Sprouts Farmers Market, Inc. · NASDAQ:SFM
Sprouts Farmers Market — Investor Presentation (February 2019)
28 slides from Sprouts Farmers Market's investor presentation, Feb 26, 2019
Slide 1: Investor Deck February '19
Investor Deck February ‘19 Exhibit 99.1
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
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
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
Produce surrounded by a complete grocery offering Promote value everyday Differentiated assortment of high-quality, healthy foods: Fresh, natural and organic offering High standard Private Label rooted in quality and taste Do not carry most national branded CPG items Farmers market-inspired open sto
Slide 7: Value Proposition Attracts a Broad Customer Base
HEALTH REGIMENTED HEALTH ENTHUSIAST Segment Description HEALTH REGIMENTED follow a strict diet/regiment because they have to (medical reasons) or want to (weight management, paleo, etc.). HEALTH ENTHUSIASTS do not follow a strict diet, but health/wellness is important to them and a primary considera
Slide 8: One of the Largest and Fastest Growing Natural and Organic Retailers
’14 – ’18 CAGR: 15% ($ in mm) Net Sales One of the Largest and Fastest Growing Natural and Organic Retailers
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 GUEST ENGAGEMENT Continue to grow Private Label rooted in superior taste and healthier ingredients our guests trust Expanding deli offerin
Slide 10: Private Label Sales Continues to Grow at 25%
Private Label Sales Continues to Grow at 25%, almost Doubling since 2013,with more than 2,400 Sprouts Innovative Items Private label sales as a % of total sales
Slide 11: Entering New States of LA, NJ & VA in 2019
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” markets and more “traditional” markets Plan to open approximately 30 stores
Slide 12: Reaching a Broad Base of Consumers Through Traditional & Digital Mediums
Reaching A Broad Base of Consumers Through Traditional & Digital Mediums BROAD CUSTOMER DEMOGRAPHICS BRAND AWARENESS & REACH Middle income and higher Medium to above-average education Boomers, Gen-X and rising Millennial demographics Diverse ethnic backgrounds Value conscious Engage with 2.4 million
Slide 13: 2018 Sustainability & Social Responsibility
2018 Sustainability & Social Responsibility ENVIRONMENT - Committed to Zero Waste by 2020 - Donated 27 million pounds of food to local food banks - Diverted 37 million pounds of organics to local cattle farms and compost facilities - Recycled 91 million pounds of cardboard - 89 stores achieved Susta
Slide 14: Business & Financial Performance
Business & Financial Performance
Slide 15: Powerful Growth Business – Results Driven
7-8% 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 industry projections for natural and organic food and supplement sales growth through 2020 Compelling Store-Level
Slide 16: Strong Business Fundamentals in 2018
COMP STORE SALES GROWTH1 12% sales growth for 2018 supported by consistent Strong New Store Productivity Comps – Impacted by Deflation Private Label, Product Innovation and Non-Perishable departments driving sales Sales Initiatives, particularly in deli, continue to bolster sales Strong Business Fun
Slide 17: History of Strong Operating Performance
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 2015 is presented on a 53-week basis. RO
Slide 18: A History of Strong Earnings Growth
ADJUSTED NET INCOME1 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 Append
Slide 19: Store Count: Long Runway of Organic Growth
Store Count Long Runway of Organic Growth 1 As of December 30, 2018
Slide 20: Capex Focused on Unit Growth, Sales Initiatives & Infrastructure
Capex Spend Capex Focused on Unit Growth, Sales Initiatives & Infrastructure ($ in mm) Note: Cap Ex is net of landlord reimbursements
Slide 21: Compelling New Store Economics
Compelling New Store Economics Average square foot 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), new store development cost and cash pre-opening expenses. 30K $3.6
Slide 22: Financial Priorities – Capital Structure
Share repurchases 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 $453 million drawn as of 12/30/2018 on $700 million credit facility Mi
Slide 23: 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 24: Appendix: Supplemental Materials
Appendix: Supplemental Materials
Slide 25: Management Team with Grocery & Retail Experience
Management Team with Grocery & Retail Experience Jim Nielsen Brad Lukow Dan Sanders Brandon Lombardi Ted Frumkin Shawn Gensch Interim Co-Chief Executive Officer, President & Chief Operating Officer 7 Years with Sprouts Interim Co-Chief Executive Officer and Chief Financial Officer 3 Years with Sprou
Slide 26: 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 27: Appendix - Footnotes
Appendix - Footnotes (1) Income tax provision (benefit) includes approximately $12 million (or $0.10 per diluted share) in 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
Slide 28: ROIC Reconciliation
Appendix ROIC Reconciliation The following table shows a reconciliation of ROIC to net income for the Company’s 2014, 2015, 2016, 2017 and 2018 fiscal years. SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES NON-GAAP MEASURE RECONCILIATION (UNAUDITED) (IN THOUSANDS) (1) Fiscal 2015 includes 53 weeks. $1
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