Sprouts Farmers Market, Inc. · NASDAQ:SFM
Sprouts Farmers Market — Investor Presentation (November 2017)
30 slides from Sprouts Farmers Market's investor presentation, Nov 8, 2017
Slide 1: Investor Deck November '17
Investor Deck November ‘17 Exhibit 99.1
Slide 2: Forward-looking statements and non-GAAP disclaimer
Certain statements in this presentation are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. Any statements contained herein (including, but not limited to, statements to the effect that Sprouts Farmers Market, Inc. (the “Company”) or its management "anticipates,"
Slide 3: Overview of Sprouts
Overview of Sprouts |
Slide 4: Sprouts is Well Positioned to Meet the Needs of Today's Consumer
Pro Forma Net Sales1 Full grocery store rooted in fresh, natural and organic foods at value prices Broad consumer appeal One of the largest and fastest growing natural and organic retailers with significant white space Industry leading results and strong new store economics Sprouts is Well Positione
Slide 5: Focused Strategic Priorities are Driving Top Line Performance and Improved Operational Efficiencies
Focused Strategic Priorities are Driving Top Line Performance and Improved Operational Efficiencies SALES DRIVERS ORGANIZATIONAL STRUCTURE THE SPROUTS BRAND Deli expansion rollout Continue to grow Private Label rooted in health, taste, innovation and value Further improvement in Meat/Seafood as a tr
Slide 6: A Grocery Shopping Experience that Makes Healthy Living Easy & Affordable
A Grocery Shopping Experience that Makes Healthy Living Easy & Affordable Health Value Selection Engagement SELECTION VALUE KNOWLEDGEABLE SERVICE & ENGAGEMENT HEALTH
Slide 7: Sprouts – A Healthy Grocery Store that Flips the Conventional Model
Produce surrounded by a complete grocery offering Promote value everyday Differentiated assortment of high-quality, healthy foods: Do not carry most national- branded CPG items Fresh, natural and organic offering High standard Private Label rooted in quality and taste Farmers market-inspired open st
Slide 8: Footprint and near-term expansion covers high growth areas
Sprouts’ footprint and near-term expansion covers high growth areas Demographics allows for deep penetration in markets Model works well in densely populated, urban areas as well as smaller metropolitan markets Successful in “natural / lifestyle” markets and more “traditional” markets Balanced unit
Slide 9: Reaching a Broad Base of Consumers Through Traditional & Digital Mediums
Reaching A Broad Base of Consumers Through Traditional & Digital Mediums BROAD CUSTOMER DEMOGRAPHICS Middle income and higher Medium to above average education Boomers, Gen-X and rising Millennial demographic Diverse ethnic background Value conscious BRAND AWARENESS & REACH Distribute more than 17 m
Slide 10: Sprouts' Consumers are at Different Stages of Adoption
Follows a specific diet because they need to (medical reasons) or they want to (weight management / ingredient avoidance) Sprouts’ Consumers are at Different Stages of Adoption ¹ Company consumer insight study DIET FOLLOWER Does not follow a strict or specific diet, but health / wellness is importan
Slide 11: 2016 Sustainability
2016 Sustainability RESPONSIBLE SOURCING ZERO WASTE REDUCED CARBON FOOTPRINT HEALTHY COMMUNITIES Committed to Zero Waste by 2020, a 90% waste diversion rate per EPA Diverted over 30M pounds of food from landfills through our Food Rescue, Composting and Animal Feed Programs Recycled more than 70M pou
Slide 12: Business & Financial Performance
Business & Financial Performance
Slide 13: Powerful Growth Business – Results Driven
7-8% Natural and Organic Sector Growth1 Powerful Growth Business – Results Driven GROWTH RESULTS One of the Best White Space Opportunities in Retail Healthy Unit Growth Rate 1 SPINS LLC projections for natural and organic food and supplement sales growth through 2020 Compelling Store-Level Economics
Slide 14: Q3 Comps Best in Class Despite a Challenging Environment
COMP STORE SALES GROWTH1 16% Q3 sales growth supported by strong new store productivity Q3 comps improved from continued momentum in non-perishable departments & strong produce growing season Private Label represents 12% of our revenue Strategic initiatives remain on track and aided in sales growth
Slide 15: Maintaining Best in Class Comp Performance Through Deflationary Periods
Pro Forma COMP STORE SALES GROWTH1 Maintaining Best in Class Comp Performance Through Deflationary Periods 1 “Comparable store sales growth” refers to the percentage change in our comparable store sales as compared to the prior comparable period. Pro forma comparable store sales growth is calculated
Slide 16: A History of Strong Earnings Performance
ADJUSTED NET INCOME2 ADJUSTED EBITDA1 A History of Strong Earnings Performance ¹ See the Appendix to this presentation for a reconciliation of EBITDA and adjusted EBTIDA to net income. For 2016-2017, adjustments to EBITDA were immaterial; thus only EBITDA is presented. ² See the Appendix to this pre
Slide 17: Double Digit Unit Growth
Store Count Plan to Open Approximately 30 Stores Per Year Double Digit Unit Growth
Slide 18: Strong Cash Flow Generation
Net cash provided by operations Strong Cash Flow Generation ($ in mm)
Slide 19: Cap Ex Focused on Unit Growth, Sales Initiatives & Infrastructure
Cap ex spend Cap Ex Focused on Unit Growth, Sales Initiatives & Infrastructure ($ in mm) Note: Cap Ex is net of landlord reimbursements
Slide 20: Compelling New Store Economics
Compelling New Store Economics Average sq ft. store size Net Cash Investment1 First Year Sales Initial Sales Growth over 3 to 4 years ¹ Includes store build-out (net of contributions from landlords), inventory (net of payables) and cash pre-opening expenses. 30K $3.3M ~$12M - $14M 20% - 30% Pre-Tax
Slide 21: Strong Return on Invested Capital (ROIC)
ROIC (1) Strong Return on Invested Capital (ROIC) ¹ ROIC is a non-GAAP measure that we define as net operating profit after taxes divided by average invested capital. ROIC excluding effect of capitalized leases adds back the capitalized operating lease interest to NOPAT and is calculated by the hypo
Slide 22: Financial Priorities – Capital Structure
Share repurchases Utilize strong free cash flow to self fund unit growth and achieve strategic objectives Maintain net debt/EBITDA in the range of 1.2x to 1.5x Net debt/EBITDA increased from .5x in 2015 to 1.3x in 2016 Q317 at 1.5x Preserve financial flexibility for opportunistic growth prospects $3
Slide 23: Why Sprouts is a Compelling Investment
Why Sprouts is a Compelling Investment Authentic Fresh, Natural & Organic Food Offering at Great Value Fastest Growing Segment of the U.S. Supermarket Industry with Strong Macro Tailwinds Significant New Store Growth Opportunity Supported by Broad Demographic Appeal Compelling Business Model with St
Slide 24: Appendix: Supplemental Materials
Appendix: Supplemental Materials
Slide 25: Management Team with Grocery & Retail Experience
Management Team with Grocery & Retail Experience Amin Maredia Jim Nielsen Brad Lukow Dan Sanders Dan Bruni Ted Frumkin Shawn Gensch Brandon Lombardi Chief Executive Officer 6 Years with Sprouts President & Chief Operating Officer 6 Years with Sprouts Chief Financial Officer 1Year with Sprouts Chief
Slide 26: Appendix: Non-GAAP Measure Reconciliation (EBITDA)
Appendix SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES NON-GAAP MEASURE RECONCILIATION (UNAUDITED) (IN THOUSANDS) The following table shows a reconciliation of EBITDA to net income for the thirteen and thirty-nine weeks ended October 1, 2017 and October 2, 2016 and the fiscal year ended January 1, 2
Slide 27: Appendix: Adjusted Net Income and Adjusted EBITDA Reconciliation
Appendix The following table shows a reconciliation of adjusted net income and adjusted EBITDA to net income for the Company’s 2012, 2013, 2014 and 2015 fiscal years: The 2012 Net Income has been adjusted to give pro forma effect to events that were (i) directly attributable to the Sunflower Transac
Slide 28: Appendix - Footnotes
Appe ) ) ndix - Footnotes (iecly afc the performance of sor operations.
Slide 29: Appendix: ROIC Reconciliation
Appendix The following table shows a reconciliation of ROIC to net income for the Company’s 2014, 2015 and 2016 fiscal years and for rolling four quarters ended October 1, 2017: SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES NON-GAAP MEASURE RECONCILIATION (UNAUDITED) (IN THOUSANDS) (1)Fiscal 2015 in
Slide 30: Thank You!
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