Sprouts Farmers Market, Inc. · NASDAQ:SFM
Sprouts Farmers Market — Investor Presentation (August 2016)
24 slides from Sprouts Farmers Market's investor presentation, Aug 9, 2016
Slide 1: Investor Deck – August '16
INVESTOR DECK – august ‘16 Exhibit 99.1
Slide 2: Forward-Looking Statements & Non-GAAP Financial Measures
Forward-Looking Statements & 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 limited to, statements to the effect that Sprouts Farmers Marke
Slide 3: Overview of Sprouts
fie Si OVERVIEW OF SPROUTS
Slide 4: Sprouts Is Well Positioned to Meet the Needs of Today's Health Curious Shoppers
Pro Forma Net Sales1 Sprouts Is Well Positioned to Meet the Needs of Today’s Health Curious Shoppers Healthy grocery store rooted in fresh, natural and organic foods at affordable prices Broad consumer appeal One of the largest and fastest growing natural and organic retailers with significant white
Slide 5: A Grocery Shopping Experience that Makes Healthy Living Easy & Affordable
A Grocery Shopping Experience that Makes Healthy Living Easy & Affordable Differentiated Business Model Focused on Four Pillars Health Value Selection Engagement HEALTH SELECTION VALUE ENGAGEMENT
Slide 6: A Healthy Grocery Store that Flips the Conventional Model
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: High standard Private Label Fresh, natural and organic offering Doesn’t sell most national- branded p
Slide 7: Proven Concept: Stores in States as of August 4, 2016
PROVEN CONCEPT: 243 STORES IN 13 STATES AS OF AUGUST 4, 2016 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 / lif
Slide 8: Reaching a Broad Base of Consumers Through Traditional & Digital Mediums
Reaching a Broad Base of Consumers Through Traditional & Digital MEDIUMS ¹ Represents actual planned promotions at each store during FY 2016. BROAD CUSTOMER DEMOGRAPHICS Middle income and higher Medium to above average education Boomers, Gen-X and rising Millennial demographic Diverse ethnic backgro
Slide 9: Sprouts' Consumers are at Different Stages of Adoption
Sprouts’ Consumers are at Different Stages of Adoption ¹ Company consumer insight study Follows a specific diet because they have to (medical reasons) or they want to (weight management / ingredient avoidance) DIET FOLLOWER Does not follow a strict or specific diet, but health / wellness is importan
Slide 10: Sprouts' Main Competitor is the Traditional Grocery Store
Sprouts’ Main Competitor is the Traditional Grocery Store More than 50% of Sprouts’ consumers are coming from traditional grocers Our average consumer’s monthly spending generally will increase nearly 3x from their initial experimentation phase Significant opportunity to increase trial visits and ba
Slide 11: Increase Relevance with Priorities for 2016
INCREASE RELEVANCE WITH PRIORITIES FOR 2016 SALES DRIVERS INFRASTRUCTURE WORKFORCE Deli expansion rollout Continue to build Private Label rooted in health, innovation and value Enhance partnerships Invest in technology to support growth Build on promotional effectiveness and pricing Improve operatio
Slide 12: Responsible Retailing for Sprouts
RESPONSIBLE RETAILING FOR SPROUTS IS COMPRISED OF FOUR MAIN FOCUS AREAS Food Rescue Program—donated approximately 14M pounds of food in 2015 Composting at 50 stores diverted 5.5 million pounds from the landfill in 2015 Recycled 60M pounds of cardboard in 2015 In-store “Green Leaders” engaged to impl
Slide 13: Business & Financial Performance
BUSINESS & FINANCIAL PERFORMANCE
Slide 14: Powerful Growth Business – Results Driven
POWERFUL GROWTH BUSINESS – RESULTS DRIVEN GROWTH RESULTS 9% Natural and Organic Sector Growth1 One of the Best White Space Opportunities in Retail 14% Unit Growth Compelling Store-Level Economics Mid Teens Sales Growth with Industry- Leading Comps Deleveraged Capital Structure Ideal Free Cash Flow G
Slide 15: Balanced Sales Growth Across Comp Store Sales Growth & New Store Openings
BALANCED SALES GROWTH ACROSS COMP STORE SALES GROWTH & NEW STORE OPENINGS ¹ Pro forma net sales reflect the net sales of our predecessor entity, Henry’s and Sunflower as if the Transactions had been consummated on the first day of fiscal 2008. 2 “Comparable store sales growth” refers to the percenta
Slide 16: Comp Store Sales Growth
COMP STORE SALES GROWTH1 COMPS remain solid despite continued deflationary environment HIGHLIGHTS Q2 Comps impacted by: Overall deflationary environment Led by nonperishable departments 14% Q2 2016 sales growth Private Label represents nearly 10% of our revenue Strategic initiatives remain on track
Slide 17: A History of Strong Earnings Performance
A HISTORY OF STRONG EARNINGS PERFORMANCE Note: Financial information on this slide for fiscal 2012 gives pro forma effect to our business combination with Sunflower if it had been consummated on the first day of fiscal 2012. ¹ See the Appendix to this presentation for a reconciliation of EBITDA and
Slide 18: Compelling Unit Economics
COMPELLING UNIT ECONOMICS TARGET NEW STORE ECONOMICS Store Size Net Cash Investment1 First Year Sales Initial Sales Growth ¹ Includes store build-out (net of contributions from landlords), inventory (net of payables) and cash pre-opening expenses. Average 28k to 30k square feet $3.1 million ~$12 to
Slide 19: Financial Priorities
FINANCIAL PRIORITIES CAPITAL STRUCTURE Utilize strong free cash flow to self fund 14% unit growth and achieve strategic objectives Opportunistically employed $150 million share repurchase Preserve financial flexibility for opportunistic growth prospects $160 million outstanding on $450 million credi
Slide 20: Why Sprouts Is a Compelling Investment
WHY SPROUTS IS A COMPELLING INVESTMENT Authentic Fresh, Natural & 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 Resilient Business Model with Compel
Slide 21: Appendix: Supplemental Materials
APPENDIX: SUPPLEMENTAL MATERIALS
Slide 22: Non-GAAP Measure Reconciliation: EBITDA
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 twenty-six weeks ended July 3, 2016 and June 28, 2015: Sprouts Farmers Market, Inc. and Subsidiaries Non-GAAP M
Slide 23: 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 and the twenty-six weeks ended June 28, 2015: Note: Footnotes on the following page. Financial information on this slide for fiscal 20
Slide 24: Appendix
APPENDIX ‘heongoing pesformance of fs store operations ‘equipment, obligation Fallect the performance dits tre perators. ‘ongoing income x prowsion,
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