Sprouts Farmers Market, Inc. · NASDAQ:SFM
Sprouts Farmers Market — Investor Presentation (December 2013)
29 slides from Sprouts Farmers Market's investor presentation, Dec 3, 2013
Slide 1: Investor Deck
Investor Deck Investor Deck Exhibit 99.1
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
Forward-Looking Statements and Non- GAAP Financial Measures Forward-Looking Statements and Non- GAAP Financial Measures 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
Slide 3: Sprouts Farmers Market
SPROUTS FARMERS MARKET
Slide 4: Benefitting from Long-Term Macro Trends
Benefitting from Long-Term Macro Trends Strong Market Opportunity 1 Sprouts is Outpacing Relevant Segments 2 Supported by Strong Macro Tailwinds Benefitting from Long-Term Macro Trends Sprouts growing at 7x U.S. Supermarkets 2008-2012 CAGR: 2.4% 6.1% 8.6% 10.3% 17.1% U.S. Supermarkets Vitamins & Sup
Slide 5: Sprouts has a Differentiated Go-to-Market Strategy
Sprouts has a Differentiated Go-to-Market Strategy Complete Natural & Organic Offering HEALTH SELECTION VALUE SERVICE Sprouts has a Differentiated Go-to-Market Strategy HEALTH SELECTION VALUE SERVICE An Engaged, Loyal Customer Base Leading to Strong Financial Performance and Significant New Unit Gro
Slide 6: Sprouts "Flips" the Conventional Grocery Store Model
Sprouts “Flips” the Conventional Grocery Store Model Sprouts “Flips” the Conventional Grocery Store Model Produce surrounded by a complete grocery offering Differentiated assortment of high- quality, healthy alternatives Farmers market inspired, open store layout with low profile displays Convenient
Slide 7: Fresh Produce is at the Core of Sprouts' Offering
Fresh Produce is at the Core of Sprouts’ Offering Current Produce Distribution Centers Produce Sourced and Distributed In-House Local Sourcing, Deep Industry Relationships Regional Buying Model Limited CapEx Required for New Distribution Centers Produce is a common denominator among customers Supply
Slide 8: Reaching a Broad Base of Consumers in Both Traditional and Digital Mediums
Reaching a Broad Base of Consumers in Both Traditional and Digital Mediums Reaching a Broad Base of Consumers in Both Traditional and Digital Mediums More than 10 million weekly circulars Reinforces value offering 25+ annual department promotions , which drive transition to increased basket size and
Slide 9: Sprouts Targets the Conventional Supermarket Customer
Sprouts Targets the Conventional Supermarket Customer Broad Customer Demographics Draw Traffic in Variety of Markets Sprouts Targets the Conventional Supermarket Customer Middle income and up Educated Wide spectrum of demographic and ethnic makeups Wanting to eat healthier, but not sure how Looking
Slide 10: Sprouts Grows its Share of Consumers' Food Retail Wallet
Lifestyle Transition Trial Sprouts Grows its Share of Consumers’ “Food Retail Wallet” Lifestyle Transition Trial Sprouts Grows its Share of Consumers’ “Food Retail Wallet” Consumers Start with High Quality Produce Over Time Make Sprouts Their Primary Grocery Store Then Begin Shopping in an Increasin
Slide 11: Estimated 15+ Years of New Store Growth Potential
Estimated 15+ Years of New Store Growth Potential U.S. Store Count¹ 300 in Existing Markets Nevada Utah Colorado New Mexico Arizona California Oklahoma Texas Estimated 15+ Years of New Store Growth 1 Based on an assumed new store growth rate of 12% per year and research conducted by Buxton Company i
Slide 12: Sprouts' Consistent Growth in Competitive Markets
Sprouts’ Consistent Growth in Competitive Markets Broad Appeal Makes Sprouts a Formidable Competitor Sprouts’ Consistent Growth in Competitive Markets Case Study of a Sprouts Phoenix Location 1 Not indicative of every store location. Whole Foods opened 2002 Wal-Mart opened Trader Joe’s opened Frys M
Slide 13: Why Sprouts is a Compelling Investment
Why Sprouts is a Compelling Investment Why Sprouts is a Compelling Investment Authentic Natural and Organic Food Offering at Great Value Fast Growing Segment of the U.S. Supermarket Industry with Strong Macro Tailwinds Significant New Store Growth Opportunity Supported by Broad Demographic Appeal Pr
Slide 14: Business & Financial Performance
Business & Financial Performance
Slide 15: A Powerful Long-Term Growth Engine
A Powerful Long-Term Growth Engine 10%+ Natural / Organic Sector Growth Consistent Store Performance Across Geographies and Vintages Comp Growth and Margin Expansion in Existing Stores Compelling Store-Level Economics One of the Best White Space Opportunities in the Public Markets Leverage Infrastru
Slide 16: History of Organic Growth
History of Organic Growth Balanced Sales Growth Across Comparable Store Sales Growth and New Store Openings 2.6% 2.3% 5.1% 9.7% Pro Forma Comparable Store Sales Growth Pro Forma Net Sales 1 2 History of Organic Growth ($ in mm) $1,059 $1,239 $1,490 $1,723 $1,991 11.6% 4.9% 7.4% 14.8% Prior Period Cu
Slide 17: Compelling Unit Economics
Compelling Unit Economics Target New Store Economics Pre-Tax Cash-on-Cash Returns 35%-40% within 3-4 years Compelling Unit Economics Includes store build-out (net of contributions from landlords), inventory (net of payables) and cash pre-opening expenses. Store Size 25 – 28k sq. ft. Net Cash Investm
Slide 18: Momentum Continued through Q3
Momentum Continued through Q3 Highlights Net Sales Pro Forma Comparable Store Sales Growth ² Momentum Continued through Q3 Net sales for 2012 YTD are pro forma net sales, reflecting the net sales of Sunflower as if the Sunflower Transaction had been consummated on the first day of fiscal 2012. “Comp
Slide 19: Robust Earnings Growth
Robust Earnings Growth Adj. EBITDA¹ Adj. Net Income² Robust Earnings Growth ($ in mm) ($ in mm) % Margin 6.3% 8.3% Note: Financial information on this slide for fiscal gives pro forma effect to the Sunflower Transaction as if it had been consummated on the first day of fiscal 2012. ¹ See the Appendi
Slide 20: Strong Balance Sheet and Liquidity
Strong Balance Sheet and Liquidity Capitalization Total Debt $480 Net Debt $388 Strong Balance Sheet and Liquidity ¹ Represents the midpoint of estimated capital expenditures range of $70mm to $75mm for 2013, net of estimated landlord tenant improvement allowances of $11mm. New store capital expendi
Slide 21: 2013 Financial Targets
2013 Financial Targets Unit Growth 19 New Stores Comparable Store Sales Growth 9.0% - 9.5% Total Sales Growth 20% - 21% Adjusted EBITDA $188M - $192M Adjusted Net Income $63M - $65M Adjusted Diluted EPS $0.45 - $0.46 Capital Expenditures (net of landlord reimbursements) $70M - $75M Financial Targets
Slide 22: Long-Term Financial Targets
Long-Term Financial Targets Unit Growth ~12% Comparable Store Sales Growth 6%+ Total Sales Growth ~15% EBIT Growth 17-20% Net Income Growth 20%+ Long-Term Financial Targets
Slide 23: Conclusion and Q&A
Conclusion and Q&A Significantly lower prices 10% CAGR to $98B in 2020 1,200 potential stores (7.2x current base) Target 35-40% cash-on- cash returns 20% 2-year comps Conclusion and Q&A Authentic Natural and Organic Food Offering at Great Value Fast Growing Segment of the U.S. Supermarket Industry w
Slide 24: Appendix: Supplemental Materials
Appendix: Supplemental Materials Appendix: Supplemental Materials
Slide 25: Non-GAAP Reconciliation
Non-GAAP Reconciliation Non-GAAP Reconciliation (a) See “Unaudited Supplemental Pro Forma Condensed Consolidated Financial Information” for a reconciliation of pro forma net income to net income for the thirteen and thirty-nine weeks ended September 30, 2012. (b) adjusted EBITDA, and from adjusted a
Slide 26: Pro Forma Reconciliation
Pro Forma Reconciliation Pro Forma Reconciliation SPROUTS FARMERS MARKET, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS For the Thirteen Weeks Ended September 30, 2012 (in thousands, except per share amounts)
Slide 27: Pro Forma Reconciliation
Pro Forma Reconciliation Pro Forma Reconciliation SPROUTS FARMERS MARKET, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS For the Thirty-nine Weeks Ended September 30, 2012 (in thousands, except per share amounts)
Slide 28: Pro Forma Reconciliation
Pro Forma Reconciliation Pro Forma Reconciliation SPROUTS FARMERS MARKET, INC. NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION 1. Basis of Presentation and Description of Transactions Effective May 29, 2012, the Company acquired all of the outstanding common and preferred s
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