Sysco Corporation (SYY) Earnings Call Transcript & Summary

Good afternoon, it's my pleasure to welcome Sysco back to CAGNY. Sysco, as many of you know, is the global leader in selling, marketing and distributing food products to restaurants, health care, educational facilities, lodging establishments and other customers who prepare meals away from home. With more than 69,000 associates, the company operates more than 320 distribution facilities worldwide and serves more than 650,000 customer locations. For the company's most recent fiscal year, the company generated sales of more than $60 billion. To tell us a little bit more, we're joined here today by President and Chief Executive Officer, Kevin Hourican; Executive Vice President and Chief Financial Officer, Joel Grade; and Vice President of Corporate Affairs, Neil Russell. Before turning it over, we want to thank Sysco for their continued support of CAGNY and for sponsorship of dinner this evening. We look forward to seeing you all there. And with that, I'll turn it over to Kevin.

Good afternoon, everyone. My name is Kevin Hourican, as [ Reed ] just said and we're -- we at Sysco are honored to be able to be here today. Me, myself, I'm in my third week as the President and CEO of Sysco Foods, and just wanted to tell you, first, why I'm so excited to be at Sysco, what I see as far as our ability to continue to grow profitably into our future and then tee up the day on what we're going to talk about. So why Sysco? You know the company that we are. We are the biggest in our space. We have roughly 16% market share in a $300 billion business. We have big opportunities to be able to grow in that regard given that share and we have a very strong balance sheet that affords us the opportunity of the free cash flow generation to be able to invest in ourselves to be able to profitably grow our business. We also have the opportunity to leverage the industry's largest physical scale to be able to continuous process improvement, take cost out of our business to be able to invest in our own ability to grow, and you'll hear more about that in a moment. Another reason why I'm excited to be with the company is, this year, we are celebrating our 50th anniversary in business. We will honor our heritage and what got us to where we are and we will craft the plan to be able to ensure success over the next 50 years. We'll be ringing the bell at the New York Stock Exchange in roughly 3 weeks, and we look forward to that monumental event in our company's history, celebrating that 50th anniversary. So why specifically I am at Sysco? We are a food company with an incredibly strong team of leaders that are experts in food. What we also are is the world's most significant supply chain company in the food space. I come to this job with multiple decades of experience, specifically in building world-class supply chains that enable improved sales, improved customer service and network optimization strategies that take cost out of the business to afford the ability to invest in growth. In addition to that, however, I've also led very large businesses that we're able to improve customer service and grow top line through both organic and large-scale M&A activity and seamlessly having the ability to bring those acquired entities into the fold, integrate them, improve service, improve sales and improve the bottom line. And I look forward to having the opportunity to do that along with my teammates and associates at Sysco. A little bit more about our company. As I said a moment ago, we are the industry's leader. We have a platform for long-term growth given the scale of our business and the fundamental strength of our balance sheet, as I mentioned. We continue to bring value to our shareholders, and you can continue to expect that predictable, consistent, strong results from our company, and we are anticipating the future where we can accelerate our top line growth in a profitable way. We will talk more about that at the end of the summer when we have our next Investor Day, when we lay out that plan, lay out the strategies and specifically talk to the what and how behind the details of what we're at the high level talking about this afternoon. We also are a socially responsible investment. My partner, Neil, will be coming up in a moment to talk about some terrific work that's happening in the CSR space. We are leaders in the CSR space. And you can be a leader as an investor by getting a part of what we're doing to help improve our carbon footprint and have a more sustainable business climate in this country and globally. More on that in a little bit. You've seen this chart from our company before, the 4 priorities of Sysco. And I'm going to talk about this page, and I'm also going to introduce a new slide in a moment that talks about where you might see some improvements and involvement in this strategy. But as I roll around the slide, the top left, our mission as a company is to help our customers grow by being their most trusted partner. Our role, we get up every day to determine how we can improve the ability of our end customers to be able to grow their business. You'll hear more about that from both me and from Joel. On the top right, I mentioned our size and scale. The ability to be the most efficient operator in our space affords us the ability to compete profitably on large-scale clients and local individual customers. On the bottom right, this is an enabler, the one I just spoke of. We can do things to take cost out of our business, zero-based budgeting, if you will, to identify those areas where we can remove expense, again, with the purpose of driving investments into our business. All of which is driven by the power of our people, which is the fourth, and I would say, most important component of our work. Our people are experts in food. We have a sales force that has 6,000 people strong out in the communities, in the restaurants. They're on a first-name basis with the chef inside the restaurant, providing suggestions on product, helping fill out menu suggestions and providing that face-to-face ability to serve that customer. We're also able to do so from a tools perspective, and I want to talk about that on my next page. So as we talk about turbocharging growth, you can think about where that growth will come from through these 3 lenses: The one on the left is we believe we have the right to have the best customer-facing tool in the industry. We've made a tremendous amount of progress in our tool that we call Shop, which is the ability for our customers to be able to order through an omnichannel manner, product to be able to delivered through their restaurant or through their business. Roughly 50% of our orders are now being generated through the Shop tool, but we can make improvements to this tool. A suggested order that they simply need to improve. Suggestions for new items they might want to try. Suggestions for menu additions that other customers like them have been trying and have had success with. When you couple that local relationship of the 6,000 MAs with the industry's best-in-class tool for our customers to be able to order because some do want to order for themselves or they have select items they want to order from themselves, we believe that is a powerful one-two punch. The middle piece is what I've mentioned a few times, which is we will relentlessly and continuously be looking for ways that we can take cost out of the business: network optimization of our distribution centers; reducing the number of miles that our trucks need to drive, which reduces both our carbon footprint and also reduces our expenses. Our objective is then to take those savings and invest them back into our business to be able to accelerate growth. And about growth, the right-hand side of the page, we have multiple avenues of growth or vectors of growth that we will chat about on my very next slide. And similar to the slide I just showed you, all of which will be enabled by the power of the people and the talent that exists at Sysco. So where will this growth come from? We've been pretty predictable in our ability to be able to grow our top line over time. What we are communicating is, in addition to that, we are going to take share over time in our future growth objectives. The how are the things that are listed here, and this is not an all-encompassing list. This is an initial view into the things that we, as a leadership team, will be focused upon. The first is accelerating our organic growth. As I mentioned, we are the biggest in this space by a large margin, but we have only 16% share in a $300-plus billion business. By taking more share, we can grow our top line, and we will do so profitably, which Joel will talk about. On our most recent earnings call, I gave a single example of growing in the metro market space. We under-indexed our percent to total in the metro markets versus our national average. So why is our mousetrap isn't uniquely best served for those specific customers in those metro markets? And we can improve on that. We have the ability to make the investments in delivery frequency, vehicle delivery type and even just the physical, how we get product to those customers from a same-day, next-day perspective. More on that in the future. Another metro example I would give you is a completely different type of a city. I had the opportunity to visit our operating company in Nashville, Tennessee just last week, one of my very first visits out getting to meet our team. Nashville, as you all know, is absolutely exploding from a population growth perspective. What goes along with population growth: new buildings, new restaurants, new customers for us to serve. We have the opportunity to be more aggressive in places like Nashville with our staffing strategies, our customer acquisition strategies and our business model to serve in markets like that where we can be taking outsized share in a market that, by itself, is growing. This is a different mentality, a different level of entrepreneurial aggressiveness that we will go after markets like Nashville. Example only. As I mentioned on my last page, using that Shop tool, we have roughly 40% share of wallet for the customers that we today serve. That means 60% of what they're ordering, and these are products that we stock and carry, is the opportunity to increase the share of wallet with those existing customers that we serve. And we believe that Shop tool, as we improve it, when we improve it, coupled with our local market sales force, we have the opportunity to earn more than the 40% share of wallet that we currently have with our existing customers. And that is a very fertile return on investment because we're already going to their location and we're simply putting a few more cases on the truck that is a very cost-effective way for us to grow. We get asked the question often about mergers and acquisitions. Yes, we will continue to be active in that space if it's strategically right for our company, and I'll talk more about that in a little bit. All of this, I can't impress more, will be done in a disciplined and focused way to ensure that the growth is profitable. International is the last thing that I will communicate. We do have international presence. Our current focus internationally is to stabilize our operations. Joel will talk about that in a little bit when he comes up. And once stabilized, we will, in fact, then be in a position to look for growth. So more on M&A. As you know, in our 50 years as a company, we have, in fact, done quite a few acquisitions. What I would like to articulate is where, when and how acquisitions make sense for us as a company. Access to new geographies, access to new products that we haven't had before in the specialty space, mostly in fresh and in center-of-plate categories or adjacencies, business adjacencies that is a effective way for us to get into those businesses. Access to product, access to physical geographies and sometimes, access to customers, and we can fold that into our existing operations, sometimes even pulls down an operation that was there because we can more cost effectively serve that customer base that was being served. Those are very profitable acquisitions. The key point on this slide is our extremely strong balance sheet and our strong free cash flow generation affords us the opportunity to continue to be active in this space. So my last slide, before I bring up Neil, is the following. Why invest in Sysco? We continue to be a leader from a return on shareholder value creation perspective, and the how and the why is listed on the page behind me. Our profitable share gains. We'll continue to be able to create free cash flow. And as I mentioned, we are going to accelerate our ability to take share, and we'll talk more about that at the end of the summer. We produced meaningful cash flow, which gives us bountiful choices by which we can invest that cash in both returning that cash directly to our shareholders by the next [indiscernible], 51 consecutive years of increasing our dividend, and Joel will talk more about that in a moment. And the bottom line is we will produce and return solid and consistent shareholder return for the people that choose to invest with us, and we hope you come along with us on that journey. And for those that are already invested with us, we really appreciate what you do with us and for us, and thank you for that. So I'm going to turn it over to Neil. But before I do, there's a video that we're going to show. This video shows some fantastic work that we are doing in the community responsibility space. Neil leads that work for our company, and I'm excited for him to have the opportunity to share that work with you. So if you could please roll the video. [Presentation]

Thank you, Kevin. Good afternoon, everyone. It's good to be back at CAGNY again this year. Thanks for having us. It's certainly always great to be back at a great Sysco customer, too, here at this beautiful resort. So good to be here this afternoon, and thanks for your time. Some of you know me as my role in Investor Relations and the conversations we have about Sysco's strategy, our financial results and our position in the marketplace. And some of you know me from my role in CSR, as Kevin just alluded to, in conversations we have with you as a governance team or with the governance teams at your investment firms. Sysco, as you can tell, we actually combined both of those into one because we think that's really important. The conversations we have with you about our financial standing and the conversations we have with you about our governance standards matter. And so we like combining those 2, and I'm glad to be able to spend a few minutes this afternoon with you to talk not only about Sysco's strategy and our direction, as Kevin just articulated to you, but also about Sysco's great foundation for financial success that Joel is about to walk you through. But importantly, why we believe we're also a very responsible investment from a social perspective. So at Sysco, that starts with our brand. As some of you know, we have very powerful branded product. And the brand portfolio that we have is very wide and deep. It's a big part of what we sell. Nearly half of what we sell to our local customers is our own private brand. And as you can see on this chart, our brand is not only just various levels and degrees of product within quality components but across different categories as well. So whether it be a product category like dairy with Wholesome Farms or even an ethnic brand like Arrezzio for Italian product, we have a broad depth of product categories within our brand portfolio. And in fact, we actually have 5 brands that are more than $1 billion in sales. That's larger than most of our competitors in total. We believe that for our customers, the end consumer is more interested in their food and where it came from, how it was raised than they ever have been, and we don't think that trend is going away anytime soon. The ability for a local restaurant to say, this fish came from here. Or for ingredients on a menu to be listed with simple ingredients in how they were responsibly sourced matters more and more to the end consumer. Our ability to provide that to our customers is a path to success for us, and there are a couple of ways in which we do that within our branded product portfolio. The first of which here is our Simply brand. The Simply brand is product that we have sourced in a very simple, responsible way, think about simple clean ingredient labels, things that our customers can advertise on their menus to their customer to help represent this increasing demand from the end consumer. You're going to get a chance tonight at dinner to sample some of our Simply-branded products. These range from things like plant-based proteins, to clean labels, simple ingredients within premixed products, things that help this very-growing part of our portfolio. Another way in which we approach this topic is through our Earth Plus brand of products. This gets beyond the product itself, things like packaging, smallwares, utensils, towels and tissues. Think about responsibly sourced products, recyclable items and minimizing plastics in the environment where our customers can feel good about the environment in which their product is being consumed or how it's taken home. Now these 2 things: the Simply brand product portfolio and the Earth Plus product portfolio are good, but we would argue quite frankly, those are table stakes to be in the industry and to have the success that a foodservice distributor should have. Don't get me wrong. As a leader in this space, we're very proud to have what we have, and we'd encourage you to press upon maybe some other competitors in the space on their depth in these areas compared to ours, and this is one of the advantages that we have and why customers would want to interact with Sysco and buy product from us versus purchasing from someone else. But we know that we need to do more, and do more we have over a long period of time. In fact, we've been at this, in terms of CSR space, for more than 4 decades. It started with some supplier audits back in the 1980s that continue even today and continuing forth with our renowned integrated pest management program to very specific seafood sustainability goals to CDP reporting and now, to some very big commitments that we've made with our 2025 CSR goals. And it would be easy enough for us at Sysco to leverage the brand ideas that I mentioned earlier with Simply and Earth Plus and stopping there and just, quite frankly, calling it a day. But we are right where we should be. We are stretching to do more and to make a difference and to make a big difference, not only within our company but in the industry with the goals that we've set for ourselves. These goals that we've set are across 3 different pillars, and they're not just easy stuff that we do anyways. These 3 pillars are people, product and planet. And as you saw in the video, there are 14 goals in all. 14, not just 1 or 2. And none of them easy. All of them very impactful, in fact. I'm not going to repeat them all that was in the video, but let me just highlight some that we think are very, very important to us. So by 2025, we pledged to donate 200 million meals to help fight hunger. To increase ethnic and gender diversity in our staff in the United States to 62%. To increase spend 25% with minority and women-owned suppliers. To expand our product offerings with health and wellness benefits. To publish an animal welfare policy for our Sysco brand suppliers to comply with. To create responsible sourcing commitments for 5 key commodities. To divert 90% of our waste from landfill. To have 20% of our electricity usage to be from renewable sources. And for 20% of the tractor fleet to be fueled by alternative fuels. These are very big goals and very big commitments for us. And we know that ultimately, we will be measured by our actions and our progress, so we are committed to providing interim updates along the path towards our 2025 goals, both the ups and downs that come with a journey like this. So starting with the people pillar. Good news. Last year alone, we donated more than 7 million meals in the local communities in which we serve to help fight hunger. But clearly, we have a long ways to go to achieve our goal. We added 15 new women- and minority-owned businesses to our supplier network, and we increased our ethnic and gender diversity in the U.S. to more than 57%. And these are programs -- they don't cost a lot of money. We're talking about making better choices in terms of diversity. We're talking about using otherwise wasted product to help fight hunger. These are decisions we're making, processes we're putting in place in the business, not simply just adding cost. On the product side, in terms of additional key commodities to responsibly source, we've made good progress to narrow the list down to 13 key commodities and ingredients to figure out where we go from here, and importantly, to place ownership within the business. This is not just the CSR team thinking of goals and ideas and hopes for the business. This is embedding the responsibility for these choices into our organization and partners of ours within our merchandising organization, for example, who have true ownership of these decisions. For social audits, increasing the number of those just last year alone by more than 9%. And with more than 30 suppliers, improving their score in the last year, and 14 of those suppliers achieving a perfect score. For planet, we had a big year last year. We launched 3 new solar gardens to help fuel our -- the electricity within our system. And now 10% of our U.S. electricity is being fueled by alternate sources, and that represents nearly all of our operations in Texas. Additionally, we've improved our energy efficiency by 14% since 2014. And we've increased waste diversion to 73%, which is good progress towards that 90% goal I mentioned a minute ago. We're very proud of this progress, but I'll be the first to admit that we have work to do to achieve our goals. But that is where your confidence can come in. And knowing that we are committed to doing the right thing for our people, for the product we sell to our customers and ultimately, for the planet. So thank you for your time today. It's my pleasure to now bring Joel up to the stage.

Thank you, Neil. Good afternoon, everyone. Always a pleasure to be here at CAGNY. Again, thank you to CAGNY for having us, as Neil said, and certainly appreciate all of your interest in Sysco. So thanks for being here. I wanted to start out by just taking a few minutes to review the past quarter, give you a few high-level thoughts just to get us level set on where we're at based on the last quarterly results. So starting on the top line. I would say, in general, this is an area, as we talked about on the call, that we generally feel good about. And why do we feel good about that? Because as we talked about the exit rates from the first quarter heading into the second quarter, this area of our local sales continue to escalate. It's an area that was driven by our independent customers. Those customers, as we talk about often, are so much the lifeblood of this business and so much of the focus of what we do. And so while we grew $15 billion again -- and 1.8%, that number on the overall isn't necessarily high. But obviously, as we've talked about many times before as well, that's partially because we've taken a very disciplined approach to growth in the multi-unit segment. And so if you take a look at the growth that we've had in the local, which we feel really good about, a disciplined approach in the multi-unit and some softness in our international segment, that's where we end up on the top line as we did. Gross margin is certainly something we talked about quite a bit in the last quarter, something that we did struggle with some in the U.S. business and somewhat as well in France. On the U.S. side of the business, inflation late in the quarter escalated relatively quickly in a way that caused us not to be able to pass along the inflation as efficiently and as effectively as we could. In the past, you've heard us talk about revenue management as an area that is something that's helped us navigate those ups, those downs. This is an area we've continued to invest resources, and we'll continue to do so. And I feel confident we're going to continue to do a better job of passing that along. In fact, we've seen some improvement on that as we've gone here now into the February time period of our year. But the reality of it is we still have ways to go. And in France, as we've talked about, again, we'll get into this a little bit more. Some of the issues we've had in France are related to some of the service levels. Again, I'll go into more detail on this, that also impacted our gross profit dollars. On the operating expense side, a couple of key areas to call out. In the labor area, we've talked about some of the challenges we had over the last couple of years and how -- in terms of hiring drivers, in terms of hiring warehouse people. And this is an area we've actually carried some level of labor a little higher than we normally would have to ensure we don't find ourselves in that place again. So labor expenses have been an area we continue to see some struggle. We also talked about bad debt expense. Some of this is something that, I'd say, the majority is self-inflicted. The things that we've done in terms of the consolidation, our finance technology road map, some significant savings in our SG&A area, but some bumps along the way. There's a bit of increased bankruptcies in the space as well. But I would say that's not something we're raising a red flag at, at this time. Really, it's more self-inflicted, things that I believe, again, we'll continue to get better at. And then on the corporate expense line in the last quarter, some, I'll call discrete items. Discrete items and things like, again, we had a strike in our Denver facility that lasted the better part of 2 weeks. We had some things in our corporate expense related to some claims and auto liability in workers' comp. And some areas that, again, were just what I'd call generally discrete. And so this is bit of a summary that took a stab on operating income of 3.9%. And earnings per share of $0.85 that had some tax benefit, but again, feel good about in the sense that we did hit consensus. So overall, a quarter that had strong top line growth certainly in the local and certainly fueled by our independent restaurants as well as an EPS line with some softness in between. And obviously, one of the key highlights we talked about on the earnings call was related to this idea that we took down guidance. We've gone from $600 million to just $500 million to $525 million. I just want to refresh your memory on a couple of points around the 3-year plan that we're now reaching the end of as we head into this fiscal year. We talked about 6 key targets: we talked about growth in local cases. And over that 3-year time period, we reached the high end of our local case target of 3% to 3.3%. We talked about total cases of 2.5% to 3%; sales, 3.5% to 4%; gross profit, 3.5% to 4%. And in each of those cases, the total case is around a little bit on the lower end, the other 2 were in the middle of the range. But even having said that, again, this is, I think, an important point, that all happened even with the disciplined approach we talked about in our multi-unit cases. And so from an overall perspective, we feel pretty good there. From the perspective of adjusted operating income, we did take down the target. Again, an 8% CAGR, down to 7%. But I guess, just a reminder here, over the course of the 2 -- 3-year plan, we actually added $1 billion of operating income over a 5-year time period on a base of $1.8 billion. And so some very significant growth over that time period. And just a reiteration of the strong fundamental this business continues to have. From an earnings per share perspective, we talked about targeting 15%. And on the last earnings call, we reiterated our guidance to hit that EPS target again, in this case, was slightly over the 15% mark. So a lot of good things there. But nonetheless, we did reset guidance. And one of the things that we took a lot of questions on after the fact was this idea of how do I think about that? How do I bucket this? Where are some of the main issues? And so I'd like to spend a couple of minutes actually talking about that. So I'm going to bucket the areas of the reset into 3 key areas: I'm going to call it our international operations, our U.S. operations and then I'll call it cost. And so you'll see here on the slide that we've actually bucketed this both in terms of the percentages of the impact, the length of time that we anticipate being an issue and then, again, a little bit of specificity around it. So let me talk through that for a second. About 40% of the cause of the change was related to our international segment, the majority of that being France. And so to take a couple of minutes and talk about what exactly that is and what exactly that isn't. So doing business in France oftentimes, again, there's some complexities around the work councils and labor unions. When we attempt to merge a couple of businesses, this was not the issue that we had. This is actually an area that we handled quite well. Where the challenges came in for us in France was related to the integration of 2 very similar-sized businesses that have been acquired by the Brakes Group prior to our acquisition of that company. And so when I think about this, the 2 areas are primarily technology and what I'll call one delivery. In other words, each of the 2 businesses we're delivering to customers, similar customers. And so instead of having those customers receiving deliveries from each, a single delivery. And so this is an area that has had some bumps on the road in ways that were certainly above what we anticipated. It's created service level challenges for our customers, resulting in gross profit impact. The positive out of that, I guess, the silver lining of that, if you will, is that we actually haven't lost significantly customers. We've lost share of wallet within customers, and we certainly need to earn that back. But I think that's an important point. And I have a lot of confidence. We, as a team, have a lot of confidence in our leadership in France. The work that we're doing as a company, we're continuing to commit additional resources to address that issue. But again, to this point, that was a portion of this, you'll see about 40% related to international, the majority of it's France and the remainder at some unexpected softness sites in Canada. But certainly, France being the major part. 20% of the impact was on the U.S. side. So one of the things we spent a lot of time talking about in the earnings call was margin impact and some of the issues with expense, although, again, strong volume. But the reality of it is the takedown. Our core business remains strong. The fundamentals of that business remain good. Yes, we have some opportunities. Yes, we're continuing to address those opportunities and feel good about our ability to improve it. But nonetheless, 20% of that was in the U.S. area. And again, revenue management, I would call out, is a key part of what we continue to rely on in order to navigate us through some of the margin challenges we had. And a key point, again, I made it once and made it 1 million times, as we continue to talk about growth and the opportunities we have there, this is not something, as the industry leader, we have ever led with or we ever will lead with in terms of price. And so again, some opportunities, we'll get better at that as it relates to moving some of the inflation through, but 20% in the U.S. Finally, about 40% was related to what I'm going to call both transitory costs and investment. And I'll talk about each of those for just a second. The transitory costs, part of that was already what we talked about on the corporate side that we talked about in the quarter. Part of that was also what I'm going to call transition costs with leadership change with our CEO out, and then, of course, Kevin joining us. The other half of that is what we've talked about as investments. And this is an important part of the story. And it's -- I guess, there's a couple of points here that I'd like to make. One, if faced with the choice of saying, should we plug in extra X billion dollars against a target, or should we do what's right for the long term of this business, we'll choose what's right for the long term of this business every time, and that's what we've done here. These are not new initiatives. They're continuations of existing priorities, but there are opportunities to accelerate things. And so one of the other questions that came out of the earnings call a little bit was what does that mean? What are these investments? And the reality of it is -- obviously, Kevin has been here very recently. We'll have an Investor Day, as he mentioned, some time later in the summertime to go through this in more detail. But I can say a couple of things in terms of how to think about some of the investments we're making. They fall into a few key categories. As Kevin talked about earlier, customer-facing technologies remain a really critical part of our story. You'll see here on this slide, and again, Kevin talked about this a little bit earlier in his conversation, the ability to search easily. The ability to have opportunities for suggested orders or ideas. These are things that just go long ways, again, as part of enhancing the experience of how customers do business with us. The way that we are changing how we go-to-market and evolving how we go-to-market from a local customer standpoint. So again, that's an important part of our investment story. Having technologies that support our sales force, giving them more time to actually spend in consultative selling. Simplifying their jobs to reduce the administrative work they have to do, and again, allow them to spend more time helping our customers succeed. Things in our business that drive more efficiency and reduce complexity in the organization, again, making our overall business more efficient, easier to do business with as a company. These are things -- and some of that falls into the areas of additional categories of indirect spend that are above and beyond some of the smart spending work that you've heard us talk about. These are some of the opportunities that we believe can accelerate investment in this business. Again, more to come at Investor Day when we have the opportunity to tell you more fulsomely about what we're doing, but to give you an idea of what it is. And I'll take this from another perspective as well to just put a little context around a couple of words that you've heard that I think are need of clarification in terms of some questions we've gotten after our earnings call, those 2 words are growth and investment. And I'd like to frame this up for you in what I'm going to call is investment cycle. And so think about it this way. As a company with a 16% share, as Kevin talked about earlier, there's -- and multiple levers to grow, growth should be something actually that we are not apprehensive about. Something we're actually very excited about. And again, we plan to do so in a very profitable way. We plan to drive continued efficiency of the business. And this creates a cycle that accelerates growth that allows us to continuously and consistently generate positive earnings to the bottom line as well as to drive investment to fund future growth. And that cycle continues. And again, some of the things that you get out of this are these tools, again, this enhancement to the experience our customers have with us, being the most efficient operator, providing the best levels of service, pursuing multiple avenues of growth. This reinvestment cycle is the way to think about this. Again, more on this at Investor Day. But to just put a little bit of context around what -- how we think about these words: growth; how we think about these words: investment. I wanted to make sure I shared those thoughts with you. And of course, all of those things are designed to have a sustainable, long-term model of returning value to shareholders to build on those things that we've done for a long time here at Sysco. Just a few key facts: a 16% 2-year TSR. In our fiscal 2019, $1.8 billion of total value returned between dividends, between share repurchase. As Kevin talked about earlier, a great amount of pride for this company and now our 51st consecutive annual dividend increase. And return on invested capital, that's now at the 17% level. Again, this is an area that we talked about as well as part of the 3-year plan and set a target goal of 16%, and again, we've achieved that goal and feel really good about the progress we've made there. And as we think about cash generation and the ability then to use again, our resources, our ability to turn our earnings into cash, and then what do we do with that cash? Well, let's spend a couple of minutes just talking again about our disciplined approach to capital allocation, which, again, is something that we certainly support. And again, they're very consistent with how we've thought about this in the past. Our first priority in this company is, and has always been, to invest in our business. To invest in those technologies, to invest in those processes, to invest in fleet and facilities and all the things that actually drive our network, our ability to be our customers' most valued and trusted partner. We remain committed. We, as a management team and our Board, remain committed to continued growth in our dividend. Again, this is an important part of our story and one that is obviously very high on our priority list as it relates to capital allocation. As Kevin talked about earlier, M&A, both what I'll call, normal course M&A and always keeping an eye open for strategic opportunities, is certainly an important part of our story. It has been for a long time. This company in 50 years we've done business has done over 210 acquisitions. And so our ability to grow both organically and inorganically has been an important part of our story and remains a key priority. And finally, a view, and I say, a very balanced view between debt paydown and opportunistic share repurchase is part of what we also continue to look at as part of our overall capital allocation strategy. So in closing, this is an important year for Sysco. As we celebrate our 50th year as a public company, we have a chance for just a few minutes to look back and celebrate that. But we remain focused on going forward and coming to see what's going to move us forward for the next 50 years and well beyond that. I feel really good about where this business is today. Yes, we had a takedown of results, but again, it was certainly based on a 5-year time period and a 3-year plan that's generated a really significant amount of income for this company and has put us in a position to really move forward in a strong way. Our fundamentals in this business are good. Some of the growth that we have in the local cases and the independence is as good as the growth that we've had in many years in this company. We continue to be a company that has consistent execution, one that continues to drive efficiency, that, again, fuels that cycle that ultimately fosters growth, drives efficiency, consistent results, reinvestment in the business. And as I talked about, and as I again will reiterate, we feel very well positioned for future growth in this company and positioned to be the industry leader -- again, as we have been for the first 50 years, positioned to be the industry leader for the next 50 years and beyond. Thanks very much for your time today. Again, greatly appreciate your interest in Sysco, and I'll open it up to questions at this point. Thank you.

Okay. Thank you, Joel. [Operator Instructions]. But any questions from the audience before -- or not? Okay. [ Tim ], they're all yours

Last chance on questions. But in case we're a little shy this afternoon, we will have management next door in a breakout room to answer anything that we might want to ask there. But before we head out, please join me in thanking Sysco again for their presentation and sponsorship of dinner this evening. Thank you.