Sprouts Farmers Market, Inc. · NASDAQ:SFM
Sprouts Farmers Market — Investor Presentation (November 2020)
30 slides from Sprouts Farmers Market's investor presentation, Nov 24, 2020
Slide 1: Investor Deck November 2020
INVESTOR DECK November 2020 Exhibit 99.1
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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
Slide 3: Sprouts, Where Goodness Grows
Sprouts, Where Goodness Grows
Slide 4: What Defines Sprouts and What Makes Us Different
A farmers market experience – open layout of fresh produce at the heart of the store, community feel, treasure hunt for unique products A place with happy, helpful team members Intentional curation of responsibly and locally sourced products The right assortment of healthy alternatives and good-for-
Slide 5: Why Invest in Sprouts: A Powerful Growth Business
Building an advantaged fresh supply chain 10%+ annual unit growth beyond 2021 and incredible white space Strong and improving unit economics Sustained robust cash flows Unique farmers market experience Innovative products with lifestyle friendly ingredients WHY INVEST IN SPROUTS A POWERFUL GROWTH BU
Slide 6: Environmentally and Socially Responsible Company
Environmentally and Socially Responsible Company
Slide 7: Sprouts Strategy
Sprouts Strategy Win with Target Customer Identified through research to have tremendous opportunity Refine Brand and Marketing Approach Elevate national recognition and top of mind awareness Update Format and Expand in Select Markets Smaller stores with higher returns where our core customers live
Slide 8: Target Customers: Health Enthusiasts and Experience Seekers
WE EXIST FOR THE HEALTH ENTHUSIASTS WE EXIST FOR THE EXPERIENCE SEEKERS What brings them together is simple: They’re into their food – like, really into it. Cover a wide range of income Age demographics - Gen Z to Baby Boomers Healthy and organic options, better for you, quality products Innovative
Slide 9: Opportunity to Gain Share in Target Customer Segments
Tremendous Opportunity to Gain Share in Winning Target Customer Segments Consumers Spend $1.2T on Food at Home Sprouts’ Share Today >$200B Market Opportunity to Grow Target Customers in our Regions is Vast
Slide 10: Sprouts' Affinity Strong Among Frequent Shoppers
Sprouts’ Affinity is Very Strong Among Frequent Shoppers and inline with Best-in-Class Peers Net Promoter Score (NPS) – Among Frequent Shoppers Frequent as defined as in Respondent’s Top 3 Most Visited for Grocery +65 +22 +69 NPS +23 +47 +47 +42 +32 +66 +44 +61 +63 +72 +70 +60 Promoters Passives Det
Slide 11: Refined Brand and Marketing Approach
Elevate brand recognition and top of mind awareness Bring our brand story to life focusing on our differentiation and innovation Reach more customers through story telling channels like digital media and TV Meet customers’ needs with ecommerce offerings Establish a truly differentiated private label
Slide 12: Produce Remains the Heart of the Store
Produce Remains the Heart of the Store Hybrid produce buying model – centralized and regional teams allow us to be flexible and react to the produce markets quickly Meaningful farmer partnerships which deliver new varietals and favorable pricing to our customers through spot buys New distribution ch
Slide 13: Curation of Differentiated Good-For-You Products
Sprouts’ Stores are Filled with a Curation of Differentiated Good-For-You Products Thousands of Responsibly Sourced Products Made with Simple Clean Ingredients with Certifications and Attributes like USDA Organic, Fair Trade, and Humane Certified
Slide 14: Updated Store Format: Smaller Box with Higher Returns
Deliver a Unique, Friendly Experience with Healthy, Innovative Products in a Smaller Box with Higher Returns Format to Stay True to our Fresh-focused Farmers Market Heritage Prioritize Categories For Growth Potential Continue to Offer all Categories 21K-25K Small Market Layout square foot box From…
Slide 15: Smaller Store Benefits
Lower Cost to Build Reduce Non-Selling Space Decreased Occupancy Cost Reduce Operating Cost Sales Remain Flat Strong Returns & Ability to Accelerate Growth Smaller Store Benefits
Slide 16: Expansion Markets and Site Selection
Site selection intersecting: Target customers Growth potential Supply chain Expansion Markets Drive growth in existing markets with support of Distribution Centers (DC) California & Texas – More opportunity to fill in where we are strong Build out Mid-Atlantic and Florida 300-400 New Stores in Expan
Slide 17: Create an Advantaged Fresh Supply Chain
Current Deliver on Fresh Commitment DCs are located within 500 or more miles of the stores 5 DCs serving 345 stores (Atlanta serving southern Florida) Multiple deliveries to the stores daily Future Aspire DC to be within 250 miles of the majority of stores Additional Florida & Colorado DCs in 2021 M
Slide 18: Financial Targets
Financial Targets Low Double-Digit Earnings Growth and Expansion of ROIC Cost to Build Reduced & Attractive New Store Economics 10% unit growth or more Low single digit comps Stable to Expanding EBIT Margins
Slide 19: New Store Four Wall Box Target Economics
New Store Four Wall Box Target Economics Sales EBITDA Margins 20% to 25% sales growth in 4 years $16M - $18M annual Sales per Box in year 4 Blended 8% EBITDA Margins in year 4 Cash on Cash Return ~40% by year 4, continues to grow in year 5 Cash Investment $3.2M average new store build including CapE
Slide 20: Annual Unit Growth Target of 10% or More
Unit growth (1) Annual Unit Growth Target of 10% or More Beyond 2021 Long Runway of Organic Growth 2019 & 2020 actual unit growth, 2021 and beyond represent a range of potential growth
Slide 21: Low Single Digit Comps Target
Low Single Digit Comps Target Key Comp Drivers Low Single Digit Comps Brand and marketing Innovative, differentiated products Ecommerce Better new store ramp with smarter promotional approach
Slide 22: Stable to Expanding EBIT Margins
Stable to Expanding EBIT Margins Stable to Expanding EBIT Margins All Stores New Stores Smarter Promotions Improved Buying Supply Chain Optimization Labor Productivity Improving Shrink Headwinds from Labor & Benefit Costs Headwinds from ecommerce Reduction in Cost to Build (Improved DA) Lower Rents
Slide 23: History of Strong Cash Generation and Solid Operating Performance
History of Strong Cash Generation and Solid Operating Performance NET SALES ADJUSTED EBITDA (1) ROIC (3) NET CASH PROVIDED by OPERATIONS 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
Slide 24: Capital Expense Driven by New Store Growth
Capital Expense Driven by New Store Growth Capex Spend as % of Sales
Slide 25: Delight in the Goodness of Fresh, Healthy Foods
DELIGHT IN THE GOODNESS OF FRESH, HEALTHY FOODS… Sprouts delivers a unique farmers market experience that brings together passionate, knowledgeable team members and the best assortment of high-quality food that is good for us, and good for the world.
Slide 26: Appendix
APPENDIX
Slide 27: Executive Management Team with Leading Grocery & Retail Experience
Executive Management Team with Leading Grocery & Retail Experience Jack Sinclair Chief Executive Officer since 2019 Denise Paulonis Chief Financial Officer since 2020 Scott Neal Chief Fresh Merchandising Officer since 2020 Dan Sanders Chief Operations Officer since 2016 Jim Wallace Senior VP, Store
Slide 28: Non-GAAP Measure Reconciliation
SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES NON-GAAP MEASURE RECONCILIATION (UNAUDITED) (IN THOUSANDS) The following table shows a reconciliation of EBITDA and adjusted EBITDA to net income, as well as a reconciliation of net income and diluted earnings per share to adjusted net income and adjuste
Slide 29: Appendix: Reconciliation Footnotes
Appendix Income tax provision (benefit) includes approximately $12 million (or $0.10 per diluted share) benefit during the fifty-two weeks ended December 30, 2018 and $10 million (or $0.08 per diluted share) in the fifty-two weeks ended December 31, 2017, in excess federal and state tax benefits for
Slide 30: Reconciliation of ROIC to Net Income
Appendix The following table shows a reconciliation of ROIC to net income for the Company’s 2015, 2016, 2017, 2018 and 2019 fiscal years. SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES NON-GAAP MEASURE RECONCILIATION (UNAUDITED) (IN THOUSANDS) (1)Fiscal 2015 includes 53 weeks (2) Net income amounts r
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