Sprouts Farmers Market, Inc. · NASDAQ:SFM
Sprouts Farmers Market — Investor Presentation (March 2014)
29 slides from Sprouts Farmers Market's investor presentation, Mar 6, 2014
Slide 1: Investor Deck March 2014
Exhibit 99.1 Investor2014 March Deck
Slide 2: Forward-Looking Statements and Non-GAAP Measures
Forward-Looking Certain Sprouts historical risks Company‘s maintain time revise In with, trends addition, Inc. defines Sunflower diluted depreciation extinguishment These companies. cash the 1See addition Company’s the (“Sunflower that to and ornon-GAAP them relating earnings time Appendix adjusted
Slide 3: Overview of Sprouts
2Overview of Sprouts
Slide 4: Sprouts at a Glance
Sprouts High-growth, Broad One 3Significant ofconsumer the at alargest momentum white Glance value-oriented appeal space natural opportunity andfresh, organic natural retailers and organic food retailer
Slide 5: Benefitting from Strong Macro Tailwinds
Benefitting Strong $600B Sprouts 4.3x 1.0x 1997 Natural 2008-2012 Supported Health Greater Childhood ²¹Specialty 4Dollar Source: Chart 3.6x $9 2013E Tree, &Wellness Market U.S. data focus &growing Nutrition diets $54 Organic by obesity by from represents Supermarket Family 2020E Strong on 2.5x 11% O
Slide 6: A Differentiated Go-to-Market Strategy
Sprouts HEALTH Complete 5An Engaged, has Natural SELECTION a Loyal Differentiated &Customer Organic VALUE Go-to-Market Offering Base SERVICE LeadingStrategy to Strong Financial Performance and Significant New Unit Growth Opportunity
Slide 7: Sprouts Differentiated Farmers Market Store Model
Sprouts Produce Differentiated Farmers Convenient, Comfortable, 6Full grocery “Flips” surrounded market small-box: store easy assortment the inspired, toConventional by shop a25complete open of environment – high-quality, 28k store sq. Grocery grocery layout ft. healthy Store with offering low Model
Slide 8: Fresh Produce Focus and Supply Chain
Fresh Produce Produce Supply Focus 7Prices on significantly chain Local is freshness, a common system is Sourcing, at the below speed-to-market scalable denominator Core Limited competitors oftoSprouts’ support CapEx among and drive Offering growth value Required Current trial and Regional Produce t
Slide 9: Reaching More Consumers with Traditional and Digital Mediums
Reaching More Reinforces 30+ 8¹Digital Represents annual than platform a11 value Broad department planned million for offering Base relevance promotions weekly promotions of Consumers circulars today at 1, each and which in tomorrow store Bothdrive Traditional during transition FY 2014. andmargin Di
Slide 10: Broad Spectrum of Customer Demographics
Broadspectrum Middle Wide Educated Wanting Looking Successful Sprouts “Natural 9Densely Customer income Targets Proves populated, to for / lifestyle” Across eat value healthier of and the Demographics demographic Markets Conventional urban up markets areas andHealthy and That Supermarket ethnic Eati
Slide 11: Sprouts Customer Spend Increasing Over Time
Sprouts Increasing Over LIFESTYLE Then TRANSITION Consumers TRIAL 10 Time Shop Grows Average Make an Start Increasing itswith Sprouts Share Basket High of Number Their Size Consumers’ Quality Primary and ofProduce Gross Departments “Food Grocery Margin RetailWallet” Store Over Time
Slide 12: Estimated Potential New Store Growth Plan
Estimated Proven Strong Plan Demographics 2Potential Utah Nevada Oregon ~1,200 Washington 24 74 California 626 Carolina 29 Alabama Existing Mississippi Target 1As 11Colorado Georgia Based Kansas 5Missouri 170 ofSouth toMar. Near performance 300 open Concept: on Market Texas U.S. Florida 15+ 7.1x 11,
Slide 13: Sprouts' Case Study: Broad Appeal Makes Sprouts Formidable Competitor
Sprouts’ Case ($ Wal-Mart +10% (1) Sales +7% +30% +11% Average 2004 1Broad 12Not in+7% 000s) Study 2005 +3% indicative Target Appeal +1% Consistent opened 2006 ofadded Makes a Sprouts of 2007 +4% every Growth Frys Sprouts 2008 Phoenix Whole store 2009 inaCompetitive location. Formidable Foods Locati
Slide 14: Business & Financial Performance
Business & Financial Performance 13
Slide 15: A Powerful Growth Engine
A Powerful Consistent 10%+ Public High, Margin Operating Deleverage Long-Term 14 balanced Comp Growth expansion leverage Store Net capital Long-Term Growth Existing sales Earnings Onein structure from growth existing Leverage of Growth Stores the scale Growth Best stores and Growth Performance Engin
Slide 16: Compelling Target Store Economics
Compelling Target Store Initial Pre-Tax ¹35%-40% 15 Includes Size Sales New Cash-on-Cash store within 25Store Unit Growth – 28k build-out Economics 3-4 Economics sq.ft. 20-30%over3 years Returns (net Net Cash of contributions –Investment¹ 4years from$2.8landlords), million First inventory Year Sales
Slide 17: Pro Forma Net Sales and Comparable Store Sales History
History Pro ($ 20.4% 14.8% $1,991 2008 2.3% 5.1% 4.9% ‘08-’13 Prior Balanced 2¹Proforma growth the 16“Comparable inpro Forma mm) Period 2009 $2,438 10.7% forma calculated CAGR: ofSales net Organic Net 2010 Current $1,723 comparable sales Sales store Growth 18.2% 2011 asGrowth reflect Period if sales
Slide 18: Momentum Continued in Q4 2013
Momentum Met Highlights Over Continued Net YoY ($ 4Q 21Q4 growth store 17Net “Comparable in2-Year 2012 Sales annual Growth: mm) sales 27% sales calculated 4Q Pro 21.0 net growth Stacked double for target Continued 2013 27% Forma sales 2012 %store of 22.4 as -digit 2012¹ of YoY growth YTD 19 if sales
Slide 19: Robust Adj. EBITDA and Net Income Growth
Robust Adj. $28.7 ($ ($inmm) YoY $195.2 2012 % Note: ²reconciliation 18 See in EBITDA¹ Margin Growth:31% Growth:119% Growth:33% Growth:69% mm) the Q4 2013 Financial $37.7 $67.4 Earnings Appendix 2013 ($ 6.0% 7.4% 2012 $11.4 in $147.3 of Q4 Adj. mm) information 6.2% 8.0% 2013 adjusted Growth 2012 $5.
Slide 20: Strong Balance Sheet and Ample Liquidity
Strong Ample Solid ¹Generate At Capitalization Total Cash Net 1.2x NetDebt/ 19 Net Dec.29, Debt 2013 of 78 Debt free Balance liquidity landlord significant $360 cash Adj. $438 2013flow EBITDA Sheet going Revolver tenant generation free and forward improvement cash Liquidity ($60mm) flow supported wi
Slide 21: 2014 Growth Guidance
2014 Growth Total Capital $0.60 20 Sales Expenditures Growth Guidance 16% (net- of 18%landlord Unit Growth improvement 22-24 New allowances) Stores Comparable $110M-$120MStore Sales Growth 7.0% - 8.0% Adjusted EBITDA Growth 17% - 20% Adjusted Net Income Growth 30+% Adjusted Diluted EPS $0.58 -
Slide 22: Long-Term Financial Targets
Long-Termer Unit 21 Growth ~12% Financial Comparable Targets Store Sales Growth 6%+ Total Sales Growth ~15% EBIT Growth 17 – 20% Net Income Growth 20%+
Slide 23: Why Sprouts
9Why 9Significantly 92020 9(7.2x 9cashTarget 920% 22Authentic FastSprouts Significant Proven Resilient Passionate 2-year Growing 11% 1,200 and Business CAGR Natural 35 Team current comps New is Replicable lower returns aSegment Compelling Store with toand Model potential prices $113B _40% aOrganic G
Slide 24: Appendix: Supplemental Materials
Appendix: Supplemental Materials 23
Slide 25: Non-GAAP Reconciliation
Non-GAAP The December 2013 Pro Sunflower Actual Income Store Costs IPO Secondary Loss Interest Depreciation, Net Per Adjusted (a) closure the (c) severance, believes (d) and ongoing (e) adjusted (f) operations. with comparability (g) (b) for Company its 24 ongoing Secondary See Costs IPO Store Gain/
Slide 26: Pro Forma Condensed Consolidated Statement of Income (Thirteen Weeks)
Pro Forma SPROUTS UNAUDITED Thirteen Historical Sprouts Farmers Market, Net Cost Gross Direct Selling, Store Income Interest 3,341 Basic Diluted 25 sales of pre-opening closure $profit 125,957 store sales, 0.03 from expense $-Adjustment 128,958 general Inc. Historical weeks $0.03 ProForma Reconcilia
Slide 27: Pro Forma Condensed Consolidated Statement of Income (Fifty-Two Weeks)
Pro Forma SPROUTS UNAUDITED Fifty-two Historical Sprouts Farmers Market, Cost Gross Direct Selling, Store Interest Other Loss Income Net Basic Diluted 26 sales income of on pre-opening closure $income 119,427 profit store sales, 0.16 from expense before tax $for 121,781 general Inc. extinguishment H
Slide 28: Notes to Unaudited Pro Forma Financial Information
ProPro SPROUTS NOTES 1. Effective financed ended. 2. The impact adjustments Sunflower deducting Cost assets Direct Selling, to Interest used Income Net Weighted 27 Basis depreciation Forma income historical to ofand Forma Store The on effectuate Sales, Tax Expense General of TO through May average o
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