Sprouts Farmers Market, Inc. · NASDAQ:SFM
Sprouts Farmers Market — Investor Presentation (November 2018)
29 slides from Sprouts Farmers Market's investor presentation, Nov 5, 2018
Slide 1: Investor Deck November '18
Investor Deck November ‘18 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, Well Positioned to Meet the Needs of Today's Consumer
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 an Everyday Healthy Grocery Store,
Slide 5: Focused Strategic Priorities are Driving Top Line Performance and Improved Operational Efficiencies
Focused Strategic Priorities are Driving Top Line Performance and Improved Operational Efficiencies SALES GROWTH DRIVEN BY INNOVATION BUILDING FOR GROWTH THE SPROUTS BRAND Continue to grow Private Label rooted in health, taste, innovation and value Expanding deli offering Further improvement in Meat
Slide 6: Private Label Continues to Expand
Private Label Continues to Expand – Launched More than 900 Innovative Items Since 2013; Almost Doubling our Private Label Sales Growth Private label sales as a % of total sales
Slide 7: 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 8: 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 9: Years of New Store Growth
Entered the new states of WA, PA & MD in 2018 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 Plan to open approximately 30 stores
Slide 10: 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 demographics Diverse ethnic backgrounds Value conscious BRAND AWARENESS & REACH Reaching 2.4 million un
Slide 11: Sprouts' Value Proposition Attracts a Broader Customer Base
Follows a specific diet because they need to (medical reasons) or they want to (weight management / ingredient avoidance) Sprouts’ Value Proposition Attracts a Customer Base that is Much Broader than that of Traditional Health Food or Specialty Stores Source: Company consumer insight study DIET FOLL
Slide 12: 2017 Sustainability & Social Responsibility
2017 Sustainability & Social Responsibility SUSTAINABLE SOURCING ZERO WASTE ENERGY & CARBON REDUCTION HEALTHY COMMUNITIES Committed to Zero Waste by 2020, a 90% waste diversion rate per EPA Diverted 155 million pounds of food and other recyclables 55% landfill diversion rate achieved 23 million poun
Slide 13: Business & Financial Performance
Business & Financial Performance
Slide 14: 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 projections for natural and organic food and supplement sales growth through 2020 Compelling Store-Level Economics
Slide 15: Q3 Sales Growth and Comparable Store Sales
COMP STORE SALES GROWTH1 10% Q3 Sales Growth supported by consistent Strong New Store Productivity & Traffic Q3 Comps – Impacted by Deflation Private Label, Product Innovation and Non-Perishable departments Driving Sales Strategic Initiatives remain on track, continue to Bolster Sales Strong Busines
Slide 16: A History of Strong Earnings Growth
ADJUSTED NET INCOME2 ADJUSTED EBITDA1 A History of Strong Earnings Growth ¹ See the Appendix to this presentation for a reconciliation of EBITDA and adjusted EBTIDA to net income. For 2016-2018, adjustments to EBITDA were immaterial; thus only EBITDA is presented. ² See the Appendix to this presenta
Slide 17: Double Digit Unit Growth
Store Count Plan to Open Approximately 30 Stores Per Year Double Digit Unit Growth 1 As of November 1, 2018
Slide 18: Solid Cash Flow Generation
Net cash provided by operations Solid Cash Flow Generation ($ in mm)
Slide 19: 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
Slide 20: 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 $3.4
Slide 21: 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 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 1.4x to 1.7x Preserve financial flexibility for opportunistic growth prospects $435 million drawn as of 9/30/2018 on $700 million credit facility Mitigat
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 Amin Maredia Jim Nielsen Brad Lukow Dan Sanders Brandon Lombardi Ted Frumkin Shawn Gensch Chief Executive Officer 7 Years with Sprouts President & Chief Operating Officer 7 Years with Sprouts Chief Financial Officer 2 Years with Sprouts Chief Operatio
Slide 26: Appendix: Non-GAAP Measure Reconciliation
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 and thirty-nine weeks ended September 30, 2018 and October 1, 2017, and for the fiscal years ended Dec
Slide 27: Appendix: 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 2014 and 2015 fiscal years: Note: Footnotes on the following page. SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES NON-GAAP MEASURE RECONCILIATION (UNAUDITED) (IN THOUSANDS)
Slide 28: 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 als
Slide 29: Appendix: Reconciliation of ROIC to Net Income
Appendix The following table shows a reconciliation of ROIC to net income for the Company’s 2014, 2015, 2016 and 2017 fiscal years and for rolling four quarters ended September 30, 2018: SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES NON-GAAP MEASURE RECONCILIATION (UNAUDITED) (IN THOUSANDS) (1) Fisc
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