A Note to Shareholders about COVID-19 from President and CEO Kevin Hourican

Sysco Provides Update Related to COVID-19

Sysco is and will remain the global leader in foodservice distribution – This is who we are and this is what we do for foodservice

 

To our Sysco community

 

As the business world assesses and navigates this rapidly changing operating environment, our first priority will always be the health and well-being of our associates and customers. We continue to address the coronavirus with the seriousness it demands, and are working closely with our partners, in conjunction with CDC and WHO guidelines, to ensure we are doing our part to prevent the spread of COVID-19. Only through a collaborative effort can Sysco, our customers and the communities they serve, emerge stronger than before.

 

Over the last 50 years, we’ve built a resilient company that has weathered its share of exogenous shocks and economic crises, and each time Sysco has remained a resolute foodservice industry leader. As Americans stock up on food and essentials, our nationwide presence allows us to continue to serve communities across the country and restore a sense of security during uncertain times. We can’t predict when this shock will subside, but we know through it we will continue to provide innovative solutions for our customers in the ways we lead the industry. Our ability to navigate the current environment stems from our strong fundamentals and the advantages we hold from:

 

Customer diversification:

Approximately two-thirds of our business fall within the “restaurant” category. Roughly half of this segment are local independents and the other half are various chain restaurants. Many of these customers are still safely operating under take-out, drive-through and/or delivery options. We are continuing to support our customers with the food related products that they need.  As importantly, we are increasing our support of these customers in two important areas: restaurant cleaning and enablement of take-out business.  We have enabled our large sales force to rapidly provide our customers with cleaning supplies and take-out supplies, such as to-go containers and utensils, as activity ramps up in this area. Also, we are actively engaging our customers who don’t normally utilize a take-out or third-party delivery model to help them develop these capabilities.  Sysco is helping enable small businesses pivot their business model.

 

The remaining one-third of Sysco’s business is composed of healthcare, government/military, correctional facilities and other sorts of “food-away-from-home” which are less volatile amidst disruptions such as the one we are currently experiencing. We are proudly supporting our healthcare workers as they combat this virus from the frontlines. We provide supplies and janitorial products to our customers, including healthcare facilities, and items to spaces that are now being converted to testing and treatment facilities, such as college dorms. We provide food to emergency healthcare centers, daycare centers and other pop up centers that are replacing closed schools, and work closely with the Red Cross and other relief charities that are integral to containing the spread of COVID-19.  Our company is prepared to support increased demand in these settings for the food and cleaning products we sell.

 

More retail and ‘food-to-go’ options:

As everyone knows the grocery store industry has seen a surge of business in recent weeks.  Sysco is increasing its focus on this important segment and is aligning with partners to help address this pivotal supply chain.  Sysco’s worldwide scale and network of warehouses and transport positions us in a place to strengthen the retail food supply chain at this critical time.  We are able to provide supply chain services to this channel and we are also able to sell product where there is a shortage and need for goods.  The speed and agility with which Sysco has moved into this space is an indication of our expertise in global food supply chain management.

 

Balance sheet strength:

Our balance sheet is the strongest in the industry, and has successfully weathered national security, natural disaster and geopolitical shocks in the past. We have a $2 billion credit facility available to us, which we are prepared to use to remain agile, ensure business continuity, and to pursue business opportunities over time. We have no secured debt.

 

Technology:

Our Sysco Shop app, which is one of the best customer-facing tools in the industry, enables our customers to order from Sysco’s complete product catalog and have our products delivered to their restaurant or business for easy online ordering. Roughly 50% of our orders are generated through the Sysco Shop app. In addition to Sysco Shop, we have a sales force that’s 6,000 associates strong, who are experts in food and on a first name basis with the chefs and customers that we serve. Our marketing associates and Sysco Shop app team have the virtual tools necessary to continue to support our customers and provide the same high level of support that Sysco is known for. These digital tools will also play a critical role in the return to normalcy and help our customers come to terms with returning demand dynamics

 

Smart labor and fleet management:

We have one of the world’s largest privately-owned fleets and warehouse networks, which covers the map. This allows for route density during normal operations and route flexibility during unique environments. We also have both driver and warehouse personnel available to serve our customers. We are well-positioned to serve an evolving landscape and ready to increase service should the need arise.

 

We are proud of the actions our team has taken to remain safe while maintaining our commitment to customers. We are committed to ensuring safety and business continuity for our associates, customers and the communities they serve. We will continue to work tirelessly to adapt to this ever-changing situation and support communities through this time.  As the need for safe high-quality food changes and evolves through this crisis, Sysco is uniquely positioned to support the industry, our customers, and our fellow citizens. We are proud to serve our customers and be their most valued and trusted partner during this difficult period.

 

Sincerely,

Kevin Hourican

President and Chief Executive Officer

 

 

 

 

 

Cautionary Statement Regarding Forward-Looking Statements

 

Statements made in this document that that look forward in time or that express management’s beliefs, expectations or hopes are forward-looking statements within the meaning of the Private Securities Litigation 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: our ability to increase our support of our restaurant customers; our ability to support certain customers facing increased demand; our ability to increase our focus on the grocery store industry; the role of our digital tools in assisting customers in the current operating environment; and our ability to adapt to the current environment and continue to serve communities. These statements are subject to risks and uncertainties, such as general economic conditions, the impact and effects of public health crises, pandemics and epidemics, such as the recent outbreak of COVID-19, and the adverse impact thereof on our business, and other risks and uncertainties. For a discussion of additional factors impacting our business, see our Annual Report on Form 10-K for the year ended June 29, 2019, as filed with the SEC, and our subsequent filings with the SEC. We do not undertake to update our forward‑looking statements, except as required by applicable law.

An important update is available for your browser. Please install this critical update.

×