Sprouts Farmers Market, Inc. · NASDAQ:SFM
Sprouts Farmers Market — Investor Presentation (May 2019)
31 slides from Sprouts Farmers Market's investor presentation, May 13, 2019
Slide 1: Investor Deck May '19
Investor Deck May ‘19 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 it
Slide 3: Overview of Sprouts
Overview of Sprouts
Slide 4: Sprouts is an Everyday Healthy Grocery Store Well-Positioned for Today's Consumer
Sprouts is an Everyday Healthy Grocery Store Well- Positioned to Meet the Needs of Today’s Consumer 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
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: A Healthy Grocery Store that Flips the Conventional Model
A Healthy Grocery Store that Flips the Conventional Model PRODUCE surrounded by a complete grocery offering Promote VALUE everyday DIFFERENTIATED selection of high-quality, healthy foods Farmers market-inspired OPEN STORE LAYOUT with low profile displays CONVENIENT Small-box: 30k Sq. Ft. Friendly, E
Slide 7: Sprouts' Value Proposition Attracts a Broader Customer Base
Sprouts’ Value Proposition Attracts a Customer Base that is Much Broader than that of Traditional Health Food or Specialty Stores HEALTH REGIMENTED HEALTH ENTHUSIAST Segment Description HEALTH REGIMENTED follow a strict diet/regiment because they have to (medical reasons) or want to (weight manageme
Slide 8: Continued Top Line Growth in a Dynamic Marketplace
Continued Top Line Growth in a Dynamic Marketplace ’14 – ’18 CAGR: 15% ($ in mm) Net Sales
Slide 9: Focused Strategic Priorities to Drive Top Line Performance
Focused Strategic Priorities to Drive Top Line Performance and Enable Operational Efficiencies SALES GROWTH DRIVEN BY INNOVATION ESTABLISHING A STRONG FOUNDATION AMPLIFYNG THE GUEST EXPERIENCE Continuing to grow private label Expanding deli offering Unit growth expansion in both existing and new mar
Slide 10: Private Label Sales Continues to Grow over 20%
Private Label Sales Continues to Grow over 20%, almost Doubling since 2013,with more than 2,400 Sprouts Brand Items
Slide 11: One of the Largest and Fastest Growing Natural and Organic Retailers
One of the Largest and Fastest Growing Natural and Organic Retailers Entering the new states of LA, NJ & VA in 2019 Demographics allow for deep penetration in markets Model works well in densely populated, urban areas as well as smaller metropolitan markets Successful in “natural / lifestyle” market
Slide 12: Reaching A Broad Base of Consumers Through Traditional & Digital Mediums
Reaching A Broad Base of Consumers Through Traditional & Digital Mediums
Slide 13: Environment: Positive Impact on Our Planet
ENVIRONMENT: We are committed to creating a positive impact on our planet by engaging our team members, suppliers and strategic partners to implement programs that eliminate waste, fight hunger, reduce greenhouse gas emissions and save energy. SOURCING - 98% of Sprouts fresh and frozen seafood sourc
Slide 14: Sourcing: 90% of Products are Natural or Organic
SOURCING: 90% of our More than 20,000 Products are Natural or Organic SOURCING - 98% of Sprouts fresh and frozen seafood sourced responsibly - Ranked #8 in the nation by Greenpeace for sustainable seafood sourcing - Surveyed more than 230 suppliers for sustainable sourcing practices - 20% of Sprouts
Slide 15: Investing in Our Team Members
INVESTING IN OUR TEAM MEMBERS: Cultivating a Dedicated Team rooted in Sprouts Culture
Slide 16: Community: Our Commitment to Helping Others
COMMUNITY: Our Commitment to Helping others in our Community Extends beyond our Stores
Slide 17: Business & Financial Performance
Business & Financial Performance
Slide 18: Powerful Growth Business – Results Driven
Powerful Growth Business – Results Driven 7-8% Natural and Organic Sector Growth1 One of the Best White Space Opportunities in Retail Healthy Unit Growth Rate 1 SPINS LLC industry projections for natural and organic food and supplement sales growth through 2020 Compelling Store-Level Economics Doubl
Slide 19: Q1 Sales Supported by New Store Productivity and Sales Initiatives
Q1 Sales Supported by New Store Productivity and Sales Initiatives COMP STORE SALES GROWTH1 10% Q1 sales growth supported by consistent strong New Store Productivity Grocery, deli and frozen departments driving sales Sales Initiatives, particularly in deli, and private label continue to bolster sale
Slide 20: History of Strong Operating Performance
NET SALES ADJUSTED EBITDA (1) ROIC (3) NET CASH PROVIDED by OPERATIONS History of Strong Operating Performance 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.
Slide 21: A History of Strong Earnings Growth
A History of Strong Earnings Growth 1 See the Appendix to this presentation for a reconciliation of adjusted net income to net income. For 2016, adjustments to net income were immaterial, thus only net income is presented. 2 2015 is presented on a 53-week basis. 3 See the Appendix to this presentati
Slide 22: Long Runway of Organic Growth
Long Runway of Organic Growth Store Count As of March 31, 2019 (1)
Slide 23: Capex Focused on Unit Growth, Sales Initiatives & Infrastructure
Capex Focused on Unit Growth, Sales Initiatives & Infrastructure Capex Spend ($ in mm) Note: Cap Ex is net of landlord reimbursements
Slide 24: Compelling New Store Economics
Compelling New Store Economics Average square foot store size Average 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), new store development cost and cash pre-opening expenses.
Slide 25: Financial Priorities – Capital Structure
Share repurchases Financial Priorities – Capital Structure Utilize strong free cash flow to self fund unit growth and achieve strategic objectives Maintain Net Debt/EBITDA in the range of 1.2x to 1.5x (1) Preserve financial flexibility for opportunistic growth prospects $500 million drawn as of 3/31
Slide 26: Sprouts is an Everyday Healthy Grocery Store, Well Positioned for Today's Consumer
Sprouts is an Everyday Healthy Grocery Store, Well Positioned to Meet the Needs of Today’s Consumer 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
Slide 27: Appendix: Supplemental Materials
Appendix: Supplemental Materials
Slide 28: Management Team with Grocery & Retail Experience
Management Team with Grocery & Retail Experience Brad Lukow Dan Sanders Brandon Lombardi Ted Frumkin Shawn Gensch Interim Co-Chief Executive Officer and Chief Financial Officer 3 Years with Sprouts Chief Operations Officer 3 Years with Sprouts Chief Human Resources & Legal Officer 7 Years with Sprou
Slide 29: 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 30: Appendix: Non-GAAP Footnotes
Appendix Income tax provision (benefit) includes approximately $11 million (or $0.08 per diluted share) benefit during the thirteen weeks ended April 1, 2018 in excess federal and state tax for share based compensation primarily associated with the exercise of expiring pre-IPO options. Income tax pr
Slide 31: 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 fiscal years and rolling four quarters ended March 31, 2019. SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES NON-GAAP MEASURE RECONCILIATION (UNAUDITED) (IN THOUSANDS) (1)Fiscal 2015 incl
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