Sysco Corporation (NYSE:SYY) Q4 2019 Earnings Conference Call - Final Transcript

Aug 12, 2019 • 10:00 am ET


Sysco Corporation (NYSE:SYY) Q4 2019 Earnings Conference Call - Final Transcript


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Q & A

[Operator Instructions] Our first question comes from Kelly Bania of BMO Capital. Your line is open.

Kelly Bania

Good morning. Thanks for taking my questions and for all the color. I guess just wanted to start with maybe a diagnosis of the top line and the case growth. And if there is any execution factors that you see either with sales reps or service levels, or you really think it's just a function of the industry, and I think, you've just made a comment about a level of competition increasing, so maybe you can just expand on what you're seeing there and how you feel about execution?

And then, I guess, second part of the question is the outlook for $600 million, I guess, does imply a little bit of a stronger year in fiscal '20 than the last two years. And just maybe helping, let's see, if you could help us walk through the puts and takes on how you're thinking about modeling that? Thank you.

Thomas L. Bene

Yes. Thanks, Kelly. So let's start with the top line and it's a great question. So as I shared, we've certainly seen and continued to focus on this disciplined profitable growth as it relates to our national customers. And so we've seen certainly some impact there and some fairly significant change in the trajectory of that business as we've kind of -- were in the fourth quarter, and even as we're into the New Year. So that's a big part of what we're talking about here.

We've seen that also at some of the regional customer level. So we've talked over the last year or so about our focus on these micro chains, and we cycled some business that we had picked up in the past, but we've also seen competition ramp up in that space. And so that's the biggest single impact, I think, you will see both in the fourth quarter, driving our top line performance. Joel also talked about just the overlap we had year-over-year. Our Q4 last year was one of our biggest quarters in record both local and total cases.

As far as operational or executional things, most of what we're talking about is on the expense side. Although as we talk about some of the transformative initiatives that we've been executing, but we see from time to time, as we're learning that there are some customer service challenges that get created. We're not broadly concerned about that, and don't feel like that is a long-term issue, but we've certainly seen a little bit of impact, both from our finance transformation and also from some of the work we've done with our new ordering platform. But again in both cases, we think they are short-term and we're working through them, and obviously our customer service is kind of paramount for us in everything we do.

As it relates to fiscal year '20, I think that your point is correct, which is even at the $600 million number that does suggest a