Sysco Corporation (SYY) Earnings Call Transcript & Summary

Welcome back Sysco to CAGNY, a $40 billion market cap company that will generate $80 billion in sales this year. We're joined today by President and CEO, Kevin Hourican, CFO, Kenny Cheung; CAO, Neil Russell; and Vice President of Investor Relations, Kevin Kim. Sysco is the #1 player in the fast-growing food-away-from-home industry. The company recently reported its 11th consecutive quarter of double-digit EPS growth, building on strong multiyear momentum that's included share gains, industry-leading profitability and balanced capital allocation. Please join me in welcoming Sysco's President and CEO, Kevin Hourican. Kevin, welcome. Take it away.

Okay. Great. Thank you. Good afternoon, everyone. It's a pleasure to be back here at CAGNY. It's, believe it or not, my fifth time having the opportunity to present at this conference and have the privilege of being able to represent Sysco's 71,000-plus global associates and tell you the story about why Sysco and why we are the leader in this industry, why we have a profit margin rate that's substantially higher than those that we compete against. And more importantly, what we are doing at the company to drive profitable growth. So without further ado, let's jump in. And I'd like to start with this slide to describe who we are at Sysco. And we describe it in the following way. We are 50% a food supply chain company, and we are 50% a food sales and marketing corporation. And it's these 2 things coming together that enable the success that we've had for 54 years. On the supply chain side, it's about cold chain protection or product from the vendor source all the way to our end customers' kitchen. And on the selling side, the people that work for us in the selling capacity are ex-chefs, they're culinary professionals, they're former restaurant owners and their job every day is to wake up to help our end customers be more successful in their line of work, and nobody does this type of work better than we do. So let's jump in and just talk a little bit more about the scale of our company. First and foremost, we are the only global player in this space, and I'll talk more about that in a little bit. In our most recent fiscal year, we did $76.3 billion in top line sales, serving over 700,000 customers worldwide. And if I could, let me just explain the different colors on the map. The green color is the countries with which we have what we call domiciled operations. So warehouses that we own, trucks that we own, salespeople that work for us, knocking on doors of restaurant customers on the daily. On the lighter blue color on the chart, this is where we export food through an export business that we own to customer distributor partners throughout the world, and that's in 80-plus countries around the world. And what's really interesting about that space was our frozen containers, those are refrigerated containers and dry containers, bringing products that overseas customers want that they have confidence and trust that the product is going to arrive in the condition it needs to with all the appropriate duties, customs fees and country of origin requirements accomplished. So let's jump a little bit further into the track record of performance of the company for the last 54 years. Sysco has grown top line revenues, 51 out of those 54 years. And the '09 financial crisis was the one first time of a blip. And then obviously, the COVID 2 years had a negative impact upon the sector and the negative impact on Sysco. Good news is we're fully back. You can see the revenue component is we've more than fully recovered the pre-COVID impact, and we are profitably growing the business. So let's talk on the bottom right-hand side of the chart, where will the additional growth for the next 50 years come from because we're just getting started. We like to talk about the 12% CAGR that we've delivered over the last 54 years and how it has stayed in power and longevity into the future. First and foremost, is specialty, which I'm going to talk about more in a minute, driving profitable growth through specialty. Second is through our digital capabilities and platforms. Third is through international. International is and will be a growth engine profitability for this company. And last but not least, we have a strong track record of M&A, and that will continue into our future. I'd like to take a step back for a minute and talk about the industry that we have the privilege of working within not just the Sysco Corporation. So this chart is about the industry, food-away-from-home. So everything that's consumed outside of you going to the grocery store and preparing that meal at your house. And if this chart isn't a trend, I don't know what a trend would be for the last 20 years with the exception of COVID when we all got that people text message in March of 2020, saying, go home, stay home and don't leave your home. You take that window out, food-away-from-home has taken share from the grocery channel every single year. And that is a trend that is going to continue. The why behind that trend is people are time starved. We're leaving it to the professionals to prepare our meals for us, whether or not that's breakfast, lunch or dinner. Some of life's greatest moments happen at a table over food with people that you love and people that you want to spend your time with. And this chart -- this trend is happening worldwide. And why we have tremendous confidence in international. International is actually significantly behind the United States on the penetration percent, but it will follow this same pattern. And the why is because worldwide, people are time starved, worldwide, innovative restauranteurs are coming up with concepts that are resonating with end customers. So let's scale that trend into the actual current size. This is a chart showing just the U.S. business, which is our largest business, the total addressable market in the space we compete within the $360 billion. We say Sysco has "only" 17% of that share. I think what's even more interesting is the big 3 in our space, and we're often compared to 1 or 2 other companies. The big 3 combined have less than 40% share in this industry. And why that matters I'm going to talk about in the next few slides is that size and scale matter in this space. One might make the argument, well, 60% is being done by others. It must not matter. It matters meaningfully, and we'll convey that message to you over the next 45 minutes. Let's talk about the customer segments that we have the privilege to serve. We're roughly 66% restaurants and 1/3 non-restaurants. Within that restaurant space, we're fully diversified from white table cloth, all the way to QSR and everything in between. From The Cheesecake Factory to Wendy's, from Ruth's Chris Steak House to Texas Roadhouse, from Crumbl Cookies to Velvet Taco. Each and every one of those are terrific Sysco customers, we have the opportunity to serve either nationwide for some concepts or a company like Crumbl, who's opening a new store every 48 hours, we've taken them from 100 stores to over 1,000 stores over the last few years, and we're doing so profitably, and we're doing so because they found a great partner at Sysco that can keep their limited time offer product in stock every single week because if you know the customer's concept, they're launching a new cookie each and every week. And we have the opportunity to support that type of customer coast to coast, as importantly or more importantly, we have over 100,000 mom-and-pop restaurant customers that we have the privilege of serving to help them profitably grow their business. In fact, that's the customer more than any that we wake up every day focused on serving. So let's talk about the other 1/3 of our business, a more recession-proof business sector, if you will, things from education to hospitality to health care, golf courses, concert venues, sporting halls and everything in between. We have number one market share in the vast majority of the businesses that you see on the slide behind me. And the why is what we call our recipe for growth. I fully understand this is a busy chart. I don't intend to cover all the components of the chart. The focus should be the wheel, which is our growth wheel on the bottom of the slide. Most importantly, the center of that growth wheel, we say our customer and our colleague is at the center of everything that we do. And 3 years ago, we launched the growth strategy called the Recipe for Growth to say, how can we serve those colleagues in those customers in a more effective way and it's a 5-part plan. It started with digital. We wanted to create the best in industry digital tools to make it easier for our customers to do better business with Sysco, to inspire them to buy more things, to provide them with pricing that is customized and unique to them. We'll talk more about that at Investor Day in May. Hopefully, you can come. The second is products and solutions, and Neil will talk about that in a little bit. Products and solutions are things like expanding our assortment, making it more fresh, making it more agile and local where and when it needs to be. And for those commodity products, procuring them at a cost that no one else can compete against because we are buying more food than anyone in our industry. The third is our supply chain, making it more agile, making it higher from a service outcomes perspective and being more customer focused. Fourth is our customer teams. We have the largest sales force in this industry who is the best trained and has the highest Net Promoter Score in this industry. We're working hard to make that sales force even more effective. Providing them digital tools to make it easier to sell and knowing what to offer to a customer, doing something we call total team selling, which is bridging our specialty business and our core broadline business together and bringing an N-of-1 solution to that customer to sell around the room as we call it. And last but not least is customer, excuse me, future horizons. Future of Horizons is about structural cost being removed from the system to invest those dollars back into profitable growth and to return those dollars to our shareholders. Kenny will talk about this in Investor Day as well. The punch line of this chart is that it's working. We have grown our share profitably for each and every one of the last 4 years, and our momentum is building, and we are making incremental progress on a year-over-year basis. Let's talk a little bit about the why behind these capabilities of size and scale matter meaningfully in this space. As we said, we are the largest in the space, but we're not standing still or resting on our laurels. The left-hand side of this page is fulfillment capacity. We operate over 334 distribution centers around the world. And I think what's important to note about these distribution centers is what they are and what they're not. These are very large cold chain facilities, 100,000 foot freezer at minus 30 degrees, a refrigerator that's more than 100,000 square feet that has more than 5 temperature zones because dairy needs to be stored at a different temperature than produce. There's a different temperature then shredded cheese has a different temperature than potatoes and onions and you get the drill. Nobody does that work better than Sysco, which then gets put on a tri-temperature truck which has delivered hundreds of miles at times, on time and in full to a customer. That's what we mean when we say fulfillment scale. Why having double the number of distribution centers as our second largest competitor matters, we are closer to the end customer. And because we are closer to the end customer, we can more predictably be on time and in full, and we can do so at a lower cost to serve which is one reason why our EBITDA as a percent of sales is substantially higher than who we compete against. On the right-hand side, you can be the greatest supply chain in the world, but if you're not selling, it's for not -- we have #1 market share in the United States, Canada, U.K., Ireland, Costa Rica and the Bahamas, and we have plans to be #1 in additional countries. So how do you pull that off? What are the things that you do to pull together an ecosystem of products and solutions that resonate in a compelling way to our customers, that's what this chart shows. I think everybody in the room knows we're the largest, what's called broadliner in the industry. But where we have made substantial progress over the last 4 years is in winning what we call specialty. I'm going to start on the top right. You may not know, we run and operate the largest specialty meat business in the United States called SSMG, which is Sysco Specialty Meat Group. What this division does is custom cut bespoke proteins for some of the highest end white tablecloth restaurants like Ruth's Chris exactly the spec they need and they want. Aged for the exact number of days they want. Marinated with the exact flavor profile from their recipe that they want. And we do that over and over and over again at a production scale. And here's what's awesome about it. There's incredible bespoke custom cut premium proteins. We offer them to all Sysco Broadline houses to be sold by our sales associates on our Sysco truck. So we literally get the best of both worlds. We have a specialty truck. Think of that as a small truck or a van going into a metro city, delivering to the highest end white tablecloth steakhouse in those same products can be made available to the Broadline truck delivering anywhere across the United States. Now go to specialty produce. It's the same concept in the produce space. Bespoke custom cut produce, the exact quantity, shape, size and quality of tomato that the customer asks for. Some want 4 box, some want at 6 box. some want a 12 box. A broadliner would carry 1 size, 1 shape, 1 color. We match the exact spec of that customer. Simple cuts, so like a banana ripening room. We'll ripen the bananas to exactly the spec that, that customer needs because, believe it or not, each of them has a different spec. Restaurant labor costs are significantly rising. So they're asking for work to be taken out of the kitchen. Think about knives being taken out of the kitchen because we can do all of the precut work for that produce that, that restaurant is going to put on to their menu either as a standalone item and/or an ingredient in a recipe. At FreshPoint, we were one of the largest specialty produce business in America, and we buy more fresh produce locally than anyone in this business. Once again, that product can be sold through a specialty truck that says FreshPoint on its side and those same products can be made available on a Sysco truck to an existing Sysco broadline customer. I'm going to continue around the wheel, digital. I talked about its importance, having tech tools that are incredibly easy to use. The area that we made the most progress in as a company over the last 4 years, of our customer. We've made it easier for them to place their order whenever they want, wherever they want. They no longer have to text, e-mail, call or reach a sales rep. This sales rep is awake 24 hours a day, 7 days a week and can answer any question as well as inspire them to buy more. But I want to be crystal clear that does not replace the sales rep. This is a relationships business. We believe the magic formula is actually the blend between the digital capabilities and the human capital, and we believe we can do it better than anyone in our space. I've spoken about international. International will increase in its size and scale and outpunch its weight class at Sysco for the years to come. We have tremendous opportunity to run what we call the Sysco play internationally. And when we do, we have proven that we can succeed. Ireland is a perfect case study, an example as we've expanded the capabilities within Ireland to match what we do in the U.S. We have by far number one market share in Ireland, and we have a very successful and profitable business, just as an example. And when I say run the Sysco play, there's no better example of that than the Sysco brand, which I'm going to talk about more in just a minute. So the punch line of this chart is that Sysco is winning. We're winning in aggregate versus the marketplace in total in both national and in local sales. On the national sales side, it's absolutely crystal clear that we are winning versus the marketplace. And the how are the 4 topics that are listed on the page. The first, as I mentioned earlier, I mentioned household restaurant names that you know, and they want a partner that they can work with coast to coast. Many of those same restaurant operators want a partner that can help them overseas. I mentioned The Cheesecake Factory, we manage their business coast to coast. They've opened up licensed stores in Dubai. And we are the company that's getting all of their proprietary products in a temperature-controlled way overseas, so they can have the same experience overseas that they have in the United States. Just an example, coast-to-coast and burgeoning international capabilities. The second is fulfillment strength. Partnering with them on things like inventory allocation, so they can have confidence that when they place their order, we will be in stock, doing joint business planning with them against their promotional cadence. I gave the example of Crumbl Cookies earlier to be in stock on the unlimited time offer that's happening week after week after week, we have resources inside the corporate headquarters of these national restaurant partners working on that joint business planning. We've increased our head count in specialty specific skill areas like education and health care, where you have to be credible, a licensed nutritionists as an example, to be able to call upon that health care setting, to be able to talk of the end customer, we have increased our head count in those specialty selling areas. And last but most certainly not least, is in the technology space. I talked a lot about our website being an N-of-1 website for the mom-and-pop restaurant. We have made just as many advancements in our B2B tech stack for big corporate partners making it very easy for them to connect to our systems, increase data sharing, making it frictionless for that large national customer to be able to deal with one Sysco voice, coast-to-coast for whatever problem they have or whatever solution they're trying to accomplish. They have an easy button that they can work with. Notice what I didn't say at any point in time was a margin rate. In fact, we've expanded and increased our margin rate in national sales during this period of time, and we have won net billions of dollars of incremental business profitably. Hands down, we are dominating and winning in this space in a compelling way, and that will continue. It's -- 50% of the business is national sales. You need to win in national to be the best in this space. They are profitable cases that cover a heck of a lot of fixed cost, and you have to win when it's half the business. I want to be crystal clear that winning in national does not, in any way, shape or form, prevent the ability to win in local. They are different supply chains -- excuse me, I didn't mean to say, there are different sales teams and they are writing a common supply chain. And our supply chain does not have storage or throughput capacity constraints. So winning in national actually provides benefits on the local side. So let's talk about local. We are the leader in the local space. We are growing faster than the industry in total, and we can do better in local. On our most recent earnings call, we talked about the progress that we're making quarter-over-quarter, and we are confident in our ability to be very successful in local. We have the largest sales force in the industry with the highest Net Promoter Score. We have enabled success with this population of colleagues significantly by improving our CRM, which provides them suggested prioritization of what customers to visit. Suggestions on what products can be offered. Suggestions on what deals would be relevant and customized for that end customer and it's working. Neil will talk in a bit about Sysco, Your Way and Sysco Perks and we are working to increase the localization of our product assortment so we can even be more quintessentially right for that end customer. So let's talk about product. Nothing speaks to Sysco's capabilities and strengths more than the product that's on the screen behind me, which is Sysco brand. $19 billion of sales at Sysco come with Sysco on the case. It's says Sysco private label product, $19 billion. It's more than 50% of the cases that we sell to that mom-and-pop local customer. One of the brands, Sysco Classic by itself is $5 billion, the role below it is 5 brands, each of which are more than $1 billion. Some fantastic companies at this conference on the left-hand side of the page and their relative size. Talk about the power and strength of this company, there's nothing that does that more than this slide. The profit per case on Sysco brand is meaningfully higher than national brand, and we're providing compelling value to the end customer. So when I wrap up, I'll wrap up with this slide before I turn it over to Kenny, who's going to go deeper into our financial results, and then Neil will come up last, Neil is our Chief Administrative Officer, who leads our growth programs at Sysco as well as sustainability and he'll doubleclick into those 2 arenas. But before I turn it over to Kenny to go deeper into our financials, why Sysco from an investor thesis perspective. A little bit of our view on why our company is a special company. And again, one that's not resting on its laurels. We are meaningfully focused on long-term, sustainable, profitable growth. But where we are right now, substantially industry-leading profit margins, substantial. Number two, that distribution network I've talked about, it's more than twice the size of the second biggest competitor of cold chain warehousing and tri-temperature truck delivery. We're the only one in our space with an investor-grade rating. We have a consistent track record of share repurchase, more importantly, the one next to it, which Kenny will talk about in a minute. We are a dividend aristocrat. It's been raised, our dividend for 54 consecutive years, which is a verified error to be in because you have to withstand a lot of unique situations across 54 years. We've raised our dividend every year for 54 consecutive years. And most recently, we added ESG climate-based commitments into our compensation goals. We have a formally stated science-based target that we've gone public with, and we have built those commitments into our compensation programs. We're here to stay for the long term. We're here to invest in our customers' capabilities so that we can increase share of wallet with those customers. Proud and honored to be able to be here with all of you today, and I'm going to turn it over to Kenny. Kenny, come on up. I'm sorry. I have a video that's going on, and then Kenny will be up in a second. Forgive me for that. [Presentation]

All right. Good afternoon. Now before I get started, I want to thank our customers, our colleagues, our partners, our shareholders. Thank you for everything you do and thank you for your continuous support to Sysco. I've been at Sysco for almost a year now. And big, big things that I am more excited today than when I was on day 1. So why is that? Looking out in the future -- all right. Hope you could hear me earlier, looking out in the future, Sysco has the building blocks, the fundamentals of the ingredients to elevate our company to the next level. These ingredients are fivefold, ingredients pun intended. Number one, we have the industry-leading balance sheet, investment grade. Number two, ample liquidity and free cash flow, over $2 billion of free cash flow a year. Number three, market-leading position with market-leading margins, as Kevin said, size and scale matters. Number four, people, world-class talent in which we have and are developing through our leadership academies. And last but not least, Sysco brand, iconic and well established. We are positioned to win and we are positioned to grow. If you look at this page, you can see that we achieve record performance in FY '23 across top line and bottom line, and we are on pace to again achieve a record year in FY '24. Our consistent performance over the past 3 years, including this year, yields a 16% CAGR of sales over 3 years and approximately 45% EPS CAGR across the 3 years. The Sysco team has proven to be resilient. We can consistently grow and be successful across various market conditions, which included overcoming COVID-related disruptions, the great resignation, hyperinflation, disinflation, deflation, which occurred for a couple of quarters in the U.S., the proof points and the positive momentum across our business gives us confidence in our FY '24 guidance, which includes mid-single-digit top line growth to roughly $80 billion and EPS growth between 5% and 10%, from $4.20 to $4.40. Turning to Slide 18. You can see strong operating margin improvement across the 4 years. Positive operating leverage is all about expanding both the margin dollar and the margin rate. It's all about both of them. As you can see on the page, in 2021 first half, operating income margin was roughly 2.6%. That has blossom by 150 basis points to 4.1% this year. This performance were driven by targeted and deliberate action on both the gross profit line and the operating expense line. Let's start with the middle part of the page, gross profit. On the GP line, first, as Kevin mentioned, we continue to drive penetration on Sysco brand, which is accreting margin mix benefits. Second, applying centralized pricing tool across our portfolio, which is yielding nice flow through down to gross profit. Third, increase of specialty mix which comes with an attachment rate of higher margins. And last but not least, strategic sourcing, really leveraging our size and our scale to partner with our suppliers and drive stronger unit economics for our business and provide value for our customers. Moving on to the right-hand side of the page, operating expense. We have been improving retention rates across our supply chain employees and moving up the productivity curve. With increased retention, there is a basket of benefits across the board. Increased outputs, increased productivity, lower hiring costs, lower training costs, lower levels or product shrink. Overall, better service for our customers. Each of these elements has a positive impact to the P&L. They flow straight to the bottom line. Furthermore, we are on track this year to delivered $100 million of cost out, and we are in the planning process of identifying more actions for future period. On the next slide, this demonstrates the work that I just talked about around GP and expenses, coupled with the fact that we are the market leader and how this translates from a financial expression standpoint. Being the market leader gives us the superior performance competitive advantage versus our core peers. You can see on this page, there is balance sheet benefits and there's also income statement benefits. On the income statement side, on the left-hand side of the page, last year, we delivered over 18% gross profit margins. That is roughly 1.3x higher than average core peer. If you work your way to the middle part of the page is EBITDA, 5% margins, that's roughly 1.5x higher than the average core peer. Now that's the income statement side. On the balance sheet, Sysco is also the industry leading in terms of cash conversion and quality of earnings. From an operating cash flow standpoint, the conversion from EBITDA is roughly 75%. From a free cash flow standpoint, the conversion from EBITDA is roughly 55%. So as you can see, we're very effective in managing inventory and working capital investments. With the combination of the income statement, margin expansion, operating leverage, coupled with the rock solid balance sheet, cash conversion and quality of earnings, you get to the right-hand side of the page, which is a robust free cash flow generation of over $2 billion annually. Now that is almost 3x higher than the average core peer. If you take a step back, because of the fact that we have strong cash flow generation, we have the luxury to do both, invest in the business and reward our shareholders. Which brings us to slide -- to the next page. On this page, there's a capital allocation framework. Very simple, we have 3 priorities: first and foremost, invest for growth, invest in our business profitably and consistently. This includes leasehold improvements, buildings, fleets, technology, digital tools, recipe for growth, as Kevin just mentioned, this also includes prudent M&A deals as well. We will be disciplined in deploying our capital, utilizing ROIC, a key incentive for the management team to ensure capital deployed is above the hurdle rate. In terms of the second priority is maintain our investment-grade balance sheet to operate within the threshold of our target leverage ratio of 2.5 to 2.75x. And last but not least, any excess cash back to reward our shareholder base through compelling dividends and share repurchases. Turning to the next slide. Sysco is a very cash-generative business as we have a balanced approach on capital allocation. Our substantial EBITDA growth coupled with strong cash flow conversion allows us to invest in both the business. At the same time, reward our shareholders. Earlier in the year, we were able to raise debt at a very attractive rate, given our investment-grade credit rating, and we were able to redeploy that capital to high earning assets and projects that render a really positive ROIC for our business. You can see on the left-hand side of the page for FY '24, we expect to invest back into the business between CapEx and M&A, $2 billion combined. On the right-hand side, in the sphere of balanced back to shareholders, also $2 billion between share repurchase and dividends. Our balanced approach this year further builds on our long history of being disciplined and balanced. This is a notable strength of Sysco. Very quickly, looking at this page, you can see that here is part of the CapEx spend for our company. there are roughly 7 exciting new sites that we have planned globally to deliver new capacity in high-growth, high-potential markets and cuisine segments. We are disciplined here. Again, ROIC will be the lens through which we will make each project decision. These sites will support future growth from an enterprise level and globally. On the following page, Sysco has a strong track record of capital returns. So let's take each chart at a time. On the left-hand side, we are honored and we are proud, as Kevin said, of our dividend aristocrat status. Did you know that Sysco is 1 of 4 consumer staples company that has increased dividends the past 25-plus years and accelerated dividend payments of more than 35% in the past 5 years. It's a very elite group, and we are extremely proud to be part of it. If you look at the page, over the past 5 years, cumulatively, we have paid out roughly $4.5 billion of dividends. Moving away to the middle part of the chart, the other piece is share repurchase. We are consistently in the marketplace on share repurchase given the confidence in our business. Over the past 5 years, cumulatively, $3 billion of value in terms of share repurchase. If you combine the 2, it's roughly $8 billion. Said differently, that is 18% of our market cap. Our peer competitors roughly 1% of the market cap deployed back to shareholders. Next page is about M&A. Overall, the strategy is clear, focus on high-margin specialty acquisitions I'm going to make a very important statement here. We don't buy companies to be bigger. I'll say it again, we don't buy companies to be bigger. The reason why we buy companies is threefold, right? First is to really increase the customer value proposition. This is around coverage, service and product assortment. That's point number one. The second piece is, when we think about acquisition, we apply an extensive financial rigor in terms of IRR to ensure it is multiples accretive to our enterprise. And the third reason is because of our scale, because of our experience, Sysco is the acquirer of choice. Because of our scale, it allows us to buy an asset, integrate it end to end from merchandising to procurement, to operation to commercial execution. Successful execution and integration of deals is part of our DNA. Let me give you an example. In 2021, we bought a company called Greco, which was the leading Italian distributor in the U.S., when we bought them, they were roughly $800 million of top line of revenue. Fast forward to 2023, 2 years over $1.3 billion, up 65%. So what happened there? Synergies occurred. We combine Sysco's leading broadline capabilities with a leading specialty platform. We are going wide with new customers, with coverage and products. We're going deep by combining the power of the broadline self consultants and working alongside with a specialist to drive incremental sales and value to our customer, the concept known as total team-based selling. This enabled us to have a 1 plus 1 equals 3 equation. Take a look at this page, we only -- we not only invest in the business through organic and inorganic growth, but we are committed to increasing our dividends every year. In fact, we've grown dividends as Kevin said, for the past 54 years, and we're proud of our dividend aristocrat status. A few characteristics of the status is include consistent cash flow to weather economic fluctuations and a strong history of returning cash back to shareholders in form of dividends and share repurchase, and we will continue to maintain the status. On my last page, speaking of returning back to shareholders between FY '15 and FY '24, we're planning to deploy back over $17 billion of cash back to shareholders. This is yet another example of how Sysco's strong cash flow conversion is driving shareholder value and returns. Before handing it over to Neil, we should go deeper on initiatives and sustainability, I'll close out with a couple of comments. We are optimistic, not only to deliver a fantastic FY '24, but to continuously improve our financial performance over time. We have the ability to deliver today and build for tomorrow and reward our shareholders. This is a great time to be at Sysco. Our future is extremely bright. There is no other place I'd rather be than right here right now at Sysco. With that, I'll turn it over to Neil.

Thank you, Kenny. Appreciate it. Just going to try how my mic sounds, if it's working. Thumbs up in the back, if you vote for Sysco is the best U.S. food service distributor. Thank you very much. Appreciate that. Good to be with you. Good to be back at CAGNY and to have some time with you to talk about some of our growth initiatives and how we think about growth through a lens of responsibility as well. You just heard from both Kevin and Kenny, who walked you through this awesome core business that we have the privilege of leading, an industry leader in a growing industry. The pie that we participate in is getting bigger. And the slice of the pie that represents Sysco is getting bigger at the very same time, a growing leader in a growing industry, and that's a very fortunate position for us to be in. More than 300 locations, an incredible supply chain that Kevin described to you and the network of foodies that are designed and geared and trained around helping our customers grow and succeed every day. As Kenny talked about, the best margins in the business and by far, the best returns and the most cash to be able to return to our shareholders with regular and increasing value each year, all the things that are on the left-hand side of that slide. And what I'll cover here with you over the next couple of minutes, ways in which we are growing through a lens of long-term profitable growth on top of that great core business that we call our Recipe for Growth, and Kevin introduced that wheel to you, that's on the right-hand side of the slides. So let me talk about just a few components that make up this tremendous Recipe for Growth for us, and I'll cover just a few of them here with you now. The first is personalization. Personalization is the way in which we take a look at data and make specific offers to specific customers at the same time. I want you to recognize that the industry in which we're in is a more traditional B2B industry. And a lot of the programs that I'm going to talk about here are more traditional in the B2C space, but ways in which we're taking that mentality, that data-rich environment and translating it to an industry that didn't typically have these type of tools in the past. We're analyzing buying behaviors of our customers and leveraging those opportunities into a specific offer to that customer, patterns that they have, predictive analytics that we're monitoring and measuring over a multiyear time period and combining those into that very personalized offer, exclusive offers to further engage that customer specific to them. You might be an American Bar & Grill, and we know that you're buying hot dog buns from us. We know that you're buying mustard from us. We know that you're buying a national brand ketchup from us, and we know you're not buying the hot dogs from us. I can come up with a data-infused option for you to buy the hot dogs from us and give you that offer right now. I can also convert you from that national brand ketchup to Sysco Brand ketchup up with that same specific offer that's personalized to you. And maybe you have an Italian restaurant and you need a different type of pasta that I'm going to offer to you. And you've got a seafood restaurant and I've got a salmon offer from you. And you've got a sandwich shop and I've got an offer on romaine and turkey breast for you delivered at the same time to each of those customers with the same look and feel in a very consistent approach but a specific offer to different types of customers based on data, based on buying patterns. This has been an exercise 2 years in the making in terms of building the machine behind it, and it's driving tremendous value for us, and we're seeing a lot of great returns that we're very, very pleased with, and we call it personalization or perso for short. The next program, you've heard more about as if you follow us and you've heard about Sysco Your Way and has talk about it. If you're not as familiar with us, just a quick summary of what Sysco Your Way is, Sysco Your Way is our version of taking the delivery model and turning it on its head a little bit. We are delivering to a neighborhood instead of a customer, and this is a game changer for our space. Think of a neighborhood as a very dense, couple block area with a lot of local independent restaurants. Same truck, same driver, same salesperson, they're every day, late order cutoff, no minimum, walking around the neighborhood, knocking on doors, what do you need? What do you need, the Sysco truck is here. That's a completely different level of service, that's much greater than what the vast majority of our competitive space can be able to duplicate because we have the size and scale that Kevin talked to you about that opportunity to deliver to a neighborhood instead of a customer with a very specific high level of service, and we're seeing great returns from this. The idea is twofold. To further penetrate, share of wallet with customers we're already serving in that neighborhood and further penetrate share of doors in that neighborhood. And with that high level of service, we can do both at the same time. We're currently in more than 400 neighborhoods across the globe where we serve. And in the U.S., we're working on optimizing those neighborhoods that we're in, which is further penetration of those accounts, further penetration of the share of number of accounts. And then internationally, we're looking to open more neighborhoods as we move forward. We're already in areas like Toronto, Dublin and we'll be doing more and more international neighborhoods based on the success that we've been seeing. The third program is what we call Sysco Perks. Sysco Perks is our loyalty program. This is a membership club. You might be a local customer that might exist outside of a Sysco Your Way neighborhood. So how can we still have a high level of service to you, but you're not quite in a Sysco Your Way neighborhood. This is the way in which we can invite you into the club to have a high level of service that exceeds that of a typical customer. Currently, more than 12,000 customers within Sysco Perks program. And again, 6 days a week delivery, late order cutoff, working with you on minimum orders, having a high level of service, including a suite of restaurant services such as menu design and profitability analysis that cannot be duplicated by other distributors in our space. seeing very good returns across all 3 of these. Any given customer participating in 1 of these 3 programs, we're seeing growth in the double digits across Sysco with them. And as I said, we look at growth through a lens of responsibility as well. You've heard me talk about the 3 pillars of how we think about this. People, product and planet. We've got some big goals that we've set as an organization across this. As we look at the people pillar, we have a very large commitment of $500 million for global good, which is a combination of inventory product donations, 1 in 5 kids in America is hungry, 1 in 5 and they're children and they represent our future. And this company is going to do something about that. Also cash donations and the value of volunteerism across the network. In the product pillar, it represents what we call One Planet. One Table., the way in which, again, we've leveraged data to put tags on product that represents the attribute of that product. And for consumers, that matters in terms of where their food and where it came from, and we're seeing 6% growth in those products versus products that are not tagged with that type of label. So we're seeing really good growth across taking our values to value for the P&L, for how we think about this. I also wanted to talk to you about our Board just for one minute. They represent you, our shareholders. You should know who they are. And here they are. We've got a great, very strong, diverse, experienced board. They represent a lot of great experience across the restaurant, the consumer, retail and the technology space. And in fact, Kevin, Kenny and I are leaving here to go there to spend 3 days with them to talk about our strategy to talk about our long-term growth aspirations. And we do that with them every year outside of the normal quarterly board cadence. And you'll hear more about that at our Investor Day coming up in May. So Kevin talked about this, why Sysco? And let me just reiterate a couple of strong points here for us. As I said, growing market, growing company in that growing market. Food-away-from-home has grown at a 3.5% CAGR since 2000. And Sysco is growing profitably and faster than the industry within that. An incredibly strong balance sheet that allows us to have a tremendous amount of cash that we can invest in the business for further growth and return that value to shareholders as well. With that, I think maybe we've got time for 1 or 2 questions. Why don't I turn it over to Kevin Kim.

We better take it to the breakout. But I want to take the opportunity to thank Sysco. They'll be taking questions to break out right now. Thank you for your great presentation.