Sprouts Farmers Market, Inc. · NASDAQ:SFM
Sprouts Farmers Market — Q3 2014 Earnings Presentation
25 slides from Sprouts Farmers Market's earnings presentation, Nov 7, 2014
Slide 1: Investor Deck 3rd Quarter 2014
Exhibit 99.1 Investor 3rd Quarter Deck 2014
Slide 2: Forward-Looking Statements
Forward-Looking Certain statements similar expected presentation. to ability and information In in additional well combination collectively, connection diluted income disposal These reported Company’s consider measures. successfully accordance addition Exchange asnon-GAAP to earnings expressions) at
Slide 3: Overview of Sprouts
Overview of Sprouts
Slide 4: Sprouts Healthy Living for Less
Sprouts Healthy Broad One Significant ofconsumer the Delivers grocery largest momentum whitestore appeal Healthy space natural that opportunity Living and offers organic fresh, for 3Less! retailers natural and organic foods at great prices
Slide 5: Sprouts Go-to-Market Strategy
Sprouts Go-to-Market Complete SERVICE VALUE SELECTION HEALTH An 4 Engaged, has Natural a Loyal Differentiated Strategy &Customer Organic Offering Base Leading to Strong Financial Performance and Significant New Unit Growth Opportunity
Slide 6: Significant Market Opportunity
Significant $600B SFM Other, Our Multiple % Current 2x 5x 10x Supermarkets U.S. Column1 Vitamins Value Sales Natural Sprouts ¹Consumers 2 Grocer Source: Chart Market 0.9 2.3 4.5 Potential Current CAGR: 4.2x incl. %U.S. (U.S. data & and % Sales has growing 7.5x is of Progressive &Share Outpacing bene
Slide 7: Sprouts Differentiated Produce-Focused Store Model
Sprouts Produce Differentiated Farmers Convenient, Comfortable, Full 6 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 Mode
Slide 8: Broad Appeal with Wide Demographics
WithAngeles Broad Middle Wide Educated Wanting Looking Draw Densely Los “Natural Colorado Successful Sprouts aspectrum Traffic Customer Broad income Proves populated, to for /and lifestyle” in eat value and in Appeal, new Oklahoma healthier That of and Variety Demographics Eldemographic asurban up P
Slide 9: Fresh Produce, Regional and Local Sourcing
Fresh Produce Regional Local Limited Produce Supply Focus Prices Sourcing, on significantly chain CapEx Sourced is Buying freshness, a common system isRequired Deep at and Model the below speed-to-market scalable Distributed denominator Industry Core for competitors of New toRelationships Sprouts’ s
Slide 10: Reaching More Consumers and Reinforcing Value
Reaching More Reinforces 30+ ¹Digital Represents annual than anda13 health-focused, Broad social promotions1, planned million platforms Base promotions weekly ofwhich Consumers value for circulars relevance drive offering at each transition in store Both throughout todayTraditional during to andincr
Slide 11: Sprouts Consumers Increasing Share of Wallet
Sprouts Consumers Increasing LIFESTYLE TRANSITION TRIAL Grows Average Over its ThenShare Time Start Basket Shopof Make with an Size Consumers’ Increasing High Sprouts andQuality Gross Their “Food Number Margin Produce Primary Retail ofOver Departments 10 Wallet” Grocery Time Store
Slide 12: Proven Concept with Strong Store Growth Potential
Estimated Proven Strong Opened Demographics Potential Nevada ¹6 Based 4 79 27 performance Concept: on Utah 24U.S. 515+ an new 33Colorado assumed Store Years allow stores 191Count¹ across of for stores innew Kansas New deep 2014 all in store Store penetration markets, ten with Missouri growth states
Slide 13: Sprouts' Case Study: Average Weekly Sales
Sprouts’ Case ($ Average Whole 2005 2004 2006 2007 2008 2009 2010 2011 2012 2013 Broad 1 Not in ‘000s) Study +7% +1% +15% +30% +11% +3% +4% +10% indicative Appeal Foods Weekly Consistent ofopened Makes a Sprouts of Sales(1) every Growth Sprouts 2002 Phoenix store Wal-Mart inaCompetitive location. Fo
Slide 14: Business & Financial Performance
Business & Financial Performance
Slide 15: A Powerful Consistent Growth Model
A Powerful 10%+ Consistent Comp Compelling One Leverage High, Margin Operating Deleverage Long-Term 14 ofbalanced Natural Growth the expansion Infrastructure leverage Best Store Net capital Long-Term Store-Level /and sales Organic White Earnings Performance in Margin structure from growth existing S
Slide 16: History of Consistent Comparable Store Sales Growth
History 08 2008 Pro Prior 2009 2010 2011 2012 2013 ¹Balanced 2 including growth 15Pro “Comparable –Forma ’13 forma $1,723 5,1% Period $1,059 $1,239 $1,490 $1,991 $2,438 2,6% 2,3% 9,7% 10,7% of of CAGR: Sales all the Organic Net Comparable 7,4% 11,6% 4,9% 14,8% net 20,4% Current stores period Sales1
Slide 17: Consistent Net Sales Growth
Consistent Net ($ ‘11 YoY Pro 2013 Q3 Note: 16 inYTD –Forma Sales Growth: mm) $2,438 ‘13 Pro2014 2013 CAGR forma and 2011 2012 22.0% $1,830 $2,233 Strong $1,723 financial $1,991 19.0%Salesinformation Growth on this slide gives effect to the Henry’s Transaction and the Sunflower Transaction for all p
Slide 18: Continued Momentum: Q3 Highlights
Momentum Consumers Highlights 21% Opened Continued Pro Q4 Q1 Q2 Q3 2-year 1. including adding 17 “Comparable YTD 2013 2014 Forma Q3stacked the 14 2014 10.2 13.8 12.8 9.5 9.0 2013 2014 all strong pro Comparable new focus Continued % stores %Sales 9.7 10.4 YTD forma 20.3 19.2 stores store 20.2 22.4 20
Slide 19: Robust Q3 Adjusted EBITDA and Net Income Growth
Robust Q3 Adj. ($ YoY 2012 2013 3Q ²¹Note: See inYTD EBITDA¹ Net Growth: mm) the $147 $195 $40 $67,4 Financial Earnings Appendix Income² 2013$157 2014$212 2013 201433% 35% 68% 66% $56 $93 information Growth to this presentation on this slide forfor a reconciliation fiscal 2012 gives of adjusted pro
Slide 20: Compelling New Store Unit Economics
Compelling Target Store Net First Initial ¹Pre-Tax Includes Cash Year Size Sales New Cash-on-Cash Investment¹ Sales store 25Store Unit Growth – 28k build-out ~$10 Economics Economics sq. 20-30% –$2.8 Returns ft. $12(net million million over of35%-40% contributions 3 – 4 years within from 3-4landlord
Slide 21: Long-Term Financial Targets
Long-Term Unit Comparable Total EBIT Net Note: control material. described Exchange 20 Income Growth Sales Growth17 These ofFor under the Commission. Growth Financial Growth targets Store ~14% discussion Company the – Sales 20% ~15% are caption 20%+ Targets forward-looking Nothing and of Growth some
Slide 22: Why Sprouts: Growing Fast and Authentic
WhyGrowing Authentic Fast Significant Proven Resilient Passionate Significantly 11% 1,200 Target 20% YTD CAGR Sprouts potential 35 and Business –Fresh, 2-year Team New 40% Replicable tolower isSegment $113B stores aStore cash-on-cash with Natural Compelling comps Model prices (7x ain Growth Store of
Slide 23: Appendix: Supplemental Materials
Appendix: Supplemental Materials
Slide 24: Non-GAAP Reconciliation
Non-GAAP The ended Thirteen September Income Store Costs IPO Secondary Loss Interest Depreciation, Net Per Adjusted (a) with period-to-period (b) EBITDA store (c) (d) comparability (e) Company directly (f) rates operations Adjusted Store IPO Loss Secondary share income following Bonus landlords. for
Slide 25: Healthy living for less
Its healthy living for less
Sprouts Farmers Market — Q3 2014 Earnings Presentation on 6ix