Sprouts Farmers Market, Inc. · NASDAQ:SFM
Sprouts Farmers Market — Investor Presentation (May 2017)
29 slides from Sprouts Farmers Market's investor presentation, May 11, 2017
Slide 1: Investor Deck May '17
Investor Deck May ‘17 Exhibit 99.1
Slide 2: Forward-looking statements and non-GAAP disclosure
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: 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 6: 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 7: 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 8: 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 that 16 m
Slide 9: 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 10: 2016 Responsible Retailing Accomplishments
2016 Responsible Retailing Accomplishments - 4 Main Focus Areas RESPONSIBLE SOURCING ZERO WASTE * GHG REDUCTION HEALTHY COMMUNITIES Diverted over 30M pounds of Food from landfills through our Food Rescue, Composting and Animal Feed Programs Recycled over 70M pounds of cardboard saving approx. 500k t
Slide 11: Business & Financial Performance
Business & Financial Performance
Slide 12: Powerful Growth Business – Results Driven
9% 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 2019 Compelling Store-Level Economics M
Slide 13: Q1 Comps Remain Positive Despite Significant Deflationary Environment
COMP STORE SALES GROWTH1 14% Q1 sales growth supported by strong new store productivity Q1 comps impacted by significant overall deflationary and promotional environment Private Label represents 11% of our revenue Strategic initiatives remain on track and aided in sales growth Q1 Comps Remain Positi
Slide 14: 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 15: 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 16: Double Digit Unit Growth
Store Count Plan to Open Approximately 30 Stores Per Year Double Digit Unit Growth 1 As of May 4, 2017 STORE COUNT 167 2013 191 2014 217 2015 253 2016 268(1) 2017 YTD
Slide 17: Strong Cash Flow Generation
Net cash provided by operations Strong Cash Flow Generation ($ in mm) NET CASH PROVIDED BY OPERATIONS $161 2013 $181 2014 $240 2015 $254 2016 $98 Q1 16 $115 Q1 17
Slide 18: Cap Ex Focused on Unit Growth, Sales Initiatives & Infrastructure
Cap ex spend Cap Ex Focused on Unit Growth, Sales Initiatives & Infrastructure ($ in mm) Note: Cap Ex is net of landlord reimbursements CAP EX SPEND $8 $11 $10 $47 2013 $9 $20 $10 $69 2014 $11 $26 $20 $47 2015 $12 $45 $15 $95 2016 New Stores Infrastructure Sales Initiatives & Remodels Maintenance
Slide 19: 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 ~$12 - $14M 20% - 30% Pre-Tax C
Slide 20: 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 21: Financial Priorities – Capital Structure
Share repurchases through APRIL 2017 Utilize strong free cash flow to self fund unit growth and achieve strategic objectives Net debt/EBITDA increased from .5x in 2015 to 1.3x in 2016 Maintain net debt/EBITDA in the range of 1.2x to 1.5x Q117 at 1.3x Preserve financial flexibility for opportunistic
Slide 22: 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 23: Appendix: Supplemental Materials
Appendix: Supplemental Materials
Slide 24: 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 25: Reconciliation of EBITDA to Net Income
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 weeks ended April 2, 2017 and April 3, 2016 and the fiscal year ended January 1, 2017: Thirteen Weeks
Slide 26: Reconciliation of Adjusted Net Income and Adjusted EBITDA
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: Note: Footnotes on the following page. Fifty-Three Weeks Ended Fifty-Two Weeks Ended Fifty-Two Weeks Ended Fifty-Two Weeks Ended Janu
Slide 27: Appendix - Footnotes
Appendix - Footnotes (a) Store closure and exit costs represents reserves established for closed stores and facilities, adjustments to those reserves for changes in expectations for sublease or actual subleases or settlements with landlords. Ongoing expenses related with the closed facilities are al
Slide 28: Reconciliation of ROIC to Net Income
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 April 2, 2017: SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES NON-GAAP MEASURE RECONCILIATION (UNAUDITED) (IN THOUSANDS) (1)Fiscal 2015 incl
Slide 29: Thank You!
Thank You!
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