GAAP)

$ 635,974 $ 584,047 $ 51,927 $ 416,943 $ 468,870

13-Week Period EndedCumulative 24-month Change $

results

Cumulative 27-month Change $

resultsSeptember 30, 2017 October 1, 2016Period Change

$

(1) Fiscal 2018 includes $19 million related to business technology costs, professional fees on three-year financial objectives, restructuring expenses within our Brakes operations, severance charges related to restructuring and and costs to convert to legacy systems in conjunction with our revised business technology strategy. Fiscal 2017 includes $28 million in accelerated depreciation associated with our revised business technology strategy and $10 million related to professional fees on three-year financial objectives, restructuring expenses within our Brakes operations, costs to convert to legacy systems in conjunction with our revised business technology strategy and severance charges related to restructuring.(2) Fiscal 2018 and 2017 include $15 million and $19 million, respectively, related to intangible amortization expense from the Brakes Acquisition, which is included in the results of Brakes and $5 million and $2 million, respectively, in integration costs.(3) The tax impact of adjustments for Certain Items are calculated by multiplying the pretax impact of each Certain Item by the statutory rates in effect for each jurisdiction where the Certain Item was incurred. The Brakes Acquisition also resulted in non-recurring tax expense in fiscal 2017, primarily from non-deductible transaction costs.

130

IMPACT OF CERTAIN ITEMS, BRAKES AND EXTRA WEEK IN FISCAL YEAR 2016

131

Sysco Corporation and its Consolidated SubsidiariesNon-GAAP Reconciliation (Unaudited)Impact of Certain Items, Brakes and extra week in fiscal year 2016(In Thousands, Except for Share and Per Share Data)

July 1, 2017 July 2, 2016

Period Change

in Dollars

Period %/bps Change July 2, 2016 June 27, 2015

Period Change

in Dollars

Period %/bps Change

Sales $ 55,371,139 $ 50,366,919 $ 5,004,220 9.9% $ 50,366,919 $ 48,680,752 $ 1,686,167 3.5%Impact of Brakes (5,170,787) - (5,170,787) NM - - - NMLess 1 week fourth quarter sales - (974,849) 974,849 NM (974,849) - (974,849) NMComparable sales using a 52 week basis and excluding the impact of Brakes (Non-GAAP)

$ 50,200,352 $ 49,392,070 $ 808,282 1.6% $ 49,392,070 $ 48,680,752 $ 711,318 1.5%

Gross profit $ 10,557,507 $ 9,040,472 $ 1,517,035 16.8% $ 9,040,472 $ 8,551,516 $ 488,956 5.7%Impact of Brakes (1,333,852) - (1,333,852) NM - - - NMLess 1 week fourth quarter sales - (178,774) 178,774 NM (178,774) - (178,774) NMComparable gross profit using a 52 week basis and excluding the impact of Brakes (Non-GAAP)

$ 9,223,655 $ 8,861,698 $ 361,957 4.1% $ 8,861,698 $ 8,551,516 $ 310,182 3.6%

Gross margin 19.07% 17.95% 112 bps 17.95% 17.57% 38 bpsImpact of Brakes 0.69% 0% 69 bps 0% 0% 0 bpsLess 1 week fourth quarter sales 0% 0.01% -1 bps 0.01% 0.00% 1 bpsComparable gross margin using a 52 week basis and excluding the impact of Brakes (Non-GAAP)

18.37% 17.94% 43 bps 17.94% 17.57% 38 bps

Operating expenses (GAAP) $ 8,504,336 $ 7,189,972 $ 1,314,364 18.3% $ 7,189,972 $ 7,322,154 $ (132,182) -1.8%Impact of MEPP charge (35,600) - (35,600) NM - - - NMImpact of restructuring costs (1) (161,011) (123,134) (37,877) 30.8% (123,134) (7,801) (115,333) NMImpact of acquisition-related costs (2) (102,049) (35,614) (66,434) NM (35,614) (554,667) 519,052 -93.6%Operating expenses adjusted for certain items (Non-GAAP) $ 8,205,676 $ 7,031,224 $ 1,174,452 16.7% $ 7,031,224 $ 6,759,686 $ 271,537 4.0%Impact of Brakes (1,282,800) - (1,282,800) NM - - - NMImpact of Brakes restructuring costs (3) 13,732 - 13,732 NM - - - NMImpact of Brakes acquisition-related costs (2) 78,273 - 78,273 NM - - - NMLess 1 week fourth quarter operating expenses - (133,899) 133,899 NM (133,899) - (133,899) NMOperating expenses adjusted for certain items, extra week and excluding the impact of Brakes (Non-GAAP)

$ 7,014,881 $ 6,897,325 $ 117,556 1.7% $ 6,897,325 $ 6,759,686 $ 137,639 2.0%

Operating income (GAAP) $ 2,053,171 $ 1,850,500 $ 202,671 11.0% $ 1,850,500 $ 1,229,362 $ 621,138 50.5%Impact of MEPP charge 35,600 - 35,600 NM - - - NMImpact of restructuring costs (1) 161,011 123,134 37,877 30.8% 123,134 7,801 115,333 NMImpact of acquisition-related costs (2) 102,049 35,614 66,434 NM 35,614 554,667 (519,052) -93.6%Operating income adjusted for certain items (Non-GAAP) $ 2,351,831 $ 2,009,248 $ 342,583 17.1% $ 2,009,248 $ 1,791,830 $ 217,419 12.1%Impact of Brakes (51,053) - (51,053) NM - - - NMImpact of Brakes restructuring costs (3) (13,732) - (13,732) NM - - - NMImpact of Brakes acquisition-related costs (2) (78,273) - (78,273) NM - - - NMLess 1 week fourth quarter operating income - (44,876) 44,876 NM (44,876) - (44,876) NMOperating income adjusted for certain items, extra week and excluding the impact of Brakes (Non-GAAP)

$ 2,208,773 $ 1,964,372 $ 244,401 12.4% $ 1,964,372 $ 1,791,829 $ 172,543 9.6%


IMPACT OF CERTAIN ITEMS, BRAKES AND EXTRA WEEK IN FISCAL YEAR 2016 (CONT’D)

132


July 1, 2017 July 2, 2016

Period Change

in Dollars


Period Change

in Dollars

Period %/bps Change

Operating margin (GAAP) 3.71% 3.67% 3 bps 3.67% 2.53% 115 bpsOperating margin excluding Certain Items (Non-GAAP) 4.25% 3.99% 26 bps 3.99% 3.68% 31 bpsOperating margin excluding Certain Items, Extra Week and Brakes (Non-GAAP) 4.40% 3.98% 42 bps 3.98% 3.68% 30 bps

Interest expense (GAAP) $ 302,878 $ 306,146 $ (3,268) -1.1% $ 306,146 $ 254,807 $ 51,339 20.1%Impact of acquisition financing costs (4) - (123,990) 123,990 NM (123,990) (138,422) 14,432 -10.4%Interest expense adjusted for certain items (Non-GAAP) $ 302,878 $ 182,156 $ 120,722 66.3% $ 182,156 $ 116,385 $ 65,771 56.5%Less 1 week fourth quarter interest expense - (3,975) 3,975 NM (3,975) - (3,975) NMInterest expense adjusted for certain items and extra week (Non-GAAP)

$ 302,878 $ 178,181 $ 124,697 70.0% $ 178,181 $ 116,385 $ 61,797 53.1%

Other (income) expense $ (15,937) $ 111,347 $ (127,284) NM $ 111,347 $ (33,592) $ 144,939 NMImpact of foreign currency remeasurement and hedging - (146,950) 146,950 NM (146,950) - (146,950) NMOther (income) expense adjusted for cetain items (Non-GAAP) (15,937) (35,603) 19,666 -55.2% (35,603) (33,592) (2,011) 6.0%Less 1 week fourth quarter other (income) expense - 403 (403) NM 403 - 403 NMOther (income) expense adjusted for certain items and extra week (Non-GAAP)

$ (15,937) $ (35,200) $ 19,263 -54.7% $ (35,200) $ (33,592) $ (1,608) 4.8%

Net earnings (GAAP) $ 1,142,503 $ 949,622 $ 192,881 20.3% $ 949,622 $ 686,773 $ 262,849 38.3%Impact of MEPP charge 35,600 - 35,600 NM - - - NMImpact of restructuring cost (1) 161,011 123,134 37,877 30.8% 123,134 7,801 115,333 NMImpact of acquisition-related costs (2) 102,049 35,614 66,435 NM 35,614 554,667 (519,053) -93.6%Impact of acquisition financing costs (4) - 123,990 (123,990) NM 123,990 138,422 (14,432) -10.4%Impact of foreign currency remeasurement and hedging - 146,950 (146,950) NM 146,950 - 146,950 NMTax Impact of MEPP charge (11,903) - (11,903) NM - - - NMTax impact of restructuring cost (5) (51,184) (47,333) (3,851) 8.1% (47,333) (3,200) (44,133) NMTax impact of acquisition-related costs (5) (19,003) (13,690) (5,313) 38.8% (13,690) (227,518) 213,828 -94.0%Tax impact of acquisition financing costs (5) - (47,662) 47,662 NM (47,662) (56,779) 9,117 -16.1%Tax impact of foreign currency remeasurement and hedging - (56,488) 56,488 NM (56,488) - (56,488) NMNet earnings adjusted for certain items (Non-GAAP) $ 1,359,073 $ 1,214,137 $ 144,936 11.9% $ 1,214,137 $ 1,100,166 $ 113,971 10.4%Impact of Brakes (46,988) - (46,988) NM - - - NMImpact of Brakes restructuring costs (3) (11,794) - (11,794) NM - - - NMImpact of Brakes acquisition-related costs (2) (67,221) - (67,221) NM - - - NMImpact of interest expense on debt issued for the Brakes acquisition (6) 83,633 - 83,633 NM - - - NMTax impact of interest expense on debt issued for the Brakes acquisition (5) (33,880) - (33,880) NM - - - NMLess 1 week fourth quarter net earnings - (26,119) 26,119 NM (26,119) - (26,119) NMNet earnings adjusted for certain items, extra week and excluding the impact of Brakes (Non-GAAP)

$ 1,282,823 $ 1,188,018 $ 94,805 8.0% $ 1,188,018 $ 1,100,166 $ 87,852 8.0%


IMPACT OF CERTAIN ITEMS, BRAKES AND EXTRA WEEK IN FISCAL YEAR 2016 (CONT’D)

133


July 1, 2017 July 2, 2016

Period Change

in Dollars


Period Change

in Dollars

Period %/bps Change

Diluted earnings per share (GAAP) $ 2.08 $ 1.64 $ 0.44 26.8% $ 1.64 $ 1.15 $ 0.49 42.6%Impact of MEPP charge 0.06 - 0.06 NM - - - NMImpact of restructuring costs (1) 0.29 0.21 0.08 38.1% 0.21 - 0.21 NMImpact of acquisition-related costs (2) 0.19 0.06 0.13 NM 0.06 0.93 (0.87) -93.5%Impact of acquisition financing costs (4) - 0.21 (0.21) NM 0.21 0.24 (0.03) -12.5%Impact of foreign currency remeasurement and hedging - 0.25 (0.25) NM 0.25 - 0.25 NMTax Impact of MEPP charge (0.02) - (0.02) NM - - - NMTax impact of restructuring cost (5) (0.09) (0.08) (0.01) 12.5% (0.08) - (0.08) NMTax impact of acquisition-related costs (5) (0.03) (0.02) (0.01) 50.0% (0.02) (0.38) 0.36 -94.7%Tax impact of acquisition financing costs (5) - (0.08) 0.08 NM (0.08) (0.10) 0.02 -20.0%Tax impact of foreign currency remeasurement and hedging - (0.10) 0.10 NM (0.10) - (0.10) NMDiluted EPS adjusted for certain items(Non-GAAP) (7) $ 2.48 $ 2.10 $ 0.38 18.1% $ 2.10 $ 1.84 $ 0.26 14.1%Impact of Brakes (0.09) - (0.09) NM - - - NMImpact of Brakes restructuring costs (3) (0.02) - (0.02) NM - - - NMImpact of Brakes acquisition-related costs (2) (0.12) - (0.12) NM - - - NMImpact of interest expense on debt issued for the Brakes acquisition (6) 0.15 - 0.15 NM - - - NMTax impact of interest expense on debt issued for the Brakes acquisition (5) (0.06) - (0.06) NM - - - NMLess 1 week impact of fourth quarter diluted earnings per share - (0.05) 0.05 NM (0.05) - (0.05) NMDiluted EPS adjusted for certain items, extra week and excluding the impact of Brakes (Non-GAAP) (7)

$ 2.34 $ 2.06 $ 0.28 13.6% $ 2.06 $ 1.84 $ 0.22 12.0%

Diluted shares outstanding 548,545,027 577,391,406 577,391,406 596,849,034

2-year average diluted EPS adjusted for certain items, extra week and excluding the impact of Brakes (Non-GAAP)

12.8%

NM represents that the percentage change is not meaningful.

(3) Includes Brakes acquisition restructuring charges.

(6) Sysco Corporation issued debt to fund the Acquisition. The interest expense arising from the debt issued is attributed to the incremental impact of Brakes operating results, even though it is not a direct obligation of the Brakes Group and is not considered a certain item.(7) Individual components of diluted earnings per share may not add to the total presented due to rounding. Total diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.


(1) Fiscal 2017 includes $111 million in accelerated depreciation associated with our revised business technology strategy and $46 million related to professional fees on 3-year financial objectives, restructuring expenses within our Brakes operations, costs to convert to legacy systems in conjuction with our revised business technology strategy and severance charges related to restructuring.(2) Fiscal 2017 includes $76 million related to intangible amortization expense from the Brakes acquisition, which is included in the results of Brakes and $24 million in transaction costs. Fiscal 2016 and fiscal 2015 includes US Foods merger termination costs.

(4) Includes US Foods financing costs (first quarter 2016 and fiscal 2015 only) and Brakes acquisition financing costs (third and fourth quarter fiscal 2016 only).(5) The tax impact of adjustments for certain items are calculated by multiplying the pretax impact of each certain item by the statutory rates in effect for each jurisdiction where the certain item was incurred. The adjustments also include $7 million in non-deductible transaction costs and $4 million in other one-time costs related to the Brakes acquisition in fiscal 2017.

ROIC

Sysco Corporation and its Consolidated SubsidiariesNon-GAAP Reconciliation (Unaudited)Adjusted Return on Invested Capital (ROIC)(In Thousands)

2-year Average

Form of calculation:Net earnings (GAAP) $ 1,142,502 $ 949,622 Impact of Certain Items on net earnings 216,570 238,396 Adjusted net earnings (Non-GAAP) 1,359,072 1,188,018

Impact of Brakes 82,021 - Adjusted net earnings excluding Brakes (Non-GAAP) $ 1,277,052 $ 1,188,018

Invested Capital (GAAP) $ 10,820,302 $ 9,693,589 Adjustments to invested capital (307,736) (1) (1,267,922) (2)

Adjusted Invested capital (Non-GAAP) 10,512,566 8,425,667

Impact of Brakes 2,621,746 - Adjusted invested capital excluding Brakes $ 7,890,820 $ 8,425,667

Return on investment capital (GAAP) 10.6% 9.8% 10.2%Adjusted return on investment capital (Non-GAAP) 12.9% 14.1% 13.5%Adjusted return on investment capital excluding Brakes (Non-GAAP) 16.2% 14.1% 15.1%

Adjusted Return on Invested Capital (ROIC) Target

52-Week Period Ended Jul. 1, 2017


We calculate ROIC as net earnings divided by (i) stockholder’s equity, computed as the average of adjusted stockholders’ equity at the beginning of the year and at the end of each fiscal quarter during the year; and (ii) long-term debt, computed as the average of the long-term debt at the beginning of the year and at the end of each fiscal quarter during the year. All components of our ROIC calculation are impacted by Certain Items. As a result, in the non-GAAP reconciliation below for fiscal 2017 and 2016, adjusted total invested capital is computed as the sum of (i) adjusted stockholder’s equity, computed as the average of adjusted stockholders’ equity at the beginning of the year and at the end of each fiscal quarter during the year; and (ii) adjusted long-term debt, computed as the average of the adjusted long-term debt at the beginning of the year and at the end of each fiscal quarter during the year. Sysco considers adjusted ROIC to be a measure that provides useful information to management and investors in evaluating the efficiency and effectiveness of the company's long-term capital investments, and we currently use ROIC as a performance criteria in our managment incentive programs. It is possible that a different definition of ROIC may be used by other companies since it can be defined differently. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP. In the table that follows, Adjusted ROIC for each period presented is to a GAAP based calculation of ROIC.

(1) Shareholder's equity adjustments include the impact of Certain Items from earnings and removal of foreign currency translation adjustments that arose in the fiscal year.

(2) Adjustments to invested capital includes the removal of debt incurred for the Brakes Acquisition that would not have been borrowed absent this acquisition. Shareholder's equity adjustments include the impact of Certain Items from earnings and removal of foreign currency translation adjustments that arose in the fiscal year.

We have an ROIC target of 16% that we expect to achieve by fiscal 2020. We cannot predict with certainty when we will achieve these results or whether the calculation of our ROIC in such future period will be on an adjusted basis due to the effect of certain items, which would be excluded from such calculation. Due to these uncertainties, we cannot provide a quantitative reconciliation of this non-GAAP measure to the most directly comparable GAAP measure without unreasonable effort. However, we would expect to calculate adjusted ROIC, if applicable, in the same manner as we have calculated this historically and all components of our adjusted ROIC calculation would be impacted by certain items as shown in the foregoing calculation.

134

OPERATING LEVERAGE

135


(a) 27 month average gross profit (GAAP) 10.5%(b) 27 month average gross profit excluding the impact of Brakes (Non-GAAP) 3.9%

(c) 27 month average operating expenses (GAAP) 7.2%(d) 27 month average operating expenses adjusted for certain items and excluding the impact of Brakes (Non-GAAP) 2.0%

Gross profit $ 2,793,668 $ 2,691,919 $ 101,749 3.8% (a) $ 2,759,590 $ 2,502,838 $ 256,752 10.3% (a) $ 2,534,135 $ 2,142,825 $ 391,310 18.3% (a)Impact of Brakes (342,059) (343,051) 992 -0.3% (338,721) - (338,721) NM (298,947) - (298,947) NMLess 1 week fourth quarter gross profit - - - NM - (178,774) 178,774 NM - - - NMComparable gross profit using a 13 week basis and excluding the impact of Brakes (Non-GAAP) $ 2,451,609 $ 2,348,868 $ 102,741 4.4% (b) $ 2,420,869 $ 2,324,064 $ 96,805 4.2% (b) $ 2,235,188 $ 2,142,825 $ 92,363 4.3% (b)

Operating expenses (GAAP) $ 2,170,576 $ 2,125,086 $ 45,490 2.1% (c) $ 2,201,631 $ 1,956,013 $ 245,618 12.6% (c) $ 2,098,173 $ 1,765,207 $ 332,966 18.9% (c)Impact of certain items (38,798) (59,995) 21,197 -35.3% (108,870) (81,432) (27,438) 33.7% (64,336) (60,030) (4,306) 7.2%Impact of Brakes (313,104) (300,270) (12,834) 4.3% (307,501) - (307,501) NM (295,909) - (295,909) NMLess 1 week fourth quarter operating expense - - - NM - (133,899) 133,899 NM - - - NMOperating expenses adjusted for certain items and excluding the impact of Brakes (Non-GAAP) $ 1,818,674 $ 1,764,821 $ 53,853 3.1% (d) $ 1,785,260 $ 1,740,682 $ 44,578 2.6% (d) $ 1,737,928 $ 1,705,177 $ 32,751 1.9% (d)

Gross profit $ 2,571,863 $ 2,156,814 $ 415,049 19.2% (a) $ 2,691,919 $ 2,237,995 $ 453,924 20.3% (a) $ 2,502,838 $ 2,220,164 $ 282,674 12.7% (a)Impact of Brakes (353,133) - (353,133) NM (343,051) - (343,051) NM (178,774) - (178,774) NMGross profit excluding the impact of Brakes (Non-GAAP) $ 2,218,730 $ 2,156,814 $ 61,916 2.9% (b) $ 2,348,868 $ 2,237,995 $ 110,873 5.0% (b) $ 2,324,064 $ 2,220,164 $ 103,900 4.7% (b)

Operating expenses (GAAP) $ 2,079,446 $ 1,724,231 $ 355,215 20.6% (c) $ 2,125,086 $ 1,744,521 $ 380,565 21.8% (c) $ 1,956,013 $ 2,099,169 $ (143,156) -6.8% (c)Impact of certain items (65,460) (4,281) (61,179) NM (59,995) (13,005) (46,990) NM (81,432) (388,250) 306,818 NMImpact of Brakes (287,114) - (287,114) NM (300,271) - (300,271) NM (133,899) - (133,899) NMOperating expenses adjusted for certain items and excluding the impact of Brakes (Non-GAAP) $ 1,726,873 $ 1,719,950 $ 6,923 0.4% (d) $ 1,764,820 $ 1,731,516 $ 33,304 1.9% (d) $ 1,740,682 $ 1,710,919 $ 29,763 1.7% (d)

Gross profit $ 2,142,825 $ 2,057,498 $ 85,327 4.1% (a)(b) $ 2,156,814 $ 2,085,137 $ 71,677 3.4% (a)(b) $ 2,237,995 $ 2,188,717 $ 49,278 2.3% (a)(b)

Operating expenses (GAAP) $ 1,765,207 $ 1,730,190 $ 35,017 2.0% (c) $ 1,724,231 $ 1,769,691 $ (45,460) -2.6% (c) $ 1,744,521 $ 1,723,104 $ 21,417 1.2% (c)Impact of certain items (60,029) (49,974) (10,055) 20.1% (4,281) (80,809) 76,528 NM (13,005) (43,435) 30,430 NMOperating expenses adjusted for certain items (Non-GAAP) $ 1,705,178 $ 1,680,216 $ 24,962 1.5% (d) $ 1,719,950 $ 1,688,882 $ 31,068 1.8% (d) $ 1,731,516 $ 1,679,669 $ 51,847 3.1% (d)



13-Week Period Change

in Dollars

13-Week Period

% ChangeSep. 26, 2015 Sep. 27, 2014




in Dollars

13-Week Period

% ChangeJuly 2, 2016 June 27, 2015




in Dollars

13-Week Period

% ChangeApr. 1, 2017 Mar. 26, 2016




in Dollars

13-Week Period

% ChangeDec. 26, 2015 Dec. 27,




in Dollars

13-Week Period

% ChangeOct. 1, 2016 Sep. 26, 2015




in Dollars

13-Week Period

% ChangeJuly 1, 2017 July 2, 2016




in Dollars

13-Week Period

% ChangeMar. 26, 2016 Mar. 28, 2015




in Dollars

13-Week Period

% ChangeDec. 31, 2016 Dec. 26, 2015




in Dollars

13-Week Period

% ChangeSep. 30, 2017 Oct. 1, 2016

FREE CASH FLOW

136

Sysco Corporation and its Consolidated Subsidiaries

Free Cash Flow and Adjusted Free Cash Flow

Net cash provided by operating activities (GAAP) $ 2,176,425 $ 1,933,142 $ 1,555,484 Additions to plant and equipment (686,378) (527,346) (542,830) Proceeds from sales of plant and equipment 23,715 23,511 24,472 Free cash flow (Non-GAAP) $ 1,513,762 $ 1,429,307 $ 1,037,126 Impact of certain items on operting cash flows 108,658 454,980 350,307 Tax impact of certain items in operating cash flows (22,819) (175,201) (119,470) Adjusted Free cash flow (Non-GAAP) $ 1,599,601 $ 1,709,086 $ 1,267,963

Non-GAAP Reconciliation (Unaudited)

(In Thousands)



52-Week Period Ended Jun. 27, 2015

Free cash flow represents net cash provided from operating activities less purchases of plant and equipment and includes proceeds from sales of plant and equipment. Adjusted free cash flow adjustsout the cash impact of our Certain Items representing primarily restructuring and acquisition costs. Sysco considers free cash flow and adjusted free cash flow to be liquidity measures that provideuseful information to management and investors about the amount of cash generated by the business after the purchases and sales of buildings, fleet, equipment and technology, which maypotentially be used to pay for, among other things, strategic uses of cash including dividend payments, share repurchases and acquisitions. Adjusted free cash flow further provides the amount ofcash generated excluding larger payments sometimes incurred with our certain items. However, free cash flow may not be available for discretionary expenditures, as it may be necessary that we useit to make mandatory debt service or other payments. Free cash flow and adjusted free cash flow should not be used as a substitute in assessing the company’s liquidity for the periods presented. Ananalysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP. In the table that follows, the free cash flow and adjusted free cash flow foreach period presented are reconciled to net cash provided by operating activities.

ADJUSTED SALES, GROSS PROFIT, OPERATING EXPENSE, OPERATING INCOME, EARNINGS PER SHARE AND ADJUSTED OPERATING INCOME TARGETS

137

Sales, Gross Profit, Operating Expense, Operating Income and Earnings per Share Targets

Adjusted Operating Income Margin Target

Form of calculation:Sales (GAAP)

Operating income (GAAP)Impact of certain itemsOperating income adjusted for certain items (Non-GAAP)

Operating margin (GAAP)Operating margin excluding certain items (Non-GAAP)

We expect to achieve our sales, gross profit, operating expense, operating income and earnings per share (EPS) targets under our 3-year strategic plan by fiscal 2020. We cannot predict with certainty when we will achieve these results or whether the calculation of our sales, gross profit, operating expense, operating income and/or EPS will be on an adjusted basis in future periods to exclude the effect of certain items. Due to these uncertainties, we cannot provide a quantitative reconciliation of these potentially non-GAAP measures to the most directly comparable GAAP measure without unreasonable effort. However, we expect to calculate these adjusted results, if applicable, in the same manner as the reconciliations provided for the historical periods that are presented herein.

We have an adjusted operating income margin target of 5% that we expect to achieve by fiscal 2020. We cannot predict with certainty when we will achieve these results or whether the calculation of our operating income margin in such future period will be on an adjusted basis due to the effect of certain items, which would be excluded from such calculation. Due to these uncertainties, we cannot provide a quantitative reconciliation of this non-GAAP measure to the most directly comparable GAAP measure without unreasonable effort. However, we would expect to calculate adjusted operating income margin, if applicable, in the same manner as we have calculated this historically. All components of our adjusted operating income margin calculation would be impacted by certain items. We calculate adjusted operating income margin as adjusted operating income divided by sales.

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INVESTOR DAY | 2017/media/Files/S/Sysco... · U.S. Foodservice Operations. International. Foodservice. Operations. OTHER. Geographic expansion. Restaurant segment penetration. Lodging