UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 22, 2024
Sprouts Farmers Market, Inc.
(Exact name of registrant as specified in its charter)
Delaware |
|
001-36029 |
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32-0331600 |
(State or other jurisdiction of incorporation or organization) |
|
(Commission File Number) |
|
(I.R.S. Employer Identification No.) |
5455 E. High Street, Suite 111
Phoenix, Arizona 85054
(Address of principal executive offices and zip code)
(480) 814-8016
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
|
Trading Symbol(s) |
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Name of Each Exchange on Which Registered |
Common Stock, $0.001 par value |
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SFM |
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NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On February 22, 2024, Sprouts Farmers Market, Inc. (the “Company”) issued a press release announcing its results of operations for its fourth fiscal quarter and fiscal year ended December 31, 2023. On the same date, the Company posted on its investor relations website, located at investors.sprouts.com, a PowerPoint presentation (the “Earnings Presentation”) that will be used by management during the Company’s earnings conference call. A copy of the press release and the Earnings Presentation are furnished herewith as Exhibits 99.1 and 99.2, respectively, and are incorporated into this Item 2.02 by reference.
The information furnished in this Item 2.02, including Exhibits 99.1 and 99.2 attached hereto and incorporated herein, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Item 7.01. Regulation FD Disclosure.
The information set forth under Item 2.02 is hereby incorporated by reference.
The Company is also furnishing in this Current Report on Form 8-K a PowerPoint presentation (the “Investor Presentation”) to be used by the Company at various meetings with institutional investors or analysts. The Investor Presentation may be amended or updated at any time and from time to time through another Current Report on Form 8-K, a later company filing or other means. A copy of the Investor Presentation is furnished herewith as Exhibit 99.3 and is incorporated into this Item 7.01 by reference.
The information furnished in this Item 7.01, including Exhibits 99.1, 99.2 and 99.3, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
The Company does not have, and expressly disclaims, any obligation to release publicly any updates or any changes in its expectations or any change in events, conditions, or circumstances on which any forward-looking statement in the attached press release, Earnings Presentation or Investor Presentation is based.
The text of this Current Report on Form 8-K and the attached press release, Earnings Presentation and Investor Presentation are available on the Company’s investor relations website located at investors.sprouts.com, although the Company reserves the right to discontinue that availability at any time.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit Number |
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Description |
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99.1 |
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|
|
|
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99.2 |
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|
|
|
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99.3 |
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Sprouts Farmers Market, Inc. Presentation, dated February 22, 2024, entitled "Investor Deck" |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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SPROUTS FARMERS MARKET, INC. |
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Date: February 22, 2024 |
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By: |
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/s/ Brandon F. Lombardi |
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Name: |
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Brandon F. Lombardi |
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Title: |
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Chief Legal Officer and Corporate Secretary |
Exhibit 99.1
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|
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Investor Contact: |
Media Contact: |
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Susannah Livingston |
media@sprouts.com |
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(602) 682-1584 |
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susannahlivingston@sprouts.com |
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Sprouts Farmers Market, Inc. Reports Fourth Quarter and Full Year 2023 Results
PHOENIX, Ariz. – (Business Wire) – February 22, 2024 – Sprouts Farmers Market, Inc. (Nasdaq: SFM) today reported results for the 13-week fourth quarter and 52-week year ending December 31, 2023.
"Our fourth quarter performance demonstrates our continued strength as a leading specialty grocer," said Jack Sinclair, chief executive officer of Sprouts Farmers Market. "Our 2023 results exceeded our original expectations, with solid comparable sales each quarter, positive traffic, accelerating unit growth, and increasing customer engagement. I am confident our strategy and our passionate, dedicated team will continue to create shareholder value."
Fourth Quarter Highlights:
Full Year 2023 Highlights:
(1) Adjusted diluted earnings per share, a non-GAAP financial measure, excludes the impact of certain special items. See the “Non-GAAP Financial Measures” section of this release for additional information about this item.
Leverage and Liquidity in 2023
First Quarter and Full Year 2024 Outlook
The following provides information on our full year 2024 outlook:
Fourth Quarter and Full Year 2023 Conference Call
Sprouts will hold a conference call at 5:00 p.m. Eastern Standard Time on Thursday, February 22, 2024, during which Sprouts executives will further discuss fourth quarter and full year 2023 financial results.
A webcast of the conference call will be available through Sprouts’ investor relations webpage, accessible via the following link. Participants should register on the website approximately ten minutes prior to the start of the webcast.
A webcast replay will be available at approximately 8:00 p.m. Eastern Standard Time on Thursday, February 22, 2024. This can be accessed with the following link.
Important Information Regarding Outlook
There is no guarantee that Sprouts will achieve its projected financial expectations, which are based on management estimates, currently available information and assumptions that management believes to be reasonable. These expectations are inherently subject to significant economic, competitive and other uncertainties and contingencies, many of which are beyond the control of management. See “Forward-Looking Statements” below.
Forward-Looking Statements
Certain statements in this press release are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. Any statements contained herein that are not statements of historical fact (including, but not limited to, statements to the effect that Sprouts Farmers Market or its management "anticipates," "plans," "estimates," "expects," or "believes," or the negative of these terms and other similar expressions) should be considered forward-looking statements, including, without limitation, statements regarding the company’s outlook, growth, opportunities and long-term strategy. These statements involve certain risks and uncertainties that may cause actual results to differ materially from expectations as of the date of this release. These risks and uncertainties include, without limitation, the company’s ability to execute on its long-term strategy; the company’s ability to successfully compete in its competitive industry; the company’s ability to successfully open new stores; the company’s ability to manage its growth; the company’s ability to maintain or improve its operating margins; the company’s ability to identify and react to trends in consumer preferences; product supply disruptions; equipment supply disruptions; general economic conditions that impact consumer spending or result in competitive responses; accounting standard changes; the current inflationary environment and future potential inflationary and/or deflationary trends; and other factors as set forth from time to time in the company’s Securities and Exchange Commission filings, including, without limitation, the company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The company intends these forward-looking statements to speak only as of the time of this release and does not undertake to update or revise them as more information becomes available, except as required by law.
Corporate Profile
True to its farm-stand heritage, Sprouts offers a unique grocery experience featuring an open layout with fresh produce at the heart of the store. Sprouts inspires wellness naturally with a carefully curated assortment of better-for-you products paired with purpose-driven people. The healthy grocer continues to bring the latest in wholesome, innovative products made with lifestyle-friendly ingredients such as organic, plant-based and gluten-free. Headquartered in Phoenix, and one of the largest and fastest growing specialty retailers of fresh, natural and organic food in the United States, Sprouts employs approximately 32,000 team members and operates more than 400 stores in 23 states nationwide. To learn more about Sprouts, and the good it brings communities, visit about.sprouts.com.
SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
|
|
Thirteen Weeks Ended |
|
|
Fifty-Two Weeks Ended |
|
||||||||||
|
|
December 31, 2023 |
|
|
January 1, 2023 |
|
|
December 31, 2023 |
|
|
January 1, 2023 |
|
||||
Net sales |
|
$ |
1,698,545 |
|
|
$ |
1,576,554 |
|
|
$ |
6,837,384 |
|
|
$ |
6,404,223 |
|
Cost of sales |
|
|
1,078,172 |
|
|
|
1,003,745 |
|
|
|
4,315,543 |
|
|
|
4,055,659 |
|
Gross profit |
|
|
620,373 |
|
|
|
572,809 |
|
|
|
2,521,841 |
|
|
|
2,348,564 |
|
Selling, general and administrative expenses |
|
|
513,476 |
|
|
|
472,795 |
|
|
|
2,000,437 |
|
|
|
1,855,649 |
|
Depreciation and amortization (exclusive of depreciation included in cost of sales) |
|
|
32,059 |
|
|
|
30,153 |
|
|
|
131,893 |
|
|
|
123,530 |
|
Store closure and other costs, net |
|
|
5,400 |
|
|
|
7,991 |
|
|
|
39,280 |
|
|
|
11,025 |
|
Income from operations |
|
|
69,438 |
|
|
|
61,870 |
|
|
|
350,231 |
|
|
|
358,360 |
|
Interest expense, net |
|
|
433 |
|
|
|
1,399 |
|
|
|
6,491 |
|
|
|
9,047 |
|
Income before income taxes |
|
|
69,005 |
|
|
|
60,471 |
|
|
|
343,740 |
|
|
|
349,313 |
|
Income tax provision |
|
|
18,956 |
|
|
|
15,351 |
|
|
|
84,884 |
|
|
|
88,149 |
|
Net income |
|
$ |
50,049 |
|
|
$ |
45,120 |
|
|
$ |
258,856 |
|
|
$ |
261,164 |
|
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
0.49 |
|
|
$ |
0.43 |
|
|
$ |
2.53 |
|
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$ |
2.41 |
|
Diluted |
|
$ |
0.49 |
|
|
$ |
0.42 |
|
|
$ |
2.50 |
|
|
$ |
2.39 |
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
101,383 |
|
|
|
105,730 |
|
|
|
102,479 |
|
|
|
108,232 |
|
Diluted |
|
|
102,207 |
|
|
|
106,832 |
|
|
|
103,390 |
|
|
|
109,139 |
|
SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
|
|
December 31, 2023 |
|
|
January 1, 2023 |
|
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ASSETS |
|
|
|
|
|
|
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Current assets: |
|
|
|
|
|
|
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Cash and cash equivalents |
|
$ |
201,794 |
|
|
$ |
293,233 |
|
Accounts receivable, net |
|
|
30,313 |
|
|
|
16,108 |
|
Inventories |
|
|
323,198 |
|
|
|
310,545 |
|
Prepaid expenses and other current assets |
|
|
48,467 |
|
|
|
53,918 |
|
Total current assets |
|
|
603,772 |
|
|
|
673,804 |
|
Property and equipment, net of accumulated depreciation |
|
|
798,707 |
|
|
|
722,241 |
|
Operating lease assets, net |
|
|
1,322,854 |
|
|
|
1,106,524 |
|
Intangible assets |
|
|
208,060 |
|
|
|
184,960 |
|
Goodwill |
|
|
381,741 |
|
|
|
368,878 |
|
Other assets |
|
|
12,294 |
|
|
|
13,973 |
|
Total assets |
|
$ |
3,327,428 |
|
|
$ |
3,070,380 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
179,927 |
|
|
$ |
172,904 |
|
Accrued liabilities |
|
|
164,887 |
|
|
|
151,306 |
|
Accrued salaries and benefits |
|
|
74,752 |
|
|
|
61,574 |
|
Current portion of operating lease liabilities |
|
|
126,271 |
|
|
|
135,584 |
|
Current portion of finance lease liabilities |
|
|
1,032 |
|
|
|
1,012 |
|
Total current liabilities |
|
|
546,869 |
|
|
|
522,380 |
|
Long-term operating lease liabilities |
|
|
1,399,676 |
|
|
|
1,145,173 |
|
Long-term debt and finance lease liabilities |
|
|
133,685 |
|
|
|
258,902 |
|
Other long-term liabilities |
|
|
36,270 |
|
|
|
36,340 |
|
Deferred income tax liability |
|
|
62,381 |
|
|
|
61,123 |
|
Total liabilities |
|
|
2,178,881 |
|
|
|
2,023,918 |
|
Commitments and contingencies |
|
|
|
|
|
|
||
Stockholders' equity: |
|
|
|
|
|
|
||
Undesignated preferred stock; $0.001 par value; 10,000,000 shares |
|
|
— |
|
|
|
— |
|
Common stock, $0.001 par value; 200,000,000 shares authorized, |
|
|
101 |
|
|
|
105 |
|
Additional paid-in capital |
|
|
774,834 |
|
|
|
726,345 |
|
Retained earnings |
|
|
373,612 |
|
|
|
320,012 |
|
Total stockholders' equity |
|
|
1,148,547 |
|
|
|
1,046,462 |
|
Total liabilities and stockholders' equity |
|
$ |
3,327,428 |
|
|
$ |
3,070,380 |
|
SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
|
|
Fifty-Two Weeks Ended |
|
|||||
|
|
December 31, 2023 |
|
|
January 1, 2023 |
|
||
Operating activities |
|
|
|
|
|
|
||
Net income |
|
$ |
258,856 |
|
|
$ |
261,164 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization expense |
|
|
137,811 |
|
|
|
127,067 |
|
Operating lease asset amortization |
|
|
127,208 |
|
|
|
117,315 |
|
Impairment of assets |
|
|
30,549 |
|
|
|
8,066 |
|
Share-based compensation |
|
|
18,898 |
|
|
|
16,603 |
|
Deferred income taxes |
|
|
(4,915 |
) |
|
|
3,228 |
|
Other non-cash items |
|
|
1,086 |
|
|
|
672 |
|
Changes in operating assets and liabilities, net of effects from acquisition: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
3,173 |
|
|
|
13,381 |
|
Inventories |
|
|
(10,857 |
) |
|
|
(45,158 |
) |
Prepaid expenses and other current assets |
|
|
2,210 |
|
|
|
(18,467 |
) |
Other assets |
|
|
3,482 |
|
|
|
2,039 |
|
Accounts payable |
|
|
12,215 |
|
|
|
13,362 |
|
Accrued liabilities |
|
|
11,746 |
|
|
|
5,416 |
|
Accrued salaries and benefits |
|
|
12,880 |
|
|
|
2,831 |
|
Operating lease liabilities |
|
|
(138,795 |
) |
|
|
(132,889 |
) |
Other long-term liabilities |
|
|
(479 |
) |
|
|
(3,301 |
) |
Cash flows from operating activities |
|
|
465,068 |
|
|
|
371,329 |
|
Investing activities |
|
|
|
|
|
|
||
Purchases of property and equipment |
|
|
(225,310 |
) |
|
|
(124,010 |
) |
Payments for acquisition, net of cash acquired |
|
|
(13,032 |
) |
|
|
— |
|
Cash flows used in investing activities |
|
|
(238,342 |
) |
|
|
(124,010 |
) |
Financing activities |
|
|
|
|
|
|
||
Proceeds from revolving credit facilities |
|
|
— |
|
|
|
62,500 |
|
Payments on revolving credit facilities |
|
|
(125,000 |
) |
|
|
(62,500 |
) |
Payments on finance lease liabilities |
|
|
(1,006 |
) |
|
|
(819 |
) |
Payments of deferred financing costs |
|
|
— |
|
|
|
(3,373 |
) |
Repurchase of common stock |
|
|
(203,496 |
) |
|
|
(199,980 |
) |
Proceeds from exercise of stock options |
|
|
11,454 |
|
|
|
5,041 |
|
Cash flows used in financing activities |
|
|
(318,048 |
) |
|
|
(199,131 |
) |
(Decrease)/Increase in cash, cash equivalents, and restricted cash |
|
|
(91,322 |
) |
|
|
48,188 |
|
Cash, cash equivalents, and restricted cash at beginning of the period |
|
|
295,192 |
|
|
|
247,004 |
|
Cash, cash equivalents, and restricted cash at the end of the period |
|
$ |
203,870 |
|
|
$ |
295,192 |
|
Non-GAAP Financial Measures
In addition to reporting financial results in accordance with accounting principles generally accepted in the United States (“GAAP”), the company presents Adjusted gross margin, Adjusted EBITDA, Adjusted EBIT, and Adjusted diluted earnings per share. These measures are not in accordance with, and are not intended as alternatives to, GAAP. The company's management believes that this presentation provides useful information to management, analysts and investors regarding certain additional financial and business trends relating to its results of operations and financial condition. In addition, management uses these measures for reviewing the financial results of the company, and certain of these measures may be used as components of incentive compensation.
The company defines EBITDA as net income before interest expense, provision for income tax, and depreciation, amortization and accretion. Adjusted gross margin, Adjusted EBITDA, Adjusted EBIT and Adjusted diluted earnings per share exclude the impact of certain specified special items. The Company has begun reporting these adjusted measures to provide additional information with respect to the impact of store closure costs and certain other items during the thirteen and fifty-two weeks ended December 31, 2023. There were no such material adjustments during the thirteen and fifty-two weeks ended January 1, 2023.
Non-GAAP measures are intended to provide additional information only and do not have any standard meanings prescribed by GAAP. Use of these terms may differ from similar measures reported by other companies. Because of their limitations, non-GAAP measures should not be considered as a measure of discretionary cash available to use to reinvest in the growth of the company’s business, or as a measure of cash that will be available to meet the company’s obligations. Each non-GAAP measure has its limitations as an analytical tool, and they should not be considered in isolation or as a substitute for analysis of the company’s results as reported under GAAP.
The following table shows a reconciliation of (i) Adjusted gross margin to gross margin, (ii) Adjusted EBITDA and Adjusted EBIT to net income and (iii) Adjusted diluted earnings per share to diluted earnings per share, in each case, for the thirteen and fifty-two weeks ended December 31, 2023 and January 1, 2023:
SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES
NON-GAAP MEASURE RECONCILIATION
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
|
|
Thirteen Weeks Ended |
|
|
Fifty-Two Weeks Ended |
|
||||||||||
|
|
December 31, 2023 |
|
|
January 1, 2023 |
|
|
December 31, 2023 |
|
|
January 1, 2023 |
|
||||
Gross profit |
|
$ |
620,373 |
|
|
$ |
572,809 |
|
|
$ |
2,521,841 |
|
|
$ |
2,348,564 |
|
Special items (1) |
|
|
— |
|
|
|
— |
|
|
|
2,955 |
|
|
|
— |
|
Adjusted gross profit |
|
$ |
620,373 |
|
|
$ |
572,809 |
|
|
$ |
2,524,796 |
|
|
$ |
2,348,564 |
|
Gross margin |
|
|
36.5 |
% |
|
|
36.3 |
% |
|
|
36.9 |
% |
|
|
36.7 |
% |
Adjusted gross margin |
|
|
36.5 |
% |
|
|
36.3 |
% |
|
|
36.9 |
% |
|
|
36.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
50,049 |
|
|
$ |
45,120 |
|
|
$ |
258,856 |
|
|
$ |
261,164 |
|
Income tax provision |
|
|
18,956 |
|
|
|
15,351 |
|
|
|
84,884 |
|
|
|
88,149 |
|
Interest expense, net |
|
|
433 |
|
|
|
1,399 |
|
|
|
6,491 |
|
|
|
9,047 |
|
Earnings before interest and taxes (EBIT) |
|
|
69,438 |
|
|
|
61,870 |
|
|
|
350,231 |
|
|
|
358,360 |
|
Special items (2) |
|
|
— |
|
|
|
— |
|
|
|
46,034 |
|
|
|
— |
|
Adjusted EBIT |
|
|
69,438 |
|
|
|
61,870 |
|
|
|
396,265 |
|
|
|
358,360 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation, amortization and accretion, adjusted for special items |
|
|
34,144 |
|
|
|
31,010 |
|
|
|
131,933 |
|
|
|
127,067 |
|
Adjusted EBITDA |
|
$ |
103,582 |
|
|
$ |
92,880 |
|
|
$ |
528,198 |
|
|
$ |
485,427 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
50,049 |
|
|
$ |
45,120 |
|
|
$ |
258,856 |
|
|
$ |
261,164 |
|
Special items, net of tax (2) |
|
|
— |
|
|
|
— |
|
|
|
34,272 |
|
|
|
— |
|
Adjusted net income |
|
$ |
50,049 |
|
|
$ |
45,120 |
|
|
$ |
293,128 |
|
|
$ |
261,164 |
|
Diluted earnings per share |
|
$ |
0.49 |
|
|
$ |
0.42 |
|
|
$ |
2.50 |
|
|
$ |
2.39 |
|
Adjusted diluted earnings per share |
|
$ |
0.49 |
|
|
$ |
0.42 |
|
|
$ |
2.84 |
|
|
$ |
2.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted weighted average shares outstanding |
|
|
102,207 |
|
|
|
106,832 |
|
|
|
103,390 |
|
|
|
109,139 |
|
(1) For the fifty-two weeks ended December 31, 2023, special items included approximately $3 million in Cost of sales related to store closures and our supply chain transition.
(2) For the fifty-two weeks ended December 31, 2023, special items included approximately $28 million in Store Closure and other costs, net primarily related to impairment charges and $6 million in Depreciation and amortization (exclusive of depreciation in cost of sales) for accelerated depreciation in connection with store closures, $9 million in Selling, general and administrative expenses related to store closures, our supply chain transition and acquisition related costs, and $3 million in Cost of sales related to store closures and our supply chain transition. After-tax impact included the tax benefit on the pre-tax charge.
###
Source: Sprouts Farmers Market, Inc
Phoenix, AZ
2/22/24
Q4 & Full-Year 2023 Earnings February 2024 Exhibit 99.2
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 that are not statements of historical fact (including, but not limited to, statements to the effect that Sprouts Farmers Market, Inc. (the “Company”) or its management "anticipates," "plans," "estimates," "expects," or "believes," or the negative of these terms and other similar expressions) should be considered forward-looking statements, including, without limitation, statements regarding the Company’s outlook, growth, opportunities and long-term strategy. These statements involve certain risks and uncertainties that may cause actual results to differ materially from expectations as of the date of this presentation. These risks and uncertainties include, without limitation, the Company’s ability to execute on its long-term strategy; the Company’s ability to successfully compete in its competitive industry; the Company’s ability to successfully open new stores; the Company’s ability to manage its growth; the Company’s ability to maintain or improve its operating margins; the Company’s ability to identify and react to trends in consumer preferences; product supply disruptions; equipment supply disruptions; general economic conditions that impact consumer spending or result in competitive responses; accounting standard changes; the current inflationary environment and future potential inflationary and/or deflationary trends; and other factors as set forth from time to time in the Company’s Securities and Exchange Commission filings, including, without limitation, the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The Company intends these forward-looking statements to speak only as of the time of this presentation and does not undertake to update or revise them as more information becomes available, except as required by law. Non-GAAP Financial Measures We refer to adjusted gross profit, adjusted gross margin, EBIT, adjusted EBIT, adjusted EBIT Margin, and adjusted diluted earnings per share, each of which is a Non-GAAP Financial Measure. These measures are not prepared in accordance with, and are not intended as alternatives to, generally accepted accounting principles in the United States, or GAAP. The Company's management believes that such measures provide useful information to management, analysts and investors regarding certain additional financial and business trends relating to its results of operations and financial condition. In addition, management uses these measures for reviewing the Company’s financial results, and certain of these measures may be used as components of incentive compensation. The Company defines adjusted gross profit as gross profit, excluding the impact of special items. Adjusted gross margin reflects adjusted gross profit divided by net sales for the applicable period. EBIT is defined as net income before interest expense and provision for income tax, and adjusted EBIT as EBIT, excluding the impact of special items. Adjusted EBIT Margin reflects adjusted EBIT, divided by net sales for the applicable period. The Company defines adjusted diluted earnings per share as diluted earnings per share excluding the impact of special items. Non-GAAP measures are intended to provide additional information only and do not have any standard meanings prescribed by GAAP. Use of these terms may differ from similar measures reported by other companies. Because of their limitations, non-GAAP measures should not be considered as a measure of discretionary cash available to use to reinvest in the growth of the Company’s business, or as a measure of cash that will be available to meet the Company’s obligations. Each non-GAAP measure has its limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. To the extent forward looking non-GAAP financial measures are provided herein, they are not reconciled to comparable forward-looking GAAP measures due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation.
Sprouts 2023 Accomplishments Opened 30 new stores, all in the new format Sales of Sprouts Brand grew 13% in 2023 and added 400 new items Created supply chain capacity with a new California DC and expanded Texas DC to support Sprouts’ long-term growth E-commerce grew to 12.2% of our sales and added DoorDash to expand access to Sprouts Best customer service scores in company history Adjusted Diluted EPS up 19%(1) Created ~3,000 new jobs, promoted more than 20% of our team members See the Appendix to this presentation for a reconciliation of diluted EPS to Adjusted diluted EPS. Reflects comparison of 2023 adjusted diluted EPS to 2022 diluted EPS
Fourth Quarter 2023 Highlights Net Sales +8% Comps(1) +3.3% Diluted EPS $0.49 EPS Growth(2) +17% New Store Openings 6 Share Repurchases(3) $23M Comparable Store Sales Reflects comparison of Q4 23 diluted EPS to Q4 22 diluted EPS Excluding excise tax
Fourth Quarter Sales Drivers Solid positive traffic trends continue in-store and online Added Uber Eats to our Omnichannel offering to expand access to Sprouts Differentiated departments (e.g., Proteins, Grocery, Dairy, and Frozen) driving results Strength in Sprouts Brand, including new holiday items and seasonal favorites Convenience holiday meals and attribute-driven holiday items were strong
Full-Year 2023 Highlights Net Sales +7% Comps(1) +3.4% Adj. diluted EPS(2) $2.84 EPS Growth(3) 19% New Stores 30 Cash Generation $465M From Operations Share Repurchases (4) $203M Comparable Store Sales See the Appendix to this presentation for a reconciliation of diluted EPS to Adjusted diluted EPS Reflects comparison of 2023 adjusted diluted EPS to 2022 diluted EPS Excluding excise tax
Maintaining a Structurally Improved Margin Profile 7 (1) 2023 gross margin is on an adjusted basis. See the Appendix to this presentation for a reconciliation of gross margin to adjusted gross margin (2) See the Appendix to this presentation for a reconciliation of EBIT to adjusted EBIT - for 2022, adjustments to EBIT were immaterial; thus, only EBIT is presented.
Strong Balance Sheet, Robust Cash Flows Self Fund our Growth and Deliver Shareholder Value through Ongoing Share Repurchase Program ($ in mm) Capital expenditures are net of landlord reimbursement Excluding excise tax (1) (2)
Full-Year 2024 Outlook Expect to open approximately 35 new stores Capex $225M to $245M First Quarter, 2024: Comp sales growth of 2.5% to 3.5% and adj. diluted EPS $0.98 to $1.02 Total sales growth of 5.5% to 7.5% Comp sales growth of 1.5% to 3.5% Adj. earnings before interest & taxes (EBIT) $397M to $412M Adj. diluted earnings per share (EPS) $2.85 to $2.95
Appendix
SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES NON-GAAP MEASURE RECONCILIATION (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) The following table shows a reconciliation of adjusted gross profit to gross profit, adjusted gross margin to gross margin, EBIT and adjusted EBIT to net income, adjusted EBIT margin to EBIT margin, as well as a reconciliation of net income and diluted earnings per share to adjusted net income and adjusted diluted earnings per share for the fiscal years ended Dec 31, 2023, Jan 1, 2023, Jan 2, 2022, Jan 3, 2021, and Dec 29, 2019: Appendix Includes approximately $3 million in Cost of sales related to store closures and our supply chain transition. Includes approximately $28 million in store closure and other costs, net primarily related to impairment charges and $6 million in Depreciation and amortization (exclusive of depreciation in cost of sales) for accelerated depreciation in connection with store closures, $9 million in selling, general and administrative expenses related to stores closures, our supply chain transition and acquisition-related costs, and $3 million in Cost of sales related to store closures and our supply chain transition. After-tax impact includes the tax benefit on the pre-tax charge. Includes professional fees related to strategic initiatives. After-tax impact includes the tax benefit on the pre-tax charge. Includes direct costs associated with store closures or relocations. After-tax includes the tax benefit on the pre-tax charge.
INVESTOR DECK February 2024 Exhibit 99.3
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 that are not statements of historical fact (including, but not limited to, statements to the effect that Sprouts Farmers Market, Inc. (the “Company”) or its management "anticipates," "plans," "estimates," "expects," or "believes," or the negative of these terms and other similar expressions) should be considered forward-looking statements, including, without limitation, statements regarding the Company’s outlook, growth, opportunities and long-term strategy. These statements involve certain risks and uncertainties that may cause actual results to differ materially from expectations as of the date of this presentation. These risks and uncertainties include, without limitation, the Company’s ability to execute on its long-term strategy; the Company’s ability to successfully compete in its competitive industry; the Company’s ability to successfully open new stores; the Company’s ability to manage its growth; the Company’s ability to maintain or improve its operating margins; the Company’s ability to identify and react to trends in consumer preferences; product supply disruptions; equipment supply disruptions; general economic conditions that impact consumer spending or result in competitive responses; accounting standard changes; the current inflationary environment and future potential inflationary and/or deflationary trends; and other factors as set forth from time to time in the Company’s Securities and Exchange Commission filings, including, without limitation, the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The Company intends these forward-looking statements to speak only as of the time of this presentation and does not undertake to update or revise them as more information becomes available, except as required by law. Non-GAAP Financial Measures We refer to adjusted gross profit, adjusted gross margin, EBIT, adjusted EBIT, adjusted EBIT Margin, and adjusted diluted earnings per share, each of which is a Non-GAAP Financial Measure. These measures are not prepared in accordance with, and are not intended as alternatives to, generally accepted accounting principles in the United States, or GAAP. The Company's management believes that such measures provide useful information to management, analysts and investors regarding certain additional financial and business trends relating to its results of operations and financial condition. In addition, management uses these measures for reviewing the Company’s financial results, and certain of these measures may be used as components of incentive compensation. The Company defines adjusted gross profit as gross profit, excluding the impact of special items. Adjusted gross margin reflects adjusted gross profit divided by net sales for the applicable period. EBIT is defined as net income before interest expense and provision for income tax, and adjusted EBIT as EBIT, excluding the impact of special items. Adjusted EBIT Margin reflects adjusted EBIT, divided by net sales for the applicable period. The Company defines adjusted diluted earnings per share as diluted earnings per share excluding the impact of special items. Non-GAAP measures are intended to provide additional information only and do not have any standard meanings prescribed by GAAP. Use of these terms may differ from similar measures reported by other companies. Because of their limitations, non-GAAP measures should not be considered as a measure of discretionary cash available to use to reinvest in the growth of the Company’s business, or as a measure of cash that will be available to meet the Company’s obligations. Each non-GAAP measure has its limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. To the extent forward looking non-GAAP financial measures are provided herein, they are not reconciled to comparable forward-looking GAAP measures due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation.
FIND YOUR HEALTHY
WHAT DEFINES SPROUTS And what makes us different Differentiated assortment of innovative, healthy and lifestyle-friendly products Purposeful curation of responsibly and locally sourced products Sprouts Brand: high-quality, attribute-specific private label Farmers market experience open layout with fresh produce at the heart of the store, community feel, treasure hunt for unique products Increasing access to high-quality, better-for-you products Team: friendly & welcoming, helpful, knowledgeable Culture: care, own it, love being different! Fresh supply chain: integrated fresh produce distribution channel
WHY INVEST IN SPROUTS? A Differentiated, Powerful Growth Business Incredible growth opportunity: ~ 35 new stores in 2024, approximately 10% annual unit growth Strong box economics Strong financial returns: low double-digit earnings growth and expansion of ROIC Healthy balance sheet & robust cash flows, with shareholder-friendly capital allocation Innovative & differentiated products with lifestyle-friendly ingredients Leadership team: deeply experienced in retail and consumer space Best in fresh, with best-in-class customer service Sustainability: deep commitment to taking care of our team, community and the planet
SPROUTS’ LONG-TERM STRATEGY Approximately 10% UNIT GROWTH LOW DOUBLE-DIGIT EARNINGS GROWTH EXPANDING ROIC These are targets and not projections; they are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and are based on assumptions with respect to future decisions, which may be subject to change. Actual results may vary and the variances may be material. Nothing in this presentation should be regarded as a representation that these targets will be achieved and the Company undertakes no duty to update its targets. See “Forward-Looking Statements.” Expect to open approximately 35 new stores in 2024 DELIVER ON FINANCIAL TARGETS INSPIRE & ENGAGE OUR TALENT TO CREATE A BEST PLACE TO WORK REFINE BRAND AND MARKETING APPROACH: Digital-first marketing program focused on customer engagement WIN WITH TARGET CUSTOMERS: Robust omnichannel experience Products steeped in innovation UPDATE FORMAT AND EXPAND IN SELECT MARKETS: Smaller stores focused on higher returns De-risking our growth INCREASINGLY ADVANTAGED SUPPLY CHAIN: Fresher products Increased local offering (1) (2)
SPROUTS’ FOCUS ON INNOVATION & DIFFERENTIATION: ~70% of Products Sold at Sprouts are Attribute-Based >15% Vegan ~30% non-GMO >40% organic ~20% gluten-free >10% non-GMO >15% organic ~15% non-GMO > 50% of Beef sales are grass-fed >20% organic >20% Kosher ~55% gluten-free ~35% organic ~30% vegan ~15% plant-based ~50% organic >25% plant-based >45% gluten-free >20% plant-based >20% vegan ~25% organic ~75% gluten-free >40% vegan
PRODUCE: THE HEART OF THE STORE; Farmers Market Experience Hybrid produce buying model: centralized and regional teams allow us to be flexible and react to the produce markets quickly Meaningful farmer partnerships: delivers new varietals and favorable pricing to our customers through spot buys Increasingly locally sourced fresher produce, through new distribution channels Rescued Organics program: designed to reduce food waste and support famers; launched in all stores in California Produce priced below most in the marketplace
SPROUTS’ STORES ARE FILLED WITH A CURATION OF DIFFERENTIATED BETTER-FOR-YOU PRODUCTS More than 70% of Products Sold in Sprouts are Attribute Driven: Organic, Paleo, Keto, Plant Based, Non-GMO, Gluten Free, Vegan, Dairy-free, Grass Fed, Raw (Includes all produce)
SPROUTS BRAND: DIFFERENTIATED, HIGH QUALITY, ATTRIBUTE-SPECIFIC Sprouts Brand Sales Penetration(1) (1) Sprouts Brand Sales Penetration represents sales of Sprouts Brand products, as a percentage of total company sales.
SPROUTS SHOPPER: Higher Income Consumer who Craves Health & Wellness, High Quality, Lifestyle-friendly Products, & Differentiated Assortment Sprouts’ assortment of unique and attribute-based products continues to be a key driver of customer trips $121K Avg. HHI 49% $100K + 46 Avg. Age 69% College/ Grad 57% Married/ Relationship 2.4 Avg. People in Household Demographics Over Index on Lifestyle Choices 32% committed to buying organic 30% committed to dietary lifestyle (vegan, gluten-free, pesca, etc.) 69% are concerned about the environment 41% review nutrition labels 28% are looking for fair trade / socially responsible 27% are looking to try new things 41% research recipes online 28% listen to podcasts Gen Z & Millennial opportunity Less susceptible to economic downturns Slightly higher educated Serving each family member’s need Typically dual income
CUSTOMER ENGAGEMENT: OMNICHANNEL OFFERING We let the customer choose how to shop IN-STORE: ONLINE: Ecommerce Penetration (2) Majority of ecommerce customers are omnichannel with higher share of wallet (1) Sprouts NPS study, September 2023 (2) Sprouts Ecommerce Penetration represents ecommerce sales as a percentage of total company sales. CSAT Scores are up 230 bps Year over Year NPS scores at +57, with less than 10% detractors (1) Increasing sampling programs Greeting all customers Recommendations to increase basket
2023 CUSTOMER STATISTICS: OPPORTUNITY FOR MORE ENGAGEMENT 19% of transactions linked to a Sprouts account in 2023, representing ~26% of our sales 15.2% Ecommerce sales growth in 2023 Upcoming Loyalty Program: market test in 2024 Identifiable customers come more often and spend more
SMALLER BOX WITH HIGHER RETURNS New store size decreasing from approximately 30K to 23K square feet Format stays true to our Fresh-focused Farmers Market Heritage Prioritize Categories for Growth Potential Continue to Offer all Categories More Productive Store, cost-effective (lower cost to build, and reduced operating cost)
HIGH GROWTH RETAILER Potential for 300+ New Stores in Expansion Markets 2019, 2020, 2021, 2022, 2023 actual unit growth, 2024 outlook, & approximately 10% unit growth thereafter Expansion Markets Existing DCs Future DCs Existing Markets Unit growth (1)
ADVANTAGED FRESH SUPPLY CHAIN Distribution Centers (DCs) within 250 Miles of the Majority of Stores Optimizing our Supply Chain: Expanded capabilities Leveraging system and data improvements to enable “computer-assisted ordering” (CAO) and create a more disciplined inventory management process Created DC capacity to support future growth: Opened new Southern CA DC & expanded TX DC Partnered with produce distributor to support mid-Atlantic growth Added ripening rooms in SoCal, TX, and Arizona DCs: Nearly all stores are now receiving Sprouts ripened fruit (bananas and avocados) compared to zero stores pre-2021 Benefits of Closer DCs: Efficiency Reduced miles on the road by 4% in 2023, while opening 30 new stores Service Reduced lead time 2 hour static delivery windows -- improving store labor planning Local farms Partnering with over 150 local farmers impacting 175 locally grown products representing more than 18% of total produce
INVESTING IN OUR TEAM MEMBERS >20% of team members promoted in 2023 Approximately 3,000 jobs created in 2023 More than 800,000 training hours completed in 2023 $19.68 Average pay rate for store team members(1) (1) As of December 31, 2023; for hourly store team members only
2022 ENVIRONMENT, SOCIAL & GOVERNANCE HIGHLIGHTS At the core of our identity is a genuine commitment to environmental sustainability. We are taking steps to reduce our carbon footprint and our natural resource intake while providing our customers with local, organic, and other sustainable food choices. We are diverting food from landfills and providing it to those in need. MTCO2e averted through food recovery programs CLIMATE 320 Sprouts brand products launched with How2Recycle logo polystyrene meat trays transitioned to recyclable PET trays pounds of plastic bags and film recycled from customer and in-store use PACKAGING & PLASTICS 2.5M landfill diversion rate 69% WASTE & RECYCLING FOOD WASTE RECOVERY 87% of food waste recovered, and donated equivalent to 27 million meals Food waste recovery rate 800k 51k tons of food and recyclables diverted from landfill 77k reduction in store carbon emissions per sq. ft. over a 2019 baseline 4%
2022 SUSTAINABLE & RESPONSIBLE SOURCING Millions of customers choose Sprouts because they can find products that are grown and produced in ways that are healthier for the planet and people. Our stores are stocked with a wide variety of organically grown, non-GMO, and plant-based options that lower the environmental impact of the food consumed. 100% of Sprouts Brand chicken and pork are raised without antibiotics 100% cage-free, pasture-raised, or free-range eggs Committed to improving chicken welfare in providing environmental enrichments by 2024, reduced stocking density by 2025, and allow for more humane processing, through CAS (controlled-atmosphere stunning), by 2026 $3.2B in sales of products with a social or environmental attribute 26% of total sales from organic products totaling nearly $1.6B in sales 100% of Sprouts Brand whole pork is from suppliers that utilize open-pen housing systems 250 local growers provide fresh seasonally grown produce 21% increase in less carbon intensive plant-based product sales 100% responsibly sourced seafood
2022 SOCIAL Providing safe and healthy food is at the core of our commitment to health and well-being. We collaborate with our team members, supply chain partners, community organizations, and industry experts to promote food safety, support workers’ rights, source responsibly, and develop a diverse and inclusive workplace. 5,400 safety audits completed 105,000 safety training hours completed 12% reduction in workers’ safety claims over the prior year TEAM MEMBER SAFETY $3.2M awarded local programs supporting youth nutrition education and food system equity 120 local non-profit partners supported in the communities we serve 8,400 new products launched in store 6,000 food safety audits completed 96 supplier food safety audits completed COMMUNITY IMPACT 1,600 new jobs created 24% team member promotion rate 51% female and 48% racially/ethnically diverse workforce 674,000 hours of in-store training delivered SAFE AND HEALTHY FOOD TEAM MEMBER DEVELOPMENT & INCLUSION
2022 GOVERNANCE We pride ourselves on operating with integrity, accountability, and transparency. Our ESG goals and initiatives are integrated throughout our business strategy, and strong oversight by our executive leadership team and Board of Directors ensures that the long-term interests of our stakeholders are factored into our decision making. 88% of board members are independent 25% of board members are female and 25% are racially/ethnically diverse Our board’s Risk Committee monitors our enterprise risk management program and provides oversight of our risks related to cybersecurity, critical systems, and environmental, social and governance matters, among others. RISK MANAGEMENT Maintaining our customers’ and team members’ trust by safeguarding their personal data and respecting their privacy decisions is critical to our success. We did not experience any data breaches in 2022. We remain committed to exercising cybersecurity best practices. DATA PRIVACY & CYBER SECURITY COPORATE GOVERNANCE (1) Acting ethically and with integrity helps us maintain our reputation with our customers as a preferred shopping destination, as a safe and welcoming place to work with our team members, and as a responsible corporate citizen with our communities and stakeholders. Established Commitment to Human Rights with Board oversight that sets forth our high standards and expectations for human rights and fair labor in our operations and supply chain. ETHICS AND COMPLIANCE As of Jan 1, 2023
LONG-TERM STRATEGIC FINANCIAL TARGETS(1) Low Double-Digit Earnings Growth and Expansion of ROIC Cost to Build Reduced & Attractive New Store Economics ~10% unit growth(2) Low single digit comps Stable EBIT Margins off a Higher Base These are targets and not projections; they are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and are based on assumptions with respect to future decisions, which may be subject to change. Actual results may vary and the variances may be material. Nothing in this presentation should be regarded as a representation that these targets will be achieved and the Company undertakes no duty to update its targets. See “Forward-Looking Statements.” Expect to open approximately 35 new stores in 2024
LOW-SINGLE-DIGIT COMPS TARGETS, WITH STABLE EBIT MARGINS(1) These are targets and not projections; they are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and are based on assumptions with respect to future decisions, which may be subject to change. Actual results may vary and the variances may be material. Nothing in this presentation should be regarded as a representation that these targets will be achieved and the Company undertakes no duty to update its targets. See Forward-Looking Statements.”See the appendix to this presentation for a reconciliation of EBIT margin to the comparable GAAP figure. KEY COMP DRIVERS Brand and marketing Innovative, differentiated products Omnichannel offering Better new store ramp with smarter promotional approach ALL STORES Smarter Promotions Improved Buying Improving Shrink Supply Chain Optimization Labor Productivity and Cost Management Headwinds from Labor & Benefit Costs & Ecommerce fees NEW STORES Reduction in Cost to Build (improved DA) Lower Rents driven by Smaller Boxes Less Efficient Operations during maturity ramp
NEW STORES’ STRONG PERFORMANCE: FOUR-WALL BOX TARGET ECONOMICS (1) EBITDA MARGINS (2) Break even year 1 Grows to a blended ~8% EBITDA Margins over the next 4 years These are targets and not projections; they are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and are based on assumptions with respect to future decisions, which may be subject to change. Actual results may vary and the variances may be material. Nothing in this presentation should be regarded as a representation that these targets will be achieved and the Company undertakes no duty to update its targets See “Forward-Looking Statements.” See the Appendix to this presentation for a reconciliation of EBITDA Margin to the comparable GAAP figure. SALES Box opens on average at $13M in year 1 annual sales Grows 20% to 25% over next the next 4 years CASH INVESTMENT $3.8M average new store build including CapEx, Inventory and Pre-opening expenses CASH ON CASH RETURN Low to mid thirties by year 5
STRONGER FOUNDATION: STRATEGIC INITIATIVES BEGINNING TO TAKE HOLD See the Appendix to this presentation for a reconciliation of adjusted diluted EPS to diluted EPS
STRUCTURALLY IMPROVED AND MAINTAINING THE MARGIN PROFILE (1) 2023 gross margin is presented on an adjusted basis. See the Appendix to this presentation for a reconciliation of gross margin to adjusted gross margin (2) See the Appendix to this presentation for a reconciliation of EBIT to adjusted EBIT - for 2022, adjustments to EBIT were immaterial; thus, only EBIT is presented.
IMPROVING ROIC: IN-LINE WITH STRATEGIC GOALS ROIC (1) ROIC is a non-GAAP measure defined as net operating profit after taxes divided by average invested capital. See the Appendix to this presentation for a reconciliation of ROIC to net income 2020 is presented on a 53-week basis (2)
STRONG BALANCE SHEET, ROBUST CASH FLOWS: Delivering Shareholder Value through Ongoing Share Repurchase Program (1) (2) ($ in mm) Capital expenditures are net of landlord reimbursement Excluding excise tax
FIND YOUR HEALTHY IN OUR ASSORTMENT OF FRESH, HEALTHY FOODS Sprouts delivers a unique farmers market experience: bringing together passionate, knowledgeable team members, and the best assortment of high-quality food that is both good for us and good for the world.
APPENDIX
EXECUTIVE MANAGEMENT TEAM WITH LEADING GROCERY & RETAIL EXPERIENCE Jack Sinclair Chief Executive Officer since 2019 Curtis Valentine Chief Financial Officer since 2024 (joined SFM in 2015) Scott Neal Chief Merchandising Officer since 2022 (joined SFM in 2020) Dustin Hamilton Chief Stores Officer since 2023 (joined SFM in 2021) Dave McGlinchey Chief Strategy Officer since 2022 (joined SFM in 2017) Brandon Lombardi Chief Legal Officer & Chief Sustainability Officer since 2012 Kim Coffin Senior VP, Chief Forager since 2022 (joined SFM in 2012) Joe Hurley Chief Supply Chain Officer since 2023 (joined SFM in 2019) James Bahrenburg Chief Technology Officer since 2023 (joined SFM in 2023) Timmi Zalatoris Chief Human Resources Officer since 2023 (joined SFM in 2017) Nick Konat President & Chief Operating Officer since 2022 Alisa Gmelich Senior VP, Chief Marketing Officer since 2022
APPENDIX The following table shows a reconciliation of adjusted gross profit to gross profit, adjusted gross margin to gross margin, EBIT and adjusted EBIT to net income, adjusted EBIT margin to EBIT margin, as well as a reconciliation of net income and diluted earnings per share to adjusted net income and adjusted diluted earnings per share for the fiscal years ended Dec, 31, 2023, Jan 1, 2023, Jan 2, 2022, Jan 3, 2021, and Dec 29, 2019: SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES NON-GAAP MEASURE RECONCILIATION (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Includes approximately $3 million in Cost of sales related to store closures and our supply chain transition. Includes approximately $28 million in store closure and other costs, net primarily related to impairment charges and $6 million in Depreciation and amortization (exclusive of depreciation in cost of sales) for accelerated depreciation in connection with store closures, $9 million in selling, general and administrative expenses related to stores closures, our supply chain transition and acquisition-related costs, and $3 million in Cost of sales related to store closures and our supply chain transition. After-tax impact includes the tax benefit on the pre-tax charge. Includes professional fees related to strategic initiatives. After-tax impact includes the tax benefit on the pre-tax charge. Includes direct costs associated with store closures or relocations. After-tax includes the tax benefit on the pre-tax charge.
APPENDIX The following table shows a reconciliation of ROIC to net income for the Company’s 2019, 2020, 2021, 2022 and 2023 fiscal years